Canada (Attorney General) v. Chambre des notaires du Québec

Canada (Attorney General) v. Chambre des notaires du Québec
Collection
Supreme Court Judgments
Date
2016-06-03
Neutral citation
2016 SCC 20
Report
[2016] 1 SCR 336
Case number
35892
Judges
McLachlin, Beverley; Abella, Rosalie Silberman; Cromwell, Thomas Albert; Moldaver, Michael J.; Karakatsanis, Andromache; Wagner, Richard; Gascon, Clément
On appeal from
Quebec
Subjects
Constitutional law
Taxation
Notes
SCC Case Information: 35892
Decision Content
SUPREME COURT OF CANADA
Citation: Canada (Attorney General) v. Chambre des notaires du Québec, 2016 SCC 20, [2016] 1 S.C.R. 336
Appeal heard: November 3, 2015
Judgment rendered: June 3, 2016
Docket: 35892
Between:
Attorney General of Canada and Canada Revenue Agency
Appellants
and
Chambre des notaires du Québec and Barreau du Québec
Respondents
- and -
Advocates’ Society, Canadian Bar Association,
Federation of Law Societies of Canada and
Criminal Lawyers’ Association
Interveners
Official English Translation
Coram: McLachlin C.J. and Abella, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ.
Joint Reasons for Judgment:
(paras. 1 to 96)
Wagner and Gascon JJ. (McLachlin C.J. and Abella, Cromwell, Moldaver and Karakatsanis JJ. concurring)
Canada (Attorney General) v. Chambre des notaires du Québec, 2016 SCC 20, [2016] 1 S.C.R. 336
Attorney General of Canada and
Canada Revenue Agency Appellants
v.
Chambre des notaires du Québec and
Barreau du Québec Respondents
and
Advocates’ Society,
Canadian Bar Association,
Federation of Law Societies of Canada and
Criminal Lawyers’ Association Interveners
Indexed as: Canada (Attorney General) v. Chambre des notaires du Québec
2016 SCC 20
File No.: 35892.
2015: November 3; 2016: June 3.
Present: McLachlin C.J. and Abella, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ.
on appeal from the court of appeal for quebec
Constitutional law — Charter of rights — Search and seizure — Professional secrecy of notaries and lawyers — Income tax — Tax audit and collection — Whether ss. 231.2(1) and 231.7 and definition of “solicitor‑client privilege” set out in s. 232(1) of Income Tax Act infringe right guaranteed by s. 8 of Canadian Charter of Rights and Freedoms insofar as they apply to lawyer or notary — If so, whether that impairment can be justified under s. 1 of Charter — Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .), ss. 231.2(1) , 231.7 , 232(1) “solicitor‑client privilege”.
Taxation — Income tax — Enforcement — Professional secrecy of notaries and lawyers — Statutory provision requiring provision of documents or information for audit or enforcement purposes — Constitutional validity of requirement scheme with respect to notaries and lawyers and of exception for accounting records of lawyer provided for in definition of “solicitor‑client privilege” set out in Act — Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .), ss. 231.2(1) , 231.7 , 232(1) “solicitor‑client privilege”.
Some notaries practising law in Quebec received requirements to provide documents or information from the Minister of National Revenue under s. 231.2 of the ITA. The purpose of these requirements was to obtain information or documents relating to clients of the notaries for tax collection or audit purposes. Some of the notaries who received such requirements contacted the Chambre des notaires du Québec (« Chambre ») to raise concerns about their clients’ right to professional secrecy. The Chambre instituted a declaratory action against the Attorney General of Canada and the Canada Revenue Agency (“CRA”) for the purpose of having ss. 231.2 and 231.7 of the ITA and the exception for the accounting records of notaries and lawyers set out in the definition of “solicitor-client privilege” in s. 232(1) declared to be unconstitutional and of no force or effect with respect to notaries. The Barreau du Québec (« Barreau ») joined in the proceedings as an intervener for the purpose of having any declaration made by the courts concerning the legislative provisions in question apply equally to its members.
The Superior Court and the Court of Appeal ruled in favour of the Chambre and the Barreau. The Court of Appeal found that, pursuant to s. 52 of the Constitution Act, 1982, ss. 231.2(1) and 231.7 and the accounting records exception set out in s. 232(1) are unconstitutional and of no force or effect with respect to Quebec notaries and lawyers for all information and documents protected by professional secrecy.
Held: The appeal should be dismissed.
Section 8 of the Charter protects against unreasonable searches and seizures. There are two questions that must be answered to determine whether a government action was contrary to s. 8 : whether the government action intruded upon an individual’s reasonable expectation of privacy, in which case it constituted a seizure within the meaning of s. 8 , and whether the seizure was an unreasonable intrusion on that right to privacy.
The first of these questions is not problematic, as the Court has already established that a requirement constitutes a seizure within the meaning of s. 8 . The seizure in this case involves information or documents that may be protected by the professional secrecy of notaries or lawyers. Professional secrecy must remain as close to absolute as possible, and it is generally seen as a fundamental and substantive rule of law. In this respect, professional secrecy has a deep significance regardless of the nature of the legal advice being sought or the context in which it is sought. For the purposes of the analysis under s. 8 of the Charter , the civil and administrative context of the requirement scheme does not diminish the taxpayer’s expectation of privacy for information that is protected by professional secrecy. A client of a notary or a lawyer has a reasonable expectation of privacy for information and documents that are in the possession of the notary or lawyer and in respect of which a requirement is issued.
In answering the second question, the courts must balance the interests at stake, namely an individual’s privacy interest on the one hand and the state’s interest in carrying out a search or seizure on the other. Where the interest at stake is the professional secrecy of legal advisers, which is a principle of fundamental justice and a legal principle of supreme importance, the usual balancing exercise under s. 8 will not be particularly helpful. Stringent standards must be adopted to protect professional secrecy. This means that any legislative provision that interferes with professional secrecy more than is absolutely necessary will be labelled unreasonable.
In this case there are several defects that cause a requirement sent to a notary or lawyer concerning information that is protected by professional secrecy to be unreasonable and contrary to s. 8 , namely that the client is given no notice of the requirement, that an inappropriate burden is placed solely on the notary or lawyer concerned, that compelling disclosure of the information being sought is not absolutely necessary and that no measures have been taken to help mitigate the impairment of professional secrecy. The requirement scheme serves legitimate purposes, namely the collection of amounts owed to the CRA and tax audits, but the existence of an important purpose cannot justify sidestepping the protection afforded by s. 8 of the Charter . The constitutional defects in the requirement scheme are all the more unacceptable given that they could easily be mitigated and remedied by way of measures that are compatible with the state’s obligations relating to the protection of professional secrecy. Currently, therefore, the impairment permitted by the requirement scheme set out in ss. 231.2(1) and 231.7 of the ITA is not consistent with the principle of minimization.
The exception whose effect is to exclude the accounting records of notaries and lawyers from the protection of professional secrecy and which is set out in s. 232(1) of the ITA also infringes the rights guaranteed by s. 8 of the Charter . To determine whether an abrogation of professional secrecy in the context of a seizure is constitutional, a court must consider what characterizes professional secrecy as a substantive right. Thus, a legislative provision cannot, by abrogating professional secrecy, authorize the state to gain access to information that is normally protected, where the abrogation is not absolutely necessary to achieve the purposes of the legislation. Limits on professional secrecy must take into account the duty recognized by the Court to minimize impairments, and the exceptions must be precisely defined. In this case, the exception is broad and undefined, as it permits the seizure of any accounting record of a notary or a lawyer, and is therefore problematic from the standpoint of the absolute necessity test. Moreover, for all practical purposes, the exception removes from the court’s jurisdiction the determination of whether accounting records in respect of which a requirement has been issued are privileged. In sum, in the absence of absolute necessity and given that there is no possibility of judicial review to ensure that professional secrecy is protected, the accounting records exception allows the unreasonable seizure of information found in the accounting records of notaries or lawyers.
Because the statutory provisions in question — ss. 231.2(1) and 231.7 and the accounting records exception set out in s. 232(1) of the ITA — do not minimally impair the right to professional secrecy, they cannot be saved under s. 1 of the Charter . As for the appropriate remedy in this case, since the Court has already found that the requirement scheme is generally constitutional insofar as requirements are sent to taxpayers, it is neither necessary nor appropriate to find that the entire scheme is invalid. The requirement scheme in the ITA infringes s. 8 of the Charter and must be declared to be unconstitutional insofar as it applies to notaries and lawyers in Quebec. Section 231.2(1) of the ITA, which authorizes the Minister to send requirements, and s. 231.7 of the ITA, which authorizes the Minister to apply to a court to follow up on a requirement, are unconstitutional, and inapplicable to notaries and lawyers in their capacity as legal advisers. The exception for a lawyer’s accounting records set out in the definition of “solicitor‑client privilege” in s. 232(1) of the ITA is unconstitutional and invalid.
Cases Cited
Distinguished: Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425; applied: Lavallee, Rackel & Heintz v. Canada (Attorney General), 2002 SCC 61, [2002] 3 S.C.R. 209; Canada (Attorney General) v. Federation of Law Societies of Canada, 2015 SCC 7, [2015] 1 S.C.R. 401; referred to: Maranda v. Richer, 2003 SCC 67, [2003] 3 S.C.R. 193; R. v. Edwards, [1996] 1 S.C.R. 128; R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627; Solosky v. The Queen, [1980] 1 S.C.R. 821; Descôteaux v. Mierzwinski, [1982] 1 S.C.R. 860; Smith v. Jones, [1999] 1 S.C.R. 455; Canada (Privacy Commissioner) v. Blood Tribe Department of Health, 2008 SCC 44, [2008] 2 S.C.R. 574; R. v. McClure, 2001 SCC 14, [2001] 1 S.C.R. 445; R. v. National Post, 2010 SCC 16, [2010] 1 S.C.R. 477; R. v. Brown, 2002 SCC 32, [2002] 2 S.C.R. 185; Goodis v. Ontario (Ministry of Correctional Services), 2006 SCC 31, [2006] 2 S.C.R. 32; Foster Wheeler Power Co. v. Société intermunicipale de gestion et d’élimination des déchets (SIGED) inc., 2004 SCC 18, [2004] 1 S.C.R. 456; Hunter v. Southam Inc., [1984] 2 S.C.R. 145; R. v. Cunningham, 2010 SCC 10, [2010] 1 S.C.R. 331; Canada (National Revenue) v. Thompson, 2016 SCC 21, [2016] 1 S.C.R. 381; Organic Research Inc. v. Minister of National Revenue (1990), 111 A.R. 336; Pritchard v. Ontario (Human Rights Commission), 2004 SCC 31, [2004] 1 S.C.R. 809; R. v. Dunbar (1982), 68 C.C.C. (2d) 13; A. (L.L.) v. B. (A.), [1995] 4 S.C.R. 536; R. v. Seaboyer, [1991] 2 S.C.R. 577; Carter v. Canada (Attorney General), 2015 SCC 5, [2015] 1 S.C.R. 331.
Statutes and Regulations Cited
Act respecting the ministère du Revenu, R.S.Q., c. M‑31 [now Tax Administration Act, CQLR, c. A‑6.002], s. 39.
Act to amend the Income Tax Act, S.C. 1956, c. 39, s. 28.
Act to amend the Income Tax Act and the Federal‑Provincial Fiscal Arrangements Act, S.C. 1965, c. 18, s. 26.
Act to facilitate the payment of support, CQLR, c. P‑2.2, s. 57.
Canadian Charter of Rights and Freedoms, ss. 1 , 7 , 8 .
Charter of human rights and freedoms, CQLR, c. C‑12, s. 9.
Constitution Act, 1982, s. 52 .
Criminal Code, R.S.C. 1985, c. C‑46, s. 488.1 .
Income Tax Act, R.S.C. 1952, c. 148.
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .), ss. 230 to 232 , 231.1 , 231.2 , 231.7 , 232(1) “solicitor-client privilege”, (2)(a), 238.
Authors Cited
Geddes, Gloria. “The Fragile Privilege: Establishing and Safeguarding Solicitor‑Client Privilege” (1999), 47 Can. Tax J. 799.
Lederman, Sidney N., Alan W. Bryant and Michelle K. Fuerst. The Law of Evidence in Canada, 4th ed. Markham, Ont.: LexisNexis, 2014.
Wigmore, John Henry. Evidence in Trials at Common Law, vol. 8., revised by John T. McNaughton. Boston: Little, Brown, 1961.
APPEAL from a judgment of the Quebec Court of Appeal (Bich, Léger and Fournier JJ.A.), 2014 QCCA 552, [2014] AZ‑51056416, [2014] J.Q. no 2296 (QL), 2014 CarswellQue 8337 (WL Can.), setting aside in part a decision of Blanchard J., 2010 QCCS 4215, [2010] R.J.Q. 2069, [2010] AZ‑50670160, [2010] J.Q. no 8868 (QL), 2010 CarswellQue 9351 (WL Can.). Appeal dismissed.
Marc Ribeiro, Christopher Rupar and Chantal Comtois, for the appellants.
Raymond Doray and Loïc Berdnikoff, for the respondent Chambre des notaires du Québec.
Giuseppe Battista, for the respondent Barreau du Québec.
Pierre Bienvenu and Andres Garin, for the intervener the Advocates’ Society.
Mahmud Jamal, Alexandre Fallon and W. David Rankin, for the intervener the Canadian Bar Association.
John B. Laskin and Yael Bienenstock, for the intervener the Federation of Law Societies of Canada.
Brian Gover, Justin Safayeni and Carlo Di Carlo, for the intervener the Criminal Lawyers’ Association.
English version of the judgment of the Court delivered by
Wagner and Gascon JJ. —
I. Overview
[1] In this appeal, the Attorney General of Canada (“AGC”) and the Canada Revenue Agency (“CRA”), on the one hand, and the Chambre des notaires du Québec (“Chambre”) and the Barreau du Québec (“Barreau”), on the other, disagree about the requirement procedure set out in the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .) (“ITA ”). This procedure enables the tax authorities to require any person to provide information or documents for any purpose related to the administration of the ITA .
[2] The Chambre and the Barreau submit that, when a “requirement to provide documents or information” is sent to a notary or a lawyer, there is a risk that the information or documents being sought will, unbeknownst to the legal adviser’s client, reveal particulars that are protected by the professional secrecy of notaries and lawyers, otherwise known as solicitor-client privilege. To this extent, it is argued, the relevant provisions of the ITA infringe the rights guaranteed by ss. 7 and 8 of the Canadian Charter of Rights and Freedoms (“Charter ”), and the infringement cannot be justified under s. 1 .
[3] The AGC and the CRA counter that the Canadian tax system is based on the principle of self‑reporting and self‑assessment, which means that the tax authorities must rely on broad powers of audit to ensure the system’s integrity. In this regard, they argue, the requirement procedure does not infringe any section of the Charter . Because the requirements in question are issued in an administrative context, not a criminal one, taxpayers have a lower expectation of privacy. In addition, according to the exception set out in the definition of “solicitor-client privilege” in s. 232(1) of the ITA , the accounting records of a notary or a lawyer, which contain information that is prima facie not privileged, are not protected by professional secrecy (“the accounting records exception”). The AGC and the CRA submit that this exception is valid and that the CRA should have access to information of this nature by means of requirements issued to such legal advisers.
[4] The Superior Court and the Court of Appeal ruled in favour of the Chambre and the Barreau. The Court of Appeal found that, pursuant to s. 52 of the Constitution Act, 1982, ss. 231.2(1) and 231.7 and the accounting records exception are unconstitutional and of no force or effect with respect to Quebec notaries and lawyers for all information and documents protected by professional secrecy. We are in substantial agreement and would dismiss the appeal.
[5] The Court has held in the past that professional secrecy is a principle of fundamental justice within the meaning of s. 7 (Lavallee, Rackel & Heintz v. Canada (Attorney General), 2002 SCC 61, [2002] 3 S.C.R. 209, at para. 49). It is also a civil right of supreme importance in the Canadian justice system. Professional secrecy must thus remain as close to absolute as possible, and the courts must adopt stringent standards to protect it.
[6] A requirement under the ITA constitutes a seizure within the meaning of s. 8 of the Charter . The seizures made in this case are unreasonable and are contrary to that section, because the requirement scheme and the exception for accounting records do not provide adequate protection for the professional secrecy of notaries and lawyers. The procedure set out in the ITA does not require that the client, who is the holder of the privilege, be informed of the requirement or of any proceeding brought by the CRA to obtain an order to provide information or documents. The procedure also places the entire burden of protecting the privilege on the notary or lawyer. Finally, the AGC and the CRA have not established that it is absolutely necessary here to impair professional secrecy. Because the impugned provisions do not minimally impair the right to professional secrecy, they also cannot be saved under s. 1 . In light of this conclusion, a separate analysis under s. 7 of the Charter will not be necessary.
II. Background
A. Requirement Scheme of the ITA
[7] Three provisions of the ITA relating to the requirement scheme are central to this appeal. They are set out in full in the appendix.
[8] The first of these provisions, s. 231.2(1), authorizes the Minister of National Revenue (“Minister”), by notice served personally or by registered or certified mail, to require a person to provide information or documents concerning a taxpayer within a reasonable time stipulated in the notice. This section therefore allows the CRA, for and on behalf of the Minister, to send a notary or lawyer a requirement concerning a client. But in most cases, the client in question has no knowledge of the requirement. The CRA generally sends the notice to the notary or lawyer without sending a copy to the client, that is, to the taxpayer about whom information is being sought. Moreover, the requirement is issued without judicial intervention.
[9] The second provision, s. 231.7, comes into play where a person to whom a requirement is issued refuses to provide the information or documents being sought. In such a case, this section provides that the Minister may have recourse to the courts by means of a proceeding of a summary nature. Section 231.7 authorizes a judge, on application by the Minister, to order a person to provide any access, assistance, information or document sought by the Minister if the judge is satisfied that the person in question did not do so when required under s. 231.1 or 231.2 of the ITA . However, this section provides that the judge may make an order in respect of the information or document being sought only if the information or document is not protected from disclosure by solicitor‑client privilege within the meaning of s. 232(1) of the ITA .
[10] The third provision is the definition of “solicitor‑client privilege” set out in s. 232(1) :
solicitor‑client privilege means the right, if any, that a person has in a superior court in the province where the matter arises to refuse to disclose an oral or documentary communication on the ground that the communication is one passing between the person and the person’s lawyer in professional confidence, except that for the purposes of this section an accounting record of a lawyer, including any supporting voucher or cheque, shall be deemed not to be such a communication.
[11] This definition was added to the Income Tax Act, R.S.C. 1952, c. 148, in 1956 (c. 39, s. 28). At the time, professional secrecy had not yet attained the status it is given today. As for the “accounting record of a lawyer” exception, it was added to the definition in 1965 (c. 18, s. 26), although the term “accounting record” is not defined in the ITA . The definition and the exception have remained unchanged since they were first enacted. The third paragraph of s. 232(1) provides that, for the purposes of s. 232 , the term “lawyer” includes both notaries and advocates in Quebec.
[12] It should be added that the ITA ’s requirement scheme provides for sanctions up to and including imprisonment for persons who have failed to comply with any of ss. 230 to 232 (s. 238(1) of the ITA , also reproduced in the appendix). However, a notary or lawyer who is prosecuted for failure to comply with a requirement can raise professional secrecy as a defence and must be acquitted if the judge is satisfied that the notary or lawyer had reasonable grounds to believe that solicitor-client privilege applied to the information or document being sought (s. 232(2) (a) of the ITA ).
B. Source of the Dispute
[13] The factual background to the parties’ dispute is essentially quite simple. In recent years, notaries practising law in Quebec have received requirements issued by the CRA under s. 231.2 of the ITA . The purpose of all these requirements has been to obtain information or documents relating to clients of the notaries for tax collection or audit purposes. According to the CRA, the information in question falls within the accounting records exception set out in the definition of “solicitor‑client privilege” in s. 232(1) of the ITA . In almost every one of the requirements filed in evidence, the CRA official who sent the requirement advised the notary of the possible sanctions — namely a fine or imprisonment — for failing to comply with it.
[14] Some of the notaries who received such requirements contacted the Chambre to raise concerns about their clients’ right to professional secrecy. The Chambre tried unsuccessfully to negotiate a compromise with the CRA on what should be done when requirements are issued to notaries. The failure of the negotiation led the Chambre to institute a declaratory action against the AGC and the CRA in the Superior Court for the purpose of having ss. 231.2 and 231.7 of the ITA and the accounting records exception declared to be unconstitutional and of no force or effect with respect to notaries. The Chambre argued, inter alia, that those provisions authorized unreasonable seizures contrary to the Charter because they did not include adequate protection for professional secrecy. In its action, the Chambre also requested that a series of documents regularly held or prepared by its members in their practice be declared to be prima facie privileged.
[15] The Barreau, whose members are lawyers practising in Quebec to whom similar requirements could be issued for information and documents relating to their clients, joined in the proceedings as an intervener for the purpose of having any declaration made by the courts concerning the legislative provisions in question apply equally to its members.
III. Judicial History
A. Quebec Superior Court, 2010 QCCS 4215, [2010] R.J.Q. 2069
[16] Blanchard J. allowed the Chambre’s action. He made an order declaring that ss. 231.2 and 231.7 of the ITA and the definition of “solicitor‑client privilege” in s. 232(1) of the ITA are unconstitutional and of no force or effect with respect to notaries and lawyers in Quebec for documents protected by professional secrecy. He also granted the request to recognize a list of legal documents prepared by notaries or lawyers in the practice of their profession as being prima facie protected by professional secrecy regardless of the medium on which the documents in question are found.
[17] In his reasons, Blanchard J. noted at the outset that there was no need for a lengthy discussion of the distinction between notaries and lawyers. Both are legal advisers. As such, they have the same duty and obligation to respect their clients’ right to professional secrecy. After reviewing this Court’s decisions on the professional secrecy of notaries and lawyers, Blanchard J. concluded that, in this case, there was no reason to draw a distinction based on whether the seizure in question occurred in a civil or a criminal context. He added that the distinction advanced by the CRA between “facts” and “communications” was not justified. In his view, the relationship between a legal professional and a client presupposes that all actions, documents and information resulting from that relationship are prima facie privileged. He also expressed the view that exceptions to professional secrecy should be made very rarely and only as a last resort.
[18] Concerning the impugned provisions of the ITA , Blanchard J. observed that the procedure established by Parliament does not provide a way for clients who hold the right to professional secrecy to know that their right is in jeopardy or to ensure that it is protected: only the person against whom an order is sought has to be given notice of a summary application made by the Minister to a judge. In the context of this case, that person is the notary. The fact that a judge can order a person to provide documents does not ensure that the holder of the right to professional secrecy is given a reasonable opportunity to raise an objection in order to maintain the confidentiality of privileged information. Blanchard J. concluded that ss. 231.2 and 231.7 result in an unreasonable search and seizure contrary to s. 8 of the Charter .
[19] As to the accounting records exception, Blanchard J. found that it also had to be declared to be of no force or effect under the Constitution. In his view, the CRA should always have to apply directly to a superior court judge when seeking to obtain privileged information.
B. Quebec Court of Appeal, 2014 QCCA 552
[20] The Court of Appeal unanimously allowed the appeal, but solely to make a minor change to para. 125 of the trial judge’s judgment and to strike out paras. 126-27 thereof. The primary purpose of the changes was to make it clear that where s. 231.2 of the ITA was concerned, only subs. (1) was to be declared to be of no force or effect with respect to a requirement sent to a taxpayer’s notary or lawyer. In addition, the changes limited the scope of the declaration of unconstitutionality to the accounting records exception set out in s. 232(1) of the ITA . The paragraphs of the judgment that were struck out concerned the list of documents that Blanchard J. had recognized as being prima facie protected by professional secrecy. Bich J.A., who wrote the Court of Appeal’s reasons, found that it was risky to establish in advance a presumption as to what documents or classes of documents were privileged.
[21] This being said, Bich J.A. accepted Blanchard J.’s conclusions about the scope of professional secrecy and noted that exceptions to professional secrecy must be rare and must be narrowly construed. In her opinion, the distinction between “facts” and “communications” is not relevant, and the expectation of privacy associated with professional secrecy is high regardless of whether the circumstances in which it might be jeopardized arise in a civil or criminal context. She agreed with Blanchard J. that there are strong similarities between the professional secrecy of legal advisers in Quebec and solicitor‑client privilege in the law of the other provinces; the definition in s. 232(1) thus incorporates the law relating to professional secrecy in Quebec and all the rules on solicitor‑client privilege developed by this Court.
[22] As to the requirement scheme provided for in ss. 231.2(1) and 231.7 of the ITA , Bich J.A. found that, insofar as it concerns notaries and lawyers, it infringes s. 8 of the Charter because of one principal, fatal feature: the potential breach of the professional secrecy of legal advisers without the knowledge or consent of the client in respect of whom a requirement is issued. For this reason, Bich J.A. was of the opinion that the provisions lead to an unreasonable seizure and that the impairment is not minimal, given that it does not meet the constitutional requirements for the seizure of documents that could be protected by professional secrecy. Nor, in her view, was the requirement scheme consistent with the principle of minimization enunciated in Maranda v. Richer, 2003 SCC 67, [2003] 3 S.C.R. 193, according to which a seizure may be carried out at the office of a legal adviser only where there are no reasonable alternative measures for obtaining the information being sought. She added that a seizure cannot be justified by mere convenience.
[23] Bich J.A. found that the accounting records exception is equally invalid. The exception does not meet the requirements of s. 8 of the Charter ; Parliament cannot opt out of s. 8 by enacting a legislative exception to professional secrecy. In her view, judges may not be stripped of the possibility of deciding on a case‑by‑case basis whether documents are protected by professional secrecy. Finally, Bich J.A. noted that the scheme does not include measures that would satisfy the minimal impairment requirement that applies in respect of professional secrecy, and that as a result it cannot be saved under s. 1 .
IV. Issues
[24] The Chief Justice stated the following constitutional questions for the purposes of the appeal:
1. Do ss. 231.2(1) and 231.7 and the definition of “solicitor‑client privilege” set out in s. 232(1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .), infringe a right guaranteed by s. 7 of the Canadian Charter of Rights and Freedoms insofar as they apply to a lawyer or a notary?
2. If so, is the infringement a reasonable limit prescribed by law that can be demonstrably justified in a free and democratic society under s. 1 of the Canadian Charter of Rights and Freedoms ?
3. Do ss. 231.2(1) and 231.7 and the definition of “solicitor‑client privilege” set out in s. 232(1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .), infringe the right guaranteed by s. 8 of the Canadian Charter of Rights and Freedoms insofar as they apply to a lawyer or a notary?
4. If so, is the infringement a reasonable limit prescribed by law that can be demonstrably justified in a free and democratic society under s. 1 of the Canadian Charter of Rights and Freedoms ?
[25] As can be seen from these questions, the constitutional validity of the relevant provisions of the ITA is at issue under both s. 7 and s. 8 of the Charter . In Lavallee, at para. 34, and in Canada (Attorney General) v. Federation of Law Societies of Canada, 2015 SCC 7, [2015] 1 S.C.R. 401 (“FLS”), at para. 33, the Court stated that there is no need to undertake a s. 7 analysis where a s. 8 analysis leads to the conclusion that the impugned provisions are unconstitutional.
[26] Since that is in fact the conclusion we reach in the instant case, it will suffice for us to begin by outlining the framework for the s. 8 analysis and then to discuss the constitutional defects identified by the courts below in the requirement scheme as a whole and more particularly in the accounting records exception. Because the scope of the professional secrecy of legal advisers is central to this case, it will be necessary for us to discuss it in our analysis, as the Superior Court and the Court of Appeal did in their respective reasons.
V. Analysis
A. Section 8 and Professional Secrecy
[27] Section 8 of the Charter does not explicitly protect professional secrecy. Rather, it protects against unreasonable searches and seizures. There are two questions that must be answered to determine whether a government action was contrary to s. 8 . The first is whether the government action intruded upon an individual’s reasonable expectation of privacy. If it did, it constitutes a seizure within the meaning of s. 8 . The second is whether the seizure was an unreasonable intrusion on that right to privacy (R. v. Edwards, [1996] 1 S.C.R. 128, at para. 33; Lavallee, at para. 35). In the case at bar, the first step is not really problematic, as the Court held in R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627, that a requirement under s. 231(3) of the ITA (now s. 231.2(1) ) constitutes a seizure within the meaning of s. 8 (pp. 641‑42).
(1) Reasonable Expectation of Privacy
[28] On the first question, it should be remembered that professional secrecy, which started out as a mere rule of evidence, became a substantive rule over time (Solosky v. The Queen, [1980] 1 S.C.R. 821, at p. 837; Descôteaux v. Mierzwinski, [1982] 1 S.C.R. 860, at pp. 875-76; Smith v. Jones, [1999] 1 S.C.R. 455, at paras. 48‑49; Canada (Privacy Commissioner) v. Blood Tribe Department of Health, 2008 SCC 44, [2008] 2 S.C.R. 574, at para. 10). The Court now recognizes that this rule has deep significance and a unique status in our legal system (R. v. McClure, 2001 SCC 14, [2001] 1 S.C.R. 445, at paras. 28 and 31‑33; Smith, at paras. 46‑47). In Lavallee, the Court reaffirmed that the right to professional secrecy has become an important civil and legal right and that the professional secrecy of lawyers or notaries is a principle of fundamental justice within the meaning of s. 7 of the Charter (para. 49). Moreover, professional secrecy is generally seen as a “fundamental and substantive” rule of law (R. v. National Post, 2010 SCC 16, [2010] 1 S.C.R. 477, at para. 39). Because of its importance, the Court has often stated that professional secrecy should not be interfered with unless absolutely necessary given that it must remain as close to absolute as possible (Lavallee, at paras. 36-37; McClure, at para. 35; R. v. Brown, 2002 SCC 32, [2002] 2 S.C.R. 185, at para. 27; Goodis v. Ontario (Ministry of Correctional Services), 2006 SCC 31, [2006] 2 S.C.R. 32, at para. 15).
[29] From this perspective, Blanchard J. was right to note that [translation] “[t]he fundamental importance of the right to professional secrecy of lawyers is a cornerstone not only of our judicial system but, more broadly, of our legal system” (para. 86).
[30] In this respect, professional secrecy has a deep significance regardless of the nature of the legal advice being sought or the context in which it is sought (Smith, at para. 46). We therefore conclude, contrary to the argument of the AGC and the CRA, that for the purposes of the analysis under s. 8 of the Charter , the civil and administrative context of the requirement scheme does not diminish the taxpayer’s expectation of privacy for information that is protected by professional secrecy.
[31] It is true that this Court stated in Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425, that it might be appropriate to find that there is a lower expectation of privacy in an administrative context and therefore to apply a “less strenuous and more flexible” standard of reasonableness in determining whether a seizure is constitutional (pp. 506-7). To justify its reasoning in that case, the Court stated that “there can only be a relatively low expectation of privacy in respect of premises or documents that are used or produced in the course of activities which, though lawful, are subject to state regulation as a matter of course” (p. 507). In such cases, the routine performance of the activities in question often involves the inspection by agents of the state of premises or documents that would otherwise be considered private. Since the state is therefore expected to have access to information for regulatory purposes, it would make no sense to find that, on the one hand, the disclosure of such information is normal but that, on the other, the expectation of privacy associated with the information is extremely high.
[32] The situation is very different when information protected by professional secrecy is involved. The nature of such information means that it cannot be disclosed by a notary or a lawyer in any regulatory context. Even if the information may be obtained from a third party or may be a type of information that taxpayers must regularly provide to the tax authorities, it is presumed to be protected by professional secrecy while in the hands of a notary or a lawyer and is therefore exempt from seizure (Maranda, at paras. 33‑34). The key difference between the situation in the case at bar and the one in Thomson Newspapers lies in the fact that here, the party in possession of the information is the notary or the lawyer, not the person who is subject to the regulatory framework. We are therefore of the opinion that, with certain rare exceptions, the general rule is that information protected by professional secrecy that is in the possession of a legal adviser is immune from disclosure (Foster Wheeler Power Co. v. Société intermunicipale de gestion et d’élimination des déchets (SIGED) inc., 2004 SCC 18, [2004] 1 S.C.R. 456, at para. 37; Smith, at para. 51; McClure, at paras. 34‑35.
[33] Moreover, the Court confirmed in FLS that the reasonable expectation of privacy in relation to communications subject to solicitor‑client privilege is always high, regardless of whether the question arises in a civil, administrative or criminal context. Cromwell J. wrote the following on this point:
I also accept that, as Arbour J. noted in Lavallee, “the need for the full protection of the privilege is activated” in the context of a criminal investigation: para. 23. However, the reasonable expectation of privacy in relation to communications subject to solicitor‑client privilege is invariably high, regardless of the context. The main driver of that elevated expectation of privacy is the specially protected nature of the solicitor‑client relationship, not the context in which the state seeks to intrude into that specially protected zone. I do not accept the proposition that there is a reduced expectation of privacy in relation to solicitor‑client privileged communication when a [Financial Transactions and Reports Analysis Centre of Canada] official searches a law office rather than when a police officer does so in the course of investigating a possible criminal offence. While Arbour J. placed her analysis in the context of criminal investigations (see, e.g., paras. 25 and 49), her reasons, as have many others before and since, strongly affirmed the fundamental importance of solicitor‑client privilege. [para. 38]
[34] We recognize that, in that case, Cromwell J. rejected the AGC’s contention that the impugned scheme had to be characterized as merely an administrative law regulatory compliance scheme. Cromwell J. stated that the purposes of the scheme were instead to deter criminal offences and to facilitate the investigation and prosecution of serious offences. He noted that the scheme had “a predominantly criminal law character and [that] its regulatory aspects serve[d] criminal law purposes” (FLS, at para. 37). However, this takes nothing away from the clear and unequivocal remarks quoted above, which, in our view, apply to this appeal. The protection afforded to professional secrecy in the context of a s. 8 analysis is