http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/218798/index.do
Revcon Oilfield Constructions Incorporated v. Canada (National Revenue) (February 1, 2017 – 2017 FCA 22 Stratas (author), Webb, Scott JJ. A.).
Précis: The Federal Court issued a compliance order pursuant to section 237.1 of the Income Tax Act. The taxpayer appealed to the Federal Court of Appeal. The Court of Appeal found no error in the original decision but also entertained a new legal argument raised by the taxpayer based on two recent Supreme Court of Canada decisions dealing with the effect of requirements on members of the legal profession. The Court of Appeal rejected the new argument on the basis that the taxpayer, not being a member of the legal profession, was not entitled to benefit from the decisions in question: Canada (Attorney General) v. Chambre des notaires du Québec, 2016 SCC 20, [2016] 1 S.C.R. 336 and Canada (National Revenue) v. Thompson, 2016 SCC 21, [2016] 1 S.C.R. 381. Thus the appeal was dismissed from the Bench with costs to the Crown.
Decision: The Court of Appeal, while accepting jurisdiction to entertain the new argument, rejected it:
[6] We reject the appellant’s new argument. These two decisions do not apply to section 231.7 as applied in this case. In these two decisions, the Supreme Court declared section 231.7 to be of no force or effect only insofar as it relates to lawyers and notaries: see Chambre des notaires, at paras. 92-93; Thompson at para. 36. Thus, the Supreme Court read down section 231.7 to exclude lawyers and notaries. But section 231.7 otherwise remains in force.
[7] In this case, the requirements under the Income Tax Act were issued against the appellant. The appellant is neither a lawyer nor a notary. Therefore, in this case, section 231.7 still authorized the Federal Court to make the order it did.
[8] The appellant also submitted that the Federal Court’s order cannot stand because it directly or indirectly ordered the appellant’s law firm to disclose material, contrary to the Supreme Court’s two decisions. It says that the Federal Court’s order is an order against its law firm.
[9] We disagree. The Federal Court’s order is directed only against the appellant and, in effect, requires it to disclose all documents in its power, possession and control, wherever located. The order remains an order against the appellant and falls outside of the concern of the Supreme Court—that certain requirements issued against lawyers and notaries might subvert the client’s legal professional privilege. Here, the client had a full opportunity to contest issues relating to legal professional privilege and legal professional privilege was fully respected in this case.
Thus the appeal was dismissed from the Bench with costs of $1,730, all-inclusive, to the Crown.