http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/108838/index.do
Zeldap Corporation v. The Queen (March 30, 2015 – 2015 TCC 78, Favreau J.).
Précis: The Crown conducted written examinations for discovery of the taxpayer. The taxpayer declined to answer a question on the basis that it was subject to litigation privilege. The question concerned meetings at the offices of the taxpayer’s lawyer at which the taxpayer’s lawyer was present. The Court held that there was no evidence that the dominant purpose of the meetings was in respect of existing, contemplated or anticipated litigation. The taxpayer was ordered to answer the question but without an order as to costs.
Decision: The underlying tax dispute concerned whether the taxpayer was engaged in a money lending business during the period under appeal. The Crown conducted written examinations for discovery. The taxpayer refused to answer the following question on the basis of litigation privilege:
Question 32.
Having regard to the meetings and discussions referenced in the document reproduced under tab 37 of the appellant’s book of documents,
a) when and where was each such discussion held?
b) between whom was each discussion?
c) who else, if anyone, was present for each discussion? Please provide their full names and contact information.
d) what was said?
[. . .]
g) were any records created diarizing any part of the discussion, and if so, please produce any and all copies of the same or make your best efforts to obtain and produce the same, including making requests of parties who might reasonably be expected to have copies of the same (should your best efforts fail, please describe what efforts were taken)?
The taxpayer claimed that all of such meetings had taken place at the offices of its lawyer and with him present:
[4] Counsel for the appellant opposed the motion brought by the respondent and filed an affidavit of Dr. Zbigniew Pona, now president of Zeldap Corporation, stating that:
(a) he met with Michael Stebila, an accountant, under the direction of his then lawyer, Scott Sullivan, in contemplation or anticipation of possible litigation, and
(b) every meeting took place in Mr. Sullivan’s office with Mr. Sullivan being present at each meeting.
The Court did not accept that the taxpayer had established that the predominant purpose of the meetings concerned existing, contemplated or anticipated litigation:
[10] Even if the meetings took place in Mr. Sullivan’s office with Mr. Sullivan present at each meeting, no case has been made that the dominant purpose of the meetings was in respect of an existing, contemplated or anticipated litigation. No information has been given in this respect. The December 18, 2007 letter from Michael Stebila to Dr. Pona referred to a list of loans and investments made by the appellant and to the manner these loans and investments are to be reported in the financial statements and income tax returns of the corporation for the years 2003 to 2006. Most of the meetings and discussions to which the letter refers to, seem to have taken place in the year 2007, more than three years before those years were reassessed. The appellant did not explain why a litigation was anticipated at that time.
[11] The fact that Mr. Sullivan was present at the meetings between Mr. Stebila and Dr. Pona does not necessarily mean that the dominant purpose of the meetings was in respect of an existing, contemplated or anticipated litigation. A lawyer’s presence at a meeting is not indicative that his legal advice was being sought. The appellant has not provided any information concerning the nature of the legal advice sought from Mr. Sullivan.
[12] In the circumstances, the appellant has not established a
prima facie case for litigation privilege to apply.
In the result the motion was allowed and the taxpayer was directed to answer the questions, but without costs.