The appellant was assessed under s. 103(1). A representative of the appellant (Mr. Thompson, who wholly-owned it) refused to answer questions posed on his examination for discovery, that were designed to elicit the reason or purpose for which various transactions were engaged in by the appellant and other companies in the group, on the grounds that he and the appellant did “not have any information (including information about reasons, purposes, intention or understanding) that pertains to the … Questions and that could be provided to the Respondent without disclosing information that is protected by solicitor-client privilege.”
Sommerfeldt J stated (at paras. 74, 77 and 79-80):
[S]olicitor-client privilege may be impliedly waived where a taxpayer relies on legal advice as an element of its appeal. This could occur where the taxpayer puts its state of mind in issue, having received legal advice to help form that state of mind. …
Merely forming a view, after receiving legal advice, and then implementing a transaction does not constitute reliance on that advice … . Based on my review of the pleadings and the relevant portions of the Transcript …I do not think that the Appellant has placed its reliance on legal advice in issue as part of the position that it will take at trial. …
Although I will not issue an order that would require the Appellant, in response to any of the Disputed Questions, to disclose information that is subject to solicitor-client privilege, I will note that … unless the Appellant furnishes the information in writing to the Respondent no later than ten days after this Appeal is set down for trial, the Appellant will require leave of the trial judge [under Rule 96)1)], in order to introduce that information at trial.
I suspect that the Appellant is of the view that it can make its case without introducing the privileged information at trial.