CBS Canada Holdings Co. (2016 TCC 85)considered when a lawyer crosses the line between advocate and partisan, and when doing so results in a conflict with the lawyer’s responsibilities as an officer of the court.

The Crown took the position that a mistake of fact was underlying a settlement agreement that it had reached with the taxpayer. A partner at the law firm representing the taxpayer CBS had sworn an affidavit in support of a CBS motion to enforce the settlement agreement.  The Crown’s cross-examination of the lawyer did not go smoothly, and the Crown brought a motion to strike the affidavit. 

The Crown said that the affidavit should be struck because it contained too much hearsay evidence and because a partner at the law firm for the taxpayer was an improper affiant on the controversial issue at hand.

Although the Tax Court Rules allow hearsay statements in affidavits in certain circumstances, the TCC said that hearsay evidence is only admissible if the criteria of reliability and necessity are met.

On the issue of reliability, the TCC explained that assessing reliability requires determining whether there are sufficient indicia of reliability so that the trier of fact has a satisfactory basis to evaluate the truth and accuracy of the statement.  On cross-examination, the CBS affiant declared solicitor client privilege.  The TCC found that in doing so the lawyer made it difficult for the court to test the reliability of the evidence.  Hence, the affidavit could not meet the reliability criterion.

On the issue of necessity, the TCC found that it was not necessary to have CBS’s lawyer as affiant, especially given that other CBS personnel would have been available to give an affidavit.  Hence, the TCC found that the affidavit was not necessary.

The TCC further noted that the court should not strike an affidavit on a motion unless the applicant can show prejudice.  On this issue, the TCC observed that because CBS’s lawyer claimed privilege during the cross examination, there were limitations on the Crown’s ability to test the reliability and accuracy of the Affidavit, which in turn created prejudice.

Ultimately, the TCC struck the affidavit and gave leave to CBS to file a fresh affidavit.

CBS subsequently appealed to the Federal Court of Appeal, which heard the case but reserved judgment.

The rules of professional conduct say that a lawyer who appears as an advocate should not submit his or her affidavit except on purely formal or uncontroverted matters, a rule that also applies to the lawyer’s partners and associates. It is acceptable practice for lawyers and legal assistants to swear affidavits on “routine matters” that are within the knowledge of counsel and are otherwise not known first-hand to the client.

However, a conflict can arise if a lawyer both swears an affidavit on a “controversial matter of fact” and then acts as an advocate in the matter. This decision is a reminder that a lawyer must be mindful of his or her obligations as an officer of the court. There are consequences when a lawyer goes beyond being an advocate and enters the fray on factual matters. 

W. Jack Millar and John G. Bassindale

Millar Kreklewetz LLP, Toronto

A version of this article was published in the May 2016 issue of Canadian Tax Highlights.