On July 14th, the Alberta Court of Appeal held that the privilege embodied in section 241 of the Income Tax Act was not a basis for striking a claim against the federal government based on the manner in which it administers the ITA.
The Court held that it was not clear section 241 would preclude the plaintiff from obtaining evidence from the government. More broadly, it held that a party’s ability to obtain evidence is not a proper consideration on a motion to strike:
In any event, the section does not preclude the plaintiff from deriving the evidence it needs from sources other than the defendant Canada. It is reasonably common for a defendant to be in the possession of relevant and material information which need not be disclosed because it is privileged, but that does not prevent the lawsuit from proceeding. The plaintiff can try to prove its case without that evidence. Further, whether a pleading discloses a cause of action is a distinct issue from whether the plaintiff will be successful in marshalling the evidence needed to prove that cause of action. Section 241 is not determinative of this appeal.
The Court ultimately did strike the claim as disclosing no reasonable cause of action based on a finding that the government did not owe the plaintiff a private law duty of care.