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Can Accountants Blow the Whistle on Clients? The Superior Court Sheds Some Light on this Question

By Emily Dikranian, from our Insurance Law Practice Group

Emily Dikranian is an associate at our Montreal office, and she is a member of our Professional Liability Practice Group. Her practice includes defending the interests of accountants with respect to reputation-menacing claims and lawsuits. She works closely on such matters with our Élisabeth Laroche, Katherine Delage, Laurence Gauthier, and Alice Bourgault-Roy.

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November 24, 2021 — On October 18, 2021, the Superior Court of Quebec rendered an important decision in Ordre des comptables professionnels agréés du Québec c. Procureur général du Québec, 2021 QCCS 4327, regarding the limitations of the duty of confidentiality applicable to chartered professional accountants [CPA]. Essentially, the Court concludes that section 17.0.1 of the Act respecting the regulation of the financial sector [Act] is not applicable to Quebec CPAs, as further explained below.

Summary of claim

The professional order of CPAs [Order] sought the Superior Court’s intervention to obtain the annulment of section 17.0.1 of the Act, which protects a CPA who reports violations of certain legal provisions to the Autorité des marchés financiers from repercussion.

The Order was of the view that the wording of the derogation in the provision is not sufficiently explicit to override the right of CPAs’ clients to professional secrecy provided for in section 9 of the Quebec Charter of Human Rights and Freedoms [Quebec Charter]. The Order argued that in order to override it, the legislator must expressly do so in accordance with section 9. In fact, the Order claimed that this newly added provision constitutes an invitation to the violation of section 5 of the Quebec Charter, the right to privacy. Moreover, considering that a CPA’s denunciation of a violation could eventually lead to the client’s imprisonment, the Order states that this is contrary to section 7 of the Canadian Charter of Rights and Freedoms [Canadian Charter], being the right to life, liberty and security.

Overall, the Order argued that the Government of Quebec did not pass the test found at section 1 of the Canadian Charter and section 9.1 of the Quebec Charter, claiming that the benefits of a law do not outweigh the violation of a right protected by Charter.

Reasoning

The Court reviewed each of the Order’s arguments to conclude the inapplicability of the provision to CPAs as follows:

1. Is there an express provision in section 17.0.1 of the Act that exempts solicitor-client privilege from its application? The Court concludes that the provision is deemed explicit, as it specifically mentions the non-applicability of the lifting of professional secrecy for lawyers and notaries;
2. Does section 17.0.1 of the Act infringe on the obligation to respect privacy under section 5 of the Quebec Charter? The Court answers affirmatively to this question. The disclosure of confidential information by one’s accountant to the public authority is not what a client expects because he or she relies on the CPA’s professional secrecy;
3. Does section 17.0.1 of the Act violate section 7 of the Canadian Charter? Contrary to the Order’s argument, the provision is clear. Secondly, the Court does not believe there is an infringement of the right to liberty of the person, because of accountant-client privilege. The Court is of the opinion that confidential information obtained by a CPA in the course of an accounting mandate is not sufficient to place a client’s communications with his accountant on the same level as those of a client with his lawyer. According to the judge, there is no reason to raise the CPA’s professional secrecy to the level of a principle of fundamental justice;
4. Does section 17.0.1 of the Act constitute a minimal impairment within the meaning of section 9.1 of the Quebec Charter? The Court concludes that section 17.0.1 does not meet the criteria of minimal impairment provided for by section 9.1 of the Quebec Charter, which would ultimately justify the breach of a Charter right. The Court adds that the provision should provide for intermediate steps for the accountant to take, whereby a client’s higher authorities should be informed of the problem before it is reported to the public authorities.

Takeaways

Although section 17.0.1 of the Act is explicit, and even though the professional secrecy of the accountant is not as fundamental as attorney-client privilege, this provision does not constitute a minimal impairment of the rights protected by the Charters, since the confidential information belongs to the client and not the accountant. Accordingly, the Act should provide for intermediate measures to allow the higher authorities of a client to be informed of a problem in order to assert their opposition to disclosure, if any.

As such, section 17.0.1 of the Act does not constitute a minimal impairment justified by section 9.1 of the Quebec Charter. The Court therefore declares that CPAs are not shielded by section 17.0.1 of the Act.