Montreal tax lawyer fights federal whistleblower watchdog

Yacine Agnaou is one of a handful of Canadian lawyers who took on Quebec tax authorities and plead a case so successfully that now others are trying to follow suit. Last year Agnaou won a precedent-setting ruling that condemned Revenue Quebec to pay nearly $4 million, including a staggering $2 million in punitive damages, to a businessman who was forced to shut down his business after it mishandled his case. Lawyers from different firms, evidently emboldened, are now working together to plead a case before the Quebec Court of Appeal to stop Revenue Quebec’s controversial policy of holding companies liable for the tax delinquencies of its suppliers.

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Truth & Consequences

When Edgar Schmidt launched an atypical lawsuit against the Attorney-General of Canada accusing Ottawa of circumventing a legal requirement to properly review the constitutionality of draft legislation, the soft-spoken lawyer was prepared to pay the price for revealing a long-standing practice that strikes at the heart of the federal legislative process.

The riposte was swift. The day after the 61-year old senior lawyer of the federal Department of Justice filed his claim before the Federal Court of Canada in December 2012, he was suspended without pay. Schmidt would have preferred to keep working, but is now retired and living on a reduced pension. While disappointed with the “vengeful attitude” displayed by his former employer and the snub he has felt by some former colleagues, he has no regrets over his actions. “Quite frankly, I don’t think there was anything wrong with I did,” says the former general counsel of the Legislative Services Branch, the group responsible for drafting and examining bills and regulations. “There is nothing wrong in seeking to uphold the rule of law. There is nothing wrong in seeking the court to clarify one’s instructions when the instructions one is getting seems in conflict with the law.”

Schmidt joins a growing list of Canadian whistleblowers who quickly discover that disclosing potential wrongdoing in the workplace almost always leaves them vulnerable. Schmidt’s court case raises thorny issues over the nature of the professional responsibilities and ethical obligations of government lawyers. But it also underscores the tension that exists between the duty of loyalty an employee owes to his employer, freedom of expression as guaranteed by the Canadian Charter of Rights and Freedoms, and federal and provincial whistleblowing legislation that aims to protect whistleblowers from retribution by their employers.

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