Tax Court Upholds Confidentiality in Surrogacy Agreements

A recent decision by the Tax Court of Canada sends a clear message to fertility lawyers and those seeking fertility law services: confidentiality clauses—at least in surrogacy agreements—are to be strictly upheld.

Overview of the Case

In this case, a single man pursued egg donation and surrogacy in Canada. He utilized a fertility clinic in Toronto and entered into a surrogacy contract with a friend in Ottawa (and her husband) before subsequently engaging an international surrogate in Nepal after three embryo transfers with the Ottawa surrogate proved unsuccessful. He sought to claim some of the costs incurred as a medical expense tax credit. A key issue in the proceedings was whether the surrogacy agreements he had entered into should be admitted as evidence. These agreements contained explicit confidentiality provisions in which the parties agreed to keep the terms confidential. Accordingly, the man brought a motion for a confidentiality order to preserve the privacy of these documents.

The Importance of Confidentiality

The judge reviewed several legal principles related to confidentiality, including the balance between openness—a cornerstone of the justice system—and the protection of personal, sensitive information. Applying a test established by the Supreme Court of Canada for confidentiality orders, the judge first examined whether disclosure posed a serious risk to an important public interest. On this point, he stated:

Having read the Surrogacy Agreements, I am of the view that they each contain personal, intimate and sensitive information that pertains to the biographical core of each individual who is a party to the respective agreements. If that information were to be disclosed to the public, there may be a serious risk that the dignity and integrity of each individual might be adversely impacted in an inordinate manner.

Although the man argued that public disclosure could harm the children by potentially identifying them, the Crown introduced documents showing that he had previously spoken about his journey to parenthood and mentioned his children by name in various media. Nonetheless, the judge remained concerned about the privacy and dignity of both the children and the two surrogates involved. Notably, the surrogates were not participants in the tax proceedings, and the judge expressed concern that their absence prevented them from advocating for their own privacy rights.

A significant portion of the judge's analysis focused on the enforceability of the confidentiality clauses. He observed:

[41] As noted above, each of the Surrogacy Agreements contains a confidentiality clause, obligating Mr. McNeilly not to disclose the terms of the respective agreements. Where two parties enter into a contract, which imposes mutual confidentiality and non‑disclosure obligations, in my view, there is a public interest in not interfering with the fulfilment of those obligations. This interest “relates to the objective of preserving contractual obligations of confidentiality.”^[26]

[42] The above principles are supported by the Supreme Court’s decision in Sierra Club, in which Justice Iacobucci noted that “the preservation of … contractual relations” is an interest that may “be promoted by a confidentiality order”.^[27] In that same case, he also stated that, “if … exposure of information would cause a breach of a confidentiality agreement,” there is a “general … interest of preserving confidential information.”^[28]

[43] Accordingly, there is an important public interest in not impeding Mr. McNeilly’s efforts to fulfill his obligations under the confidentiality clauses in the Surrogacy Agreements.

[44] We also need to consider this interest from the perspective of the Surrogates and the husband of the Ottawa Surrogate. Those three individuals bargained for Mr. McNeilly’s covenant not to disclose the terms of the Surrogacy Agreements. That is sufficient to activate the Court’s concern for the privacy of those three individuals. It would be unreasonable to expect them to appear before the Court, in a legal proceeding to which they are not parties, to make their own motion for a confidentiality order, particularly as they would not have any practical way of even knowing of the trial of this Appeal. They have already extracted, from Mr. McNeilly, a covenant of non‑disclosure, and, in so doing, they have, by implication, made it clear that disclosure of the terms of the Surrogacy Agreements would threaten their integrity and dignity. Nothing further should be required of them to protect their respective interests in this situation.

The judge also evaluated whether redaction might be a viable alternative to a confidentiality order. However, because each Surrogacy Agreement mandated that all terms remain confidential, any redaction would effective rendering the documents devoid of substantive content. Consequently, a confidentiality order was deemed a far more practical solution.

The judge noted that the man did not seek a publication ban, nor did he attempt to prevent public access to the courtroom. Moreover, the Crown was permitted access to the surrogacy agreements. Ultimately, the motion was granted, meaning that the surrogacy agreements—and a few related documents—were sealed and treated as confidential, with no public disclosure allowed.

On the tax issues, while the Crown made some concessions, the judge referred those matters back for reconsideration, except for the expenses related to egg donation and surrogacy.

Conclusion

This decision reinforces that when confidentiality provisions are clearly drafted, the courts will enforce them rigorously—even in cases where a key party, such as the surrogate, is not present in the litigation. The ruling serves as a strong reminder to all parties involved in surrogacy agreements of the critical importance of maintaining confidentiality to protect personal dignity and privacy.