In re Cotroneo, 82 DTC 6115, [1982] CTC 131 (FCTD)

Mahoney, J:—In rendering judgment herein on January 6, 1982, I said:

Counsel was invited, and declined, to make a case for any claim of privilege on behalf of Francis Cotroneo apart from his joint claim with Vincent J Cotroneo. I therefor proceed on the basis that the claim of privilege as to all documents is vitiated if the evidence establishes a prima facie case of fraud on the part of Vincent J Cotroneo.

I then found that a prima facie case of fraud on the part of Vincent J Cotroneo had been established and ordered that all communications subject of the applicants’ claim of privilege be delivered to a person prescribed pursuant to subparagraph 232(5)(b)(ii) of the Income Tax Act. Before execution of that order, Francis Cotroneo moved for reconsideration under Rule 337 (5)(b) on the grounds that a separate claim of privilege on his part had been overlooked or omitted.

The claim of privilege was expressed, in the originating notice of motion, to be a joint claim. I make nothing, one way or the other, of the exchange between myself and counsel that led to the above recited conclusion on my part. It occurred several hours into the proceeding. I accept that counsel may have misunderstood me or I him. The underlying authorization to search and seize, made under subsection 231(4), made no reference to Francis Cotroneo. The claim of privilege as to certain communications was individually asserted when the documents were first seized in the lawyer’s office. The agreement entered into pursuant to subsection 232(3) identifies those documents as Francis Cotroneo’s alone and not as joint documents.

Under the circumstances, the application for reconsideration is well founded. I might suggest that it would be desirable, in similar circumstances, that separate applications be made by the individuals asserting privilege. It would, at least, reduce the possibility of their being unjustly tarred with the same brush.

Had it appeared necessary to do so, I should, in my earlier judgment, have found that no prima facie case of fraud on the part of Francis Cotroneo had been established. Having considered the further representations of respondent’s counsel directed to the point, I remained of the same opinion. It then became necessary for me to inspect the documents in issue. That inspection satisfied me that, prior to the end of 1980, Francis Cotroneo was very active in the management of the business of the numbered Ontario company to which I referred in my January 6 judgment. With this additional evidence, I have no choice but to change my opinion and to find that a prima facie case of Francis Cotroneo’s involvement in the fraud is established and that his claim of privilege in respect of the documents in issue is vitiated.

Having arrived at that conclusion, I can only add that none of the documents are so clearly unrelated to the alleged fraud as to warrant their exclusion on grounds of irrelevance, as was the case in re Hoyle, [1980] CTC 501; 80 DTC 6363. After reconsideration, I confirm the judgment rendered January 6.

The applicants also seek to have the Court’s file sealed. The respondent had not instructed counsel on this matter and he took no position.

The Rules of Court provide:

RULE 201. (4) Any person may, subject to appropriate supervision, and when the facilities of the court permit without interfering with the ordinary work of the Court,

(a) inspect any Court file or the annex thereto, and

(b) upon payment of 20¢ per page, obtain a photocopy of any document on a Court file or the annex thereto.

RULE 319. (1) Where any application is authorized to be made to the Court, a judge or a prothonotary, it shall be made by motion.

(2) A motion shall be supported by affidavit as to all the facts on which the motion is based that do not appear from the record, which affidavit shall be filed; and an adverse party may file an oaffidavit in reply.

Parliament has, by subsection 232(5) of the Income Tax Act, expressly Stipulated that an application for a determination of a question of solicitorclient privilege, as this, under subsection 232(4), “shall be heard in camera”. If the evidence had been given viva voce, it would not have appeared in the Court file and been available for inspection under Rule 201(4). I really do not think that this is a discretionary matter; the clear direction of Parliament as to the closed nature of these proceedings is not to be circumvented simply because the evidence was, under the Rules, tendered by affidavit rather than viva voce. If I am correct in this conclusion, the order sought ought to be unnecessary. However, in the apparent absence of a directive to registry officers on the subject, I shall order that the evidence on file herein in the Registry be sealed. The “Registry of the Court” is defined by section 14 of the Federal Court Act as consisting of its pricipal office in Ottawa and all its other offices.