Teitelbaum,
J.:—By
means
of
an
originating
motion,
the
applicant,
John
Norman
Gregory,
a
partner
in
the
firm
of
Thorsteinssons,
Barristers
&
Solicitors,
requests:
.
..
an
order
pursuant
to
subsection
232(4)
of
the
Income
Tax
Act,
S.C.
1970-71,
c.
63,
as
amended
(the"Act"):
i)
fixing
a
day,
not
later
than
21
days
after
the
date
of
the
order,
and
place
for
the
determination
of
the
question
whether
the
client
has
solicitor-client
privilege
in
respect
of
certain
documents,
production
of
which
has
been
required
by
the
Minister
of
National
Revenue;
and
li)
requiring
the
production
of
these
documents
to
the
judge
of
the
Court
at
that
time
and
place.
The
grounds
for
the
motion,
as
stated
in
the
originating
motion”
"are
that
the
clients
have
a
solicitor-client
privilege
in
respect
of
the
documents".
In
support
of
the
motion
were
filed
three
affidavits
of
the
applicant,
dated
June
15,
1992
(affidavit
#1),
July
7,
1992
(affidavit
#2)
and
August
27,
1992
(affidavit
#3).
This
matter
came
up
for
hearing
on
August
27,
1992.
The
facts
leading
up
to
the
present
hearing
are
not
contested.
The
applicant
represented
a
partnership
known
as
Geddes
Contracting
Co.
Ltd.
("Geddes")
and
others
in
connection
with
the
acquisition
of
interests
in
a
partnership
carrying
on
business
under
the
firm
name
of
Grand
Bell
Property
Ltd.
(paragraph
2,
affidavit
#1).
Notwithstanding
the
fact
that
Geddes
is
referred
to
as
a
"Co.
Ltd.”,
it
is
not
a
corporation,
it
is
a
partnership.
This
is
permitted,
I
am
told,
under
the
laws
of
New
Mexico
where
it
carried
on
business.
On
December
20,
1989,
the
applicant
was
personally
served
with
a
requirement
to
provide
documents
or
information
pursuant
to
the
provisions
of
subsection
231.2(1)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act").
|
John
N.
Gregory,
Partner
|
|
|
Thorsteinsson,
Mitchell,
Little,
|
|
|
O’Keefe
&
Davidson
|
|
|
Barristers
&
Solicitors
|
G.
Hartford
|
|
P.O.
Box
49123
|
Audit
Division
|
|
Twenty-Seventh
Floor
|
|
|
3
Bentall
Centr
|
Tel:
(604)
492-9350
|
|
595
Burrard
Street
|
|
|
Vancouver,
B.C.
|
|
|
V7X
1/2
|
December
12,
1989
|
|
Dear
Sir:
|
|
|
Re:
requirement
to
Provide
Documents
or
Information
|
|
For
purposes
related
to
the
administration
or
enforcement
of
the
Income
Tax
Act,
R.S.C.
1952,
Chapter
148
(as
amended),
pursuant
to
the
provisions
of
subsection
231.2(1)
of
the
said
Act,
I
hereby
require
that
you
provide
information
and
documents
as
follows:
All
books
and
records,
correspondence,
planning
documents,
agreements,
reports,
memoranda,
schedules,
working
papers,
minutes
of
meetings,
telexes
and
other
records
or
documents
in
your
possession
or
under
your
control,
and
in
the
manner
originally
kept
relating
directly
or
indirectly
to:
GRAND
BELL
PROPERTIES,
LTD.
GRAND
BELL
JOINT
VENTURE
GRAND
BELL
PROPERTY
II,
LTD.
BELLAMAH
COMMUNITY
DEVELOPMENT
KEN
LAND
DEVELOPMENT,
INC.
G.J.S.
RESOURCES
LTD.
for
the
period
May
30,
1986
to
August
31,
1989.
The
aforementioned
enumeration
of
classes
of
information
and
documents
is
not
to
be
presumed
to
be
exhaustive
of
the
material
which
officer
or
officers
of
the
Department
will
wish
to
review
and
subsequent
reference
may
be
made
to
classes
or
specific
information
and
documents
which
must
be
provided
pursuant
to
this
requirement.
If
this
requirement
is
not
complied
with,
you
may
be
liable
to
prosecution
without
further
notice
under
subsection
238(1).
To
comply
with
this
requirement
you
must
provide,
within
thirty
(30)
days
of
service
of
this
letter,
any
and
all
of
the
above
noted
files,
documents,
records
and
information
to
a
duly
authorized
officer
or
officers
of
the
Department
of
National
Revenue.
When
the
information
and
documents
are
available
you
may
contact
Gord
Hartford
at
(604)
492-9350
in
the
Penticton
District
Office.
Yours
truly,
Paul
E.
Seguin
Director-Taxation
Vancouver
District
Office
of
the
Department
of
National
Revenue,
Taxation
(Exhibit
"A"
to
affidavit
#1).
The
requirement
was
subsequently
amended
by
agreement.
On
June
5,
1992,
an
officer
acting
under
the
authority
of
the
requirement
attended
at
the
office
of
the
applicant
to
inspect
and
examine
the
documents
in
the
applicant’s
possession
and
that
are
described
in
the
requirement
notice.
The
applicant
claimed
a
client-solicitor
privilege
in
respect
of
certain
of
the
documents.
Pursuant
to
subsection
232(3.1)
of
the
Act,
the
officer
did
not
examine
the
documents
until
such
time
as
a
court
of
proper
jurisdiction
determines
the
issue
of
solicitor-client
privilege.
The
affidavit
of
the
applicant
(Exhibit
"A")
dated
July
6,
1992
describes
the
documents
upon
which
privilege
is
being
claimed.
The
affidavits
of
July
6,
1992
and
August
27,1992
describe
the
reasons
why
the
applicant
believes
the
documents
are
privileged.
The
more
important
affidavit
is
dated
July
6,
1992
as
it
explains
why
each
document
is
considered
as
privileged
by
the
applicant.
The
affidavit
of
August
27,
1992
only
refers
to
documents
18
and
19
as
listed
in
Exhibit
"A"
to
his
July
6,
1992
affidavit.
I
believe
it
necessary
to
reproduce
the
two
affidavits
in
order
to
better
understand
the
issue
of
whether
the
documents
are
subject
to
the
solicitorclient
privilege.
I,
JOHN
NORMAN
GREGORY,
of
the
District
of
North
Vancouver,
in
the
Province
of
British
Columbia,
barrister
and
solicitor,
make
oath
and
say
as
follows:
1.
I
am
a
partner
in
the
firm
of
Thorsteinssons,
Barristers
and
Solicitors,
carrying
on
the
practice
of
law
in
the
City
of
Vancouver,
in
the
Province
of
British
Columbia
and
as
such
have
personal
knowledge
of
the
facts
herein
deposed
to.
2.
I
represented
Geddes
Contracting
Co.
Ltd.
("Geddes")
and
other
in
connection
with
the
acquisition
of
interests
in
a
partnership
carrying
on
business
under
the
firm
name
of
Grand
Bell
Property,
Ltd.
3.
A
requirement
to
provide
information
and
documents
pursuant
to
section
231.2
of
the
Income
Tax
Act
(the
"Act")
set
forth
in
a
letter
dated
December
12,
1989
(the
"requirement"),
a
copy
of
which
is
annexed
as
Exhibit
"A"
to
this
my
affidavit,
was
served
on
me
personally
at
the
City
of
Vancouver,
in
the
Province
of
British
Columbia
on
December
20,
1989
by
the
author,
Paul
E.
Seguin,
Director—Taxation,
Vancouver
District
Office,
Department
of
National
Revenue.
4.
The
requirement
was
amended
by
an
agreement
set
forth
in
two
letters
dated
May
19,
1992,
copies
of
which
are
annexed
as
exhibits
"B"
and
"C"
to
this
my
affidavit.
5.
On
June
5,
1992
an
officer
acting
under
the
authority
of
the
requirement
attended
at
my
office
to
inspect
and
examine
documents
in
my
possession
and
that
are
described
in
the
requirement.
At
that
time,
I
claimed
that
Geddes
and
other
clients
identified
in
exhibit
"D"
to
this
my
affidavit
had
a
solicitor-client
privilege
in
respect
of
certain
of
the
documents
(the
“
Documents”).
6.
The
officer
did
not
examine
the
documents
and,
as
provided
by
subsection
232(3.1)
of
the
Act,
I
placed
the
documents
in
a
package,
suitably
sealed
and
identified,
and
I
have
retained
the
package
to
ensure
that
it
is
preserved
until
produced
to
a
judge
of
the
Court
and
an
order
is
issued
under
section
232
of
the
Act.
7.
I
make
this
affidavit
in
support
of
an
application
on
behalf
of
Geddes,
for
an
order
fixing
a
day
(not
later
than
21
days
after
the
date
of
the
order)
and
place
for
determining
the
question
whether
Geddes
has
a
solicitor-client
privilege
in
respect
of
the
Documents,
or
any
of
them,
and
an
order
requiring
the
production
of
the
Documents
to
the
judge
of
the
Court
at
that
time
and
place.
SWORN
BEFORE
ME
at
the
City
of
Vancouver,
in
the
Province
of
British
Columbia,
this
15th
day
of
June,
1992.
|
“
signature
illegible”
|
"John
Norman
Gregory”
|
|
A
Commissioner
for
taking
|
JOHN
NORMAN
GREGORY
|
|
affidavits
within
the
|
|
|
Province
of
British
Columbia
|
|
I,
JOHN
NORMAN
GREGORY,
of
the
District
of
North
Vancouver,
in
the
Province
of
British
Columbia,
barrister
and
solicitor,
make
oath
and
say
as
follows:
1.
I
am
a
partner
in
the
firm
of
Thorsteinssons,
Barristers
and
Solicitors,
carrying
on
the
practice
of
law
in
the
City
of
Vancouver,
in
the
Province
of
British
Columbia
and
as
such
have
personal
knowledge
of
the
facts
herein
deposed
to.
2.
Annexed
as
exhibit
"A"
to
this
my
affidavit
is
a
summary
of
the
documents
in
respect
of
which
I
have
claimed
privilege
on
behalf
of
Geddes
and
all
of
the
other
partners
for
whom
I
have
served
as
solicitor
in
connection
with
the
transactions
pertaining
to
the
partnership.
3.
The
solicitors
for
the
vendors
of
the
partnership
interests
purchased
by
my
clients
were
Messrs.
Chappell
and
Barlow,
Attorneys
at
Law.
No
solicitor-client
privilege
is
claimed
in
respect
of
correspondence
from
or
to
those
attorneys.
4.
Documents
1
and
3
are
my
working
copies,
containing
hand
written
notations,
of
draft
reporting
letters
to
my
clients
in
relation
to
the
transactions
which
I
reviewed
in
the
course
of
my
retainer
prior
to
their
finalization.
5.
Document
2
is
a
letter
of
advice
from
Messrs.
Bromberg
&
Leeds,
Attorneys
at
Law,
a
firm
which
was
retained
by
me
or
my
firm
for
the
purpose
of
obtaining
legal
advice
which
would
permit
me
to
provide
legal
advice
to
my
clients.
6.
To
the
best
of
my
recollection,
document
4
is
an
opinion
from
Messrs.
Lyall,
McKercher
&
Hanna,
Barristers
&
Solicitors,
who
were
retained
by
me
or
my
firm
for
the
purpose
of
obtaining
legal
advice
which
would
permit
me
to
provide
legal
advice
to
my
clients.
No
privilege
is
claimed
if
the
opinion
is
a
copy
of
an
opinion
provided
to
Messrs.
Chappell
and
Barlow.
7.
Document
5
is
an
opinion
from
Messrs.
Deloitte,
Haskins
&
Sells,
Chartered
Accountants,
a
firm
which
was
retained
by
me
or
my
firm
for
the
purpose
of
obtaining
an
accounting
opinion
which
would
permit
me
to
provide
legal
advice
to
my
clients.
Document
8
summarizes
the
terms
upon
which
I
had
engaged
Messrs.
Deloitte,
Haskins
&
Sells
for
the
purpose
of
providing
me
with
the
accounting
opinion
I
required
in
order
to
permit
me
to
properly
advise
my
clients.
8.
Document
6
is
a
legal
opinion
which
I
had
requested
from
Messrs.
Bennett
&
Jones,
Barristers
and
Solicitors,
for
the
purpose
of
enabling
Messrs.
Lyall,
McKercher
&
Hanna,
Barristers
and
Solicitors,
who
were
special
counsel
retained
by
me,
to
provide
an
opinion
in
respect
of
the
transaction.
No
privilege
is
claimed
if
the
opinion
was
provided
in
support
of
an
opinion
by
Messrs.
Lyall,
McKercher
&
Hanna
to
Messrs.
Chappel
and
Barlow.
9.
Document
7
is
a
legal
opinion
provided
to
me
by
Messrs.
Rodey,
Dickason,
Sloan,
Akin
and
Robb,
Attorneys
at
Law,
with
respect
to
the
law
of
New
Mexico
which
I
required
for
the
purpose
of
advising
my
clients.
10.
Document
9
is
correspondence
provided
by
me
to
chartered
accountants
for
the
purpose
of
obtaining
accounting
advice
which
was
relevant
to
the
legal
advice
I
provided
to
my
clients.
11.
Document
10
is
correspondence
from
me
to
the
representative
of
my
clients
Malaga
Capital
Corp,
and
Ingot
Capital
Corp.
12.
Document
11
is
an
opinion
obtained
by
me
from
Messrs.
Johnson,
Bromberg
&
Leeds,
Attorneys
at
Law
for
the
purpose
of
enabling
me
to
advise
my
clients.
13.
Document
12
contains
research
and
cases
compiled
by
me
for
the
purpose
of
advising
my
clients.
14.
Document
13
contains
the
names
and
addresses
of
my
clients.
15.
Document
14
is
the
file
containing
my
working
papers
with
respect
to
the
computation
of
the
purchase
price
paid
by
my
clients
and
was
prepared
in
order
that
I
could
provide
my
clients
with
legal
advice.
16.
Document
15
is
a
legal
opinion
provided
by
special
counsel.
No
privilege
is
claimed
if
the
opinion
is
a
copy
of
that
provided
to
Messrs.
Chappell
and
Barlow.
17.
Document
16
is
an
environmental
audit
report
obtained
by
me
on
behalf
of
my
clients
in
order
that
I
could
provide
my
clients
with
legal
advice.
18.
Document
17
is
an
appraisal
obtained
by
me
on
behalf
of
my
clients
in
order
that
I
could
provide
my
clients
with
legal
advice.
19.
Documents
18
and
19
were
drafts
of
agreements,
related
documents
and
financial
statements
provided
to
me
for
my
review
in
my
capacity
as
solicitor
for
my
clients.
20.
Document
20
is
comprised
of
several
accounts
rendered
to
me
or
my
firm
by
firms
or
persons
I
had
retained
for
the
purpose
of
providing
me
with
the
informa-
tion
I
required
in
order
to
advise
my
clients
and
copies
of
my
firm's
records
containing
descriptions
of
the
services
I
provided
and
the
persons
with
whom
I
had
discussions
from
time
to
time
in
the
course
of
providing
my
clients
with
legal
advice.
21.
Document
21
is
comprised
of
file
memoranda
which
I
prepared
in
the
course
of
advising
my
clients
and
providing
them
with
legal
advice.
22.
Document
22
is
comprised
of
various
file
memoranda
and
other
communications
prepared
by
me
or
other
members
of
my
firm
for
the
purpose
of
permitting
me
to
provide
legal
advice;
and
correspondence,
memoranda
or
other
written
materials
passing
between
me
or
members
of
my
firm
and
advisors
retained
by
me
or
my
firm
for
the
purpose
of
obtaining
information
and
opinions
permitting
me
to
advise
my
clients
in
connection
with
the
transactions
pertaining
to
the
partnership.
I
make
this
affidavit
in
support
of
an
application
on
behalf
of
Geddes,
for
the
determination
of
a
solicitor-client
privilege
in
respect
of
each
and
every
document
identified
in
Exhibit
"A"
to
this
my
affidavit.
SWORN
BEFORE
ME
at
the
City
of
Vancouver,
in
the
Province
of
British
Columbia,
this
7th
day
of
July,
1992.
|
“Steve
Cook"
|
“John
Norman
Gregory”
|
|
A
Commissioner
for
taking
|
JOHN
NORMAN
GREGORY
|
affidavits
within
the
Province
of
British
Columbia
The
issue
is
to
determine
if
some
or
all
the
documents
come
into
the
context
of
protection
of
solicitor-client
privilege.
At
the
commencement
of
the
hearing,
I
was
informed
by
counsel
for
the
applicant
that
the
hearing
before
me
only
relates
to
the
listed
documents
as
they
pertain
to
Grand
Bell
Properties
Ltd.
There
is
to
be
no
abandonment
as
it
relates
to
the
other
companies
listed
in
the
requirement
to
provide
documents
or
information
found
in
exhibit
"A"
to
Gregory's
first
affidavit.
During
the
course
of
the
hearing,
counsel
for
the
applicant
agreed
that
document
#4
found
in
paragraph
6
of
the
July
6,
1992
affidavit
is
not
subject
to
the
solicitor-client
privilege.
Nor
are
documents
#6
listed
in
paragraph
8,
document
#13
in
paragraph
14
and
document
#15
in
paragraph
15.
As
a
result,
I
issued
an
order
whereby
counsel
for
respondent
could,
if
he
made
a
request
to
the
court
registrar
in
Vancouver,
obtain
the
said
documents.
I
was
also
informed
by
counsel
for
the
respondent
that
if
I
found,
after
examining
the
documents
in
question,
namely
document
numbers
1
and
3,
2,
5,7,9,
10,
11,
12,
14,
20,
21
and
22,
that
the
said
documents
were
as
described
by
the
applicant
in
paragraphs
4,
5,
7,
9,
10,
11,
12,
13,
15,
20,
21
and
22
of
his
July
7th
affidavit,
he
would
agree
that
these
documents
were
subject
to
a
solicitorclient
privilege.
At
the
hearing,
it
was
submitted
by
counsel
for
respondent
that
the
documents
listed
in
paragraphs
17,
18
and
19
of
the
applicant's
July
7,
1992
affidavit
are
not
and
cannot
be
considered
as
subject
to
the
solicitor-client
privilege.
These
are
documents
#16,
an
environmental
audit
report,
document
#17,
an
appraisal
and
documents
#18
and
#19,
drafts
of
agreements
prepared
by
Messrs.
Johnson,
Bromberg
&
Leeds,
attorneys-at-law,
whom
the
applicant
retained
for
the
purpose
of
enabling
the
applicant
to
advise
his
clients
(paragraph
2,
August
27
affidavit).
I
will
first
deal
with
documents
1,
2,
3,
5,
7,
9,
10,
11,
12,
14,
20,
21
and
22.
Documents
#1
and
#3
are
documents
as
described
in
paragraph
4
of
the
July
7,
1992
Gregory
affidavit
("affidavit")
and
are
to
be
considered
as
privileged
documents.
Document
#3
as
well
consists
of
a
letter
to
Mr.
Gordon
Geddes
relating
to
"Billing"
and
nothing
else.
This
letter
dated
July
15,
1988
is
not
privileged
as
it
does
not
fit
into
the
description
of
documents
as
stated
in
paragraph
4
of
the
"affidavit".
There
is
also
to
be
found
in
document
3
a
number
of
invoices.
These
invoices
for
services
rendered
are
subject
to
a
solicitor-client
privilege.
Document
#2
consists
of
two
letters
plus
a
duplicate
of
one
of
the
letters.
The
letter,
in
duplicate,
is
a
letter
of
advice
but
is
not
addressed
to
the
applicant
or
his
firm.
It
is
addressed
to
The
Purchasers
of
the
General
Partnership
Interests
in
Grand
Bell
Property,
Ltd.
c/o
the
applicants
firm.
Nevertheless,
I
am
satisfied
that
this
letter
is
a
letter
giving
legal
advice
and
is
a
privileged
document.
The
letter
addressed
to
the
applicant
is
a
document
as
described
in
paragraph
5
of
the
"affidavit"
and
is
thus
privileged.
Documents
#5
and
#8
are
documents
as
described
in
paragraph
7
of
the
"affidavit"
and
are
thus
considered
privileged.
Document
#7
is
a
document
as
described
in
paragraph
9
of
the
"affidavit"
and
is
thus
considered
privileged.
Documents
#9,
#10
and
#11—I
was
asked
to
examine
document
#9
which
is
alleged
by
the
applicant
in
paragraph
10
to
be
correspondence
provided
by
the
applicant
to
chartered
accountants.
In
examining
the
files
found
in
the
box
of
documents,
I
am
unable
to
find
document
#9.
Nor
am
I
able
to
find
documents
#10
and
#11.
Document
#12
is
as
described
in
paragraph
13
of
the
"affidavit"
and
is
therefore
to
be
considered
as
a
privileged
document.
Document
#14
is
as
described
in
paragraph
15
of
the
“affidavit”
and
is
thus
to
be
considered
as
a
privileged
document.
Document
#20
is
as
described
in
paragraph
20
of
the
"affidavit"
and
is
to
be
considered
as
a
privileged
document.
Document
#21.
There
was
no
file
folder
marked
document
#21.
There
are
two
file
folders
marked
document
#22
one
of
which
comprises
file
memoranda.
I
take
this
file
folder
to
be
document
#21.
I
have
examined
the
documents
in
this
file
folder
and
conclude
that
the
documents
contained
therein
fit
the
description
in
paragraph
21
of
the
"affidavit".
Document
#22
are
documents
as
described
in
paragraph
22
of
the
"affidavit"
and
are
to
be
considered
as
privileged
documents.
As
I
have
stated,
counsel
for
respondent
informed
me
that
if
the
above
mentioned
documents
were
as
described
by
the
applicant
in
his
July
7,
1992
affidavit,
he
agreed
that
the
documents
should
be
considered
as
privileged.
Thus,
the
above
mentioned
documents
are
considered
to
be
documents
subject
to
the
solicitor-client
privilege.
In
paragraph
19
of
the
applicant's
July
7,
1992
affidavit,
he
states
that
documents
#18
and
#19
were
drafts
of
agreements,
related
documents
and
final
statements
provided
to
the
applicant
for
his
review
in
his
capacity
as
solicitor
to
his
clients.
On
August
27,
1992,
the
applicant
swore
to
a
supplementary
affidavit
in
which
he
states,
as
it
relates
to
documents
#18
and
#19
that
the
drafts
of
agreement
to
which
reference
was
made
in
the
July
7,
1992
affidavit
in
paragraph
19
were
prepared
by
Messrs.
Johnson,
Bromberg
&
Leeds
who
the
applicant
claims
to
have
retained
for
the
purpose
of
enabling
him
to
advise
his
clients.
The
applicant
goes
on
to
state
that,
to
the
best
of
his
knowledge,
the
drafts
were
not
provided
by
him
to
any
other
person
or
anyone
other
than
his
own
clients
or
an
authorized
agent
of
his
clients.
Counsel
for
the
respondent,
in
a
letter
dated
September
3,
1992,
states:
It
is
agreed
that
the
drafts
of
agreements
referred
to
in
paragraph
2
of
the
said
supplementary
affidavit
are
privileged,
if
inspection
confirms
that
such
is
the
nature
of
such
documents.
I
have
examined
the
drafts
of
agreements
and
I
am
satisfied
the
drafts
of
the
agreements
are
privileged.
Counsel
for
the
respondent
goes
on
to
say
with
regard
to
the
issue
of
the
financial
statements,
the
following:
With
respect
to
the
financial
statements
referred
to
in
paragraph
19
of
the
affidavit
of
Mr.
Gregory
filed
July
8,
1992
and
referred
to
in
paragraph
3
of
Mr.
Gregory's
supplementary
affidavit
filed
August
28,
1992
it
is
submitted
that
these
financial
statements
are
not
privileged.
Therefore,
there
remains
to
be
decided
the
issue
of
whether
document
#16,
the
environmental
audit
report,
document
#17,
the
appraisal
report
and
the
financial
reports
in
documents
#18
and
#19
are
subject
to
solicitor-client
privilege.
In
paragraph
17
of
the
applicants
July
7,
1992
affidavit,
the
applicant
states
that
document
#16,
an
environmental
audit
report,
was
obtained
by
the
applicant
on
behalf
of
his
clients
in
order
to
provide
his
clients
with
legal
advice.
Counsel
for
the
applicant
submits
that
this
report
should
be
covered
by
solicitor-client
privilege
as
it
is
in
the
same
category
as
an
auditor's
report
which
counsel
for
respondent
agreed
would
be
protected
by
solicitor-client
privilege
if
the
auditor's
report
was
obtained
by
the
applicant
in
order
to
permit
him
to
provide
legal
advice
to
his
clients
(documents
#5
and
#8).
Counsel
for
applicant
makes
the
same
submissions
for
document
#17,
an
appraisal
obtained
by
the
applicant
on
behalf
of
his
clients
in
order
that
the
applicant
could
provide
his
clients
with
legal
advice
(paragraph
18
of
applicant's
July
7,1992
affidavit).
Counsel
for
respondent
submits
that
no
solicitor-client
privilege
can
attach
to
these
two
documents
as
neither
were
obtained
for
purposes
of
litigation
or
in
contemplation
of
litigation.
Counsel
for
the
applicant
admits
that
not
one
of
the
documents
mentioned
in
the
applicant's
affidavits
were
obtained
for
purposes
of
litigation
or
in
contemplation
of
litigation.
Counsel
for
respondent
therefore
submits
that
documents
#16,
#17
and
the
financial
statements
contained
in
documents
#18
and
#19
can
be
subject
to
solicitor-client
privilege.
I
am
satisfied
that
legal
opinions,
as
in
the
present
case,
given
by
a
solicitor
to
his
or
her
client
are
subject
to
a
solicitor-client
privilege.
Does
this
include
documents
such
as
appraisal
reports,
environmental
reports
and
financial
statements
obtained
by
a
solicitor
in
order
to
allow
the
solicitor
to
give
his
or
her
client
an
informed
opinion?
In
the
case
of
Susan
Hosiery
Ltd.
v.
M.N.R.,
[1969]
C.T.C.
353,
69
D.T.C.
5278,
Jackett,
P.
(as
he
then
was)
had
to
decide
whether
a
party
(the
appellant
in
the
case)
was
obliged
to
produce
for
inspection
a
letter
from
its
auditor
to
its
solicitor
referred
to
in
an
examination
for
discovery
and
a
letter
from
the
solicitor
to
the
auditor
also
referred
to
in
an
examination
for
discovery.
The
facts
in
the
Susan
Hosiery
case
are,
in
many
ways,
similar
to
the
facts
in
the
case
at
bar.
Jackett,
P.
states
at
pages
359-61
(D.T.C.
5281-83)
under
the
title
Basic
principles
examined
the
following:
As
it
seems
to
me,
there
are
really
two
quite
different
principles
usually
referred
to
as
solicitor
and
client
privilege,
viz:
(a)
all
communications,
verbal
or
written,
of
a
confidential
character,
between
a
client
and
a
legal
adviser
directly
related
to
the
seeking,
formulating
or
giving
of
legal
advice
or
legal
assistance
(including
the
legal
adviser's
working
papers,
directly
related
thereto)
are
privileged;
and
(b)
all
papers
and
materials
created
or
obtained
specially
for
the
lawyer's"
brief”
for
litigation,
whether
existing
or
contemplated,
are
privileged.
In
considering
the
ambit
of
these
principles,
it
is
well
to
bear
in
mind
the
reasons
for
them.
In
so
far
as
the
solicitor-client
communications
are
concerned,
the
reason
for
the
rule,
as
I
understand
it,
is
that,
if
a
member
of
the
public
is
to
receive
the
real
benefit
of
legal
assistance
that
the
law
contemplates
that
he
should,
he
and
his
legal
adviser
must
be
able
to
communicate
quite
freely
without
the
inhibiting
influence
that
would
exist
if
what
they
said
could
be
used
in
evidence
against
him
so
that
bits
and
pieces
of
their
communications
could
be
taken
out
of
context
and
used
unfairly
to
his
detriment
unless
their
communications
were
at
all
times
framed
so
as
not
only
to
convey
their
thoughts
to
each
other
but
so
as
not
to
be
capable
of
being
misconstrued
by
others.
The
reason
for
the
rule,
and
the
rule
itself,
extends
to
the
communications
for
the
purpose
of
getting
legal
advice,
to
incidental
materials
that
would
tend
to
reveal
such
communications,
and
to
the
legal
advice
itself.
.
.
What
is
important
to
note
about
both
of
these
rules
is
that
they
do
not
afford
a
privilege
against
the
discovery
of
facts
that
are
or
may
be
relevant
to
the
determination
of
the
facts
in
issue.
What
is
privileged
is
the
communications
or
working
papers
that
came
into
existence
by
reason
of
the
desire
to
obtain
a
legal
opinion
or
legal
assistance
in
the
one
case
and
the
materials
created
for
the
lawyer's
brief
in
the
other
case.
The
facts
or
documents
that
happen
to
be
reflected
in
such
communications
or
materials
are
not
privileged
from
discovery
if,
otherwise,
the
party
would
be
bound
to
give
discovery
of
them.
.
.
In
my
view,
it
follows
that,
whether
we
are
thinking
of
a
letter
to
a
lawyer
for
the
purpose
of
obtaining
a
legal
opinion
or
of
a
statement
of
facts
in
a
particular
form
requested
by
a
lawyer
for
use
in
litigation,
the
letter
or
statement
itself
is
privileged
but
the
facts
contained
therein
or
the
documents
from
which
those
facts
were
drawn
are
not
privileged
from
discovery
if,
apart
from
the
facts
having
been
reflected
in
the
privileged
documents,
they
would
have
been
subject
to
discovery.
For
example,
the
financial
facts
of
a
business
would
not
fall
within
the
privilege
merely
because
they
had
been
set
out
in
a
particular
way
as
requested
by
a
solicitor
for
purposes
of
litigation,
but
the
statement
so
prepared
would
be
privileged.
[Privilege
applied
to
accountant's
materials]
Applying
these
principles
as
I
understand
them,
to
materials
prepared
by
accountants,
in
a
general
way,
it
seems
to
me
(a)
that
no
communication,
statement
or
other
material
made
or
prepared
by
an
accountant
as
such
for
a
business
man
falls
within
the
privilege
unless
it
was
prepared
by
the
accountant
as
a
result
of
a
request
by
the
business
man’s
lawyer
to
be
used
in
connection
with
litigation,
existing
or
apprehended;
and
(b)
that,
where
an
accountant
is
used
as
a
representative,
or
one
of
a
group
of
representatives,
for
the
purpose
of
placing
a
factual
situation
or
a
problem
before
a
lawyer
to
obtain
legal
advice
or
legal
assistance,
the
fact
that
he
is
an
accountant,
or
that
he
uses
his
knowledge
and
skill
as
an
accountant
in
carrying
out
such
task,
does
not
make
the
communications
that
he
makes,
or
participates
in
making,
as
such
a
representative,
any
the
less
communications
from
the
principal,
who
is
the
client,
to
the
lawyer;
and
similarly,
communications
received
by
such
a
representative
from
a
lawyer
whose
advice
has
been
so
sought
are
none
the
less
communications
from
the
lawyer
to
the
client.
[Emphasis
added.]
It
is
my
understanding
from
this
case,
and
I
subscribe
to
this
view,
that
all
communications
between
client
and
his
or
her
solicitor
wherein
a
legal
opinion
is
given
is
subject
to
the
solicitor-client
privilege.
Documents,
not
accounting
documents,
prepared
by
third
parties,
for
and
on
behalf
of
a
solicitor
would
be
subject
to
the
privilege
only
if
the
documents
were
prepared
for
the
purposes
of
litigation
or
in
contemplation
of
litigation.
Accounting
documents
are
different.
Accounting
documents
would
be
subject
to
solicitor-client
privilege
if
the
accountant
is
used
as
a
representative
of
a
client
to
obtain
legal
advice.
This
principle
also
applies
when
a
solicitor
whose
advice
has
been
sought
by
a
client
requests
information
from
an
accountant
to
prepare
a
legal
opinion.
I
have
examined
documents
#16,
#17
and
the
financial
statements
contained
in
documents
#18
and
#19
in
light
of
principles
stated
in
the
Susan
Hosiery
Ltd.
case,
supra,
and
in
light
of
the
principle
established
in
the
case
of
McKinlay
Transport
Ltd.
v.
Canada,
1
S.C.R.
627,
[1990]
2
C.T.C.
103,
90
D.T.C.
6243
where
Madame
Justice
Wilson,
at
pages
110-11
(C.T.C.
113-14;
D.T.C.
6248,
6250-51)
states:
First,
subsection
231(3),
even
construed
narrowly
in
accordance
with
prior
authority,
envisages
the
compelled
production
of
a
wide
array
of
documents
and
not
simply
those
which
the
state
requires
the
taxpayer
to
prepare
and
maintain
under
the
legislation.
Second,
the
legislation
contemplates
that
parties
who
are
not
the
subject
of
an
investigation
or
audit
can
be
compelled
to
produce
documents
relating
to
another
taxpayer
who
is
the
subject
of
such
investigation
or
audit.
Thus,
compelled
production
reaches
beyond
the
strict
filing
and
maintenance
requirements
of
the
Act
and
may
well
extend
to
information
and
documents
in
which
the
taxpayer
has
a
privacy
interest
in
need
of
protection
under
section
8
of
the
Charter
although
it
may
not
oe
as
vital
an
interest
as
that
obtaining
in
a
criminal
or
quasicriminal
context.
I
would
therefore
conclude
that
the
application
of
subsection
231(3)
of
the
Income
Tax
Act
to
the
appellants
constitutes
a
"seizure"
since
it
infringes
on
their
expectations
of
privacy.
It
remains
to
be
determined,
however,
whether
the
state’s
intrusion
on
that
privacy
interest
is
unreasonable
or,
to
put
it
another
way,
whether
it
violates
the
taxpayers’
reasonable
expectation
of
privacy.
At
the
beginning
of
my
analysis
I
noted
that
the
Income
Tax
Act
was
based
on
the
principle
of
self-reporting
and
self-assessment.
The
Act
could
have
provided
that
each
taxpayer
submit
all
his
or
her
records
to
the
Minister
and
his
officials
so
that
they
might
make
the
calculations
necessary
for
determining
each
person's
taxable
income.
The
legislation
does
not
so
provide,
no
doubt
because
it
would
be
extremely
expensive
and
cumbersome
to
operate
such
a
system.
However,
a
selfreporting
system
has
its
drawbacks.
Chief
among
these
is
that
it
depends
for
its
success
upon
the
taxpayers'
honesty
and
integrity
in
preparing
their
returns.
While
most
taxpayers
undoubtedly
respect
and
comply
with
the
system,
the
facts
of
life
are
that
certain
persons
will
attempt
to
take
advantage
of
the
system
and
avoid
their
full
tax
liability.
Accordingly,
the
Minister
of
National
Revenue
must
be
given
broad
powers
in
supervising
this
regulatory
scheme
to
audit
taxpayers'
returns
and
inspect
all
records
which
may
be
relevant
to
the
preparation
of
these
returns.
The
Minister
must
be
capable
of
exercising
these
powers
whether
or
not
he
has
reasonable
grounds
for
believing
that
a
particular
taxpayer
has
breached
the
Act.
Often
it
will
be
impossible
to
determine
from
the
face
of
the
return
whether
any
impropriety
has
occurred
in
its
preparation.
A
spot
check
or
a
system
of
random
monitoring
may
be
the
only
way
in
which
the
integrity
of
the
tax
system
can
be
maintained.
If
this
is
the
case,
and
I
believe
that
it
is,
then
it
is
evident
that
the
Hunter
criteria
are
ill-suited
to
determine
whether
a
seizure
under
subsection
231(3)
of
the
Income
Tax
Act
is
reasonable.
The
regulatory
nature
of
the
legislation
and
the
scheme
enacted
require
otherwise.
The
environmental
audit
report
is
a
report
made
after
a
study
performed
of
property
located
in
Surprise,
Arizona.
Notwithstanding
that
this
report
was
made
at
the
request
of
the
applicant
and
in
order
to
enable
him
to
give
a
legal
opinion,
I
do
not
see
why
this
report
should
be
covered
by
a
solicitor-client
privilege.
It
is
possible
that
some
information
contained
in
the
applicants
legal
opinion
to
his
clients
came
from
the
environmental
report
but
this
fact
by
itself
is
not
sufficient
to
give
this
document
a
special
status,
that
is,
it
should
be
covered
by
a
solicitor-client
privilege.
The
same
applies
to
document
#17,
the
appraisal.
The
appraisal
is
a
report
concerning
an
appraisal
made
of
575.26
acres
of
vacant
agricultural
land
located
on
the
southwest
corner
of
Bell
Road
and
Grand
Avenue
in
Surprise,
Mariposa
County,
Arizona.
With
the
greatest
respect
to
counsel
for
the
applicant,
I
cannot
conclude
that
the
appraisal
prepared
at
the
request
of
the
applicant
is
protected
by
solicitor-client
privilege.
In
the
file
folder
labelled
document
#18,
the
documents
therein
contained,
draft
agreements,
are
protected
by
the
solicitor-client
privilege.
The
financial
statements
prepared
for
the
purpose
of
allowing
the
applicant
to
give
a
legal
opinion
to
his
clients
and
found
in
file
folder
labelled
18-19
are
protected
by
solicitor-client
privilege
for
the
same
reason
the
accountant's
reports
were
covered
by
solicitor-client
privilege
as
in
paragraph
7
of
the
applicant's
July
7,
1992
affidavit.
The
accountant's
opinion
was
given
to
the
applicant,
I
assume,
based
on
their
study
of
the
financial
statements
found
in
file
folder
document
18-19.
Document
#19
are
agreements
and
are
subject
to
solicitor-client
privilege.
In
conclusion,
I
am
satisfied
that
with
the
exception
of
documents
#16
and
#17,
the
environmental
audit
report
and
the
appraisal,
all
documents
are
subject
to
the
solicitor-client
privilege
claimed
by
the
applicant.
Order
accordingly.
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