Collier,
J:—This
is
an
application
by
Hoyle
Industries
Ltd,
Hoyle
Twines
Ltd,
and
William
L
Hoyle
(hereafter
the
“‘clients’’)
to
determine
the
question
whether
they
can
successfully
claim
solicitor-client
privilege
in
respect
of
certain
files
and
documents.
The
proceeding
is
pursuant
to
subsection
232(4)
and
(5)
of
the
Income
Tax
Act.
The
Department
of
National
Revenue
obtained
court
approval
of
an
authorization
to
enter
and
search
certain
premises,
and
to
seize
documets
and
records,
pertaining
to
Hoyle
Industries
Ltd
and
Hoyle
Twines
Ltd:
that
may
afford
evidence
as
to
the
evasion
of
any
provision
of
the
Income
Tax
Act.
..
One
of
the
premises
for
which
entry
was
authorized
was
that
of
the
solicitors
for
the
two
companies.
On
May
6,
1980
officers
of
the
Department
seized
from
the
solicitors
a
number
of
files.
Some
of
the
files
related
to
William
L
Hoyle,
a
principal
in
the
two
companies.
Hoyle
had
not
been
named
in
the
court
approved
authorization
to
search
and
seize.
At
the
hearing
before
me,
Mr
Thor-
steinsson,
for
the
clients,
said
he
did
not
take
issue
with
that
defect
in
the
authorization.
When
the
files
were
seized
by
the
tax
officials,
solicitor-client
privilege
was
Claimed,
on
behalf
of
the
clients,
by
the
solicitors.
Subsequently,
the
clients,
through
their
advisers,
waived
solicitor-client
privilege
in
respect
of
a
number
of
seized
files.
I
shall
set
out
a
list
of
those
files
in
Paragraph
1
of
the
formal
pronouncement.
The
custodian
of
the
files,
Arthur
Pickering,
Deputy
Sheriff
of
the
County
of
Vancouver
(hereafter
“the
custodian”)
will
deliver
these
files
to
the
appropriate
officer
of
the
Department
of
National
Revenue.
Six
files
remain,
for
which
solicitor-client
privilege
is
claimed,
either
for
the
whole
file
or
for
certain
documents
in
those
files.
I
have
marked
those
files
on
their
covers
as
153
to
158,
and
have
signed
my
name
under
the
markings.
In
these
proceedings
the
Department
filed
an
affidavit
by
one
D
M
Gilbert.
That
document
set
out
inquiries
he
had
made
into
the
affairs
of
the
clients,
and
the
conclusions
which
he
had
drawn.
Speaking
generally,
the
Gilbert
conclusions
were
that
in
respect
of
tax
liability
for
the
years
1974
and
1975,
the
clients
had
engaged
in
fraudulent
schemes.
Mr
Thorsteinsson
said
he
was
prepared,
for
the
purposes
of
this
application,
to
assume
the
taxation
department
had
made
out
a
prima
facie
case
of
fraud.
Both
counsel
agreed
that,
in
respect
of
any
communications
between
solicitor
and
client,
or
advice
given
by
the
solicitor,
in
furtherance
of
a
fraud
(whether
the
solicitor
was
a
party
to
or
ignorant
of
the
illegal
object)
the
privilege
is
lost.
Counsel
also
agreed
that
if
the
solicitor
was
consulted,
after
the
fact,
for
advice,
then
the
communications
passing
between
the
solicitor
and
client,
and
any
advice
given,
were
privileged.
In
this
case,
some
of
the
disputed
files
relate
to
communications
passing
between
the
clients
and
their
solicitors,
and
advice
given,
in
respect
of
matters
alleged
to
have
occured
in
1974
and
1975.
But
those
matters,
it
is
contended,
have
no
relation
to
the
fraudulent
schems
or
transactions
alleged
by
the
tax
department.
Certain
other
files
related
to
communications
passing
between
the
solicitor
and
client,
and
advice
given,
several
years
later,
in
respect
of
the
tax
liability
matters
now
under
investigation.
I
now
deal
with
the
specific
files.
File
153
After
considering
the
file,
I
adopt
Mr
Thorsteinsson’s
description
of
it.
The
file
contains
no
outside
documents.
Its
contents
comprise
internal
memoranda,
all
dated
in
1978,
in
the
solicitor’s
office,
dealing
with
proposals
for
liquidation
or
winding
up
of
the
Cordex
establishment,
and
loans
by
or
investment
of
the
Cordex
establishment
funds.
There
is
also
some
correspondence
relating
to
extra
provincial
registration
in
Alberta
of
Hoyle
Industries
Ltd.
That
correspondence
is
irrelevant
to
the
matters
in
issue
here.
I
direct
that
solicitor-client
privilege
is
properly
claimed.
File
153
will
be
returned
by
the
custodian
to
the
solicitors.
File
154
Again
I
agree
with
Mr
Thorsteinsson’s
description.
The
file
relates
to
advice
concerning
a
Foreign
Investment
Review
Agency
problem.
It
has
no
reference
to
the
matters
alleged
in
the
Gilbert
affidavit.
It
casts
no
light
on
the
alleged
fraud,
or
any
tax
liability,
of
the
clients.
Solicitor-client
privilege
is
properly
claimed.
It
is
not,
in
the
circumstances
here,
defeated.
This
file
will
be
returned
by
the
custodian
to
the
solicitors.
File
155
This
file
contains
documents
and
memoranda
commencing
in
July
of
1978
and
running
into
1980.
The
communications,
memoranda
and
advice
relate
to
advice
given,
following
the
tax
investigation,
in
respect
of
the
Cor-
dex
matter.
The
communications
and
advice
given
are,
in
my
view,
privileged.
Mr
Heinrich,
for
the
department,
did
not
dispute
that
aspect
of
the
matter.
There
was,
however,
considerable
argument
as
to
whether
certain
telexes
passing
between
the
clients
and
Baumhuter
and
others
in
1975
were
privileged.
The
solicitors,
when
consulted
in
respect
of
certain
demands
made
by
the
tax
department,
requested
the
clients
to
obtain
copies
of
the
telexes
in
question.
Copies
were
obtained.
This
was,
it
appears
to
me,
necessary
for
the
solicitor
to
advise
the
clients
as
to
their
position.
It
was
contended
by
the
Crown
that
no
privilege
attached
to
the
originals
in
the
first
instance;
therefore
no
privilege
could
attach
to
the
copies
obtained
at
a
later
date.
I
agree,
speaking
generally,
that
copies
of
non-privileged
documents
are
themselves
not
privileged.
But
there
are
situations
where
the
copies
may,
and
in
particular
circumstances,
acquire
the
category
of
privilege.
See
Lyell
v
Kennedy,
[1984I
27
Ch
D
1.
I
quote
from
the
head
note:
Held
(affirming
Bacon,
VC),
that
although
mere
copies
of
unprivileged
documents
were
themselves
unprivileged,
the
whole
collection,
being
the
result
of
the
professional
knowledge,
skill,
and
research
of
his
solicitors,
must
be
privileged—any
disclosure
of
the
copies
and
photographs
might
afford
a
clue
to
the
view
entertained
by
the
solicitors
of
their
client’s
case.
That
principle,
in
my
view,
applies
in
this
case.
The
whole
file,
including
the
copies
of
the
telexes,
is
privileged,
and
will
be
returned
to
the
solicitors.
File
156
There
are
a
number
of
different
documents
in
this
file.
There
is
a
copy
of
a
will
of
W
L
Hoyle.
Counsel
for
the
Minister
indicated
to
me
the
department
does
not
want
production
of
that
document.
I
have
put
it
in
a
separate
file
marked
156A.
That
file
will
be
returned
by
the
custodian
to
the
solicitors.
There
are
some
draft
agreements,
between
Baumhuter
and
Hoyle
Twines
Ltd,
all
fastened
on
a
separate
Acco
fastener.
Counsel
for
the
clients
has
advised
me
that
the
clients
are
prepared
to
waive
any
privilege
in
respect
of
those
drafts.
I
have,
therefore,
put
them
in
a
file
marked
156B.
That
file
will
be
delivered
by
the
custodian
to
the
appropriate
officer
of
the
Department
of
National
Revenue.
The
remaining
material
in
file
156
was
clipped
on
an
Acco
fastener
to
the
back
of
the
file
folder.
It
consists
of
correspondence
passing
between
the
clients
and
the
solicitors,
or
other
internal
memoranda
and
notes
of
the
solicitors
reflecting
advice
given.
The
remaining
material
is,
in
my
opinion,
privileged.
But
counsel
for
the
clients
does
not
claim
privilege
in
respect
of
certain
telexes
and
correspondence
passing
between
Messrs
Hoyle
and
Baumhuter
between
March
2
and
April
5,
1978,
a
financial
statement
dated
December
31,
1977,
and
an
undated
telex
commencing
with
the
words
“your
telex
245’’.
I
have
put
those
latter
documents
in
a
file
marked
156C.
They
will
be
delivered
by
the
custodian
to
an
appropriate
officer
in
the
Department
of
National
Revenue.
The
remaining
portion
of
File
156
will
be
returned
to
the
solicitors
for
the
client.
File
157
I
agree
with
the
description
by
Mr
Thorsteinsson
of
the
material
contained
in
this
file.
(See
his
memorandum
of
September
4,
1980).
Privilege
was
waived
in
respect
of
certain
documents
as
follows:
(a)
the
contents
of
a
brown
envelope
(b)
computer
print-outs
of
accounting
data
(c)
helicopter
lease
proposal
(d)
brass
pin
collecting
published
income
tax
material
(e)
2
pages
of
notes
re
helicopter
(f)
solicitors
docket
print-out
(g)
financial
statements
dated
September
30,
1975
(h)
telexes
dated
November
25
and
27,
1975
(i)
letter
from
Harrigan
dated
November
24,
1975
(j)
proposal
letter
from
Harrigan
dated
September
5,
1975
(k)
Harrigan’s
account
dated
September
29,
1975
(l)
letter
to
Harrigan
dated
August
14,
1975.
In
respect
to
the
balance
of
the
file
the
claim
of
privilege,
to
my
mind,
should
be
sustained.
I
should
add
that
none
of
the
material
there
relates
to
the
matters
deposed
to
in
the
Gilbert
affidavit.
The
documents
set
out
above,
for
which
privilege
is
not
claimed
or
is
waived,
are
set
out
in
a
file
marked
157A.
They
will
be
delivered
by
the
custodian
to
the
appropriate
officer
of
the
Department
of
National
Revenue.
The
documents
remaining
in
File
157,
including
copies
of
wills
of
Mr
and
Mrs
Hoyle,
and
published
materials
fastened
with
a
paper
clip
under
a
Federal
Court
slip,
will
be
returned
to
the
client.
File
158
This
relates
to
a
transaction
involving
a
barge.
At
one
time
the
clients
were
interested
in
the
matter.
But
early
in
the
course
of
the
negotiations,
they
withdrew
from
the
proposed
transaction.
The
file
has
nothing
at
all
to
do
with
the
tax
liability.
I
direct
that
it
be
returned
to
the
solicitors.
I
make
no
orders
as
to
costs.
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