Muldoon,
J.:—Back
on
July
14,
1989,
the
above
named
applicants
lodged
in
this
Court
a
motion
for:
1.
An
Order,
pursuant
to
clause
(i)
of
paragraph
(a)
of
subsection
232(4)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
fixing
a
day,
not
later
than
21
days
after
the
date
of
the
Order,
and
place
for
the
determination
of
the
question
whether
the
Applicants,
or
any
of
them,
or
any
other
client
of
Messrs.
Fleischer
and
Kochberg,
Barristers
and
Solicitors,
has
a
solicitor-client
privilege
in
respect
of
any
document
or
documents
placed
in
a
package
by
Messrs.
Fleischer
and
Kochberg
pursuant
to
paragraph
(a)
of
subsection
232(3.1)
of
that
Act;
2.
An
Order,
pursuant
to
clause
(ii)
of
paragraph
(a)
of
subsection
232(4)
of
that
Act
requiring
the
production
of
the
package
of
documents
at
that
time
and
place
to
the
Judge
of
this
honourable
Court
hearing
this
application;
and
3.
An
Order,
pursuant
to
paragraph
6
of
Rule
321.1
of
the
Federal
court
rules,
dispensing
with
compliance
with
that
Rule
on
the
hearing
of
this
application.
THE
GROUNDS
OFTHE
MOTION
ARE
the
provisions
of
the
Income
Tax
Act
(Canada)
and,
in
particular,
sections
231.2
and
232
thereof.
The
following
documentary
evidence
will
be
presented:
the
affidavit
of
Paul
Kochberg,
Barrister
and
Solicitor,
filed
and
such
further
or
other
material
as
counsel
may
advise
and
this
honourable
Court
permit.
On
August
29,
1989,
the
Associate
Chief
Justice
granted
the
applicants'
request
by
order
drafted
as
follows:
Order
of
this
court
dated
August
8/89
is
amended
nunc
pro
tunc
to
read,
Order
to
go
in
terms
of
Notice
of
Motion
herein,
adjourned
for
hearing
to
August
29/89.
Further,
applicant
[sic]
having
been
served
August
28/89
with
the
affidavit
of
David
J.
Kimball,
this
motion
is
adjourned
indefinitely,
to
be
brought
on
upon
seven
days
notice
by
either
party.
Two
facts
are
noteworthy.
First,
the
order
was
made
as
sought
by
the
applicants.
Second,
no
date
and
place
were
ever
fixed
for
the
determination
of
the
alleged
solicitor-client
privilege
proposed
by
the
applicants.
This
second
fact
does
not
mean,
however,
that
the
matter
is
dormant,
for
there
have
been
cross-examinations
on
affidavit
material
in
the
meanwhile.
On
January
3,
1990
a
motion
was
lodged
on
behalf
of
the
Attorney
General
of
Canada
for:
1)
A
Declaration
that
the
release
to
the
[applicants]
of
certain
documents
pertaining
to
the
income
tax
affairs
of
Omicron
Energy
Systems
Inc.
does
not
violate
s.
241
of
the
Income
Tax
Act;
2)
An
Order
that
the
aforementioned
documents
be
released
to
the
[applicants];
3)
An
Order
that
the
cross-examination
of
David
Kimball,
commenced
November
14,
1989
be
continued
before
a
judge
of
this
Honourable
Court.
THE
GROUNDS
OF
THE
MOTION
ARE:
1)
That
the
documents
sought
to
be
released
should
be
released
to
ensure
a
fair
determination
of
the
cause
and
come
within
the
exception
contained
in
s.
241(3)
of
the
Income
Tax
Act;
2)
That
the
commencement
of
potentially
protracted
proceedings
before
an
official
examiner
are
inconsistent
with,
and
not
contemplated
by,
the
summary
procedure
for
disposing
of
solicitor-client
privilege
applicants
set
out
in
s.
232(5)
of
the
Income
Tax
Act.
THE
FOLLOWING
DOCUMENTARY
EVIDENCE
WILL
BE
PRESENTED:
1)
An
excerpt
from
the
cross-examination
of
David
Kimball
conducted
November
14,
1989;
2)
The
Corporate
records
of
Omicron
Energy
Systems
Inc.
filed
with
the
Ontario
Ministry
of
Consumer
and
Commercial
Relations.
3)
Registered
letter
addressed
to
Sam
Bernard,
dated
December
5,
1989.
The
above
recited
notice
evinces
two
factors.
First,
the
cross-examination
of
David
Kimball
was
becoming,
or
had
become,
wearisome
to
the
respondent.
Second,
the
respondent's
notice
of
motion
was
not
supported
by
an
affidavit
as
required
by
Rule
319(2).
On
January
8,
1990,
the
Associate
Chief
Justice
dismissed
the
respondent's
motion
by
means
of
an
order
which
runs
thus:
For
reasons
given
orally
from
the
Bench,
this
motion
is
dismissed.
Costs
in
the
discretion
of
the
presiding
Judge
upon
the
motion.
He
meant
of
course
the
applicants’
motion
of
July
14,
1989,
for
the
determination
of
privilege,
which
he
retroactively
granted
on
August
29,
1989
and
directed
take
place
at
an
indefinite
future
date,
upon
seven
days'
notice
by
either
party.
So
the
proceedings
to
determine
which,
if
any
and
if
not
all,
of
the
documents
packaged
by
Messrs.
Fleischer
&
Kochberg
pursuant
to
paragraph
232(3.1)(a)
of
the
Income
Tax
Act
(the
Act)
are
still
afoot
and
moving,
if
barely
perceptively,
to
some
sort
of
resolution.
Afoot
they
are,
sent
along
by
the
Associate
Chief
Justice’s
valid
and
unappealed
order
of
August
29,
1989.
Now
the
respondent,
once
again,
moves,
by
undated
notice
filed
on
February
26,
1992,
in
the
following
very
words
for:
1.
Directions
pursuant
to
s.
232(1)
of
the
Income
Tax
Act;
and
2.
An
Order
dismissing
the
original
motion
in
these
proceedings.
THE
GROUNDS
OF
THE
MOTION
ARE:
1.
That
the
Requirement
to
Provide
Information
and
Documents
[hereinafter
the
respondent's
requirement]
that
prompted
the
solicitor-client
privilege
upon
which
the
original
motion
is
based
has
been
withdrawn
in
respect
of
the
documents
in
dispute;
and
2.
That
the
original
motion
has
thereby
been
rendered
moot,
as
its
subject
matter
has
ceased
to
exist.
THE
FOLLOWING
DOCUMENTARY
EVIDENCE
WILL
BE
PRESENTED:
1.
Registered
letter
addressed
to
Paul
Kochberg
dated
January
23,1992
2.
Letter
addressed
to
Franklyn
Cappell,
dated
January
24,
1992.
This
is
the
sort
of
motion
which
ordinarily
would
excite
the
Court's
suspicions
that,
without
conditions
or
concession
of
anything
in
the
applicants’
favour,
the
respondent
might
be
behaving
a
touch
oppressively.
Once
again
the
Attorney
General
or
her
deputy
appears
positively
oblivious
to
the
Requirement
of
Rule
319(2),
for
no
supporting
affidavit
is
tendered
even
to
exhibit
the
two
free-floating
letters
mentioned.
The
respondent's
posture
also
evinces
the
possibility
of
oppressive
conduct
because
although
respondent's
counsel
characterizes
it
as
telling
the
applicants
"you
win;
take
your
documents'
there
is
nothing
about
which
to
fight”,
yet
counsel
was
not
instructed
to
undertake
that
the
respondent's
requirement
which
he
seeks
to
withdraw,
will
never
be
repeated.
The
applicants'
counsel
sees
this
as
a
kind
of
sword
of
Damacles
which
will
hold
his
clients
in
terrorem.
Therefore
he
says:
"give
that
undertaking;
or
concede
the
claimed
privilege;
or
let
us
get
on
to
the
determination
of
solicitor-client
privilege,
ordered
by
the
Associated
Chief
Justice”,
now
in
process
(but
terribly
slowly).
Indeed
since
Jerome,
A.C.J.
has
already
granted
the
applicants'
motion
and
directed
that
the
determination
of
privilege
be
effected,
without
any
adverse
appeal
by
the
respondent,
the
applicants'
counsel
asserts
that
they
are
entitled
to
have
the
question
adjudicated.
The
respondent
is
not
entitled
to
void
the
process
by
purporting
to
withdraw
the
respondent's
requirement,
at
least,
not
without
proper
terms,
just
as
in
any
usual
case
of
the
discontinuance
of
an
action.
However
the
respondent
will
simply
not
hear
of
any
terms
or
conditions
as
counsel
was
instructed
to
relate
to
the
Court.
Well,
then,
it
is
not
clear
at
all
why
the
Court
should
accede
to
the
respondent's
motion,
especially
when
the
respondent's
counsel
states
that
it
is
quite
possible
that
the
Minister
of
National
Revenue
(MNR)
will
one
day
want
to
attach
the
subject
documents
for
further
investigation.
The
determination
of
the
questions
of
privilege
would
handily
resolve
such
matters
for
all
time.
Without
such
resolution
the
MNR
could
well
just
require
solicitor
Kochberg
to
keep
the
papers
for
all
time.
The
applicant's
counsel
argues,
somewhat
persuasively
that
subsection
232(5)
of
the
Act
sets
out
the
orders,
and
the
only
orders
which
the
Court
can
lawfully
make.
The
determination
order
made
under
subparagraph
232(5)(b)(i)
declares
documents
to
be
privileged;
the
determination
order
made
under
subparagraph
232(5)(b)(ii)
declares
documents
to
be
not
privileged.
This
is
a
plausible
argument
and
it
may
indeed
override
two
principal
counterconsiderations.
The
first
is
the
notion
that
subsection
232(10)
was
designed
exactly
for
this
situation.
Be
it
noted
that
the
powers
accorded
under
subsection
232(10):
—
to
give
directions
with
anything
done
or
being
done
under
this
section,
other
than
subsection
(2),
(3)
or
(3.1),
which
is
a
judge's
opinion,
is
most
likely
to
carry
out
the
object
of
this
section
of
allowing
solicitor-client
privilege
for
proper
purposes.
Subsection
(3)
relates
to
an
officer,
pursuant
to
section
231.3,
being
about
to
seize
certain
documents
where
privilege
is
claimed.
It
speaks
in
mandatory
terms
of
packaging
the
papers:
it
makes
no
provision
for
the
MNR
"depackaging"
the
documents
or
of
the
Court,
without
adjudication
returning
the
packaged
documents
to
the
taxpayer.
Subsection
232(3.1),
about
which
no
direction
under
subsection
232(10)
can
be
given,
speaks
in
subparagraph
232(3.1)(b)
of
the
package
of
documents
being
retained
to
"ensure
that
it
is
preserved
until
it
is
produced
to
a
judge,
as
required
under
this
section,
and
an
order
[not
a
direction]
is
issued
under
this
section
in
respect
of
the
document".
Did
the
drafters
foresee
these
ramifications?
Maybe
and
maybe
not.
The
court
must
proceed
on
the
basis
in
any
circumstance,
that
Parliament
meant
what
it
said,
and
said
what
it
meant.
So,
after
all,
it
seems
fairly
clear
that
subsection
232(10)
was
not
designed
for
the
instant
contingency,
far
from
it.
The
second
notion
which
may
be
seen
to
be
overridden
by
the
force
of
the
applicant's
argument
is
that
the
giving
of
a
direction
to
permit
the
withdrawal
of
the
respondent's
requirement
is
in
sweet
accord
with
the
object
of
section
232
of
the
Act.
But
that
cannot
be
so,
for
as
is
provided
in
subsection
232(10),
itself,
the
object
of
this
section
is
the
allowing
of
solicitor-client
privilege
for
proper
purposes,
not
the
bizarre
imposition
and
attempted
withdrawal
of
a
minister's
requirement.
The
object
is
to
have
the
determination
effected,
not
aborted.
It
is
therefore
not
at
all
clear
that
the
respondent
is
entitled
to
withdraw
the
requirement
(i.e.
discontinue)
without
terms
and
conditions
to
protect
the
taxpayer
from
oppressive
conduct,
and
it
is
equally
unclear
that
the
Court
is
empowered
to
permit
or
authorize
the
respondent
to
do
that.
For
these
reasons,
primarily
that
the
respondent
failed
to
comply
with
Rule
319(2)
and
filed
no
supporting
affidavit,
and
secondarily
that
the
respondent
is
not
entitled
to
withdraw
its
requirement
so
as
arbitrarily
to
discontinue
this
validly
constituted
enquiry
without
undertaking
terms
and
conditions
to
safeguard
the
applicants
from
oppressive
behaviour
on
the
part
of
the
MNR
and
his
or
her
minions,
the
respondent's
motion
is
dismissed.
As
to
costs,
which
the
applicants
seek
in
regard
to
these
proceedings,
subsection
232(9)
must
be
considered.
It
provides
(9)
No
costs
may
be
awarded
upon
the
disposition
of
any
application
under
this
section.
If
the
respondent's
motion
be
not
one
contemplated
by
section
232
can
it
be
"any
application
under
this
section"?
Or
is
it
an
extraneous
application
which
the
respondent's
solicitor
purport
to
squeeze
or
push
under
this
section?
That
is
a
doubtful
matter.
The
moral
philosophy
of
Western
civilization
including
the
common
law
has
always
been
against
acting
on
a
doubt.
The
doubt
resides
in
the
appearance
of
the
direct
literal
applicability
of
subsection
232(9)
in
these
circumstances.
Counsel
on
each
side
could
cite
no
jurisprudence
construing
the
provision
one
way
or
another
in
circumstances
such
as
these.
The
better
course
is
to
heed
the
subsection
and
to
award
no
costs,
and
none
is
awarded.
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