Matas,
J.:—On
June
26,
1968,
the
Department
of
National
Revenue
seized
correspondence,
memoranda,
and
other
documents
at
the
offices
of
Messrs.
Sokolov
&
Wolinsky,
solicitors.
Mr.
D.
Sokolov
claimed
solicitor
and
client
privilege
on
behalf
of
several
corporate
and
individual
clients.
All
the
documents
were
placed
in
the
custody
of
the
Sheriff
of
the
Eastern
Judicial
District.
Application
was
made
by
the
solicitor
pursuant
to
Section
126A
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
for
determination
of
the
question
whether
a
solicitor-client
privilege
exists
in
respect
of
the
documents.
Three
schedules
were
prepared:
(A)
Memorandum,
listing
by
number,
all
the
files
which
had
been
seized.
(B)
List
of
client
companies
and
an
explanation
of
positions
held
by
writers
and
recipients
of
letters.
(C)
List
of
documents
for
which
privilege
was
claimed,
keyed
to
the
numbering
in
Schedule
A.
Three
individuals,
clients
of
Mr.
Sokolov,
were
in
the
process
of
purchasing
shares
in
the
capital
stock
of
a
British
Columbia
company.
The
vendor
was
a
company
having
its
head
office
in
Winnipeg.
After
completing
the
purchase,
the
individuals
transferred
the
shares
to
another
company.
A
reorganization
and
amalgamation
was
consummated.
Immediately
following,
certain
dividends
were
declared
by
a
subsidiary
company
to
its
parent.
Messrs.
Sokolov
&
Wolinsky
acted
as
general
counsel
for
the
companies
whose
names
are
listed
on
Schedule
B.
Cowan
and
Company
acted
as
British
Columbia
counsel
for
Sokolov
and
Company.
Farris
and
Company
were
the
solicitors
for
the
British
Columbia
company
at
the
time
of
acquisition
and
continued
to
act
for
about
a
year
thereafter.
Mr.
H.
Bell-Irving
of
the
firm
of
Douglas
and
Company
was
retained
as
special
counsel
by
one
of
the
individual
clients
and
was
consulted
by
Sokolov
and
Company.
Mr.
Lazarus
Phillips,
Q.C.,
of
Montreal
was
retained
as
special
tax
counsel.
Mr.
D.
Bellwood
was
employed
as
the
staff
solicitor
for
the
British
Columbia
companies.
There
is
no
suggestion
that
the
activities
of
the
clients
were
in
any
way
fraudulent,
illegal
or
criminal
so
as
to
void
the
claim
for
privilege.
(See
In
re
Missiaen
et
al.,
[1967]
C.T.C.
579
at
581.)
Counsel
for
the
appellant
and
counsel
for
the
Department
met
prior
to
the
hearing
and
agreed
on
the
disposition
to
be
made
in
respect
of
certain
documents.
I
heard
the
submissions
of
counsel
and
examined
the
documents
in
respect
of
which
agreement
had
not
been
reached.
1.
(a)
Letters
from
Cowan
and
Company
to
Sokolov
and
Company
dated
November
28,
1961,
December
9,
1961,
December
11,
1961,
December
5,
1962.
(b)
Copies
of
letters
from
Sokolov
and
Company
to
Cowan
and
Company
dated
December
5,
1961,
and
December
6,
1961.
These
letters
are
contained
in
Files
1195
and
1195B
and
relate
to
the
purchase
of
the
shares
and
questions
arising
out
of
the
purchase,
including
rights
of
shareholders.
The
general
principles
applicable
to
the
question
of
solicitor
and
client
privilege
were
set
out
by
Wilson,
C.
J.
in
the
case
of
In
re
Kask
et
al.,
[1966]
C.T.C.
659
at
660
and
661.
The
relationship
between
solicitor
and
counsel
is
set
out
in
12
Halsbury’s
Laws
of
England
(3rd
ed.)
44,
para.
61:
61.
Communications
with
counsel.—The
privilege
extends
to
instructions
and
briefs
to
counsel,
and
cases
for
counsel’s
opinion,
together
with
his
opinion
thereon,
drafts
and
notes
made
by
counsel,
and
documents
settled
by
him;
memoranda
or
minutes
made
by
the
client
of
the
communications
between
himself
and
the
solicitor
or
entries
in
a
solicitor’s
diary
of
similar
communications.
Mr.
Kroft
referred
to
Phipson
on
Evidence,
10th
ed.
254,
para.
591,
where
it
is
stated:
The
communications
must
have
been
confidentially
made
for
the
purpose
of
the
employment,
or
the
knowledge
confidentially
obtained
solely
in
consequence
of
it,
to
be
privileged.
All
the
documents
are
in
respect
of
obtaining
and
giving
of
counsel’s
opinion
and
are
within
the
principles
set
out
above.
The
documents
are
privileged.
2.
Bill
of
costs
dated
January
10,
1963,
(File
1195B)
from
Cowan
and
Company
to
Sokolov
and
Company.
The
privilege
is
questioned
by
the
Department
because
of
the
exception
in
Section
126A(l)(e).
That
subsection
reads:
“solicitor-client
privilege”
means
the
right,
if
any,
that
a
person
has
in
a
superior
court
in
the
province
where
the
matter
arises
to
refuse
to
disclose
an
oral
or
documentary
communication
on
the
ground
that
the
communication
is
one
passing
between
him
and
his
lawyer
in
professional
confidence,
except
that
for
the
purposes
of
this
section
an
accounting
record
of
a
lawyer,
including
any
supporting
voucher
or
cheque,
shall
be
deemed
not
to
be
such
a
communication.
Mr.
Cantlie
argued
that
this
document
is
not
an
accounting
record
of
Sokolov
and
Company.
If
it
were
paid
and
receipted,
it
would
be
a
voucher,
but
in
the
state
of
an
unreceipted
account,
it
is
not.
Mr.
Kroft
contended
that
whether
it
was
receipted
or
not
it
is
a
voucher
and
is
part
of
the
accounting
records
of
Sokolov
and
Company.
I
agree
with
this
view.
The
bill
would
eventually
be
paid
by
Sokolov
and
Company
and
the
amount
presumably
charged
to
the
client
as
a
disbursement.
If
necessary
the
solicitor
would
produce
the
account
from
Cowan
and
Company
to
support
his
billing.
Voucher
is
defined
in
the
Oxford
Universal
Dictionary
as
:
A
written
document
or
note,
or
other
material
evidence,
serving
to
attest
the
correctness
of
accounts
or
monetary
transactions,
to
prove
the
delivery
of
goods
or
valuables,
etc.”
The
document
is
not
privileged.
3.
Copy
of
letter
dated
December
15,
1961,
(File
1195)
from
Farris
and
Company
to
the
British
Columbia
company
in
respect
of
termination
and
holiday
pay
for
employees
of
the
company.
Original
copy
of
this
letter
is
on
the
file
of
Farris
and
Company.
A
copy
was
sent
to
Sokolov
and
Company
who
became
counsel
for
the
British
Columbia
company
on
December
13,
1961.
Counsel
for
the
Department
contended
that
this
document
is
not
privileged.
The
essence
of
privilege
is
based
on
the
relationship
of
solicitor
and
client
for
the
purpose
of
getting
legal
advice.
The
document
was
privileged
in
the
hands
of
Farris
and
Company.
‘‘A
communication
or
document
once
privileged
is
always
privileged.’’
The
protection
is
not
lost
on
change
of
solicitors.
(Phipson
ibid.
225,
para.
594).
This
is
especially
so
where
the
client
continued
to
have
both
counsel
act.
It
was
important
for
Sokolov
and
Company
as
the
new
solicitors
to
be
informed
in
its
professional
capacity
of
the
subject
matter
of
this
letter
for
the
purpose
of
general
counselling
to
the
company.
The
document
is
privileged.
4.
Letter
dated
July
9,
1962,
(File
1195A)
from
an
individual
client
to
Sokolov
and
Company.
The
first
part
of
this
letter
contains
privileged
matters.
Privilege
is
not
claimed
for
the
rest
of
the
letter.
Mr.
Cantlie
contends
that
if
part
of
a
document
is
privileged
and
part
is
not,
the
whole
is
privileged.
(Halsbury
ibid.
43,
para,
59).
However,
this
principle
is
applicable
where
there
is
an
intermingling
of
privileged
and
non-privileged
material.
In
this
age
of
superlative
copying
methods
there
is
no
problem
in
blocking
out
the
top
of
the
letter
and
providing
the
Department
with
a
copy
of
the
non-privileged
sections.
5.
Letter
dated
December
19,
1962,
(File
1195A)
from
Farris
and
Company
to
Sokolov
and
Company
relating
to
corporate
reorganization.
A
copy
of
the
letter
was
sent
to
the
comptroller
of
a
client
company.
This
document
is
privileged
under
the
same
principles
as
are
set
out
in
item
1.
above.
Sending
a
copy
to
a
responsible
officer
of
the
client
does
not
bring
the
matter
within
the
category
of
communication
to
a
third
party
so
as
to
void
the
privilege.
6.
Letter
dated
July
13,
1962,
(File
1195
(1))
from
an
individual
client
to
Sokolov
and
Company
with
respect
to
a
dispute
between
the
vendor
of
the
shares
and
the
purchasers.
The
document
is
within
the
principle
expressed
in
Halsbury
ibid.
39,
para.
96.
7.
Unexecuted
agreement
(File
1195
(17A).
If
the
agreement
had
been
signed
and
had
become
part
of
the
company
records
it
would
not
be
a
privileged
document.
Since
it
was
not
signed
it
must
be
inferred
that
the
advice
of
the
solicitor
was
not
taken
;
the
document
must
be
considered
as
being
in
the
same
category
as
a
draft
opinion.
The
document
is
privileged.
(See
In
re
Kask
(supra)
at
661).
8.
File
1195
(41)
consists
of
a
series
of
letters
and
memoranda
relating
to
a
proposed
plan
of
reorganization
:
(a)
Copy
of
a
letter
of
April
9,
1963,
from
an
individual
client
to
Mr.
Bellwood.
The
letter
is
privileged.
It
forms
part
of
the
process
of
obtaining
advice.
(Annual
Practice
1966
p.
521
cited
in
Zn
re
Kask
(supra)
at
661.)
(b)
Two
memoranda,
undated,
prepared
by
Mr.
Kelsey,
a
chartered
accountant
associated
with
the
firm
of
Helliwell
and
Company.
There
is
no
definite
indication
of
how
the
memoranda
came
into
Mr.
Sokolov’s
possession.
The
court
was
asked
to
draw
an
inference
that
they
accompanied
document
8(a).
Ordinarily
memoranda
prepared
by
an
accountant
are
not
privileged.
(See
Primrose
J.,
Missiaen
et
al.
v.
M.N.R.
(supra)
at
581.
There
may
be
circumstances
in
which
such
a
report
is
a
privileged
document
in
the
possession
of
a
solicitor.
Corpus
Juris
Secundum,
Vol.
97,
p.
788,
Section
276(d)
summarizes
the
principle
as
follows:
Whether
or
not
communications
between
an
attorney
and
a
third
person
are
privileged
depends
on
the
circumstances
of
the
particular
case,
but
ordinarily
such
communications
are
not
privileged,
although
they
may
relate
to
the
client’s
business.
Phipson
ibid.,
p.
260,
para.
604
gives
the
following
example
of
a
privileged
communication
:
Oral
or
documentary
information
from
third
persons,
which
has
been
called
into
existence
by
the
client
for
the
purpose
of
submission
to
the
solicitor,
either
for
advice
or
for
the
conduct
of
litigation
(and
whether
submitted
or
not).
Halsbury
ibid,
on
the
other
hand
sets
out
at
page
45,
para.
63
that:
Communications
between
a
party
and
a
non-professional
agent
or
third
party
are
only
privileged
if
they
are
made
both
(1)
in
answer
to
inquiries
made
by
the
party
as
the
agent
for
or
at
the
request
or
suggestion
of
his
solicitor,
or
without
any
such
request,
but
for
the
purpose
of
being
laid
before
a
solicitor
or
counsel
for
the
purpose
of
obtaining
his
advice
or
of
enabling
him
to
prosecute
or
defend
an
action
,or
prepare
a
brief;
and
for
the
purposes
of
litigation
existing
or
in
contemplation
at
the
time.
Both
these
conditions
must
be
fulfilled
in
order
that
the
privilege
may
exist.
Confining
the
privilege
to
cases
involving
litigation
is
contrary
to
the
trend
of
the
development
of
the
law
of
privilege.
C.E.D.
(Ontario)
2nd
ed.,
Vol.
7
has
this
to
say
at
pp.
324
and
326
:
Professional
communications
between
solicitor.
and
client
of
a
confidential
character
which
take
place
for
the
purpose
of
getting
legal
advice
are
privileged.
The
law
as
to
privilege
for
communications
between
a
client
and
his
solicitor
has
been
gradually
developed.
It
is
not
now
necessary,
as
it
formerly
was,
for
the
purpose
of
obtaining
protection,
that
the
communications
should
be
made
either
during
or
relating
to
an
actual,
or
even
to
an
expected
litigation.
It
is
sufficient
if
they
pass
as
professional
communications
in
a
professional
capacity.
And
at
page
326
:
Where
the
document
has
come
into
existence
as
a
communication
from
the
client
himself
to
his
solicitor,
it
is
protected;
also
where
the
document
has
come
to
the
solicitor
from
any
kind
of
agent
employed
or
instructed
by
the
client
to
communicate
with
the
solicitor;
also
where
the
solicitor
has
obtained
the
document
or
information
on
the
instructions
of
his
client
for
the
purpose
of
giving
advice
.
.
.
Reverting
to
the
memoranda
in
question,
Mr.
Cantlie
submitted
they
were
prepared
by
the
auditors
at
the
request
of
the
client.
They
expressed
the
consensus
of
a
meeting
called
to
obtain
the
opinion
of
Mr.
Phillips
as
tax
counsel;
the
auditor
was
the
agent
of
the
client
in
transmitting
the
information
to
Sokolov
and
Company
for
their
information
and
advice.
The
documents
were
considered
by
Mr.
Sokolov.
One
of
the
memoranda
contains
handwritten
notes
made
by
him
suggesting
changes
in
the
proposed
plan.
I
have
concluded
that
because
these
documents
were
called
into
existence
for
submission
by
the
client
to
his
solicitor
for
advice
they
are
privileged.
(c)
Copy
of
a
letter
from
Mr.
Bell-Irving
to
a
client
with
copies
of
a
schedule
and
plan
of
reorganization.
Counsel
for
the
Department
contended
that
the
plan
and
schedule
are
not
privileged
if
the
actual
steps
taken
by
the
client
in
the
corporate
reorganization
followed
the
proposed
scheme.
I
do
not
agree.
The
final
result
is
a
matter
of
public
record
and
is
not
privileged.
However,
it
would
not
be
right
to
permit
strangers
to
the
transaction
to
examine
a
proposed
plan
and
compare
it
with
the
final
result
in
order
to
determine
if
in
fact
there
was
confidentiality.
If
this
were
permitted
the
privilege
would
be
illusory.
The
schedule
and
plan
were
prepared
by
the
accountant
as
the
agent
of
the
client
for
submission
to
the
solicitor
for
his
advice.
The
documents
are
privileged.
(d)
Letter
dated
May
2,
1963,
from
Douglas
and
Company
to
an
individual
client;
copy
of
letter
dated
May
10,
1963,
from
Mr.
Bell-Irving
to
Mr.
Phillips;
copy
of
letter
of
June
7,
1963,
from
Mr.
Sokolov
to
Mr.
Bell-Irving;
copy
of
letter
of
July
12,
1963,
from
Mr.
Sokolov
to
Douglas
and
Company;
these
are
privileged
documents
as
being
within
the
category
of
communi-
cations
of
solicitor
to
client,
and
solicitors
to
and
from
counsel
for
the
purpose
of
the
client’
s
business
and
obtaining
advice
and
opinions.
(e)
loose
plan
of
reorganization,
undated,
with
alterations
in
the
handwriting
of
Mr.
D.
Sokolov.
This
is
a
copy
of
the
document
enclosed
with
letter
of
April
30,
1963,
from
Mr.
Bell-Irving
to
an
individual
client.
This
document
is
privileged
under
the
principle
expressed
in
8(c)
above,
as
well
as
under
the
principles
referred
to
in
the
case
of
I
n
re
Kask
(supra)
where
reference
is
made
at
page
661
to
Document
No.
28.
(f)
Letter
of
April
22,
1963,
from
the
auditors
to
the
client.
This
document
is
similar
in
form
to
the
earlier
plan
of
reorganization
referred
to
under
8(b).
Copies
of
this
letter
were
sent
to
Messrs.
Phillips,
Bell-Irving,
and
Bellwood,
and
to
Mr.
Kenna
an
administrative
officer
of
the
British
Columbia
companies.
The
letter
refers
to
the
plan
of
reorganization
reviewed
with
Mr.
Phillips
and
the
consideration
of
the
plan
by
the
client
with
Douglas
and
Company.
Further
suggestions
are
made
for
reorganization.
These
suggestions
were
volunteered
by
the
auditors
in
their
communication
to
the
client.
Under
these
circumstances
I
find
that
the
letter
is
not
a
privileged
document.
9.
File
1195
(40A).
This
file
is
in
respect
of
a
dispute
between
a
client
and
the
vendor
of
physical
assets
being
purchased
by
the
client.
These
are
a
series
of
letters
requesting
advice
and
given
advice
and
opinions.
There
are
also
three
handwritten
notes
made
by
the
solicitor,
being
memoranda
of
the
relevant
facts.
The
letters
are
agreed
to
be
privileged.
I
find
that
the
memoranda
are
privileged.
Phipson,
ibid.
p.
257,
para.
597.
10.
Letters
from
Cowan
and
Company
dated
November
16,
1961,
and
November
21,
1961
(File
1195
(13)
to
the
manager
of
the
corporate
trust
department
of
Royal
Trust;
Company
in
respect
of
offers
to
be
made
to
minority
shareholders.
In.
fact,
the
offers
were
not
made
by
the
Royal
Trust.
Mr.
Cantlie.
contended
that
the
letters
are
written
by
Cowan
and
Company.
as
agents
for
the
client.
In
my
opinion
the
documents
are
not
privileged
and
do
not
come
within
the
rule
expressed
by
Jessel,
M.
R.
in
the
case
of
Anderson
v.
Bank
of
British
Columbia
(1876),
2
Ch.
D.
644
at
649.
11.
Copy
of
letter
dated
December
21,
1962,
from
Lawrence
and
Company,
solicitors
in
British
Columbia
(File
1195
(6)
to
the
general
manager
of
client
companies
in
British
Columbia
in
respect
of
a
union
contract:
Sokolov
and
Company
received
a
copy
for
information.
The
letter
is
privileged
on
the
same
basis
as
the
letter
in
item
3
above.
12.
Check
list
for
closing
the
sale
(File
1195
(12)
is
a
privileged
document.
Counsel
for
the
Department
raised
the
question
whether
a
document
prepared
by
the
solicitor
for
his
own
guidance
and
perhaps
that
of
a
client
is
a
privileged
communication.
To
hold
otherwise
would
be
to
defeat
the
purpose
of
the
rule.
Notes
made
by
a
solicitor
related
to
the
client’s
business
and
being
part.
of
the
necessary
information
of
the
solicitor
for
the
purpose
of
giving
advice
to
the
client
are
privileged.
(See
item
9
supra).
13.
Copy
of
a
letter
dated
September
2,
1966,
from
Sokolov
to
Kenna
(File
1195
(17A).
Mr.
Sokolov
was
acting
for
the
clients
at
that
time.
The
document
comes
within
the
general
category
of
a
privileged
communication.
14.
Item
4,
letter
dated
July
9th,
1962,
will
be
photostated.
The
document
will
be
returned
to
the
solicitor
and
the
photostatic
copy
will
be
delivered
to
the
Department
.
15.
The
other
privileged
documents
will
be
returned
to
the
solicitor.
All
the
other
documents
seized
will
be
delivered
to
the
Department.
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