Weber v. Pawlik, [1952] CTC 32

0 ’Halloran, J. A.:— This appeal raises a high constitutional question. It turns on the power of the Minister in charge of the Income Tax Department (who is not a party to the litigation) to refuse on his own sole decision, to produce at the trial the income tax returns and assessment of a partnership (Sapperton Meat Market, a retail butcher shop in New Westminster) covering the period of litigation between the two partners who are the appellant and respondent hereto. The point at issue may also be put in this way, viz., was it or was it not the trial Judge’s duty to examine the documents and determine whether they should be privileged on the facts before him in the kind of case he had to decide ?

On February 27, 1947, appellant paid respondent’s mother-in- law $6,500.00 for her half interest in the butcher shop respondent and she owned in equal partnership. Appellant at no time worked in the butcher-shop, or took any part in its management or the affairs of the partnership. He agreed respondent should draw $45.00 salary per week from the business for managing it, handling the money, keeping the books of account, and doing the work of meat cutter. Appellant, ignorant of this kind of business, relied entirely on respondent to conduct and manage the business while he himself worked as a longshoreman in New Westminster.

Respondent gave appellant a financial statement for 1947 showing a half share of the profits for that year to be $2,908.50 and appellant paid income tax thereon. Appellant received no financial statement for 1948, respondent informing him there were no net profits. During the first six months of 1949 respondent maintained the business was a losing proposition but paid appellant $592.64 as his half share of the net profits and gave him a financial statement to that effect. The apparently unsuc- cessful character of the business led appellant on June 24, 1949, to sell out his half interest to respondent for $4,000.00 thereby incurring a capital loss of $2,500.00.

In March, 1950, the income tax branch notified appellant he was assessed $365.00 for the year 1948 on $2,495.27 alleged to be his half of the partnership net profits for that year. Again in May 1950 the income tax branch assessed him $357.00 for the first six month period of 1949, on $2,017.22, alleged to be his half share of the partnership net profits for that period. Since this was the first appellant had heard of these profits for 1948 and 1949 he went to see the income tax people in Vancouver, who gave him full particulars of the partnership statements filed by the respondent with them.

In an affidavit filed on the appeal in this Court (allowed as of right in an interlocutory appeal—see R. 5 of the Court of appeal rules 1943) appeallant swore:—

4 ‘5. As the result of inquiries I made at the Assessor’s office of the said Income Tax Branch regarding the aforesaid assessments I was informed by an assessor Mr. Green that he had queried the Defendant Pawlik on the genuineness of the 1948 financial statement of Sapperton Meat Market with the result the result that the said Pawlik assented to having the net profits for the period established at some $6,964.88. Another Assessor, Mr. Lalonde, likewise informed me that he had queried the genuineness of the first six months of the 1949 financial statement of Sapperton Meat Market with the result that the said Pawlik again assented to having the net profits for the six month period established at some $4,212.28.

6. These assessments, I was informed by said assessors, were based on the normal mark-up prevailing in the retail butcher trade of around 19 per cent over wholesale prices of meat purchased over the period by Sapperton Meat Market. I was informed by the said assessors that the records and accounts of the said Sapperton Meat Market as maintained by the defendant Pawlik were useless to secure any reliable information on the cash income of the business over the periods in question.

7. I was further informed by the said assessors that the financial statement for the year 1947 was accepted as genuine because the said Pawlik showed therein the normal mark-up over wholesale prices of 19 per cent for meat purchased over that period.

8. I was not consulted at all by the assessors in connection with such reassessments and the first time I heard of it was on receipt of the Notices aforesaid.

9. I am informed by the said assessors that the Defendant Pawlik paid his share of income tax assessments for 1948 and first six months of 1949, and after securing legal advice I paid my said assessments although I did not receive any of the net profits upon which they are based.

10. I am informed by my solicitor and believe that I cannot proceed to trial without the evidence of the aforesaid assessors as their testimony is vital to establish my case.” (My italics).

Appellant then sued respondent inter alia for an accounting. The action was set down for trial and on 14 June, 1951, the solicitor for the appellant (plaintiff) issued a subpoena duces tecum to H. M. Green, Esq., local income tax official, to attend at the trial on June 19, in the action of appellant against respondent arising out of the aforesaid partnership disclosures, and there produce

“income tax returns filed in connection with Sapperton Meat Market partnership between parties to this action for period March 3, 1947, to June 30, 1949, inclusive, and assessments based thereon.’’

On the day of the trial counsel for the Minister appeared in Court and objected to the evidence being produced, accompanying that objection with an affidavit from the Minister, which, after reciting Section 81 of the Income War Tax Act, c. 97, R.S.C. 1927, and its amendment in c. 52, Statutes of Can. 1948, continued :—

“3. All reports, papers and documents filed with the Department of National Revenue under or in connection with the administration of the Income War Tax Act, the Excess Profits Tax Act, 1940 of the Income Tax Act are of such confidential nature that their production would be prejudicial to the public interest and I accordingly object to their production.

4, I am of opinion that it would be prejudicial to the public interest for the said H. M. Green or any other officer of the Taxation Division of the Department of National Revenue to give orally evidence relating to returns received by the said Division under any of the said statutes or relating to information which he or they have obtained in the course of their employment in connection with the administration or enforcement of any of the said statutes.”

Counsel for the Minister relied on the House of Lords decision in Duncan v. Cammell Laird & Co. Ltd., [1942] A.C. 625, and the learned Judge immediately accepted that decision as applicable and gave effect to it. This appeal lies therefrom.

It is my judgment with deference that the appeal ought to be allowed because (1) the Canadian Income Tax Act implicitly excludes the application of the Cammell Laird case; and alternatively (2) the Cammell Laird ease clashes directly with the decision of the Judicial Committee in the Australian case of Robinson v. State of South Australia (1931), 100 L.J.P.C. 183; and (3) a war-time decision such as the Cammell Laird decision involving publication of National defence particulars regarding the construction of a submarine in my opinion at least can have no analogy in principle to a case like the present.

On the first point, Section 81 of the Income War Tax Act, c. 97, R.S.C. 1927 reads :—

“81. (1) No person employed in the service of His Majesty shall communicate or allow to be communicated to any person not legally entitled thereto, any information obtained under the provisions of this Act, or allow any such person to inspect or have access to any written statement furnished under the provisions of this Act.

(2) Any person violating any of the ‘‘provisions of this section shall be liable on summary conviction to a penalty not exceeding two hundred dollars.’’

Section 121 of the Income Tax Act, c. 52 of the Statutes of 1948 reads

“Every person who, while employed in the service of His Majesty, has communicated or allowed to be communicated to a person not legally entitled thereto any information obtained under this Act or has allowed any such person to inspect or to have access to any written statement furnished under this Act is guilty of an offense and liable on summary conviction to a fine not exceeding $200.00’’. (My italics).

To my mind, with respect, income tax returns and assessments in a case like the present can have no claim to secrecy, confidence or non-communication not preserved and stated in the Statute itself. We are not here dealing with official secrets, government policy, defence of the state or even inter-departmental communications.

I must conclude (a) that the provisions for non-communication contained in the statute as cited must be taken to mean Parlia- ment has expressly limited the occasion for non-communication to the grounds set out in the statute and (c) the Cammell Laird case can have no application to the kind of case and statute now under advisement.

Nor does any question of prerogative arise. Many things might be said in answer to that contention but it is enough here to say that whatever might be the position of the King’s Prerogative (even if it could be regarded as vested in a single head of a political department of Government) if it were left as a matter of the common law, it is here in this particular respect and in this particular enactment made a matter of Parliamentary legislation, so that the Prerogative is pro tanto merged in the statute (ef. Moore v. Atty.-Gen. for Irish Free State (1935), 104 L.J.P.C. at 57).

With deference, it is my judgment that since the Court was “legally entitled’’ by statute to production under the subpoena duces tecum, and since the terms of the statute must be read to exclude the existence of any ministerial or governmental power not expressed in the statute and since any applicable prerogative is merged in the statute and its exercise restricted by such statute, grounds for introducing any principle in the Cammell Laird case cannot exist here.

In the view I take this concludes the case. But since the majority are not of this opinion I cannot escape discussing the Cammell Laird case in so far as it is sought to be made applicable to this case.

I think with respect there is a direct clash in principle between the House of Lords in 1942 in the Cammell Laird case (Viscount Simon, L.C., Lord Thankerton, Lord Russell, Lord Macmillan, Lord Wright, Lord Porter and Lord Clauson) and the Judicial Committee in 1931 (Lord Blanesborough, Lord Warrington, Lord Atkin, Lord Thankerton and Lord Russell) in Robinson v. State of South Australia (1931), 100 L.J.P.C. 183. Viscount Simon, L.C., in giving the judgment of the House of Lords in the Cammell Laird case said at p. 641:

“In Robinson v. State of South Australia (No. 2) the Judicial Committee reversed the decision of the Supreme Court of South Australia which had refused to order the inspection of documents which the Minister in charge of the department objected to produce on grounds of publie policy and remitted the case to the Supreme Court with the direction that it was one proper for the exercise of the Court’s power of inspecting documents to determine whether their production would be prejudicial to the public welfare. I cannot agree with this view.’’ (My italics.)

Again at p. 641, in discussing the Judicial Committee’s part reliance in the Robinson case on a rule similar in its relevant aspect to our M.R. 361, giving the Court power to inspect documents in order to decide the validity of a claim for their privilege, Viscount Simon, L.C., said.

‘‘In my opinion the Privy Council was mistaken in regarding such a rule as having any application to the subject-matter.’’

A Canadian Court of Appeal certainly since the Statute of Westminster in 1931 is not bound to accept a decision of the House of Lords in preference to its own. There is no appeal from the Court of Appeal of this Province to the House of Lords, and hence the House of Lords has no jurisdiction to which this Court of Appeal can constitutionally submit its own. jurisdiction. Whether this Court of Appeal is bound by decisions of the Judicial Committee in appeals from Australia (before Canadian Appeals to the P.C. were abrogated) may or may not be a matter of differing opinion. If this Court is so bound then the situation becomes easy; for Robinson v. South Australia must then be accepted in preference to the reasoning in the Cammell Laird case.

On the other hand if there is doubt regarding the binding effect of Robinson v. South Australia, upon a Canadian Court and I have to choose between the reasoning in that decision and in the Cammell Laird case, then with deep respect for the purpose of and strictly limited to the facts in the present case, I unhesitatingly adopt the former as more consistently uniform with the historical English legal tradition and more in accord with Canada’s own constitutional development. Moreover the Cammell Laird case was a war-time decision; the Robinson case was not. I resist the attraction to write more fully upon a subject-matter of far-reaching and immediate significance to our Country and restrict myself to a number of brief observations ;

In the Robinson case at p. 187 fundamental reliance was placed on an integrated constitutional principle which the Judicial Committee invoked when deciding an appeal from this Province, viz., Esquimalt and Nanaimo Railway Co. v. Wilson (1920), 89 L.J.P.C. at 31 :—

“The party ought in this case to be relieved against the King, because the King is the fountain and head of justice and equity ; and it shall not be presumed that he will be defective in either. And it would derogate from the King’s honour to imagine, that what is equity against a common person should not be equity against him.”

I apply this principle to the simple facts of this case previously recited. How the production of the partnership income tax statements and returns in this case, at the behest of one partner in his action against the other partner can in any way be prejudicial to the public interest in any way is completely beyond my understanding. To me with respect it is plainly inequitable and unjust that in this kind of case such documents should not be produced in Court.

The second observation is directed to the sole, final, and absolute character claimed for the Minister’s decision and seemingly supported by the Cammell Laird case and also by Liversidge v. Anderson, [1942] A.C. 206 (as to the latter decision see 1951 — 29 Can. Bar. Rev. at pp. 832-3.).

In Canada at least it is the accepted and traditional constitutional view that decisions relating to life, liberties, rights and property are determined by the constituted Courts of the land, whose jurisdiction in that respect cannot be hindered or stayed by the Executive as such, let alone by the political head of a department of Government, c.f. Home Où Distributors Ltd. v. Atty.-Gen. of B.C. (1939), 54 B.C. at 654. In Rez v. Brixton Prison (Governor) (1916), 86 L.J.K.B. 62, a case involving the deportation of an alien during the first world war, Mr. Justice Low said at p. 66 :

“I do not agree that it is for the Executive to come here and simply say, ‘the man is in custody and therefore the right of the High Court to interfere does not apply, because the custody is at the moment technically legal’.

I say that answer of the Crown will not do if this Court is satisfied that what is really in contemplation is the exercise of an abuse of power. The arm of the law would have grown very short, and the power of the Court very feeble if that were the case”.

These observations were approved and added to by the Judicial Committee in Eshugbayi v. Nigeria Government (1931), 100 L.J.P.C. at 157, where it is of some significance to note the Governor of Nigeria had acted solely under Executive powers and in no sense as a Court. The Judicial Committee gave voice there also at p. 157 to a well-known and highly important principle which in my opinion goes to the root of a proper decision in this case, viz., the true meaning of ‘‘act of State’’;

“This phrase is capable of being misunderstood. As applied to an act of the sovereign power directed against another sovereign power, or the subject of another sovereign power, not owing temporary allegiance, in pursuance of sovereign rights of waging war, or maintaining peace on the high seas or abroad, it may give rise to no legal remedy. But as applied to acts of the Executive directed to subjects within the territorial jurisdiction it has no special meaning and can give no immunity from the jurisdiction of the Court to inquire into the legality of the act’’. (My italics.)

Nothing in my present decision is applicable to situations where martial law is in force, or the country is on a war footing, or is in present danger of attack (within or without) by an enemy nation. Britain was at war and in immediate danger of invasion when the Cammell Laird and Liversidge decisions were given. Even at that, these decisions have been subjected to criticism in England see—1943—87 Sol. Jo. 61 and 1942 08 L.Q.R. 486-8, which it may be necessary to examine on a future occasion.

With deference, it is more unwise not to say dangerous to our national institutions, to attempt in times of comparative peace and tranquillity to introduce for guidance in Canada, decisions, which do no more in truth than reflect the desperate efforts of a besieged country against the subversive machinations within the country itself, of the agents of a powerful and unscrupulous enemy nation. In such conditions it is well known the urgency of national preservation may compel a constitutionally democratic government to resort temporarily to expedients and practices which under more normal conditions would be regarded as unconstitutional not to say totalitarian in character.

I would allow the appeal. In my opinion it was not for the Minister to determine whether the partnership income tax statements and assessments should or should not be produced in Court. That was a decision for the trial Judge alone to make. I would send the case back to him to make that decision and proceed with the trial. It is for the trial Judge to determine in the first instance whether the facts discoverable by the production of the documents would be prejudicial or detrimental to the public welfare in any justifiable sense.

ROBERTSON, J.A.:—This is an appeal from the learned Chief Justice refusing to permit an officer of the Taxation Division of the Department of National Revenue, Income Tax Branch, who had been subpoenaed, to produce on the trial an income tax return made by the defendant on behalf of the partnership alleged in the statement of claim and hereafter referred to, and to give evidence with regard to it, because of the objection set forth in an affidavit of the Minister of National Revenue in the Government of Canada that all reports, papers and documents filed with the Department of National Revenue under or in connection with the administration of the Income Tax Act, the Ex- cess Profits Tax Act 1940, or the Income Tax Act, are of such a confidential nature that their production would be prejudicial to the public interest ; and as to the officer giving evidence would be prejudicial to the public interest for him to give orally evidence relating to returns received by his Division under any of the said statutes relating to information which had been obtained in the course of his employment in connection with the administration or enforcement of any of the said Acts. Counsel for the Minister appeared on the trial in support of the objection.

In the action the plaintiff alleges a partnership with the defendant from February 27, 1947, to the June 24, 1949, during which time the defendant managed the business, the plaintiff being a silent partner; the defendant misconducted himself in the management of the business during the period above mentioned in failing to actually report to the plaintiff the true financial position of the business and to keep proper records, and by making false statements with respect thereto, so that the plaintiff was induced to sell out his interest in the partnership business to the defendant at a substantial loss upon the dissolution.

The defence was a general denial and, alternatively, that the plaintiff took an active interest in the business and in any event any cause of action the plaintiff might have had, was terminated by an agreement in writing dated 24th June, 1949.

At the trial, counsel for the appellant stated his position to be that in pursuance of the Income War Tax Act the plaintiff was re-assessed as being a partner of the Sapperton Meat Market (by which name the partnership appears to have been known), on the basis of returns made by his co-partner who kept the books of the concern, and that on the basis of these re-assessments, based on the figures presented by the respondent, the appellant, being at all times nothing but a silent partner who occupied himself in no way in the management or operation of the business, was assessed for considerable sums of money after the partnership had been dissolved, and suddenly found himself confronted with assessments, i.e., re-assessments covering the years 1948-9 for considerable sums of money; that he went in after receiving these assessments, to the Income Tax Department, had certain interviews with the officials there, and received certain informa- tion from their records as the basis of these re-assessments, and that it was on the basis of those circumstances, revealed to him then, upon which he had to pay considerable sums of money— these re-assessments being made on the basis of returns made by his co-partner—that this action was brought.

It is submitted that this is not the case of a stranger seeking to see an income tax return made by someone else, but of a partner seeking to see a return made by his partner of their business, ostensibly on his behalf as well as that of the respondent and that no public interest or policy is in question, and that he is legally entitled thereto within the sections next mentioned. Secs. 81 and 121 of the Income War Tax Act prohibit, and make it an offence, for any person employed in the service of His Majesty, to communicate or allow to be communicated ‘‘to any person not legally entitled thereto’’ any information obtained under the provisions of the Act, or to allow such person to inspect or have access to any written statement furnished under the provisions of the Act. Counsel for the appellant argues that his client is legally entitled to see the return allegedly made on behalf of the partnership. I do not think these sections give the appellant any right. They are not designed to do so. They are to protect him and all other income tax payers from having their private affairs divulged to anyone not legally entitled thereto. The expression‘‘ persons legally entitled thereto ’ ’ in my view includes all those in the Department and others in authority who might find it necessary for the administration and enforcement of the Act to see the same and to obtain information with regard thereto.

It is suggested that the affidavit of the Minister is insufficient in that it does not disclose the grounds under which he was of the opinion that what was sought in this action by the appellant was against public policy ; that the affidavit should have set out in detail the objections, as was done in the case of Murray v. Murray (1947), 63 B.C. 540. However, as I view it, I think it is clear that his objection is based generally on the purposes of the Act and the inadvisability of permitting the course suggested because of its effect on the administration and enforcement of the Act. The respondent relies upon Duncan and Another v. Cam- mell Laird & Company Limited, [1942] A.C. 624, a unanimous decision of the House of Lords that an objection taken by a public department when called upon to produce documents in a suit between private citizens that on grounds of public policy the documents should not be produced, should be upheld. But it is said the principle has only been applied when great national or governmental interests are in question, more especially in time of war or national crisis. Reliance is placed on the judgment of Lord Blanesburgh on behalf of the Privy Council in Robinson v. State of South Australia, [1931] A.C. 704. When speaking of the privilege of the Crown to refuse production, he said at p. 714 :

11 And, first of all, it is, their Lordships think, now recognized that the privilege is a narrow one, most sparingly to be exercised. ‘ The principle of the rule, ’ Taylor points out in his work on Evidence, Section 939, ‘is concern for public interest, and the rule will accordingly be applied no further than the attainment of that object required’ ’’.

The authorities cited by Lord Simon in his speech show that in numerous English cases since 1822 these principles have been applied in time of peace, e.g., Earl v. Vass (1882), 1 Shaw’s App. 299 ; Horne v. Lord William Bentinck (1820), 2 Brod. & B. 130.

The following cases in which the principle was applied seem to have no relation to great national or governmental interests and were also decided when England was not disturbed by war:

In Hughes v. Vargas (1893), 9 T.L.R. 551, a decision of the Court of Appeal, it appeared that a clerk in the Inland Revenue office brought an action for alleged libel contained in a report made by the defendant, the chief cashier, and the plaintiff’s superior, to the Accountant General, as a result of which it was alleged the plaintiff suffered loss. At the trial the secretary of the Board of Inland Revenue was called, who said he was instructed by a minute of the Board to object to produce the report upon the ground that to do so would be prejudicial and injurious to the public service.

The Master of the Rolls, with whom the other Judges agreed, followed Beat son v. Skene (1860), 5 H. & N. 838, in which it was said by Lord Chief Baron Pollock that they were of the opinion that if the production of a State paper would be injurious to the service, the general public interest must be considered paramount to the individual interest of the suitor in a court of justice; and the question then arose how it was to be determined. It appeared to them that the question whether the production of a document would be injurious to a public service must be determined, not by the Judge, but by the head of the department having the custody of the paper. Cases might arise where the matter would be so clear that the Judge might ask for it in spite of some official scruples as to producing it, but that this must be considered rather an extreme case, throwing very little light on the practical rules of life.

In Anthony v. Anthony (1919), 35 T.L.R. 559, the petitioner in a divorce proceeding sought to have her husband’s army medical sheets produced in an endeavour to prove from these that she had contracted a certain disease from him. The Secretary of State took the position that the medical history sheets should be regarded as confidential documents, and that it was not in the public interest that they should be produced. Notwithstanding the fact that both parties to the petition desired the production of these sheets, Coleridge J., said that he was satisfied he had no option but to accept the decision of the Secretary of State.

In In re Joseph Hargreaves Ltd., [1900] 1 Ch. 347, the liquidator of a company, in order to obtain evidence in support of a misfeasance summons, applied for an order that the surveyor of taxes should attend for examination and produce some balance sheets of the company which had been delivered to him for the purpose of assessment of income tax. The Board of Inland Revenue supported the surveyor’s objection to produce these documents on the ground that this would be predjudicial to the public interest and service. The trial Judge held that the order for production ought not to be made. The Court of Appeal held the exercise by the Judge of his discretion ought not to be interfered with.

Ankin v. London & N.E. Ry. Co., [1930] 1 K.B. 527 was an action to recover damages for personal injury, incurred in an accident on defendant’s railway, wherein the defendants objected to produce a copy of the report made by them to the Ministry of Transport on the ground it was a copy of a confidential document made in discharge of their duty to the Crown. The Minister of Transport’s position was that reports made pursuant to the Act were furnished for his own information and guidance and that it was his practice in the public interest to decline any request to inspect these reports or to obtain copies of them. Lord Justice Scrutton said at p. 533 that it was the practice of the English Courts to accept the statement of one of His Majesty’s Ministers that production of a particular document would be against the public interest, even though the Court might doubt whether any harm would be done by producing it.

At first it might appear difficult to see why the report made in Hughes v. Vargas, supra, the balance sheets for income tax purposes in the Hargreaves case, the army medical sheets in Anthony v. Anthony, and the report made in the Ankin case should NOT be produced, as ostensibly they would affect only the interest of the parties concerned. As to this I am of the opinion, with res- pect, that what Viscount Simon said in his classic judgment in Duncan v. Cammell, Laird & Co. supra, referring to various cases cited in his speech, in which the principle in question was upheld, is exactly in point with regard to returns made under the Income Tax Act, viz.,

“It will be observed that the objection is sometimes based upon the view that the public interest requires a particular class of communications with, or within, a public department to be protected from production on the ground that the candour and completeness of such communications might be prejudiced if they were ever liable to be disclosed in subsequent litigation rather than on the contents of the particular document itself’’.

He then referred to what Lord Lyndhurst, L.C., said in Smith v. Hast India Co. (1841), 1 Ph. 50:

“Now it is quite obvious that public policy requires, and looking to the act of parliament, it is quite clear that the legislature intended, that the most unreserved communication should take place between the East India Company and the Board of Control, that it should be subject to no restraints or limitations; but it is also quite obvious, that if, at the suit of a particular individual, those communications should be subject to be produced in a court of justice, the effect of that would be to restrain the freedom of the communications, and to render them more cautious, guarded, and reserved. I think, therefore, that these communications come within that class of official communications which are privileged, inasmuch as they cannot be subject to be communicated without infringing the policy of the act of parliament and without injury to the public interests’’.

Lord Simon referred at p. 639 to what Pollock, C.B., said in Beatson v. Skene supra, that the general public interest must be considered paramount to the individual interest of a suitor in a Court of Justice; and at pp. 642-3 he said when these conditions are satisfied and the Minister feels it his duty to deny access to material which otherwise be available, there is no question but that the public interest must be preferred to any private consideration.

With reference to the objection to produce documents as being prejudicial to public interest, he said in his speech at p. 641 the approved practice in Scotland as in England was to treat a ministerial objection taken in proper form as conclusive.

At p. 642 he said that this was quite unconnected with the interests or claim of the particular parties in the litigation, and, indeed, was a rule in which the Judge should, if necessary, insist, even though no objection was taken at all. Further, at p. 642, he stated that the Minister in deciding whether it was his duty to object, should bear in mind certain considerations there mentioned, for he ought not to take the responsibility of withholding production except where the public interest would otherwise be damnified, for example, inter alia, ‘‘where the practice of keeping a class of documents secret is necessary for the proper functioning of the public service’’.

This obviously is the reason for the Minister’s objection in this case.

It is submitted that Robinson v. State of South Australia is a decision contrary to Duncan’s case and, being a decision of the Privy Council, should be followed by this Court in preference to the decision of the House of Lords, in the Duncan case. If in fact these two decisions are in conflict it might be necessary to consider whether the Robinson case, being a decision from Australia, is binding upon the Court. As to this, I refer to the remarks of Ford, J., as he then was, in Will v. Bank of Montreal, [1931] 3 D.L.R. 526 at pp. 536-7 ; Negro v. Pietro, [1933] O.R. 112; and what Martin, J.A., said in his dissenting judgment In re Promis, [1934] 2 W.W.R. 481 at 483. However, it is clear to me that in the Robinson case the Privy Council held that the objection to the production of the documents was too vague and inadequate and therefore decided that the claim in that case could not be entertained. They did not find it necessary to decide that a claim properly made would not be given effect to. Their Lordships held the Australian Court ‘‘had to reserve’’, under a Rule of Court in force in Australia relating to discovery of documents, the power to enquire into the nature of the document for which protection was sought, and to require some indication of the nature of the injury to the state which would follow its production under the rule in force in Australia (p. 716). It is this latter part of the decision which the House of Lords said in Duncan’s case, was not correct, and stating that the withholding of documents on the ground that their publication would be contrary to public interest, was not properly to be regarded as a branch of the law of privilege, connected with discovery (p. 641).

We are, of course, only concerned with the facts in this case. There may be other cases referred to by Lord Simon at p. 642, where the Minister would not have adequate justification to object to production. It may be that the Court could see an objection was not tenable on the ground of injury to the publie interest, as was suggested in Beatson v. Skene, supra. Income tax returns are compulsory and the government rightly expects candour and completeness in such returns, and that such communication might be prejudiced if they were ever liable to be disclosed in litigation between private individuals.

Finally, Lord Simon points out in the Duncan ease at 643, that while the opinion therein was concerned only with the production of documents, it seemed to him that the same principles must also apply to the exclusion of oral evidence which, if given, would jeopardize the interests of the community.

With great respect, I agree with this view. In the result I think that the learned Chief Justice reached the right conclusion ; and the appeal must be dismissed.

SMITH, J. A.:—This case raises an important point as to the Crown’s right to prevent an income tax official, who has been subpoenaed, from producing tax returns and testifying as to their contents.

The point arises in an action between partners, the plaintiff alleging in his statement of claim that he was a sleeping partner, and that the defendant ran the business and prepared all income tax returns. The plaintiff further alleges in effect that the defendant by concealing and mis-stating the firm’s earnings deprived him of his proper share, and eventually induced him to sell out his interest at an undervalue. This amounts to a charge of fraud.

The plaintiff, in order to prove the real earnings of the firm, issued a subpoena to one Mr. Green, an official of the income tax office at Vancouver, requiring him to produce the defendant’s returns for the firm from 1947 to 1949. At the trial counsel appeared for the Minister of National Revenue and objected to Mr. Green’s producing any income tax returns. He did not specifically refer to oral evidence, but I think his objection was intended to extend to that too; for he produced and relied on an affidavit of the Minister objecting to Mr. Green’s giving any oral evidence relating to the returns. The Chief Justice, who was presiding at the trial, ruled out Mr. Green’s evidence.

Subsequently the plaintiff filed an affidavit which was read before us, verifying the allegations in his statement of claim, and also showing that the income tax authorities had assessed him for far larger profits for 1949 and 1950 than the defendant had admitted to, or accounted for. Thus he says he was assessed on $2,495.37 as his half of the profits for 1948, though the defendant had told him there were no profits that year. Similarly, he was assessed on $2,017.22 for 1949, though defendant had only accounted to him for $592.64. The affidavit also states that income tax officials, including Mr. Green, had told him that they had questioned defendant’s tax returns for 1948 and 1949, and defendant had assented to having the firm’s income fixed at $6,964.88 for 1948 and $4,212.28 for 1949. The firm was reassessed on this basis, although the authorities did not communi- cate with the plaintiff. Acting on legal advice, he paid on the re-assessment, though he never received the alleged profits on which they were based. This affidavit has not been answered and I think it must be taken as true for the purposes of this appeal.

The Minister, in the objections that he raises, set up Section 121 of the Income Tax Act (1948) c. 52, which reads:

“Section 121. Every person who, while employed in the service of His Majesty, has communicated or allowed to be communicated to a person not legally entitled thereto any information obtained under this Act or has allowed any person to inspect or have access to any written statement furnished under this Act is guilty of an offence and liable on summary conviction to a fine not exceeding $200.00.’’

He also set up Section 81 of the former Act (R.S.C. 1927, e. 97). Section 81 (which governed during 1948) though differently worded, is, for all practical purposes, the same.

I have no hesitation in saying that these sections provide no justification whatever for the Minister’s objections. Equally they contain nothing derogating from the privilege of the Crown (represented here by the Minister of National Revenue in his official capacity) to withhold production of documents on grounds of public policy. The Chief Justice below held, on the authorities and apart altogether from the statute, that the Minister was entitled to object, and that the Courts could not go behind his statements in the public interest. With this ruling I am, respectfully, in complete agreement.

It is true there is some conflict of authorities on the point. In Robinson v. South Australia, [1931] A.C. 704, a case in which the Crown was a party and was resisting discovery of documents, the Privy Council held that the Court and not the Crown was the judge whether public interest was involved. But in Duncan v. Cammell Laird & Co., [1942] A.C. 624, a case like the present, where the Crown was intervening to prevent evidence from being called between two subjects, the House of Lords refused to follow the Robinson case and held that if a Minister objected to production of any document on the ground that the practice of keeping a class of documents secret is necessary for the proper functioning of the public service, then the Courts would not go behind his statements. I think this case should be followed by us here. Two of the Law Lords (Lord Thankerton and Lord Russell of Killowen) sat on both cases.

But apart altogether from these high authorities, it seems clear (though the point was not taken before us) that the plaintiff’s attempt to get in the returns under his present subpoena must fail on other grounds. It is well established that, even though the Crown has no interest in documents wanted, a party cannot compel their production by issuing a subpjena to anyone who is not their owner, but only a servant or agent. Austin v. Evans (1841), 2 Mac. & G. 430; Crowther v. Appleby (1873), L.R. 9 C.P. 28; Eccles & Co. v. Louisville and Nashville Railroad Coy., [1912] 1 K.B. 135; Chapman & Sons v. Stoddard & Co. (1930), 43 B.C. 182.

The next question is whether the Minister can keep out oral evidence from Mr. Green as to the contents of the returns. Apart from the Crown’s being involved, it seems to me clear that if a servant, having possession of his superior’s documents, cannot produce them in Court, he cannot give oral evidence of them; so I do not see how Mr. Green can be called upon to state the contents of the returns.

I would dismiss the appeal.

I should perhaps state that I am not to be taken as deciding that a ruling on evidence such as the Chief Justice has made, is properly appealable before the trial is finished. In my judgment this case is not to be taken as questioning this Court’s ruling in Merryfield v. Male Minimum Wage Board (1931), 44 B.C. 380. As I understand it, both parties here consented to an appeal at this point without objection from the Court below and, under the special circumstances, without objection from this Court.

Appeal dismissed.