Donald,
J.:—The
petitioners
claim
solicitor-client
privilege
for
documents
relating
to
a
tax
investigation.
The
in
camera
procedure
under
section
232
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
involves
the
packaging
of
the
subject
papers
by
the
lawyers
claiming
privilege.
They
are
then
presented
to
a
judge
who
makes
a
ruling
in
concise
terms
which
identifies
the
documents
without
divulging
their
contents.
If
the
claim
ts
upheld,
then
the
documents
are
returned
to
the
lawyers
without
allowing
the
Crown
an
opportunity
to
inspect
them.
When
in
October
1990,
Revenue
Canada
began
to
audit
the
acquisition
of
the
Rail
Division
of
B.C.
Hydro
and
Power
Authority
by
the
petitioners,
lawyers
from
Ladner
Downs,
the
petitioners’
solicitors,
went
to
Southern
Railway's
office
and
to
the
offices
of
the
petitioners’
accountants,
Ernst
&
Young,
and
set
aside
the
documents
for
which
privilege
is
asserted.
Additional
documents
were
then
sent
by
the
clients
and
accountants
to
the
solicitors.
Those
taken
from
the
petitioners'
offices
were
placed
in
two
sealed
envelopes
and
marked
A
and
B
to
the
affidavit
of
Edward
Grant
Kroft.
Those
taken
from
Ernst
&
Young
were
sealed
in
an
envelope
and
marked
Exhibit
C
to
his
affidavit.
The
parties
agree
on
the
principles
which
govern
the
determination
of
the
issues.
The
Act
defines
solicitor-client
privilege
in
paragraph
232(1)(e):
(e)
“Solicitor-client
privilege'—'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.
In
Descoteaux
v.
Mierzwinski,
[1982]
1
S.C.R.
860;
141
D.L.R.
(3d)
590
(S.C.C.),
Lamer,
J.
(as
he
then
was)
said
at
D.L.R.
page
603:
The
following
statement
by
Wigmore
(8
Wigmore,
Evidence,
$52992,
p.
554
(McNaughton
Rev.
1961)),
of
the
rule
of
evidence
is
a
good
summary,
in
my
view,
of
the
substantive
conditions
precedent
to
the
existence
of
the
right
of
the
lawyer's
client
to
confidentiality:
Where
legal
advice
of
any
kind
is
sought
from
a
professional
legal
adviser
in
his
capacity
as
such,
the
communications
relating
to
that
purpose,
made
in
confidence
by
the
client,
are
at
his
instance
permanently
protected
from
disclosure
by
himself
or
by
the
legal
adviser,
except
the
protection
be
waived.
The
documents
can
be
divided
into
four
categories:
1.
Communications
between
the
petitioners
and
Ladner
Downs;
2.
Communications
between
Ladner
Downs
and
Clarkson
Gordon
(now
Ernst
&
Young)
concerning
the
petitioners'
legal
affairs;
3.
Lawyers'
bills;
and,
4.
Working
papers
including
draft
documents
containing
handwritten
notes
on
them
and
other
notes
recording
discussions
with
lawyers,
legal
advice
or
research.
The
first
category
embraces
advice
and
opinions,
requests
for
instructions,
submission
of
draft
documents
for
instructions
and
general
supervision
on
confidential
legal
matters.
Their
privileged
status
cannot
be
questioned.
The
following
documents
fall
into
the
first
category
and
are
privileged:
Exhibit
"B":
15,
22,
32,
35;
Exhibit"C":
2,
3,
4,
6,
7,
8,
9,
11,
40,
44,
52,
66.
The
second
category,
communications
between
lawyers
and
accountants,
is
more
controversial.
Mr.
Carruthers
submits
that
the
court
should
recognize
that
chartered
accountants
often
give
tax
advice
independently.
He
argues
that
only
those
documents
which
arise
from
the
interaction
of
the
accountants
and
lawyers
with
the
former
acting
as
agents
in
the
course
of
obtaining
legal
advice
for
the
client
should
be
protected.
Jackett,
P.
(as
he
then
was)
in
Susan
Hosiery
Ltd.
v.
M.N.R.,
[1969]
2
Ex.
C.R.
408;
[1969]
C.T.C.
353;
69
D.T.C.
5278
at
361
(D.T.C.
5283)
analyzed
the
question
this
way:
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.
My
examination
of
the
relevant
papers
satisfies
me
that
all
the
documents
in
Exhibit
C
conform
to
the
second
part
of
the
above
analysis
by
Jackett,
P.
These
documents
are
thus
privileged.
As
to
the
third
category,
it
is
well
settled
that
if
the
lawyers'
bills
contain
a
description
of
the
services
rendered,
they
are
protected.
Therefore,
they
do
not
fall
within
the
exception
in
the
definition
of
solicitor-client
privilege
in
paragraph
232(1)(e),
namely
“an
accounting
record
of
a
lawyer":
Mutual
Life
Assurance
Co.
of
Canada^.
Deputy
A.-G.
Canada,
[1984]
C.T.C.
155;
84
D.T.C.
6177
(Ont.
H.C.).
Billing
instructions
are
to
be
treated
similarly.
The
following
documents,
consisting
of
the
accounts
from
several
law
firms
and
related
correspondence,
are
privileged:
Exhibit"
B":
1-14,
16-26,
28-31,
33-34,
36-62;
Exhibit"C":
45-51,
53,
55-61,
67.
The
petitioners
have
waived
privilege
to
the
front
page
of
those
Ladner
Downs'
accounts
which
disclose
only
the
amount
of
the
bill.
They
have
not
waived
the
remaining
billing
information
in
the
body
of
the
account.
Finally,
I
turn
to
the
group
of
documents
generally
labelled
"working
papers"
and
these
are
described
as
copies
of
non-privileged
documents
with
lawyers'
notes
on
them,
notes
of
discussions
with
lawyers
and
others
relating
to
advice
given
by
the
lawyers,
notes
on
legal
issues,
research
and
draft
documents.
They
were
taken
from
the
offices
of
the
clients
and
the
accountants.
I
am
satisfied
that
they
are
all
privileged
in
their
present
form
save
for
those
which
are
capable
of
redaction,
that
is,
revision
by
deleting
or
excising
notes
or
other
markings
from
otherwise
non-privileged
material,
mostly
draft
documents:
Exhibit"A",
1-9;
except
that
in
document
No.
2
the
interoffice
memo
dated
October
30,
1984
should
be
disclosed
with
handwriting
removed
on
the
front
page.
Exhibit
"
B",
1-10,
15,
18,
20,
21,
22,
27,
51-52,
61;
Exhibit"
C",
1-2,
4-5,
7-39,
41-43,
62-66.
Redactions:
11-13,
18,
20,
23,
25,
29,
43,
62-64
are
capable
of
redaction.
They
are
mostly
draft
documents,
many
originating
from
B.C.
Hydro's
solicitors,
on
which
handwritten
notes
have
been
made.
The
notes
should
be
excised
from
the
documents
and
released
to
the
respondents.
No.
21
is
a
document
of
the
same
type
but
the
handwritten
notes
are
so
extensive
that
redaction
may
be
practically
impossible.
I
leave
it
to
Ladner
Downs
to
substitute
for
this
document,
and
any
other
similar
document
for
which
redaction
is
impractical,
a
clean
copy
of
the
unmarked
document
for
disclosure
to
the
respondent.
If
this
direction
is
unclear
or
gives
rise
to
difficulties
in
implementation,
the
parties
have
liberty
to
apply
for
further
directions.
All
the
documents
in
their
present
form
are
privileged.
I
order
that
the
three
packages
of
documents,
which
I
have
resealed,
be
returned
to
Ladner
Downs
with
a
direction
for
redaction
of
the
documents
indicated
and
release
to
the
respondents.
Motion
granted.
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