Date:
20021025
Docket:
2000-1209-IT-G
BETWEEN:
GRAHAM
CONSTRUCTION & ENGINEERING (1985) LTD.,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Reasons
for Order
Campbell,
J.
[1]
This motion is brought by the Appellant for an order directing
that certain documents which are in the possession of the
Respondent be excluded from the proceedings of the within appeal.
The basis upon which the Appellant has brought the motion is that
the documents were inadvertently disclosed to the Respondent, but
are subject to solicitor/client privilege, which was not
waived.
[2]
After hearing this motion, four issues arose. The first is
whether in fact I have jurisdiction to hear this motion and if I
do, is it a matter that should be decided by the presiding judge.
Secondly, are the documents subject to client/solicitor privilege
or to agent/client privilege. Thirdly, was this privilege waived.
And finally, if the privilege was not waived must the documents
be excluded under common law rules of evidence.
[3]
The appeal itself concerns the question of whether the Appellant
can claim certain losses of a natural gas company called Himic
Investments Ltd. In 1991, the Appellant purchased Himic
Investments Ltd. There was a winding up of Himic Investments Ltd.
after this merger. Prior to and after this transaction, the
Appellant sent carbon copies of various documents prepared by its
solicitors to its accounting firm, Coopers & Lybrand. On
March 21, 1995, Revenue Canada, as it was then, sent a
letter to Coopers & Lybrand requesting certain documents
pertinent to its re-assessment of the Appellant. Sometime between
March 21, 1995 and May 16, 1995, one of Coopers &
Lybrand's partners, Mr. Bill Patterson, informed the
Vice-President of the Appellant, Michael Wytrykush, of
Revenue Canada's request. On May 16, 1995, Coopers &
Lybrand responded to this request and made the documents
available at their office for review. Their response indicated
that the information was subject to tax advisor/client privilege
and that the review by Revenue Canada was on a without prejudice
basis. Appellant's counsel advised that Michael Wytrykush
believed that the documents exchanged between Coopers &
Lybrand and the Appellant's lawyers were covered by
solicitor/client privilege because at the time Coopers &
Lybrand were allegedly acting as the Appellant's agent
vis-à-vis its lawyers. According to Appellant's
counsel, Bill Patterson's opinion was that they were not
privileged because Coopers & Lybrand was not a legal firm. By
letter dated July 26, 1995, Revenue Canada made a second
request on the Appellant itself to inspect and obtain various
other documents pursuant to section 231.2 of the Income Tax
Act. In August 1995, a CCRA representative,
Chuck Garland, attended at the Appellant's premises and
received access to the documents. He made photocopies of some
documents and took those copies with him. No one claimed
privilege. Counsel for Appellant advised that Mr. Wytrykush
was of the understanding that he gave Mr. Garland copies of the
documents to comply with the requirement but not with a view to
waiving solicitor/client privilege. The Appellant now seeks to
suppress these documents and the Coopers & Lybrand documents
based on privilege.
[4]
Appellant counsel traced the development of the body of law in
the area of privilege, culminating with the most recent Supreme
Court of Canada pronouncement in Lavalle et al. v. Canada
(Attorney General), [2002] S.C.J. No. 61. He then outlined
why various documents were subject to privilege based on work
product, solicitor/client and agency relationship.
[5]
Counsel in addressing whether this privilege had been waived
expressly or by implication, continued to review relevant case
law. He submitted that although the Appellant had knowledge that
the disputed documents contained solicitor/client privileged
information, there was no waiver but instead it was merely
compliance with the Revenue Canada request. He argued that
whether the documents were essential to the outcome of the appeal
or not, the most important factor is whether there has been
interference with the fundamental right of privilege.
[6]
Respondent Counsel argued that the entire matter should be left
to the decision of the Judge hearing the appeal and that the
Appellant by its motion was seeking to have only a part of the
overall picture presented to the Trial Judge. She argued that
this matter involved more than admissibility of evidence. If the
motion were to be allowed, counsel submitted that very few of the
Minister's assumptions would remain. As a result she argued
that it was not only evidentiary issues which arise but also onus
issues and substantive law issues.
[7]
It is clear that a decision on this motion could ultimately
determine which party will be successful. A great number of
documents are in controversy and concern the take-over and
eventual winding up of Himic Investments Ltd.
[8]
The motion is brought pursuant to sections 12 and 13 of the
Tax Court of Canada Act and section 4 of the Tax Court
of Canada Rules (General Procedure). Subsection 12(1) of the
Tax Court of Canada Act vests this Court with the power to
decide this motion by virtue of its "exclusive original
jurisdiction to hear and determine references and appeals to the
Court ... under ... the Income Tax Act". Because the
Tax Court has exclusive subject matter jurisdiction over cases
arising under the Income Tax Act (the
"Act"), it must hear any motion that may
determine the outcome of a case arising under the Act.
Section 13 grants the Court "...with respect to ... the
production and inspection of documents ... all such powers,
rights and privileges as are vested in a superior court of
record". I therefore conclude that I have jurisdiction to
hear the motion.
[9]
This motion involves a collection of documents ranging from
drafts and final copies of a purchase agreement, promissory note,
shareholder's resolution, minutes, correspondence respecting
share structure and opinions on taxation matters. I believe it is
for the Judge hearing the appeal to make a determination on the
exclusion of these documents because it is that Judge who will
have all the circumstances and facts before him. It is that Judge
who can make the most informed decision during the hearing of the
appeal.
[10] Both
counsel addressed the potential problem of dealing with
examinations for discovery if I determined that the matter be
left to the Judge hearing the appeal. I can see no problem in
having examinations proceed on the basis that all documents are
properly admissible until the Judge decides some or all of them
are not admissible and this would mean that portion of the
transcript may not be read-in or subjected to
cross-examination.
[11] In my view,
it is preferable to allow the hearing to proceed without a
decision that could potentially exclude a large number of
documents. In doing so, I am pursuing what I believe to be the
most reasonable approach where I am not privy to the entire
context in which the materials may play a role.
[12] The
Appellant's motion is dismissed. However this does not
preclude the Appellant from renewing this motion before the
presiding Judge. The cost of this motion shall be costs in the
cause.
Signed at
Ottawa, Canada, this 25th day of October 2001.
J.T.C.C.
COURT FILE
NO.:
2000-1209(IT)G
STYLE OF
CAUSE:
Graham Construction
&
Engineering (1985) Ltd. and
Her Majesty the Queen
PLACE OF
HEARING:
Calgary, Alberta
DATE OF
HEARING:
September 16, 2002
REASONS FOR
ORDER
BY:
The Honourable Judge Diane Campbell
DATE OF
ORDER:
October 25, 2002
APPEARANCES:
Counsel for
the Appellant: Jehad Haymour and
Denny Kwan
Counsel for
the
Respondent:
Bonnie F. Moon
COUNSEL OF
RECORD:
For the
Appellant:
Name:
Jehad Haymour
Firm:
Fraser Milner
Calgary, Alberta
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-1209(IT)G
BETWEEN:
GRAHAM
CONSTRUCTION & ENGINEERING (1985) LTD.,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Motion heard
on September 16, 2002, at Calgary, Alberta, by
the
Honourable Judge Diane Campbell
Appearances
Counsel for
the
Appellant:
Jehad Haymour and
Denny
Kwan
Counsel for
the
Respondent:
Bonnie F. Moon
ORDER
The
Appellant's motion is dismissed in accordance with the attached Reasons for Order and
the matter left to a determination by the presiding Judge should
the Appellant renew the motion at the hearing. The cost of this motion shall be costs in the
cause.
Signed at
Ottawa, Canada, this 25th day of October 2002.
J.T.C.C.
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