A-283-77
William Bernard Herman, City Parking Canada
Limited, The William Bernard Herman Trust,
Musketeers Investments Limited, S.A., Columbus
Holdings Limited, Columbus Development Corpo
ration Limited, Dumas Investments Limited, S.A.,
and City Parking Holdings Limited (Applicants)
v.
Deputy Attorney General of Canada (Respondent)
Court of Appeal, Jackett C.J., MacKay and Kelly
D.JJ.—Toronto, November 10, 1977.
Practice — Application to add documents to case, with
proviso that they be available only to Court for examination
— Documents subject to solicitor-client privilege — Applica
tion made during course of section 28 application to review
order re disposal of these documents — Income Tax Act, S.C.
1970-71-72, c. 63, s. 232 — Federal Court Rule 1402.
This interlocutory application is made in the course of a
section 28 application seeking a review of an order of the
Ontario Supreme Court, made pursuant to section 232 of the
Income Tax Act, for the return of documents to which the
solicitor-client privilege attached. It is to be treated as an
application for an order (a) adding the documents in question
to the case as constituted by Rule 1402(1) and (b) requiring
that such documents be placed in the Court in some manner
whereby they would not be available for examination except by
the Court.
Held, the application is dismissed. Assuming that the Court's
jurisdiction under section 28 extends to reviewing the decision
or order of a judge under section 232 of the Income Tax Act as
to whether a particular document is subject to solicitor-client
privilege, such jurisdiction should not be exercised in respect of
an entirely academic matter any more than an Appeal Court's
jurisdiction to hear an appeal should be exercised once the
order or decision attacked ceases to have any practical effect. If
the Court cannot review the order under section 232, there is no
point in adding the documents to the case as constituted by
Rule 1402(1).
Deputy Attorney General of Canada v. Brown [1965]
S.C.R. 84, applied.
APPLICATION.
COUNSEL:
J. M. Clow for applicants.
J. S. Gill for respondent.
SOLICITORS:
Goodman & Carr, Toronto, for applicants.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for judgment
delivered orally in English by
JACKETT C.J.: This is an interlocutory applica
tion made in the course of a section 28 application.
It is expedient to outline the proceedings preceding
the interlocutory application before attempting to
indicate the substance of it.
Section 232 of the Income Tax Act, S.C. 1970-
71-72, c. 63' provides, inter alla, a procedure for
resolving a claim of solicitor-client privilege in
respect of documents seized under that Act, which
' The following are the relevant portions of section 232:
232....
(4) Where a document has been seized and placed in
custody under subsection (3), the client, or the lawyer on
behalf of the client, may
(a) within 14 days from the day the document was so
placed in custody, apply, upon 3 days' notice of motion to
the Deputy Attorney General of Canada, to a judge for an
order
(i) fixing a day (not later than 21 days after the date of
the order) and place for the determination of the ques
tion whether the client has a solicitor-client privilege in
respect of the document, and
(ii) requiring the custodian to produce the document to
the judge at that time and place;
(b) serve a copy of the order on the Deputy Attorney
General of Canada and the custodian within 6 days of the
day on which it was made, and, within the same time, pay
to the custodian the estimated expenses of transporting the
document to and from the place of hearing and of safe
guarding it; and
(c) if he has proceeded as authorized by paragraph (b),
apply, at the appointed time and place, for an order
determining the question.
(5) An application under paragraph (4)(c) shall be heard
in camera, and on the application
(a) the judge may, if he considers it necesary to determine
the question, inspect the document and, if he does so, he
shall ensure that it is repackaged and resealed; and
(b) the judge shall decide the matter summarily and,
(i) if he is of opinion that the client has a solicitor-client
privilege in respect of the document, shall order the
custodian to deliver the document to the lawyer, and
procedure is designed to protect the privilege in
cases where the dispute is resolved in favour of it.
That procedure may be summarized as follows:
(1) where a solicitor-client privilege is claimed
in respect of a document about to be examined
or seized while in possession of a lawyer, the
document is to be sealed up and put in the
custody of the appropriate sheriff or other cus
todian (section 232(3));
(2) the client or the lawyer may apply to a
judge of a superior court in a manner prescribed
by the statute for an order determining the
validity of the claim (section 232(4));
(ii) if he is of opinion that the client does not have a
solicitor-client privilege in respect of the document, shall
order the custodian to deliver the document to the
officer or some other person designated by the Deputy
Minister of National Revenue for Taxation,
and he shall, at the same time, deliver concise reasons in
which he shall describe the nature of the document without
divulging the details thereof.
(6) Where a document has been seized and placed in
custody under subsection (3) and a judge, on the application
of the Attorney General of Canada, is satisfied that neither
the client nor the lawyer has made an application under
paragraph (4)(a), or, having made that application, neither
the client nor the lawyer has made an application under
paragraph (c) thereof, he shall order the custodian to deliver
the document to the officer or some other person designated
by the Deputy Minister of National Revenue for Taxation.
(7) The custodian shall
(a) deliver the document to the lawyer
(i) in accordance with a consent executed by the officer
or by or on behalf of the Deputy Attorney General of
Canada or the Deputy Minister of National Revenue for
Taxation, or
(ii) in accordance with an order of a judge under this
section; or
(b) deliver the document to the officer or some other
person designated by the Deputy Minister of National
Revenue for Taxation
(i) in accordance with a consent executed by the lawyer
or the client, or
(ii) in accordance with an order of a judge under this
section.
(8) Where the judge to whom an application has been
made under this section for any reason cannot act or contin
ue to act under this section, subsequent applications under
this section may be made to another judge.
(Continued on next page)
(3) after a hearing in camera, during which "if
he considers it necessary to determine the ques
tion" he may inspect the document (and, if he
does so, must ensure that it is "resealed"), the
judge is to decide the matter "summarily", and
(a) if he decides in favour of the privilege,
"order the custodian to deliver the document
to the lawyer", and
(b) otherwise, "order the custodian to deliver
the document" to the Department (section
232(5)).
There is a statutory duty on the custodian either
(a) to deliver the document to the lawyer
(Continued from previous page)
(9) No costs may be awarded upon the disposition of any
application under this section.
(10) Where any question arises as to the course to be
followed in connection with anything done or being done
under this section (other than subsection (2) or (3)) and
there is no direction in this section with respect thereto, a
judge may give such direction with regard thereto as, in his
opinion, is most likely to carry out the object of this section
of allowing solicitor-client privilege for proper purposes.
(11) The custodian shall not deliver a document to any
person except in accordance with an order of a judge or a
consent under this section or except to any officer or servant
of the custodian for the purposes of safeguarding the
document.
(12) No officer shall examine or seize a document in the
possession of a lawyer without giving him a reasonable
opportunity of making a claim under subsection (3).
(13) At any time while a document is in the custody of a
custodian under this section, a judge may, upon an ex parte
application of the lawyer, authorize the lawyer to examine or
make a copy of the document in the presence of the custodi
an or the judge by an order that shall contain such provisions
as may be necessary to ensure that the document is repack
aged and that the package is resealed without alteration or
damage.
(14) Where a lawyer has, for the purpose of subsection
(2) or (3), made a claim that a named client of his has a
solicitor-client privilege in respect of information or a docu
ment, he shall at the same time communicate to the Minister
or some person duly authorized to act for the Minister the
address of the client last known to him so that the Minister
may endeavour to advise the client of the claim of privilege
that has been made on his behalf and may thereby afford
him an opportunity, if it is practicable within the time
limited by this section, of waiving the claim of privilege
before the matter comes on to be decided by a judge or other
tribunal.
(i) in accordance with a consent by or on
behalf of the Department, or
(ii) in accordance with an order of the judge
made under section 232, or
(b) to deliver it to the Department
(i) in accordance with a consent from the
lawyer or client, or
(ii) in accordance with an order of the judge
made under section 232 (section 232(7)),
and to no one else (section 232(11)).
In accordance with this procedure, on April 21,
1977, Madam Justice Boland of the Supreme
Court of Ontario, on application of the applicants,
made an order inter alia that the Sheriff of the
County of York deliver certain specified docu
ments to Goodman and Carr, Barristers and
Solicitors, of Toronto, and that he deliver certain
other specified documents to an officer of the
Department of National Revenue (Taxation).
(The order further provided that such docu
ments "not be delivered by the Sheriff `until' an
Appeal or Application for Leave to Appeal from,
or for judicial review of, this Order, if any, be
disposed of" provided such appeal or application
be filed with the appropriate court within 10 days.
Having regard to the scheme of section 232, I do
not think that this order that the documents "not
be delivered" until some time in the future is
authorized by section 232, subsection (5)(b) of
which, in my view, contemplates not only that the
matter be decided "summarily" but that there be
an unconditional order "to deliver". Section
232(10) does not, in my view, authorize what is, in
effect, a suspension of the section 232(5) order. It
follows that the continued custody of the Sheriff in
this case is of the same character as was the
custody of the Sheriff in The Deputy Attorney
General of Canada v. Brown 2 to which reference
will be made later in these reasons.)
On April 28, 1977, the applicants filed a section
28 application for an order setting aside that part
of the aforesaid order in which Madam Justice
2 [1965] S.C.R. 84.
Boland "decided that certain documents seized by
the Department of National Revenue from the
applicants' solicitors were not privileged".
A copy of documents filed in connection with
the matter before Madam Justice Boland, under
cover of a certificate dated May 3, 1977, and
accompanied by a statement to the effect, inter
alia, that the documents referred to in her order
"were never in the possession or' the office of the
Supreme Court of Ontario, was received in the
Registry of this Court pursuant to Rule 1402. 3
3 Rule 1402 reads, in part, as follows:
Rule 1402. (1) A section 28 application shall be decided
upon a case that shall consist, subject to paragraph (2), of
(a) the order or decision that is the subject of the applica
tion and any reasons given therefor,
(b) all papers relevant to the matter that are in the
possession or control of the tribunal,
(c) a transcript of any verbal testimony given during the
hearing, if any, giving rise to the order or decision that is
the subject of the application,
(d) any affidavits, documentary exhibits or other docu
ments filed during any such hearing, and
(e) any physical exhibits filed during any such hearing.
(2) Within 10 days of filing the section 28 originating
notice, in the case of the applicant, and within 10 days of
being served with that originating notice, in the case of any
other person, an application in writing, made in accordance
with Rule 324, may be made to vary the contents of the case
as fixed by paragraph (1).
(3) Unless the Court otherwise directs, of its own motion
or upon the application of an interested person, the Deputy
Attorney General of Canada or counsel specially appointed
to apply on behalf of the tribunal, the tribunal shall, forth
with after receipt of the section 28 originating notice, either
(a) send to the Registry of the Court all the material in the
case as defined by paragraph (1), or, if some part thereof
is not in its possession or control, the part thereof that is in
its possession or control, the part thereof that is in its
possession or control together with a statement of the part
of the case not in its possession or control, or
(b) prepare copies of the material referred to in subpara-
graph (a) that is in its possession or control, except the
physical exhibits, duly arranged in sets and duly certified
by an appropriate officer to be correct, and send 4 copies
of each set to the Registry of the Court together with the
physical exhibits if any and a statement of the part of the
case not in its possession or control, and send one copy of
While not originally so framed, counsel have
agreed that this interlocutory application should
be treated as a general application for directions
that would achieve the objectives sought by the
applicants. To be more specific, it is to be treated
as an application for an order
(a) adding the documents in question to the
case as constituted by Rule 1402(1), and
(b) requiring that such documents be placed
before the Court in some manner whereby they
would not be available for examination except
by the Court.
(Whether, without consent of all parties, an order
can be made for placing the documents before the
Court in such manner that they would not be
available for examination except by the Court, is,
in my view, open to argument. In certain section
28 applications, such an order is made by consent.)
However, regarding the interlocutory applica
tion as being, in effect, an application for such an
order, and assuming that the Court would have
power to make such an order, I am of opinion that
it should, nevertheless, be rejected because
(a) having regard to the reasoning of the
Supreme Court of Canada in The Deputy
Attorney General of Canada v. Brown, 4 dealing
with section 232 when it was section 126A of the
the copies and such statement to each of the interested
persons.
(6) Any order made under paragraph (2) shall contain
incidental directions varying the procedure as contained in
this Rule, if necessary in the circumstances.
4 [1965] S.C.R. 84, per Martland J. (delivering the judgment
of the Court at pages 90 et seq):
I agree with the view expressed by Lord J.A., in the Court
of Appeal, that, in cases to which the section is applicable,
Section 126A is a complete code in itself for deciding the
question of solicitor-client privilege relative to documents
of a client in the possession of a solicitor.
(Continued on next page)
Income Tax Act, it would be entirely academic
for the Court to set aside the decision or order
that is under attack, and
(b) assuming that the Court's jurisdiction under
section 28 extends to reviewing the decision or
order of a judge under section 232 of the Income
Tax Act as to whether a particular document is
subject to solicitor-client privilege, a matter con
cerning which I have doubt, such jurisdiction
should not, in my view, be exercised in respect of
an entirely academic matter any more than an
Appeal Court's jurisdiction to hear an appeal
should be exercised once the order or decision
attacked ceases to have any practical effect.
(Compare Oatway v. The Canadian Wheat
Board.) 5
If the Court cannot, on the section 28 application,
review the order under attack from the point of
(Continued from previous page)
It is, of course, clear that the privilege involved is that of
the client and not the solicitor and the application to a judge
for which the section provides may be made by the client, or
by the lawyer on his behalf.
The section contemplates a speedy determination of the
issue of the claim of privilege and thereafter a prompt
delivery of possession of the document involved, either to the
solicitor or to the officer of the Department. It seems to me
that once that has been done the whole matter has been not
only determined, but completed, and that any order which
could be made on an appeal (assuming that an appeal lies)
could not have a "direct and immediate practical effect", to
use the words of Chief Justice Duff in The King on the
Relation of Tolfree v. Clark, [1944] S.C.R. 69 at 72, 1
D.L.R. 495. The document in question would no longer be in
the hands of the custodian. If the order appealed from
directed delivery to the departmental officer, he would, by
the time the appeal was heard, have had his opportunity to
inspect the document. If the order appealed from directed
delivery to the solicitor, the Act contains no provision which
would require him, after the document has been restored to
him, to surrender it again to the departmental officer or to
the custodian.
We were advised that in the present case, following the
delivery of the documents to the solicitor, pursuant to the
order of Sullivan J., they were voluntarily returned to the
custody of the sheriff, pending an appeal, but I do not see
how such a voluntary delivery can clothe the Appellate Court
with power to make a new direction regarding their disposi
tion. They are no longer in the hands of the custodian,
pursuant to subs. (3). Furthermore, the custodian, under
subs. (7), is obligated to deliver the document only upon a
consent, or in accordance with the order of a judge under the
section.
5 [1945] S.C.R. 204.
view of the availability of solicitor-client privilege
with reference to particular documents, in my
view, it is clear that there is, except possibly in
exceptional circumstances that I do not perceive
here, no point in adding such documents to the
case as constituted by Rule 1402(1). I am, there
fore, of the view that the interlocutory application
should be dismissed.
* * *
MACKAY D.J. concurred.
* * *
KELLY D.J. concurred.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.