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.
|
"Diane Campbell" |
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.
|
"Diane Campbell" |
J.T.C.C.