Campbell, J.:
The Issue
This case involves the law and procedure to be followed when a plaintiff, ordered to produce his income tax returns on discovery, seeks to withhold some of his tax information.
The Facts
The respondent, the president and sole shareholder of a wholesale car trading company, claims damages from a motor vehicle accident which occurred in August of 1985. In his statement of claim he avers that "he has lost and will lose time from his work, his earning power and ability to work have been and will be impaired and his enjoyment of life has been and will be lessened".
On discovery his counsel agreed to provide a calculation of his loss of income and to let the defendants’ accountants look at it and the data on which it is based. He agreed to provide all records relating to income and expenses upon which the tax returns for the previous five years were based, but declined to produce the tax returns themselves.
The defendants moved before the Master to compel production of the returns. The learned Master ordered the returns to be produced, but ordered that the plaintiff "may block out all matters set out in the income tax returns that are not related to the issue of loss of income".
The plaintiff produced copies of his personal income tax returns for 1980 to 1985 inclusive. A great deal of information is blocked out of the copies. The total income for each year is blocked out, as is information relating to interest income, allowable business investment losses, other deductions, capital losses, and all information relating to investment income. For each year except 1980 the business and professional income, or lack thereof, is fully disclosed.
The Principles of Compelling Production of Tax Returns
The plaintiff asks that the defendant pay him for his income loss, and is therefore obliged to prove his income loss and produce and submit for examination the evidence upon which he avers it. Although he has satisfied part of that requirement by offering the records on which the income tax returns are based, the returns themselves are cogent evidence of income and there is no reason the defendant should be deprived of that means of testing the financial allegations of the plaintiff.
The principles were set out by Southey, J. in Janhevich v. Thomas (1977), 15 O.R. (2d) 765. Personal income tax returns are compellable on discovery but only to the extent they are relevant to matters in issue.
The Substance of the Order
The substance of the order below is consistent with the principle in Janhevich because it aims at the disclosure of relevant information and the withholding of irrelevant information. To that extent the order is unassailable.
The Practicalities of Compelling Production of Tax Returns
In leaving it entirely up to the plaintiff to decide what to reveal and what not to reveal, the learned Master placed a great deal of confidence in the plaintiff's judgment as to what was relevant and what was not relevant, to the extent that he delegated that function to the plaintiff. While it may be appropriate in some cases to give the plaintiff an initial opportunity to tender the information he says is relevant while withholding the rest, the determination of relevance is for the court and cannot be delegated to either party.
I reject the appellant's submission that the Master has no jurisdiction to determine what is relevant and what is not relevant. In deciding whether or not to compel the answer to any question on discovery or whether to compel production of all or part of any document, a Master must necessarily determine what is relevant and what is not.
While the parties should be encouraged in the first instance to sort out as much as possible between themselves the precise and detailed ambit of disclosure, there must, failing agreement, be some recourse to the court making the order. To that extent the learned Master erred, in my respectful opinion, in failing either to specify precisely what information should be disclosed or alternatively to retain jurisdiction to rule on any matter upon which the parties could not agree.
The 1980 Returns
In this case the plaintiff has suppressed his business and professional income for 1980 while disclosing his dividend income from taxable Canadian corporations. The business and professional income is obviously relevant to a claim for loss of earned income, while the dividend income is not so clearly relevant.
The plaintiff has obviously proceeded on wrong principles and now agrees that the 1980 business and professional income should be disclosed. The appeal is allowed to the extent that it is ordered that the plaintiff produce a copy of his 1980 tax return without any deletions in relation to business and professional income.
The Other Information
It is not so clear that all of the other personal tax information is relevant. The plaintiff makes no claim for loss of ability to manage his investments, but claims only for loss of his "time from work, his earning power and ability to work . . .”. The defendant says that he thus put into issue every detail of his financial position; that a large investment income would be relevant because it would reduce his motivation to return to work as soon as he was able. The plaintiff says that he has put in issue only his work income, that not having made any claim that touches on his investment or disposition or other income he is not compellable to disclose it.
On the issue pleaded I cannot see how the plaintiff's income, other than his income from his work, has any relevance. The only income pleaded is the income from his work and therefore it is the only income that is relevant to the issues pleaded.
Conclusion
Although I think the learned Master erred in leaving it completely up to the plaintiff to decide what to delete, an examination of the returns produced by the plaintiff show that the deleted information is not relevant to the issues as pleaded.
The appeal is dismissed except to the extent that the 1980 business and professional income figure must be produced.
Costs in the cause.
Appeal allowed in part.