Matas, J.:—On June 26, 1968, the Department of National Revenue seized correspondence, memoranda, and other documents at the offices of Messrs. Sokolov & Wolinsky, solicitors. Mr. D. Sokolov claimed solicitor and client privilege on behalf of several corporate and individual clients. All the documents were placed in the custody of the Sheriff of the Eastern Judicial District. Application was made by the solicitor pursuant to Section 126A of the Income Tax Act, R.S.C. 1952, c. 148 for determination of the question whether a solicitor-client privilege exists in respect of the documents.
Three schedules were prepared:
(A) Memorandum, listing by number, all the files which had been seized.
(B) List of client companies and an explanation of positions held by writers and recipients of letters.
(C) List of documents for which privilege was claimed, keyed to the numbering in Schedule A.
Three individuals, clients of Mr. Sokolov, were in the process of purchasing shares in the capital stock of a British Columbia company. The vendor was a company having its head office in Winnipeg. After completing the purchase, the individuals transferred the shares to another company. A reorganization and amalgamation was consummated. Immediately following, certain dividends were declared by a subsidiary company to its parent.
Messrs. Sokolov & Wolinsky acted as general counsel for the companies whose names are listed on Schedule B. Cowan and Company acted as British Columbia counsel for Sokolov and Company. Farris and Company were the solicitors for the British Columbia company at the time of acquisition and continued to act for about a year thereafter. Mr. H. Bell-Irving of the firm of Douglas and Company was retained as special counsel by one of the individual clients and was consulted by Sokolov and Company. Mr. Lazarus Phillips, Q.C., of Montreal was retained as special tax counsel. Mr. D. Bellwood was employed as the staff solicitor for the British Columbia companies.
There is no suggestion that the activities of the clients were in any way fraudulent, illegal or criminal so as to void the claim for privilege. (See In re Missiaen et al., [1967] C.T.C. 579 at 581.)
Counsel for the appellant and counsel for the Department met prior to the hearing and agreed on the disposition to be made in respect of certain documents. I heard the submissions of counsel and examined the documents in respect of which agreement had not been reached.
1. (a) Letters from Cowan and Company to Sokolov and Company dated November 28, 1961, December 9, 1961, December 11, 1961, December 5, 1962.
(b) Copies of letters from Sokolov and Company to Cowan and Company dated December 5, 1961, and December 6, 1961.
These letters are contained in Files 1195 and 1195B and relate to the purchase of the shares and questions arising out of the purchase, including rights of shareholders.
The general principles applicable to the question of solicitor and client privilege were set out by Wilson, C. J. in the case of In re Kask et al., [1966] C.T.C. 659 at 660 and 661.
The relationship between solicitor and counsel is set out in 12 Halsbury’s Laws of England (3rd ed.) 44, para. 61:
61. Communications with counsel.—The privilege extends to instructions and briefs to counsel, and cases for counsel’s opinion, together with his opinion thereon, drafts and notes made by counsel, and documents settled by him; memoranda or minutes made by the client of the communications between himself and the solicitor or entries in a solicitor’s diary of similar communications.
Mr. Kroft referred to Phipson on Evidence, 10th ed. 254, para. 591, where it is stated:
The communications must have been confidentially made for the purpose of the employment, or the knowledge confidentially obtained solely in consequence of it, to be privileged.
All the documents are in respect of obtaining and giving of counsel’s opinion and are within the principles set out above. The documents are privileged.
2. Bill of costs dated January 10, 1963, (File 1195B) from Cowan and Company to Sokolov and Company. The privilege is questioned by the Department because of the exception in Section 126A(l)(e). That subsection reads:
“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.
Mr. Cantlie argued that this document is not an accounting record of Sokolov and Company. If it were paid and receipted, it would be a voucher, but in the state of an unreceipted account, it is not. Mr. Kroft contended that whether it was receipted or not it is a voucher and is part of the accounting records of Sokolov and Company. I agree with this view. The bill would eventually be paid by Sokolov and Company and the amount presumably charged to the client as a disbursement. If necessary the solicitor would produce the account from Cowan and Company to support his billing. Voucher is defined in the Oxford Universal Dictionary as : A written document or note, or other material evidence, serving to attest the correctness of accounts or monetary transactions, to prove the delivery of goods or valuables, etc.” The document is not privileged.
3. Copy of letter dated December 15, 1961, (File 1195) from Farris and Company to the British Columbia company in respect of termination and holiday pay for employees of the company. Original copy of this letter is on the file of Farris and Company. A copy was sent to Sokolov and Company who became counsel for the British Columbia company on December 13, 1961. Counsel for the Department contended that this document is not privileged. The essence of privilege is based on the relationship of solicitor and client for the purpose of getting legal advice. The document was privileged in the hands of Farris and Company. ‘‘A communication or document once privileged is always privileged.’’ The protection is not lost on change of solicitors. (Phipson ibid. 225, para. 594). This is especially so where the client continued to have both counsel act. It was important for Sokolov and Company as the new solicitors to be informed in its professional capacity of the subject matter of this letter for the purpose of general counselling to the company. The document is privileged.
4. Letter dated July 9, 1962, (File 1195A) from an individual client to Sokolov and Company. The first part of this letter contains privileged matters. Privilege is not claimed for the rest of the letter. Mr. Cantlie contends that if part of a document is privileged and part is not, the whole is privileged. (Halsbury ibid. 43, para, 59). However, this principle is applicable where there is an intermingling of privileged and non-privileged material. In this age of superlative copying methods there is no problem in blocking out the top of the letter and providing the Department with a copy of the non-privileged sections.
5. Letter dated December 19, 1962, (File 1195A) from Farris and Company to Sokolov and Company relating to corporate reorganization. A copy of the letter was sent to the comptroller of a client company. This document is privileged under the same principles as are set out in item 1. above. Sending a copy to a responsible officer of the client does not bring the matter within the category of communication to a third party so as to void the privilege.
6. Letter dated July 13, 1962, (File 1195 (1)) from an individual client to Sokolov and Company with respect to a dispute between the vendor of the shares and the purchasers. The document is within the principle expressed in Halsbury ibid. 39, para. 96.
7. Unexecuted agreement (File 1195 (17A). If the agreement had been signed and had become part of the company records it would not be a privileged document. Since it was not signed it must be inferred that the advice of the solicitor was not taken ; the document must be considered as being in the same category as a draft opinion. The document is privileged. (See In re Kask (supra) at 661).
8. File 1195 (41) consists of a series of letters and memoranda relating to a proposed plan of reorganization :
(a) Copy of a letter of April 9, 1963, from an individual client to Mr. Bellwood. The letter is privileged. It forms part of the process of obtaining advice. (Annual Practice 1966 p. 521 cited in Zn re Kask (supra) at 661.)
(b) Two memoranda, undated, prepared by Mr. Kelsey, a chartered accountant associated with the firm of Helliwell and Company. There is no definite indication of how the memoranda came into Mr. Sokolov’s possession. The court was asked to draw an inference that they accompanied document 8(a).
Ordinarily memoranda prepared by an accountant are not privileged. (See Primrose J., Missiaen et al. v. M.N.R. (supra) at 581. There may be circumstances in which such a report is a privileged document in the possession of a solicitor.
Corpus Juris Secundum, Vol. 97, p. 788, Section 276(d) summarizes the principle as follows:
Whether or not communications between an attorney and a third person are privileged depends on the circumstances of the particular case, but ordinarily such communications are not privileged, although they may relate to the client’s business.
Phipson ibid., p. 260, para. 604 gives the following example of a privileged communication :
Oral or documentary information from third persons, which has been called into existence by the client for the purpose of submission to the solicitor, either for advice or for the conduct of litigation (and whether submitted or not).
Halsbury ibid, on the other hand sets out at page 45, para. 63 that:
Communications between a party and a non-professional agent or third party are only privileged if they are made both (1) in answer to inquiries made by the party as the agent for or at the request or suggestion of his solicitor, or without any such request, but for the purpose of being laid before a solicitor or counsel for the purpose of obtaining his advice or of enabling him to prosecute or defend an action ,or prepare a brief; and for the purposes of litigation existing or in contemplation at the time. Both these conditions must be fulfilled in order that the privilege may exist.
Confining the privilege to cases involving litigation is contrary to the trend of the development of the law of privilege. C.E.D. (Ontario) 2nd ed., Vol. 7 has this to say at pp. 324 and 326 :
Professional communications between solicitor. and client of a confidential character which take place for the purpose of getting legal advice are privileged. The law as to privilege for communications between a client and his solicitor has been gradually developed. It is not now necessary, as it formerly was, for the purpose of obtaining protection, that the communications should be made either during or relating to an actual, or even to an expected litigation. It is sufficient if they pass as professional communications in a professional capacity.
And at page 326 :
Where the document has come into existence as a communication from the client himself to his solicitor, it is protected; also where the document has come to the solicitor from any kind of agent employed or instructed by the client to communicate with the solicitor; also where the solicitor has obtained the document or information on the instructions of his client for the purpose of giving advice . . .
Reverting to the memoranda in question, Mr. Cantlie submitted they were prepared by the auditors at the request of the client. They expressed the consensus of a meeting called to obtain the opinion of Mr. Phillips as tax counsel; the auditor was the agent of the client in transmitting the information to Sokolov and Company for their information and advice. The documents were considered by Mr. Sokolov. One of the memoranda contains handwritten notes made by him suggesting changes in the proposed plan. I have concluded that because these documents were called into existence for submission by the client to his solicitor for advice they are privileged.
(c) Copy of a letter from Mr. Bell-Irving to a client with copies of a schedule and plan of reorganization. Counsel for the Department contended that the plan and schedule are not privileged if the actual steps taken by the client in the corporate reorganization followed the proposed scheme. I do not agree. The final result is a matter of public record and is not privileged. However, it would not be right to permit strangers to the transaction to examine a proposed plan and compare it with the final result in order to determine if in fact there was confidentiality. If this were permitted the privilege would be illusory. The schedule and plan were prepared by the accountant as the agent of the client for submission to the solicitor for his advice. The documents are privileged.
(d) Letter dated May 2, 1963, from Douglas and Company to an individual client; copy of letter dated May 10, 1963, from Mr. Bell-Irving to Mr. Phillips; copy of letter of June 7, 1963, from Mr. Sokolov to Mr. Bell-Irving; copy of letter of July 12, 1963, from Mr. Sokolov to Douglas and Company; these are privileged documents as being within the category of communi- cations of solicitor to client, and solicitors to and from counsel for the purpose of the client’ s business and obtaining advice and opinions.
(e) loose plan of reorganization, undated, with alterations in the handwriting of Mr. D. Sokolov. This is a copy of the document enclosed with letter of April 30, 1963, from Mr. Bell-Irving to an individual client. This document is privileged under the principle expressed in 8(c) above, as well as under the principles referred to in the case of I n re Kask (supra) where reference is made at page 661 to Document No. 28.
(f) Letter of April 22, 1963, from the auditors to the client. This document is similar in form to the earlier plan of reorganization referred to under 8(b). Copies of this letter were sent to Messrs. Phillips, Bell-Irving, and Bellwood, and to Mr. Kenna an administrative officer of the British Columbia companies. The letter refers to the plan of reorganization reviewed with Mr. Phillips and the consideration of the plan by the client with Douglas and Company. Further suggestions are made for reorganization. These suggestions were volunteered by the auditors in their communication to the client. Under these circumstances I find that the letter is not a privileged document.
9. File 1195 (40A). This file is in respect of a dispute between a client and the vendor of physical assets being purchased by the client. These are a series of letters requesting advice and given advice and opinions. There are also three handwritten notes made by the solicitor, being memoranda of the relevant facts. The letters are agreed to be privileged. I find that the memoranda are privileged. Phipson, ibid. p. 257, para. 597.
10. Letters from Cowan and Company dated November 16, 1961, and November 21, 1961 (File 1195 (13) to the manager of the corporate trust department of Royal Trust; Company in respect of offers to be made to minority shareholders. In. fact, the offers were not made by the Royal Trust. Mr. Cantlie. contended that the letters are written by Cowan and Company. as agents for the client. In my opinion the documents are not privileged and do not come within the rule expressed by Jessel,
M. R. in the case of Anderson v. Bank of British Columbia (1876), 2 Ch. D. 644 at 649.
11. Copy of letter dated December 21, 1962, from Lawrence and Company, solicitors in British Columbia (File 1195 (6) to the general manager of client companies in British Columbia in respect of a union contract: Sokolov and Company received a copy for information. The letter is privileged on the same basis as the letter in item 3 above.
12. Check list for closing the sale (File 1195 (12) is a privileged document. Counsel for the Department raised the question whether a document prepared by the solicitor for his own guidance and perhaps that of a client is a privileged communication. To hold otherwise would be to defeat the purpose of the rule. Notes made by a solicitor related to the client’s business and being part. of the necessary information of the solicitor for the purpose of giving advice to the client are privileged. (See item 9 supra).
13. Copy of a letter dated September 2, 1966, from Sokolov to Kenna (File 1195 (17A). Mr. Sokolov was acting for the clients at that time. The document comes within the general category of a privileged communication.
14. Item 4, letter dated July 9th, 1962, will be photostated. The document will be returned to the solicitor and the photostatic copy will be delivered to the Department .
15. The other privileged documents will be returned to the solicitor. All the other documents seized will be delivered to the Department.