Tyrwhitt-Drake, J.:—The petitioners, partners in the firm of solicitors Cox Taylor Bryant, have applied under subsection 232(4) of the Income Tax Act for an order determining the question of whether or not the firm’s trust account ledger in respect of a client’s moneys in their hands is a privileged document which, and the contents of which, the firm may not reveal to third parties without the consent of the client.
The ambit of solicitor-client privilege, so far as this application is concerned, is defined and limited in the Income Tax Act, paragraph 232(1)(e) in this way:
“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 written communication as 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.
The resolution of the question posed depends entirely upon whether or not the petitioners’ trust account ledger is "an accounting record of a lawyer" and so not a privileged communication between solicitor and client.
Many authorities which bear upon this point were cited, such as He/man et al. v. M.N.R., [1970] C.T.C. 586; 70 D.T.C. 6355, but the case most apposite, relied upon by both sides here, is Re Romeo's Place Victoria Ltd. et al. v. The Queen, [1981] C.T.C. 380; 128 D.L.R. (2d) 279, where the very same section of the Income Tax Act now under scrutiny was analyzed by Collier, J. in the Federal Court. That learned judge had this to say (p. 388; D.L.R. 289):
A solicitor’s trust account record of a client's transactions is, in ordinary circumstances, fraud absent, privileged. It is not a record required, by the Income Tax Act, to be kept by lawyers.
Nevertheless, it is my view the particular trust account records in this case are excluded from the normal solicitor-client privilege: this by the specific exception in paragraph 232(1)(e):
(e) . . . 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.
Trust account records are, undoubtedly, accounting records of a lawyer. [My emphasis.]
Thereafter he proceeds to distinguish earlier cases, such as Helman, which dealt with privilege where the affairs of lawyers themselves were under investigation; and where the statute at that time referred to "any books or records are, or should be kept pursuant to this Act"; since trust account records were not required to be kept by the Income Tax Act, their prima facie privileged quality was not affected by it. Collier, J. went on to point out that the words "pursuant to this Act" do not appear in the current statute (subs. 231(1)). Having referred again to the fact that in these cases it was the lawyer's own business which was under investigation, he continued:
That is not the question here. The tax affairs of the clients, not their solicitor, are being investigated. The clients are, in reality, claiming the privilege. But the statute specifically provides the solicitor's trust account records of those clients are not privileged. In that aspect, as distinguished from the He/man case, the legislators have, in my view, clearly done away with the normal solicitor-client privilege.
Since I am unable to agree with the statement that "trust account records are, undoubtedly, accounting records of a lawyer" and its corollary "the statute specifically provides the solicitor's trust account records of those clients are not privileged", I am faced with the disagreeable duty of saying so, and differing, with sincerely expressed respect, from the opinion of so learned and experienced a judge as Collier, J.
In In re Hansard Spruce Mills Ltd. (in Bankruptcy) (1954), 13 W.W.R. (N.S.) 285 Wilson, J., after discussing the matter of stare decisis and referring to the recently decided case of Bell v. Klein et al. (1954), 12 W.W.R. (N.S.) 255 in the Court of Appeal, said (p. 286):
.. . I Will only go against a judgment of another judge of this Court if:
(a) subsequent decisions have affected the validity of the impugned judgment;
(b) it is demonstrated that some binding authority in case law or some relevant statute was not considered;
(c) the judgment was unconsidered, a nisi prius judgment given in circumstances familiar to all trial judges, where the exigencies of the trial require an immediate decision without opportunity to fully consult authority.
If none of these situations exist I think a trial judge should follow the decisions of his brother judges.
While we are not members of the same court, Collier, J]. and I exercise coordinate jurisdiction in matters of the sort before me, so I consider the observations of Wilson, J. set out above to be applicable here.
I believe that item (c) of Wilson, J.'s criteria governs the situation in which I find myself. The finding of Collier, J. that a lawyer's trust account records are "records of a lawyer" within the meaning of paragraph 232(1)(e) of the Income Tax Act is a bald statement indeed. No authority is given for it: and there is nothing in his judgment to indicate that he heard argument on the point as I have done. I pause here to decry, in strong terms, the pestilential habit of the law reporters of this day which moves them to omit any note of the arguments addressed to the judge whose judgment they record. Such is, to my mind, a serious omission, particularly in such cases as this where I have had the benefit of extensive argument to the effect that I ought not to follow the baldly expressed opinion of Collier, J.
Had that learned judge had the benefit of the argument of Mr. Pitfield in the Romeo's case, I cannot see how he could have expressed the opinion he did without explaining the process at which he arrived at it. So I have to conclude that his opinion was “unconsidered, a nisi prius judgment given in circumstances . . . where the exigencies of the trial require an immediate decision without opportunity to fully consult authority".
Mr. Pitfield argued that while trust account records (which every lawyer is required to keep by the Law Society as well as by law, prudence and common sense) are indeed “accounting records of a lawyer”, they are much more than that. I agree. They are in reality the accounting records of the lawyer's client. To say that such records are simply lawyers' records without more, is analogous to saying that possessory and proprietary rights in the law of property are the same. A lawyer's trust accounts, like the accounts of any trustee, record the incomings and outgoings of his clients money: it is the client's account which he records.
To say that the record of a client’s trust account is that of the lawyer who keeps it is to say, in the final analysis, that such records belong to the clerk who keeps the lawyer's books. The recording of someone else's transactions, whether by a trustee for his cestui que trust, a bookkeeper for his employer or a lawyer for his client is an act purely ministerial. The recorder has no interest, other than those of accuracy and confidentiality, in the content of such records. In my opinion Mr. Pitfield's argument is unanswerable: a lawyer's record of his client’s trust account is privileged, and only express legislation can take that privilege away.
The matter here is governed, there being no legal proceedings afoot, by the rule of the common law, a substantive rule rather than a rule of evidence, stated by Dickson, J. in Solosky v. The Queen, [1980] 1 S.C.R. 821; 105 D.L.R. (3d) 745 in this way at page 839 (D.L.R. 760):
One may depart from the current concept of privilege and approach the case on the broad basis that . . . the right to communicate in confidence with one's legal adviser is a fundamental civil and legal right, founded upon the unique relationship of solicitor and client. . . .
This rule was stated with greater elaboration by Lamer, J. in Descoteaux v. Mierzwinski and A.G. Quebec, [1982] 1 S.C.R. 860; 141 D.L.R. (3d) 590. Lamer, J. referred to Solosky and went on to formulate a working rule thus:
1. The confidentiality of communications between solicitor and client may be raised in any circumstances where such communications are likely to be disclosed without the client’s consent.
2. Unless the law provides otherwise, when and to the extent that the legitimate exercise of a right would interfere with another person's right to have his communications with his lawyer kept confidential, the resulting conflict should be resolved in favour of protecting the confidentiality.
3. When the law gives someone the authority to do something which, in the circumstances of the case, might interfere with that confidentiality, the decision to do so and the choice of means of exercising that authority should be determined with a view to not interfering with it except to the extent absolutely necessary in order to achieve the ends sought by the enabling legislation.
4. Acts providing otherwise in situations under para. 2 and enabling legislation referred to in para. 3 must be interpreted restrictively.
Applying this formula to paragraph 232(1)(e) of the Income Tax Act, the phrase "accounting records of a lawyer" comes to mean, when interpreted restrictively, exactly what it says: the accounting records of a lawyer relating only to his own business.
Mr. Pitfield made a further submission of a rather technical nature, but when one looks at the statute with a restrictive eye — and indeed, apart from the rule enunciated in Descoteaux, all taxing statutes are required to be interpreted strictly — it has merit. Referring to the definition of "lawyer" in paragraph 232(1)(c) of the Income Tax Act, as “a barrister or solicitor" in the singular, he argues that this definition cannot be said to include a partnership firm such as that of the petitioners here; this firm is a collective of individuals, and its books of account are those of the firm and not of any single lawyer who is a partner therein. Strictly speaking, the firm’s accounting records, are not the accounting records of "a" lawyer.
In my judgment then, the petition succeeds because the accounting records demanded are the records of the client rather than those of the solicitor and so privileged. If I am wrong in this, then they are not in any event caught by the statute because they are the records of a partnership of lawyers and not those of "a" lawyer.
In accordance with paragraph 232(a), there will be no order as to costs.
Petition allowed.