Southey J, [Orally]:—This is an application by Mutual Life under section 232 of the Income Tax Act for orders respecting a number of documents seized and placed in the custody of the Deputy Sheriff of the judicial district of Waterloo in accordance with that section of the Income Tax Act. In addition, the application relates to one further document which was described as a letter from Lang, Michener, Cranston, Farquharson & Wright to Mr R Thorlacious of the Mutual Life Assurance Company as to which Mutual Life also claims privilege and which the parties have requested me to consider and rule on. The applicant and the Attorney General of Canada submitted an agreed statement of facts, and the schedule to that agreement lists 39 documents. Numbers I to 38 are documents originally contained in a file entitled “Shipp Centre at Bloor and Islington (mortgage between Shipp Corporation and Mutual Life)” and the final document is one from another file.
The main argument on the motion related to documents 24 and 32 in the schedule to the agreed statement of facts. Document 24 is a photocopy of a letter from Lang, Michener to Mutual Life marked to the attention of J Stanley Steele, who was Assistant General Counsel of Mutual Life, enclosing a statement of account of Lang, Michener consisting of 3 and l/3 foolscap length pages. The first page bears the account letterhead of Lang, Michener. The document ends with the phrase so familiar to lawyers — “This is our account. Toronto August 7, 1979.”, followed by the firm name and the signature of a partner at Lang, Michener.
The statement of account contains no legal advice itself, but refers to professional services rendered by a number of lawyers associated with Lang, Michener in advising Mutual Life about the project in question, namely, the Shipp Centre at Bloor and Islington in Toronto. The services referred to include those of articling students and title searchers in connection with searching the title to the property, consideration given by lawyers to the zoning by-laws, a site control agreement, a site plan agreement and a lease, consideration given to income tax aspects, and work done in negotiating the transaction and settling the documents with the solicitors for other interested parties. The account includes a statement of the number of hours worked on this matter by a number of different lawyers at Lang, Michener and the hours charged to the matter by articling students, title searchers and corporate clerks. Finally, the statement contains an itemized list of the disbursements made by the law firm.
The question before me is whether this document is one to which the solicitorclient privilege attaches under paragraph 232(1 )(e) of the Income Tax Act. That subsection defines solicitor-client privilege as follows:
(e) “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.
Were it not for the concluding exception in the definition, I would have no difficulty in deciding that a statement of account like document 24 is ordinarily a document to which the solicitor-client privilege attaches. In a recently decided case Re Ontario Securities Commission and Greymac Credit Corporation, [1983] 41 OR (2d) 328, I had occasion to state the general scope of the solicitor-client privilege and used that adopted from Wigmore on Evidence by the Supreme Court of Canada in a recent case:
Where legal advice of any kind is sought from a professional legal advisor in his capacity as such the communications relating to that purpose made in confidence by the client are at his instance permanently protected from disclosure by himself or by the legal advisor except the protection be waived.
The privilege attaches not only to communications made by the client but obviously to communications made by the solicitor to the client as well and generally speaking covers all communications relating to the obtaining of legal advice. That general rule in my view would cover a statement of account. The interesting question raised by Mr Templeton on behalf of the Attorney General of Canada is whether a statement of account constitutes “an accounting record of a lawyer, including any supporting voucher or cheque”.
In my view, this statement of account which was seized in the files of the client cannot be described as an accounting record of a lawyer (the lawyer in this case being Lang, Michener) nor is it a supporting voucher or cheque. This document could be regarded as a supporting voucher for the accounting records of Mutual Life, but I do not think that documents sent out by the lawyers which would not ordinarily be returned to them can be regarded as part of the accounting records of the lawyer. Those records, in my view, would ordinarily be the ledgers of the law firm and its other books of accounts together with the documents preserved in the files of the lawyer which support those entries. In my judgment, document 24 does not fall within the exception contained in the definition and I rule that it is subject to the solicitor-client privilege and should be returned to Mutual Life.
The next document is document number 32. It is a copy of a memorandum prepared by a solicitor at McMillan, Binch, the solicitors for another party interested in the Shipp Centre project, and addressed to an officer or representative of that other client, a Mr Stuart Smith. It will be seen that McMillan, Binch and the lawyer with that firm who prepared the document were not solicitors for Mutual Life and the memorandum in question was prepared for and initially sent to McMillan, Binch’s client which was not Mutual Life. The memorandum, it appears from the evidence, was copied by the person receiving it from the author and the copy was sent to Mutual Life (it is believed to Mr Derksen). The document was then seized from a file in the legal department and has written on it several notes believed to be in the handwriting of Mr Derksen commenting in the margin on the advice given by the author of the memorandum.
Mr Steele, the solicitor at Mutual Life, who was primarily concerned with this matter could not specifically remember whether this memorandum had been sent to him for his legal advice, but he assumed from the fact that it was in his file that it had in fact been sent to him by someone at Mutual Life for that purpose. The document is said to outline the tax considerations discussed by the author with the person to whom it is addressed regarding the development of the project and contains a great deal of advice respecting the tax aspects of the project. The nature of the document is such that I have no hesitation in concluding that Mr Steele’s assumption as to the reason why the document was sent to him must, almost certainly, be correct. It seems highly likely that the reason why a senior employee of Mutual Life would send this memorandum to Mr Steele in the legal department would be to obtain his advice on it. The handwritten comments, if written by Mr Derksen as is believed to be the case, are part of what the legal department was asked to give its advice about and the privilege extends to them as well as to the memorandum itself. I therefore order that it too be returned to Mutual Life.
There were two other documents that were dealt with separately, items 34 and 37, and Mr Templeton on behalf of the Attorney General, requested me to examine the documents and see whether the description contained in the schedule to the agreed statement of fact was an accurate one. Item 34 is described as “Photocopy of memorandum from Claude Gingras, General Counsel to M R Reynolds, Investment Executive, both of the Mutual Life Assurance Company of Canada, dated May 15, 1978”. It is a short one-page document entitled “Re Bloor-Islington Project” and contains recommendations by Mr Gingras as to leasing arrangements and ownership of the project that would be most favourable to Mutual Life from a tax standpoint. It clearly is a memorandum containing legal advice and is one that the solicitor-client privilege clearly attaches to and I order that it be returned to Mutual Life.
Document number 37 is described as “Handwritten file memorandum by Paula Fecteau, Assistant General Counsel of The Mutual Life Assurance Company of Canada, dated July 29, 1980”. The document is very short and relates to the whereabouts of documents involved in the project and the responsibility of participants to provide a copy of one of those to Mr Farquharson of Lang, Michener for his comments. The document does not contain any legal advice itself, but clearly relates to the giving of legal advice by the firm of outside solicitors, Lang, Michener retained by Mutual Life in this matter. In my view, it too is subject to the solicitor-client privilege and ought to be returned to Mutual Life.
The additional document not included in the schedule to the agreed statement of facts is a letter from Lang, Michener to Mr Thorlacious of Mutual Life dated February 12, 1980 enclosing a document headed “Professional Communication . . .” and which is described in the letter as being the professional communication of Lang, Michener and a firm of chartered accountants. The memorandum relates to the venture with Shipp Corporation Limited and contains advice as to the effect of various arrangements with respect to the project on the tax liability of the participants. The memorandum appears to me to be full of legal advice respecting the tax liability of participants in the project. It is common knowledge that chartered accountants and lawyers frequently must work together in advising clients as to the effect on particular projects of the extremely complex provisions of our Income Tax Act. It is impossible for me to tell in reading the memorandum what portion of it is attributable to the chartered accountants and what portion is attributable to the solicitors.
I am satisfied, however, that the solicitors by sending the memorandum with the covering letter have accepted responsibility for the very considerable amount of legal advice contained in it. For that reason, and because it appears from a quick reading that all the advice could be described as legal in that it involves advice as to the impact of the income tax laws, I think that Lang, Michener is responsible for the entire document even though it acknowledges the input of a firm of chartered accountants. It appears to me to be clearly a communication that is protected by the solicitor-client privilege referred to in section 232.
As to the remaining documents referred to in the schedule, a number of them had been the subject of agreement between counsel before the matter came on this morning and the agreement was that those documents were privileged. As to the ones not covered by the agreement of counsel, counsel for the Deputy Attorney General asked me to verify by my inspection of the documents the accuracy of the descriptions of them contained in the schedule to the agreed statement of fact. Apart from certain minor errors in the description of number 18 and number 36 which were the subject of discussion in court and were found to be not of any material significance, the documents are accurately described in the schedule to the agreed statement of fact and I go on to say that they clearly contain legal advice or refer to the giving of legal advice in connection with this project. Mr Templeton stated that if the descriptions were accurate then the Deputy Attorney General did not dispute that the documents should be returned to Mutual Life.
In the result, therefore, all the documents that were handed to me by the Deputy Sheriff of the Judicial District of Waterloo should be returned to Mutual Life. Mr Waterman has pointed out that under the provisions of section 232 of the Income Tax Act, the procedure to be followed is for the custodian, that is the Deputy Sheriff to deliver the documents to the lawyer, who, in this case, is Paula Fecteau, and accordingly I shall return the envelope with the documents to the Deputy Sheriff so that she may seal them and to return them to Paula Fecteau.