Dixon v. Deputy Attorney General of Canada, 91 DTC 5584 (Ont HCJ.)

Documents which related to an alleged scheme involving the sale of land at a substantial undervalue by a corporation to another corporation in which its president had a beneficial interest, or which were exchanged in the course of furthering that scheme, were divested of solicitor/client privilege by reason of their relevance to the alleged fraud. Most documents which lost their privilege on this basis related to the closing of the transaction of purchase and sale. Documents which emerged once the Department's challenge was disclosed and which were created or exchanged for the purpose of advising the clients as to their rights, obligations, liabilities and defences, did not lose their privilege. In finding that a statement of account was privileged, Henry J. stated (p. 5594) that "if one looks at the document as a form of report to the client of what the solicitor has done, which it is, it becomes self-evident that it must be a privileged communication".

An alleged transaction in which a corporation sold land at a substantial undervalue to another corporation in which its president ("Dixon") had a beneficial interest was found to be a non-arm's length transaction given that the president "was the guiding mind, common to both vendor and purchaser, he had de facto control over both, and this gave to the vendor and purchaser a common purpose which must be imputed to both corporations" (p. 5590).

An allegation of the Crown that a corporation had knowingly sold land at a substantial undervalue to a corporation half-owned by its president, if established would indicate the conferral of a benefit under s. 56(2) on the president because a direct payment of the benefit to him would have been included in his income under s. 6(1)(a).