In the Matter of the Bankruptcy of Kaiser, of the City of Toronto, in the Province of Ontario [Indexed as: Kaiser (Re)]
113 O.R. (3d) 308
2012 ONCA 838
Court of Appeal for Ontario,
Goudge, Feldman and Blair JJ.A.
November 29, 2012
Professions -- Barristers and solicitors -- Solicitor-client privilege -- Motion judge granting motion by trustee in bankruptcy for order for disclosure of identity of person paying bankrupt's legal fees in bankruptcy proceedings -- Bankrupt's appeal allowed -- Identity of person paying party's legal fees presumptively privileged -- Presumption being rebuttable by evidence showing that there is no reasonable possibility that disclosure will lead to revelation of confidential solicitor-client communications or that requested information is not linked to merits of case and its disclosure would not prejudice client -- Motion judge erring in finding that presumption had been rebutted.
K was a bankrupt. His trustee in bankruptcy suspected that he was hiding assets and using B as a straw man to do so. Accordingly, the trustee applied for the appointment of a receiver over the property of B and his company on the basis that the property belonged to K and therefore to the trustee. A member of the law firm that represented the trustee had in the past represented numerous litigants in proceedings against or involving K. When the trustee sought to examine K pursuant to s. 163(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, K brought a motion to have the law firm removed as solicitor for the trustee (the "removal motion"). The removal motion was dismissed, and K was ordered to pay costs to the trustee. Those costs were not paid. The trustee moved for an order compelling K and his lawyer to disclose the identity of the person paying K's lawyer's legal fees for the removal motion. K opposed that motion on the basis that the information sought was permanently protected by solicitor-client privilege. The motion judge granted the motion. K appealed.
Held, the appeal should be allowed.
Administrative information relating to the solicitor-client relationship -- including the identity of the person paying the lawyer's bills -- is presumptively privileged. The presumption may be rebutted by evidence showing (a) that there is no reasonable possibility that disclosure of the requested information will lead, directly or indirectly, to the revelation of confidential solicitor-client communications; or (b) that the requested information is not linked to the merits of the case and its disclosure would not prejudice the client. The motion judge took too narrow a view both of the potential prejudice and the impact of disclosure on K's right to confidentiality. K's lawyer was not simply retained for the removal motion; rather, he was retained to represent K in the bankruptcy proceedings generally, and in those proceedings, the real dispute was about whether K was hiding assets from the trustee through the use of a straw man. The identity of the person paying K's legal fees on the removal motion was not merely tangential information. It impacted directly on the merits of the overall dispute and its revelation might well be prejudicial to K in that overall context. Moreover, disclosure of the source of K's lawyer's fees would reveal confidential communications between the lawyer and his client. The information was provided in the context of the lawyer's need to know how his fees would be paid in order to decide whether to act. It was