Canadian Lawyer

LEGAL REPORT/Insolvency Law Privileged, I presume . . . Ontario's courts have confirmed presumptive privilege attaches to administrative and peripheral information, including who paid a lawyer's fee. But what if the person suspected of paying the fee was outside the solicitor-client relationship? I t all started with a simple question to a lawyer: Who is paying you? In Re Kaiser, a trustee in bankruptcy asked the question of a lawyer representing Morris Kaiser, who had declared bankruptcy more than three years ago. The trustee suspected Kaiser was shielding money from the trustee through the use of a "straw man," Cecil Bergman, and his company Bergman Capital. Milton A. Davis represented the trustee. He wanted to know if Bergman was bankrolling Kaiser's lawyer, Melvyn L. Solmon, to pursue expensive litigation in proceedings arising from the bankruptcy. Davis says he was merely seeking "administrative" or purely "peripheral" information about the lawyer's account. He only wanted to know who paid Solmon. Solmon, representing Kaiser, said the information is protected by solicitor-client privilege, since it could potentially be used to prejudice his client's case in the wider bankruptcy proceedings. Ontario's Superior Court and Court of Appeal came to different conclusions about the merits of the case. Nevertheless, they did agree on one thing: "administrative" or purely "peripheral" information about a lawyer's account is presumed to be privileged, although that presumption may be challenged and rebutted. In this respect, the courts have come a long way from Greymac v. the Ontario Securities Exchange Commission. In 1986, Greymac initially distinguished between "factual" components of a lawyer's relationship with the client (payment of fees, for example), to which no privilege attaches, and the "communications" or "advice" part of the relationship, which is protected by solicitor-client privilege. Within legal circles, support for the reasoning in Greymac persists, even as the law regarding solicitor-client privilege has evolved. Re Kaiser settled one day before the Court of Appeal confirmed that solicitorclient privilege applied to Davis' question about the lawyer's bill. The appeal court found the presumption could be rebutted by alleging fraud, but the trustee did not advance that argument. The case is now officially in the books, and Davis says he wished he had a chance to seek leave to the Supreme Court of Canada on the issue. "While I am respectful of the Court of Appeal, I really disagree with what they had to say because the 'who?' should not be privileged," www.CANADIAN L a w ye r m a g . c o m June 2013 43 Kim Rosen By David Gambrill

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