Canadian Lawyer

LEGAL REPORT/Insolvency Law "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. The privilege should simply be the communication between the lawyer and the client." Milton A. Davis he says. "The privilege should simply be the communication between the lawyer and the client. If it's a third person [paying the lawyer], it's not covered by privilege or shouldn't be covered by privilege." Solmon says the Supreme Court of Canada took the position in Maranda v. Richer and R. v. Cunningham that seeking "factual" information about a lawyer's account may still be privileged, even if this information does not reveal "communications" between the client and his or her lawyer. "Because of the difficulties inherent in determining the extent to which the information contained in lawyers' bills of account is neutral information, and the importance of the constitutional values that disclosing it would endanger [i.e. such as the right not to self-incriminate], recognizing a presumption that such information falls prima facie within the privileged category will better ensure that the objectives of the solicitor-client privilege are achieved and helps keep impairments of solicitor-client privilege to a minimum," the Supreme Court found in Maranda. Solmon adds that the Supreme Court's decision in Cunningham linked the potential prejudice to a client of revealing solicitor-client privileged information to whether or not the presumption of privilege can be rebutted. Cunningham addressed whether a portion of solicitor-client privilege might be waived so that a lawyer could prove his client had not paid his fees. This allowed the lawyer to defend his application to withdraw from a legal aid case. "Where payment or non-payment of fees is relevant to the merits of the case, or disclosure of such information may cause prejudice to the client, solicitorclient privilege may attach," the Supreme Court found in Cunningham. The application of solicitor-client privilege to the 44 June 2013 www.CANADIAN question of who paid a lawyer's bill formed the basis of Re Kaiser. Morris Kaiser had been bankrupt for more than three years, and claimed to have been impecunious at the time of his bankruptcy, the Court of Appeal found. "In spite of this, however, he appears to have continued to live a life of some means in Toronto," wrote Justice Robert A. Blair. "He has made a number of trips to various casinos in the United States, gambling many hundreds of thousands of dollars in pursuit of this hobby, and made numerous cash withdrawals on credit cards allegedly paid for by a third party, Mr. Cecil Bergman, and by various companies under Mr. Bergman's control." This led Kaiser's trustee in bankruptcy, Soberman's Inc., to suspect Kaiser was hiding assets from the trustee and using Bergman as a "straw man" to do so. "Both Kaiser and Bergman deny that Bergman has provided Mr. Kaiser with any funds since the date of his bankruptcy, but this controversy underpins the issue arising on this appeal," the appellate court wrote. The trustee applied to the court for the appointment of a receiver over the property of Bergman and his company Bergman Capital, alleging the property belonged to Kaiser and therefore to the trustee as a result of the bankruptcy. It also moved for an order requiring Kaiser, or any person so requested by the trustee, to disclose the source of "any and all funds" received by Kaiser since the bankruptcy. Milton Davis and his law firm Davis Moldaver LLP represented the trustee in the proceedings. Kaiser and Davis had a long history of litigation against one another, the appeal court observed. Kaiser brought a motion to have Davis Moldaver LLP removed as solicitor for L a w ye r m a g . c o m the trustee. The motion failed, and the Court of Appeal rejected Kaiser's leave to appeal that decision. Kaiser did not pay costs associated with the motion to remove Davis Moldaver LLP. At that point, the trustee pursued an order compelling Kaiser and his lawyer, Solmon, to disclose the identity of the person paying Solmon's legal fees. Superior Court Justice Frank Newbould ruled the presumption of privilege over the information applied. Nevertheless, he concluded, the presumption could be rebutted because revealing the information would not prejudice Kaiser. ". . . I cannot see how such information would directly or indirectly reveal any communication between Mr. Kaiser and Mr. Solmon that was protected by privilege," Newbould wrote. The appeal court ruled Newbould "had taken too narrow a view both of the potential prejudice and the impact of disclosure on Mr. Kaiser's right to confidentiality." It observed that Solmon had been retained by Kaiser for both the motion to remove Davis Moldaver LLP from the case and for the wider bankruptcy proceedings initiated by the trustee. "The identity of the person paying Mr. Kaiser's legal fees on the removal motion is not merely tangential information," the appeal court ruled. "It has relevance beyond that motion. Mr. Bergman is the trustee's primary suspect as the 'straw man,' if there is one. . . . In that sense, the information sought to be disclosed impacts directly on the merits of the overall dispute and its revelation might well be prejudicial to Mr. Kaiser in that overall context. Thus, the presumption of privilege cannot be rebutted using the Cunningham criteria." Davis maintains the trustee was not seeking privileged information, because

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