On May 9th, the Alberta Court of Appeal issued a split judgement that touches on the scope of confidentiality that is waived by the act of filing an expert report in court. The majority held the filing of a report only waives confidentiality as between the litigant and its expert in the content of the report itself. The minority held that a person filing an expert report waives confidentiality in all information in the custody of the expert that is relevant and material to the dispute in which the report is filed.
This was a case about an expert report written by an accounting firm for a woman engaged in a child support and custody dispute (the “complainant”). The firm traced her husband’s assets and drafted a preliminary report, which the complainant filed in court in support of her position in two proceedings. This action, which the firm claimed she did not have authorization to take, led to a series of events that culminated in complaint by the woman to the Institute of Chartered Accountants of Alberta.
After viewing the report, the husband (also an accountant and familiar to the firm) then called the author of the report to complain about its quality. The author wrote an e-mail to the managing partner which stated, “If Danny feels we have slighted his reputation, we have not.” Soon after, the firm decided to withdraw the report. It took the position that withdrawal was justified because the report was filed without its authorization and the complainant’s account was unpaid. It told the husband around the same time it sent a letter to the wife, who heard about the withdrawal through the husband’s counsel before she received the letter. Later, in response to a summons issued by the husband, an accountant from the firm swore an affidavit to confirm the withdrawal.
In an award written by Picard J.A., the majority of the Court of Appeal affirmed the Institute’s findings of professional misconduct on a “reasonableness” standard of review. She first affirmed a finding that the author’s e-mail, despite being sent internally, was “false and misleading” and constituted a breach of the professional rule against making such statements. Picard J.A. read the rule broadly; since it didn’t exclude internal communications, she held that it applied to them.
Picard J.A. also affirmed breach of confidence findings that were based on the firm’s direct communications with the husband and its affidavit. She rejected the firm’s reliance on the rule governing litigation privilege that deems privilege to be waived for all information relevant and material to an expert report filed in court. She held this was a rule about litigation privilege and was not incorporated into the Institute’s confidentiality standard, so upheld the Institute’s finding that the firm acted improperly by disclosing information about the terms and reasons for the report’s withdrawal, the state of the complainant’s account and its relationship with the complainant.
Slatter J.A. wrote a very strong dissent.
He first took issue with the internal e-mail finding. He held that the Institute’s interpretation of its “false and misleading” communications standard would create a form of absolute liability for bad opinions and would also prevent firms from discussing the resolution of complaints. His reasoning speaks to a form of privilege:
The decision of the Appeal Tribunal would have a chilling effect on the ability of any firm of accountants to conduct open and frank inquiries about the conduct of its members, and the quality of the work that had been completed for any client. Any partner (like Mr. Nelson) who attempted to defend his work could be found guilty of professional misconduct if it turned out later that he was mistaken. Any partners who shared and repeated the opinion that the work had been properly done would likewise potentially be subject to discipline…
The Complaints Inquiry Committee, the Discipline Tribunal and the Appeal Tribunal all play a key role in maintaining the standards of the accounting profession. However, the first line of defence of the standards of the profession must be with the professionals themselves and with their firms. Accounting firms must be free to make inquiries about the quality of their work and the conduct of their partners, without fear that if they make statements, or express opinions, subsequently found to be inaccurate they would be subject to discipline. Penalizing a firm for such statements is counter-productive.
Slatter J.A. also objected to the confidentiality findings. He held that the Institute’s rules should not be read in conflict with an expert’s duty to the court. He held that the fact that the report had been withdrawn, the terms of the retainer, the fact that there was an alleged breach of the retainer, that the firm had ceased to act for the complainant, that it was prepared by an articling student, its belief in the suitability of the report as evidence and even the status of the complainant’s account were all material and relevant facts in the legal dispute, and therefore were the subject of an implicit waiver of confidentiality. On the timing of the disclosure to the husband, he said:
It is true that Mr. Preston disclosed this information to Mr. Dalla-Longa on the telephone prior to advising the complainant. Mr. Dalla-Longa undoubtedly caught Mr. Preston by surprise when he telephoned to inquire about the report four years after it was prepared. But when Mr. Dalla-Longa advised Mr. Preston that the report had been filed in court, the latter was entitled to proceed on the basis that confidentiality had been waived. Experts should be encouraged to make timely disclosure of the information that underlies their reports, to avoid surprise and adjournments, and to promote settlement discussions. The rules should not be construed to require a court order before an expert discloses his or her working papers, or to require or encourage experts to avoid producing information until they are actually in court, on the stand, and under cross-examination. Providing the limited information involved to Mr. Dalla-Longa was at most a breach of business etiquette that does not warrant discipline.
Also of interest, the majority and minority concluded that a different standard of review applied based on the standard of review analysis recently endorsed by the Supreme Court of Canada in its landmark Dunsmuir decision. The majority supported a reasonableness standard and the minority one of correctness.