BCCA splits on privilege given to lawyers’ trust account ledgers

On March 27th, the Court of Appeal for British Columbia split on whether lawyers’ trust account ledgers are presumptively subject to solicitor-client privilege.

Mr. Justice Smith dissented. He held that, in Maranda v. Richer, the Supreme Court of Canada held that “all information arising out of solicitor-client relationships whatever may be their legal context” is presumptively privileged. Facts are not privileged, but Smith J.A. explained that the Supreme Court adopted a broad and protective rule for a records related to the solicitor-client relationship because solicitor-client privilege is so important and because “it is difficult to segregate single professional acts from the complex of facts, events, and communications that characterizes ongoing solicitor-client relationship.”

Mr. Justice Chiasson (Madam Justice Newbury concurring) held that Maranda was about a search for lawyer fee accounts in the course of a law enforcement investigation and could not be applied directly to a dispute about the production of trust account ledgers in the civil context. Trust accounts, according to the majority, “generally record facts.” Therefore, the party claiming privilege over trust account ledgers must establish that the entries claimed “arise out of the solicitor-client relationship and what transpired within it” to establish a rebuttable claim. In applying this test, the majority held that some entries met this test and others related strictly to a real estate transaction and did not.

The Court also unanimously rejected application of the crime and fraud exception to solicitor-client privilege in the circumstances and made comment on the procedure for hearing privilege claims in a manner that protects privilege but is also fair and transparent.

 Donell v. GJB Enterprises Inc., 2012 BCCA 135.

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