On November 29th, the Court of Appeal for Ontario held that the identity of a person paying the legal fees of a bankrupt person was protected by solicitor-client privilege.
The Court stated the applicable law as follows:
From these developments in the jurisprudence I take the law to be that 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 (Maranda, at para. 34 and Ontario (Assistant Information and Privacy Commissioner), at para. 9); or (b) that the requested information is not linked to the merits of the case and its disclosure would not prejudice the client (Cunningham, at paras. 30-31).
The Court applied this in dealing with a trustees’s pursuit of assets from a person it alleged to be holding assets for the bankrupt. The bankrupt had lost a motion in the matter and was ordered to pay a large costs award which, unpaid, led the trustee to move to discover the identity of the person paying the bankrupt’s fees.
The Court held that the trustee could not rebut solicitor-client privilege because the identity of the payor was relevant to the trustees’s broader allegation if not the motion that had led to the costs order. Much more broadly, it also held that disclosing the identity of the payor would reveal a confidential communication between the bankrupt and his counsel about how the bankrupt would pay his fees – a communication necessary to the bankrupt’s process of obtaining legal advice.