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Evidence - Privilege - Solicitor-Client (8). Sakab Saudi Holding Company v. Al Jabri [law firm accounting records]
In Sakab Saudi Holding Company v. Al Jabri (Ont CA, 2026) the Ontario Court of Appeal dismissed an appeal, here brought against a Divisional Court appeal ruling that mostly upheld a Superior Court ruling that dismissed a motion "requiring the respondents to produce two categories of information", these being law firm trust ledgers and unredacted bank statements.
Here the court considers the presumptively solicitor-client privileged status of law firm accounting records:[9] The trust ledgers requested are presumptively privileged. The presumption is applicable regardless of the procedural context in which the records are sought. The presumption arises because a trust ledger is an accounting record of a lawyer reflecting dealings with a client from which privileged communications might be deduced. The nature of the retainer, and how that affects whether a trust ledger actually discloses such communications, are matters relevant to whether the presumption is rebutted. I agree with the courts below that the presumption in this case was not rebutted by the mere allegation, without evidentiary support, that the law firms whose records were requested were being used for “non-legal” transactions (i.e., as conduits only).
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The Presumption of Privilege Over a Lawyer’s Records
[42] The law recognizes that to effectively protect privilege, it is sometimes necessary to presume that certain types of documentation contain privileged information, rather than imposing the obligation on the party claiming privilege to establish that they do. In Maranda v. Richer, 2003 SCC 67, [2003] S.C.R. 193 and Chambre des notaires, the Supreme Court established that lawyers’ administrative records, including accounting records, are subject to a rebuttable presumption of solicitor-client privilege because such records may contain information which, though neutral on its face, could be used to deduce privileged information.
[43] In Maranda, the client was suspected of money laundering and drug trafficking, and police obtained a warrant to search his lawyer’s offices for records of the amount of fees and disbursements billed by the lawyer to the client. Though this information did not fall within the traditional rubric of solicitor-client communications, “[t]he documents and information sought, in particular concerning [the lawyer’s] disbursement accounts, might enable an intelligent investigator” to divine considerable confidential information: Maranda, at para. 24.
[44] The Supreme Court held, at para. 33, that there is a presumption of solicitor-client privilege over certain kinds of apparently neutral administrative information kept by a lawyer:In law, when authorization is sought for a search of a lawyer’s office, the fact consisting of the amount of the fees must be regarded, in itself, as information that is, as a general rule, protected by solicitor-client privilege. While that presumption does not create a new category of privileged information, it will provide necessary guidance concerning the methods by which effect is given to solicitor-client privilege, which, it will be recalled, is a class privilege. 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, recognizing a presumption that such information falls prima facie within the privileged category will better ensure that the objectives of this time‑honoured privilege are achieved. That presumption is also more consistent with the aim of keeping impairments of solicitor-client privilege to a minimum …. [Emphasis added.] [45] In Chambre des notaires, the Supreme Court struck down, as contrary to the Canadian Charter of Rights and Freedoms protection against unreasonable seizure, provisions of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) that permitted the Canada Revenue Agency to compel a lawyer to provide information about a client, and that purported to exempt, from solicitor-client privilege, the lawyer’s accounting records. The Supreme Court held, at para. 40, that there is “a rebuttable presumption … ‘that all communications between client and lawyer and the information they shared would be considered prima facie confidential in nature’” (citation omitted). The Court further held, at para. 73, that accounting records fall within that presumption, as they may contain privileged information such that disclosure could involve a breach of solicitor-client privilege.
The Test for Rebutting the Presumption of Privilege
[46] The presumption of privilege may be rebutted by evidence that disclosure of the information “would not violate the confidentiality of the relationship”: Maranda, at para. 34.
[47] In Kaiser, this court articulated the test for rebutting the presumption of privilege. In that case, a trustee in bankruptcy suspected the bankrupt of hiding assets and using an associate as a “straw man”. The trustee sought an order compelling the bankrupt’s lawyer to disclose the identity of the person paying the bankrupt’s legal fees. This court reversed the lower court’s grant of the trustee’s request, holding, at para. 21, that “administrative information related to the establishment of a solicitor-client relationship – including a lawyer’s bill and a client’s ability to pay, and by extension, the source of the lawyer’s fees – is presumptively privileged” (emphasis in original). This court, at para. 30, stated that the presumption may be rebutted by evidence showing that: (a) there is no reasonable possibility that disclosure of the requested information will lead, directly or indirectly, to the revelation of confidential solicitor-client communications; or (b) the requested information is not linked to the merits of the case and its disclosure would not prejudice the client.
[48] On the evidence in Kaiser, the presumption was not rebutted: at paras. 32-38.
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[51] .... The case law establishing the presumption envisages no such limitation on its application. To the contrary, in Chambre des notaires, the Supreme Court emphasized the importance of protecting solicitor-client privilege in all contexts: “[T]he reasonable expectation of privacy in relation to communications subject to solicitor-client privilege is always high, regardless of whether the question arises in a civil, administrative or criminal context”: at para. 33.
[52] The presumption is important for the protection of privilege even in the context of a contested civil motion, since it limits the amount of information that must be disclosed before privilege will rebuttably apply, obviating the risk of a client having to disclose privileged information to establish its privilege claim. Kaiser was a contested civil motion, and this court applied the presumption in it.
[53] The presumption operates in respect of records which might or might not ultimately be privileged; records which, on the one hand, might contain information that not only appears but actually is “neutral” in the sense of not disclosing privileged information, or on the other, might contain information that discloses or creates a pathway for deducing privileged information. The difficulty in knowing, in advance, into which category the records fall, and the objective of keeping any impairment of solicitor-client privilege to a minimum, favours presuming such records to be privileged and placing the onus on the requesting party to rebut the presumption: Maranda, at para. 33.
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[55] For ease of reference, I repeat the test from Kaiser, at para. 30, for rebutting the presumption of privilege. It has two branches, either of which may be relevant depending on the facts of the case:The presumption [of privilege] 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; or (b) that the requested information is not linked to the merits of the case and its disclosure would not prejudice the client. [Citations omitted.] ....
[112] ...., depending on the circumstances, the fact that a person made a payment to a lawyer, and its quantum, could be privileged. In Maranda, at para. 32, the Supreme Court explained that what a lawyer advised, what they charged, and what they were paid, could be inextricably bound up:The existence of the fact consisting of the bill of account and its payment arises out of the solicitor-client relationship and of what transpires within it. That fact is connected to that relationship, and must be regarded, as a general rule, as one of its elements. [Emphasis added.] [113] Second, although the payments are recorded in bank statements, it is a contextual question as to whether privilege could apply. As the Supreme Court recognized in Chambre des notaires, at para. 73, privilege does not depend on the type of document, but instead, “on its content and on what it might reveal about the relationship and communications between a client and his or her … lawyer” (emphasis added). The question of whether privilege could apply in this context is at least arguable, in light of Chambre des notaires, Maranda, and cases which have considered that records held by third parties may contain privileged information: see generally R. v. A.B., 2014 NLCA 8, 346 Nfld. & P.E.I.R. 218. Although the appellants contest the proposition that the entries on the bank statements are privileged, they do not contest the concurrent findings in the courts below that any privilege in those entries has not been waived.
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