Fraud vitiates solicitor client privilege

Le Soleil Hospitality Inc. v. Louie, 2010 BCSC 1183 (CanLII), <http://canlii.ca/t/2c4k8> retrieved on 2012-02-04
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[134] In the course of the trial, an application was made for production of Mr. Berger’s file based on the principles in Pax Management Ltd. v. C.I.B.C., 14 B.C.L.R. (2d) 257 (C.A.). In considering whether a claim of fraudulent misrepresentation vitiated solicitor-client privilege, the court in Pax Management stated at ¶ 64:

It is well established law that one cannot claim the protection of the solicitor-client privilege where the solicitor himself has been a party to a fraud, or where the communications were made by the client for the furthering of fraudulent conduct, ie., such as obtaining advice for the purpose of perpetrating a fraud.

Where fraud is a genuine issue, privilege will be displaced on the basis that the benefits of its maintenance are outweighed by the benefits of full disclosure of all circumstances relevant to resolving the issue of fraud.
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Solicitor-Client Privilege in Canada
Challenges for the 21st Century
Professor Adam Dodek, B.A., J.D., LL.M.
University of Ottawa
Discussion Paper for the Canadian Bar Association
February 2011
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There is a growing trend to try to expand the notion of “fraud” to include various torts. The
law in this area is in conflict and as Robyn Ryan Bell & Rebecca Huang have written in a must-read
paper for any lawyer dealing with this issue, clarification of the scope of the crime-fraud exception
will have to await such time as the issue is squarely before an appellate court.61 Since the Supreme
Court’s 1999 decision in R. v. Campbell, a number of lower courts have shown a willingness to extend
the crime-fraud exception to tortious conduct. Ryan Bell & Huang identify three lines of authority:
the Broad View; the Narrow View; and the “Akin to Fraud”/Middle Ground Cases.62

The Broad View articulates the Crime-Fraud Exception as a “Crime-Fraud-Tort” Exception.
Thus, in the 1999 Goldman Sachs case, the British Columbia Supreme Court equated the tort of
abuse of process to “civil fraud”.63 In obiter, Justice Smith went further, explaining how the Crime-
Fraud exception extended to unlawful or tortious conduct:

Accordingly, intended crimes and frauds are but instances of the
application of the general principle that the privilege does not attach
to communications in relation to unlawful conduct. In this context,
“unlawful conduct” has a broader meaning than simply conduct that
is prohibited by the criminal law. It includes breaches of regulatory
statutes, breaches of contract, and torts and other breaches of duty.
Breaches of contract and of civil duties are “unlawful” because,
although they are not prohibited by any enactment, they cause injury
to the legal rights of other citizens and give rise to legal remedies.
They are therefore contrary to law.64
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