Auditor General Act does not permit Auditor General to override solicitor-client privilege: OCA

Legislation is currently before the legislature to tweak the wording of the Act

Auditor General Act does not permit Auditor General to override solicitor-client privilege: OCA
Fredrick Schumann and Bonnie Lysyk

Ontario’s Auditor General Act does not expressly and unambiguously allow the Auditor General to override solicitor-client, litigation, and settlement privilege, the Court of Appeal has found.

Ontario (Auditor General) v. Laurentian University, 2023 ONCA 299 examined whether the Act gave the Auditor General the power to compel disclosure of privileged information. The court dismissed the Auditor General’s appeal, accepting Laurentian University’s argument that the legislature had intended to allow, but not require, the disclosure of privileged information to the Auditor General.

“Solicitor-client privilege is a fundamental legal right that, in Canada, has constitutional status,” says Fredrick Schumann, counsel for Laurentian University and a partner at Stockwoods. “The Court of Appeal described it as ‘sacrosanct.’ Statutes can override or ‘abrogate’ privilege, but only if they do so in express and unequivocal terms. Any statutory ambiguity must be resolved in favour of upholding privilege.

“In this case, the Court of Appeal applied those principles to a statute, the Auditor General Act, that contemplates, but does not expressly require, the disclosure of privileged information,” he says. “To my knowledge, that situation has never before been addressed by a Canadian court.”

As part of a value-for-money audit of Laurentian University, the Office of the Auditor General of Ontario sought privileged information and records. The school declined, saying it had no right to this material. The Auditor General responded by bringing an application to the court seeking a declaration that the Auditor General Act grants it the authority to pierce solicitor-client, litigation, and settlement privilege.

The application judge ruled in favour of Laurentian University, finding no “clear and unambiguous intent to abrogate solicitor-client privilege” in the Act. The Auditor General appealed.

Historically, parties being audited have complied with Auditor General requests, and the two sides have jointly assessed whether the information is privileged, says Bonnie Lysyk, Auditor General of Ontario. When the audited party deems the information privileged, the Auditor General keeps it confidential, she says.

When Laurentian rebuffed her, saying they would not be able to provide privileged information, the office went to the court to seek clarity on the wording of the legislation, says Lysyk.

Bill 19, the Auditor General Amendment Act, 2022, is currently before the Ontario Legislative Assembly and would provide that the duty to furnish information applies to “documents and information that are otherwise confidential or subject to certain privilege rights.”

“We have a huge dependency on people disclosing information to us to inform our audits for the legislature,” says Lysyk. “And we do respect privilege. I do respect privilege. My office respects privilege. And until Laurentian, our Act hasn't posed an issue.”

“I'm hopeful that we'll continue to have cooperation during our audits because, in some cases, we definitely need privileged information to be able to sign off on financial statement audit opinions in the provincial public sector.”

If organizations using taxpayer money can withhold information because it contains privilege, and her office cannot discuss the disclosure with them, privilege could become a “veil,” she says.

Justice Michael Tulloch wrote the reasons for the Court of Appeal.

The case stemmed from Laurentian University’s insolvency. The school entered creditor protection under the Companies’ Creditors Arrangement Act in February 2021. The CCAA application led to the Standing Committee on Public Accounts asking the Auditor General for a value-for-money audit of the University’s operations over the preceding decade.

In a value-for-money audit, the Auditor General examines whether programs, agencies, and organizations receiving government grants spend money “with due regard for economy and efficiency and have satisfactory procedures for measuring and reporting on effectiveness.”

The case centred around ss. 10 and 27.1 of the Auditor General Act. The provisions require governmental agencies, Crown corporations, and grant recipients to provide the Auditor General information about their operations and access to their records. Employees of and those assisting the Office of the Auditor General have a duty of confidentiality concerning the exercise of their duties under the Act, including with respect to privileged information.

The application judge held that any statute abrogating a privilege must do so with explicit language and a “clear and unambiguous intent.” Examining the provisions’ wording and legislative history, the judge concluded that there was insufficient evidence that the goal of legislators was to waive privilege.

Related stories

Free newsletter

Our newsletter is FREE and keeps you up to date on all the developments in the Ontario legal community. Please enter your email address below to subscribe.

Recent articles & video

Injunction prevents employee from contacting and recruiting former law firm’s clients

Loopstra Nixon and Macdonald Sager merger a union of complementary practices, say managing partners

Rising Star win a big plus, past winners say; 2023 nominations now open

Law Society of Ontario declares Jacqueline Horvat’s re-election as treasurer

Information and Privacy Commissioner and Human Rights Commission call for ‘guardrails’ on AI use

Judge rejects wife’s claim husband was controlling, says opposite was true, dismisses abuse charges

Most Read Articles

Law firm ordered to pay $739,649 to client’s creditor for abuse of process and fraudulent preference

Judge rejects wife’s claim husband was controlling, says opposite was true, dismisses abuse charges

Injunction prevents employee from contacting and recruiting former law firm’s clients

Ontario Court of Appeal rejects assault victim’s appeal in a lawsuit against TD Canada Trust