Laurentian University, Ontario auditor general argue right to privileged documents in value-for-money audit

A judge has reserved his decision after arguments in Ontario Superior Court over whether the auditor general has the right to unfettered access to privileged documents as she conducts a value-for-money audit of creditor-protected Laurentian University.

The Ontario Legislature's standing committee on public accounts asked the auditor general to audit Laurentian's operations from 2010- 2020 in an effort to reveal what led to the institution's insolvency declaration on Feb. 1.

The university continues to restructure after deep cuts to programming and human resources as well as dealing with a 14 per centdecline in enrolment this year, and ongoing real estate and operational reviews.

Auditor General Bonnie Lysyk has been asked to shed light on what led to the first-ever time a public-sector institution declaredinsolvency under the Companies' Creditors Arrangement Act (CCAA),allowing it to operate as it worked on its financial struggles, and is seeking information that is normally highly protected between lawyers and their clients.

As the lawyer for Laurentian University, Brian Gover, described in his opening remarks, "Everyone has the right to consult with their lawyers in private. Privilege is a fundamental civil and constitutional right. It is a principle of fundamental justice. Exceptions from that principle must be random, narrow and justified by absolute necessity."

In a statement filed to the court, Laurentian listed the wide range of documents the auditor general is seeking.

• All in-camera briefing packages for the board of governors and its committees from 2010 to present.
• All emails from 2013 to present of various university staff, including its former general counsel (until July 2021), its current presidentand its former presidents.
• The entire electronic storage areas of various university departments, including legal/general counsel, corporate secretaryand board of governors.
• All emails between Laurentian personnel and with the domain sudburylaw.com, which is a law firm that has clients who are employed at the university.

Definition of privilege,right of access

The lawyers for both sides focused on Section 10 of the Auditor General Act that was amended in 2004 to add three subsections, and whether it creates a clear and unambiguous intent to set aside client-solicitor privilege for the auditor general to access the information for her investigation.

Richard Dearden, for the auditor general, told the court that Section 10 explicitly confirms on the AG'sthe right to access of privileged information even though one of the sub sections doesn't refer to privilege.

When questioned by the judge on that point, Dearden counteredthe three parts of the section must be considered in their entirety.

"You've got to read Section 10 as a whole, you've got to read 1, 2, 3 as a whole, and that subsection 3 is inextricably linked to what we see in subsections 1 and 2 of Section 10."

He saidamendments included the words that the grant recipients, (ie Laurentian) "shall give" and theauditor general is entitled to have free access to a grant recipient's books.

He saidsubsection 3 was an entirely new provision that the Ontario Legislature added in 2004.

"It says that disclosure to the auditor general under subsection 1 or 2 does not constitute a waiver of solicitor-client privilege, litigation privilegeor settlement privilege," said Dearden.

He added the exercise of that right is "another movie to be played on another date."

As for Laurentian's arguments, lawyer Brian Gover noted Dearden admitted at one time to the judge that the language of Section 10 "could have been clearer" or was "pretty clear".

Gover picked on those remarks as showing the language did not meet the the bar to break client-solicitor privilege.

"Nothing less than clear, explicit and unequivocal language will justify an interpretation that abrogates privilege."

Gover argued that if the legislature had intended a waiver of privilege, it would have said so explicitly, and he argued it doesn't.

Clarity of language in legislation questioned

To illustrate his point, he listed different acts introduced around the same time that spell out decidedly where privilege can be set aside. They include the Law Society Act, the Health and Insurance Act, the Commitment to Medicare Act, and the Archivesand Record Keeping Act, and compared that to the less specific language used in Section 10 of the Auditor General Act.

"That does not make sensethe Legislature did not simply forget to use that language but then revert to using that language in the 2006 Archives Act."

Gover also included seven pages of arguments about the constitutionality of preserving the client-solicitor relationship.

He said those arguments, if Laurentian were unsuccessful in this hearing, might "foreshadow" the basis offuture litigation under the Charter of Rights, but he told the judgehe was not presenting a charter challenge just yet.

In response, Dearden told the judge that a charter challenge is beyond the scope of what the judge should be considering, and there was no evidence to support it included in the record.

Gover also delved into why he thinks allowing the auditor general access to what Laurentian considers privileged information could be dangerous and infringe on people's rights.

He noted that while the auditorgeneral and her staff are under a legal duty to preserve the confidentiality of information they receive, he worries the infringement of privilege is very real.

He said there is always the risk of information being mistakenly leaked publicly or used against the person entitled to the privilege.

"The auditor general uses the information to inform her report even if she does not disclose it directly, even if she does not quote it directly.Ten staff will have access to Laurentian's information, and it just takes one mistake for privileged information to be disclosed forever. I'm not questioning the sincerity of the auditor general's staff."

Laurentian sees danger of 'reverse engineering'of report

Goversuggested the auditor general could also violate privacy by making inferences in her report.

"Having access to privileged information allows the auditor generalto reverse engineer her report to use the information obtained in the privileged documents to create a narrative that has the same effect as disclosing the information directly."

In closing, Gover insisted that privilege is not a "lawyer's trick to avoid scrutiny," but a critical civil right.

It would be wrong to conclude the result in this case represents the triumph of secrecy over transparency and accountability, but rather it represents a reaffirmation of a principle which is a cornerstone value in our democracy and which has been so for hundreds of years."

In response, Dearden called allegations the auditor general "reverse engineers" her reports as "offside" and not the issue at hand.

He said the judge must simply determine whether Lysyk has right of access, and noted he wasn't seeking an order compelling Laurentian to produce any documents at this time.

Dearden saidthe auditor general is not seeking costs if it is successful in the matter, given Laurentian is insolvent, while Laurentian is seeking $25,000 to cover costs should the judge rule in its favour.

Justice Geoffrey Morawetz saidhe'll need some time to come to a decision, and will do so as quickly as possible, but didn't say when it might be available.