In Sakab Saudi Holding Company v. Al Jabri, 2026 ONCA 586 (“Sakab”), the Ontario Court of Appeal clarified the law in ruling that the crime-fraud exception to solicitor-client privilege may apply in civil cases, although the exception will be narrowly construed.
Background
In their action, the appellants alleged that the respondents had: (1) engaged in multi-billion-dollar civil frauds; and (2) breached Mareva court orders in doing so. The appellants sought production of both the trust ledgers of the respondents’ law firms and the respondents’ own bank statements to help prove their underlying case. They had been unsuccessful in obtaining production before the motion judge and the Divisional Court.
The Protected Status of Solicitor-Client Privilege
The Court of Appeal in Sakab notes that the Supreme Court of Canada has raised solicitor-client privilege to the level of a fundamental right in Canada (para. 37). The privilege must be “as close to absolute as possible” and should not be interfered with unless “absolutely necessary” (para. 41).
The privilege has been held to protect key interests in the administration of justice. It encourages honest communication between clients and lawyers to allow lawyers to advise clients to the best of their abilities, and the provision of candid legal advice is essential to the effective operation of the legal system in Canada (para. 37). Given the important interests that solicitor-client privilege protects, its scope is interpreted broadly while any exception is interpreted narrowly (para. 41).
The Supreme Court has ruled that a presumption of solicitor-client privilege extends to a lawyer’s administrative records, including trust ledgers and other accounting information. This is a rebuttable presumption of privilege that is imposed because “such records may contain information which, though neutral on its face, could be used to deduce privileged information” (para. 42).
The Crime-Fraud Exception to Solicitor-Client Privilege
A narrow exception to the protection of solicitor-client privilege is the crime-fraud exception. Privilege will not apply where communications between a lawyer and client are themselves criminal or legal advice is sought to facilitate a crime. Such communications have no place in the role of a legal professional and run against the interests of justice that solicitor-client privilege is meant to advance in the first place (paras. 64-66).
The crime-fraud exception bears the following features: (a) the exception does not encompass good-faith legal advice such as consulting a lawyer on the legality of a potential course of action; (b) the client must be using the lawyer-client relationship to further conduct it knows or ought to know is unlawful; (c) the impugned communications must be about future conduct as communications about past conduct are privileged; and (d) the party who asserts the exception bears the burden of proof to show a prima facie case that a communication falls within the exception (para. 67).
The Crime-Fraud Exception Can Apply in Civil Cases
Significantly, the Court of Appeal in Sakab held that the crime-fraud exception can apply in civil cases. On this point, the Court of Appeal disagreed with the rulings below of the motion judge and the Divisional Court.
In the Court of Appeal’s words: “The applicability of the exception turns on the nature and purpose of the communications between the client and the lawyer, not the nature of the proceeding in which privilege is claimed or challenged” (para. 94). Thus, the crime-fraud exception to solicitor-client privilege can apply in a civil case, as well as in criminal, quasi-criminal, or regulatory proceedings.
Fraud is a broad concept in criminal law. In the Court of Appeal’s view, a communication between a client and lawyer about how to concoct or carry out a fraud fits comfortably within the criminal law’s broad understanding of the term and thus the crime-fraud exception applies (para. 89).
The Court of Appeal also found that communications intended to facilitate the future breach of a court order have a criminal purpose and therefore fall within the crime-fraud exception. Contempt of court undermines respect for the role and authority of the courts, is quasi-criminal in nature, and is punishable by sanctions that can include imprisonment (paras. 90-92).
To succeed in coming within the crime-fraud exception, the appellants were obliged to establish a prima facie case that the respondents were involved in communications with their lawyers to facilitate a fraud or breach of a court order. This they failed to do.
The Appellants’ Motion for Production Fell Short
The appellants’ motion for production of the trust ledgers of the respondents’ law firms exhibited several weaknesses. Their notice of motion was very general. The appellants sought records for lengthy periods of time spanning several years. They sought trust ledgers from “any” law firm, with no law firm specified. They failed to identify the steps that these unidentified law firms allegedly took to facilitate a future fraud or breach of the Mareva orders, and no specific transactions were identified (paras. 99-100).
The Court of Appeal found that the appellants failed to demonstrate a prima facie case for access to the law firms’ records. In the Court’s words, “the appellants could go no farther than say that access to the documents could enable them to determine that they are entitled to that access” (para. 100). The appellants did not meet their onus.
The appellants were also unsuccessful in establishing an immediate right to the production of the respondents’ unredacted bank statements. The appellants claimed that the Divisional Court should have determined that no privilege applies to such documents. Instead, the Divisional Court found that, even though bank statements are not presumed to be privileged, a litigant can argue and establish privilege over bank statements in appropriate circumstances. It remitted the issue of privilege to the motion judge for determination (para. 109).
The Court of Appeal agreed with the Divisional Court, finding that the appellants failed to demonstrate that there is no arguable case that privilege could apply to bank entries showing payments to lawyers. Depending on the circumstances, the fact that a person has made a payment to a lawyer, and the quantum, may be privileged. Privilege does not depend on the type of document, but rather on the content of the document and what it may disclose about the relationship between the client and lawyer. In the Court of Appeal’s view, it was appropriate to remit the privilege issue regarding the bank statements back to the motion judge for determination (paras. 111-114).
Takeaways
The decision of the Court of Appeal in Sakab is significant in holding that the crime-fraud exception to solicitor-client privilege can apply in civil cases. The decision is equally instructive, though, in showing the high evidentiary threshold that must be met to trigger the exception. Parties seeking production of a law firm’s trust ledgers or bank statements showing a client’s payments to a lawyer must establish a prima facie case by adducing credible evidence with specifics of the allegedly wrongful conduct for the crime-fraud exception to apply. In narrowly restricting the scope of the crime-fraud exception, Sakab underscores the high level of protection given to solicitor-client privilege in Canada.
The information and comments herein are for the general information of the reader and are not intended as advice or opinion to be relied upon in relation to any particular circumstances. For particular application of the law to specific situations, the reader should seek professional advice.
