Solicitor-Client Privilege Presumption Upended In Sakab Saudi

by Kyle Smyth · February 13, 2025

Solicitor-client privilege remains a fundamental right which is only displaced where absolutely necessary. The court in Sakab Saudi Holding Company v Al Jabri, 2025 ONSC 35 [Sakab Saudi] upheld the presumption of solicitor-client privilege protection to a law firm’s trust ledger but found that the motion judge erred in extending that same presumption to the defendant’s bank statements.

Background

Proceedings against Saad Aljabri and later Mohammed Aljabri (the “defendants”) originally arose from a claim of civil fraud which resulted in Gilmore J. granting an ex parte Mareva injunction against the defendants. Sakab Saudi et al (the “plaintiffs”) alleged that former Saudi cabinet minister Saad Aljabri orchestrated a massive international fraud which resulted in the misappropriation or theft of $3,500,000,000 USD. Gilmore J. found that there was a strong prima facie case of fraud and a significant risk of the continued dissipation of assets, which warranted the Mareva injunction to freeze the defendants assets (Sakab Saudi, para 3). While the underlying claim has not been heard, it has resulted in many interlocutory steps.

Gilmore J. also granted a Norwich order that required the production of documents from certain non-parties, including financial institutions. Through direct enforcement of the order on non-parties in Canada, the plaintiffs obtained unredacted copies of bank statements from Canadian financial institutions. However, the bank statements produced by foreign banks were heavily redacted (Sakab Saudi, para 6).

The plaintiffs later brought a contempt motion against the defendant for an alleged breach of the Mareva injunction. Cavanagh J. dismissed the motion due to the failure to prove a breach of the Mareva injunction because frozen funds were only used for living or legal expenses (Sakab Saudi, para 9).

Judicial History

In the decision rendered in Sakab Saudi Holding Company et al v Saad Khalid S Al Jabri et al, 2024 ONSC 1601, the plaintiffs brought a motion for the production of any law firm trust ledgers in respect of funds received or sent by the defendants and unredacted copies of the bank statements from foreign banks that had been produced with redactions (Sakab Saudi, paras 10-13).

In dismissing the motion, Cavanagh J. recognized solicitor-client privilege as a substantive right and a principle of fundamental justice. In his assessment of that right, law firm’s administrative and accounting records relating to a solicitor-client relationship are presumptively privileged. Therefore, the plaintiffs held the onus to prove that the documentation sought was not subject to solicitor-client privilege, but failed to do so. Cavanagh J. further held that the redacted bank statements which were already produced contained privileged information, but did not need to be reproduced without redaction because privilege had not been waived by making payments to lawyers using ordinary bank mechanisms. Cavanagh J. further concluded that the future crime or fraud exception to solicitor-client privilege did not apply (Sakab Saudi, para 14).

Issues

On appeal, the Ontario Divisional Court considered whether the motion judge erred by:

refusing to order production of the law firm trust ledgers;
refusing to order production of unredacted copies of the bank statements that had been produced in redacted form; and,
finding that the future crime or fraud exception to solicitor/client privilege did not apply. (Sakab Saudi, at para 16)

Decision

The Ontario Divisional Court (the “Court”) held that the appeal should be allowed in part. Matheson J., wrote for a unanimous bench, emphasizing that solicitor-client privilege must be as close as possible to absolute to ensure the proper functioning of the legal system (Sakab Saudi, paras 19-22). Matheson J. affirmed that the presumption of solicitor-client privilege over the law firm trust ledgers had not been rebutted, upholding the motion judge’s conclusion on this matter. However, Mattheson J. held the motion judge erred in extending the presumption of solicitor-client privilege to the foreign bank statements. The Court remitted the matter to the motion judge to re-examine the bank statements for solicitor-client privilege without applying the presumption (Sakab Saudi, para 62).

Law Firm Trust Ledgers

Matheson J. commented on the established principle that law firm accounting records are presumptively privileged. Rebutting this presumption requires the party seeking disclosure to present evidence which shows:

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
that the requested information is not linked to the merits of the case and its disclosure would not prejudice the client (Sakab Saudi at paras 23-25; see Kaiser (Re), 2012 ONCA 838).

Matheson J. held that the motion judge correctly applied the above test in finding that information in the trust ledgers could provide meaningful information regarding privileged relationships. The plaintiffs had the onus of rebutting the presumption of solicitor-client privilege and failed to do so; there was no palpable or overriding error in the motion judge’s consideration of the record before him (Sakab Saudi, paras 27, 32).

Foreign Bank Statements

Matheson J. held that while the motion judge correctly found that privilege had not been waived, the motion judge erred in extending the presumption of privilege to the foreign bank statements. Unlike law firm ledgers, bank account statements are not presumptively privileged. To assert solicitor-client privilege over the bank account statements, the defendants must satisfy the court that they are subject to solicitor-client privilege. Matheson J. noted the issues that would arise should bank account statements be afforded a presumption of privilege, since bank accounts are routinely ordered to be produced in litigation. Instead, the question should have been whether the defendants sufficiently proved their privilege claim, which would have to be readdressed without the presumption of privilege (Sakab Saudi, paras 33-38).

Future Crime or Fraud Exception

The plaintiffs urged the court to order full disclosure of both the law firm trust ledgers and foreign bank statements pursuant to the future crime or fraud exception recognized by the Supreme Court of Canada in Canada (Privacy Commissioner) v Blood Tribe Department of Health, 2008 SCC 44 [Blood Tribe]. Matheson J. declined, holding that the exception did not apply. Matheson J. clarified that the exception applies solely to future acts, not past ones. The plaintiff was attempting to obtain documentation which related to acts taken after the alleged fraud, not before. Further, the Supreme Court of Canada held in Blood Tribe that the future crime or fraud exception applies in rare circumstances where the communications are criminal in and of themselves, or are intended to further a criminal purpose (Sakab Saudi, paras 39-48).

To abrogate solicitor-client privilege in the case of unlawful civil conduct, the plaintiffs must establish, on a prima facie basis, that:

the challenged communications related to proposed future conduct;
the client sought to advance conduct that it knew or should have known was unlawful; and
the wrongful conduct under contemplation was clearly wrong. (Sakab Saudi at para 56; citing Wintercorn v Global Learning Group Inc., 2022 ONSC 4576 [Wintercorn])

Matheson J. held that the plaintiffs could not rely on the alleged fraud underpinning the civil proceedings, and failed to identify a specific future crime or fraud. In raising the exception, the plaintiffs failed to link any law firm to any later fraudulent transaction or act (Sakab Saudi, para 58).

The plaintiffs could not rely on an alleged breach of the ex parte Mareva injunction without meeting the evidentiary threshold to demonstrate it applies to the requested disclosure. Matheson J. noted that the decision finding prima facie fraud was ex parte and was not before the motion judge. Furthermore, the decision was focused on events predating the time period for the requested disclosure. The alleged Mareva breach was also advanced in the contempt motion, which was dismissed as the wrongful activity was not sufficiently proved (Sakab Saudi at para 60).

Matheson J. concluded that the general nature of the claims advanced by the plaintiffs were insufficient to displace a fundamental right. The plaintiffs must present enough evidence to demonstrate that the Wintercorn criteria are met on a prima facie basis (Sakab Saudi, para 61).

Analysis

Matheson J.’s decision highlights the importance of solicitor-client privilege and draws a clear line as to which party has the onus of proving whether privilege applies. Ordinarily, the party asserting privilege must demonstrate that solicitor-client privilege applies to a communication or document. The party seeking disclosure can challenge the assertion of privilege where the communication or document does not meet the requirements of solicitor-client privilege. In Sakab Saudi, the Divisional Court ruled that the motion judge correctly identified the presumption of solicitor-client privilege to law firm trust ledgers, as discussed by the Supreme Court of Canada in Canada (Attorney General) v Chambre des notaires du Québec, 2016 SCC 20. However, Matheson J. held that the motion judge erred in effectively importing that presumption to the defendants foreign bank accounts which are not law firm accounting or administrative records.

The foreign bank account statements at issue in this case allegedly redacted the transactions to law firms which are not presumptively privileged. While these statements may contain alleged transactions whose reciprocal would appear on the privileged trust ledger of the recipient law firm, that does not extend the presumption of solicitor-client privilege. Rather, the party claiming privilege must demonstrate that solicitor-client privilege applies as would ordinarily be the case for the assertion of privilege. The ruling in Sakab Saudi does not disturb the fundamental principles of solicitor-client privilege, but rather considers them individually to the law firm trust ledger and bank statements rather than collectively applying the presumption of privilege.

Sakab Saudi also reiterates the narrow ambit of the future crime or fraud exception advanced by the Supreme Court of Canada.. Matheson J. was hesitant to order disclosure under this narrow exception to privilege due to the plaintiff’s broad and ambiguous allegations of future crime or fraud. The plaintiffs cast a wide net by requesting the trust ledgers from any law firm the defendants had dealings with. Further, the plaintiffs failed to identify what future fraud was being facilitated. The speculative nature of the plaintiff’s claim, marked by the nebulous nature of the future fraud and identity of parties involved, fell short of what is required for the Court to displace a fundamental right of the Canadian justice system. The Court required credible evidence of criminal or fraudulent conduct, which the plaintiffs failed to provide. Matheson J. noted that the plaintiffs are able to try again once they possess sufficient evidence.

Overall, Sakab Saudi reaffirmed the fundamental underpinnings of solicitor-client privilege and the importance of correctly assessing whether applicable to a communication or document. The decision ensures that courts dealing with documentation subject to the presumption of privilege are not commingled with those which are not. Finally, the decision builds upon the Wintercorn civil case application of the future crime and fraud exception discussed by the Supreme Court of Canada in Blood Tribe.