Donell et al. v. GJB Enterprises Inc. et al. 2012 BCCA 135
Barristers and Solicitors - Relationship with client - Confidential communications - General
The petitioner was a Receiver appointed in March 2009 by a California court over the assets of GJB Enterprises Inc. (a “Ponzi scheme”) and its principals, the Berkes (the GJB parties). The court ordered the Berkes to disclose certain personal financial information. In July 2010, Mr. Berke came to British Columbia, and a Vancouver law firm (“Farris”) paid him some $524,000 through its trust account. The Receiver learned that Mr. Berke had a bank account at HSBC.
The British Columbia Supreme Court made a recognition order pursuant to s. 270 of the Bankruptcy and Insolvency Act, recognizing the California receivership proceedings. The court ordered that HSBC pay into court all monies it held in the name of any of the GJB parties. HSBC paid some $374,000 into court. The Receiver learned that the source of those funds was the $524,000 trust cheque drawn by Farris in July 2010. Farris declined the Receiver’s request to produce documents and records belonging to the GJB parties, on the grounds of solicitor-client privilege. The Receiver applied for: (1) “a declaration that no solicitor-client privilege or other privilege attaches to communications, files or other documents of any kind in the possession of Farris relating to the GJB Parties as a result of the GJB Parties’ unlawful conduct. (2). Alternatively, a declaration that no solicitor-client privilege or other privilege attaches to communications, files or other documents of any kind in the possession of Farris relating to the GJB Parties from March 23, 2009, to the present.”
The British Columbia Supreme Court, in a decision reported at [2011] B.C.T.C. Uned. 758, dismissed the Receiver’s application. “[N]ot only are almost all of the files not producible on the basis of relevance in the civil context, I conclude that solicitor-client privilege attaches to all of the files and documents in the possession of Farris”. The Receiver sought leave to appeal the order to the extent it applied to the trust account ledgers of Farris that pertained to the funds paid to Berke in July 2010.
The British Columbia Court of Appeal, per Newbury, J.A., in a decision reported at [2011] B.C.A.C. Uned. 89, granted leave to appeal.
The British Columbia Court of Appeal, K. Smith, J.A., dissenting, allowed the appeal and ordered that the trust account ledger information and entries identified by the Court be provided to the Receiver.
