Whether information is relevant and
material, and therefore producible to opposing parties, is a
question every litigator must grapple with when preparing for
trial. When lawyers are named defendants in an action few of them
would consider prior files, with little connection to the matter at
hand, as producible; however the recent decision by the Honourable
Master J.T. Prowse in Royal Bank of Canada v Kaddoura,
2013 ABQA 630 ("RBC v Kaddoura")
has left the door open for placing an obligation on lawyers who are
parties to an action to produce information from prior files.
According to the Alberta Rules
of Court, AR 124/2010, (the "Rules") a question,
record or information is relevant and material if it could
reasonably be expected to significantly help determine one or more
of the issues raised in the pleadings, or to ascertain evidence
that could reasonably be expected to significantly help determine
one or more of the issues raised in the pleadings (rule 5.2(1)). In
RBC v Kaddoura the Court considered whether, in the case
of two separate mortgage fraud matters involving "straw
buyers," the defendant lawyers' prior files were
The Court held that the defendant
lawyers should be required to disclose the existence of previous
purchase and mortgage transaction files which involve either the
same mastermind or agent of the mastermind or loans officer,
subject to solicitor and client privilege (at para. 27).
Consequently, the defendant lawyers' counsel were directed to
cause their clients to file supplemental affidavits or records.
The Court conceded that in certain
straw buyer cases there may be an innocent explanation as to why a
lawyer may not have been put on a heightened duty of enquiry:
Perhaps the vendor selling the recently acquired property was lucky
to acquire the property for far less than what it is currently
being sold for; or perhaps the purchaser is simply receiving help
from a friend or relative when the down payment is provided by
someone other than the purchaser. The point is however, that if the
same circumstances involving the same parties repeat themselves
then the chances of an innocent explanation diminish (at para.
A key issue in any straw buyer
trial is what was known between the lawyer and the straw buyer
regarding the true nature of the transaction. The Court held that a
defendant lawyer's prior files involving the same mastermind or
agent of the mastermind or loans officer are relevant as they may
"establish a pattern which distinguishes the transaction in
question from a bona fide transaction and therefore relevant to the
issue of whether the lawyer ought to have made enquiries of the
straw buyer to ascertain the true nature of the transaction"
(at para. 1).
The Court did acknowledge that such disclosure is subject to
solicitor and client privilege, but declined to consider the topic
"in abstract" as it related to the parties in RBC v
Kaddoura (at para. 31).
It will be interesting to see if
and how this decision is applied in subsequent decisions. Of
particular interest is whether this decision will be applied to
cases other than mortgage fraud matters involving straw buyers.
With its broadest interpretation and application the decision could
be used to compel defendant lawyers to produce information from
prior files involving clients that are a party to the litigation in
question simply to determine whether the client's previous
dealing with that lawyer should have triggered a heightened duty of
enquiry. The danger is that this could lead to a "fishing
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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