Case information

Law of professions — Barristers and solicitors — Breach of confidence — Breach of solicitor-client privilege — Bankruptcy — Lawyer creditor in former clients’ bankruptcy — Clients made assignment into bankruptcy while owing lawyer fees — Clients made incomplete disclosure of assets to trustee in bankruptcy — Lawyer received disclosure of assets as creditor — Lawyer alerted trustee in bankruptcy to omissions — Code of Conduct allows lawyers to disclose limited confidential information to establish or collect fees — Whether Court of Appeal erred in law in finding that Milot Law did not breach duty of confidentiality or privilege — Whether Court of Appeal erred in law in relying on the Bankruptcy Act — Whether Court of Appeal erred in finding that certain information not privileged — Code of Conduct, L.S.A., 2018, Rule 3.3-5.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

The Sittlers hired Mr. Milot of Milot Law to act as their counsel in dealing with the CRA and litigation they expected to follow. Without paying the fees owed to Milot Law, the Sittlers assigned themselves into bankruptcy. As a creditor, Milot Law received correspondence from the bankruptcy trustee that included the Sittlers’ bankruptcy Statement of Affairs. Based on the information he had received as their lawyer, Mr. Milot realized that the Sittlers had not disclosed all of their assets to the trustee. Milot Law sent a letter to the Sittlers and their then counsel saying that it would inform the trustee of that situation if they did not disclose all of their assets. When the Sittlers did not respond, Mr. Milot consulted with the practice advisor for the Law Society of Ontario, who reminded him that Rule 3.3 5 of the Ontario Rules of Professional Conduct, like Rule 3.3-5 of the Law Society of Alberta’s Code of Conduct, states that “[a] lawyer may disclose confidential information in order to establish or collect the lawyer’s fees, but the lawyer shall not disclose more information than is required”. Mr. Milot then provided the trustee with redacted versions of records and other information about the Sittlers’ assets and transfers of assets. The trustee requested and received further disclosure from the Sittlers. Milot Law applied to compel Ms. Sittler to attend questioning; the Sittlers cross applied to, inter alia, prevent anyone from relying on information they believed to be privileged in the bankruptcy proceeding.

The chambers judge declared that Mr. Milot had only breached duty of privilege and/or confidentiality in one email and that Mr. Milot’s obligations regarding confidential information had been changed by the assignment into bankruptcy. He ordered the questioning of the parties. The Court of Appeal dismissed the Sittlers’ appeal and granted Milot Law’s application to adduce new evidence (the unredacted email string leading to the email) and its cross-appeal. It held that the email did not contain privileged information and that confidentiality had not been breached.