Laurentian fires back at auditor general, says her demands violate Canadian constitution

Ontario Auditor General Bonnie Lysyk is seen in this photo. (Frank Gunn/THE CANADIAN PRESS)

Laurentian University has fired the latest shot in its ongoing court battle with Ontario's auditor general.

The sides are involved in a dispute centred on whether LU has an obligation to give the auditor general documents covered by solicitor-client privilege. A hearing is expected to be held in the first two weeks of December.

Auditor General Bonnie Lysyk is conducting a value-for-money audit of Laurentian's books following the university's declaration of insolvency in February. Lysyk argues Section 10 of Ontario's Auditor General Act gives her the right to access to confidential information. Lawyers for LU argue they have the option, but not obligation, to hand over the documents.

In her court filing, Lysyk accused the university of creating a "culture of fear" among staff at the university when it comes to speaking with her staff. And she argued language in the act referring to confidential documents clearly means she has a right to the information.

In response, lawyers for Laurentian took issue with the "culture of fear" comment, saying it rejects the allegation "in the strongest possible terms."

"The auditor general’s allegation was incorrect," Laurentian said in its factum to the Superior Court of Justice.

"The university has provided access to all staff for interviews with the auditor general. The allegation that it has created a 'culture of fear' … appears to be based purely on the university’s direction to its staff that they not disclose privileged information. That direction was entirely appropriate."

Lawyers for Laurentian reject the idea that Lysyk needs access to all privileged information to conduct her audit. They point out that after initially pursuing the information last summer, she then told the university she had changed her mind.

"On Aug. 15, 2021, she formally decided 'not to legally pursue the production of privileged documents,' stating that she would 'conduct her audit using information and documents that she voluntarily receives from Laurentian University,'" the court transcript said.

And they said there is a previous case where she was denied access to privileged documents. When auditing the Attorney General's office in 2019, Lysyk was denied access to files about criminal prosecutions.

"She did not insist on access, and instead used her 'discretion' to deal with the situation with 'a scope limitation,'" the transcript said.

Further, lawyers for Laurentian argued that to force organizations to surrender privileged documents is a major step, and if that was what the province intended, it would have said so explicitly in the legislation.

Instead, they argued the act gives organizations the option to voluntarily surrender those documents, as some provincial organizations have done.

Supreme Court of Canada decisions

To support their arguments, Laurentian points to Supreme Court of Canada decisions that characterize solicitor-client confidentiality as a pillar of the justice system.

"It is indisputable that solicitor-client privilege is fundamental to the proper functioning of our legal system and a cornerstone of access to justice,” one SCC ruling said.

"As a substantive rule, solicitor-client privilege must remain as close to absolute as possible and should not be interfered with unless absolutely necessary,” said another.

In order for it to be lifted, the SCC ruled that language in the legislation "must be explicit and evidence a clear and unambiguous legislative intent to do so."

Language in Section 10 of the Auditor General Act says that if an organization hands over privileged documents, it doesn't constitute a waiver of privilege. Lysyk argues that section means she has the right to that information.

But Laurentian argues there are three pieces of legislation in Ontario in which privileged documents must be handed over; in each case, LU argues the language is explicit.

If that was the intention with the Auditor General Act, the language would be explicit, as well.

"Such language could have been introduced in (Section) 10 of the Auditor General Act, if the Legislature’s intention had truly been to abrogate privilege," the transcript said.

"The auditor general will still have access to all an audit subject’s non-privileged information, including all financial information. This will provide abundant information by which to judge whether public money was properly spent. She will also have access to any privileged information that an audit subject voluntarily provides."

'Flagrant violation'

And Laurentian argues if the act did compel them to surrender privileged documents, it would amount to a "flagrant violation of the Charter of Rights."

Laurentian -- and everyone else -- communicates with lawyers with an expectation of privacy, LU argued. There must be a compelling reason and explicit language in legislation for that right to be removed, something that is not present in this case.

"That expectation of privacy is not diminished by the regulatory context of (Section) 10," the transcript said.

"The reasonable expectation of privacy in information protected by privilege is always high, even though the infringement of privilege arises in a civil, administrative, or regulatory context."

Finally, Laurentian argued the Supreme Court of Canada has ruled that legislation "that interferes with professional secrecy more than is absolutely necessary will be labelled unreasonable."

In this case, Lysyk has demanded confidential information because she has a right to all documents "to inform her work," not because she has proven it is "absolutely necessary."

"In sum, if the auditor general’s interpretation of (Section) 10 is correct, the provision suffers from serious constitutional defects," the transcript said.

"Since the Legislature is presumed to enact constitutional legislation, courts should prefer an interpretation of Section 10 that does not result in a constitutional infringement. This is another reason to prefer the interpretation of (Section) 10 that does not compel the disclosure of privileged information."

Read the entire court filing here.