Laurentian University, Ontario auditor general argue right to privileged documents in value-for-money audit

A judge has reserved his decision after arguments in Ontario Superior Court over whether the auditor general has the right to unfettered access to privileged documents as she conducts a value-for-money audit of creditor-protected Laurentian University.

The Ontario Legislature's standing committee on public accounts asked the auditor general to audit Laurentian's operations from 2010- 2020 in an effort to reveal what led to the institution's insolvency declaration on Feb. 1. 

The university continues to restructure after deep cuts to programming and human resources as well as dealing with a 14 per cent decline in enrolment this year, and ongoing real estate and operational reviews.

Auditor General Bonnie Lysyk has been asked to shed light on what led to the first-ever time a public-sector institution declared insolvency under the Companies' Creditors Arrangement Act (CCAA), allowing it to operate as it worked on its financial struggles, and is seeking information that is normally highly protected between lawyers and their clients. 

As the lawyer for Laurentian University, Brian Gover, described in his opening remarks, "Everyone has the right to consult with their lawyers in private. Privilege is a fundamental civil and constitutional right. It is a principle of fundamental justice. Exceptions from that principle must be random, narrow and justified by absolute necessity."

In a statement filed to the court, Laurentian listed the wide range of documents the auditor general is seeking.

The lawyers for both sides focused on Section 10 of the Auditor General Act that was amended in 2004 to add three subsections, and whether it creates a clear and unambiguous intent to set aside client-solicitor privilege for the auditor general to access the information for her investigation.

Richard Dearden, for the auditor general, told the court that Section 10 explicitly confirms on the AG's the right to access of privileged information even though one of the sub sections doesn't refer to privilege.

When questioned by the judge on that point, Dearden countered the three parts of the section must be considered in their entirety.

"You've got to read Section 10  as a whole, you've got to read 1, 2, 3 as a whole, and that subsection 3 is inextricably linked to what we see in subsections 1 and 2 of Section 10." 

He said amendments included the words that the grant recipients, (ie Laurentian) "shall give" and the auditor general is entitled to have free access to a grant recipient's books.

He said subsection 3 was an entirely new provision that the Ontario Legislature added in 2004.

"It says that disclosure to the auditor general under subsection 1 or 2 does not constitute a waiver of solicitor-client privilege, litigation privilege or settlement privilege," said Dearden.

He added the exercise of that right is "another movie to be played on another date."