Solicitor-client privilege is the cornerstone of our legal system. It can only be set aside in the rarest of circumstances. As a rule, solicitor-client privilege remains as close to absolute as possible. The exceptions are few. Recently, on appeal of a motion, the Ontario Divisional Court reviewed one such exception to the rule, the crime/fraud exception in Industrial Alliance Securities Inc. v Kunicyn, 2020 ONSC 3393.


The Respondent, Industrial Alliance Securities Inc., brought an action against the Appellant, Ms. Kunicyn, for the repayment of the remainder of a forgivable loan. In response, the Appellant counterclaimed that the remainder was compensation for the losses she incurred due to the termination of her agreement with Industrial Alliance. Additionally, the Appellant claimed for damages for breach of contract, breach of duty of good faith and malicious prosecution.

The Appellant pleaded that the Respondent procured her prosecution by the regulatory body, Investment Industry Regulatory Organization of Canada (“IIROC”). The Respondent allegedly facilitated her prosecution by providing false evidence in the form of a correction email. The email correction stated that the Respondent was, in fact, unaware of the appellant’s office sharing arrangement with a permanently barred investment representative until the IIROC investigation. The correction stems from the Vice President of the Respondent’s, Industrial Alliance, previous statements to IIROC claiming that the Respondent had long known of the appellant’s office sharing arrangement.

The President of the Respondent was examined for discovery regarding the circumstances of the correction email. However, the questions and requests for further productions pertaining to the correction email were refused on the basis of solicitor-client privilege.

Subsequently, the former Vice President of the Respondent, was examined and testified to being coerced into changing his IIROC testimony by the President. He stated that contents of the correction email were false and that the Respondent had known of the appellant’s office-sharing arrangement prior to entering into a business agreement with her.


The Appellant brought a motion for an order to compel the questions regarding the correction emails to be answered and for the productions to be made. There was no issue that the information sought was privileged, rather it was whether the crime/fraud exception applied. However, the motion judge found the Appellant had not met the threshold for applying the fraud/crime exception.

The Appellant appealed the motion judge’s decision on two bases:

  • the motion judge erred in requiring proof of a crime in applying the test for the exception;
  • the motion judge erred in applying too high a standard of proof to the exception.


The fraud/crime exception, as per the Supreme Court of Canada in Descôteaux et al. v. Mierzwinski, [1982], is solicitor-client communication made for the purpose of committing a crime or the communication itself is a material element of the crime.

The Divisional Court found that the motion judge judiciously did not weigh in on the debate on whether the fraud/crime exception should be extended to include civil wrongs such as the tort of malicious prosecution. Instead, the motion judge turned to whether, if the exception could be extended, had the Appellant made out a prima facie case that the exception should apply?

The Court reviewed the alleged wrongdoing at issue in the Appellant’s counterclaim, malicious prosecution. The appellate judges found that there was no evidence to support the claim that it was impossible for IIROC to exercise independent discretion regarding her prosecution. Moreover, they found no evidence that the correction email, in any way, influenced IIROC’s prosecution of her. The evidence before the motion judge, and the Court, illustrates IIROC’s prosecution of the appellant stemmed from her arrangement with the banned investment representative.

Additionally, the Court disagreed with the Appellant that the motion judges analysis focused on whether there was prima facie evidence of malicious prosecution in deciding that the exception should not apply as that would have been erroneous.

The Court reaffirmed that the characterization of communications is central to the exceptions to the solicitor-client privilege. As such, the exception does not depend on whether communication is for a criminal or civil purpose.

At law, for a deceit to constitute a wrong, the dishonest conduct must cause injury. The Court took issue with the application of the exception in this case. There was an absence of prima facie evidence that the communications were either unlawful in of themselves, or they were made for the purpose of furthering unlawful conduct. The appellate judges determined that the evidence from the Respondent’s former Vice President does not show that the communications were made to injure the Appellant or that her injury would be a consequence from the correction email. While there was prima facie evidence to support that the correction email was a untrue; however, there was no prima facie evidence to support the Appellant’s allegation that the lie to IIROC would harm her or protect the Respondent.

In sum, the Court concurred with the motion judge’s finding that given the lack of harm stemming from the correction email, it does not warrant invoking what is meant to be “a very narrow exception to a very important privilege”.