The Satisfaction of a Level Playing Field: Carey v Laiken
In March of 2014, the Supreme Court of Canada (“SCC”) granted leave to hear the appeal of Sabourin & Sun Group v Laiken, 2013 ONCA 530 [Sabourin] (more about this case here). A year later, the court released its decision in Carey v Laiken, 2015 SCC 17 [Carey].
At issue in Carey was the status of a Mareva injunction. A Mareva injunction is a type of injunction that freezes the assets of the party in question pending further order or resolution by a court. In Carey, Ms. Laiken obtained an ex parte Mareva injunction – where a decision was reached in the absence of the opposing party – against multiple defendants, including Mr. Sabourin. The SCC instructed that the injunction order applied not only to all the defendants, but also to anyone that had knowledge of the order.
After the order had been sent out, Mr. Sabourin sent his lawyer, Mr. Carey, with a $500,000 cheque to settle with Ms. Sabourin on a separate matter. When the settlement failed, Mr. Carey returned the money to Mr. Sabourin.
Ms. Laiken alleged that Mr. Carey was in contempt of court because he had knowledge of the order and still dealt with Mr. Sabourin’s funds. Mr. Carey, however, disagreed with this allegation and claimed that the release of funds cannot be considered a “transfer” (as per the Mareva injunction issued by the court). Furthermore, Mr. Carey made the claim that, since he was Mr. Sabourin’s lawyer, he was entitled to protection under solicitor-client privilege as he was told of Mr. Sabourin’s Mareva injunction in confidence as his legal counsel.
The SCC reiterated the three elements that must be satisfied in order for the court to find contempt as follows:
- “The first element is that the order alleged to have been breached ‘must state clearly and unequivocally what should and should not be done’” (Carey, para 34)
- “The second element is that the party alleged to have breached the order must have had actual knowledge of it” (Carey, para 35)
- “Finally, the party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act that the order compels” (Carey, para 36)
In response to Mr. Carey’s argument that the funds released did not qualify as “transfer,” the SCC took a hard line, demonstrating that attempts to play on technicalities when it comes to upholding the integrity of a Mareva injunction is not going to get you far in their court:
[T]he purpose of the order was to prevent dealings with Mr. Sabourin’s assets that would defeat the court’s process (para. 50). Mr. Carey’s position, if accepted, would mean the order actually permitted trustees of assets held for Mr. Sabourin’s benefit to freely transfer those assets between accounts and even between jurisdictions, putting those assets beyond the reach of the court in the event of execution, so long as Mr. Sabourin retained beneficial ownership of the assets. An interpretation of the order that permitted this would be illogical: it would clearly defeat the purpose of the order and would also run counter to the plain language of the order specifically prohibiting those with knowledge of it from ‘dealing with’ Mr. Sabourin’s assets. For these reasons, I cannot accept Mr. Carey’s position. (Carey, para 50)
The final judgment from the SCC was very clear: a lawyer that returns trust funds to his or her client when facing a Mareva injunction will be found in contempt. This reaffirms that lawyers will be held to the same standards as their clients with regard to court orders. As such, solicitor-client privilege is not a valid defence because, as noted above, upholding the integrity of the Mareva injunction is of such great importance to the Court.
The decision by the SCC is quite satisfying. Having an even playing field encourages public trust in the judicial system and the legal profession. In the event that a solicitor-client privilege argument had availed in these circumstances, a double standard would have arisen, causing a grey area that would allow unjustifiable privileges for lawyers who might try to abuse the system, creating a two-tiered law depending on one’s occupation. On the issue of privilege, David Dias puts it best in his article “Privilege isn’t a shield against contempt: Supreme Court,” when he says, “Lawyers cannot use solicitor-client privilege to immunize themselves from findings of contempt.” The inability to immunize oneself on the basis of being a lawyer alone helps make everyone more equal under the law and, in turn, to nurture a balanced justice system.