2013 QCCA 95, 2013 QCCA 95

Unofficial English Translation Laquerre c. Société canadienne d'hypothèques et de logement 2013 QCCA 95 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-022012-116 (705-17-003155-098) DATE: January 21, 2013 CORAM: THE HONOURABLE PAUL VÉZINA, J.A. NICHOLAS KASIRER, J.A. MARIE ST-PIERRE, J.A. EDGAR LAQUERRE APPELLANT – Defendant v.

CANADA MORTGAGE AND HOUSING CORPORATION RESPONDENT – Plaintiff and CHAMBRE DES NOTAIRES DU QUÉBEC BARREAU DU QUÉBEC INTERVENERS JUDGMENT [ 1 ] The appellant appeals from a judgment rendered on August 11, 2011, by the Superior Court, District of Joliette (the Honourable Mr. Judge Jean Guibault), which dismissed the notary appellant's privilege-based objection to testifying. [ 2 ] For the reasons of Vézina, J.A., with which Kasirer and St-Pierre, JJ.A. agree, THE COURT: [ 3 ] DISMISSES the appeal with costs and the interventions without costs. PAUL VÉZINA, J.A. NICHOLAS KASIRER, J.A. MARIE ST-PIERRE, J.A.

Mtre Hélène B. Tessier Mtre Marie-Claude Vernier Lapointe Rosenstein Marchand Melançon For the appellant Mtre Francine Martel Gowling Lafleur Henderson For the respondent Mtre Giuseppe Battista Shadley Battista For the intervener the Chambre des notaires du Québec

Mtre Sylvie Champagne Barreau du Québec For the intervener the Barreau du Québec Date of hearing: October 29, 2012 REASONS OF VÉZINA, J.A. [ 4 ] The notary appellant refuses to provide the respondent, the CMHC, with [ translation ] "various documents respecting his trust accounts" or to answer questions about them. [ 5 ] The trial judge (hereinafter the “judge”) declared this refusal to be unfounded: [ translation ] [16] Therefore, and as required, the notary must provide the documents and information sought and answer the questions asked because not only are the banks and the CMHC (as successor) entitled to that information as parties to the contract and mandators of the notary regarding the drawing up of a hypothec and paying out the loans issued, but also because, prima facie , the other parties to the contract acted fraudulently.

Background [ 6 ] The judge gave a complete

summary of this matter: [ translation ] [4] In this case, the CMHC acts as successor to various banks that granted loans for the purchase, sale, and resale of 22 properties, and respecting which a mandate was given by the said institutions to the notary to prepare and register good and valid hypothecs to guarantee that the loans issued would be reimbursed. [5] In its motion to institute proceedings, the CMHC, as successor to the banks, claimed $2,365,841.51 in damages from Laquerre to compensate the losses suffered by the financial institutions, which the CMHC, as insurer of the said institutions and in accordance with its obligations, covered when the various hypothecary debtors described more fully in the said motion defaulted on the loans. [6] In its action, the CMHC alleges that there was fraud involved when the properties in question were purchased and then immediately sold to insolvent borrowers at a much higher price than fair market value, thereby enabling the vendors to obtain an amount from the loans issued by the plaintiff's insureds to which they were not entitled. [7] The petitioner contends that the executing notary committed delictual and contractual faults in the course of various transactions and loans issued by the CMHC's insureds and that he should consequently be condemned to reimburse the losses thus suffered.

To establish the liability of the notary, the defendant in this case, the CMHC, as successor to the financial institutions, would like to obtain more information about the said transactions and the movement of money in the notary’s trust account, information that the notary refuses to provide on the grounds that it is privileged.

Reasons for judgment [ 7 ] The first reason of the judgment is the mandatary's duty to render an account of the performance of the mandate. [1] [ 8 ] The judge wrote: [ translation ] [8] ... in this case, a party wishes to obtain information from the notary it mandated. [9] Indeed, the financial institutions were the ones to issue the loans on the properties in question and mandate the notary to prepare good and valid hypothecs to guarantee the reimbursement of the amounts disbursed. The banks are also the ones asking for the above- described information and documents.

In these circumstances, the notary cannot refuse to disclose the information and provide the documents requested insofar as the CMHC is successor to the banks asking the notary what he did with the money they paid out. ... [11] It would be paradoxical, to say the least, for a lender to be unable to obtain information from the notary regarding the movement of the amounts disbursed for transactions or their use, on the grounds of privilege. The documents and information sought by the CMHC are important, even fundamental, to the establishment of the notary's liability in the present case.

In the Court's view, the notary cannot hide behind privilege to refuse to answer the questions or to refuse to provide the documents and information sought, ...

[ 9 ] The second reason is the "crime exception" that applies to privilege. Fraudsters who dupe professionals for the purpose of committing their crimes do not benefit from the protection of the law in general, [2] or that of privilege in particular. [ 10 ] The judge found that to be the case here: [ translation ] [14] ...

The CMHC also argued before the Court that the objection based on privilege could not be raised in this case ... relying specifically on the case law establishing an exception to privilege when there is an unlawful purpose and the commission of a crime, no matter whether the notary knew of the matter. [15] Prima facie [ [3] ] proof that the other parties to the contract defrauded the banks appears from the allegations of the motion to institute proceedings and the contracts adduced in support of these allegations, leaving no room for doubt.

In light of the preceding, the parties to the contract with the banks cannot benefit from the protection offered by privilege in the context of the transactions where the defendant acted as executing notary. Grounds of appeal [ 11 ] The appellant's main ground of appeal concerns the second reason for judgment.

He maintains that the judge erred in finding [ translation ] "without explanation or nuance that he had been presented with prima facie proof of fraud by all of the parties to the contract". [ 12 ] The intervener Chambre des notaires goes even further: [ translation ] "the judge did not require ... proof that the crime exception applied". The intervener Barreau du Québec fully agrees: [ translation ] "The judge did not require prima facie proof from the respondent... that a fraud or crime had been committed". [ 13 ] The appellant's ground also concerns the first reason of the judgment.

Even if the appellant must render an account, he cannot do so to the detriment of privilege. [ 14 ] Additionally, the interveners criticize the judge for having found that the “crime exception” applies without requiring all the contracting parties with regard to the 22 properties to be impleaded and without taking cognizance of all the documents involved. [ 15 ] The appellant's second ground concerns the banks that hired him with respect to the hypothecary loans. He argues that the respondent cannot waive the right to privilege on their behalf even if it is subrogated to their rights.

Analysis [ 16 ] All parties agree, as they ought, that respect for the right to privilege is one of the fundamental rights protected under the Charter of human rights and freedoms : [4] 9. Every person has a right to non-disclosure of confidential information. No person bound to professional secrecy by law and no priest or other minister of religion may, even in judicial proceedings, disclose confidential information revealed to him by reason of his position or profession, unless he is authorized to do so by the person who confided such information to him or by an express provision of law.

The tribunal must, ex officio, ensure that professional secrecy is respected. [ 17 ] The importance of this right justified the interventions by the Chambre des notaires du Québec and the Barreau du Québec. [ 18 ] Much ink has been spilled over the number of issues respecting privilege that have been discussed by the appellant and the interveners, and some of these issues are the subject of appeals currently pending before this Court.

In this case, the context of fraud limits the debate to the "crime exception" and the first order of business is therefore to determine whether the judge’s ruling that there was prima facie proof of fraud was correct. [ 19 ] Finding this to be so, we must consider the consequences of the exception on the fraudster clients. Finally, the privilege enjoyed by the appellant's other clients must be considered since they were not involved in the fraud. These other clients are the lender banks and the vendors in the initial purchase of each of the properties (hereinafter the "First Vendors").

Prima facie proof of fraud [ 20 ] The fraud described by the judge consists in [ translation ] "properties that are bought and then immediately sold to insolvent borrowers at much higher prices than their fair market value". This unfortunately widespread scam is known as a "real estate flip". [ 21 ] Before assessing the evidence, it might be relevant to illustrate this reality with a few excerpts gathered through a simple Google search. [ 22 ] This search revealed an

article by journalist Stéphanie Grammond, published in the La Presse newspaper, titled Les rouages du "flip" immobilier [The inner workings of real estate flipping]. [5] In closing, she describes a [ translation ] "typical case": [ translation ]

1- The fraudsters purchase for $200,000. 2- They sell to a front at the inflated price of $325,000. This front obtains a hypothec in the amount of $315,000 based on falsified documents. 3- The fraudsters pocket $115,000. 4- The fraudsters stop paying the hypothec. 5- The bank registers a loss. [ 23 ] An

article from the OACIQ (the Organisme d'autoréglementation du courtage immobilier du Québec), dated October 2, 2008, is entitled, "The real estate flip: avoid getting involved". [6] It says: The ''flip'' ... consists in the quick and successive sale of the same property with a substantial and unjustified price hike. ... they can cause a major prejudice to several parties, namely: ... ▪ losses for financial institutions that are conned into lending against an immovable that is worth less than the guaranteed loan; [ 24 ] Another news item on Canoe.ca is entitled [ translation ] "Real estate flips: more cases found of profits going unreported to tax authorities”. [7] It says: [ translation ] According to explanations given by the Chambre des notaires, property flips are a process that involves repeated sales of one property in quick succession while artificially boosting the price between each sale.

Financing for the last transaction, obtained on the basis of a highly inflated price, is used to purchase a property in a first sale. [ 25 ] The last text cited here, which is from Wikipedia, [8] draws a useful distinction between lawful real estate flips and scams: Real estate flipping Profits from flipping real estate come from either buying low and selling high (often in a rapidly-rising market), or buying a house that needs repair and fixing it up before reselling it for a profit. …The investor will (usually) then perform necessary renovations and repairs, and attempt to make a profit by selling the house quickly at a higher price (closer to market value).

Illegal activity Flipping can sometimes also be a criminal scheme. Illegal property flipping is a fraud-for-profit scheme whereby recently acquired real property is resold for a considerable profit with an artificially inflated value. The real property is resold within a short time frame, often after making only cosmetic improvements to the real property. … This type of fraud is one of the most costly for lenders because the loss is always large. The following is an example of an illegal property flip: A buyer contracts to purchase a property in his name for $30,000.

Before closing the deal, he draws up a second contract to sell the property to a co-conspirator at $70,000 — a price substantially higher than market value. … A mortgage lender approves the application and releases the $70,000. Next, the contracts for the property are closed either simultaneously or within a short time from each other. The originator of the scheme takes the $70,000, pays off the $30,000 and divides the remaining $40,000 between himself and any other plotters … That buyer makes a few payments on the property, then defaults and allows it to go into foreclosure.

Finally, the lender learns that the property doesn’t even cover the loan value. [ 26 ] In short, a flip (the act of turning something over with a sudden movement) is the purchase of property not with the intention of taking up residence there but with the aim of reselling it quickly and, of course, at a higher price. The property passes from the first owner to the second and then immediately to a third. If this manoeuvring is nothing more than real estate speculation then it is simply honest capitalism.

It is the same when an entrepreneur sees potential in a run-down house and restores it to full value with a few quick fixes. The legerdemain becomes a scam if the higher price at resale is fictional and creates an artificially bloated value that fools the institutional lender relying on it. [ 27 ] How does this apply to the present case? [ 28 ] In its action, the respondent alleges 22 fraudulent flips (legerdemain) that followed a single modus operandi . First, a restricted group of about ten related persons (hereinafter the “restricted group”) orchestrated quick sales between themselves.

The properties were overvalued and the borrowers insolvent. The hypothecary payments stopped shortly after the loan was granted, giving rise to a judgment and a sale for the recovery of the properties at a much lower price, resulting in significant losses for the lender banks and ultimately for the respondent, who compensated them. [ 29 ] Here are some of the allegations in the respondent's action: [ translation ] 9.1 In addition to the 18 previously listed transactions that are the subject of this claim, four new transactions using the same modus operandi have been identified, to wit: ...

10. Many searches and verifications respecting these transactions have revealed the use of a process whereby certain individuals unduly benefited from the proceeds of the hypothecary loans issued; 11. More specifically, a restricted group of persons was involved in a series of transactions. These persons acted either as buyers/borrowers, vendors, resellers, intermediaries, agents or representatives, mandataries, previous owners, or employees of the vendors or of the persons mentioned above, and they generally, lived at the same address or were related through family or marriage. 12.

Most of the hypothecary borrowers were young, unmarried and, with few exceptions, employees of one of the following businesses: [three businesses related to persons in the restricted group]; 13. The connection between the parties involved is established as follows: [graph of the restricted group]; 14.

These borrowers, although they stated that they would live in the purchased property, appear never to have even set foot in or managed them and instead acted as mere fronts for the vendors or resellers who were thus given access to the proceeds of the hypothecary loans issued for amounts clearly superior to the value of the properties in question; 15. In most cases, the borrowers defaulted on the loans shortly after purchasing the property, even though these properties were supposed to generate income and the rents declared were supposed to exceed the hypothecary payments. 16.

The portion of the purchase price going to the buyer/borrower at the time of transaction was usually disbursed by the vendor or someone acting on his or her behalf; 17. Thus, through a scheme of concurrent transactions through fronts that were not declared to the lending institutions, loans were obtained for amounts clearly superior to the actual underlying transaction, and the fronts (alleged purchasers and hypothecary debtors) all defaulted on their hypothecary obligations in the months following the issue of the loans. ... 33.

To meet its contractual obligations and as a direct consequence of the faults and omissions of the notary [appellant], the [respondent] paid the amount of two million three hundred and sixty-five thousand, eight hundred and forty-one dollars and fifty-one cents ($2,365,841.51) to the banks who suffered a loss... ; 34.

In consideration for the payment of two million three hundred sixty-five thousand eight hundred forty-one dollars and fifty-one cents ($2,365,841.51), [the respondent] is legally and contractually subrogated to the rights of the financial institutions insured against liable third parties; [ 30 ] The land register proves the frauds performed by the members of the restricted group. It shows the steps of the legerdemain, the initial purchase and the quick resale, a loan based on the resale price, and ultimately the lower price obtained after the judgment of surrender. All the deeds were received by the appellant.

Here are some examples drawn from the

summary of registry entries given to the judge. [ 31 ] Example 1: (

a) In May of 2003, sale by a First Vendor, owner of a residence since 1983, to one of the persons in the restricted group for $125,000; [9] (

b) Six days later, resale to another person from the restricted group, for $162,000; (

c) Simultaneously, publication of a deed of loan in the amount of $150,000; amount clearly established based on the resale price; (

d) Then, in January of 2004, a second resale to another person from the restricted group for $184,000; (

e) The same day, increase of the loan on first hypothec to $169,000; (

f) In February of 2005, judgment rendered after the borrower has defaulted; (

g) In September of 2005, sale of the property by the lender bank for $85,000. [ 32 ] Example 2: - On May 23, 2003, sale by a First Vendor for $92,000; - That same day, resale for $129,000 and hypothec of $119,000; - In April of 2004, new resale for $145,000 and loan increased to $133,000; - And, last step, judgment rendered in June of 2005 and bank recovery sale for $98,000. [ 33 ] Example 3: - In January of 2004, First Vendor, for $65,000: - resale for $129,000 and hypothec of $118,000 on the same day; - In June of 2004, second resale for $184,000 and hypothec increased to $169,000;

- In May of 2005, judgment rendered and recovery sale for $50,000. [34] And the pattern repeated itself. [35] In a lengthy 41-page defence, the appellant, without denying the basic facts, dissected each of the transactions to explain thatthe picture emerging from the land registry requires some qualification.

Mostly, he reiterated that he had always acted in good faith. [36] It is the trial judge, of course, who will have the final say on the matter and who will determine whether the notary was naïve orat fault, in light of the overall evidence. [37] At this stage, it is sufficient to note that the judge certainly did not err in finding prima facie proof of fraud. He added that thereis [translation] "no room for doubt"; an opinion that I share, while deferring to the judge on the merits. [38] Fraud involves the application of the so-called “crime exception” to privilege.

The principle is recognized by all the parties,including the appellant who wrote: [translation] 65. We submit that, to rely on the crime exception, it is necessary to present prima facie proof that would lead a reasonable person tofind, on a balance of probabilities, that there was a fraudulent act or crime on the part of the client, the whole as set out in the oft-cited cases of Bullivant v. Attorney General of Victoria37 and O'Rourke v.

Darbishire: "Some prima facie evidence that there is some foundation in fact…" "The Court will exercise its discretion, not merely on the terms in which the allegation is made, but also as to the surroundingcircumstances for the purpose of seeing whether the charge is made honestly and with sufficient probability of its truth to make it right todisallow the privilege of professional communications.

Accusation and proof of a [should read: prima] facie case."38 _________ 37 [1920] A.C. 581 (U.K.). 38 (QC CA), [1991] R.J.Q. 1839, AZ-91011763 (C.A.) [39] Fraud also affects the rendering of account by the notary to the mandators, the victim banks, and the respondent on their behalf,who require, with reason, many more details and explanations than they normally would to support their claims. Consequences of the exception on the fraudsters [40] Here, the members of the restricted group used the services of the notary to commit fraud. The crime exception means that theycannot benefit from the right to privilege.

In Descôteaux v. Mierzwinski,[10] the Supreme Court writes: The Court of Appeal adopted the conclusions of the Superior Court judge, together with his reasons. To these Bélanger J.A. added onbehalf of the Court that in any event solicitor-client privilege could not have operated to protect the communication, since the latter wasprecisely what had been resorted to in order to mislead a representative of the legal aid bureau.

On that matter, he stated the following: [TRANSLATION] In the case at bar the communications or documents that are alleged to be confidential are those referred to in thecharge as having been used in the commission of the offence in question. Apart from common law principles, they are no moreprivileged than if the same information and documents had been used to mislead the lawyer himself in order to fraudulently obtain hisservices on special terms. In either case I do not think that false communications made to the eventual victim who will have to bear thecost of the services are confidential in any way.

In short, a communication made to a representative of the Commission des servicesjuridiques [Legal Services Commission] is in no way confidential if it is an element of an offence committed to the latter's prejudice,since in such circumstances there is no confidentiality between solicitor and client. ...

I share the opinion of the Quebec Court of Appeal, however, that, in the case at bar, the information concerning Marcellin Ledoux'sfinancial means had lost the benefit of being privileged since, as alleged in the search warrant, it was communicated with a view tocriminally obtaining a benefit and, consequently, fell within one of the common law exceptions to the principle of privilege. ... [Emphasis in original] [41] Note that this exception is quite different from that relating to public security (Smith v.

Jones, (SCC), [1999] 1S.C.R. 455), for example, where the professional must override his or her duty of confidentiality in the greater interest of protecting aperson who risks being seriously injured or killed.

Clearly, the disclosure thus authorized would be limited to those aspects that relate tothe imminent danger, no more. [42] This is also true of the recognized exception where the right of the accused to make full answer and defence is in jeopardy.[11]At the outset, privilege exists, but there is a need to override it, as minimally as possible, for the greater good. [43] In the case of the crime exception, there is no privilege since, initially, there is no "confidential information revealed"[12] to the

professional in his or her capacity as such. Secrecy includes the notion of trust: [13] [ translation ] Confidential Adj. - Intended to be kept secret. lat. confidentia. From the v. confidere. V. confide. • 1. That which is told to someone with the caveat that this person refrain from revealing it to anybody; which is provided in writing or verbally under the seal of secrecy (in confidence and trust). E.g., confidential letter, confidential file, confidential admission. • 2. ... [ 44 ] In this case, the fraudulent parties did not confide in the appellant-notary; they hid their true intentions from him.

They did not seek his help; rather, as he himself states, they used him and he was duped. [ 45 ] If they did not confide, there is no privilege. Where there is no privilege, the professional is not exempted from giving evidence [14] before the court. Nor is there any reason to seek to have the fraudster client lift the privilege, or to obtain it. Indeed, there is no fundamental right to protect, and the testimony of the professional must unfold as it would for any other witness.

Privilege as it applies to banks [ 46 ] Leaving no stone unturned, the appellant once again raises the argument of privilege, this time with respect to the lender banks, to refuse to answer the respondent's questions. It seems somewhat surreal for the appellant to raise the argument of privilege against victims seeking reparation when they themselves are the beneficiaries of this privilege. [ 47 ] Although the banks were the direct victims of the legerdemain, the respondent is the ultimate victim, the one who lost in excess of two million dollars.

In fact, the respondent's involvement in the file is one of the components of the fraudulent legerdemain; the whole thing was set up by exploiting a flaw in its property value assessment system. [ 48 ] The appellant raises the argument [15] that [ translation ] "privilege is an extra-patrimonial personal right" and thus, the respondent is a third party that cannot discharge the appellant on behalf of the banks, who are clients of the notary.

The theory is interesting, and in a different context such as family or succession would merit an in-depth analysis. [ 49 ] But this case involves only large amounts of money, hence the diverging opinions [16] in scholarly commentary: [ translation ] 450. ... In our view, it would be inaccurate to state that the right to privilege is an extra-patrimonial right in all cases. Let us consider the case of an expert assessment drafted at the request of counsel for the purpose of litigation. This report, although covered by that counsel's client attorney privilege, is nonetheless patrimonial.

Furthermore, could anyone possibly argue that if the client for whom the report was drafted was to die, his or her heirs could not use it because they would not have the power to waive its privileged nature? [ 50 ] The lender banks have no secrets from the respondent who, upon opening the files, becomes a stakeholder in the loans because it guarantees them. [ 51 ] Moreover, there is legal subrogation in favour of the respondent following the compensation paid to the banks. The National Housing Act [17] provides: Paiements par la Société en cas de manquement aux obligations 10. 1. ...

(2) Les paiements faits au prêteur agréé ou au détenteur d’un prêt assuré dans le cadre du paragraphe (1) ont pour effet de subroger la Société dans les droits du prêteur agréé ou du détenteur dans la mesure du montant payé; celle-ci peut en poursuivre l’exécution en son nom ou celui du prêteur ou du détenteur. Toutefois, les sommes recouvrées par le prêteur ou le détenteur sont imputées en premier lieu à sa créance dans le cadre du prêt. Avoiding or curing defaults 10. 1. ...

(2) If the Corporation makes a payment to an approved lender or holder of an insured loan under subsection (1), the Corporation is subrogated, to the extent of the amount of the payment, to all the rights and interests of the lender or holder in respect of that amount, and may maintain an action in respect of those rights and interests in the name of the lender or holder or in the name of the Corporation.

Any money recovered by the lender or holder must first be applied against money owing to the lender or holder on account of the insured loan. [ 52 ] This is more than the subrogation found in the Civil Code because the action in damages against the notary could have been brought by the banks themselves. In such a case, the appellant's own clients would be examining him. [ 53 ] In addition, we must assume, without going too far out on a limb, that the banks agree with the fact that no privilege argued on their behalf could hamper the respondent's action against those who are liable for the losses suffered.

Privilege as it applies to the First Vendors [ 54 ] As there is no reason to suspect that the First Vendors acted in bad faith, the crime exception does not apply to them. Each of them is entitled to the protection of privilege [ translation ] "regarding the confidential information" disclosed to the notary. [ 55 ] It is difficult, however, to imagine that such confidences were made when the First Vendors sold their residences. [ 56 ] According to the allegations of the defence, a certain Ms.

Brousseau, a member of the restricted group, acted as broker and collected all the information relating to the sale, which she then transmitted to the appellant. [ 57 ] The relevant documentation – the vendors' titles, the tax assessments, the certificate of location, the promise to purchase (or to sell), the broker agreement, etc. – is not confidential in itself.

Subsequently, the deed of sale was executed and published, the adjustments accepted by the parties, the discharges executed, and the cheques in payment remitted. [ 58 ] In this case, in fact, nobody deemed it necessary to implead the First Vendors, even though some argue that the presence of some of them is essential. [ 59 ] In my opinion, it was right not to bother and worry these people with visits from a bailiff, which would have almost inevitably entailed legal consultation fees and, in all likelihood, steps to formalize a waiver of the privilege concerning the secrets, which, it would appear, are nonexistent. [ 60 ] This is especially true since the appellant is not their family notary or even the one they chose for the sale.

The notary was chosen by the restricted group – more specifically, by Brousseau, who appears to have been involved in every step along the way. [ 61 ] In the circumstances, I do not find that the fact that the First Vendors were not parties to the action constitutes grounds for allowing the appeal. The judgment criticizes first and foremost the appellant's general objection to providing any document whatsoever and his refusal in principle to answer questions.

In fact, the appellant still seeks to have the respondent's motion entirely dismissed on appeal. [ 62 ] Although unlikely, it is not impossible that a First Vendor entrusted the notary with a secret or provided him with a document detailing sensitive information.

In such a case, the notary must present a specific objection and the judge will determine whether there is a secret that must be protected and how to proceed, whether by means of a notice to the interested party, redaction of the document, or in some other manner. [ 63 ] Subject to this reserve, the appellant must provide the documents sought and answer the questions related thereto.

Obligation to render an account [ 64 ] This brings us back to the first reason for judgment, the notary's obligation to render an account of his mandate. [ 65 ] The fact of the matter is that, in the circumstances, privilege does not prevent the rendering of an account. [ 66 ] Some of the appellant's admissions are intriguing in the context of fraudulent legerdemain and warrant a closer look: [ translation ] a) ... he did not receive the down payments stated in the purchase offers, contrary to what appears in the relevant purchase offers; b) ... the down payments that were not specifically remitted to the notary were always stated as being received prior to the the second vendor executing the deed of sale; c) ... deeds of sale were published for amounts that were less than the amount stated as paid or received by the parties to the transaction; d) … e) ... he issued promissory notes to guarantee to the first vendor that the funds necessary to complete the transactions concurrently were available; Interventions [ 67 ] The interveners' position is that there is no distinction to be made in the procedure to be followed regardless of the exception at issue, whether it be of “crime exception”, which leads to the observation that privilege is nonexistent once the commission of a crime is proved, or one of the two other exceptions (public security or full answer and defence) where privilege exists but may be overridden minimally for the greater good. [ 68 ] In any event, the interveners argue, even when proof of fraud is obvious, as in this case, it is necessary to summon all the potential privilege holders, require proof that the information cannot be obtained any other way, and oblige the judge to take cognizance of all the documents before they can be filed. [ 69 ] In my opinion, this is going too far. [ 70 ] The trial judge must be satisfied by prima facie proof that a crime was committed.

If there is a doubt, or if deemed appropriate, the judge may require notification of the person claiming privilege, proof that the information cannot be otherwise obtained, or

assurance that the sensitive documents will be provided only to the judge for consideration. The judge may also take any otherprecaution. [71] But if the judge is entirely convinced by the prima facie proof, [translation] "leaving no room for doubt" as the trial judgewrote, he or she may then consider that there is no privilege to protect and act accordingly. [72] The Chambre des notaires submits, and rightly so, that it is not sufficient to allege the crime exception for privilege to be setaside. In my view, it all depends on the evidence.

If the prima facie proof does not entirely satisfy the judge, there is cause for prudence;if, conversely, it is convincing, these precautions must not become obstacles in the search for the truth. [73] The Barreau cites the Supreme Court on the social significance of privilege; In 2004, the Supreme Court of Canada enshrined the social significance of privilege in Foster Wheeler:6 33.

In a context such as this, the choice of an appropriate solution to the problem of applying professional secrecy must be rooted firstand foremost in a concern for the social importance that the case law, including that of this Court, attaches to professional secrecy for itsrole in maintaining a properly functioning justice system and preserving the rule of law in Canada.

Any solution must also take intoaccount the evolving nature of the legal profession, in which lawyers are increasingly called upon to provide services in fields wellbeyond their traditional sphere of practice. 34. ... the fundamental relationship of trust between lawyers and clients. ... ensures ... that the legal information required for that purposecan be communicated in a full and frank manner. ___________ 6 Foster Wheeler Power Co. v. Société intermunicipale de gestion et d'élimination des déchets (SIGED) inc., 2004 SCC 18 ,[2004] 1 S.C.R. 456. [74] The Barreau is correct.

The public must know that, in times of need, any person must feel confident that they may consult anattorney or notary and trust that his or her secrets will remain just that, and that they will therefore obtain judicious advice, with fullawareness of the circumstances. [75] But in my opinion, public confidence in the institution of privilege is strengthened when it can be ensured that privilege is of nouse to fraudsters once their offences are discovered and that it cannot be used to protect professionals who are guilty of fault to thedetriment of their clients. [76] For these reasons, I would dismiss the appeal with costs and the interventions without costs.

PAUL VÉZINA, J.A. [8] "Flipping", Wikipedia, online: <http://en.wikipedia.org/wiki/Flipping> (site consulted on 5 December 2012).