Under Ontario privacy law, private organizations may disclose personal information about an individual without their consent if the organization reasonably believes the individual has breached an agreement or the laws of Canada. Recently, under Ontario privacy law, the Ontario Court of Appeal affirmed a bank's power to disclose personal information to another bank despite assertions of solicitor-client privilege and Canadian Charter of Rights and Freedoms violations.

Solicitor-client privilege is a right that belongs to a lawyer's client. The right is intended to keep communications between a lawyer and the lawyer's client or prospective client strictly confidential. Section 8 of the Charter states that "everyone has the right to be secure against unreasonable search or seizure." However, section 7(3) of Ontario's Personal Information Protection and Electronic Documents Act (PIPEDA) provides for disclosure of personal information by an organization without the knowledge or consent of the individual if the organization reasonably believes the information relates to a breach of an agreement or the laws of Canada.

In Royal Bank of Canada v. Welton et al., Royal Bank (RBC) determined that it had been the victim of a series of fraudulent mortgage transactions involving a lawyer retained by RBC for these transactions. Accordingly, without notice to the lawyer, RBC asked The Toronto-Dominion Bank (TD) to trace a series of mortgage advances made by RBC into the lawyer's trust account with TD. As a result of the information gathered, RBC was able to obtain orders freezing the lawyer's assets and allowing RBC to search the lawyer's premises without notice. The Superior Court of Justice held that RBC's actions were justified.

Justice Cumming dismissed the lawyer's claim that his trust account was protected by solicitor-client privilege, reasoning that a mere banking relationship, in the form of a lawyer's trust account, does not necessarily mean a solicitor-client relationship. Furthermore, solicitor-client privilege applies to communications and not actions (as in the use of a conduit of funds) and cannot apply to communications where a lawyer knowingly participates in a fraudulent scheme. Finally, solicitor-client privilege belongs to the client, not the lawyer so the lawyer could not raise it against his own client, RBC.

With respect to the Charter, Justice Cumming reasoned that the Charter does not apply to private organizations, such as financial institutions, unless their actions are geared toward implementing a specific governmental policy or program. The fact that the enforcement of RBC's private rights related to criminal offences, did not make RBC an agent of the state for Charter purposes.

On appeal, the Ontario Court of Appeal affirmed Justice Cumming's conclusions and, among other things, noted that PIPEDA is a privacy statute and, as such, it does not grant search and seizure powers to private entities, as contemplated by the Charter. Rather, PIPEDA restricts disclosure of private information subject to certain exemptions, such as the detection and prevention of fraudulent activity. Under PIPEDA, sharing information without consent is permitted for the purpose of protecting the economic interests of the business in jeopardy, a right which has been recognized for many years before the enactment of PIPEDA