Laurentian's lawyers ask judge to rule on legality of Speaker's warrant forcing release of private info

Lawyers for insolvent Laurentian University continue to defend against a Speaker's warrant issued by the Ontario Legislature that aims to force the Sudbury school to give up privileged information to the auditor general.

A legislative committee tasked Bonnie Lysyk with a special audit last spring to look into how the university became insolvent. (The school has been restructuring under the Companies' Creditors Arrangement Act, or CCAA, process that allows it to operate while dealing with its financial problems.) 

For its part, Laurentian responded it was co-operating as fully as possible, but she had no right to certain documents and asked the court to define privilege and rule on the matter.

A judge reserved his decision until Dec. 6

A few days later, the standing committee on public accounts of the Ontario Legislative Assembly introduced a motion to issue a Speaker's warrant, a rarely used provincial tool, to compel Laurentian to produce the information in question by Feb. 1, 2022.

Why Laurentian's lawyers are resisting warrant

In its introduction to its latest factum, Laurentian's lawyers say they feel the auditor general was "secretly" working with the standing committee to circumvent the courts.

"While her application was pending — even while this court had its decision under reserve — the committee was making her demands their own. The committee's intention is to give her the information produced, regardless of this court's ruling on whether she has the right to access it." 

Laurentian's lawyers continue to resist the Speaker's warrant, arguing the issue falls squarely with the judicial system and not with the government, insisting the province is acting beyond its scope and inappropriately.

"Here, the irresponsibility of the assembly's actions is breathtaking. The assembly has commanded the production of all privileged communications, including pertaining to an ongoing insolvency proceeding before this court, and to the litigation with the auditor general," lawyers write in the documents filed Jan. 5.

"Its only evident interest is in obedience as an end in itself. The committee has no legislative interest in the documents. It shows no shred of concern to respect privilege, or about the consequences of its actions. Its interest is to ensure that the auditor general receives all conceivable information regardless of whether her statute authorizes it. Some of its members regard the CCAA proceeding as illegitimate and wish to second guess it."

The documents under dispute include:

• All of Laurentian's in-camera board packages from 2010 to present.
• The complete emails of its president (Robert Haché), and its former and current lawyers.
• The chair of its board of governors (Claude Lacroix).
• Representatives of Laurentian's unions and Senate subcommittee who participated in the CCAA mediation.
• Correspondence among law firms and the university's auditor and now court monitor, Ernst and Young.

The auditor general is also seeking the production of two letters exchanged between the Ministry of Colleges and Universities, and Haché two weeks prior to declaring insolvency, which have been sealed by the courts.

Laurentian's lawyers say complying with the Speaker's warrants could irreparably harm the university's chances at successfully restructuring.

They are urging a judge to consider staying the warrants until he decides on their legality.

While universities and other broader public-sector entities receive funding from the government, they are not part of the provincial government.- Lawyers for Laurentian University

To support their stand, lawyers for Laurentian University say it is not a part of the government.

"While universities and other broader public-sector entities receive funding from the government, they are not part of the provincial government," the lawyers argue. "Laurentian, for instance, is funded by and reports to the Ministry of Colleges and Universities, the minister of which is responsible to the Legislature, but Laurentian is not responsible to the Legislature. Unlike colleges, universities are not included in Ontario's public accounts.."

On Dec. 16, the university announced the Ministry of Colleges and Universities would provide $35 million to refinance its existing debtor-in-possession (DIP) loan, which allows it to operate while restructuring.

Furthermore, the lawyers argue the production of the documents under dispute is not even necessary.

"If the assembly is concerned about how Laurentian used government funding, and how to prevent similar situations arising in the future, it will have ample access to the university's information. It will also have access to information from the Ministry of Colleges and University relating to its funding and oversight of Laurentian.

"The underlying facts will all be disclosed; only privileged communications or information protected by a CCAA court order will be protected," the lawyers say. "This will provide a sufficient basis for the assembly's proper consideration of those issues. An absolute and unreviewable power to override CCAA confidentiality and sealing orders is not necessary."

Laurentian declared insolvency Feb. 1 in a move that shocked the region and the academic world.

It has severed ties with its founding partners, terminated around 200 jobs and cut dozens of programs in an effort to restructure under the CCAA, an unprecedented move for a public-sector institution.

It is also undergoing real estate, and governance and operational reviews.