Jim Lepore

The appellant commercial landlord appealed from the Divisional Court's order quashing a motion judge's production order that had found the respondent tenants had impliedly waived solicitor-client privilege over legal advice received when entering into a commercial lease.

The Court of Appeal allowed the appeal, finding three errors by the Divisional Court: applying a correctness standard of review instead of palpable and overriding error, misreading the motion judge's reasons as based on the original rather than amended pleadings, and failing to recognize that even the amended defence still placed reliance on the respondents' understanding of their legal position.

The court clarified that deemed waiver of privilege does not require explicit reference to legal advice and provided a five-point summary of the applicable legal principles.

The plaintiff, One York Street Inc., brought a motion seeking production of the former counsel's file for the defendants, 2360083 Ontario Limited and LCIL Ltd., and other discovery-related orders.

The defendants had initially pleaded lack of legal advice regarding a lease and its extension, but later withdrew this pleading.

The plaintiff argued that the defendants had waived solicitor-client privilege by asserting affirmative defenses of misrepresentation and placing their state of mind in issue.

The court applied a two-step test for deemed waiver of privilege, finding that the legal advice was relevant to the defendants' reliance on alleged misrepresentations and that the defendants had made the receipt of advice an issue through their pleadings.

The court granted the motion for production of the Fogler's file, deeming privilege waived due to fairness considerations.