Liquor Control Board of Ontario v. Lifford Wine Agencies Limited
Liquor Control Board of Ontario v. Lifford Wine Agencies Limited [Indexed as: Liquor Control Board of Ontario v. Lifford Wine Agencies Ltd.]
76 O.R. (3d) 401
[2005] O.J. No. 3042
Court of Appeal for Ontario,
MacPherson and Cronk JJ.A. and Whalen J. (ad hoc)
July 18, 2005
Administrative law -- Duty to act fairly -- Liquor licensee moving to stay licence revocation hearing on basis of witness tampering -- Employer of witnesses retaining private investigator to investigate witness tampering allegations -- Licensee requesting issuance of summons to require investigator to provide evidence on stay motion -- Board depriving licensee of natural justice by refusing to issue requested summons.
Administrative law -- Judicial review -- Prematurity -- Liquor licensee moving to stay licence revocation hearing on basis of witness tampering -- Employer of witnesses retaining private investigator to investigate witness tampering allegations -- Board denying licensee's request for issuance of summons to require investigator to provide evidence on stay motion -- Licensee's application for judicial review of that decision not premature -- Judicial intervention before completion of administrative hearing appropriate to avoid denial of natural justice.
Administrative law -- Judicial review -- Standard of review -- General principle that tribunal's errors in determining relevance of evidence are beyond judicial review where tribunal is protected by strong privative clause not applying where tribunal's decision occasions breach of natural justice -- Divisional Court finding that tribunal's refusal to issue witness summons impaired fairness of hearing and denied natural justice -- This finding displacing curial deference and supporting judicial intervention on either correctness or reasonableness standard of judicial review.
Evidence -- Privilege -- Liquor licensee moving to stay licence revocation hearing on basis of witness tampering by employee of Liquor Control Board of Ontario ("LCBO") -- LCBO having intervenor status in proceedings -- LCBO's external counsel retaining private investigator to investigate witness tampering allegations -- Report of private investigator to external counsel not protected by solicitor-client privilege or litigation privilege -- Tribunal erring in declining licensee's request for issuance of witness summons to investigator to testify on stay motion.
The Alcohol and Gaming Commission of Ontario issued notices of proposal to revoke the respondent's licence for alleged violations of the Liquor Licence Act, R.S.O. 1990, c. L.19 and regulations. The respondent's main defence to the allegations was officially induced error. It planned to argue that it conducted its business in accordance with the procedures and policies of the appellant Liquor Control Board of Ontario ("LCBO"). In anticipation of the licence hearing before a panel of the AGCO (the "Board"), the respondent served summonses on employees of the appellant. The respondent subsequently obtained information suggesting that the General Manager of the appellant's Logistics Facility may have sought to influence the evidence to be given by the appellant's employees before the Board. The respondent moved to stay the licence hearing on the basis that its [page402] right to a fair hearing before the Board had been impaired by witness tampering. After hearing from several witnesses on the stay motion, the Board adjourned the motion to permit three witnesses to obtain legal representation and advice. The appellant's external counsel retained a private investigator to conduct an investigation of the witness tampering allegation. The private investigator interviewed several witnesses and provided a report and various witness statements to the external counsel. The respondent sought the issuance of a summons to compel the investigator's testimony on the stay motion and the production of his report. The Board denied the request, stating that the investigator's testimony and report would not be relevant or helpful. The respondent brought an application for judicial review of the Board's refusal to issue the requested summons. The Divisional Court allowed the application and ordered the Board to issue a summons to the investigator requiring his attendance before the Board and further requiring him to bring with him the transcripts and/or recordings of interviews he made with the LCBO employees who were summonsed by the respondent. The appellant appealed.
Held, the appeal should be dismissed.
The error of an administrative tribunal in determining the relevance of evidence is an error of law. Generally, where a tribunal enjoys the protection of a robust privative clause, its decisions are beyond judicial review for such errors. However, this does not apply, even in the face of a complete privative clause, where the tribunal's decision on the relevance of evidence occasions a breach of the rules of natural justice. As administrative decisions that deprive a party of natural justice do not attract curial deference, the Divisional Court's finding that the Board's decision to deny the respondent the opportunity to explore the investigator's evidence impaired the fairness of the hearing on the stay motion, thereby resulting in a denial of natural justice, displaced curial deference and supported judicial intervention on either a correctness or reasonableness standard of judicial review.
The respondent's judicial review application was not premature. Courts in Ontario have frequently stressed the need to avoid a piecemeal approach to judicial review of administrative action. As a general rule, review applications should be avoided until completion of the tribunal's hearing. This general rule, however, is not absolute and should not be applied rigidly if there is a prospect of real unfairness through, for example, the denial of natural justice. In these circumstances, which will arise infrequently, the courts will intervene before completion of an administrative hearing and prior to the exhaustion of all alternative remedies. That exception was engaged here. The Divisional Court's conclusions that the investigator's evidence was material to the stay motion and that the denial of the summons constituted a breach of natural justice was sustainable. The Board's ruling precluded the respondent's ability to lead material evidence in support of the basis for its stay motion.
Solicitor-client privilege did not apply to the investigator's evidence. While solicitor-client privilege can extend to communications between a solicitor or client and a third party, that extension is subject to important constraints. The investigator was authorized only to gather information from outside sources and pass it on to the appellant's external counsel so that counsel might advise the appellant. This function by the investigator was not essential to the maintenance or operation of the solicitor-client relationship between the appellant and its external counsel. Moreover, the respondent was not seeking disclosure or production of communications between the appellant and its external counsel. Rather, it was seeking disclosure of communications between the investigator and those of the appellant's [page403] employees interviewed by him who were summonsed by the respondent. Litigation privilege did not apply either. The appellant was not a party to the proceedings before the Board. It enjoyed intervenor status on the respondent's stay motion and had held that status briefly. It had no interest in the stay motions. Moreover, the affidavits upon which the appellant relied to resist the summons contained no assertion that the dominant purpose of the appellant's investigation was actual or contemplated litigation to which the appellant was, or anticipated that it might be, a party. Finally, the respondent's interest in receiving a fair hearing before the Board on its stay motion and during the licence hearing trumped any litigation privilege claim available to the appellant.
APPEAL from the decision of the Divisional Court (MacFarland, Jennings and Howden JJ.), reported at [2004] O.J. No. 2696, 188 O.A.C. 196, allowing an application for judicial review of refusal to issue witness summons.
General Accident Assurance Co. v. Chrusz (1999), 1999 ONCA 7320, 45 O.R. (3d) 321, [1999] O.J. No. 3291, 180 D.L.R. (4th) 241, 38 C.P.C. (4th) 203 (C.A.); Université du Québec à Trois-Rivières v. Larocque, 1993 SCC 162, [1993] 1 S.C.R. 471, [1993] S.C.J. No. 23, 101 D.L.R. (4th) 494, 148 N.R. 209, 93 C.L.L.C. 14,020 (sub nom. Université du Québec à Trois Rivières v. Syndicat des Employés Professionnels de l'Université du Québec), apld Other cases referred to Dr. Q. v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, [2003] S.C.J. No. 18, 223 D.L.R. (4th) 599, 302 N.R. 34, [2003] 5 W.W.R. 1, 2003 SCC 19, 11 B.C.L.R. (4th) 1; Gage v. Ontario (Attorney General), 1992 ONSC 8517, [1992] O.J. No. 696, 90 D.L.R. (4th) 537, 55 O.A.C. 47 (Div. Ct.); Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, [2003] S.C.J. No. 17, 257 N.B.R. (2d) 207, 223 D.L.R. (4th) 577, 302 N.R. 1, 674 A.P.R. 207, 2003 SCC 20, 31 C.P.C. (5th) 1; McIntyre v. Kitchener-Waterloo Real Estate Board Inc., [2004] O.J. No. 2214 (Div. Ct.); Ontario College of Art v. Ontario (Human Rights Commission) (1993), 1993 ONSC 3430, 11 O.R. (3d) 798, [1993] O.J. No. 61, 99 D.L.R. (4th) 738 (Div. Ct.); Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 SCC 778, [1998] 1 S.C.R. 1222, [1998] S.C.J. No. 77, [1998] 1 S.C.R. 982, [1998] S.C.J. No. 46, 160 D.L.R. (4th) 193, 226 N.R. 201; R. v. Jorgenson, 1995 SCC 85, [1995] 4 S.C.R. 55, [1995] S.C.J. No . 92, 25 O.R. (3d) 824n, 129 D.L.R. (4th) 510, 189 N.R. 1, 32 C.R.R. (2d) 189, 102 C.C.C. (3d) 97, 43 C.R. (4th) 137 (sub nom. R. v. Ronish) Statutes referred to Evidence Act, R.S.O. 1990, c. E.23, s. 23 Liquor Licence Act, R.S.O. 1990, c. L.19 Authorities referred to Sharpe, R.J., "Claiming Privilege in the Discovery Process" in Law in Transition: Evidence, L.S.U.C. Special Lectures (Toronto: De Boo, 1984)
Johanna Braden and Diana Iannetta, for appellant. Douglas C. Hunt, Q.C., and Alistair Crawley, for respondent.
The judgment of the court was delivered by [page404]
CRONK J.A.: --
I. Introduction
1This appeal arises from the refusal by an administrative tribunal to issue a witness summons requested by a liquor licensee on a motion to stay a hearing before the tribunal in which the possible revocation of the licensee's licence is at issue. The stay motion is based on the licensee's assertion that its right to a fair hearing was irreparably compromised by interference with witnesses whom it proposed to call to give evidence in support of its defence to allegations that it violated provisions of the Liquor Licence Act, R.S.O. 1990, c. L.19 (the "Act") and associated regulations.
2In preparation for the start of the hearing into the allegations made against it, the licensee summonsed approximately 12 witnesses to give evidence before the tribunal. When the witness-tampering allegation arose before the hearing commenced, the licensee moved to stay the hearing. The tribunal heard one day of evidence on the stay motion and then adjourned the motion to permit certain of the witnesses to consult and retain legal counsel.
3During the adjournment, the employer of the witnesses summonsed by the licensee retained counsel who, in turn, engaged the services of a private investigator to investigate the witness-tampering allegation. The investigator interviewed most of the witnesses summonsed by the licensee, questioning them on the witness-tampering allegation and, in some instances, on issues relating to the main licence hearing. When the licensee learned of this investigation and the interviews, it sought the issuance of a summons to require the investigator to provide evidence before the tribunal on the stay motion and to produce the transcripts or other recordings of his interviews.
4The tribunal declined to issue the requested summons on the ground that the investigator's proposed evidence was irrelevant to the subject-matter of the stay motion. On judicial review by the licensee, the Divisional Court overturned the tribunal's ruling and directed it to issue a summons to the investigator, requiring him to attend to give evidence on the stay motion and to produce the transcripts or other recordings of the interviews of the witnesses summonsed by the licensee. The appellant employer of these witnesses now appeals the Divisional Court's decision to this court.
5The appellant raises four issues: (i) whether the Divisional Court erred by failing to determine and apply the appropriate standard of review in its consideration of the tribunal's decision; (ii) whether the licensee's judicial review application ought to [page405] have been denied on the ground of prematurity; (iii) whether the Divisional Court erred by concluding that the investigator's proposed evidence is relevant to the licensee's stay motion; and (iv) whether the investigator's proposed evidence is protected by solicitor- client or litigation privilege.
6For the reasons that follow, I would dismiss the appeal.
II. Factual Background
7It is important that the issues on this appeal be considered in the context of the somewhat unusual and protracted procedural history of this case. For this reason, it is necessary to set out the background facts in some detail.
8The respondent Lifford Wine Agencies Limited ("Lifford") holds a licence under the Act as a wine manufacturer's representative in connection with its business known as Lifford Agencies. In 2001, the Alcohol and Gaming Commission of Ontario (the "AGCO") issued two notices of proposal to revoke Lifford's licence for alleged violations of the Act and associated regulations. A hearing into these allegations was scheduled to commence before a panel of the AGCO (the "Board") in the fall of 2003. Lifford's main defence to the allegations is officially induced error. It plans to argue before the Board that it conducted its business in accordance with the procedures and policies of the appellant, the Liquor Control Board of Ontario (the "LCBO").
9In anticipation of the start of the licence hearing, Lifford served summonses on approximately 12 LCBO employees, many of whom worked in the Toronto Logistics Facility of the LCBO, requiring them to attend and give evidence at the hearing. However, Lifford thereafter obtained information suggesting that David French, the General Manager of the Logistics Facility, may have sought to influence the evidence to be given by the LCBO witnesses before the Board. As a result, Lifford moved to stay the licence hearing on the basis that its right to a fair hearing before the Board had been impaired by witness-tampering.
10On September 22, 2003, the Board began to hear evidence on Lifford's stay motion. The Board granted a witness exclusion order and then heard testimony from three LCBO employees. The first witness was David French, who denied any improper communications with the LCBO witnesses summonsed by Lifford. He maintained that he told the LCBO witnesses "not to lie, tell the truth". He acknowledged, however, that he also told LCBO employees that, "'I don't know' is an answer."
11The Board then heard from Tina Koonings, who worked for Mr. French. She testified that Mr. French threatened her job security with the LCBO if her evidence before the Board was perceived [page406] by the LCBO as aiding Lifford. She said that Mr. French told her, "If you tell the truth and if the LCBO in any way perceives that you are aiding the agent in their case, that your career at the LCBO will be history ... And my time in the Private Ordering Department would be made extremely difficult." She also stated that Mr. French said, "I would make a very, very strong recommendation for you ... I advise you that your idea of the truth should be the following sentences: 'I don't remember' and 'I don't recall'."
12Sante Filippi, who also worked in Mr. French's department at the LCBO, testified as well. He said that Mr. French suggested to him that, "'I don't know', is an answer"; however, he denied that Mr. French suggested to him that repercussions could occur for him or for his department if his testimony was seen by the LCBO as assisting Lifford.
13On September 23, the Board agreed to adjourn the stay motion until early November 2003 to permit Mr. French, Ms. Koonings and Kelly McFarlane -- one of the prospective LCBO witnesses who had been summonsed to testify by Lifford -- to obtain legal representation and advice. In so doing, the Board varied its prior exclusion of witnesses order to exempt Mr. French and Ms. Koonings from the order, "but only in relation to their legal counsel". The Board denied any variation of the exclusion order in respect of Ms. McFarlane, directed that Ms. McFarlane be advised by Lifford's counsel "in general terms, that there is a conflict in the evidence of Mr. French and Ms. Koonings concerning the meetings Mr. French had about the summonses", and further ordered that counsel for the AGCO and Lifford "draft an agreed summary of both Mr. French's and Ms. Koonings' evidence, which is to be provided to counsel for Mr. French and Ms. Koonings".
14The Board gave oral reasons on September 23 and delivered written reasons dated October 9, 2003 concerning these orders. In its reasons, the Board made no mention of the dissemination of the transcript from the September 22 proceeding.
15It appears that after the adjournment, copies of the transcript from the September 22 proceeding were provided by the AGCO to counsel for Ms. McFarlane and Mr. French and, Lifford contends, to counsel for the LCBO. This occurred without the consent of Lifford's counsel or the leave of the Board.
16As well, following the adjournment, the LCBO decided to undertake an investigation of the witness-tampering allegation. For that purpose, it retained external counsel who, on October 9, 2003, engaged a private investigator, Gordon Hobbs, to conduct the investigation. LCBO employees, including those who had been summonsed by Lifford, were informed of this investigation by letter dated October 10, 2003 from Ian Martin, Senior [page407] Vice-President, Logistics, of the LCBO. The full text of Mr. Martin's letter read as follows:
Re: Internal Investigation Conducted on Behalf of the Liquor Control Board of Ontario
As a result of evidence heard at an ongoing hearing before the Alcohol and Gaming Commission of Ontario, the LCBO is undertaking an internal investigation of certain events concerning the Toronto Logistics Division and, particularly, the consignment warehouse.
The investigation will be conducted by a neutral outside investigator, with the assistance of outside counsel.
It is anticipated that the investigator, Gordon Hobbs, will be contacting you in order to arrange an interview. In the event that Mr. Hobbs does contact you, you are directed to attend the interview and to answer his questions.
17Several significant events occurred thereafter. First, when Lifford learned of the dissemination of the September 22 transcript and the LCBO investigation, it brought a second stay motion before the Board, seeking this time to stay the licence hearing on the ground that the LCBO investigation and the distribution of the transcript gave rise to a serious risk that the application of pressure by the LCBO on prospective LCBO witnesses could influence their future testimony before the Board. The Board heard argument on this motion, but reserved its decision until the completion of the hearing on Lifford's first stay motion. In so doing, in reasons dated November 5, 2003, the Board found that its prior order of September 23 concerning the disclosure of evidence to witnesses was not "strictly followed".
18Second, the LCBO moved before the Board for an order granting it intervenor status on Lifford's stay motions. This order was granted and the LCBO participated in the proceedings before the Board for three days. However, its involvement as an intervenor ended on November 17, 2003, when Cunningham A.C.J. and McRae and Epstein JJ. of the Superior Court of Justice, sitting in the Divisional Court, quashed the Board's order, holding that the LCBO had no interest in Lifford's stay motions. The Divisional Court stated, "We fail to see what positive contribution the LCBO could make to the hearing. This is a narrow dispute between Lifford and the AGCO." The LCBO does not appear to have appealed this decision.
19Third, at the request of the LCBO's external counsel, Mr. Hobbs interviewed several witnesses regarding the events that transpired before the Board on September 22 and, in some instances, concerning the allegations made against Lifford in the 2001 notices of proposal issued by the AGCO. The persons interviewed included LCBO employees who received summonses from [page408] Lifford to testify before the Board. Mr. Hobbs taped his interviews. In due course, he provided a report and various witness statements to the LCBO's external counsel.
20Fourth, throughout the months of April and May 2004, the Board heard further evidence on Lifford's first stay motion. Ms. Kooning's testimony on the motion was completed and Lifford called approximately ten additional LCBO employees as witnesses to give evidence as to the alleged witness-tampering. Several of them were questioned concerning their communications with Mr. French after they were served with Lifford's summonses to attend before the Board. In some instances, they were also questioned regarding their interviews with Mr. Hobbs.
21Kelly McFarlane, who also worked under Mr. French's direction, testified on April 2, 2004. She stated that, prior to her testimony before the Board, Mr. French, "would just come up to me continuously and keep reminding me that it's okay to say 'I don't know' and 'I don't remember'". She also said that Mr. French asked her "test" questions, as if he was a lawyer, seeking to elicit responses from her that indicated a lack of recollection or knowledge on her part. She claimed that this occurred so frequently that it became a "running gag" between her and Mr. French, and among other LCBO employees who had been summonsed by Lifford. According to Ms. McFarlane, the frequency of this type of exchange with Mr. French, which increased as her scheduled date to testify approached, caused her to feel pressured to say "I don't know" during her testimony and led her to believe, "[T]his is what they want me to say."
22Ian Martin and Mark Latham, a Manager of Special Projects for the LCBO's Logistics Facility, gave evidence on the stay motion in early May 2004. During their testimony, among other matters, they outlined topics discussed by them with Mr. Hobbs. They indicated that Mr. Hobbs' tone and demeanour during the interviews was "fairly aggressive" (Mr. Martin) or "somewhat accusatory" and "aggressive" (Mr. Latham). According to Mr. Martin, for example, Mr. Hobbs began his interview by questioning him about "an allegation that I had met with Peter Murphy [another LCBO executive] and David French to conspire or come up with a story or a way of dealing with Lifford" for the purpose of "basically strategizing an attack or defence -- I can't remember the exact wording -- and to deal with Lifford ... like a game plan and how to, you know, what to say, what to do". Mr. Martin adamantly denied this allegation but concluded, in the face of Mr. Hobbs' questions, that he was one of the subjects of Mr. Hobbs' investigation. Both Mr. Martin and Mr. Latham said that they had no discussions with Mr. French concerning the hearing before the Board. [page409]
23The next development concerned Mary Fitzpatrick, Senior Vice President, General Counsel and Corporate Secretary of the LCBO. On March 29, 2004, Lifford caused a summons to be issued to Ms. Fitzpatrick, requiring her to attend before the Board at the proceedings scheduled for April and May 2004, and to bring with her all documents pertaining to any investigations after August 1, 2003 in relation to or otherwise directly or indirectly involving Lifford. The LCBO responded by moving before the Board for an order quashing this summons on the basis that the information gathered in the Hobbs investigation was protected by solicitor-client or litigation privilege.
24On April 30, 2004, the Board granted an order quashing the Fitzpatrick summons. It made no determination on the privilege claim advanced by the LCBO, instead ruling that the evidence sought was irrelevant:
The impact, if any, of the investigation on those summonsed has been and can be tested through examination and cross- examination.
Whether or not the investigation of Mr. Hobbs is privileged, the issue as this Panel sees it is one of relevance. Section 15 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 requires that evidence must be relevant to the subject matter of the proceedings which, in this instance, is the motion regarding interference with witnesses.
The decision as to whether this had occurred and whether such conduct, if proven, could vitiate the fairness of the hearing on the [notices of proposal] rests with this Panel. The views or conclusions of a non-party, Mr. Hobbs, whether retained by the LCBO or its counsel are not informative or relevant.
The issue as the Board sees it is simply one of relevance to the subject matter of the motion . . .
25On May 3, 2004, three days after the Fitzpatrick summons was quashed by the Board, Lifford sought the issuance of a summons to compel Mr. Hobbs' testimony on the stay motion and the production of his report. The LCBO resisted the motion, relying on the Board's earlier ruling on the Fitzpatrick summons and again arguing that the fruits of the Hobbs investigation were privileged. Lifford, in contrast, maintained that Mr. Hobbs' testimony was relevant and necessary to determine whether his contact with the LCBO witnesses may have affected their evidence before the Board.
26On May 6, 2004, the Board denied Lifford's request, stating:
The determination that the Board must make must be based on evidence that is relevant and necessary to the motion. On April 30th, 2004, this Panel ruled that the views [or] conclusions of Mr. Hobbs' report resulting from his investigation were neither informative nor relevant.
. . . . . [page410]
Whether or not LCBO employees were affected by their contact with Mr. Hobbs is best determined by hearing from the witnesses themselves about their feelings and concerns as a result of their interviews.
If there was any concern by Lifford regarding any impact Mr. Hobbs may have had on the witnesses, it had ample opportunity to raise them during its examination of those witnesses. We reiterate, the issue before this Panel is one of relevance to the subject matter of the motion.
The Board believes that Mr. Hobbs' testimony would be neither relevant nor helpful.
27Lifford then sought judicial review of the Board's refusal to issue the requested summons to Mr. Hobbs. On June 7, 2004, MacFarland, Jennings and Howden JJ. of the Superior Court of Justice, sitting in the Divisional Court, allowed Lifford's application and ordered the AGCO to issue a summons to Mr. Hobbs requiring his attendance before the Board and further requiring him to bring with him the "transcripts and/or recordings of interviews he made with the LBCO employees who were [summonsed] by Lifford".
28The LCBO now appeals to this court to set aside the decision of the Divisional Court and to restore the decision of the Board concerning the Hobbs summons.
III. Issues
29There are four issues:
(1) whether the Divisional Court erred by failing to determine and apply the appropriate standard of review;
(2) whether Lifford's judicial review application ought to have been denied on the ground of prematurity;
(3) whether the Divisional Court erred by concluding that Mr. Hobbs' proposed evidence is relevant to Lifford's stay motion; and
(4) whether Mr. Hobbs' proposed evidence is protected by solicitor-client or litigation privilege.
IV. Analysis
(1) Standard of review
30The LCBO argues that the Divisional Court showed no deference to the Board and simply substituted its own judgment as to what is relevant to Lifford's stay motion, thereby wrongly applying a correctness standard of review, rather than a standard of reasonableness. [page411]
31The determination of the level of deference to be accorded by a reviewing court to the decision of an administrative tribunal is governed by a pragmatic and functional approach that involves consideration of four contextual factors: (i) the presence or absence of a privative clause or statutory right of appeal; (ii) the expertise of the tribunal relative to a court in respect of the decision in issue; (iii) the purpose of the legislation or provision in question; and (iv) the nature of the question as one of fact, law or mixed fact and law: see Dr. Q. v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226, [2003] S.C.J. No. 18; Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247, [2003] S.C.J. No. 17; Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 SCC 778, [1998] 1 S.C.R. 982, [1998] S.C.J. No. 46.
32I conclude that while the Divisional Court did not expressly address the applicable standard of review, it was justified in exercising its review power and ordering the issuance of the summons to Mr. Hobbs based on either a correctness or reasonableness standard. I say this for the following reasons.
33There is little doubt that administrative tribunals are particularly well-positioned to assess the relevancy of evidence sought to be introduced before them. This was emphasized by the Supreme Court of Canada in Université du Québec à Trois-Rivières v. Larocque, 1993 SCC 162, [1993] 1 S.C.R. 471, [1993] S.C.J. No. 23, in which Lamer C.J.C., writing for the majority of the court, stated at para. 46:
For my part, I am not prepared to say that the rejection of relevant evidence is automatically a breach of natural justice. A grievance arbitrator is in a privileged position to assess the relevance of evidence presented to him and I do not think that it is desirable for the courts, in the guise of protecting the rights of parties to be heard, to substitute their own assessment of the evidence for that of the grievance arbitrator.
34Importantly, however, Lamer C.J.C. went on to say, "It may happen, however, that the rejection of relevant evidence has such an impact on the fairness of the proceeding, leading unavoidably to the conclusion that there has been a breach of natural justice" (at para. 46).
35The issue before the Board concerning the request for the issuance of the Hobbs summons was whether the evidence concerning the Hobbs investigation and its possible impact on the LCBO witnesses was relevant to the allegation of witness- tampering made by Lifford, which was the basis of its stay motion. The error of an administrative tribunal in determining the relevance of evidence is an error of law. Generally, where a tribunal enjoys the protection of a robust privative clause, its decisions are beyond judicial review for such errors: Larocque at para. 42. [page412] But this does not apply, even in the face of a complete privative clause, where the tribunal's decision on the relevance of evidence occasions a breach of the rules of natural justice: "A breach of the rules of natural justice is regarded in itself as an excess of jurisdiction and consequently there is no doubt that such a breach opens the way for judicial review" (Larocque at para. 43).
36The Divisional Court held in this case:
The [AGCO] ... refused to issue [a summons] for Hobbs on the basis that the evidence was irrelevant. In our view, in so doing, the Board precluded Lifford's ability to lead material evidence in support of the basis for its stay motion. This, in our view, was a breach of natural justice.
The statements taken by Hobbs may support Lifford's position in relation to witness tampering and it should, in our view, have the ability to explore that evidence.
37Thus, the Divisional Court's decision was based on its conclusion that the evidence sought to be introduced by Lifford through Mr. Hobbs is "material" to the central issue on the stay motion, that is, whether improper interference with the evidence of the LCBO witnesses occurred. In the view of the Divisional Court, the effect of the Board's decision to deny Lifford the opportunity to explore this evidence impaired the fairness of the hearing on the stay motion, thereby resulting in a denial of natural justice. These findings displace curial deference and support judicial intervention on either a correctness or reasonableness standard of judicial review. I agree with Lifford's submission before this court that administrative decisions that deprive a party of natural justice do not attract curial deference.
38Accordingly, the Divisional Court's decision is not assailable on the ground that it failed to determine and apply the appropriate standard of review. Rather, the critical issue is whether the denial of the issuance of the Hobbs summons, in the circumstances, impaired the fairness of the hearing of Lifford's stay motion or otherwise occasioned a breach of natural justice. I address this issue next.
(2) and (3) Prematurity and relevance
39The LCBO submits that the Divisional Court erred by failing to dismiss Lifford's judicial review application on the ground of prematurity. It argues that the Divisional Court failed to consider the question of prematurity and that the controlling jurisprudence required that Lifford's application be dismissed to avoid fragmentation of the Board's hearing and to permit consideration of the merits of Lifford's application on a full record. In the unusual circumstances of this case, I would not give effect to this argument. [page413]
40I observe at the outset that this prematurity argument is weakened by two aspects of the procedural history of this case. First, although the notices of proposal were issued in 2001, no hearing before the Board commenced until late September 2003. On the record before us, the reasons for this substantial delay are not entirely clear. Second, although the LCBO attacks Lifford's judicial review application on the basis of prematurity, in November 2003, the LCBO itself sought judicial review of certain production and disclosure orders made by the Board. Although this is not fatal to the LCBO's position on this appeal, it speaks against the force of the LCBO's assertion that prematurity alone dictated the dismissal of Lifford's judicial review application.
41I agree, however, with the LCBO's submission that courts in Ontario, especially the Divisional Court, have frequently stressed the need to avoid a piecemeal approach to judicial review of administrative action. The important rationales for this principle were aptly described by the Divisional Court in Ontario College of Art v. Ontario (Human Rights Commission) (1993), 1993 ONSC 3430, 11 O.R. (3d) 798, [1993] O.J. No. 61 (Div. Ct.). In that case, Callaghan C.J.O.C. stated at p. 800 O.R.:
For some time now, the Divisional Court has ... taken the position that it should not fragment proceedings before administrative tribunals. Fragmentation causes both delay and distracting interruptions in administrative proceedings. It is preferable, therefore, to allow such matters to run their full course before the tribunal and then consider all legal issues arising from the proceedings at their conclusion. . . .
[I]t is preferable to consider issues such as those raised on this application against the backdrop of a full record, including a reasoned decision by the board or tribunal. Obviously, this is usually available to the court only after the administrative body has conducted a full hearing.
See also McIntyre v. Kitchener-Waterloo Real Estate Board Inc., [2004] O.J. No. 2214 (Div. Ct.).
42I endorse this principle, for the reasons articulated in Ontario College of Art. Neither the interests of justice nor meaningful judicial review are facilitated by the untimely challenge of administrative action during the course of a pending hearing before an administrative tribunal. Accordingly, as a general rule, such review applications should be avoided until completion of the applicable tribunal's hearing, when a full record will be available to the reviewing court. This is particularly the case where there is an adequate alternative remedy by way of appeal.
43This general rule, however, is not absolute and should not be applied rigidly if there is a prospect of real unfairness through, for example, the denial of natural justice. In these circumstances, which will arise infrequently, the courts will intervene before [page414] completion of an administrative hearing and prior to the exhaustion of all alternative remedies. See for example, Gage v. Ontario (Attorney General), 1992 ONSC 8517, [1992] O.J. No. 696, 90 D.L.R. (4th) 537 (Div. Ct.), at p. 533 D.L.R.
44This exception is engaged here. Contrary to the appellant's submission, the Divisional Court implicitly recognized this, by finding that the denial of the Hobbs summons was a breach of natural justice. This key finding removed this case from the ambit of the general rule against review of administrative action prior to the completion of the process of the tribunal whose decision is sought to be challenged.
45Moreover, as I have said, although the rejection by an administrative tribunal of relevant evidence does not automatically constitute a breach of natural justice, where the rejection of such evidence taints hearing fairness, a breach of natural justice arises. The demonstration of such a breach displaces curial deference and permits judicial intervention: Larocque at paras. 42, 43 and 46.
46The issue, therefore, is whether the Divisional Court's conclusions that Mr. Hobbs' evidence was material to Lifford's stay motion and that the denial of the Hobbs summons constituted a breach of natural justice in the circumstances, are sustainable. In my view, the answer is 'yes'.
47The basis for Lifford's stay motion is an allegation of witness-tampering -- that is, that persons in authority within the LCBO improperly sought to influence the testimony to be given by LCBO witnesses before the Board. It need hardly be said that such an allegation, in administrative or court proceedings, is most serious. It calls into question basic principles of hearing fairness and, if substantiated, strikes at the heart of the integrity of the administration of justice and the truth-finding objective of our adversarial process. As well, if proven, such a claim could constitute the offences of counselling perjury or obstruction of justice.
48In this case, the Board held that Mr. Hobbs' testimony would be "neither relevant nor helpful". The Divisional Court disagreed, holding that the Board's ruling precluded "Lifford's ability to lead material evidence in support of the basis for its stay motion" and that, "The statements taken by Hobbs may support Lifford's position in relation to witness tampering." I agree.
49The Board based its decision on three factors: (i) its prior ruling in relation to the Fitzpatrick summons that the views or conclusions of Mr. Hobbs' report resulting from his investigation were irrelevant and not informative; (ii) hearing fairness was ensured by the fact that full examination rights in respect of the LCBO witnesses were afforded on the stay motion; and (iii) the [page415] 'best evidence' of whether or not LCBO employees were affected by their contact with Mr. Hobbs was the evidence of the employees themselves.
50The first of these ignored the fact that the purpose of Lifford's request to summons Mr. Hobbs was not to elicit his opinions or conclusions based on his investigation but, rather, to determine what was said to and by the LCBO witnesses during their interviews with Mr. Hobbs in order to test the veracity and reliability of their testimony before the Board.
51The second factor identified by the Board failed to recognize that the LCBO employees were called by Lifford as its own witnesses on the stay motion. Accordingly, the protections afforded by cross-examination were not available to Lifford, absent an adverse witness application under s. 23 of the Evidence Act, R.S.O. 1990, c. E.23. There is no suggestion that the grounds for such an application existed here.
52Finally, and perhaps most significantly, the factors relied upon by the Board do not address the nature of the alleged witness interference. This concerned the suggestions that LCBO witnesses were both pressured by Mr. French concerning their future evidence and, as well, were actively encouraged by him to adopt an attitude in response to questioning that reflected a lack of recall. Such an exhortation, if proven, could constitute a direction to lie or obfuscate under oath. In these circumstances, it was especially important to allow Lifford an opportunity to determine whether the statements of the summonsed witnesses to Mr. Hobbs concerning their interactions with Mr. French constituted prior inconsistent statements, whether the witnesses revealed to Mr. Hobbs additional facts concerning their communications with Mr. French that did not emerge in their testimony before the Board, and what the witnesses were told by Mr. Hobbs.
53It is important to reiterate that, on the evidence heard by the Board, the assertion of attempts to influence the evidence of the LCBO witnesses was not merely speculative. There was direct evidence before the Board from at least two witnesses (Tina Koonings and Kelly McFarlane) that they experienced pressure in their communications with Mr. French regarding their testimony before the Board. Ms. Koonings also testified that she was threatened by Mr. French with future adverse career consequences if her evidence before the Board was viewed by her employer as being of assistance to Lifford. This testimony, if accepted by the Board, would cast serious doubt on the integrity of the evidence before the Board and, as I have said, could constitute the offences of counselling perjury or obstruction of justice. As well, a review of the transcripts reveals a frequent [page416] assertion by some of the LCBO witnesses that they did not recall or did not know the answer to the questions posed.
54The LCBO argues that it was incumbent on Lifford to demonstrate that Mr. Hobbs' evidence was material to the issue of witness-tampering. In my view, Lifford met this burden.
55The evidence before the Board established that Mr. Hobbs interviewed several of the LCBO witnesses prior to their testimony before the Board and that some of these interviews included questioning regarding the witnesses' communications with Mr. French, the alleged perpetrator of the witness- tampering. As well, Mr. Hobbs questioned some of the LCBO witnesses (for example, Mr. Martin) concerning Lifford and, at least inferentially, regarding the allegations made against Lifford as in issue before the Board.
56The investigation conducted by Mr. Hobbs, as described by Mr. Martin in his October 10, 2003 letter to LCBO employees, was triggered by the evidence before the Board on September 22, that is, by Ms. Koonings' allegations. The focus of the investigation was events "concerning the Toronto Logistics Division" of the LCBO, where many of the witnesses summonsed by Lifford worked for Mr. French or under his direction. Importantly, the recipients of Mr. Martin's letter were directed both to attend any requested interview with Mr. Hobbs and to answer his questions. Thus, the full participation of LCBO employees in the investigation was not voluntary but, rather, compulsory at the instance of their employer.
57In this context, it was open to Lifford to argue that the interviews conducted by Mr. Hobbs operated to pressure LCBO employees or to heighten their apprehension concerning the reaction of the LCBO, their employer, if they testified candidly before the Board. Without access to information concerning what was actually said to and by the LCBO employees during the Hobbs interviews, the meaningful exploration of this concern by Lifford was frustrated. Contrary to the Board's conclusion that the 'best evidence' on these issues was the evidence of the LCBO witnesses themselves, the 'best evidence' upon which to test the LCBO witnesses' recollections of what was said to and by them during the Hobbs interviews regarding their communications with Mr. French, is the information contained in the contemporaneously generated tape recordings of the interviews.
58In these circumstances, I agree with the Divisional Court's conclusion that the evidence to be elicited from Mr. Hobbs regarding his interviews of the LCBO witnesses is material to the subject-matter of Lifford's stay motion. This evidence is separate and distinct from any evidence concerning the subjective conclusions reached by Mr. Hobbs as a result of his investigation. At the very [page417] least, the statements made by the LCBO witnesses during the Hobbs interviews relating to their communications with Mr. French as to their anticipated evidence before the Board could have a direct bearing on Lifford's efforts to establish witness-tampering and on the Board's assessment of the veracity and reliability of the testimony given by the LCBO witnesses.
59I therefore reject the LCBO's contention that it can safely be concluded on the existing record that the evidence now sought from Mr. Hobbs cannot be helpful in assisting the Board to determine whether any witness-tampering occurred. To the contrary, this evidence may establish its occurrence and significance or, perhaps more importantly, dispel the assertion of witness-tampering.
60The LCBO makes the additional submission that the evidence of the LCBO witnesses, including any testimony by them regarding the issue of witness-tampering, is irrelevant to Lifford's defence on the merits of officially induced error. It asserts that the LCBO is not a regulatory body, it does not regulate or govern Lifford's activities, and its employees are not "officials" who might be capable of inducing an error of law so as to provide Lifford with a defence to the allegations contained in the notices of proposal.
61But these issues are contested before the Board. Lifford plans to argue that the requisite elements of officially induced error are made out in this case, including that LCBO personnel are appropriate "officials" upon whose advice it could reasonably rely within the meaning of the legal test for officially induced error: see R. v. Jorgensen, 1995 SCC 85, [1995] 4 S.C.R. 55, [1995] S.C.J. No. 92.
62While it is true that, as a matter of law, Lifford faces a high hurdle to establish officially induced error, this defence is its main response to the allegations detailed in the notices of proposal. It is for the Board to ultimately determine, upon all the admissible evidence eventually introduced before it and in accordance with the applicable legal principles, whether this defence has been made out. For the purpose of Lifford's stay motion, an affirmative showing of officially induced error is not required.
63Accordingly, I conclude that the refusal by the Board to issue the Hobbs summons occasioned a breach of natural justice by precluding Lifford from introducing evidence sought to be relied upon by it to establish the foundation for the requested stay of the licence hearing. This denial of natural justice is a full answer to the LCBO's claim that Lifford's judicial review application was premature and, as well, to its invocation of curial deference in relation to the Board's decision to deny the issuance of the Hobbs summons. [page418]
(4) Privilege
64The LCBO filed three affidavits sworn by Ephry Mudryk, a law clerk in the offices of the LCBO's external counsel, in which Ms. Mudryk provided evidence concerning the circumstances surrounding the engagement of Mr. Hobbs and his mandate. This evidence established that Mr. Hobbs was hired by the LCBO's external counsel on October 9, 2003; that at the request of the LCBO's external counsel, Mr. Hobbs "interviewed a number of witnesses in connection with this case"; that Ms. Mudryk and a secretary from her law firm were present at several of these interviews and "assisted Mr. Hobbs with his investigation"; and that Mr. Hobbs provided "a report and a number of witness statements" to the LCBO's external counsel.
65In her affidavit sworn on November 10, 2003, Ms. Mudryk stated that Mr. Hobbs' retainer "was necessary due to the allegations about the conduct of several LCBO employees by Lifford . . .". She also indicated her belief that, "Mr. Hobbs' report and the witness statements obtained by Mr. Hobbs are documents on which [the LCBO's external counsel] anticipates relying in his cross-examinations, in the event that the witnesses make inconsistent statements before the Panel in the hearing."
66Subsequently, in an affidavit sworn on April 20, 2004, Ms. Mudryk added: "I am advised that the purpose of retaining an investigator was to assist [the LCBO's external counsel] in providing legal advice to the LCBO in relation to the claims made by Tina Koonings and Kelly McFarlane in their testimony before the AGCO Panel." Ms. Mudryk repeated this statement, in essentially the same terms, in a third affidavit sworn by her on May 5, 2004. In that affidavit Ms. Mudryk also said, "[T]he retainer of our firm, which practises exclusively in the area of litigation, and the purpose of the investigation itself was to provide advice to the LCBO in relation to potential issues, actions or claims arising from the testimony of Ms. Koonings, and the hearing itself." As well, Ms. Mudryk indicated:
I am further advised by [the LCBO's external counsel] that the letters from both Ian Martin and Mary Fitzpatrick, addressed to each of the employees requiring them to attend to be interviewed by Mr. Hobbs, relate solely to that purpose and do not accurately reflect the relationship between Mr. Hobbs and ... the LCBO's outside counsel.
67Based on this evidence, the LCBO argued before the Board and the Divisional Court that the Hobbs investigation and Mr. Hobbs' ensuing report were subject to solicitor-client or litigation privilege. As I have mentioned, the Board made no determination regarding this privilege claim. Rather, it quashed the Fitzpatrick [page419] summons and refused to issue the Hobbs summons on the basis of relevancy. However, in its reasons regarding the Hobbs summons, the Divisional Court ruled:
In our view the Hobbs report is not subject to solicitor and client privilege for the reasons set out by the Court of Appeal in General Accident Co. v. Chrusz (1999), 45 O.R. (3d) at 321, where at p. 15 of the quicklaw version, the Court said:
However, I would not accord communications between Bourret and Eryou with the protection of solicitor-client privilege. Bourret was retained to perform the functions of investigating and reporting. He was expected to be honest in doing his job, and no special legal protection was necessary to ensure a candid report. I agree with the reasoning of Doherty J.A. on this subject.
68The focus of these comments by the Divisional Court was the report prepared by Mr. Hobbs, in contrast to the communications that took place during his witness interviews. However, I believe that the Divisional Court's reasons, properly read, extend to both the Hobbs report and, more generally, to the information gathered by him during his investigation, including during his witness interviews. This is consistent with the Divisional Court's ruling that Mr. Hobbs attend before the Board to give evidence and that he produce at that time the "transcripts and/or recordings" of his interviews with those of the LCBO employees who were summonsed by Lifford. Notably, the Divisional Court's decision does not require Mr. Hobbs to produce a copy of the report delivered by him to the LCBO's external counsel. In its factum filed with this court, Lifford sought production of the Hobbs report but this was not pressed in oral argument. Moreover, no cross-appeal was taken by Lifford from that aspect of the Divisional
Court's ruling pertaining to Mr. Hobbs' report.
69I agree with the Divisional Court's conclusion that the decision of this court in General Accident Assurance Co. v. Chrusz (1999), 1999 ONCA 7320, 45 O.R. (3d) 321, [1999] O.J. No. 3291 (C.A.) is dispositive of the LCBO's solicitor-client privilege claim. While it is true that solicitor-client privilege can extend to communications between a solicitor or client and a third party, this extension of the privilege is subject to important constraints. In Chrusz, supra, Doherty J.A. (Carthy and Rosenberg JJ.A. concurring on this issue) stated at pp. 356-57 O.R.:
Client-solicitor privilege is designed to facilitate the seeking and giving of legal advice. If a client authorizes a third party to direct a solicitor to act on behalf of the client, or if the client authorizes the third party to seek legal advice from the solicitor on behalf of the client, the third party is performing a function which is central to the client-solicitor relationship. In such circumstances, the third party should be seen as standing in the shoes of the client for the purpose of communications referable to those parts of the third party's retainer. [page420]
If the third party is authorized only to gather information from outside sources and pass it on to the solicitor so that the solicitor might advise the client, or if the third party is retained to act on legal instructions from the solicitor (presumably given after the client has instructed the solicitor), the third party's function is not essential to the maintenance or operation of the client-solicitor relationship and should not be protected.
(Emphasis added)
70In this case, the investigation announced by the LCBO was characterized by Mr. Martin as an "internal" investigation to be conducted by "a neutral outside investigator" with the "assistance of outside counsel". As described by Ms. Mudryk in her affidavits, Mr. Hobbs' mandate was to assist the LCBO's external legal counsel in providing legal advice to the LCBO.
71Thus, in the above-quoted language of Doherty J.A. in Chrusz, Mr. Hobbs was authorized "only to gather information from outside sources and pass it on to the solicitor so that the solicitor might advise the client". This function by Mr. Hobbs was not essential to the maintenance or operation of the solicitor-client relationship between the LCBO and its external counsel. Moreover, Lifford is not seeking disclosure or production of communications between the LCBO and its external counsel. Rather, it seeks disclosure of communications between Mr. Hobbs and those of the LCBO employees interviewed by him who were summonsed by Lifford. In these circumstances, solicitor-client privilege does not apply.
72I reach a similar conclusion concerning the LCBO's claim of litigation privilege. With respect to it, the Divisional Court held, "Nor do we accept that litigation privilege applies. The LCBO was an intervenor in these proceedings for only a very short period of time before its involvement was terminated by earlier order of this Court."
73In Chrusz at p. 331 O.R., this court referred with approval to the following comparison of solicitor-client and litigation privilege set out by R.J. Sharpe, prior to his appointment to this court, in a lecture entitled "Claiming Privilege in the Discovery Process" in Law in Transition: Evidence, L.S.U.C. Special Lectures (Toronto: De Boo, 1984) 163 at pp. 164-65:
Litigation privilege, on the other hand, is geared directly to the process of litigation. Its purpose is not explained adequately by the protection afforded lawyer-client com- munications deemed necessary to allow clients to obtain legal advice, the interest protected by solicitor-client privilege. Its purpose is more particularly related to the needs of the adversarial trial process. Litigation privilege is based upon the need for a protected area to facilitate investigation and preparation of a case for trial by the adversarial advocate. In other words, litigation privilege aims to facilitate a process (namely, the adversary process) while solicitor-client privilege [page421] aims to protect a relationship (namely, the confidential relationship between a lawyer and a client).
(Emphasis added)
74As emphasized in this passage, litigation privilege is focused on litigation itself. A claim of litigation privilege triggers consideration of competing interests: the need for an arena of protected communications to assist the adversarial process, on the one hand, and the need for disclosure to ensure hearing fairness, on the other hand. In Chrusz, this court held that in order to balance these competing interests and to engage litigation privilege, the communication at issue must have been made when litigation was commenced or contemplated, where the dominant purpose for the communication was for use in, or advice concerning, the litigation. In addition, once implicated, litigation privilege is extinguished when the litigation, or the contemplation of it, comes to an end.
75In this case, in my view, the LCBO's claim of litigation privilege cannot succeed, for several reasons. First, the LCBO is not a party to the proceedings before the Board. It enjoyed intervenor status on Lifford's stay motions for a period of only three days. As the Divisional Court observed when it quashed the Board's decision granting intervenor status to the LCBO, "[T]he LCBO has no interest in the stay motions." I agree. The Board has no jurisdiction on Lifford's stay motions to make any determination affecting the rights, privileges or liabilities of the LBCO; nor does the Board have jurisdiction on those motions to impose any sanction or penalty on the LCBO, or to grant relief in its favour.
76Second, it is telling that Ms. Mudryk's affidavits, upon which the LCBO relied to resist the Hobbs summons, contain no assertion that the dominant purpose of the LCBO investigation was actual or contemplated litigation to which the LCBO was, or anticipated that it might be, a party. The only 'litigation' referenced in those affidavits is the proceeding before the Board. The LCBO chose, as the employer of the LCBO witnesses summonsed by Lifford, to investigate the allegation of witness-tampering. Although such action may be prudent in the context of labour and employment issues within the workplace, on the facts of this case it does not attract litigation privilege.
77Finally, Lifford has a compelling interest in ensuring that the Board is positioned to fairly and fully evaluate the evidence given by the LCBO witnesses in relation to the witness-tampering allegation and Lifford's proposed defence to the notices of proposal, especially in light of the statements made to or by them on these issues in their interviews with Mr. Hobbs. The calling of Mr. Hobbs as a witness before the Board and the production of [page422] the transcripts or other recordings of the interviews conducted by him, as ordered by the Divisional Court, will further this important objective. In these circumstances, Lifford's interest in receiving a fair hearing before the Board on its stay motion and during the licence-hearing trumps any litigation privilege claim available to the LCBO.
V. Disposition
78Accordingly, for the reasons given, I would dismiss the appeal. Lifford is entitled to its costs of this appeal, the costs of the LCBO's motion for leave to appeal to this court (which were reserved to this Panel), and the costs of its judicial review application before the Divisional Court (which remain outstanding) on the partial indemnity scale, fixed in the aggregate amount of $25,000, inclusive of disbursements and Goods and Services Tax.
Appeal dismissed.
