Ontario Superior Court of Justice, Divisional Court

Court File No. 672/00 Date: 2000-12-06 MacFarland J.

Counsel: Peter E. Manderville, for appellants. Leon J. Melconian, for respondent.

[1] Wilkins J.:—Prior to the order of Sanderson j. November 10, 1999, Anderson and the trustee had an agreement in furtherance of their common interest that the trustee would pursue Zivanovic and include Anderson's claims in the trustee's action on the Commercial list. Implicit in the pre-November 10 agreement would be an agreement to stay issues of conflict and adversity between Anderson and the trustee until the trustee had completed the steps necessary to collect the moneys of both the estate and Anderson to be held in trust until the disputes between Anderson and the trustee would be resolved by settlement or at Trial.

[2] Anderson and the trustee entered their agreement fully believing and agreeing that one counsel would represent their common interest until such time as the first job of work was done.

[3] Effective November 10, 1999 the order of Sanderson J. terminated this agreement.

[4] The pre-November 10 agreement was designed to reduce cost and streamline the litigation and to allow common interests to be advanced against a common foe in a common front. This common front remained in place during the advancement of the application before Sanderson J. and the respondent to this appeal seeks to obtain the communications between the parties participating in the intention in common in that application.

[5] The learned Master ordered production of the communication between Anderson or her solicitors and Ernst & Young or their solicitors related to the agreement with the trustee by Anderson.

[6] In the reasons given by Sanderson J. it was set out that the trustee did not have the legal authority or entitlement to make claims on behalf of Anderson as the person for whom the trustee represents did not advance the money to Zivanovic.

[7] The questions requesting production were founded in cross-examination to ask for the explanation as to why the Anderson action was stayed. The reason tendered was because the trustee had taken over the advancement of Andersons claims. The request was for production of communications related to the trustees advancement of Andersons claims and Anderson's stay of her action.

[8] Cases considered:

Buttes Gas & Oil Co. v. Hammer (No. 3), [[1980] 3 All E.R. 475 (C.A.)];

Vancouver Hockey Club Ltd. v. National Hockey League [(1987), 1987 2430 (BC SC), 44 D.L.R. (4th) 139 (B.C.S.C.)];

Supercom of California Ltd. v. Sovereign General Insurance Co. [(1998), 1998 31625 (ON CJ), 1 C.C.L.I. (3d) 305 (Ont. Ct. (Gen. Div.))];

Canadian Pacific Ltd. v. Canada (Director of Investigation and Research) [(1995), 60 A.C.W.S. (3d) 485 (Ont. Ct. (Gen. Div.))].

[9] Lord Denning in Buttes, established the concept of common interest privilege. He applied it in a circumstance where the parties were of such a common interest in the litigation that they could virtually be regarded as the same party — that is to say — their interests were indistinguishable.

[10] This is not the case at bar — here the common interest arose only through an agreement — the core principle of which was found to be untenable at law by Sanderson J.

[11] There parties were in dispute and in the overall litigation they could not be represented by the same solicitor.

[12] The common interest founded in the common intent agreement was entered into in honest belief and with the highest of motivation and intention the trustee was attempting to advance all of the interests of all of the creditors of the estate. The Court has set aside the two loans claims of Anderson, who alleges fraud on the part of the Bankrupts.

[13] Strictly speaking, the Master was correct in law in that there was not a true common interest in the litigation as defined by the cases. On the other hand, the circumstances of this case are unique and the commonality of interest was created for purposes consistent with good public policy.

[14] In my view, the depth and scope over which the court will allow privilege to be claimed is not restricted to pure technical law. On the facts of this case there was a true intent to communicate in circumstances of privilege under circumstances where public policy would welcome the free and open communication between Anderson or her solicitors and Ernst & Young or their solicitors. It may be that the agreement was ill founded but for the extent of its duration such exchanges would have been as if a true common interest did exist and under circumstances where it would be believed that honest exchanges would remain private as if between solicitor and client. During the currency of the agreement the trustee and their solicitor were acting as if they were the Agents of Anderson and her solicitors — and in fact the trustee's solicitor was acting as solicitor for Anderson.

[15] Under those circumstances, I am of the view that the court should extend privilege to those communications during the currency of the agreement until November 10.

[16] The order of the Master should be set aside and the substituted order should be that such productions need not be produced. Costs of this part of the Appeal — motion — to the Appellant to be awarded on the party-and-party scale here and below.

[17] The judgment of the court endorsed on the appeal book was as follows:

Leon J. Melconian, for applicant.

P. Manderville, for respondent.

[18] MacFarland J.:—The Master's reasons are brief and provide no analysis of the evidence before him and hence we are denied insight into the basis for his conclusion. He says shortly — there is no common interest privilege and the same counsel cannot represent all parties.

[19] Wilkins J. in his reasons seems to accept that the Master's analysis were correct in law relation to common interest privilege [supra]:

... in that there was not a true common interest in the litigation as defined by the cases.

He then goes on to find — on the basis of the unique facts of the case before him — that the particular facts would dictate the communications which were the subject of the motion before the Master — were made in circumstances where for public policy reasons there should be privilege. He says that the trustee and its solicitor were the agents of Anderson and her solicitor and that until the Reasons of Sanderson J. were released the trustee's solicitor was in fact the solicitor for Anderson.

[20] The effect of his decision to my mind is the Master was correct in the sense that the facts did not support a claim for privilege on the basis of common interest — but in his view the communications were nevertheless privileged on the basis he set out.

[21] I do not consider this decision to be in "conflict" with all other cases where an appeal from the Master (where reasons are given) the court must be satisfied that the Master erred.

[22] It is implicit from his reasons that Wilkins J. found the decision to be in error — Master found no basis for privilege — Wilkins J. did.

[23] I am not persuaded there is any good reason to doubt the correctness of the decision in question, but if were, I am not satisfied that the issues here in any way transcend the interests of the parties. They relate to production of documents among these parties and in my view, there is nothing here which particularly advances the law.

[24] In result the application for leave is dismissed. Costs to the respondent fixed in the sum of $1,500.00.

[25] Application dismissed.