Dramel Limited v. Multani, 2020 ONSC 4440
COURT FILE NO.: CV-17-580599 MOTION HEARD: 20200311 REASONS RELEASED: 2020 0 731
SUPERIOR COURT OF JUSTICE – ONTARIO
BETWEEN:
DRAMEL LIMITED
Plaintiff
- and -
GURNAM MULTANI and SURJIT MULTANI
Defendants
BEFORE: MASTER D. E. SHORT
COUNSEL: Pathik Baxi, for the Plaintiff (Moving Party) Roberto Cucci, for the Defendants (Responding)
REASONS RELEASED: July 31, 2020
Reasons for Decision
I. Background
[1] One of the first things a client learns when consulting a lawyer, is that everything he or she tells the lawyer, will remain confidential. The confidentiality of communications between client and lawyer is necessary to ensure the client is comfortable providing candid information to their lawyer and so the lawyer can give confidential advice and legal representation. Not only do lawyers have a professional duty to maintain their client’s confidence, the confidential communications are generally subject to solicitor-client privilege.
[2] However, clients need to know there are limits and exceptions to the confidential nature of their communications. While all communications between a lawyer and his/her client are confidential, not all communications are privileged, such that they would be protected from disclosure in a lawsuit. For solicitor and client privilege to apply, the party asserting the privilege must establish the communication meets the following criteria:
(a) the communication was between a solicitor and client;
(b) it must entail the seeking of legal advice; and,
(c) the advice sought must be intended to be confidential by the parties.
[3] When solicitor-client privilege is challenged, the onus is on the party asserting the privilege to establish that privilege should protect the communication in question. As such, while most communications between client and counsel will never be revealed (unless the client wishes them to be), it is important to understand that the confidential nature of solicitor-client communications is not all-encompassing and is not absolute.
[4] In the beginning, the present litigation arose from an alleged failure by the defendants to pay monies due on mortgage securities that are now held by the plaintiff corporation.
II. Previous Activity
[5] The Plaintiff is a mortgagee and the Defendants are mortgagors. Default in payment under the mortgage occurred on May 31, 2016. The Plaintiff’s action seeks, inter alia, payment of the outstanding principal amount and interest due under the mortgage.
[6] Normally, when a default occurs on a mortgage, lenders have a number of potential courses to follow, in order to either obtain payment, or to exercise a power of sale or to acquire the subject property, by way of foreclosure. Here, more than four years after the mortgagor’s apparent failure to pay the contacted amount. In that period little practical progress towards a resolution has been achieved.
[7] On July 15, 2019, the Defendants served a Notice of Motion seeking various interim relief. The Defendants' Motion Record, in support of the relief requested, includes three sworn Affidavits of the Defendants, which put in issue the legal advice they received, and in particular, they are questioning the circumstances wherein they appear to have executed various relevant documents with various degrees of involvement by their former lawyers.
[8] In response to that motion, the Plaintiff seeks an order permitting the Plaintiff to examine under oath the Defendants' former lawyers with regard to their involvement in the execution of various agreements and other transaction-related documents. As a result, counsel for the mortgagee, also seeks an order that any solicitor-client privilege is deemed to have been waived with respect to certain issues raised by the defendants in their Affidavits which were filed in support of their position on the main motion.
[9] The Plaintiff further sought an order requiring Michael Potashnyk to answer the undertakings given during his December 18, 2019 examination. and an order setting out a new timetable for the hearing of the Defendants' motion. If those answers have not already been provided, I am directing that they now be provided, prior to August 31, 2020.
III. History of the Debt
[10] The previous loans appear to have taken place with respect to a number of commercial properties in the East End of Toronto. As a result of failure comply with, what the plaintiff asserts was the obligations of the defendants with regard to discharging various mortgage, the plaintiff sought to obtain a judgment in the present action “on consent”, in January of 2018.
[11] The case history with respect to a second action, CV-17-588728, commenced in December of 2017 with the same parties, reflects that the defendants were noted in default, in that second action, on January 22, 2018. The Case History with respect to that action, reports a judgment in the amount of $196,044.62 being obtained from the Registrar as well as a writ of seizure and sale. Over a year later, by way of an in-writing motion, a further order for a writ of possession seems to have been signed by Justice W. Low on August 23, 2019, with regard to the property in issue in the second action.
[12] On October 1, 2019 motions in both actions first came before Justice Archibald, at a case conference whereby counsel for the defendants sought a 2 hour appointment for an injunction motion to restrain the enforcement of the alleged existing mortgage documentation.
IV. Current Status
[13] It appears that a consent order was obtained setting aside the noting in default in the 2018 matter, as part of an arrangement that the plaintiff, alleges that the parties negotiated. The plaintiff asserts that the agreement included specific payment and other terms were specifically agreed upon by the defendants.
[14] The defendants assert that they never agreed to the alleged terms and challenge the content of the various settlement documents, asserting that they do not reflect what was agreed upon at the time.
[15] Over the past two years this matter has come before more than four High Court judges, while the Plaintiff is continuing to seek to enforce its security, over the various properties involved.
[16] With that background the privilege waiver component of this dispute reached my courtroom in March of 2020. A few days after matter was argued, the extent of the COVID 19 Problem became better appreciated. The complications added by closing down of our courts has regrettably contributed to the delay in releasing this decision.
[17] Based upon the extensive material submitted on this motion, it would seem that, since at least 2013 the defendants have had a number of legal counsel assisting them, from time to time, with respect to the possible resolution or restructuring of defendants’ debts.
[18] By the time this matter reached my courtroom at least four lawyers had been brought into the action by way of motions seeking to examine them. It appears that those lawyers had by that point retained separate counsel representing each of them or had elected to act on their own behalf. What was sought by the plaintiff was a disclosure of their understanding of the existing facts and events in existence, at the times when they negotiated, witnessed, or swore, various “settlement” related documents.
[19] These members of the bar had, at some point in time, been assisting or acting for one or both defendants. A series of documents were executed along the way, which were, in every instance, in the English language.
[20] All those lawyers elected not to attend or to take a position on this motion. It was my understanding that they indicated that they would each abide by any final resolution of the present interlocutory motion.
V. Defendants’ Position
[21] On this motion counsel for the defendants sought to have this court enforce what they assert is an enforceable claim for privilege, with respect to whether or not, when the documents were executed, there was any doubt that the defendants (who had signed a range of documents) had any understanding of the meaning of the documents which were in the English language or whether they even saw the full contents of the documents, that would appear to have been signed by them.
[22] The affidavits filed this matter on behalf of Mr. Multani and his spouse, address what is acknowledged to be his signature at the end of the various documents, but the jurat in every case simply reads “sworn before me at the City of Toronto “etc. None of the contemporary documents seem to raise or address any question as to the English language fluency of the defendants, nor that any contemporaneous translation was sought or obtained.
[23] It seems to me that the defence position simply relies upon is the doctrine of “non est factum” and asserts that it applies to the various apparent “agreements”, upon which the plaintiff Corporation now relies.
[24] I therefore turn to my assessment as to what extent of disclosure by former counsel, is appropriate, at this stage of the action. There is a motion for Summary Judgment pending and already adjourned more than once to permit this issue to be determined. I therefore turn to the guidance of past decisions in similar cases and from the interlocutory decisions previously made in the present case.
VI. Case History
[25] This dispute has many odd components. It appears two actions between the parties are in existence. This matter, CV-17-580599 was commenced by a Statement of Claim on August 10, 2017. The case history reflects a motion being filed on January 10, 2018 described as “CONSENT JUDGMENT (LIQUIDATED)”.
[26] That is what was sought. However, the endorsement of Justice Diamond with that date reads:
“Despite this motion seeking Judgment on consent of the parties. I cannot grant the request of this Record. The Claim seeks damages on a $4,200,000.00 mortgage registered on March 14, 2016. Default allegedly occurred on May 31, 2016.
How is there now over $12,000,000.00 allegedly owing when interest under mortgages is only 12% per annum?
Makes zero sense and is not explained at all in the Record. Further evidence is obviously required.”
[27] As noted above, CV-17-588728 is an action between the same parties, commenced on December 19, 2017. A Writ of Possession was apparently obtained in that case, from Justice W. Low on August 23, 2019.
[28] Both actions made their way to a case conference before Justice Archibald on October 1, 2019. The case history reflects that the Defendants’ counsel obtained an adjournment, on consent, which was granted by his Honour. The Case History notes:
“…November18/19 for 2 hours injunction. Status Quo maintained until return of motion including cancellation of Eviction Notice.”
[29] On November 18 Justice Faieta adjourned the 2 hour matter to February 10, 2020. Then on that date, Justice Myers further adjourned the matter on terms, which read in part, on the Case History:
“… This motion was not booked, moreover under either rule 30.04 (5) or 34.15 the motion is properly returnable to a master. I respectfully request that the Master’s Office schedule this matter as soon as a date is available as the parties motions before this court are awaiting the outcome of the refusals and any further examinations. I’m not prepared to schedule examinations of the parties now as information may be forthcoming that will [ further delay this case . Matter ] is adjourned to a case conference to be heard by me on March 19, 2020 at 8:30 AM… Material to Masters” [ with probable content of missing portion of text added ]
[30] As a consequence, on March 11, 2019, I heard the long motion with respect to the matters raised by His Honour.
VII. Defendants’ July 15, 2019 Motion
[31] Against that background I turn to the main motion and the resolution of the issue before me. Specifically, the Plaintiff is a mortgagee and the Defendants are mortgagors. The Defendants, Gurnam Multani and Surjit Multani, are husband and wife. The Plaintiff’s position is that default in payment under the mortgage occurred on May 31, 2016 and continues to this date. Despite numerous requests for payment the mortgage debt remains outstanding.
[32] The Plaintiff brought an action against the Defendants. The Plaintiff’s action seeks, inter alia, payment of the outstanding principal amount and interest due under the mortgage.
[33] On July 15, 2019, the Defendants served a Notice of Motion seeking various interim relief. The Defendants' Motion Record, in support of the relief requested, includes three sworn Affidavits of the Defendants:
(a) The Affidavit of Gurnam Multani, sworn July 14, 2019;
(b) The Affidavit of Gurnam Multani, sworn September 15, 2019; and
(c) The Affidavit of Surjit Multani, sworn October 9, 2019.
[34] In all three Affidavits the Defendants raise the issue of the legal advice they received. The Defendants, in support of their motion, claim that they did not understand the various documents that they executed with their legal counsel.
[35] The plaintiff’s factum asserts:
- On August 8, 2018, the Defendants executed a Forbearance Agreement. The August 8, 2018 Forbearance Agreement was executed by the Defendants at the law office of their lawyer at the time, Hari Nesathurai. Mr. Nesathurai's articling student, … witnessed the Defendants execute the Forbearance Agreement. The Defendants both state in their Affidavits that they had no idea what the August 8, 2018 Forbearance Agreement was when they executed the Acknowledgement page at their lawyers' office. They claim they only received the signature page of this document, together with a stack of several other documents, and were told to sign it, which they did. They claim that the Forbearance Agreement was not explained to them by their lawyers, they never agreed to it and they never saw the entire document when they signed it.
[36] Specifically, the September 15, 2019 Affidavit of Gurnam Multani, filed in support of the Defendants' motion, states the following regarding the August 8, 2018 Forbearance Agreement at paragraphs 31-32:
Prior to the Mortgagee's counsel providing them recently, I had never seen the terms or any part of the so-called Forbearance Agreement dated August 8, 2018 (three pages on Simmons Dasilva letterhead). There is an "Acknowledgement" on a separate page which again as in the document from April 4, 2016 was given to us to sign, as an Acknowledgement page standing alone and with nothing else to refer to. Even the names of the Lender / Mortgagee doesn't appear anywhere on the page. The signatures on this Acknowledgment page are again authentically mine, my wife's, and now mine for Gursur Holdings Limited, but this acknowledgment page was executed blank, stand-alone and without other text.
On closing the transaction with the RBC our lawyer Hari Nesathurai (C2 Global Law) provided us with a bundle of reporting documents such as our Release to the RBC and their lawyers, TRB Payout Statements, etc. Which constituted 20 pages of documents. In this reporting bundle by C2 Global Law, the single Acknowledgment page (where our signatures had been witnessed by his Articling Student …) was included but again, as a single stand-alone page. If it had been part of an actual 4 page document when it was executed, then those pages would have been part of the C2 Global Law group of reporting documents. In actuality there was only one Acknowledgment page.
[37] Similarly, in her October 9, 2019 Affidavit, Surjit Multani, includes the following about the August 8, 2018 Forbearance Agreement:
“On the first so-called "Forbearance Agreement" April 4, 2016 and the fourth "Forbearance Agreement" August 8, 2018 we were told to sign a single standalone "Acknowledment" page, without any agreement in front or anything else attached. On the so-called "Consent" November 4, 2017 and on the "Forbearance Agreement" January 8 2018 our signatures and initials are outright false and not our signatures.
... As my husband says at Paragraph 20 of his Further Affidavit, as part of the Plaintiffs requirement for absolute cooperation we were provided with an Acknowledgment page standing alone and with nothing else to refer to. Even the name of the Lender/Mortgagee doesn't appear anywhere on that page. The signatures on this Acknowledgment page are authentically mine and my husband's, but we executed this Acknowledgment page blank, stand-alone, and without other text. All of the initials on the other pages, if they were intended to be mine or my husband, are outright forgeries.” [my emphasis]
[38] Clearly the Defendants have directly put into issue what legal advice they received when they executed the Forbearance Agreement. Specifically, they have raised the issues of whether various documents were explained to them; whether they agreed to the terms of any Forbearance Agreement; and whether they saw the entire document or just the signature page as they claim. All the relevant events occurred in the offices of their own lawyers or with their own lawyers.
VIII. Core Issues on Motion
[39] The Plaintiff’s position is that since the Defendants have put in issue the legal advice they received when they executed the August 8, 2018 Forbearance Agreement. There appears to be issues with respect to the advice and instructions they received when they executed the Forbearance Agreement. The state of mind of the defendants and their understanding are directly put in issue by the Defendants. The Plaintiff seeks an order permitting the Plaintiff to examine the lawyers involved with respect to what legal advice they provided the Defendants when the August 8, 2018 Forbearance Agreement was executed including whether the document was explained to the Defendants and whether the Defendants understood and were explained the Forbearance Agreement and “whether they saw the entire Forbearance Agreement or, as they claim, were they only given the signature page to sign and had no idea what they were signing.”
[40] The Plaintiff asserts that it is entitled to the best evidence on the Defendant's motion to be able to make a full answer and response. Their counsel further submits that also be relevant to know if the Defendants' current lawyer, Roberto Cucci, contacted Messrs. Hari Nesathurai and Graeme Oddy, prior to making sworn allegations of negligence against them and what due diligence Mr. Cucci conducted to ascertain whether the allegations made by his clients were true.
[41] In particular the Defendants state in their Affidavits filed in support of their motion that the Consent to Judgment (hereinafter the "Consent"), executed on November 4, 2017, was not executed by Mrs. Multani and that her signature is a forgery. The Defendants further claim that the Consent was executed by Mr. Multani, but that he had no idea what he was signing as he does not speak English and cannot read or write in that language. “Further, they claim that the initials on each page of the Consent are forgeries.”
[42] Clearly there would seem to be diametrically different views on whether the various documents are genuine and reflect a bargain that was, or was not, made between the parties. In its factum, the Plaintiff asserts:
“ Specifically, the July 14, 2019 Affidavit of Gumam Multani, filed in support of the Defendants' motion, states the following about the Consent at paragraph 14:
In reality my signature appeared on that Consent (of which I do not have a copy) simply because they told me it was a due course document I had to sign, and I couldn’t read it. My wife's signature appeared on that Consent (of which I do not have a copy) simply because they told me it was a due course document I had to sign, and I couldn't read it. My wife's signature does not truly appear on the Consent at all - my wife tells me she never signed such a thing and I do verily believe it.”
[43] A further affidavit is relied upon, sworn 2 months later by the same individual on September 15, 2019. A date, two weeks prior to the October 1, 2019 case conference, that was scheduled before Justice Archibald. In that document, portions of paragraphs 21 and 27 state the following:
“Prior to the Mortgagee's counsel providing us with a copy I had never seen the so-called Consent to Judgment. …
... The Gumam Multani signature on the "Consent" is not mine, and the signature for my wife Surjit Multani is not hers. None of the initials on the attached pages are by us. In her case, they did not even try to imitate her signature. My signature, as I am illiterate, is a rough pattern squiggle, but my wife writes out her full name as seen in the previous document, the "Acknowledgement of April 4, 2016. The squiggle that someone placed on the "Consent" of November 4, 2017 is nothing like her signature ... Someone who forged her “signature” evidently thought that if my signature was a squiggle they could use a similar squiggle to represent my wife also.” [my emphasis]
[44] Descriptions of events alleged to have taken place around November 4, 2017 seem to be diametrically opposed. Clearly the enforceability of the claims of the Plaintiff, turns on what is found to have occurred, “on the balance of probabilities”.
[45] In that regard, I turn to extracts from these paragraphs from the plaintiff’s factum:
On November 4, 2017, the day the Plaintiff submits the Consent was executed by both Defendants the Plaintiff's lawyer, immediately after the execution of the Consent, emailed a copy of the Consent to the Defendants' lawyer at the time, Richard Parker, confirming that both Defendants had executed the Consent that day. Mr. Parker sent responding correspondence to the Plaintiff's lawyer on November 7, 2017 enclosing the figures for the Defendants' mortgage.
Given that the Defendants have put their knowledge of the Consent, as well as the validity of their signatures on the Consent, into issue the Plaintiff seeks information from Mr. Parker about his discussion with the Defendants after the Plaintiffs lawyer sent him the Consent on November 4, 2017.
Mr. Parker, … is in a position to confirm or deny whether he discussed the Consent with the Defendants and whether they were aware of its existence and whether at the time they made the same allegations to him that the signature of Mrs. Multani was a forgery as are the initials of both Defendants. The Defendants by putting the validity of their signatures on the Consent and their knowledge of the Consent at issue have waived solicitor-client privilege with respect to what conversations they had with Mr. Parker regarding the Consent….
…The Plaintiff would also like to know if the meeting between the Defendants and Mr. Parker was in English and the extent that thee Defendants communicated with Mr. Parker in English.
Mr. Parker confirmed that he has acted for the Defendants for about the last 35 years including in relation to the Gerrard Street properties and that he has always communicated with the Defendants in English. He refused to answer if he discussed the November 4, 2017 email received from Mr. Baxi and the attached Consent with his clients, citing solicitor-client privilege.
[46] Similar events are alleged to have taken place which justify examinations of the other professionals sought to be examined by counsel for the plaintiff. I do not feel it is necessary to set out the justification for those companion examinations.
[47] On January 17, 2020, the Plaintiff’s lawyer advised Messrs. Khosla, Parker, Nesathurai and Oddy that this motion was being brought, returnable on February 10, 2020, and that they would be served with the Motion Materials.
[48] The Plaintiffs position is that the evidence of Messrs. Khosla, Parker, Nesathurai and Oddy is highly relevant to the outcome of the Defendant's motion. They assert that the Defendants voluntarily put the legal advice received from these four lawyers in issue. As such, it is the Plaintiffs position that fairness and consistency require that solicitor-client privilege over these specific issues has been waived by the Defendants.
IX. Applicable Rule where affidavit in language foreign to Deponent
[49] In the Rules of Civil Procedure, Rule 4 deals with the topic of Court Documents. In particular subrule 4.06(8) addresses non-English or French speaking individuals, and reads:
Where it appears to a person taking an affidavit that the deponent does not understand the language used in the affidavit, the person shall certify in the jurat that the affidavit was interpreted to the deponent in the person’s presence by a named interpreter who took an oath or made an affirmation before him or her to interpret the affidavit correctly. [my emphasis]
[50] The litigation world as we knew it in Ontario, with a long and generally understood history, has now come to an end. We simply cannot do it the way we always did. However, even if no global challenge had arisen. counsel in Ontario still needed to properly address the manner in which evidence from those, fluent in other tongues, ought to be presented in Ontario civil litigation cases.
[51] In considering this decision, I experienced significant hesitancy with respect to reliance upon any of the primary affidavits filled on the Defendants’ behalf on the present motion. All were in English and the language used in the assertion that the affidavit was sworn at a place in this province on a certain day, makes no reference to any translation or confirmation of an understanding of the written English language affidavits that appear to be asserting a detailed denial based upon a assertion that the deponent was not able to read English, when previous affidavits were sworn by them.
X. An Appropriate Jurat?
[52] A google search of the four words “affidavit+jurat+translator+Ontario” gave rise to a number of “hits”. One of the earliest found in the search results provided a sample translator’s certification. It reads:
TRANSLATOR’S AFFIDAVIT
I, ( print translator’s name ) ,
of the City of in the Province of Ontario do
SOLEMNLY DECLARE AS FOLLOWS:
• I am fluent in the English and the ( language of translation ) languages.
• I have prepared a translation from (language of translation ) into English of (insert name(s) of document(s) translated ) of (insert document owner’s name ) , of which a certified copy/certified copies of the original(s) is/are attached hereto.
• The attached document(s) is/are, in all respects, a true and correct translation from (language of translation ) into English.
• And I make this solemn declaration conscientiously believing it to be true, and knowing that it is of the same force and effect as if made under oath.
Signature of Translator:
Printed Name of Translator:
SOLEMNLY DECLARED BEFORE ME at the City of Toronto, Ontario,
on: .
Commissioner of Oaths for Ontario
[53] That no such certificate was executed on any of the supporting documentation on this motion is, at least, troubling.
XI. Case Law on Such Examinations
[54] Rule 39.03 of the Rules of Civil Procedure provides in part:
39.03 (1) Subject to subrule 39.02 (2), a person may be examined as a witness before the hearing of a pending motion or application for the purpose of having a transcript of his or her evidence available for use at the hearing.
(2) A witness examined under subrule (1) may be cross-examined by the examining party and any other party and may then be re-examined by the examining party matters raised by other parties, and the re-examination may take the form of cross-examination.
(5) The attendance of a person to be examined under subrule (4) may be compelled in the same manner as provided in Rule 53 for a witness at a trial.
[55] In a wide range of circumstances Courts have found that a lawyer, or former lawyer, of a party can be called as a witness pursuant to Rule 39.03 in appropriate cases.
[56] In Marton v. Wood Gundy Inc., 2013 ONSC 1246, my former colleague Master Dash observed that the test to be satisfied in order to conduct a Rule 39.03 examination had been stated by the Court of Appeal as follows:
The onus is on the party seeking to conduct the examination to show on a reasonable evidentiary basis that the examination would be conducted on issues relevant to the pending application and that the proposed witness was in a position to offer relevant evidence.
The onus on the party seeking the examination is not a heavy one. He need not show that the proposed examination will provide helpful evidence. If he can show that the examination will be conducted on issues relevant to the pending motion and the proposed witness is in a position to offer relevant evidence then he has a prima facie right to conduct an examination under rule 39.03. The onus then shifts to the objecting party to demonstrate that to permit the rule 39.03 examination would be an abuse of process.
[57] In that case, Master Dash had to weigh what evidence is relevant on a motion to dismiss for delay and whether he proposed former lawyers of the plaintiffs are in a position to offer relevant evidence. There he was reviewing the possible justification for a long delay in setting matter down for trial, but as in the present case the key evidence was only known by legal counsel:
“In this case, the only persons who know what really was or was not done to advance the litigation in the 17 years before current counsel was retained and why, are the plaintffs and their former lawyers. No-one else can provide that information. The evidence is not only relevant to a motion to dismiss for delay but is highly material and necessary. The plaintiffs have given evidence by affidavit blaming the delay on the former lawyers and not on any action, inaction or instructions on their own part. Fairness dictates that the defendants be entitled to test that assertion by examining the very lawyers on whom the plaintiffs place the blame. There is no other witness who can testify as to whether Mr. Marton's version of events is accurate. That combination of factors in my view amount to exceptional circumstances.” [my emphasis]
[58] Master Dash also noted that, as in the case now before me, that it was not the party’s current counsel that was sought to be examined:
“I also take into account that the defendants do not seek to examine current counsel and that examination of past counsel will not disrupt the trial process or representation on the underlying motion.”
[59] A quarter century ago, in Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co., [1995] O.J. No. 3886; 27 OR (3d) 291, Justice Sharpe pointed out (at para. 18) that:
While I accept the proposition that Rule 39.03 cannot be used to conduct third party discovery or “fishing expeditions”, I do not accept the argument that that is what is involved here. In effect, the defendants are saying that a party seeking to conduct a Rule 39.03 examination must show some likelihood that the examination will yield evidence helpful to that party. In my view, this places too heavy an onus on the party seeking to examine a witness. A party resorting to a Rule 39.03 examination is required to show that the proposed examination will be on an issue relevant to the pending motion and that the party to be examined is in a position to offer relevant evidence. I am aware of no authority which requires the party to go one step further and show that the proposed examination will yield evidence helpful to that party's cause.
[60] In Marton, Master Dash further held:
Solicitor-client privilege is deemed waived when communications between lawyer and client are “legitimately brought into issue in an action”. Privilege is waived when the client puts the advice and conduct of his lawyer in issue. Typically this applies when a client sues his lawyer for negligence, but there is no reason it should not apply also in situations where a client pleads that his lawyer's negligence or inaction is the explanation for an inordinate delay in an action. The privilege has also been held to be deemed waived where a party pleads reliance on legal advice in justification of actions taken or where a party places his state of mind in issue and has received legal advice to help form that state of mind.
Solicitor-client privilege will also be deemed waived "where the interests of fairness and consistency so dictate". In my view, if the plaintiffs can resist a motion to dismiss or delay by blaming the delay on the conduct (including inaction) of the lawyers on whom they relied and the advice (or failure to advise) of those lawyers, fairness dictates that the defendants should be permitted to test that assertion by examining the lawyers as to their conduct and advice. [my emphasis]
[61] Here the defendants seem to assert that they were not properly informed as to the meaning of the English language documents they were signing. The requested lawyers seem to have been involved in various financial transactions yet there seems to be no clear denial that moneys were borrowed and not repaid when due. Fairness dictates that the plaintiff should be permitted to test the assertions of the defendants which seem to say there was no forbearance agreement signed by them BUT they acted as if the parties had entered some form of forbearance understanding.
[62] T.R. Lofchik, J. addressed a similar issue in 1225145 Ontario Inc. v. Kelly (c.o.b. The Artists' Corner), [2006] O.J. No. 2292, 27 C.P.C. (6th) 227; 2006 CarswellOnt 3488. There the Court held that a client may waive the privilege, in whole or in part, voluntarily or by implication and stated as follows:
- A client may waive the privilege, in whole or in part, voluntarily or by implication. A party who directly raises in a proceeding the legal advice that he or she received, or the instructions the client gave to the solicitor, thereby putting that advice or those instructions in issue, may be found to have waived the privilege insofar as it relates specifically to the issue concerning the advice received or the instructions given. (Law of Evidence in Canada, John Sopinka, Sydney M. Lederman, Q.C., Alan W. Bryant, Butterworths, 1992, pages 664-667.)
[63] Similarly, in Bentley v Stone, [1998] OJ No 4823, 42 OR (3d) 149, 80 OTC 309, 83 ACWS (3d) 924 Justice Hockin held:
In my view, the affidavit of the defendant Stone, by implication, amounts to a waiver of privilege. In this case, the defendant's solicitor delivered an Offer to Settle and a Notice of Acceptance of the offer was served. Where an offer is accepted, the court may incorporate any of its terms into a judgment or a party to an accepted offer may make a motion for judgment in terms of the accepted offer. In fairness, the plaintiff and the third parties ought to be able to test the defendant Stone's evidence on the issue of authority by checking the veracity or accuracy of her evidence as against the evidence of her solicitor, Mr. Belecky; she denies that she authorized him to settle the case. The parties are entitled, to borrow a phrase from [Smith v. Smith, [1958] O.W.N. 135], to "check the accuracy" of the statement. Here, the defendant has chosen to testify about what was not included in her instructions to her solicitor and by doing so, she has waived privilege. It would be unfair if it was otherwise.
In the result, the solicitor, Mr. Belecky is compellable as a witness to answer questions with respect to the narrow issue as to whether he was instructed to deliver the Offer to Settle of May 5, 1998. The examination of Mr. Belecky may not go beyond questions relating thereto.
[64] When Chief Justice McLachlin was a member of the British Columbia Supreme Court she had occasion to address similar issues regarding the waiver of rights to assert a protective privilege in S & K Processors Ltd. v. Campbell Avenue Herring Producers Ltd., [1983] BCJ No 1499, [1983] 4 WWR 762, 45 BCLR 218, 35 CPC 146, 20 ACWS (2d) 183, 1983 CarswellBC 147:
WAIVER
- Waiver of privilege is ordinarily established where it is shown that the possessor of the privilege (1) knows of the existence of the privilege, and (2) voluntarily evinces an intention to waive that privilege. However, waiver may also occur in the absence of an intention to waive, where fairness and consistency so require. Thus waiver of privilege as to part of a communication, will be held to be waiver as to the entire communication. Similarly, where a litigant relies on legal advice as an element of his claim or defence, the privilege which would otherwise attach to that advice is lost: Rogers v. Hunter, [1982] 2 W.W.R. 189, 34 B.C.L.R. 206 (S.C.).
[65] I conclude my review of useful case law with a review of my former colleague, Master Hawkins’ 2009 decision in Lawless v. Anderson, [2009] O.J. No. 4374; 2009 CarswellOnt 6553; 181 A.C.W.S. (3d) 889.
[66] In that case the Defendant had brought motion to dismiss plaintiff's medical malpractice action on basis limitation period was expired. The Plaintiff's solicitor refused to answer certain questions or produce documents on basis of solicitor-client privilege. Master Hawkins held that privilege had been waived because the plaintiff put her state of mind at issue in Statement of Claim, so what she told her solicitor was relevant. The decision held that since the plaintiff’s solicitor swore an affidavit describing certain communications with plaintiff, he was not entitled to make selective disclosure.
[67] In part, the endorsement read:
6 In my view there has been a waiver of this privilege. I say so for the following reasons.
7 First, the plaintiff delivered a statement of claim which raises the issue of discoverability in anticipation of a limitation of action defence. This pleading devotes eleven paragraphs to the subject of discoverability, culminating with the following allegation.
The plaintiff pleads that she did not know and could not reasonably have known whether she had a cause of action against the defendants until she received the expert opinion of her expert Dr. Lista on or about June 6, 2005 and, consequently, that the limitation period with respect to her cause of action against the defendants did not begin to run until that date.
8 The allegation that the plaintiff did not know and could not reasonably have known that she had a cause of action against the defendant Anderson until June 2005 puts in issue the plaintiff's state of mind from the date of the surgery giving rise to this action until June 2005. To the extent that during this period the plaintiff's solicitors gathered information on whether the plaintiff has a cause of action, this allegation makes relevant what the plaintiff's solicitors told the plaintiff and what she told them on the subject of a possible cause of action.
9 Secondly, and of central importance to this motion, is the fact that the plaintiff's solicitor Mr. Rachlin swore an affidavit in response to this motion. Paragraphs 7 to 11 of that affidavit describe communications from the plaintiff to Mr. Rachlin in 2003 relevant to the question of whether the plaintiff had a cause of action against the defendant Anderson, and the question of what the plaintiff knew from time to time.
10 In R.F. Evans Ltd. v Canada (Minister of Foreign Affairs) (1996), 106 F.T.R. 210 at paragraph 15, Rothstein, J. approved the following passage from Wigmore on Evidence, McNaughton's Revision (1961), Volume VIII at pages 635 and 636.:
What constitutes a waiver by implication?
Judicial decision gives no clear answer to this question. In deciding it, regard must be had to the double elements that are predicated in every waiver, i.e., not only the element of implied intention, but also the element of fairness and consistency. A privileged person would seldom be found to waive, if his intention not to abandon could alone control the situation. There is always also the objective consideration that when his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder. He may elect to withhold or to disclose, but after a certain point his election must remain final.
[68] The last two sentences of this passage sum up what the mortgagors are attempting to do in the present case. It would seem they seek to make selective disclosure of some solicitor/client communications and activities and to withhold the rest. This the court will not permit. I therefore conclude that there has effectively been a waiver of privilege against disclosure of all solicitor/client communications and actions at the point in time when various documents relating to amended mortgage documents were discussed and signed.
XII. Analysis
[69] Having considered the case law and arguments put to me and the submissions of counsel I am satisfied that the Plaintiff meets the test under Rule 39.03 to examine the professionals identified in the Notice of Motion. The Defendants have directly placed in issue the legal advice received from Messrs. Khosla, Parker, Nesathurai and Oddy. The four lawyers the Plaintiff seeks to examine all have relevant information which will help properly resolve the Defendants' motion.
[70] The Defendants' pending motion seeks an injunction to prevent realization on an apparent debt, that has gone unpaid by them for at least 4 years. They claim, in support of their motion, that the Defendants:
(a) Did not know what the various documents they executed were;
(b) That the documents were not explained to them by their lawyers;
(c) That they do not speak or understand English;
(d) That they only received signature pages and were told to sign them by their lawyers without having the entire document or being advised what the document was; and
(e) In some instances that their signatures were forged.
[71] It would seem that it was the Defendants' former lawyers, who had them sign the various documents at issue. They would appear to be best suited to provide firsthand evidence as to whether or not the Defendants' allegations are true. As such, the evidence from the Defendants' former lawyers is highly relevant to the Defendants' motion.
[72] Having considered the extensive documentation filed and the submissions of counsel, I am satisfied that by virtue of their actions and positions taken that the Defendants have waived solicitor client privilege by directly putting into issue the communications between the Defendants and their former lawyers, the advice they received and their contemporaneous understanding of the nature of the documents alleged to have been reviewed by their lawyers with them.
[73] The Defendants now claim that their lawyers never explained the various documents at issue to them. The Defendants claim that their lawyers simply provided them with a signature page, not the entire document, and told them to sign it, without explaining what they were signing. The Defendants put their state of mind in issue with respect to their understanding of the documents that they signed with their former lawyers.
[74] I have concluded that fairness dictates that the Plaintiff should be permitted to test this assertion by examining the lawyers as to their communication with the Defendants when the documents at issue were signed. In the result I accept and adopt paragraphs 56 to 68 of the Plaintiff’s factum, filed before me, with respect to all four lawyers whom the plaintiff seeks to examine. I am therefore permitting and directing the witnesses to respond to proper questions relating to the circumstances described in those paragraphs.
[75] However, I wish to make clear that I believe the four individual professionals were entitled, and obliged, to maintain their duties to protect solicitor and client privilege until this Order was obtained. They took no position before me, and instead simply confirmed that they would not make any further disclosure without a Court Order.
[76] I am now making that Order.
XIII. Disposition
[77] The Plaintiff’s motion is granted: and an Order shall issue permitting the Plaintiff to examine Messrs. Nesathurai and Oddy and to re-examine Messrs. Khosla and Parker.
[78] I am therefore generally granting the terms sought by counsel for the plaintiff corporation:
(a) That Messrs. Nesathurai, Oddy, Khosla and Parker are each to attend an examination on a date prior to August 31, 2020 to be fixed by counsel by July 31; failing which, I will impose dates;
(b) These examinations may be conducted electronically to maximize health protection for all participants.
[79] To be clear, Solicitor-Client privilege is deemed to be waived as set out in paragraph 69(b) of the Plaintiff’s Factum, dated January 28, 2020.
[80] The Plaintiff further sought an order requiring Michael Potashnyk to answer the undertakings given during his December 18, 2019 examination. and an order setting out a new timetable for the hearing of the Defendants' motion. If those answers have not already been provided, I am directing that they be provided to the Plaintiff’s counsel prior to August 31, 2020.
XIV. Costs
[81] Most Mortgages and Charges against land, in Ontario, incorporate terms which provide that the lender should be entitled to be indemnified for its full costs of having to enforce the mortgage, in the event that the borrower fails to repay the debt in accordance with its terms.
[82] Here the Plaintiff proposed that if it was successful on this motion, it ought to be awarded its costs of this motion on a substantial indemnity basis pursuant to the terms of the mortgage, from the Defendants.
[83] I am not awarding any costs of the motion against the four individuals who are to be examined.
[84] In Marton, Master Dash held that it would be premature to award costs payable prior to the determination of the main issue between the parties:
- In my view the fair result is that the defendants should have their costs of this motion as against the plaintiffs but payable to them only if they are successful on the motion for which the examination of witnesses was sought, namely the motion to dismiss for delay and subject to any order from the master or judge hearing that motion
[85] I am adopting a similar approach in this case. Subject to the alteration of this interim determination by other judicial officials dealing with this case, I am conditionally awarding Solicitor and Client costs to the Plaintiff against the Defendants. If the parties cannot ultimately arrive at an agreed sum, I may be contacted through my Assistant Trial Co-Ordinator to establish a format for written cost submissions from the parties.
Master D.E. Short
Released: July 31, 2020
DS/ R315