Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20220630 DOCKET: C70182

Brown J.A. (Case Management Judge)

BETWEEN

The Corporation of the Town of Caledon Plaintiff (Respondent)

and

Darzi Holdings Ltd., Rafat General Contractor Inc. and Layth Rafat Salim, a.k.a. Carlos Salim Defendants (Appellants)

Counsel: Kevin D. Sherkin and Kaleigh Sonshine, for the appellants Melissa Winch and Robert Sniderman, for the respondent Aaron Hershtal, for the appellants’ former counsel

Heard: June 27, 2022 by video conference

Endorsement

OVERVIEW

[1] This endorsement addresses two procedural issues that have arisen during the preparation of the appellants’ motion to adduce fresh evidence on their appeal from a $1 million fine, imposed by way of sentence in civil contempt proceedings. The motion for fresh evidence relates to the appellants’ ground of appeal that alleges ineffective assistance of counsel by one of their former counsel in the proceedings below (“Former Counsel”).

[2] The appellants, Darzi Holdings Ltd., Rafat General Contractors Inc., and Layth Rafat Salim a.k.a. Carlos Salim, appeal the $1 million fine imposed by Myers J. as the sentence for their contempt of the 2019 Injunction Order obtained by the respondent, The Town of Caledon (the “Town”).

[3] The history of this matter was described fully in my endorsement dated June 8, 2022: Caledon (Town) v. Darzi Holdings Ltd., 2022 ONCA 455 (the “Endorsement”).

[4] The appellants have perfected their appeal within the time required by the Endorsement, which set aside the administrative dismissal of their appeal.

[5] In the Endorsement, I queried whether ineffective assistance of counsel exists as a ground of appeal from an order made in a civil proceeding but stated that it would be a matter for the panel to decide when the appeal from sentence is heard this Fall. In the meantime, the Endorsement gave directions for the preparation of the appellants’ motion for fresh evidence that would support their ineffective assistance of counsel ground of appeal.

[6] At the June 27, 2022 case conference, the parties raised two procedural issues relating to the ineffective assistance of counsel ground of appeal. Below, I give directions on both issues.

First issue: Production of two recordings in Former Counsel’s file

[7] The Endorsement directed that commencing June 20, 2022, appellants’ counsel should permit the Town’s counsel to have access to Former Counsel’s file. It went on to provide how to deal with any claim of solicitor-client privilege by the appellants over the contents of Former Counsel’s file.

[8] As matters have unfolded, the appellants have only refused to produce two items in Former Counsel’s file: both are recordings he made of conversations with his clients, the appellants, during the course of his retainer. The appellants have waived privilege over the balance of Former Counsel’s file.

[9] The appellants take the position that the two recordings should not be considered part of Former Counsel’s file as they were made in violation of Rule 7.2-3 of the Law Society of Ontario’s Rules of Professional Conduct, which states:

7.2-3 A lawyer shall not use any device to record a conversation between the lawyer and a client or another legal practitioner, even if lawful, without first informing the other person of the intention to do so.

[10] The appellants further submit that the alleged breach of r. 7.2-3 renders the two recordings inadmissible as evidence in this proceeding.

[11] Counsel for Former Counsel advises that his client’s evidence will be that the recordings were made in compliance with r. 7.2-3.

[12] Counsel for the Town submits that even assuming Former Counsel made the recordings in a manner that violated r. 7.2-3, the breach of a rule of professional conduct does not render the recordings inadmissible as evidence.

[13] The decision of this court in Cowles v. Balac (2006), 83 O.R. (3d) 660 (C.A.), remains the controlling authority on the issue. In his dissent, Borins J.A. stated, at para. 198:

The Law Society passed the Rules of Professional Conduct to ensure that its members maintain the highest standards of professional conduct. Where a member's contravention of a rule is brought to the attention of the Law Society, it may result in the commencement of a disciplinary proceeding against the member. However, the Rules of Professional Conduct do not, and could not, affect the admissibility of relevant evidence in civil or criminal proceedings. Thus, even if it could be said that counsel for ALS contravened rule 4.03(2), this would not affect the admissibility of relevant evidence acquired by the investigator. [Emphasis added]

[14] The majority of the panel agreed, at para. 94, with Borins J.A. on this point.

[15] Although a breach of the Rules of Professional Conduct cannot determine the admissibility of evidence in a civil proceeding, a court may take such a breach into account as part of the exercise of its inherent jurisdiction to control its own process: see, e.g., Gagnon v. Pritchard (2002), 58 O.R. (3d) 557 (S.C.), at paras. 55-56; Dumais v. Zarnett (1996), 30 O.R. (3d) 431 (S.C.), at para. 49, in which courts refused to allow the use of transcripts of examinations for discovery conducted by unlicensed persons in breach of the Rules.

[16] In the present case, any issue concerning the admissibility of evidence on the motion to adduce fresh evidence on the appeal will be heard and decided by the appeal panel at the hearing. It will be for the panel to determine whether Former Counsel made the two recordings in violation of the Rules of Professional Conduct and, if he did, what effect, if any, that may have on the use of the recordings on the appellants’ motion for fresh evidence.

[17] At this stage of the appeal proceedings, I simply need to decide the producibility of the two recordings and what, if any, conditions should attach to their use during the steps leading up to the hearing of the appeal and the motion to adduce fresh evidence.

[18] I am not persuaded by the appellants’ submission that the two recordings do not form part of Former Counsel’s file, which the Endorsement ordered produced. The recordings exist and were located in Former Counsel’s file. No party takes the position that the recordings’ contents do not relate to the issue of the allegation of ineffective assistance of counsel.

[19] Having produced most of Former Counsel’s file, thereby waiving privilege over the communications regarding the subject-matter of the ineffective assistance of counsel ground of appeal, it follows that the appellants, as the clients, are taken to have waived the privilege otherwise shielding all communications relating to the subject-matter of ineffective assistance of counsel and must produce all documents relating thereto: John Sopinka, Sidney N. Lederman & Alan W. Bryant, The Law of Evidence in Canada, 6th ed. (Lederman, Fuerst, Stewart) (LexisNexis, 2022), at para. 14.158. In those circumstances, I order the appellants to make available to the Town’s counsel the two recordings made by Former Counsel.

[20] However, in order to preserve the ability of the appellants to ask the panel to refuse to admit the two recordings into evidence on the appeal, I direct that the parties confine any reference about the content of the two recordings, and any pre-hearing examination conducted on the recordings, to the materials filed on the motion to adduce fresh evidence. I further direct that all materials relating to that fresh evidence motion be filed with the court on a sealed basis, in accordance with the standard practice of this court on motions for fresh evidence.

Second issue: The standing of Former Counsel

[21] Former Counsel wishes to file evidence that responds to the appellants’ allegations of ineffective assistance of counsel. As well, Former Counsel also wishes to file a factum and motion record on the motion for fresh evidence.

[22] The well-established practice of this court on criminal appeals in which ineffective assistance of counsel is advanced as a ground of appeal is that responding Crown counsel adduces the evidence responding to the appellant’s allegations. Typically, Crown counsel will file an affidavit from the former counsel that responds to the allegations of ineffective assistance of counsel. Either party may file the transcript of any cross-examination on that affidavit. This reflects the principle that the preparation of the materials for a motion for fresh evidence is controlled by the parties to the appeal.

[23] The same principle should apply in this civil appeal. Consequently, it will be for the Town’s counsel to file any affidavit from Former Counsel and file any necessary responding motion record regarding the fresh evidence.

[24] However, given the novelty of the appellants’ attempt to advance ineffective assistance of counsel as a ground of appeal and the obvious reputational interest of Former Counsel in the motion for fresh evidence, I grant Former Counsel leave to intervene as an added party on the appeal pursuant to r. 13.01(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, but with his rights limited as follows:

(i) Former Counsel may file a responding factum on the motion to adduce fresh evidence of no more than 10 pages, limited to the issue of whether ineffective assistance of counsel exists as a ground of appeal in civil proceedings in this province; (ii) That factum shall be delivered on or before Friday, September 23, 2022, but following the appellants’ delivery of their formal fresh evidence motion record, with supplementary factum; and (iii) Whether Former Counsel may make submissions at the hearing of the motion for fresh evidence is a matter to be decided by the panel hearing that motion and the appeal.

[25] If any further matters arise during the preparation of this appeal for hearing, counsel may arrange a further Zoom case conference before me.

“David Brown J.A.”