Peter J. Cavanagh

This decision addresses a motion by the plaintiffs for production and directions regarding claims of privilege over thousands of documents and answers to questions refused on discovery in a complex, multi-party commercial litigation.

The court reviews the legal principles governing solicitor-client privilege, litigation privilege, and common interest privilege, and applies them to various categories of documents and questions.

The court provides detailed directions on the production of documents, the sufficiency of evidence to support privilege claims, and the process for resolving ongoing disputes about privilege.

The plaintiffs brought a motion seeking a declaration that a document ("the Proffer") provided by the defendant to the Attorney General for Canada (AGC) under s. 38 of the Canada Evidence Act was not subject to privilege or that any such privilege had been waived, and an order for its production.

The defendant asserted litigation privilege.

The court found that the Proffer was created for the dominant purpose of preparing for litigation, making it presumptively protected by litigation privilege.

The court further held that the disclosure of the Proffer to the AGC, being a statutory compulsion, did not constitute a voluntary waiver of privilege, nor did fairness and consistency require waiver.

The plaintiffs' motion was dismissed.

The court determined the priority dispute between KingSett Mortgage Corporation's 2022 mortgage and various construction liens against the Debtors' property, which was in receivership.

The Receiver brought the motion to clarify "Priority Payables" under a court-approved sale agreement.

The court found that the 2022 KingSett Mortgage had priority over the construction liens, except to the extent of any deficiency in the statutory holdbacks, applying sections 78(2) and 78(6) of the Construction Act.

The court rejected the lien claimants' arguments that the mortgage did not qualify for priority under these sections and that the Receiver acted inappropriately.

The applicant, Johnson Bros.

Corporation, sought leave to appeal from a partial arbitration award and a final arbitration award concerning costs and interest.

The respondent, Soletanche Bachy Canada Inc., opposed the application.

The court dismissed the application, finding that the arbitration agreement, which incorporated CCDC 40 rules and stipulated that disputes would be "finally resolved" and awards "final and binding" precluded any right to appeal.

The court further held that even if a right to appeal existed, the proposed questions of law regarding the reversal of onus, weather-related damages, and COVID-19 impacts were either not pure questions of law or lacked sufficient evidentiary basis for appellate review.

The court-appointed Liquidator of two companies sought advice and direction regarding the application of issue estoppel to claims by a shareholder, Christos Kommatas, and the payment of funds to another shareholder, George Vastis.

The core dispute involved whether Kommatas was precluded from seeking an order for the Liquidator to conduct a claims process as part of the liquidation, an issue previously raised and denied at trial.

The court found that Kommatas was indeed precluded by issue estoppel, as this specific issue was distinctly put before and decided against Kommatas in the prior trial.

The court also authorized the payment of $250,000 to Vastis as previously ordered.

The applicants brought an application to appoint an independent firm of chartered accountants to resolve disputes over an earn-out calculation under a share purchase agreement.

The respondent opposed, arguing the disputes involved questions of contractual interpretation that must be decided by the courts, and brought a cross-application for a declaration to that effect.

The court interpreted the dispute resolution clause and concluded that the parties intended for any unresolved matters in dispute, including those requiring contractual interpretation, to be referred to the independent firm acting as an expert.

The applicants' application was granted and the respondent's cross-application was dismissed.

The Penfound Parties moved to lift a permanent stay of their claims and counterclaims, which had been imposed after they improperly accessed the Sprott Parties' privileged documents.

They sought the appointment of a litigation receiver and manager, arguing this constituted a material change in circumstances that would detoxify the litigation.

The court dismissed the motion, finding that the proposed remedy was not a new circumstance but an argument that could have been raised during the original stay motion.

The court held that issue estoppel precluded relitigating the appropriate remedy, and regardless, a receiver could not effectively cure the prejudice caused by the moving parties' knowledge of privileged information.

The Insurers brought a motion for a declaration that the "Prior Acts Exclusion" in their Directors and Officers (D&O) insurance policies barred coverage for a claim asserted against Just Energy's D&Os.

The claim, filed by a representative plaintiff in a class action, sought unpaid wages and benefits from a period prior to Just Energy's Companies’ Creditors Arrangement Act (CCAA) filing.

The court found the Prior Acts Exclusion to be clear and unambiguous.

It determined that the exclusion applied to acts or omissions committed by anyone prior to the CCAA filing date, and that this interpretation was consistent with the commercial context of the policies, which were intended to cover post-filing D&O liability during insolvency.

The court concluded that applying the exclusion did not nullify the policy's main purpose or contradict the reasonable expectations of the parties.

The Insurers' motion was granted, and the representative plaintiff's request for relief against the Insurers was denied.

CS Capital Limited, a secured creditor and mortgagee, brought a motion seeking a declaration that its mortgage had priority over construction lien claims on a property.

The court dismissed the motion, finding that the mortgage was not registered prior to the time the first lien arose in respect of the overall improvement project.

Furthermore, the court determined that the mortgage was a collateral mortgage securing a guarantee of a separate debt, and therefore no "advance" was made in respect of it for the purposes of priority under the Construction Act.

This motion, brought by the Van Essen Companies and Wouter Van Essen, sought to strike evidence, grant judgment, and stay proceedings in a receivership, alleging unauthorized access to their privileged records by the court-appointed Receiver (FTI Consulting Inc.) and the appointing creditor (MBL Administrative Agent II LLC).

The court dismissed the motion, finding that the Van Essen Companies failed to establish that the records were intended to be confidential, as Wouter Van Essen knowingly used a Techlantic email account (a third-party entity he considered arm's length) for business and personal communications, including those with legal counsel, and shared emails with Techlantic's senior officer.

The court concluded that the prerequisite for privilege (confidentiality) was not met, and even if it were, privilege was waived by the knowing use of a third-party server and delayed notification to the Receiver.

This is a costs endorsement following a decision to dismiss an application for delay.

The respondents, Robert Saltsman and the "Director Respondents" (Krishnasamy Parthiban, Andrew Lindzon, and Issa Nakhleh), sought costs on a partial indemnity scale for both the dismissal motion and the underlying application.

The applicants argued the costs were excessive.

The court found Mr. Saltsman's claimed costs of $38,696.62 reasonable and fixed them as claimed.

For the Director Respondents, the court allowed their motion costs of $27,177.12 but substantially reduced their application costs from $56,493.15 to $46,846.39 due to insufficient detail justifying the hours claimed for "preparation for the application." The total costs awarded to the Director Respondents were $74,023.51.

The applicants were ordered to pay costs jointly and severally.

This is a costs endorsement following the dismissal of the plaintiffs' contempt motion against two defendants, Saad Aljabri and Mohammed Aljabri.

The plaintiffs had sought a contempt order for alleged breaches of a Mareva Order, with potential sanctions including striking defences and default judgments for billions of dollars.

The defendants, as successful parties, sought substantial indemnity costs.

The court declined to award substantial indemnity costs, finding the plaintiffs' conduct was not reprehensible, scandalous, or outrageous, nor did they pursue the motion for an improper tactical advantage.

The court awarded partial indemnity costs to the defendants for the contempt motion.

Additionally, the court fixed costs for several preliminary motions, with mixed success for the parties, rejecting a "distributive costs" approach for the contempt motion itself but fixing costs for each preliminary motion separately.

The Monitor of BioSteel Sports Nutrition Inc. (under CCAA protection) sought an order declaring ColdHaus Direct Inc. liable for $3.97 million and directing payment, along with an extension of the stay of proceedings and approval of fees.

ColdHaus brought a cross-motion to lift the stay to allow set-off of post-filing obligations against pre-filing amounts, specifically a $1.05 million buy-back claim.

The court allowed the Monitor's payment motion in part, permitting ColdHaus to set off pre-filing billbacks for warehousing ($89,273.14) and distribution rebates ($74,546.05).

However, the court dismissed ColdHaus's motion to set off the buy-back amount, finding the obligation did not arise pre-filing and that ColdHaus had artificially created indebtedness by failing to pay invoices.

The Monitor's request for a stay extension and fee approval was granted.

The plaintiff real estate brokerage commenced an action against the defendants, including a court-appointed receiver, for unpaid commissions related to the sale of a property.

The receiver and the debtor company moved to stay the action pursuant to the receivership Appointment Order, while the plaintiff moved to lift the stay.

The court found that the plaintiff's claims for breach of contract and breach of fiduciary duty, based on an email exchange regarding a draft commission agreement, were not frivolous or vexatious.

Balancing the relative prejudice to the parties, the court lifted the stay of proceedings to allow the plaintiff's action to continue.

Preliminary motions regarding the evidentiary record were decided in favour of the receiver.

The plaintiffs moved to compel the defendants, Saad Aljabri and Mohammed Aljabri, to produce law firm trust ledgers and to answer certain questions from examinations.

The court held that trust ledgers are presumptively protected by solicitor-client privilege and that the plaintiffs failed to rebut this presumption.

The court further concluded that the "crime/fraud" exception to solicitor-client privilege does not apply to civil wrongs, including civil fraud, following the principle of horizontal stare decisis.

Consequently, the motion to compel production of trust ledgers was dismissed.

The motion to compel Mohammed Aljabri to answer undertakings and other questions was allowed, subject to redactions for privileged information in bank statements.

The Applicant, a mortgagee, sought to vary a previously consented receivership order concerning three properties (Harwood Properties) in Ajax.

The original order, which appointed a receiver, included provisions requiring consultation with the Town of Ajax on sales and a new development agreement with a right of re-purchase for the Town.

These terms were agreed upon in exchange for the Town's consent to the receivership and a stay of its own action regarding a re-purchase right and priority dispute.

The Applicant argued that changed circumstances, specifically the unacceptability of the development agreement terms to potential purchasers, justified varying the order and determining the priority of its mortgage over the Town's re-purchase right.

The court dismissed the motion, emphasizing the finality of consent orders and that the Applicant had agreed to the terms, which resolved a pending priority dispute.

The court found no misrepresentation by the Town that would vitiate the Applicant's consent and held that the comeback clause should not be used to prejudice parties who relied on the original order.

The plaintiffs, a group of private companies, brought a motion seeking to find Dr. Saad Aljabri and his son, Mohammed Aljabri, in contempt of court for allegedly breaching a Mareva Order.

The plaintiffs claimed the defendants used assets frozen under the Mareva Order to pay for legal and living expenses, arguing that a purported gift of assets from Dr. Aljabri to Mohammed before the order was a fiction.

The defendants contended that the Mareva Order did not clearly apply to the gifted assets and that the gift was valid.

The court dismissed the plaintiffs' motion, finding that they failed to prove beyond a reasonable doubt that the Mareva Order clearly and unequivocally applied to the purportedly gifted assets, or that Dr. Aljabri retained an interest in or control over them.

The court emphasized the high standard of proof (beyond a reasonable doubt) required for civil contempt and that findings from prior civil proceedings (e.g., 'badges of fraud' on a balance of probabilities) do not shift the burden of proof in quasi-criminal contempt proceedings.

The respondent sought costs on a partial indemnity scale after successfully defending an application to wind up the company.

The applicant argued for no costs or reduced costs, citing the respondent's failure to upload a Bill of Costs in advance and claiming the fees were excessive.

The court found the respondent's claimed costs to be fair and reasonable, noting the application's importance and moderate complexity, and that the applicant's own costs were comparable.

The court fixed costs payable by the applicant to the respondent in the amount of $142,890.01.

This endorsement addresses the costs of a successful motion by the Defendant, Andrew Rudensky, to set aside a noting in default and default judgment obtained by the Plaintiffs.

The Plaintiffs argued for no costs or an offset, asserting Mr. Rudensky's fault for the default.

The court found the Plaintiffs solely responsible for failing to properly serve Mr. Rudensky, thus dismissing their arguments regarding his alleged fault or delay.

The court also rejected Mr. Rudensky's claim for substantial indemnity costs under Rule 49.10, finding that his offer to settle was not "beaten" by the costs endorsement itself.

Ultimately, the court fixed Mr. Rudensky's partial indemnity costs at $79,253.40, payable by the Plaintiffs within 30 days.

The defendant, Michael Garron Hospital (MGH), sought substantial indemnity costs for a dismissed motion brought by the plaintiffs concerning lease rights.

MGH argued for elevated costs due to alleged bad faith and an unaccepted offer to settle.

The court found no reprehensible conduct justifying substantial indemnity costs and ruled that the offer to settle did not trigger Rule 49.10 consequences for an elevated scale.

The court awarded MGH costs on a partial indemnity scale, fixing the amount at $40,000 all-inclusive, considering the motion's importance, moderate complexity, and the principle of fairness and reasonableness.