SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

File No.: CV-11-9446-00CL

RE: Sajjad Ebrahim, Ali Ebrahim, Salman Ebrahim, Jatinder Dhillon and Rita Hoff, Applicants

AND:

Continental Precious Minerals Inc., Edward Godin, Patricia Sheahan, Gerard Osika and Herb Dhaliwal, Respondents

File No.: CV-11-9520-00CL

RE: Continental Precious Minerals Inc., Applicant

AND:

Sajjad Ebrahim, Ali Ebrahim, Salman Ebrahim, Par-Pak Companies Inc. and Gurdass (Gary) Singh, Respondents

BEFORE: D. M. Brown J.

COUNSEL: B. Bowen and W.R. MacDougall, for the Applicants, Sajjad Ebrahim et al.

S. Hosseini, for the Respondents, Continental Precious Minerals Inc. et al.

HEARD: February 15, 2012

REASONS FOR DECISION

I. Refusals motion in applications relating to an annual general meeting

[1] Continental Precious Minerals Inc. is a junior mining company with mineral exploration licences in Sweden. It is listed on the Toronto Stock Exchange. Continental held an annual general meeting on October 24, 2011. These two applications arise from the events surrounding that meeting: the shareholders’ Oppression Application commenced on November 4, 2011 (CV-11-9446-00CL) and Continental’s application commenced on December 14, 2011 (CV-11-9520-00CL). I will hear both applications together on March 28 to 30.

[2] Most cross-examinations have taken place. These two motions deal with refusals arising from those cross-examinations and touch on issues concerning the waiver of solicitor-client privilege, the production of drafts of an expert’s report, and the relevance of questions to the issue of acting jointly or in concert in respect of the take-over bid provisions of the Ontario Securities Act.

II. Who’s who

[3] Continental has four directors, the respondents Edward Godin, Patricia Sheahan, Gerard Osika and Herb Dhaliwal.

[4] The applicant, Sajjdad Ebrahim, is the father of Ali Ebrahim and Salman Ebrahim. All three own shares in Continental either personally or, in the case of Sajjdad, through Par-Pak Companies Inc. As of October, 2011, these parties collectively owned 11,108,800, or a little over 20%, of Continental’s issued and outstanding shares.

[5] Jatinder Dhillon owned 1,274,718 shares of Continental, and Rita Hoff owned 5,000 shares.

[6] Gurdass (Gary) Singh is a Vice-President and Senior Investment Advisor with Canaccord Wealth Management, a division of Canaccord Genuity Corp.

III. The background events

[7] Broadly put, dissatisfaction by the applicant shareholders with management’s development of Continental’s mining licences in Sweden came to a head at last October’s AGM.

[8] All of the applicant shareholders, except Ms. Hoff, had given proxies for their shares to Mr. Grant Sawiak, a lawyer with the firm of Fogler, Rubinoff LLP. Mr. Singh also held certain proxies. It appears that together Mr. Sawiak and Mr. Singh held proxies for 13,749,200 voting shares. Given the applicants’ displeasure with the results achieved by the Board, it was expected that the applicants’ proxies would be voted against the management’s proposed slate of directors. The applicants contend that management only held proxies representing 8,794,047 shares.

[9] The applicants assert that when the meeting convened the company’s transfer agent, Equity Transfer and Trust Company, told Mr. Sawiak that he would be allowed to vote only 2,217,628 of the shares for which he held proxies and Mr. Singh was informed that he could only vote 172,142 of the 993,600 shares for which he held proxies. As a result of those disallowances, management held more proxies than Mr. Sawiak and Mr. Singh.

[10] Following the disallowance of certain proxies, a total of 11,184,417 shares were present at the AGM, or 21.61% of the company’s total issued capital. Section 59 of Continental’s Amended and Restated By-Law Number 1 dealt with the issue of quorums for meetings. It provided as follows:

Quorum. (a) All of the shareholders or two shareholders, whichever number be the lesser, personally present or represented by proxy, shall constitute a quorum of any meeting of any class of shareholders. No business shall be transacted at any meeting unless the requisite quorum be present at the time of the transaction of such business. If a quorum is not present at the time appointed for a meeting of shareholders or within such reasonable time hereafter as the shareholders present may determine, the persons present and entitled to vote may adjourn the meeting to a fixed time and place but may not transact any other business and the provisions of paragraph 58 of this by-law with regard to notice shall apply to such adjournment.

(b) Notwithstanding the foregoing, two or more persons, personally present or represented by proxy and representing not less than fifty percent (50%) of the outstanding shares of the Corporation entitled to vote generally at meetings of the shareholders of the Corporation, shall constitute a quorum for the purpose of considering any resolution of the shareholders that relates to any of the matters listed below:

(i) Removal of any director or directors from office;

(ii) Election or appointment of any director or directors;

(iii) Changing the number of directors (within the minimum and maximum numbers provided in the articles of the Corporation or otherwise); or

(iv) Confirming, amending, altering, repealing or adopting any provision inconsistent with this paragraph 59(b) of this by-law.

The parties refer to the quorum requirement contained in section 59(b) of the By-law as the Special Quorum Requirement.

[11] As a result of the disallowance of certain proxies the Chair of the AGM, Mr. Grodin, held that no quorum was present for the purpose of electing directors and that the incumbent directors would continue in office until their successors were elected.

IV. The two applications

[12] In their Oppression Application the shareholders seek the following types of relief:

(i) A declaration that the Board of Continental acted oppressively by relying on the Special Quorum Requirement at the Meeting, by failing to solicit proxies to attain the Special Quorum Requirement, and by excluding certain non-management proxies from voting without justification;

(ii) An order permitting the applicants to call a shareholders’ meeting to elect directors, and related orders for the disclosure of shareholders’ lists and the payment of proxy solicitation costs for such a meeting;

(iii) A declaration that the Special Quorum Requirement is invalid and that the ordinary quorum requirement contained in section 59(a) of the By-law applies to the matters enumerated in section 59(b); and,

(iv) An order that the company be prohibited from issuing new securities or entering into certain contracts without an order of this court or approval of 50% plus one of the shareholders.

[13] In its application Continental seeks the following relief against the Ebrahim family and Mr. Singh:

(i) A declaration that the respondents acted in contravention of the take-over bid provisions in Part XX of the Securities Act;

(ii) An order that the respondents dispose of all securities of Continental acquired in contravention of Part XX; and,

(iii) A declaration as to whether a “flip-in event”, as defined in Continental’s Shareholders Rights Plan, had occurred by reason of the respondents’ conduct.

Continental advised that it is settling that part of its application brought against Mr. Singh.

V. Issues and refusals arising on the cross-examination of Sajjad Ebrahim

A. Withdrawal of part of an affidavit

[14] Towards the beginning of his October 28, 2011 affidavit Sajjad Ebrahim set out the number of Continental shares owned by his sons and himself and then, in paragraph 3, deposed:

My sons and I do not act jointly and in concert and received legal advice to that effect prior to initially purchasing shares of the Company.

[15] On December 21, 2011 Continental’s counsel wrote to applicants’ counsel requesting “any and all documents and information relating to the legal advice received by the Applicants referenced at paragraph 3 of the affidavit of Sajjad Ebrahim sworn on October 28, 2011”, stating that “our position is that there has been a voluntary waiver of privilege by reason of Mr. Ebrahim’s own affidavit”.

[16] By letter dated January 18, 2012 applicants’ counsel wrote: “[W]ith respect to paragraph 3 of Sajjad Ebrahim’s first affidavit, we will agree to remove the reference to receiving legal advice.” Sajjad Ebrahim swore a further affidavit on January 27, 2012 deposing, with respect to the statement in paragraph 3 of his earlier affidavit: “If I did waive privilege by making such statement in my Affidavit, that was certainly not my intention.”

[17] Sajjad Ebrahim went on to explain that on January 17, 2012 he, his son Ali, and Par-Pak sold Continental shares thereby reducing their total family holdings to 10,348,300, or less than 20% of the outstanding shares of the company:

Given this fact, I do not believe it matters any longer whether or not my sons are acting “jointly or in concert” as the Company alleges, since we do not exceed the 20% threshold of shareholdings. As a result, I do not see how the legal advice I previously received would be relevant any longer to this proceeding, if it was relevant before.

[18] Mr. Ebrahim seeks leave to amend his October 28 affidavit to remove from paragraph 3 the words: “and received legal advice to that effect prior to initially purchasing shares of the Company”.

[19] The record before me clearly indicates that Sajjad Ebrahim intentionally included in his affidavit the language which he now seeks to withdraw – this is not a case of inadvertence, mistake or oversight. With respect to Mr. Ebrahim’s request to withdraw a portion of his affidavit, I shall follow what I wrote a while back in Guestlogix Inc. v. Hayter:

That GuestLogix might subsequently have narrowed its claim for relief on the motion does not enable it, in effect, to withdraw portions of Mr. Proud’s affidavit from testing. It is well established that it is not permissible to withdraw an affidavit simply to avoid cross-examination on it save, possibly, in cases of mistake: Re Canadian Workers Union and Frankel Structural Steel Ltd. (1976), 1976 CanLII 829 (ON SC), 12 O.R. (2d) 560 (Div. Ct.), p. 575; R.O.M. Construction Ltd. v. Heeley (1982), 1982 CanLII 1140 (AB KB), 29 C.P.C. 194 (Alta. Q.B.), pp. 198 to 200. No claim of mistake was asserted by GuestLogix in respect of those portions of Mr. Proud’s affidavit. Accordingly, Mr. Proud must answer Questions 316, 317, 339 and 431.[^1]

[20] I dismiss the request of Sajjad Ebrahim to withdraw a portion of paragraph 3 of his October 28, 2011 affidavit.

B. Refusal to disclose legal advice

[21] That then leads me to Continental’s motion to seek an answer to Q. 230 which Sajjad Ebrahim refused to answer on his cross-examination:

Q. 230: To produce all communications with respect to the legal advice received by Mr. Ebrahim in 2009 to date (referred to at para. 3 of Mr. Ebrahim’s Affidavit, sworn October 28, 2011), including whether the advice was oral or in writing, what facts were provided to Mr. Ebrahim’s counsel, what advice was provided from counsel, and what assumptions were made for the purpose of the opinion.

[22] Continental submitted that having referred to the fact and the content of the legal advice he received on the issue of acting jointly or in concert, Sajjad Ebrahim had waived solicitor-client privilege in respect of that communication and must answer questions on the topic. Mr. Ebrahim submitted that the mere reference to legal advice in his affidavit was not sufficient to waive privilege. Instead, he argued that Continental had to show that he had used the presence of legal advice as a material element of his claim or defence before a waiver could be established. Mr. Ebrahim contended that his reference to legal advice did not constitute such a use.

[23] Let me start by going to Sopinka, Lederman and Bryant, The Law of Evidence in Canada, Third Edition,[^2] where the general principle concerning waiver of privilege is stated:

It was once thought that certain requirements should be established in order for waiver of the privilege to be established; for example, the holder of the privilege must possess knowledge of the existence of the privilege which he or she is forgoing, have a clear intention of waiving the exercise of his or her right of privilege, and a complete awareness of the result. But, as will be pointed out, other considerations unique to the adversarial system, such as fairness to the opposite party and consistency of positions, have overtaken these factors.

An obvious scenario of waiver is if the holder of the privilege makes a voluntary disclosure or consents to disclosure of any material part of a communication…[I]f a client testifies on his or her own behalf and gives evidence of a professional, confidential communication, he or she will have waived the privilege shielding all of the communications relating to the particular subject matter. Moreover, if the privilege is waived, then production of all documents relating to the acts contained in the communication will be ordered.[^3]

[24] Mr. Ebrahim deposed in a subsequent affidavit that by referring to the legal advice he had received on the issue of acting jointly or in concert he had not intended to waive solicitor-client privilege. As the authors of Sopinka, Lederman and Bryant point out, proof of a clear intent to waive privilege is not necessary to establish a waiver of privilege:

It has also been said that clear intention is not in all cases an important factor. In some circumstances, waiver may occur even in the absence of any intention to waive the privilege. There may also be waiver by implication only.

Whether intended or not, waiver may occur when fairness requires it…

The notion of fairness has also been invoked as a basis for waiver when the party directly raises in a pleading or proceeding the legal advice that he or she received, thereby putting that legal advice in issue…[^4]

However, as the authors note, the law places some limits on the concept of waiver by implication:

In assessing the question of waiver, the court must consider whether the party asserting privilege voluntarily injected the issue of its state of mind into the legislation (sic?). A mere allegation as to a state of affairs on which a party may have received legal advice does not justify setting aside solicitor-client privilege.[^5]

[25] Here is where Mr. Ebrahim rests the justification of his refusal to answer Question 230, arguing that the recent decision of Perell J. in Creative Career Systems Inc. v. Ontario[^6] held that a waiver of privilege will not be found unless it is demonstrated that the client used the presence or absence of legal advice as a material element of his or her claim or defence. In reaching its decision the Court in Creative Career Systems discussed two decisions, one of this Court – Guelph (City) v. Super Blue Box Recycling Corp.[^7] – and one of the Manitoba Court of Appeal, Simcoff v. Simcoff.[^8] Let me briefly review each decision, and then consider the analysis in Creative Career Systems.

[26] In the Super Blue Box case Corbett J. dealt with a large number of refusals arising from discoveries in an action in which the City of Guelph was seeking the termination of a waste processing agreement with Super Blue Box. The defendant alleged that the City, as a municipal authority, owed it a duty of fairness and good faith, which it had breached, and the City pleaded that at all times it had acted in good faith and in the public interest. During discovery the City’s representative referred on several occasions to the fact that City staff had acted in their dealings with Super Blue Box after obtaining legal advice from the City solicitor’s office, and some of the answers disclosed the nature of the advice given. Super Blue Box moved for production of the City solicitor’s files dealing with that advice.

[27] Except for an instance where the City had actually disclosed during the course of its discovery answers a copy of a solicitor’s opinion, Corbett J. held that the City representative’s answers did not go so far as to waive privilege. It is apparent from the extensive reasons of Corbett J. that he was concerned about the public duty under which the City labored, as well as the ease with which a slip by one part of a municipal bureaucracy could end up constituting a waiver of privilege by the municipality:

One would expect that Guelph might feel a responsibility to those whom it governs to maintain some transparency, including permitting general public dissemination of the fact that it receives legal advice in respect to commercial matters in which it is engaged. And, of course, it was no secret to Subbor that Guelph had in-house counsel who were involved in the dispute.

Surely no one staff person, City Councillor, or even the Mayor herself, has the authority to waive privilege unilaterally on behalf of Guelph. And yet, under a strict application of the Wigmore test, if the confidentiality between the City Solicitor's office and Guelph personnel and Council is compromised, waiver could result.[^9]

[28] That then led Corbett J. to fashion a “practical approach” to determining whether a waiver of privilege had occurred during the course of an examination for discovery:

In my view, mere disclosure of the receipt and reliance upon legal advice, in the discovery process, is not sufficient to give rise to waiver of privilege. Where the reliance on the legal advice will be relied upon at trial in respect to a substantive issue between the parties, that is another matter. That is covered by "waiver by reliance". But mere disclosure, by itself, that legal advice was received and followed to explain why a party did something should not be sufficient, by itself, for a waiver of privilege…

However, if the accused puts the substance of the advice in issue in the legal proceeding, then the privilege will be lost… However, solicitor-client privilege is not waived by disclosing that a solicitor's advice was obtained. It is waived when the client relies upon the receipt of the advice to justify conduct in respect to an issue at trial..

What is required is a practical approach to determining when there has been an intention to disclose, by the party having the right to prevent that disclosure. Wrongful disclosure by an unauthorized person, or mistaken disclosure by an unwary person, should not result in waiver of privilege…[^10]

[29] As I noted, some of the answers given by the City’s representative on discovery revealed the nature of the legal advice received from in-house counsel, but Corbett J. concluded that in none of those instances had the evidence of the representative gone “so far as to commit the City to relying upon the legal advice at trial”.[^11] Corbett J. contemplated that following discovery the City would have to decide whether it intended to rely at trial on the legal advice and, if it did, then it would have to disclose the advice. By finding that disclosure of legal advice on discovery did not constitute a waiver of privilege in the absence of an intention to rely on that advice at trial, Corbett J. recognized that some very significant production issues would be deferred from the discovery stage until trial:

In concluding that the disclosure to date does not amount to a waiver of privilege, I make no comment on the extent to which use of this information at trial will give rise to a finding by the trial judge that there has been a waiver of privilege… It remains for Guelph to decide whether it wishes to rely, in law, on its reliance, in fact, on legal advice to explain its intentions and motivations. If it does so, a blanket waiver will apply. If it does not do so, it will not be permitted to argue that its good faith is reflected in its reliance on the advice that it received.

Two final observations are required. First, it may be very difficult for Guelph to explain its motives and intentions without placing its reliance on legal advice before the court at trial. If Guelph determines that it will waive the privilege after all, then it should do so at the earliest opportunity, so that full production and any additional discovery may be completed prior to the commencement of trial. If Guelph decides to waive the privilege at the last minute, or after the trial has commenced, considerable extra expense and delay may arise, for which Guelph could find itself liable in costs.[^12]

[30] In Simcoff v. Simcoff the applications judge hearing a property dispute between a mother and her son allowed into evidence, at the instance of the son, an affidavit sworn by the mother’s former real estate solicitor. The mother had not authorized her former lawyer to file the affidavit. The Manitoba Court of Appeal concluded that the admission of the lawyer’s affidavit was wrong and that the lawyer should never have made the privileged disclosures contained in his affidavit. On the appeal the son argued that his mother had impliedly waived any solicitor-client privilege by putting in issue her state of mind in respect of the realty transaction. On the facts of the case the Court of Appeal found that the mother had not put her state of mind in issue. It was in that context that the Manitoba Court of Appeal made the following comments:

It is correct that a waiver may be implied where the client puts their state of mind in issue, but not in every case. The guiding principles must be fairness and consistency. The principle in Albionex, and the other cases referred to, is simply that, whether intended by the client or not, fairness may require that solicitor-client privilege be waived where the client puts the legal advice between himself and his solicitor in issue or if a party has taken positions which would make it inconsistent to maintain the privilege…

However, a mere reference to the receipt of legal advice does not constitute waiver. Waiver must involve something more. It requires not simply disclosing that legal advice was obtained, but pleading reliance on that advice for the resolution of an issue…[^13]

[31] Which brings me to the decision of Perell J. in Creative Career Systems upon which the Shareholder Applicants heavily relied. That case involved an appeal from the decision of a Master who had ordered government representatives to answer questions about the content of legal advice they had received. The plaintiffs had sued the Ontario government for failing to process their applications for registration as private career colleges. On their examinations for discovery representatives of the government defendants acknowledged that they had received legal advice, but they refused to disclose the content of that advice. That is the way in which Perell J. read the portions of their discoveries put before him.[^14] Given that reading of the transcripts, Perell J. stated that:

there is no waiver of the privilege associated with lawyer and client communications from the mere fact that during the events giving rise to the claim or defence, the party received legal advice, even if the party relied on the legal advice during the events giving rise to the claim or defence. For a party to have to disclose the legal advice more is required.[^15]

[32] From that Perell J. went on to state the following general principles, upon which the Shareholder Applicants relied on this motion:

To justify a party being required to answer questions about the content of privileged communications, the party must utilize the presence or absence of legal advice as a material element of his or her claim or defence. The waiver of the privilege occurs when the party uses the receipt of legal advice as a material fact in his or her claim or defence. While the waiver is a deemed waiver, it requires the intentional act that the party makes legal advice an aspect of his or her case.[^16]

Waiver does not occur because the party discloses that he or she received legal advice, nor does it occur because the party admits that he or she relied on the legal advice; it occurs because the party chooses to use the legal advice as a substantive element of his or her claim or defence.[^17]

[33] Perell J. concluded that whether or not the defendants had received legal advice was not relevant to the key issue in the proceeding – whether the plaintiffs owned or controlled the colleges for which they sought registration. Accordingly he found that no “deemed waiver” of privilege had occurred and reversed the Master’s ruling requiring the disclosure of privileged information.

[34] So, stepping back and looking at the cases on which the Shareholder Applicants rely to argue that no waiver of privilege occurred by Mr. Ebrahim in disclosing the contents of legal advice in paragraph 3 of his affidavit, in Simcoff v. Simcoff the court found that a former solicitor should never have sworn an affidavit disclosing confidential communications with a client without that client’s authorization. That is not this case. In Creative Career Systems the government representatives had refused to disclose the content of legal advice on their discoveries and Perell J. held that the nature of the claims in that proceeding had not given rise to an implied waiver of privilege notwithstanding that refusal to disclose. Again, that is not this case. The present case is not one in which a witness merely adverted to the fact of receiving legal advice, leaving one to consider whether a waiver had resulted from that reference because of the nature of the issues advanced by a party. Here the affiant, Mr. Ebrahim, went further and disclosed the contents of the legal advice received.

[35] Finally, in Super Blue Box Corbett J. acknowledged that the City’s representative on discovery had disclosed, to an extent, the content of legal advice received, but he deferred to the trial the issue of whether a waiver of privilege had occurred: if the City planned to rely on legal advice at trial, then a waiver would result; if it did not, no waiver had taken place. Although I have, with respect, some reservations about the approach taken by Corbett J., the case before me differs from Super Blue Box in two key respects. First, it is evident from his reasons that Corbett J. was very concerned about the consequence of accidental or inadvertent slips of the tongue which could occur during the lengthy examinations of a representative of a large organization. In that case the City had not put forward the legal advice it had received as evidence in support of its case, but had responded to questions posed by an adverse party on discovery. In the case before me one of the applicants volunteered in his affidavit the content of the legal advice he had received. Second, Corbett J. stated, in effect, that the City had until trial to determine whether it wished to rely on legal advice as part of its case. In the application before me, Mr. Ebrahim included in his affidavit the content of the legal advice he received as part of the evidence he tendered for consideration by the judge at the final hearing of the application. Here the parties are “at trial”, in the sense that the evidence they have adduced through affidavits was intended to be considered by the judge presiding at the final hearing on the merits.

[36] In sum, as interesting as the decisions are in the Creative Career Systems, Super Blue Box and Simcoff cases, they all involved quite different fact situations concerning the issue of waiver of solicitor-client privilege than in the case before me.

[37] In my view, the present case is “an obvious scenario of waiver”, as described in Sopinka, Lederman and Bryant, because the holder of the privilege, Sajjad Ebrahim, made a voluntary disclosure of a material part of a privileged solicitor-client communication by testifying on his own behalf, through his affidavit, thereby giving evidence of a professional, confidential communication:

My sons and I do not act jointly and in concert and received legal advice to that effect prior to initially purchasing shares of the Company.

By so testifying Mr. Ebrahim waived the solicitor-client privilege relating to that issue.

[38] Mr. Ebrahim obviously had available to him the advice of litigation counsel when he swore his affidavit. The statements made in his affidavit were made with some reflection; this is not a case where the deponent blurted out an answer in the heat of an examination without an opportunity to consider the implications of his answer. Presumably the statements made by Mr. Ebrahim in his affidavit were done with the intent of placing before the court information which he thought would advance his case. Under those circumstances I see no unfairness in holding an affiant to what he swore in an affidavit, refusing his request to withdraw a statement, and requiring him to answer questions about the legal advice which he clearly raised and described in his affidavit. A cornerstone of our application system is that an affiant may be cross-examined on any statement contained in his affidavit. I see no unfairness to the applicants in requiring adherence to that principle.

[39] That said, I think the information sought in Question 230 went beyond the scope of the disclosure made by Mr. Ebrahim in paragraph 3 of his affidavit and any order should be more narrowly tailored. Accordingly, I order Mr. Ebrahim to re-attend for further cross-examination to answer questions concerning the legal advice which he received, prior to initially purchasing shares of Continental, to the effect that he and his sons would not be acting jointly or in concert in acquiring shares in the company. I place a 30 minute time limit on such further cross-examination.

C. Other refusals

C.1 Validity of proxies

[40] Continental seeks answers to a series of questions asked about the proxies submitted for the October AGM:

(i) Q. 349, pp. 90-91: To produce all proxies provided to Mr. Sawiak for the October 24, 2011 Annual General Meeting;

(ii) Q. 352; pp. 91-92: To produce all documents with respect to coming into existence of the proxy for 10,700,000 shares dated October 19, 2011, given to Mr. Sawiak.

(iii) Q. 356, pp. 92-93: To say whether there was a retainer agreement at or around October 19-20 where the clients of Fogler, Rubinoff were identified for the purpose of this proxy.

(iv) Q. 357, p. 93: To say whether Mr. Ebrahim knew that Fogler Rubinoff had other clients whose proxies were included in the same omnibus proxy and who these clients were.

(v) Q. 359, p. 93: To confirm that Mr. Ebrahim did not find out the identity of the other shareholders represented by Fogler, Rubinoff at the annual meeting, their number of shares, who they were, and what the terms of the arrangement were.

(vi) Q. 360, pp. 93-94: To indicate whether there was a written or oral agreement, or what the understanding was, as to who Fogler, Rubinoff was acting for at the time of the annual meeting and what the mandate was.

(vii) QQ. 361-2; p. 94: To say whether any mechanism was set up or disclosed to Mr. Ebrahim with respect to the potential for conflicts between his interests and those of others, including Mr. Singh.

[41] Continental submits that this series of questions is relevant to two issues: (i) the validity of excluded proxies; and, (ii) whether the Ebrahim Family acted jointly and in concert with Mr. Singh in attempting to acquire control of the board of directors of Continental contrary to Part XX of the Securities Act. Continental contends that these questions are all relevant to the existence of an understanding between the Ebrahim Family and Mr. Singh to acquire shares of Continental and to recruit other shareholders who are clients of Mr. Singh as part of a common program to change control of the Company and go to the bona fides of the claim for oppression remedy.

[42] The proxies submitted by the applicant shareholders to the Company at the October AGM have been filed in evidence. A number of them were disallowed. The Minutes of the AGM record:

[T]he Chairman confirmed that: (1) he had instructed Equity Transfer Trust Company not to inform proxy holders of the reason that certain of their proxies were invalid…(2) the Scrutineer’s report would not be available until after the Meeting, and (3) in respect of the voting results form to be filed with SEDAR following the Meeting, the Corporation would make a determination within the next couple of days as to whether invalid proxies would be referenced.

[43] Mr. Godin deposed in his December 5, 2011 affidavit that in an October 20, 2011 email Equity Transfer Trust had concluded that only 2,390,370 of the 13,749,230 proxies could be voted “as the remainder of the proxies were not valid as they had not been signed by the NOBO holders”. Mr. Godin further stated: “[I]t was Equity (not me) which made the determination as to the validity of the proxies.”

[44] Against that background I do not see the relevance of Questions 349 and 352 – the starting point for determining the legality of the disallowance of the proxies by the Chair, or by Equity, will be the information which was available to them at the time they made their decision.

[45] Nor do I see the relevance of those two questions, or any of the remaining ones, to the issue of whether certain shareholders were acting jointly or in concert. The allegations Continental advances concerning breaches of Part XX of the OSA relating to shares voted or attempted to be voted at the October 24 AGM now concern only the Ebrahim family. Continental has settled with Mr. Singh, and Continental has not named any other shareholder as a respondent for purposes of the relief it seeks under section 105 of the OSA for breaches of Part XX. Accordingly, those questions are not relevant to the issue of acting jointly or in concert because they seek information about shareholders other than those against whom relief is sought.

[46] I also note that Continental has not sought any declaration that any of the proxies tendered for the AGM were invalid.

[47] I dismiss this part of Continental’s motion.

C.2 Acting jointly or in concert

[48] Continental agreed that QQ. 78 and 79 have been answered; the applicants agreed to answer Q. 126. That leaves QQ. 140 and 409:

(i) Q. 140, pp. 36-37: To give the size of Mr. Ebrahim’s investment portfolio in public company stocks from 2004 to date.

(ii) Q. 409, pp. 106-108: To produce the investment portfolio and business transactions between the applicant, the Ebrahims, and their entities, for the last 10 years. This request includes: net worth statements, investment portfolios, financial statements, all investments, especially in Continental and mining companies. To produce any formalities concerning the investment in Par-Pak or by Par-Pak, including board resolutions, or information before the Board or shareholders when making the investment. To advise whether there are any family trusts that interrelate the funding, where the money came from for the shares in Continental, what the interrelationship of the father and sons are with respect to investment portfolios and any e-mails or texts with respect to: (1) Continental, (2) junior mining companies, and (3) investment activities generally.

[49] Continental submitted that these refusals are relevant to whether Sajjad Ebrahim and his sons were acting jointly or in concert, as addressed in paragraph 3 of Sajjad Ebrahim’s Affidavit, and as pleaded in the Company’s Application.

[50] On January 19, 2012 the Shareholder Applicants delivered two bound copies of productions in response to the portions of these refusals which related to their investments in Continental. Additional information was provided in a letter of January 27, 2012. Having reviewed those letters I am satisfied that the Shareholder Applicants have answered the only parts of these questions which are relevant – i.e. those parts which relate to their investments in Continental. The investments of the Ebrahim family in other companies are not relevant, and Continental’s counsel could not point me to any evidence which would support an argument founded on similar fact evidence. I therefore dismiss the company’s motion in respect of these questions.

VI. Refusals arising on the cross-examination of Salman Ebrahim

[51] Continental seeks answers to refusals given at Q. 36 on the cross-examination of Salman Ebrahim:

(i) To produce emails or notes or any discussions between any of the applicants, and most specifically Sajjad and Ali, regarding Continental from '09 onwards, and (ii) to produce all communications between any of the applicants with respect to other investments.

[52] Continental submitted that it has pleaded in its Application that the Ebrahim Family acted jointly and in concert with Mr. Singh in attempting to effect a change of control of the Board of Continental, and that Mr. Singh has recruited certain of his other clients at Canaccord for this purpose. The company contended that this question was relevant to whether Salman Ebrahim had investments in other small cap companies where Mr. Singh assisted his clients in effecting a change of control of the boards in the past

[53] Salman Ebrahim has provided answers to Part (i) of Q. 36. As to Part (ii) it is irrelevant for two reasons: first, Mr. Singh has been let out of the application and, second, the allegation of acting jointly or in concert relates only to the conduct of the Ebrahim family as shareholders in Continental, not in other companies. Again, the Company did not lay the evidentiary foundation to support a request based on similar fact evidence. I dismiss this part of Continental’s motion.

VII. Refusals arising on the cross-examination of Edward Godin

[54] The Shareholder Applicants seek to compel Mr. Godin to answer Q. 113 on his cross-examination:

To produce a copy of the employment contract between Mr. Godin and Continental.

[55] They contend that they put the contents of Mr. Godin’s employment contract in issue when they pleaded in paragraph 2(m) of their Notice of Application, as part of their theme that the incumbent Board of Continental is resisting dislodgement, that:

The Board has also adopted a “shareholders rights plan” (also known as a “poison pill”) and a “golden parachute” in favour of Mr. Godin to further entrench the Board.

[56] Although the Shareholder Applicants did refer to a “golden parachute” in their Notice of Application, their pleading was less than clear on the link between the terms of Mr. Godin’s employment and the specific relief which they seek. In any event, the September 14, 2011 Management Information Circular issued by Continental described, in detail, the compensation of Mr. Godin, as well as his entitlements upon the termination of his employment or in the event of a change of control: Sections 5(a) and 6(c). In light of that disclosure, I fail to see the relevance or probative value of what else might be in his employment agreement. I dismiss this part of the Shareholders’ motion.

VIII. Refusals arising on the Rule 39.03 examination of Herb Dhaliwal

[57] Mr. Dhaliwal was appointed a director of Continental on December 4, 2008. The Special Quorum Requirement contained in section 59(b) of Continental’s By-law No. 1 pre-dated his appointment. The Shareholder Applicants seek an order requiring Mr. Dhaliwal to answer the following two questions:

Q. 38, pp. 18-19 To advise whether or not it concerns Mr. Dhaliwal at all, as a director, that there hasn't been a quorum achieved so that there would be an election of directors at a meeting of shareholders, for 15 years.

Q. 58, pp. 24-25: To advise whether or not Mr. Dhaliwal agrees that he should do whatever, in his ability, to ensure that shareholders have that right to vote.

[58] I regard both questions as in the nature of argument. As to Q. 38, the validity of the Special Quorum Requirement of the Company’s by-law will be determined irrespective of whether Mr. Dhaliwal possessed any concerns about the provision. Question 58 simply asks Mr. Dhaliwal whether he agrees that motherhood and apple pie are good things; the question lacks any probative value. I dismiss this portion of the Shareholders’ motion.

IX. Refusals concerning litigation privilege regarding the expert report of Wesley Hall

[59] Continental submitted an affidavit from Wesley Hall, the CEO of Kingsdale Shareholder Services Inc. That company has a multi-year contract with Continental to provide shareholder services for meetings from 2011 until 2013. In his affidavit Mr. Hall opined that it was highly likely that if shareholders of Continental requisitioned a shareholders’ meeting or engaged in proxy solicitation, then over 50% of the shareholders would participate in person or by proxy, thereby meeting the threshold of the Special Quorum Requirement of the Company’s by-law. Mr. Hall deposed that he was aware of the duties of an expert set out in Rule 4.1 of the Rules of Civil Procedure and he believed that the evidence he was presenting was fair, objective and non-partisan.

[60] Mr. Hall attached to his affidavit a chart which he had caused Kingsdale to prepare, based on its records, setting out the percentage of shareholders participating in person or by proxy at annual and special meetings of Canadian public companies in 2011. On his cross-examination Mr. Hall produced the backup documents for that chart.

[61] On his cross-examination Mr. Hall refused to answer the following two questions:

Q. 200, p. 42: To produce any written documentation between Kingsdale and Stikeman Elliott regarding Mr. Hall’s affidavit or his evidence.

Q. 201, p. 42: To produce copies of any draft affidavits prepared for Mr. Hall.

Continental asserts litigation privilege as the basis of its refusal to permit Mr. Hall to answer those questions.

[62] As to Q. 200, on his cross-examination Mr. Hall testified that he did not receive any written instructions or mandate with respect to his opinion; he was asked to submit an affidavit “in this format”, talking about the results of the AGM and votes in general for AGMs (QQ. 117-8 and 122). When asked whether he had drafted his affidavit, Mr. Hall replied: “I did not.” That said, Mr. Hall went on to testify that his firm conducted the research and compiled the information on their own, and he explained at some length what research was done. Members of Mr. Hall’s team compiled the information (QQ. 182-3).

[63] Two aspects of this evidence strike me as particularly significant for this part of the refusals motion. First, Mr. Hall, who is tendered as an expert witness, testified that he did not draft the report, or affidavit, containing his expert opinion. Second, Mr. Hall, although deposing that he recognized the duties of fairness and impartiality imposed on experts, acknowledged that his firm has an on-going commercial relationship with one party, Continental, in the very area in which he is providing expert evidence – shareholder services.

[64] Before turning to the case law, one needs first to consider the procedural framework in which the Shareholder Applicants have asked Mr. Hall, who is tendered as an expert witness, to provide further information about his expert report. Where a civil proceeding takes place by way of action, the disclosure of information about an expert’s report may occur at three different points in the lawsuit – first, on examination for discovery, where a party may “obtain disclosure of the findings, opinions and conclusions of an expert engaged by or on behalf of the party being examined”;[^18] second, in the period shortly before trial during which parties must exchange any expert reports and those reports must contain the information specified by Rule 53.03(2.1); and, finally, at trial, where an expert may be subjected to cross-examination during which requests to access his file sometimes occur.[^19]

[65] The present proceeding consists of applications, not actions. Consequently, the pre-trial Rule 31 discovery process was not used for Mr. Hall’s evidence. Instead, what would stand as his cross-examination “at trial”, or the final hearing, was conducted out-of-court, and the transcript has been filed for use at the final hearing before me at the end of March. To be used at the final hearing Mr. Hall’s expert report or affidavit must comply with Rule 53.03(2.1), just as an expert report tendered for use at trial. Rule 53.03(2.1)¶3 requires an expert to disclose “the instructions provided to the expert in relation to the proceeding”. Mr. Hall testified that he did not receive any written instructions concerning his retainer or report, and he described the oral discussions which he had about the scope of his work (QQ. 118-123). From that evidence I am satisfied that Mr. Hall has met the requirements of Rule 53.03(2.1)¶3.

[66] However, Mr. Hall testified that he did not draft his affidavit, which is his expert report. The Shareholder Applicants seek any drafts of that report as well as any communications which he had with Continental’s counsel regarding his affidavit or evidence.

[67] Three cases provide some guidance on this issue. First, Ferguson J., in Browne (Litigation Guardian of) v. Lavery[^20], commented at some length on the appropriate scope of production of “foundational” documents or information relied upon by an expert:

While the full scope of subrule 31.06(3) at the discovery stage and the scope of the common law at the trial stage are not issues before me it is important to consider the direction in which the ruling in Stone and my more limited ruling in this case may take us.

It is my tentative view that our system of civil litigation would function more fairly and effectively if parties were required to produce all communications which take place between counsel and an expert before the completion of a report of an expert whose opinion is going to be used at trial.

I can appreciate that discussions between counsel and experts for educational purposes might generally best be ruled to be within the zone of privacy protected by litigation privilege. For instance, counsel might communicate with the expert to discuss what information the expert needed to prepare an opinion. Counsel might also want to communicate with the expert to discuss questions which might be put to the expert or to the opposing expert at trial.

If the communications took place before the preparation of the report, then I am inclined to think it would [be] best for our system of litigation if they were producible because they could influence the opinion and there would be no practical way of determining this without producing and examining the communications and hearing submissions on the issue.

Any experienced counsel who has dealt with experts would appreciate how important it would be to know what the expert was instructed to do, what the expert was instructed not to do, what information was sent to the expert and the extent to which counsel instructed the expert as to what to say, include or omit in the report. McLeish and Smitiuch discuss in their article numerous cases which struggled with these issues. I would guess that every experienced litigation counsel knows such influential factors are not rare but commonplace. A recent and alarming example was discussed in the recent case of Whiten v. Pilot Insurance Co. (1999), 1999 CanLII 3051 (ON CA), 42 O.R. (3d) 641, 170 D.L.R. (4th) 280 (C.A.).

In my view, the disclosure of this information would best enable an opposing counsel and the court to assess whether the instructions and information provided affected the objectivity and reliability of the expert's opinion. I also note there is much contrary opinion on this subject: e.g. Mahon v. Standard Life Assurance Co., [2000] O.J. No. 2042 (S.C.J.).

This area of the case law cries out for appellate review.[^21]

[68] Some degree of appellate review was provided by the Court of Appeal in Conceicao Farms Inc. v. Zeneca Corp.[^22] where the court considered the scope of the information – factual or documentary – discoverable under Rule 31.06(3) with respect to expert reports:

There is an area of debate concerning the scope of information that may be obtained pursuant to this rule. It clearly encompasses not only the expert's opinion but the facts on which the opinion is based, the instructions upon which the expert proceeded, and the expert's name and address. How far beyond this the right to obtain foundational information (as our colleague called it) extends, need not be determined here. Suffice it to say that we are of the view that it does not yet extend as far as is tentatively suggested in Browne (Litigation Guardian of) v. Lavery (2002), 2002 CanLII 49411 (ON SC), 58 O.R. (3d) 49, [2002] O.J. No. 564 (S.C.J.). We simply proceed on the basis that the rule entitles the appellant to obtain on discovery the foundational information for Dr. Grafius' final opinion. As will become clear, we need not decide in this case the precise extent of the information that is discoverable.[^23]

[69] So, the Court of Appeal was not prepared to place its imprimatur on the broad principle advanced by Ferguson J. in the Browne case, but the Court made it clear that “the instructions upon which the expert proceeded” were to be disclosed when requested on discovery under Rule 31.06(3).

[70] A third case involving Rule 31.06(3) was that of Nordheimer J. which followed the Browne case in time, but pre-dated the Court of Appeal’s decision in Conceicao Farms. In Aviaco International Leasing Inc. v. Boeing Canada Inc.[^24] the court was faced with a refusal on a discovery to produce drafts of an expert report. Nordheimer J. ordered the production of the drafts for the following reasons:

In my view, draft reports represent, at the very least, preliminary findings, opinions and conclusions of the expert and therefore fall within the scope of the rule. Such an interpretation of the rule would appear to accord with the general principle that the Rules of Civil Procedure are to be "liberally construed" - see rule 1.04(1). It also seems to me, for the reasons expressed by Ferguson J. in Browne, that a party ought to be able to explore with an expert whether he or she changed her views from draft to draft and, if so, why. It is all part of testing the expert's conclusions. It is also important that this material be produced in advance of the trial so that the trial is not interrupted while such material is reviewed. This question is therefore ordered to be answered.[^25]

[71] All three cases considered the scope of pre-trial disclosure of information concerning an expert’s report. The timing of the disclosure request before me is quite different. Continental retained Mr. Hall as an expert. Mr. Hall provided an expert report in the form of his affidavit. Continental produced that report as part of its responding application record, signifying that it intended to rely on Mr. Hall’s report at the final hearing. Simply put, Continental has “called” Mr. Hall as an expert at the final hearing of these applications, although it has done so by way of a written record. Such is the procedure on an application. Mr. Hall has testified, in effect, at the final hearing, since the transcript of his cross-examination is now before me. For all intents and purposes I am being asked to rule on a refusal made by Mr. Hall during his cross-examination at the final hearing. So, the issue engaged on this motion does not concern the scope of pre-trial disclosure, but what a judge presiding at a final hearing can require an expert called to testify before him to produce during the course of his cross-examination.

[72] Which takes us to the principles concerning litigation privilege articulated by the Supreme Court of Canada in Blank v. Canada (Minister of Justice), where that Court emphasized that “the principle ‘once privileged, always privileged’, so vital to the solicitor-client privilege, is foreign to the litigation privilege. The litigation privilege, unlike the solicitor-client privilege, is neither absolute in scope nor permanent in duration.”[^26] As the authors of the Sopinka, Lederman and Bryant text point out:

Although the actual disclosure of privileged information to an expert retained for litigation purposes would not waive the original privilege, there is some debate over whether the privilege is waived when that expert takes the stand at trial and gives testimony.[^27]

[73] After reviewing the cases on both sides of the debate, the learned authors offered the following views:

Generally, the implied waiver (by the expert taking the stand or having his or her report tendered into evidence) should be narrowly construed and the privilege should be maintained whenever it is fair to do so. The waiver of litigation privilege should be restricted to material relating to formulation of the expressed opinion.

No doubt the witness should be subject to cross-examination on the factual basis of the opinion…As to the expert’s credibility, caution should be exercised before that becomes the basis for wide-ranging disclosure of all solicitor-expert communications and drafts of reports. Certainly, confidential communications which are not the foundation of the expert opinion are not waived. In any event, it might just lead to a general practice among solicitors of destroying drafts after they are no longer needed just to avoid the problem.[^28]

Morden & Perell, in The Law of Civil Procedure in Ontario, First Edition, also identify the conflicting lines of cases, but they do not offer any view on how to reconcile them.[^29]

[74] I accept the cautions voiced by the authors of Sopinka, Lederman and Bryant about the approach that a trial judge, or final hearing judge, should take when considering the scope of the waiver associated with a party placing an expert “in the box” to testify. In the present case I consider the determining factor the answer which Mr. Hall gave on his cross-examination that he did not draft his affidavit. It is unusual, to say the least, to come across an expert who has not drafted his own report, in this case in affidavit form. Mr. Hall’s admission that he did not gives rise to issues as to what findings or conclusions in his report originated as his own, or were those of others, and whether the opinion he now ventures, or the information upon which he relies, may have changed from draft to draft, with the drafts prepared by others. Those issues concern the independence and impartiality of the opinion advanced by Mr. Hall to this Court, as well as the weight which should be attached to his opinion.

[75] Accordingly, in light of those specific circumstances, I conclude that by tendering Mr. Hall as an expert witness Continental has waived litigation privilege attaching to any written documentation between Mr. Hall/Kingsdale and Stikeman Elliott, Continental’s counsel, regarding Mr. Hall’s affidavit or his evidence, including prior drafts of his affidavit report. I order Mr. Hall to re-attend for further cross-examination and to answer Questions 200 and 201 refused on his cross-examination conducted on January 19, 2012. I will want that evidence available before me at the final hearing so that I can assess Mr. Hall’s expert evidence. I place a 30 minute time limit on such further cross-examination.

X. Conclusion and costs

[76] By way of summary, I make the following orders regarding the motions brought by both parties:

(i) I dismiss the motion of the Shareholder Applicants for leave to withdraw portions of paragraph 3 of the affidavit of Sajjad Ebrahim sworn October 28, 2011;

(ii) I order Mr. Ebrahim to re-attend for further cross-examination to answer questions concerning the legal advice which he received, prior to initially purchasing shares of Continental, to the effect that he and his sons would not be acting jointly or in concert in acquiring shares in the company. I place a 30 minute time limit on such further cross-examination;

(iii) I order Mr. Hall to re-attend for further cross-examination and to answer Questions 200 and 201 refused on his cross-examination conducted on January 19, 2012. I place a 30 minute time limit on such further cross-examination;

(iv) I dismiss the remainder of the relief sought in both motions.

[77] I reserve the issue of the costs of these motions to the hearing of the applications at the end of March.

D. M. Brown J.

Date: February 17, 2012

[^1]: 2010 ONSC 5570, para. 27. [^2]: (Toronto: LexisNexis, 2009) [^3]: Ibid., §14.121 and 14.122, emphasis added. [^4]: Ibid., §14.127, 14.129 and 14.130. [^5]: Ibid., §14.131. [^6]: 2012 ONSC 649 (S.C.J.) [^7]: 2004 CanLII 34954 (ON SC), [2004] O.J. No. 4468. [^8]: 2009 MBCA 80 [^9]: Guelph (City), supra., paras. 82 and 84. [^10]: Ibid., paras. 87 to 89, emphasis added. [^11]: Ibid., para. 101, sub. (e). [^12]: Ibid., paras. 108 and 111. [^13]: Simcoff, supra., paras. 26 and 27. [^14]: Creative Career Services, para. 14. [^15]: Ibid., para. 27. [^16]: Ibid., para. 29. [^17]: Ibid., para. 31. [^18]: Rule 31.06(3). [^19]: See the detailed discussion in Donald Ferguson, Ontario Courtroom Procedure, 2009 (Toronto: LexisNexis, 2009), pp. 972-5. [^20]: (2002), 2002 CanLII 49411 (ON SC), 58 O.R. (3d) 49 (S.C.J.). [^21]: Ibid., paras. 65 to 71. [^22]: (2006), 2006 CanLII 31976 (ON CA), 83 O.R. (3d) 792 (C.A.). [^23]: Ibid., para. 14. [^24]: 2002 CanLII 21293 (ON SC), [2002] O.J. No. 3799 (S.C.J.). [^25]: Ibid., para. 16. [^26]: 2006 SCC 39, [2006] 2 S.C.R. 319, para. 27. [^27]: The Law of Evidence in Canada, Third Edition (Toronto: LexisNexis, 2009), §14.204. [^28]: Ibid., §14.208 and 14.210. See also Caputo v. Imperial Tobacco Ltd. (2002), 25 C.P.C. (5th) 78 (Ont. Master), paras. 37 and 38. [^29]: (Toronto: LexisNexis, 2010), pp. 629-630.