COURT FILE NO.: CV-10-397096CP
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: TRILLIUM MOTOR WORLD LTD., Plaintiff
AND:
GENERAL MOTORS OF CANADA LIMITED and CASSELS BROCK & BLACKWELL, LLP., Defendants
AND BETWEEN
GENERAL MOTORS OF CANADA LIMITED, Plaintiff by Counterclaim
AND:
TRILLIUM MOTOR WORLD LTD. and THOMAS L. HURDMAN,
Defendants to the Counterclaim
BEFORE: CHIAPPETTA, J.
COUNSEL:
Bryan Finlay, Q.C. and Marie-Andree Vermette,
for the Plaintiff/Defendants to the Counterclaim
David Morrit and Karin Sachar,
for the Defendants/Plaintiff by Counterclaim
HEARD: August 21, 2014
ENDORSEMENT
Overview
1The representative Plaintiff appeals from the April 3, 2014 Order of Master Haberman dismissing its motion for production from General Motors of Canada Limited (“GMCL”) of communications shared with: (a) Ernst & Young (“E&Y”) and its counsel (“E&Y communications”); and (b) various Government actors and their counsel (“Government communications”).
2The Master found that both sets of communications were protected by privilege. The E&Y communications were covered by solicitor-client privilege. The Government communications were covered by common interest privilege.
3It was found as an undisputed fact by the Master that if GMCL filed under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (“CCAA”), E&Y would have been proposed as GMCL’s monitor. A monitor in a CCAA proceeding is an officer of the court and owes a fiduciary duty to all of the distressed company’s stakeholders. It is contended that if this fiduciary duty arose, it would have been necessary for the monitor to disclose all communications between it and the distressed company.
4The Plaintiff argues that solicitor-client privilege cannot attach to communications made between a distressed company and its prospective monitor, as the monitor’s inevitable disclosure obligations eliminate any reasonable expectation of confidentiality between it and the distressed company. Since the E&Y communications were made at a time when E&Y was a prospective monitor of GMCL, the Plaintiff submits that privilege cannot attach to these communications and the Master erred in finding that it did.
5The Plaintiff also submits that the Master erred in finding that the Government communications were covered by common interest privilege. The Plaintiff argues that the Master erred in law when she concluded that common interest privilege protected communications made between a government and a distressed company made for the purpose of obtaining government financial assistance.
6For reasons set out below, the appeal is dismissed. The Plaintiff’s objection to the Master’s decision relates directly to her findings of fact, not her application of law. Deference is to be accorded to a Master’s finding of facts absent a palpable and overriding error (Zeitoun v. Economical Insurance Group, 2008 20996 (ON SCDC), [2008] 91 O.R. (3d) 131, 292 D.L.R. (4th) 313 (Div. Ct.), at paras. 40-41, aff’d 2009 ONCA 415). The learned Master carefully reviewed the evidence before her. I am satisfied that she did not misapprehend the evidence or otherwise fall into palpable and overriding error. Her findings are therefore entitled to deference.
E&Y Issue
7The class action arises out of the 2009 efforts of GMCL and its former parent, General Motors Corporation to restructure their business while preparing for insolvency proceedings in both the United States and Canada. In Canada, the proceeding contemplated was a filing under the CCAA.
8Prior to the start of the related class proceeding, GMCL retained financial and legal advisors to assist them in their efforts to avoid a filing under the CCAA, and to prepare them in the event that a CCAA filing was necessary. GMCL retained E&Y as a financial advisor. GMCL and their lawyers worked closely with E&Y and E&Y’s legal counsel, Stikeman Elliot LLP (“Stikeman”). GMCL ultimately avoided a CCAA filing.
9The Master accepted the uncontested expert evidence and found as a fact that:
E&Y, as the financial advisor to GMCL worked as part of a team of professional advisors along with legal counsel towards two possible outcomes - restructuring and CCAA filing.
The professional advisors worked seamlessly and collaboratively with the goal to maximize the success of the restructuring option.
E&Y had a much broader role to play as GMCL’s financial advisor than simply preparing GMCL to file under the CCAA.
A monitor is commonly retained first as a financial advisor. A monitor’s early involvement in a matter is invaluable as the monitor cannot be expected to come up with statutorily required cash flow forecasts if retained at the last minute.
E&Y’s role as the prospective monitor made it essential to the legal advice provided to GMCL.
GMCL and E&Y understood and expected all communications to be privileged and confidential. A confidentiality agreement was entered into, highlighting GMCL’s expectation in that regard.
Sharing confidential information with professional advisors is normal practice in the industry.
GMCL expected their communications to remain confidential and no waiver was intended.
10The Master then correctly applied the facts she found to the law extending solicitor-client privilege to third parties whose function is essential to the solicitor-client relationship. While she did not refer to the Ontario Court of Appeal’s decision in General Accident Assurance Co. v. Chrusz, 1999 7320 (ON CA), [1999] 45 O.R. (3d) 321, 180 D.L.R. (4th) 241, her reasons reflect the appropriate application of the legal principles therein. The Master, explicitly found that it would be “an unwarranted stretch” to distinguish this case from Camp Development Corp. v. South Coast Greater Vancouver Transportation Authority, 2011 BCSC 88, 102 LCR 162, wherein the British Columbia Supreme Court applied the Chrusz principles and denied a motion to produce documents from a third party that were covered by solicitor-client privilege.
11I am unable to identify any palpable and overriding error in the Master’s findings of fact; including the Master’s finding that GMCL had a reasonable expectation of confidentiality in its communications with E&Y and Stikeman, arising independently of E&Y’s role as a prospective monitor. GMCL restricted their claim for privilege to those communications with E&Y that reflect legal advice, or shared opinion and analysis. But for E&Y’s status as prospective monitor, the claim of privilege would likely not have been challenged for reasons set out in Chrusz.
12In this case, E&Y was not appointed as a monitor. It is irrelevant that it might have been or what disclosure obligations its pre-monitor activities would have been had it been appointed. E&Y were financial advisors to GMCL working with its solicitors. The Chrusz analysis of the Master was the correct analysis.
Government Issue
13The sole sources of potential funding for GMCL’s restructuring were the governments of Canada and Ontario. An essential component of GMCL’s restructuring was the successful negotiation of conditions and agreements under which these governments would invest in GMCL by June 1, 2009. During the first five months of 2009, GMCL worked with both governments to develop a restructuring plan. GMCL shared privileged information that was relevant to the class proceeding with both governments during the course of their negotiations. GMCL claimed that it did not waive privilege by disclosing its privileged material to governments since the disclosure was made to further the parties’ common interest. The Master accepted this submission and agreed that the common interest exception applied to the disclosure of privileged communications between GMCL and the governments of Canada and Ontario.
14Common interest is not a separate class of privilege. Rather, it operates to protect privilege from waiver. If the requirements of the common interest privilege exception are not met, then the sharing of the privileged information will constitute a waiver of privilege (Pitney Bowes Canada Ltd. v. Canada, 2003 FCT 214, 225 D.L.R. (4th) 747 at para. 14). The Master acknowledged that the common interest privilege exception is “so fact driven, there can be no hard and fast rule as to when it will or will not arise”.
15The Master found as a fact that the governments were acting in a commercial capacity; both the governments and GMCL wanted the same outcome -“the survival of GMCL” - and that the governments and GMCL had a common interest in developing a restructuring plan. Further, she accepted that the governments and the Canadian public received many benefits as a result of the successful restructuring of GMCL.
16The Plaintiff submits that the common interest privilege exception does not apply to communications made for the purpose of obtaining government financial assistance. It is argued that there is no precedent to justify extending the common interest privilege exception to these circumstances and the exception is no more applicable in this case than would be to a citizen’s application for employment insurance. It is further argued that GMCL and the governments did not have a common interest vis-à-vis the relevant class.
17The Plaintiff, however, does not challenge the legal principles of the exception as specifically detailed by the Master. Again, the Plaintiff objects only to the Master’s findings of fact as applied to the correct legal principles. Her findings of fact were well supported by the evidence and are entitled to deference on appeal.
Disposition
18For reasons outlined above, the appeal is dismissed.
Costs
19Counsel agreed that $10,000 is an appropriate award of costs to the successful party on this appeal. Costs are therefore fixed at $10,000 and made payable within 30 days by the appellant to the respondent.
CHIAPPETTA J.
Date: September 2, 2014