CITATION: R. v. Assessment Direct Inc., 2016 ONSC 8138
COURT FILE NO.: M195/14
DATE: 2016-12-28
ONTARIO
SUPERIOR COURT OF JUSTICE
Toronto Region
B E T W E E N:
THE ONTARIO PROVINCIAL POLICE and HER MAJESTY THE QUEEN
Respondents
- and -
ASSESSMENT DIRECT INC., UNIVERSAL INJURY REHABILITATION CETNRE INC., OSLER REHABILITATION CENTRE INC., METRO REHABILITATION CENTRE INC., ROUGE VALLEY REHABILITATION INC. and PUBLIX REHABILITATION INC.
Applicants
COUNSEL: J. Patton, for the respondents R. Shekter & N. Eisazadeh, for the applicants E. Dann, Referee
HEARD: November 17, 2016
Nordheimer J:
[1] This is an application for the determination of various claims of privilege over documents that were seized by the Ontario Provincial Police pursuant to search warrants. The O.P.P. are investigating the applicants with respect to allegations of fraud. In furtherance of that investigation, the O.P.P. obtained search warrants for the business premises of the applicants.
[2] After the search warrants were executed, the applicants raised possible privilege claims regarding many of the documents that were seized. I appointed a Referee whose task it was to review the many documents over which privilege was claimed and to report the court as to whether, in the view of the Referee, the privilege claims were properly made out. The Referee, with the assistance of a forensic examiner, has undertaken that very large undertaking over many months. The Referee has produced reports to the court from time to time as this task progressed. The Referee has also met with counsel for the applicants to review issues, which has led to many agreements regarding whether certain categories of documents are, or are not, privileged.
[3] With respect to some documents, however, agreement could not be reached. Those documents were the subject of a hearing before me for the purpose of obtaining rulings on those claims of privilege. I made those rulings, with respect to various categories of documents, as the hearing progressed. However, there were a few issues which, for different reasons, could not be dealt with at that time. I will deal with each of those issues in turn, leaving the two difficult categories, that appear to raise the same issue, to the end.
[4] One of those issues was with respect to a claim of privilege over various emails, that attached draft letters, that were responding to inquiries from third parties relating to the matters that underlie the fraud allegations. While the emails were between employees of the applicants asking for comments on the contents of the draft letters, the applicants say that all of those draft letters were ultimately going to be submitted to counsel for approval, before being finalized and sent to those third parties. The applicants contend that, as a result, the draft letters and the emails are privileged. The Referee was not satisfied that the claim of privilege was made out on the basis of the material that was provided.
[5] The question over the adequacy of the record to support the claim of privilege was left for “amplification” by the applicants. Since the hearing, the applicants have filed an affidavit from an employee, who has been principally involved in managing both the matters that have arisen from the search warrants, and related civil litigation. In that affidavit, the purpose of the emails and the draft letters are explained. I am satisfied, based on the content of that affidavit, that the emails and the draft letters are properly subject to a claim of privilege. The purpose of the emails and the draft letters was to gather information for a response that ultimately counsel for the applicants would vet and approve. In my view, changes made by counsel to the letters between the drafts, and the final version, might reveal matters of advice or strategy, and are thus properly protected from production. My view in that regard is based, of course, on the assumption that the final versions of the letters have been produced. The final letters would not be privileged, since they were sent to third parties. These various emails and drafts are, I believe, set out in categories C and D on the spreadsheet that we used at the hearing to outline the documents that required rulings.
[6] There were documents in category K that involved certain financial information. A question arose as to whether the police already had this information, through other materials that had been seized, because, if so, there was no need for the police to get the information in this form, as it would simply be duplicative. The Referee subsequently confirmed to me that the police did indeed have the financial information, so the documents in category K are unnecessary to them.
[7] The last two categories raise a more difficult issue. One has to do with the documents, principally set out in category H, that are copies of original documents that are said to have been collected for the purpose of counsel’s brief. The other has to do with documents, set out in category M, that are said to be a subset of a larger collection of documents from the applicants’ records, again destined for counsel’s brief. Notwithstanding that these documents are said to be part of counsel’s brief, all of these documents were found in the business premises of the applicants. Counsel for the applicants explained that resulted from the volume of documents, which made it more convenient to maintain the documents at the clients’ premises. I should also note that the documents, contained in the brief, were collected to respond to other pre-existing litigation, not these search warrants.[^1] However, that other litigation, as I alluded to earlier, involves the same alleged conduct that led to the search warrants. It is litigation that is therefore “closely related” to the possible criminal prosecution.
[8] The issue is difficult because there are conflicting authorities on the question whether the gathering of copies of documents, by a client for its lawyer, can properly be covered by litigation privilege. There are three main authorities. Before turning to those authorities, though, I should make it clear that, if litigation privilege applies to these documents, it does not matter that the documents were collected in response to other litigation. As long as the litigation is “closely related” to the conduct that has led to the issuance of the search warrants, litigation privilege would still apply: Blank v. Canada (Minister of Justice), 2006 SCC 39, [2006] 2 S.C.R. 319; Lizotte v. Aviva Insurance Co. of Canada, [2016] S.C.J. No. 52.
[9] The first authority is Hodgkinson v. Simms (1988), 1988 CanLII 181 (BC CA), 55 D.L.R. (4th) 577 (B.C.C.A.). The central question was aptly summarized by McEachern C.J.B.C. where he said, at p. 578:
This appeal is concerned with an important practice question relating to the privilege of a solicitor’s brief, particularly whether photocopies of documents collected by the Plaintiff’s solicitor from third parties and now included in his brief are privileged even though the original documents were not created for the purpose of litigation.
[10] The majority in Hodgkinson accepted that copies of documents could be subject to litigation privilege, if the dominant purpose of their creation as copies was:
… in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production …[^2]
The dissent was not prepared to cloak the documents, in question, with a claim of litigation privilege, on the basis that litigation privilege should be “rigidly” constrained so as to favour broad and full disclosure.
[11] The second authority is General Accident Assurance Co. v. Chrusz (1999), 1999 CanLII 7320 (ON CA), 45 O.R. (3d) 321 (C.A.). As was the situation in Hodgkinson, the court in Chrusz split in their views on this question. Carthy J.A. disagreed with the conclusion reached by the majority in Hodgkinson. He concluded that the modern approach to full discovery argued against any expansion of the zone of protection afforded by litigation privilege. He reasoned that, if the original documents did not enjoy privilege, there was little to recommend a conclusion that copies of those documents should enjoy privilege, even if the copies are prepared at the direction of counsel. In the end, Carthy J.A. concluded that the such documents were not privileged. He said, at para. 39(QL):
The production of such documents in the discovery process does little to impinge upon the lawyer’s freedom to prepare in privacy and weighs heavily in the scales supporting fairness in the pursuit of truth.
[12] Doherty J.A. was in dissent in Chrusz on the other issues raised in that case. On this specific question, he also disagreed with Carthy J.A., although he did agree that the mere copying of a document, and placing it in a lawyer’s brief, was not sufficient to cloak the copy with litigation privilege. Something more than that was required to invoke privilege. Doherty J.A. said, at para. 137(QL):
A non-privileged document should not become privileged merely because it is copied and placed in the lawyer’s brief. I would not, however, go so far as to say that copies of non-privileged documents can never properly be the subject of litigation privilege.
[13] Doherty J.A. then referenced the decision in Nickmar Pty. Ltd. v. Preservatrice Skandia Insurance Ltd. (1985), 3 N.S.W.L.R. 44 (N.S.W.S.C.) as setting out what more was required to properly invoke the privilege. He quoted with approval from the reasons of Wood J. at pp. 61-62:
If it involves a selective copying or results from research or the exercise of skill and knowledge on the part of a solicitor, then I consider privilege should apply [Lyell v. Kennedy (No. 3) (1884), 27 Ch. D. 1]. Otherwise, I see no reason, in principle, why disclosure should be refused of copies of documents which can be obtained elsewhere, and in respect of which no relationship of confidence, or legal profession privilege exists.
[14] Rosenberg J.A. was the third member of the panel in Chrusz. He agreed with the reasons of Carthy J.A. on the other issues raised in the case but, on this issue, Rosenberg J.A. tended to favour the conclusion reached by Doherty J.A. However, he did not reach a final conclusion on the issue. Rather, he said, at para. 171(QL):
As to copies of non-privileged documents, like Doherty J.A. I find the reasons of Wood J. in Nickmar Pty. Ltd. v. Preservatrice Skandia Insurance Ltd. (1985), 3 N.S.W.L.R. 44 (N.S.W.S.C.) persuasive. However, since that issue does not arise in this case, I would prefer to leave the question open.
[15] The third authority is Blank v. Canada (Minister of Justice), 2006 SCC 39, [2006] 2 S.C.R. 319. In that case, the Supreme Court of Canada dealt with the distinctions between solicitor and client privilege and litigation privilege. Among other things, the court noted that, unlike solicitor and client privilege, litigation privilege ends, when the litigation that gave rise to the privilege ends, unless there is closely related litigation that is ongoing.
[16] The Supreme Court of Canada then turned to the issue that is raised in this case, that is, whether litigation privilege attaches to documents gathered or copied, but not created, for the purpose of litigation. The court referred to the decision in Hodgkinson and also to the decision in Chrusz. With respect to the latter decision, Fish J. said, at para. 63:
This approach was rejected by the majority of the Ontario Court of Appeal in Chrusz.
[17] With due respect, I do not believe that Fish J. is correct when he says that. My reading of Chrusz would lead to the technical conclusion that Carthy J.A. disagreed with the conclusion in Hodgkinson, that Doherty J.A. agreed with it, and that Rosenberg J.A. did not reach a conclusion. The reason why that is of some consequence is that the Supreme Court of Canada in Blank does not decide the question. Rather, Fish J. says, at para. 64:
The conflict of appellate opinion on this issue should be left to be resolved in a case where it is explicitly raised and fully argued. Extending the privilege to the gathering of documents resulting from research or the exercise of skill and knowledge does appear to be more consistent with the rationale and purpose of the litigation privilege. That being said, I take care to mention that assigning such a broad scope to the litigation privilege is not intended to automatically exempt from disclosure anything that would have been subject to discovery if it had not been remitted to counsel or placed in one’s own litigation files. Nor should it have that effect.
[18] I say that is of some consequence because, if the decision in Chrusz had rejected the conclusion in Hodgkinson, then I would be bound to follow the conclusion from Chrusz. But, as I have attempted to point out, I do not believe that is the ultimate result of the decision in Chrusz. Rather, the result seems to be what would be referred to, in other contexts, as a “tie”.[^3]
[19] All of that said, one can draw from the decision in Blank some indication of the proper approach to the question whether litigation privilege attaches to documents gathered or copied, but not created, for the purpose of litigation. I view that proper approach to be, first, that a party cannot shield from production, copies of documents in their lawyer’s brief, unless the originals of those documents have been produced, assuming, of course, that the originals are in the possession of the client. I draw that conclusion from the above statement of Fish J. that:
… litigation privilege is not intended to automatically exempt from disclosure anything that would have been subject to discovery if it had not been remitted to counsel or placed in one’s own litigation files.
[20] It also follows, from the decision in Blank, that copies of documents that form part of what is said to be the lawyer’s brief, are only properly protected by litigation privilege, if the gathering of those documents is the result of “research or the exercise of skill and knowledge”. A lawyer who simply instructs his/her client to make copies of certain general categories of documents (e.g. invoices, cheques, contracts, correspondence, etc.) and to place them in binders, for the purpose of subsequent review by counsel, on the basis that they will be important documents in the litigation, does not reflect the exercise of any specialized skill and knowledge. It simply reflects a reality that would be obvious to any informed observer.
[21] That conclusion is also consistent with the principle from Nickmar Pty. Ltd. where the same threshold requirement of “research or the exercise of skill and knowledge” is made for the application of litigation privilege. I take it to be self-evident that the “skill and knowledge” being referred to is specialized skill or knowledge.
[22] That conclusion does not meant that, if a lawyer instructs his/her client to go out and find certain documents for the lawyer’s brief, those documents would not properly be subject to a claim of litigation privilege. Those documents would not, of course, be the client’s documents in the first place. It also does not mean that, if a lawyer instructs his/her client to make copies of certain of the client’s documents, but to organize them in a specific fashion, their collection, in that fashion, is also not properly the subject of a claim of privilege, assuming again that their collection, in that fashion, can be seen as reflecting the exercise of the requisite skill and knowledge. For example, simply telling the client to organize the documents chronologically would presumably not satisfy the requisite level of skill and knowledge. However, concluding that the organization of the documents is privileged is not the same thing as saying that the documents themselves are privileged.
[23] Simply put, if there are documents in the possession, custody or control of the client, those documents do not become privileged, just because the lawyer asks for copies of them to be made and included in his/her brief. Nor do those documents become privileged simply because the lawyer asks the client to organize the documents in a particular fashion, that will be of assistance to the lawyer in the litigation, unless that organization reflects skill and knowledge. If it does, then the organization of the documents may be privileged, but the documents themselves still must be produced. By way of example from this case, when dealing with some other documents, where a similar concern arose, the Referee released the documents to the O.P.P. intermingled with other documents, so that the organization of the documents would not be revealed.
[24] This approach is important to the overarching goal of full disclosure in a civil proceeding, but it is of even greater importance to the proper response to a search warrant issued in a criminal proceeding. In a civil proceeding, documents, over which a claim of privilege is made, are still required to be listed in the client’s affidavit of documents, so their existence is known.[^4] That would not, of course, be the case in a criminal prosecution where a search warrant is executed. In that situation, there is no requirement to list the documents (except as a broad category) so the specifics of the documents would not be known to the police. It seems to me that that reality requires a cautious, and more narrow, application of litigation privilege, otherwise it could become too easy a route to shield evidence from disclosure in the criminal context.
[25] Applying that approach to the documents in this case, leads me to the following conclusions. If the copies of the documents kept in the applicants’ business premises for the purpose of their lawyer’s brief, have all otherwise been produced in response to the search warrant, then the copies in the brief do not have to be turned over. On the other hand, if the brief contains the only version of the documents (e.g. original documents or the only copies), and they are documents that are otherwise the property of the applicants, then those documents must be turned over in response to the search warrant. I reach that conclusion because there is nothing in the evidence before me that demonstrates that the collection of those documents, as might appear from the brief, is the result of the exercise of the degree of skill and knowledge that is necessary to properly cloak them with litigation privilege. Further, and as has been done in other instances, if there is any significance to the organization of the documents in the brief, counsel for the applicants can arrange with the Referee for the documents to be produced in a fashion that does not reveal that organization, if that is possible. Finally, if there are any documents in the brief, that the applicants obtained from other sources, only as the result of a specific direction from their counsel, then those documents would be properly protected by litigation privilege, and need not be turned over.
[26] I believe those conclusions are sufficient to address the documents included in categories K and M.
[27] I also believe the above addresses the issues that were left to be determined from the hearing. If there are other issues that require resolution, counsel can arrange for a time for those issues to be addressed.
NORDHEIMER J
Released: December 28, 2016
COURT FILE NO.: M195/14
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HER MAJESTY THE QUEEN and another
Respondents
- and -
ASSESSMENT DIRECT INC. and others
Applicants
REASONS FOR DECISION
NORDHEIMER J.
RELEASED:
[^1]: The matters giving rise to the allegations of fraud had already become the subject of civil litigation and also some Provincial Offences prosecutions. [^2]: Voss Bros. Construction (1974) Ltd. v. North Vancouver School District (1981), 1981 CanLII 506 (BC CA), 29 B.C.L.R. 114 as quoted with approval in Hodgkinson at pp. 583-584. [^3]: While the decision of the Supreme Court of Canada in Lizotte v. Aviva Insurance Co. of Canada, [2016] S.C.J. No. 52 takes issue with the correctness of Doherty J.A.’s reasons in certain respects, that decision does not appear to address this question. [^4]: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 30.03(2)(b)