CITATION: Canadian Appliance Source Inc. v. Utradecanada.com Inc., 2017 ONSC 4959

COURT FILE NO.: CV-14-502081

MOTION HEARD: 20170727

REASONS RELEASED: 20170821

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

CANADIAN APPLIANCE SOURCE INC.

Plaintiff

• and-

UTRADECANADA.COM INC. AND CBRE LIMITED

Defendants

AND BETWEEN:

UTRADECANADA.COM INC.

Plaintiff by Counterclaim

-and-

CANADIAN APPLIANCE SOURCE INC., CANADIAN APPLIANCE SOURCE CORP., CANADIAN APPLIANCE SOURCE LLC, CANADIA APPLIANCE SOURCE, CANADIAN APPLIANCE SOURCE (OTTAWA) CORP., YANK HOLDINGS INC. and YEHUDA ARI KLEIN a.k.a. “Ari Klein”

Defendants by Counterclaim

BEFORE: MASTER M.P. McGRAW

COUNSEL: M. Kestenberg and J. Parker Email: marc@ksllaw.com -for the Defendant/Plaintiff by Counterclaim, Utradecanada.com

C. Francis Email: cfrancis@mindengross.com -for the Plaintiff/Defendants by Counterclaim

REASONS RELEASED: August 21, 2017

Reasons For Endorsement

I. Background

Introduction

[1] This is a motion by the defendant/plaintiff by counterclaim, Utradecanada.com (“Utrade”) to compel the plaintiff/defendant by counterclaim, Canadian Appliance Source Inc. (“CASI”, together with the other defendants by counterclaim, the “CASI Group”) to produce its lawyer’s file with respect to the failed lease transaction which is the subject of this action (the “Transaction File”). Utrade submits that CASI has waived privilege by filing and relying on an affidavit from CASI’s counsel on the mutual summary judgment motions in this action.

The Failed Lease Transaction and the Action

[2] On or about February 12, 2014, CASI offered to lease warehouse space owned by Utrade in Toronto, Ontario (the “Premises”) by executing an Agreement to Lease (the “Transaction”). CASI retained Minden Gross LLP (“Minden Gross”) to represent it with respect to the Transaction. Minden Gross is also counsel to the CASI Group in this action. Benjamin Radcliffe is the lawyer at Minden Gross who had primary carriage of the Transaction.

[3] Utrade executed the Agreement to Lease on February 13, 2014. Among other things, the Agreement to Lease provided that the parties agreed to Utrade’s standard lease terms which could only be modified by mutual agreement and which would include clauses normally found in a lease for property of this nature and that the lease term would commence on February 24, 2014.

[4] On February 24, 2014, John Cirillo, Utrade’s counsel on the Transaction, provided Mr. Radcliffe with Utrade’s standard lease (the “Lease”) for execution. CASI refused to execute the Lease on the basis that it did not conform with the Agreement to Lease, containing some terms which were not in the Agreement to Lease while excluding others and did not contain terms which were consistent with what a tenant would typically request in these circumstances. This initiated a series of e-mails and telephone discussions between Mr. Radcliffe and Mr. Cirillo which continued for two weeks. Although the term of the Lease commenced on February 24, 2014, given CASI’s refusal to execute the Lease, Utrade denied CASI access to the Premises to complete its final inspection. CASI never took possession of the Premises.

[5] On March 7, 2014, Mr. Radcliffe delivered a memo to Mr. Cirillo setting out a list of requested revisions to the Lease and demanded a response by 5 p.m. that day barring which CASI would take the position that the Lease was terminated. Mr. Cirillo did not respond and at 5:03 p.m. Mr. Radcliffe advised that CASI accepted Utrade’s breach of the Lease and requested the return of CASI’s deposit of $45,861.52.(the “Deposit”).

[6] Utrade did not return the Deposit and on April 11, 2014, CASI commenced this action for a declaration that Utrade breached the Offer to Lease and recovery of the Deposit. On May 28, 2014, Utrade delivered its Defence and Counterclaim claiming entitlement to the Deposit and damages of $757,125.98. Utrade was subsequently denied leave to add the other CASI Parties which was overturned on appeal to the Divisional Court. The CASI Parties were denied leave to appeal to the Court of Appeal. There have also been ongoing disputes over documentary and oral discoveries, some of it related to the pleadings amendments.

The Summary Judgment Motions

[7] In the Fall of 2016, CASI and Utrade agreed to transfer this action out of the Simplified Rules, bring mutual summary judgment motions and leave Utrade’s counterclaim against the other CASI Parties in abeyance. Pursuant to the Endorsement of Justice Firestone dated April 28, 2017, the summary judgment motions are scheduled to proceed on October 13, 2017.

[8] Utrade served its Motion Record in support of its summary judgment motion on November 8, 2016 which included an affidavit from its director Tony DeCicco. On or about January 13, 2017, CASI served its Motion Record in response to Utrade’s summary judgment motion and in support of its own. CASI’s Motion Record includes the affidavit of Mr. Radcliffe sworn January 5, 2017 (the “Radcliffe Affidavit”). Utrade submits that by filing and relying on the Radcliffe Affidavit, a deemed waiver of privilege has occurred such that CASI should be compelled to produce documents from the Transaction File which it has not already produced. Cross-examinations on affidavits filed on the summary judgment motions have not yet taken place.

This Motion

[9] This motion first came before me on June 8, 2017. At that time, it was not clear if this motion was contemplated when Justice Firestone scheduled the summary judgment motions for October 13, 2017. There was the possibility that any order I might grant would directly or indirectly affect the summary judgment motions date set by a Justice Firestone which is not permitted under Rule 37.02(2). Further, counsel for CASI took the position that there may be jurisdiction issues raised with respect to the some of the relief sought before me.

[10] Therefore, pursuant to my Endorsement dated June 8, 2017, I directed counsel to attend at Civil Practice Court or a 9:30 a.m. appointment before a Judge to obtain a direction that this motion should proceed before me. Subject to receiving such direction, I seized myself of this matter and agreed to hear this motion on an expedited basis within the confines of the October 13 motion date.

[11] Counsel attended before Justice Penny on June 26, 2017. Justice Penny directed that this motion should proceed before me and that if a new date for the summary judgment motion is required, counsel should attend at Civil Practice Court to vacate the October 13 date and obtain a new one. In his Endorsement, Justice Penny also indicated that this motion should proceed whether or not Utrade files its own competing lawyer’s affidavit on the summary judgment motion, which it has not yet done. Justice Penny added that “if there is a waiver, and/or if there are limits placed on the extent of the waiver, the same principles will apply” to Utrade as CASI. Counsel advised that another attendance at Civil Practice Court was scheduled for August 18, 2017.

[12] At the commencement of the motion, Ms. Francis, counsel for CASI, advised that she had reviewed the entirety of the Transaction File and handed up e-mail correspondence which she states represents the balance of documents from the Transaction File which CASI had not already produced. Ms. Francis further advised that CASI has always been willing to produce these documents as their primary interest is in reciprocity such that Utrade should also be compelled to produce its own privileged documentation regarding the Transaction on the same terms as CASI if Utrade files an affidavit from its lawyer, particularly Mr. Cirillio. To date, Utrade has not done so.

[13] Ms. Francis further advises that CASI is not prepared to produce Minden Gross’ retainer agreement, accounts or docket entries with respect to the Transaction; any documents subject to litigation privilege (which counsel agree starts with any documentation or communications with respect to this matter between Minden Gross and the CASI Group after March 7, 2014) and any documents with respect to the incorporation of a single purpose entity by the CASI Group which is relevant to Utrade’s counterclaim against the CASI Group (minor redactions were made to the e-mail correspondence produced today with respect to this issue).

[14] As a result of Ms. Francis’ submissions, mid-way through the motion, I encouraged her to provide these documents to Mr. Kestenberg, counsel for Utrade. She did so during the break and I discussed with counsel whether it was necessary to continue with the motion given that, subject to the exclusions noted above, CASI had now produced all of the documents from the Transaction File. Ms. Francis also advised that she would review the Transaction File again to determine if there are any additional documents to produce. Ms. Francis stated that, although CASI does not admit the relevance of these documents, CASI is “prepared to come completely clean”, provide an “open book” and are not, as Utrade alleges, hiding any relevant documents in the Transaction File.

[15] While Mr. Kestenberg expressed concern that it had taken until mid-motion today for CASI to produce this correspondence from the Transaction File, given Ms. Francis’ representations that there is nothing further to produce and that she would review the Transaction File again for any additional documents, proportionality and Rule 1.04 require that any questions or inquires by Utrade about potential additional documents and the sufficiency of production can be asked at Mr. Radcliffe’s cross-examination.

[16] While the relief sought on this motion would appear to be substantially moot, both counsel requested that they be permitted to complete their submissions that I provide reasons in order to, as Justice Penny indicated, set out the principles and scope of waiver which would apply if Utrade files an affidavit from a lawyer with a view to avoiding any future attendances to address privilege issues. Counsel also advised that such direction may assist with the upcoming cross-examinations on affidavits filed on this motion.

II. The Law and Analysis

The Law

[17] It is a long established indisputable principle, repeated many times by the Supreme Court of Canada, that solicitor-client privilege is fundamental to the proper functioning of the legal system. The importance of this principle cannot be overstated and should only be set aside when absolutely necessary (see, for example Alberta (Information and Privacy Commissioner) v. University of Calgary, 2016 SCC 53 at paragraphs 26 and 34).

[18] One of the limited circumstances where privilege will be set aside is when a deemed waiver of privilege occurs. A party will be deemed to have waived privilege on the grounds of fairness or consistency when they make their privileged communications an issue in the proceeding (Creative Career Systems Inc. v. Ontario, 2012 ONSC 649 per Perell J. at para. 25).

[19] Helpful, comprehensive guidance on deemed waiver of privilege was provided by Perell J. in Creative. A deemed waiver of privilege and an obligation to disclose a privileged communication requires two elements: i.) the presence or absence of legal advice is material to the lawsuit; and ii.) the party who received the legal advice must make the receipt of it an issue in the claim or defence (Creative at para. 30).

[20] More specifically, a party will be deemed to have waived privilege if the party places its state of mind in issue with respect to its defence and has received legal advice to help form the state of mind (Creative at para. 26). Perell J. adds at paragraph 27:

“There is, however, a subtle and profound point here about when a party must answer questions about the occurrence of legal advice in the factual narrative of a case. The subtle and profound point is 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.”

[21] As to what “more” is required, Perell J. states that the state of mind involves the party understanding its legal position in a way that is material to the law suit (Creative, at para. 29) adding at paragraph 30:

“But the materiality of the legal advice, while necessary to make questions about it relevant, is still not sufficient to justify the compelled disclosure of the legal advice. 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.”

[22] In providing further clarity, Perell J. cites the decision of Corbett J. in Guelph (City) v. Super Blue Box Recycling Corp., 2004 CanLII 34954 (ON SC), [2004] O.J. No. 4468 (S.C.J.):

“….the deemed waiver occurs as a matter of the party’s choice. 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” (Creative, at para. 31).

[23] At paragraph 31, Perell J. cites the following considerations from Guelph:

i.) privilege is waived when the client relies upon the receipt of advice to justify conduct in respect of an issue at trial (Guelph, para. 88);

ii.) privilege can be claimed regardless of the opposite party’s allegations. However, when faced with a claim of bad faith, a party who responds by relying on good faith conduct as a result of following legal advice will thereby waive its privilege (Guelph, para. 97);

iii.) it is irrelevant whether the client received and followed legal advice. It is only relevant to the extent that the client relies upon the fact that it received legal advice on these topics to establish its good faith that privilege will be waived on the basis of reliance (Guelph, para. 101).

[24] While Creative and Guelph considered deemed waiver in the context of pleadings and answers on discovery, in Sky Solar (Canada) Ltd. v. Economical Mutual Insurance Co., 2015 ONSC 4714, DiTomaso J. held that a client is deemed to have waived privilege if their counsel swears an affidavit on their behalf on a matter of substance (Sky Solar at para. 107). DiTomaso J. concluded that privilege had been waived where an affidavit from counsel was filed on a motion for a further and better affidavit of documents, stating at paragraph 108:

“When a lawyer “enters the fray”, and provides evidence in the form of an affidavit, his client is taken to have waived privilege. A party cannot use privilege as a sword, nor can a party disclose a part of a communication which is favourable, while hiding part of a communication which is unfavourable. A party cannot use a solicitor to avoid having to give evidence under oath.”

[25] In Lawless v. Anderson, 2009 CarswellOnt 6553 (S.C.J.), Master Hawkins held that privilege was waived where a lawyer’s affidavit filed in response to a summary judgment motion described solicitor-client communications relevant to a limitations defence including discussions about possible causes of action. Master Hawkins ordered that all solicitor-client communications regarding the issues relevant to the summary judgment motion be produced.

[26] Similarly, in United States v. Friedland, 1996 CanLII 8213 (ON SC), 1996 CarswellOnt 3604 (S.C.J.), Sharpe J. concluded that deemed waiver had occurred where an affidavit from a lawyer was filed on a motion for a Mareva injunction, stating that the plaintiff had “put squarely in issue the strength of its case against the defendant” and chose to establish the necessary facts to support its case by leading the evidence of its lawyer (Friedland at para. 13). Justice Sharpe also held that as a result of the implied waiver, the defendant was entitled to explore the adequacy of disclosure (Friedland at para. 14).

[27] The courts in Sky Solar, Lawless, and Friedland all relied on the oft-cited passage from Wigmore, Evidence (1961, McNaughton rev.) vol VIII, para. 2327 such that selective disclosure of some privileged communications is not permitted: a party cannot disclose as much as they please while withholding the rest (Lawless at paras. 10-11; Sky Solar at para. 109).

[28] The propriety of lawyers swearing affidavits on summary judgment motions was considered by Myers J. in Ferreira v. Cardenas, 2014 ONSC 7119. At paragraph 13, Myers J. states:

“generally, lawyers’ affidavits are not appropriate for motions for summary judgment. Clients’ and/or eyewitness firsthand evidence and expert opinion based on firsthand evidence are the trump suit.”

[29] Myers J. adds that, unlike procedural motions, motions for summary judgment “go to the heart of the merits of the dispute between the clients”; affidavits that recite background gleaned from “the file” are especially problematic as they may serve to “put the affiant lawyer’s personal opinion of the case before the court”; and such evidence is not particularly credible and will likely attract an adverse inference (Ferreira at paras. 17-18 and 24).

[30] The proportionality factors in Rule 29.2.03(1) also apply to this motion. The scope of cross-examinations on affidavits and proportionality were comprehensively explained and applied by Perell J. in Ontario v. Rothmans Inc., 2011 ONSC 2504. In particular, questions on cross-examination must be relevant to the matters in issue in the motion in respect of which the affidavit has been filed and by the matters put in issue by the deponent’s statements in the affidavit (even if those issues are irrelevant to the motion) and/or the credibility and reliability of the deponent’s evidence (Rothmans at paras. 142-143).

[31] I have also considered and applied Rule 1.04(1) which provides that the Rules of Civil Procedure shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits and Rule 1.04(1.1) which requires the court to make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

The Radcliffe Affidavit

[32] The 22-page Radcliffe Affidavit contains 92 paragraphs. The paragraphs at issue on this motion are set out below. The references to Mr. Klein are to Yehuda Ari Klein, the sole officer and director of CASI and instructing client representative:

10. It is common practice in the industry for an offer to lease or letter of intent to provide that the lease will be in the landlord’s standard form and that it will include the terms of the offer to lease and standard lease terms and be subject to such changes as are mutually agreed between the parties.

11. It is also common and accepted practice that the parties will act reasonably and in good faith in negotiating mutually agreed-upon lease terms.

12. I was concerned about the very short time frame available to finalize the lease. Leases of this nature, involving the size of the Premises and the annual rent payable, are more typically negotiated over a span of several weeks, if not longer…

13. By the end of the business day on Thursday, February 20, 2014, a day later, I had still not heard back from Mr. Cirillo. This was a concern to me considering the very short time frame to complete the lease negotiations. I informed Mr. Klein of my concerns.

14. On Tuesday morning, February 25, 2014, Mr. Klein advised me that Utrade had refused him access to the Premises to perform his final inspection of the state of the Premises and of the status of the landlord’s work set out in the Agreement to Lease, which work was to be completed by Utrade prior to the commencement date.

15. Given that Mr. Klein and I had only been provided with the missing pages of the draft lease in pdf format on Friday, February 21, 2014, that the full draft lease in the requested Word format was not provided until Monday, February 24, 2014, and that Mr. DeCicco himself admits that the draft lease did not conform with the Agreement to Lease, it was baffling that Utrade allegedly expected the lease to have been signed by CASI on February 21, 2014, without any review by CASI or negotiation of the form of lease.

16. The requested revisions were consistent with what a tenant of a similar property would typically request if represented by counsel, and incorporated provisions from the Agreement to Lease which had not been incorporated into the Utrade initial draft.

17. On Saturday, March 1, 2014 at 1:58 p.m., Mr. Cirillo responded to my email, advising me that Utrade was relying on paragraph 10 of the Agreement to Lease. Mr. Cirillo took the position that CASI was obligated to execute the lease prepared by Utrade “subject to minor adjustments”…..

18. This position was not accurate. Paragraph 10 of the Agreement to Lease was a pre-printed provision which provided (in part) as follows:…

19. Schedule “A” specifically required the lease to contain the terms and conditions of the Agreement to Lease and all the clauses normally found in a lease concerning property of this nature. As Mr. DiCicco has acknowledged in his affidavit, the draft lease provided by Utrade did not conform to the Agreement to Lease.

20. On Saturday, March 1, 2014 at 2:04 p.m., Mr. Cirillo sent me a second email enclosing a revised draft lease showing what he suggested were acceptable changes, subject to his client’s review and approval. The revised draft was seriously deficient and still did not conform to the Agreement to Lease. Mr. Cirillo only incorporated a small fraction of the changes that I had requested and he failed to address certain items which were critical to CASI.

21. Mr. DiCicco’s affidavit makes no reference at all to this telephone discussion. From my perspective, this was a very important discussion, as following this telephone conversation Mr. Cirillo and I were in substantial agreement as to the form of the lease, and CASI expected to sign the lease and be granted occupancy of the Premises shortly thereafter.

22. Mr. Cirillo admitted to me that Utrade had not provided any explanation as to why the requested revisions included in the revised draft which I had provided (and which CASI had signed) were not acceptable to Utrade.

23. Utrade’s position was completely at odds with my previous discussions with Mr. Cirillo, where Mr. Cirillo and I had agreed in principle to the form of the lease being in the form of the second draft that I provided.

24. As Mr. Cirillo was not able to provide any clarity on Utrade’s unwillingness to accept or even review the form of lease executed by CASI, I asked Mr. Klein whether he could reach out directly to Utrade to understand why Utrade appeared unwilling to accept the form of lease that I had negotiated with Utrade’s lawyer.

25. On Friday, March 7, 2014 at 11:03 a.m., I received an email from Mr. Cirillo advising me that Utrade was not willing to negotiate directly with CASI and further advising that Utrade required CASI to execute the draft lease provided the previous day by Mr. Cirillo….

26. It was clear that Utrade had no interest in further negotiations.

27. The revised draft lease which Utrade insisted that CASI must sign was fundamentally differed (sic) from the Agreement to Lease and incorporated new business points which had not been agreed to by CASI in the Agreement to Lease.

28. For example, from CASI’s perspective the deal would only work if CASI had security of tenure. Under the Agreement to Lease, CASI had the right to lease the Premises for a total of up to nine years (including the two renewal options). However, Utrade was now insisting on the right to be able to terminate the lease after the third year of the term if Utrade decided to alter the building in which the Premises were located, which had never been discussed or agreed to in the Agreement to Lease.

29. Utrade had no right to demand that CASI execute a lease which contained terms that were different form the Agreement to Lease. I could not recommend that CASI sign a form of lease that did not conform with the Agreement to Lease and that was prejudicial to CASI’s rights and interests.

30. At 1:48 p.m. that afternoon, I advised Mr. Cirillo that his revised draft failed to address the comments raised by CASI and that Utrade was not negotiating the lease in good faith, as Utrade was obligated to do under the terms of the Agreement to Lease.

31. I further advised Mr. Cirillo that CASI was prepared to execute the lease if Utrade agreed to the outstanding points as set out in a memorandum attached thereto, which points were in keeping with a lease of this nature and which would typically be agreed to by a reasonable landlord of a similar property.

32. As reflected in the memorandum, for the sake of finalizing the lease, CASI was prepared to concede on certain amendments requested by Utrade which were not provided for in the Agreement to Lease and to which Utrade was not entitled.

33. For example, every version of the draft lease provided by Utrade included a management fee payable to Utrade. The Agreement to Lease did not require CASI to pay a management fee. However, in the settlement that I negotiated with Mr. Cirillo, CASI agreed to a management fee, provided that it did not exceed 5%. Absent Utrade’s agreement on the other terms, CASI would not have agreed to the management fee.

34. In paragraph 38 of his affidavit, Mr. DiCecco (sic) admits that there remained “a few inconsistencies” between the Agreement to Lease and the revised lease presented by Utrade. He takes the position that “the changes to those sections would have been made to conform to the Agreement to Lease.”

35. Given that Utrade, through Mr. Cirillo, demanded that the last draft which he provided be executed without further amendments or negotiation, the suggestion in Mr. DeCicco’s affidavit is absolutely not true.

36. Utrade never proffered a form of lease that conformed with the Agreement to Lease and demanded that CASI execute a form of lease which contained terms that had not been agreed to by CASI, in breach of its express obligations under the Agreement to Lease.

37. I can say categorically that CASI was fully prepared to honour the Agreement to Lease and to take possession of the Premises pursuant to: (a) The Agreement to Lease; (b) The form of lease which I negotiated with Mr. Cirillo on Utrade’s behalf and which was executed by CASI; or (c) The revised form of lease which I proposed on March 7, 2014.

38. Alternatively, if Utrade was of the view that CASI was obligated under the Agreement to Lease to execute whatever form of lease Utrade demanded, Utrade could have allowed CASI to take possession under the Agreement to Lease and sought a judicial determination of the parties’ obligations under the Agreement to Lease.

39. Utrade did not accept any of these options, or propose any other acceptable options. Instead, Utrade chose to terminate the negotiations and put an end to the Agreement to Lease. CASI was never allowed to take possession under the Agreement to Lease and never obtained the benefit of the Agreement to Lease.”

[33] Utrade submits that by filing and relying on the Radcliffe Affidavit, CASI has waived privilege over the Transaction File. Specifically, in the Radcliffe Affidavit, CASI’s counsel has provided evidence on matters of substance in order to establish the merits of CASI’s position on the summary judgment motions, including legal advice, instructions and communications between Mr. Radcliffe and Mr. Klein and the state of mind of Mr. Radcliffe and CASI. Utrade further submits that CASI, through Mr. Radcliffe, has selectively disclosed privileged communications while not disclosing others. Therefore, fairness and consistency require that privilege be waived over the Transaction File including any communications and/or correspondence between Mr. Radcliffe and Mr. Klein and within Minden Gross.

[34] CASI submits that since the Lease negotiations took place between counsel, it was not only proper but necessary for CASI to file evidence on the summary judgment motion from Mr. Radcliffe, who negotiated the Lease directly with Mr. Cirillo. CASI further submits that if Utrade is correct such that filing a lawyer’s affidavit automatically constitutes a waiver of privilege, then privilege will be gutted as clients will be caught in a “Catch-22” of having to choose between filing their own affidavit based on information and belief from their counsel and filing an affidavit from counsel, both of which would result in deemed waiver. This, CASI submits, would be directly contrary to the principle of privilege established by the Supreme Court of Canada. CASI submits that deemed waiver of privilege is more nuanced and strictly circumscribed.

[35] The issue before me is not whether it was appropriate or proper for CASI to file and rely on an affidavit from its lawyer on the summary judgment motions, as considered in Perreira. This is an issue for the Judge hearing the summary judgment motions who will draw whatever inferences and give whatever weight they decide is appropriate. The issue before me is whether by filing and relying on the Radcliffe Affidavit, CASI has waived privilege over the Transaction File.

[36] I agree with CASI that the case law does not provide that a party automatically waives privilege simply by filing and relying on an affidavit from a lawyer on a motion. Rather, applying the factors and considerations set out in the cases above, the court must consider the substance, evidence and statements set out in the lawyer’s affidavit to determine if deemed waiver has occurred.

[37] Applying the relevant factors and considerations to the Radcliffe Affidavit, I conclude that deemed waiver of privilege has occurred. In my view, the Radcliffe Affidavit contains numerous, wide-ranging and substantial statements regarding the substance of this action, including which of CASI or Utrade breached the Agreement to Lease and which party negotiated in bad faith, all of which CASI relies upon to establish the strength of its case in both seeking and resisting summary judgment. As summarized below (with reference to the paragraph numbers from the Radcliffe Affidavit), this includes statements regarding Mr. Radcliffe’s legal advice and recommendations; CASI’s state of mind and negotiating positions; Mr. Radcliffe’s legal opinions; legal and factual arguments with respect to the motions; and the selective disclosure of privileged communications:

i.) Mr. Radcliffe’s legal advice and recommendations (paras. 13, 19, 63);

ii.) CASI’s state of mind including its negotiating positions, what terms it was prepared to agree to and its expectations (paras. 43, 62-63, 65-67, 78-80);

iii.) Mr. Radcliffe’s legal opinions including what he submits is “common and accepted practice”, what “typically” occurs on transactions or would be requested by a tenant and what the parties were entitled to or obligated to do and what constitutes negotiating in good faith (paras. 10-11, 13, 27, 63-65);

iv.) legal and factual arguments in support of CASI’s positions on the summary judgment motions including disputed facts, characterizations of facts, the parties’ obligations and entitlements and good faith negotiations (paras 25, 27, 35-36, 38-39, 42-43, 52-54, 60, 64, 75-80);

v.) selective disclosure of privileged communications (paras. 13, 19, 23, 54 and 59).

[38] While it is arguable that any one of the above paragraph references are sufficient on their own or combined with certain others to constitute waiver of privilege, it is not necessary for me to decide on this basis. The collective effect and weight of the many statements referenced above lead me to the conclusion that by filing and relying on the Radcliffe Affidavit on the summary judgment motions, CASI’s counsel has “entered the fray” by advancing evidence, opinions and positions which put the strength of CASI’s case and its state of mind forward in support of CASI’s positions on the motions. In doing so, the Radcliffe Affidavit also selectively discloses some, but not all, privileged communications, which is not permitted.

[39] CASI relies on Creative and submits that the two conditions set out by Perell J. have not been met, namely, that the presence or absence of legal advice is material to the action and the party receiving the legal advice, CASI, must make the receipt of it an issue in the claim or defence. CASI also submits that the communications between Mr. Radcliffe and Mr. Klein are neither relevant nor at issue in these proceedings.

[40] In my view, Creative does not assist CASI here. In Creative, Perell J. concluded that privilege is waived when a party makes a choice to use the legal advice it received as a substantive element of their claim or defence. While Creative was decided in the context of pleadings and answers on discovery, applied to the present case, CASI relies on the Radcliffe Affidavit to put its best foot forward in advancing their case on the summary judgment motions. By doing do, CASI has made a choice to use Mr. Radcliffe’s legal advice as a substantive element of their claim and defence making Mr. Radcliffe’s advice relevant to the matters at issue, including with respect to CASI’s positions regarding breach of the Agreement to Lease and good faith negotiations. Further, I disagree with CASI that Utrade’s request is a “fishing expedition” or that proportionality should otherwise prevent production of the balance of the privileged documents in the Transaction File.

[41] Based on all of the factors and considerations set out above, I conclude that fairness and consistency require that the balance of the documents and correspondence up to and including March 7, 2014 in the Transaction File be produced, including any communications between Minden Gross and CASI and between lawyers at Minden Gross. I agree with CASI that the scope of production shall exclude Minden Gross’ retainer agreement, docket entries and accounts which are not probative of any matters at issue on the summary judgment motions or proportionate, including with respect to the timeline of events which Utrade can obtain from the documents already produced and to be produced, the detailed contents of the Radcliffe Affidavit and if relevant, on Mr. Radcliffe’s cross-examination.

III. Disposition

[42] Order to go as follows:

i.) CASI shall produce all documents, correspondence, communications and notes from the Transaction File up to and including March 7, 2014 not already produced;

ii.) CASI shall not be required to produce Minden Gross’ retainer agreement, docket entries and accounts and any documents otherwise subject to litigation privilege.

[43] If the parties cannot agree on the costs of this motion they may file costs submissions in writing not to exceed 4 pages (excluding costs outlines) with me through the Masters’ Administration Office by October 31, 2017.

Released: August 21, 2017

Master M.P. McGraw