CITATION: R. v. Assessment Direct Inc., 2017 ONSC 5686
COURT FILE NO.: M195/14
DATE: 20170925
ONTARIO
SUPERIOR COURT OF JUSTICE
Toronto Region
B E T W E E N:
THE ONTARIO PROVINCIAL POLICE and HER MAJESTY THE QUEEN
J. Patton, for the respondents
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.
R. Shekter & N. Eisazadeh, for the applicants E. Dann, Special Referee
Applicants
HEARD: August 31, 2017
Nordheimer J:
[1] This application raises the issue whether recorded statements from potential witnesses that are seized by the police pursuant to a search warrant are protected by litigation privilege. For the reasons that follow, I conclude that they are not.
[2] The Ontario Provincial Police 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.
[3] After the search warrants were executed, the applicants raised possible privilege claims regarding many of the documents that were seized. I appointed a Special Referee whose task it was to review the many documents over which privilege was claimed and to report to the court as to whether, in the view of the Special 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.
[4] Included in the items seized by the police, pursuant to the search warrants, were a series of recordings of telephone conversations that an employee of the applicant, Assessment Direct Inc., had conducted with potential witnesses.[^1] It is not disputed that, in anticipation of existing or future civil litigation, along with the potential for criminal prosecutions, counsel for the applicants instructed his clients to speak to as many potential witnesses as possible in order to get their evidence “tied down”. In so doing, the employee in question contacted those potential witnesses and engaged in telephone conversations with them that he surreptitiously recorded. It is also not disputed that the employee did not tell these potential witnesses what the true purpose of his telephone calls were. The potential witnesses were not told that in order not to “scare them off”. Rather, the employee pretended that this was a routine or “ordinary” call since these potential witnesses were all persons with whom the applicants had had prior dealings. The employee would engage in a certain amount of conversation with the potential witness regarding “innocuous” topics but would eventually attempt to turn the conversation to the allegations in the litigation, or potential litigation, in an effort to obtain “acknowledgements” that might prove useful at a later stage. All of these recorded conversations were part of this strategy.
[5] The recordings made by the employee were maintained at the applicants’ offices. As I have said, when the O.P.P. executed the search warrants at the premises, these recordings were among the items seized. From the charts provided to me that detail these recordings, and if my counting is accurate, there are in excess of one hundred such recordings.
[6] The applicants take the position that the recordings are subject to litigation privilege and cannot be accessed by the O.P.P. or the Crown. The Crown disagrees as does the Special Referee. Counsel have advised that they have been unable to find any authority on this specific point.
[7] Litigation privilege was discussed by the Supreme Court of Canada in Blank v. Canada (Minister of Justice), 2006 SCC 39, [2006] 2 S.C.R. 319. In the course of that decision, Fish J. referred to the purpose that litigation privilege serves, that is, to protect “the need for a protected area to facilitate investigation and preparation of a case for trial by the adversarial advocate” (para. 40). Fish J. also observed that litigation privilege “should be viewed as a limited exception to the principal of full disclosure” (para. 60). Fish J. concluded his reasons with the following cautionary note, at para. 64:
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.
[8] That cautionary note is of importance to the issue that is before me. Counsel for the applicants accepts that, in a civil proceeding, his clients would be required to reveal the existence of all witness statements including the name of the witness, the date and time that the statement was taken, and other such particulars. Indeed, the witness statements ought to be listed in the party’s affidavit of documents. Counsel for the applicants also accepts that the facts revealed by those witness statements would have to be revealed to the opposing party as part of the discovery process.
[9] However, the applicants resist the notion that the police and Crown can access that information as a consequence of the recordings having been seized pursuant to a search warrant. The applicants say that the reason that the information must be provided in a civil proceeding is because the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 require it. They say that the law, as reflected in the Rules of Civil Procedure, has overridden the privilege in civil proceedings and in this limited way. The applicants contend that there is no similar equivalent in the criminal context.
[10] In my view, the position of the applicants is flawed in two major respects. First, I do not believe that litigation privilege applies to these recordings. The purpose of litigation privilege is to allow counsel to develop strategies to pursue or respond to litigation. The tact that counsel for a party is going to take, or the approach that is going to be pursued, is protected by the privilege. In other words, it is the revelation of the party’s litigation strategy that is protected, not base information itself. The privilege does not protect information that would otherwise have to be disclosed, as the observation by Fish J., that I have set out in para. 7 above, makes clear. If the issue here was what counsel thought was important from the witness statements, or whether counsel thought some witness statements were important while others were not, that information might be covered by the privilege. However, litigation privilege cannot be used as an indiscriminate blanket to cover each and every witness statement collected. There must be a balance between the two competing interests that are reflected in litigation privilege and which were described by Sharpe J.A. in his lecture entitled “Claiming Privilege in the Discovery Process” in Law in Transition: Evidence, L.S.U.C. Special Lectures (Toronto: De Boo, 1984) at p. 165:
There are, then, competing interests to be considered when a claim of litigation privilege is asserted; there is a need for a zone of privacy to facilitate adversarial preparation; there is also the need for disclosure to foster fair trial.
[11] In his lecture, Justice Sharpe explains what he views as the proper rationale for litigation privilege. He identifies the rationale as being the American “work product” test which he describes, at p. 168:
The work product test focuses on the need to protect counsel’s observations, thoughts and opinions as the core policy of the protection from disclosure of preparatory work.
[12] Indeed, in his lecture, Sharpe J.A. rejects the assertion that a party can withhold statements from disclosure. He notes, at p. 170:
While the formal rule of privilege will permit a party to refuse to produce witness statements, reports or other documents gathered in anticipation of litigation, the actual effect of the privilege is substantially reduced by the oral discovery rule which requires disclosure of evidence contained in those documents. What remains protected is something very close to the lawyers’ work product.
[13] In my view, the revelation of these recorded conversations with potential witnesses will not reveal counsel’s work product because it does not reveal counsel’s “observations, thoughts and opinions”.
[14] I should, at this juncture, mention one other authority to which none of the parties referred. That is Lizotte v. Aviva Insurance Co. of Canada, 2016 SCC 52, [2016] 2 S.C.R. 521. In that decision, Gascon J. also discusses litigation privilege. The decision does not, however, alter anything said in Blank nor, in my view, does it alter the analysis I have set out above, especially the nature and scope of the privilege. Rather, it reinforces that the purpose of litigation privilege is to protect the lawyer’s work product, that is, his/her theories and strategy. It is not intended to shield facts from disclosure.
[15] Second, I do not accept that the Rules of Civil Procedure are to be taken as a law that overrides the privilege. Rather, I see the Rules of Civil Procedure as recognizing the limited scope of the privilege’s application, that is, that litigation privilege does not apply to the revelation of the facts revealed by statements taken from potential witnesses. Litigation privilege was never intended to protect facts from disclosure because that disclosure does not constitute a disclosure of counsel’s work product. It is also inconsistent with the trend toward full disclosure. Litigation privilege, properly applied, is only intended to maintain the zone of privacy to which Sharpe J.A. refers. This conclusion appears to accord with the approach taken in General Accident Assurance Co. v. Chrusz (1999), 1999 CanLII 7320 (ON CA), 45 O.R. (3d) 321 (C.A.) where Carthy J.A. said, at para. 25(QL):
The modern trend is in the direction of complete discovery and there is no apparent reason to inhibit that trend so long as counsel is left with sufficient flexibility to adequately serve the litigation client. In effect, litigation privilege is the area of privacy left to a solicitor after the current demands of discoverability have been met.
[16] However, if I am incorrect in that conclusion, and the effect of the Rules of Civil Procedure is to override what would otherwise be covered by litigation privilege, then I do not see any reason why the provisions in the Criminal Code, R.S.C., 1985, c. C-46, s. 487(1)(b), that permit the court to authorize the search of premises for the purpose of seizing “anything that there are reasonable grounds to believe will afford evidence with respect to the commission of an offence”, should not have the same overriding effect. It seems incongruous to me that the law would be interpreted in a fashion that would make these witness statements, and their contents, subject to disclosure in a civil proceeding, but not in a criminal proceeding when seized pursuant to a valid search warrant. Yet that would be the result if the applicants’ position is accepted.
[17] The applicants place considerable reliance on the decision in Juman v. Doucette, 2008 SCC 8, [2008] 1 S.C.R. 157. However, rather than assisting the applicants’ position, in my view the decision in Juman contradicts it. I would begin by noting that the issue in Juman was the application of the deemed undertaking rule, not the application of litigation privilege. That distinction aside, at the conclusion of his reasons, Binnie J. makes an observation which fundamentally undermines the applicants’ position here. He said, at para. 58:
The authorities should not be able to obtain indirectly a transcript which they are unable to obtain directly through a search warrant in the ordinary way because they lack the grounds to justify it. [emphasis added]
[18] As I earlier noted, counsel for the applicants accepts that, if the applicants were being examined for discovery, they would be required to reveal not only the existence of the witness statements but also their contents. If that occurred, there would be nothing that would prevent the authorities, assuming that they had reasonable and probable grounds, from obtaining a search warrant to seize the transcript of that examination for discovery, a proposition that is accepted in Juman. There is no suggestion in Juman that the transcript would be protected by litigation privilege.
[19] The applicants also rely heavily on the decision in Kennedy v. McKenzie, [2005] O.J. No. 2060 (S.C.J.) where Ducharme J. concluded that a witness statement was protected by litigation privilege. Two considerations have to be kept in mind when considering the application of the decision in Kennedy to the situation here. First, in Kennedy, the witness statement in question was the statement of the lawyer’s own client that was inadvertently disclosed to opposing counsel. There is, in my view, a significant distinction to be drawn between the status of a statement taken by counsel from his/her own client, clearly done for the purpose of counsel being advised of the facts of the case, and statements taken from third parties of the type that are at issue here. Second, Ducharme J. did not have the benefit of the decision in Blank when he decided Kennedy. The decision in Blank has altered the landscape as it relates to the application of litigation privilege.
[20] The applicants have, by their own admission, captured the evidence of a large number of potential witnesses through these recordings. I see no compelling reason why the applicants ought to be able to shield that evidence from the authorities, especially where they accept that they would be unable to do so with respect to an opposing party in civil proceedings. I also do not see any aspect of the proper application of litigation privilege that is undermined by that conclusion. The applicants have not pointed to any particular strategy or tactic that would be revealed by allowing access to these recordings, other than the fact that potential witnesses were interviewed. There is no special or unique strategy to interviewing potential witnesses nor does the revelation that the applicants did so reveal anything about their defence to any charges that might be laid.
[21] I conclude that litigation privilege does not apply to the recordings of these statements from potential witnesses. The recordings are to be released to the O.P.P. pursuant to the search warrants under which they were seized.
[22] I assume that counsel can work out an appropriate way in which to provide the recordings to the O.P.P. but if any issues arise in that respect, I can be spoken to.
NORDHEIMER J
Released: September 25, 2017
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]: An affidavit from this employee was filed under seal on this application.