Court File No. CV-13-00000555-0000
SUPERIOR COURT OF JUSTICE
B E T W E E N :
DELMER MARTIN Plaintiff
- and –
GIESBRECHT, GRIFFIN, FUNK & IRVINE LLP (FORMERLY KNOWN AS GIESBRECHT, GRIFFIN & FUNK), THE ESTATE OF D. KIM LAVERGE Defendants
R U L I N G O N M O T I O N
BEFORE THE HONOURABLE JUSTICE C.D. BRAID on November 29, 2018, at KITCHENER, Ontario
APPEARANCES:
R. Trenker Counsel for the Plaintiff A.T. McKinnon Counsel for the Defendants
SUPERIOR COURT OF JUSTICE
T A B L E O F C O N T E N T S
Ruling on Motion . . . . . . . . . . . . . . . . . . . Page 1
LEGEND
[sic] – indicates preceding word has been reproduced verbatim and is not a transcription error. (ph) – indicates preceding word has been spelled phonetically.
Transcript Ordered: December 4, 2018
Transcript Completed: April 1, 2019
Ordering Party Notified:
THURSDAY, NOVEMBER 29, 2018
R U L I N G O N M O T I O N
I – OVERVIEW
This is a motion brought by the defendants seeking production of the contents of the divorce file of the plaintiff’s former lawyer. The plaintiff refuses to produce the file on the basis of solicitor-client privilege. The defendants also seek an order to compel the plaintiff to answer refusals to questions asked at discovery. The refusals are made on the basis of the same solicitor-client privilege.
The sole issue I must determine on this motion is whether the plaintiff has waived solicitor-client privilege. For the reasons set out below, I find that the plaintiff has waived the privilege. The divorce file should be produced and the questions answered.
II - BACKGROUND
In order to provide context to the motion, I shall summarize the background in this case. In 2000, Delmer Martin and his spouse Linda Sansome entered into a domestic contract. The law firm of Giesbrecht, Griffin, Funk & Irvine LLP prepared the domestic contract. The contract was intended to insulate Mr. Martin from any future claim made by Ms. Sansome to a family farm that Mr. Martin was purchasing from his parents.
Mr. Martin and Ms. Sansome separated seven years later and Mr. Martin commenced divorce proceedings. Ms. Sansome responded, seeking an order setting aside the domestic contract and requesting a 50 percent interest in the farm property plus other relief.
Mr. Martin retained counsel, Margaret Voll, who represented him for the first two years of the divorce proceedings. Approximately ten months before trial, Ms. Voll ceased acting as Mr. Martin’s counsel. Mr. Martin hired another counsel to move for an adjournment of the trial but the adjournment request was denied. Mr. Martin represented himself at trial.
At his divorce trial, he sought to rely on the domestic contract and avoid making an equalization payment or other remedy to his former spouse. At trial, Justice Campbell found in favour of Ms. Sansome. He set aside the domestic contract on the basis of the circumstances surrounding the preparation and signing of the agreement. Justice Campbell was highly critical of Mr. Martin and counsel Mr. Giesbrecht, who testified as a witness at trial.
Having set aside the contract, Justice Campbell granted Ms. Sansome a 50 percent interest in the farm property. Mr. Martin was also ordered to pay costs.
Mr. Martin retained other counsel and appealed to the Court of Appeal. At the appeal, Mr. Martin’s counsel conceded that Justice Campbell was correct when he set aside the domestic contract. On appeal, the award of a 50 percent interest in the property was replaced by an equalization payment, which was calculated solely on the basis of the matrimonial home portion of the farm property. This judgment on appeal was significantly smaller than the judgment at trial.
III - NATURE OF THE PRESENT CLAIM
In the present action, Mr. Martin sued the Giesbrecht law firm and a lawyer at that firm. The claim alleges solicitor’s negligence, breach of contract and/or a breach of fiduciary duty. Mr. Martin states that the defendants, his former lawyers, were the cause of his loss.
Mr. Martin seeks damages which I would describe as falling into two general categories:
i) approximately $390,000 equalization payment that he was ordered to pay to his spouse, plus pre and post-judgment interest, and;
ii) nearly $300,000 in legal fees associated with the divorce litigation and other matters but primarily associated to the divorce litigation. This included payments to the following: his divorce lawyer, the second lawyer who unsuccessfully argued for an adjournment of his trial, and his appeal lawyer. It also includes adverse costs awards made against him at trial and on appeal.
On the motion before me, the defendants seek an order permitting them to amend their statement of defence. This portion of the motion is unopposed. Accordingly, I make the order amending the claim as set out in Schedule A of the notice of motion.
IV - ANALYSIS
The issue I must determine on this motion is whether the plaintiff has waived solicitor-client privilege. Solicitor-client privilege is a fundamental right. It serves to promote open and honest communication in obtaining legal advice without fear of intrusion by other parties. However, privilege is not absolute: see Solosky v. H.M.Q., 1979 CanLII 9 (SCC), [1979] S.C.J. No. 130. A client can expressly or impliedly waive solicitor-client privilege. It is the client’s privilege to waive.
The principles of fairness and consistency temper and guide when waiver of privilege is deemed to occur. Whether fairness and consistency require implied waiver of privilege is case specific and factually dependent. The court provides an important gatekeeping function to avoid inappropriate requests for disclosure, balancing fairness with the importance of the solicitor-client privilege.
Deemed waiver and disclosure will be limited to circumstances where the relevance of the evidence in question is high and the principles of fairness and consistency require disclosure to allow a party to adequately defend: see Roynat Capital Inc. v. Repeatseat Ltd., 2015 ONSC 1108 (DC).
When determining whether privilege should be deemed to have been waived, the court must balance the interests of full disclosure for purposes of a fair trial against the preservation of solicitor-client privilege. Fairness to a party facing a trial has become a guiding principle in Canadian law. Privilege will be deemed to have been waived when the interests of fairness and consistency; or when a communication between solicitor and client is legitimately brought into issue in an action. When a party places its state of mind at issue and has received legal advice to help form that state of mind, privilege will be waived with respect to such legal advice: see Norhal Quarries & Holdings Ltd. v. Ross & McBride, [2000] O.J. No. 1082 (SCJ).
The defendants submit that the plaintiff expressly and impliedly waived solicitor-client privilege in relation to the divorce file in three ways. I will deal with these arguments in reverse order:
- The statement of claim alleges that Giesbrecht caused the plaintiff’s losses, which in turn raises the issue of whether it was reasonable for the plaintiff to litigate the domestic contract.
I am satisfied that Mr. Martin waived solicitor-client privilege by pleading that the Giesbrecht law firm was the cause of the plaintiff’s losses. More specifically, many of the damages claimed arise from the costs of proceeding to trial and appeal in the divorce litigation.
Having commenced and advanced these claims, Mr. Martin has waived privilege. In particular, some of these claims being advanced put Mr. Martin’s litigation strategy in issue. For example, Mr. Martin claims the cost awards made against him by the trial court and the Court of Appeal. He also claims the fees incurred for seeking an adjournment of the trial. These claims squarely put into issue whether or not Mr. Martin’s litigation strategy was appropriate and whether he mitigated his losses. Any advice received from his former counsel is clearly relevant to these issues.
The contents of the divorce lawyer’s file will be most relevant for purposes of determining whether the plaintiff mitigated his damages. However, they may also be relevant to causation, particularly with respect to adverse costs award made against Mr. Martin at trial and on appeal.
The plaintiff appears to concede that the divorce file is relevant to mitigation of damages but argues that the entire file is not necessary for the defendants to proceed. He argues that the question of whether the plaintiff acted reasonably to litigate the domestic contract is to be decided on an objective standard. A trial judge may consider whether proceeding to trial was reasonable based on the objective facts.
The plaintiff states that the production is not required for the defence to argue mitigation in this case. However, as I have stated, Mr. Martin’s litigation decision during the divorce proceedings will be a live issue at trial. The court may consider whether Mr. Martin’s actions in pursuing the litigation were objectively reasonable. Mr. Martin is a lay person who likely had no ability to assess whether or not a domestic contract would be upheld at trial. Any advice that he received from his lawyer in the divorce proceedings will be relevant to the reasonableness of his conduct that followed.
The trial court may be asked to determine whether it was reasonable for Mr. Martin to litigate the domestic contract issue rather than settling it. If the divorce lawyer recognized that there was a real risk that the domestic contract would not be upheld and recommended that Mr. Martin settle for something close to the ultimate result, such legal advice will be relevant to causation for damages related to adverse cost rulings and possibly other damages claimed.
In coming to these conclusions, I have considered the principles of fairness and consistency. I have attempted to balance fairness with the importance of solicitor-client privilege. In my view, the relevance of the evidence in question is high and the principles of fairness and consistency require disclosure to allow the defendants to adequately defend.
In this case, I find that the defendants cannot adequately defend themselves without the disclosure of the divorce file. It would be unfair to expect the defendants to defend the action commenced against them without providing this disclosure.
- The defendants argue that the plaintiff waived privilege by producing Ms. Voll’s detailed accounts.
I need not spend much time on this issue given that I have already found that privilege was waived. I will, however, make some passing remarks. The defendants argue that, by providing the divorce lawyer’s detailed accounts in this litigation, the plaintiff has waived privilege. I agree with this submission. The plaintiff has claimed damages which include the amount paid to his divorce lawyer, although the plaintiff states that he did not intend to waive privileges for all purposes by disclosing this document. No motion has been brought to redact portions of the document nor to have it returned to the plaintiff. Even if I were asked to do so, I would not make such an order.
The account is clearly relevant. The detailed description contained within the accounts of steps taken by the divorce lawyer is clearly relevant. This is not a case of inadvertent disclosure when a person involved in litigation mistakenly sends a document to the other side. The document is relevant and producible. By making a claim to be reimbursed for the value of these accounts, and subsequently providing copies of these accounts, the plaintiff has waived solicitor-client privilege.
In these accounts, the detailed description demonstrates that the divorce lawyer prepared offers to settle, had lengthy discussions with Mr. Martin, researched the validity of the domestic contract and wrote to the client and prepared a net equalization statement for discussion purposes.
The submissions on this point and my analysis on this point dovetails into the first point. One of the issues that will be litigated will be the litigation strategy undertaken by Mr. Martin in his divorce proceedings. These accounts demonstrate that there were steps taken and possibly advice given by his lawyer on these points. I find the plaintiff has waived privilege by disclosing these accounts. Again, having examined my gatekeeping function to avoid inappropriate requests for disclosure, I have attempted to balance fairness with the importance of solicitor-client privilege. The relevance of the evidence in question is high and disclosure is required in order to allow the defendants to adequately defend.
- Finally, the defendants raise a third point. The defendants argue that the plaintiffs, in their statement of claim, pled advice that Ms. Voll gave to the plaintiff. They argue that this constitutes a waiver of privilege.
I disagree. The statements attributed to the divorce lawyer in the pleadings can be described as practical advice rather than legal advice. I am not satisfied that this paragraph of the statement of claim constituted a waiver of solicitor-client privilege.
V - COSTS
In determining quantum of costs, the court is to consider the factors set out in Rule 57.01 of the Rules of Civil Procedure, as well as section 131 of the Courts of Justice of Act. I have considered these factors. I have also considered the principles in Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.). The fixing of costs should reflect what the court views as a fair and reasonable amount to be paid, rather than any exact measure of the actual cost to the litigant.
The factual and legal issues on this motion were of moderate complexity. The issues were of high importance to the parties. The two most important factors are the principle of indemnity and the amount of costs that the unsuccessful party could reasonably have expected to pay in the event he was unsuccessful.
The parties have advised me that they agree that the quantum of costs of each party is $12,000 on a partial indemnity basis. Such an agreement reflects the highest standards of the legal profession, for which I am grateful. Although the quantum of costs is agreed between the parties, the plaintiff argues that he should not have to pay costs. He submits that the solicitor-client privilege issue is of great importance to the plaintiff and that he should not bear costs because he was protecting this important interest.
I do not agree that the plaintiff should be exempt from paying costs on this motion. Settling issues short of litigating them should be encouraged, and unsuccessful parties should bear the costs of deciding to proceed with litigation. Costs ordinarily follow the result, as they should in this case. I will, however, temper the amount and order the plaintiff to pay $10,000 in costs which I find to be a fair and reasonable amount.
For all of these reasons, I find that the plaintiff’s divorce file should be produced to the defendants. I also find that the plaintiff should be compelled to answer the questions that were refused at the examination for discovery.
...END OF EXCERPT AS REQUESTED
FORM 2
*CERTIFICATE OF TRANSCRIPT (SUBSECTION 5(2))
Evidence Act
I, David Lobbestael, certify that this document is a true and accurate transcript of the recording of DELMER MARTIN v. GIESBRECHT, GRIFFIN, FUNK & IRVINE LLP (FORMERLY KNOWN AS GIESBRECHT, GRIFFIN & FUNK), AND THE ESTATE OF D. KIM LAVERGE in the Superior Court of Justice held at 85 Frederick Street, KITCHENER, Ontario, taken from Recording No. 4411_CrtRm-501_20181129_093838__10_BRAIDC, which has been certified in Form 1.
*This certification does not apply to the Ruling which was judicially edited.
Date (Signature of Authorized Person)
David Lobbestael
ACT #1910050206