Court File and Parties

COURT FILE NO.: CV-18-607017

MOTION HEARD: 20190710

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Jamie Kearns, Plaintiff

AND:

Canadian Tire Corporation, Limited, Defendant

BEFORE: Master Jolley

COUNSEL: Alexa Sulzenko and Laura Freitag, Counsel for the Moving Party Defendant

Matthew Fisher, Counsel for the Responding Party Plaintiff

HEARD: 10 July 2019

REASONS FOR DECISION

[1] The defendant brings this motion for answers to a number of questions that the plaintiff refused to answer on the basis of solicitor client privilege and settlement privilege. It also seeks an order under Rule 39.03 to examine Mr. Fisher, plaintiff’s counsel, in respect of the plaintiff’s pending motion to enforce a settlement and the defendant’s companion motion to enforce that same settlement, albeit on different terms.

[2] This motion was originally set for 7 June 2019 and was not heard that day. The motions to enforce the settlement are to be heard on 9 August 2019. I have endeavoured to deliver this decision as expediently as possible so that the parties are able to keep their August 9 hearing date.

The Issues

[3] On 19 December 2018 the parties to this wrongful dismissal suit attended mediation and reached a settlement. It was a term of the minutes of settlement that “in addition to amounts already paid [my underline added], CTC will provide the Plaintiff a lump sum payment in the amount of $150,000.…” Plaintiff’s counsel added the underlined phrase to the draft of the minutes of settlement prepared by defendant’s counsel and they were signed by all parties thereafter.

[4] The defendant states that it understood that the “amounts already paid” referenced in the minutes of settlement meant only the statutory minimums, which it believed were the only amounts it had paid to the plaintiff before the mediation. Unbeknownst to at least to the defendant’s representatives and its counsel who attended the mediation and signed the minutes of settlement, it had already paid the plaintiff the sum of $115,465.20 on 23 November 2018 (the “November payment”). In its motion the defendant seeks to enforce terms of settlement that exclude the November payment or seeks an order to rectify the settlement on the basis that the defendant was mistaken as to its terms.

[5] The plaintiff swore an affidavit in support of his motion and was cross-examined on that affidavit on 7 May 2019. He refused a number of questions on the basis that the answers were covered by settlement privilege in some instances and by solicitor client privilege in others.

Issue 1: Questions refused on the basis of settlement privilege

[6] The defendant seeks information from the plaintiff about an offer to settle that he made before the litigation commenced. The offer was marked without prejudice and was rejected. There is no basis in the record to establish the relevance of these questions about that early offer that would justify a waiver of the settlement privilege attached to it. It was suggested in argument that the offer terms would provide insight into what the plaintiff was prepared to settle for and would speak to the reasonableness of the ultimate settlement as interpreted by the defendant.

[7] The communication is by its express terms and by its purpose privileged. The defendant argues that privilege should be waived as answers to the questions about the plaintiff’s offer are necessary in order to prove the scope of the settlement. (see Bombardier Inc. v. Union Carbide Canada Inc. 2014 SCC 35). I find that questioning the plaintiff about this privileged offer in order to determine his intentions and legal expectations is not necessary to prove the scope of the settlement. While the offer letter sets out the amount the plaintiff was prepared to accept to settle his wrongful dismissal claim in July 2018, before he had even commenced litigation, it is not sufficiently connected to what he was prepared to settle for and what he did settle for in December 2018 to override the important settlement privilege that covers his offer.

[8] He is not required to answer questions about his without prejudice offer. Questions 65, 66, 67 and 71 need not be answered.

Issue 2: Questions refused on the basis of solicitor client privilege

[9] The defendant’s motion for rectification of the settlement agreement or to enforce a version of the settlement agreement that excludes the November payment is based on mistake of fact. It argues that it made a mistake when it entered into the minutes of settlement. It was not aware that it had made the November payment and when it settled it did not intend to pay the amount in the minutes of settlement in addition to the November payment.

[10] This series of questions seeks information about what the plaintiff told his lawyer and about what advice the plaintiff’s lawyer gave him concerning the language in the minutes of settlement and concerning the November payment. The defendant argues that it is entitled to this otherwise privileged information on two bases: first, it argues that, as part of its claim for mistake and/or rectification, it must demonstrate that the plaintiff knew of the defendant’s mistake and requires this evidence to do so; second, it argues that the plaintiff has waived his privilege over the advice his lawyer gave him.

[11] The plaintiff argues that the defendant was under no mistake as to the amount it had already paid him. He points to the fact that the defendant went so far as to include a breakdown of the November payment it had already sent him in its own mediation brief. That issue will be for the hearing of the motion.

[12] On the first ground, the defendant argues that it cannot prove the elements of mistake without being able to question the plaintiff about whether he knew of the mistake. The difficulty with this submission is that the defendant has already asked the plaintiff about his knowledge of the alleged mistake when it cross examined him on his affidavit. The plaintiff stated under oath that he did not know that the November payment was made in error. Having that answer, discussions between the plaintiff and his lawyer about the minutes of settlement and the November payment are not relevant for the purpose of proving the plaintiff knew of the mistake. He has said he didn’t know.

[13] On the second ground, the defendant argues that the plaintiff has put in issue his legal advice about the terms of the minutes of settlement and has thereby waived his claim to privilege over that advice. I have read the affidavit sworn by the plaintiff in support of his motion and read the transcript of his cross examination. I do not find that the plaintiff put the legal advice he received in issue. In the language of Roynat Capital Inc. v. Repeatseat Ltd. 2015 ONSC 1108 at paragraph 40, the plaintiff has not used “the presence or absence of legal advice as a material element of his claim or defence”.

[14] The defendant candidly admits in its factum that it has raised the issue of the plaintiff’s knowledge and advice and has sought to ascertain the plaintiff’s understanding of the settlement agreement. In that context, the defendant points to the plaintiff’s response to two of its questions to demonstrate that he has put his legal advice in issue. First, the defendant asked the plaintiff whether it was his lawyer who added the phrase “in addition to amounts already paid” to the draft minutes of settlement. He answered “I don’t know what the revisions were. He [Mr. Fisher] just sent it back and then it came back again.” In my view, that is not a waiver of privilege. The plaintiff was asked a question and his answer did not put in issue any legal advice he received.

[15] In the second instance, the defendant attempted to question the plaintiff on the legal advice he received and he refused those questions. The defendant cannot question the plaintiff about his legal advice and then take the position that his failure to answer puts that advice in issue. The privilege belongs to the client and the party opposite cannot effect a waiver of that privilege (Arci v. Miklavc 2018 ONSC 7642 at paragraph 6). As stated by my colleague Master Sugunasiri in Palinkas v. Pass 2018 ONSC 3332 at paragraph 29:

In my view, the test for waiver and the principles underlying the test lead to the conclusion that one party cannot strip the protective cloak of the other party’s solicitor-client privilege by simply raising the other party’s state of mind as an issue in the pleading and tendering evidence that it was informed by legal advice.

[16] In conclusion, I find that the plaintiff has not relied on any legal advice he received for his motion or for the defendant’s cross motion and he has not put his legal advice in issue on either motion. The questions posed by the defendant about what the plaintiff discussed with his lawyer cannot put that legal advice in issue or waive the plaintiff’s privilege when he refuses to answer those questions. The case is distinguishable from both Chemtrade West Limited Partnership v. MET Holdings Inc. 2013 ONSC 6093 and 1273368 Ontario Inc. v. Pharmx Rexall Drug Stores Ltd. 2002 CarswellOnt 2738 where in each case there had been a clear and intentional waiver of privileged information.

[17] Questions 78, 98, 111, 112, 113, 114, 116, 142, 143, 144, 156, 157, 158, 159 and 163 need not be answered.

Issue 3: Request by the defendant to examine Mr. Fisher under Rule 39.03 in aid of its motion

[18] On 21 May 2019 the defendant served Mr. Fisher with a summons requiring him to attend on 11 June 2019 to be examined and to bring with him notes or documents created based on discussions between him and Mr. Kearns at the mediation on 19 December 2018 and all relevant correspondence between him and Mr. Kearns concerning amounts paid by the defendant to the plaintiff. Mr. Fisher refused to attend to be examined and the summons was held in abeyance pending this decision.

[19] The defendant argues that what was known to the plaintiff and his counsel, Mr. Fisher, prior to and during the mediation and during the finalization of the settlement documents will be a central issue on the motions to enforce the settlement. It argues that, because the plaintiff himself did not have knowledge of the mistake, Mr. Fisher is the only individual who can provide crucial evidence on (a) whether the plaintiff or Mr. Fisher knew of the defendant’s mistake and (b) what their intentions were when Mr. Fisher added the phrase “in addition to amounts already paid” to the draft minutes.

[20] During the plaintiff’s cross examination, Mr. Fisher stated on the record that “Mr. Kearns was not communicating with anybody other than me, and his communications with me are covered by solicitor-client privilege.” The plaintiff stated that he did not know what the revisions were. The defendant argues that these two statements together demonstrate that Mr. Fisher is the only person who has the information required for this rectification motion. It seeks to ask Mr. Fisher what advice he gave his client and what his client told him.

[21] A party moving under Rule 39.03 must demonstrate on a reasonable evidentiary basis that the examination would be conducted on issues relevant to the pending application and that the proposed witness is in a position to offer relevant evidence. Where the individual sought to be examined is a lawyer, the moving party must demonstrate high materiality and necessity to justify such an order (Marton v. Wood Gundy 2013 ONSC 1246 at paragraph 9).

[22] Solicitor client privilege is fundamental to the justice system and the integrity of the administration of justice depends on the unique role of the solicitor who provides legal advice to clients within the legal system. At the heart of this privilege lies the concept that people must be able to speak candidly with their lawyers and so enable their interests to be fully represented. The occasions when solicitor client privilege yields are rare and the test to be met is a stringent one. Solicitor client privilege must be as close to absolute as possible to ensure public confidence and retain relevance. As such it will only yield in certain clearly defined circumstances, and does not involve a balancing of interests on a case by case basis (see R. v. McClure 2001 SCC 14 at paragraphs 2, 5 and 35).

[23] I find the evidence that Mr. Fisher might have is neither necessary nor highly material to justify the invasion of solicitor client privilege. The defendant can and has already obtained evidence from the plaintiff directly about his understanding of the settlement and whether he knew the November payment was a mistake. The plaintiff need not have his solicitor client privilege breached by having his lawyer compelled to disclose the legal advice he gave him about the settlement terms.

[24] Were such an order granted, the plaintiff would lose his counsel of choice for the upcoming motion to enforce the settlement and also be compelled to incur the expense of bringing new counsel up to speed. The communications that he had with his lawyer and that he rightly understood to be privileged would be disclosed to the party adverse in interest to him. And Mr. Fisher would be examined with a view to obtaining evidence from him that could be harmful to his own client. As stated in R. v. 1504413 Ontario Limited 2008 ONCA 253 at paragraphs 13 and 16:

There is abundant authority for the proposition that the practice of calling counsel for the opposing side to testify against his or her client is the exception and should be avoided whenever possible. When it is done, as in this case, involuntarily on the part of the counsel summonsed, it is highly undesirable and the court should be extremely wary of permitting it to happen…. Whether as a matter of custom or policy, issuing a summons to counsel for the opposite party to testify against his or her client is virtually unheard of and it should not be done absent the most exceptional circumstances.

[23] The defendant’s motion for an order requiring Mr. Fisher to attend for examination is dismissed.

Costs

[24] The plaintiff is entitled to his costs of defending this motion. Having reviewed both parties’ costs outlines and heard their submissions, I find the all-inclusive sum of $10,000 on a partial indemnity basis to be a fair and reasonable sum for the defendant to pay the plaintiff in all the circumstances and I order the defendant to pay that sum within 30 days.

Master Jolley

Date: 12 July 2019