Court File and Parties
Court File No.: CV-032-17 Date: 2019-11-27 Superior Court of Justice - Ontario
Re: Christopher “Buddy” Labor, Syndenham Recycling & Scrap Ltd. and 2234248 Ontario Ltd., Plaintiffs And: Scott Alexander Kelvin, DS Commercial Inc. o/a Stealth Metal Recycling and Processing, and Gloria Alonzo Schofield and Trevor Hinnegan, Estate Trustees for the Estate of Ronald A. Kirby, deceased, Defendants
Before: Justice A.K. Mitchell
Counsel: F. Leitch, Counsel, for the Plaintiffs B. Blay, Counsel, for the Defendants, Scott Alexander Kelvin and DS Commercial Inc.
Heard: November 25, 2019 (in St. Thomas)
Endorsement
[1] On this motion, the plaintiffs/vendors seek production of a letter sent by the former solicitor of record for the defendants/purchasers, Kelvin and DS Commercial Inc. (the “defendants”), reporting on the asset sale transaction forming the subject matter of this litigation (the “Reporting Letter”).
[2] In this action, the plaintiffs claim payment of the balance owing on account of a promissory note dated June 4, 2015 in the amount of $250,000 (the “Note”).
[3] The plaintiffs plead that the agreement of purchase and sale executed by the parties provides for the delivery of the Note as part payment of the purchase price for the assets sold by the plaintiffs to the defendants. The plaintiffs’ lawyer on the sale transaction was Ronald Kirby. He did not report to the plaintiffs on the closing of the transaction and did not deliver the Note to the plaintiffs. Mr. Kirby’s files do not contain a copy of the Note. Mr. Kirby is now deceased. The plaintiffs have claimed against the estate of Mr. Kirby in negligence for his handling of the transaction.
[4] Written interrogatories are underway as part of the discovery process in this action. During written discovery, the plaintiffs asked the following question of the defendants: “The Agreement of Purchase and Sale called for the defendant, DS Commercial Inc., to deliver a $250,000 Promissory Note to the vendor as part of the purchase price. Why was that not done?” Mr. Kelvin responded: “I do not know.” By way of further response, Mr. Kelvin stated: “To my knowledge, the $250K Promissory Note does not exist”.
[5] The plaintiffs say the Note does, or should, exist. The defendants deny the existence of the Note.[^1]
[6] The defendants oppose production of the Reporting Letter on three grounds: first, they say the question was asked and answered; second, they say the Reporting Letter is not relevant to the issues in the action; and last, they say the Reporting Letter is subject to solicitor-client privilege.
[7] In response to the question of whether he received the reporting letter, Mr. Kelvin said he could not recall. Mr. Kelvin appears to have little, if any, recall about the details of the subject transaction and the documents executed in furtherance of the closing of the transaction.
[8] Documentary discovery is an ongoing obligation of all parties to the litigation. The defendants had not served a sworn affidavit of documents at the time this motion was argued. The discovery process is far from complete. The defendants remain obligated to produce all relevant documents subject to claims of privilege. That obligation continues until disposition of this case by judgment after trial or through a settlement.
[9] A response provided to a written discovery question (leaving aside the adequacy of that response), does not negate Mr. Kelvin’s continuing obligation to investigate the existence of the Reporting Letter over which he has control and to obtain a copy of the Reporting Letter from his former solicitors.
[10] Inconsistent with Mr. Kelvin’s recollection, (or lack thereof), the Reporting Letter has now been provided to defendants’ counsel who currently maintains control and possession over the document.
[11] Turning now to the issue of the Reporting Letter’s relevance. The defendants argue that the Reporting Letter is not relevant to an issue in the action because the plaintiffs’ claim is dependent on the existence of the Note and, more specifically, the plaintiffs’ physical possession of the Note. A promissory note is a negotiable instrument. A claim on a negotiable instrument requires proof of the existence and production of the negotiable instrument.
[12] I find that the Reporting Letter is relevant to establishing the existence of the Note which is a precondition to success on the plaintiffs’ claim. At a minimum, a review of the Reporting Letter will assist the plaintiffs in their professional negligence claim against the estate of Mr. Kirby and is relevant to the issue of damages. A reference to the Note in the Reporting Letter, regardless of whether the executed Note can be located, is directly relevant to the plaintiffs’ claim against the estate of Mr. Kirby. I suspect that if the Reporting Letter makes no reference to the Note, the plaintiffs will need to take a hard look at the merits of their claim against the defendants.
[13] Last, the defendants assert solicitor-client privilege over the contents of the Reporting Letter. I was referred to the decision in R. v. Douglas[^2] which stands for the principle that reporting letters are subject to a rebuttable presumption of solicitor-client privilege. The defendants submit the plaintiffs have not rebutted the presumption.
[14] In response, the plaintiffs referred me to the decision of the Ontario Court of Appeal in General Accident Assurance Company v. Chrusz[^3] where Doherty J.A. (dissenting in part) described the client-solicitor privilege as the protection from disclosure of communications relating to the giving and receiving of legal advice between a professional legal adviser and his or her client. However, Doherty J.A. went on to note that the privilege does not extend to facts which may be referred to in the communications if those facts are otherwise discoverable and relevant.[^4]
[15] I find that any reference in the Reporting Letter to the Note as having been delivered on closing is a statement of fact to which the privilege does not extend.
[16] Additionally, the plaintiffs seek only the production and review of the Reporting Letter by the court so as to safeguard against any possible disclosure of privileged legal advice that might occur if the Reporting Letter was produced directly to the plaintiffs. The plaintiffs ask the court to redact the Reporting Letter for any privileged content and thereafter provide the parties with a copy of the redacted document.
[17] I find that the relief requested is appropriate to ensure a fair and just determination of the issues in this action.
[18] Order to go on the following terms:
the defendants shall deliver a copy of the Reporting Letter to the court to my attention in a sealed envelope marked to the attention of the Judicial secretaries on the 12th floor of the Courthouse, 80 Dundas Street East, London, Ontario.
As agreed by the parties, the plaintiffs, as successful parties on the motion, are entitled to their costs of the motion fixed in the amount of $1500.
“Justice A.K. Mitchell”
Justice A. K. Mitchell
Date: November 27, 2019
[^1]: Curiously, although the defendants deny the Note’s existence, two payments were made in accordance with the purported terms. [^2]: 2017 CarswellMan 302 at para. 58 (leave to the SCC refused). [^3]: 1999 ONCA 7320, 1999 ONCA 7320 at page 18. [^4]: Rosenberg J.A. adopted the analysis of Doherty J.A. of the client-solicitor privilege.