Court File and Parties
COURT FILE NO.: CV-16-559684 MOTION HEARD: 20181026 REASONS RELEASED: 20190311 SUPERIOR COURT OF JUSTICE – ONTARIO
BETWEEN:
TTC Insurance Company Limited and Toronto Transit Commission Plaintiffs
and
MVD Law Professional Corporation, Meleni Vasanthy David, Namartha Gobikrishna, John Does 1 to 10, Jane Does 1 to 10, and Suhanthan Logeswaran Defendants
BEFORE: MASTER D. E. SHORT
COUNSEL: Stephen Sargent, FAX: 416-338-0117 for the responding plaintiffs
Bronwyn Martin, FAX: 416-340-1862 for moving (first three named) defendants
RELEASED: March 11, 2019
Reasons for Judgment
I. Preamble
[1] This is a difficult case, in which allegations are made that a respected law firm, MVD Law Professional Corporation, was involved in some manner, in falsifying and submitting documentation in support of personal injury accident insurance claims made against the Toronto Transit Commission and its insurer, TTC Insurance Company Limited (collectively “TTC”).
[2] On an earlier occasion, I acceded to the parties’ request that I case manage the progress of this matter.
[3] On an unopposed basis, I directed that the deemed undertaking rule would not apply to the contents of files existing with respect each of the individual personal injury actions which gave rise to claims now challenged. Succinctly the present action challenges the veracity of documentation filed in those matters, which resulted in amounts being paid by the insurer. In the present action the TTC asserts that such claims were submitted to it improperly and resulted in unjustified insurance payments.
[4] The present portion of the complex series of motions deals with the right of a litigant to examine for discovery Mr. Townsend, an in-house counsel of the plaintiff.
II. Action to Date
[5] The background against which I am approaching this element can be found in detail in my earlier decision found at 2018 ONSC 2611.
[6] That decision was appealed to Justice Schreck, whose endorsement on the appeal can be found at 2018 ONSC 5050. The endorsement determined that I was in error with respect whether an in-house audit conducted by the plaintiff was protected by solicitor and client privilege; but upheld my decision ordering production of witness statements.
[7] In his reasons his Honour addresses nature of protection to be given to reports prepared internally by the TTC under the direction of Mr Townsend:
[3] In my view, the learned Master erred in concluding that there was an implied waiver of solicitor-client privilege in this case. For there to be implied waiver, there must be “some manifestation of a voluntary intention to waive the privilege at least to a limited extent”: S. & K. Processors Ltd. v. Campbell Ave. Herring Producers Ltd. (1983), 45 B.C.L.R. 218 (S.C.), at para. 10; R. v. Youvarajah, 2011 ONCA 654, 107 O.R. (3d) 401, at para. 149. This voluntary intention can be evidenced by making the solicitor-client communication an issue in the proceeding or by voluntarily disclosing some, but not all of the privileged material: Creative Career Systems Inc. v. Ontario, 2012 ONSC 649, 27 C.P.C. (7th) 172, at para. 25; Mediamix Interactive Inc. v. Ontario (Minister of Natural Resources), 2018 ONSC 3920, at para. 24.
[8] In Mediamix the court observed:
24 The need to apply fairness and consistency arises when a party discloses some, but not all, privileged material. In such a situation, the selective and partial release of privileged material could be misleading. Thus, when only some privileged material has been disclosed, fairness and consistency may lead to a finding of implied waiver over the rest of the privileged material. While the Guelph decision relied on by the Master did not use the exact phrase "fairness and consistency", the decision deals at length with implied wavier and is entirely consistent with the authorities Mediamix claims the Master ignored.
[9] In his decision in the present matter Justice Schreck further commented:
[4] In this case, no solicitor-client privileged communications are an issue. While discoverability is an issue, there is nothing in the pleadings to suggest that the plaintiff relies on legal advice in support of their claim that the fraudulent documents were not discoverable earlier. Nor is this a case of partial waiver of privilege. Apart from the assertion that the claim was initiated following the receipt of legal advice, which is an obvious fact true of most claims, there has been no disclosure of any solicitor-client privileged communication.
[5] However, my conclusion that there has been no waiver does not end the matter as far as the results of the audit are concerned. The results of the audit, that is, a list of the documents alleged to be fraudulent as well as the details of their fraudulent nature, do not constitute legal advice and are not subject to solicitor-client privilege. In my view, the particulars which the defendant is entitled to includes this information. The defendants should not be required to undertake the type of audit·that the plaintiff has already performed: Aviva Insurance Co. of Canada v. Kushnir, 2014 ONSC 7187, 65 C.P.C. (7th) 96, at paras. 40 ~41. The plaintiff's concern that disclosing this information now as opposed to during the discovery process will allow the defendant's witnesses to "tailor their evidence" is, in my view, speculative and in any event no basis to deny the defendants what they are otherwise entitled to. [my emphasis]
[10] Now the parties have reached the “in person” discovery stage of the process and the moving defendants have selected, as the individual they wish to examine for discovery on behalf of the plaintiffs, the TTC in-house counsel, Mr. Townsend. The plaintiffs assert that he is not an appropriate witness to be examined in the circumstances of this case.
[11] With respect to the concept of “litigation privilege” in this case, Justice Schreck observed:
[6] With respect to the report prepared by. the investigator, this was prepared in contemplation of litigation and is therefore prima facie subject to litigation privilege. Unlike solicitor-client privilege, litigation privilege is not “sacrosanct”: Mask v. Silvercorp Metals Inc., 2014 ONSC 5727, at para. 28. Like solicitor-client privilege, it can be waived, either expressly or by implication. · The Plaintiffs Amended Statement of Claim clearly outlines information received from the witnesses who were interviewed. For example, in paragraph 38, it states that “It was reported to the TTCICL by some caregivers, housekeepers and other service providers that they had not performed the services for various claimants .... ” In my. view, having chosen to divulge some of what these; witnesses said, it is not now open to the plaintiffto claim litigation privilege with respect to the rest of what the witnesses fold the investigator: Cromb v. Bouwmeester, 2014 ONSC 5318, at paras. 49-53. As a result, the Master did not err in ordering production of the witness statements of the claimants and caregivers who were interviewed. Even if, as the plaintiff suggests, Rule 30.04(2) does not apply because no specific documents are mentioned in the pleadings, it was open to the Master to make an order pursuant to Rule 30.04(5). However, my conclusion in this regard pertains only to the witness statements. Other aspects of the investigator's report remain subject to litigation privilege.
III. Responding Plaintiffs’ Position on Motion
[12] In the TTC’s responding motion record, the Director of Claims who oversees the Claims Department sets out his justification for opposing the attendance of in-house counsel as the witness to be discovered on behalf of the TTC plaintiffs. In part, his affidavit reads:
The thirteen accident benefits files at the heart of this claim originate with the accident benefits section of the Claims Department. With the exception of one of the claims, the accident benefits adjusters who handled these claims are still employed by the TTC. I adjusted three of these claims myself while I worked as an accident benefits adjuster. …. Mr. Townsend was asked to review the documents to determine what legal action would be appropriate or whether any legal action would be appropriate. It was and is my view that his work and his communication with me and others about this work is protected by solicitor/client privilege.
Mr. Townsend has worked with the Legal Department since June 30, 2008 as a litigation lawyer. In 2017 he was promoted to the position of Litigation Counsel. In this position he supervises the ten other litigation lawyers in the department and takes on larger and more complicated litigation matters. …The TTC's selection of Mr. Townsend was deliberate and no other lawyer in the department is equivalent to this particular task. The decision to select a lawyer to handle a file is based on the particular skills and abilities of the lawyers in the department. ...
Mr. Townsend's review of documents prior to the claim being issued was the same as the role of other lawyers in our department when the TTC is considering whether to issue a Plaintiff claim. …
There is not, and never has been any intention of calling Mr. Townsend as a witness in this proceeding. The intention has been for Mr. Townsend to proceed as lead counsel to take steps up to and including the conduct of a trial.
Mr. Townsend advises me and I verily believe that while he could orally answer some questions based on second hand evidence from his recollection of documents he reviewed in this case, he has no firsthand knowledge or evidence to proffer.
[13] With respect to the decision of Justice Schreck it is reported that Mr. Townsend provided the results of the audit to the Defendants pursuant to that Order. In particular it is asserted:
“Mr. Townsend advises me and I verily believe that he cannot provide anything further on the audit without breaching solicitor/client privilege.
…Mr. Townsend advises me and I verily believe his advice that it would be difficult for him (or any lawyer) to determine accurately on the spot whether an answer given about a document review to provide advice to a client would breach solicitor/client privilege. He expects the only prudent way to answer many of the questions at discovery would be to refuse them or take them under advisement.
[14] It is further asserted that the proposed witness has advised that that “he has no firsthand knowledge of the substantive issues arising from the pleadings in this action.”
[15] However given the nature of this action that is not appear to be any one person who has firsthand knowledge with respect to many of the matters alleged in the statement of claim
[16] The Affiant deposes that he is aware that accident benefits adjusters at the TTC do have firsthand knowledge of many of the substantive issues in this action including but not limited to:
- How the forged documents were relied upon;
- The expenses that were incurred both specifically and generally;
- The procedures of the department used to reduce fraud;
- The obligations of the TTCICL to accident benefits claimants;
- The reliance on invoicing provided by accident benefits claimants;
- The procedure for the provision of funds to claimants;
- The varying amount of time required to adjust accident benefits files;
- How the time to adjust a file is impacted by the submission of extensive invoicing for personal services rendered; and
- What level of honesty is expected on behalf of representatives of accident benefits claimants?
[17] The Director of Claims further notes that six of the accident benefits adjusters that adjusted these files are still employees of the TTC. He points out that they have extensive experience adjusting accident benefits files for the TTCICL and have firsthand knowledge of elements of the above factors supporting the plaintiffs’ claim. In contrast he asserts that “Mr. Townsend has no firsthand knowledge of the list of relevant points” set out above.
IV. Applicable Law
[18] I first turned to Rule 31.03(2) of the Rules of Civil Procedure which provides a prima facie right to select the employee to be examined:
(2) Where a corporation may be examined for discovery,
(a) the examining party may examine any officer, director or employee on behalf of the corporation, but the court on motion of the corporation before the examination may order the examining party to examine another officer, director or employee.
[19] Thus the question before me in this case is whether the examining parties’ choice of witness ought to be upheld.
[20] I note at the outset that the affidavit filed on behalf of the moving defendants sets out, based on information and belief, that “Mr. Townsend confirmed that he is the author of the audit results”.
[21] They then submit that the Court should not lightly interfere with the choice of the examining party, and assert that in deciding whether it is appropriate to interfere, the court should consider the following:
(a) Is the person selected sufficiently knowledgeable in relation to the matters in issue?
(b) Would it be oppressive to require the person selected by the opposing party to be examined?
(c) Would there be prejudice to the examining party to be required to examine someone other than the person whom he or she has selected?
[22] In particular they assert that “oppression” in this context takes the form of the witness having to give a great many undertakings to answer questions, resulting in a longer more expensive examination. Prejudice is largely a matter of judgment of counsel for the examining party who is responsible for the development and presentation of that party's case.
[23] With respect to the question of whether or not in-house counsel may be examined it is noted that in Ontario, there is no blanket exclusion from discovery simply because of the constraint of solicitor-client privilege.
[24] In response counsel for the TTC submitted:
“While it is not yet the Defendants' stated intention to have Mr. Townsend removed as lawyer of record, the Court should be cautious about Orders which are directed at that outcome. This is particularly true because it is the Plaintiffs intention to have Mr. Townsend as the lawyer of record through trial. The Plaintiffs submit that the Plaintiffs' risk of losing their chosen trial counsel, or having to expend time and resources defending their chosen trial counsel and/or having the uncertainty approaching a trial where a motion to remove counsel will be brought is unduly oppressive.”
[25] With respect to such possible “oppression” the TTC submitted that examining counsel for discovery has been recognized as oppressive in other jurisdictions:
Although there is minimal Ontario case law, Alberta has considered this question extensively under their equivalent rule that allows discovery of employees of a corporation. While the Alberta Courts have taken a different approach to the definition of employee, which was discussed in the Wexler appeal decision, the underlying rationale as it relates to the oppressiveness of the relief is comparable to the case herein.
In 1135973 Alberta Ltd. v. Dupre, 2008 ABQB 778, paras. 17 and 18 the Court highlighted the origin of the principle applicable in Alberta that a lawyer acting for a client in his professional capacity is not considered an employee for the purposes of examinations. The underlying rationale is that a lawyer should not be discovered regarding their conduct as a lawyer, but if they acted in some other role then that information is discoverable. In the case herein, there is no evidence that Townsend acted in any other capacity than as a lawyer providing legal advice to his client.
[26] American case law was also presented for my consideration on this issue:
- In addition to the Alberta authorities, American authorities also recognize the problems created when allowing a deposition of opposing counsel. For example, the Appellate Court in Shelton v. Am. Motors Corp. stated the following:
Taking the deposition of opposing counsel not only disrupts the adversarial system and lowers the standards of the profession, but it also adds to the already burdensome time and costs of litigation. It is not hard to imagine additional pretrial delays to resolve work-product and attorney-client objections, as well as delays to resolve collateral issues raised by the attorney's testimony. Finally the practice of deposing counsel detracts from the quality of client representation. Counsel should be free to devote his or her time and efforts to preparing the client's case without fear of being interrogated by his or her opponent. Moreover, the "chilling effect" that such practice will have on the truthful communications from the client to the attorney is obvious.
Shelton v. Am. Motors Corp, 1986 U.S. App. LEXIS 34150, pages 4 and 5,
- The Court in Shelton held that counsel is not immune from deposition, but deposition should be limited to where the party seeking same has shown no other means exist to obtain the information, the information is relevant and non-privileged, and information is crucial to preparation of the case.
[27] My colleague Master Graham considered this issue in Wexler v. Suncor Energy Products Inc., in which the plaintiffs sought to examine a lawyer employed by the corporate defendant. The defendants objected on the basis that the information acquired by in-house counsel is shielded from discovery because that information came to him in his capacity as a lawyer. This argument was rejected by Master Graham.
[28] In evaluating the positions, of each of the parties, I found the cases cited by the defendants more applicable to this case where the Ontario Rules of Civil Procedure apply.
[29] Master Graham's decision was upheld by Justice Cumming on appeal, Wexler v. Suncor Energy Products Inc.. His Honour held:
[17] The approach in Ontario through Rule 31 is to prima facie leave the choice of the opposing corporate representative to the party seeking discovery. Solicitor-client privilege and/or litigation privilege attaches to specific documents and/or communications in given, discrete circumstances; privilege does not attach simply and generally in respect of information because the person receiving that information is a lawyer.
[30] Even if I were not bound by this Divisional Court decision, I still believe the circumstances in this case are such that I prepared to accept the submissions made on behalf of the defendants as to their reasonableness of their request. Before me they submitted:
These defendants seek to examine Mr. Townsend. While the plaintiffs have suggested producing an employee from the Claims Department who has handled and supervised AB files, they have not proposed an actual substitute. Moreover, the plaintiffs have not met the onus of showing why Mr. Townsend is an inappropriate witness.
Rather, the evidence shows that Mr. Townsend has in-depth knowledge of the matters in issue as he has conducted a thorough review of the impugned files. This includes a review of the AB and in some instances tort files.
Finally, the fact that Mr. Townsend is a lawyer for the plaintiffs is not sufficient to insulate him from examination for discovery. While these defendants acknowledge that Mr. Townsend cannot be questioned about his legal advice to the plaintiffs, he can testify both as to facts within his and the corporation's knowledge and as to the plaintiffs' position on the legal issues in this action.
V. Disposition
[31] Ultimately it is my view that there is compelling no reason for this court to interfere with the prima facie right of these defendants to select a witness. Mr. Townsend has knowledge of the issues at hand, and his position as in-house counsel does not shield him from discovery.
[32] The Defendants’ motion is therefore granted.
[33] Costs of this element to the moving parties on a partial indemnity basis, payable within 60 days.
[34] If the parties are unable to agree on a quantum for the moving parties’ costs the parties shall deliver all written costs submissions in one complete package within 60 days from the date of these reasons, directly to my ATC Mr. Backes and I will fix the costs.
[35] If no package is received within that time, I will assume the parties have resolved the issue of costs.
[36] I am again obliged to counsel for their helpful submissions.
March 11, 2019