COURT FILE NOS.: CV-17-576930

DATE: 2020/02/06

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ANITA BIELAK, Plaintiff

AND:

MARILYN DADOUCH, FIRM CAPTIAL et al., Defendants

BEFORE: MASTER RONNA M. BROTT

COUNSEL: Stuart Svonkin, for the Plaintiff Fax: 647-725-5440

Milton Davis, for the Defendants Marilyn Dadouch, Firm Capital Mortgage Corporation and Door to Door Investments Fax: 416-941-8852

Shaun Laubman, for the Defendant Eli Dadouch Fax: 416-598-3730

HEARD: May 24, 2019 and October 8, 2019

ENDORSEMENT

THE FACTS

[1] On June 12, 2017 the plaintiff, Anita Bielak (“Anita”) commenced the within action against her mother-in-law Marilyn Dadouch (“Marilyn”), Firm Capital Mortgage Corporation and Door to Door Investments (“Marilyn’s companies”) and Marilyn’s son, Eli Dadouch (“Eli”) from whom she has been separated since July 2013 (“the defendants”). Anita had commenced matrimonial proceedings in November 2014 and in 2016, during the course of those proceedings, Eli’s former accounting employee, Mary Moncada (“Mary”) gave evidence that Eli had treated Marilyn’s companies as his own. He had not disclosed any information or documentation about Marilyn’s companies in the matrimonial proceeding as he asserted that they were wholly owned by his mother Marilyn.

[2] In this action the plaintiff seeks an Order directing that title to Marilyn’s companies be transferred to Eli, and she seeks an accounting for all amounts that Marilyn’s companies have paid to Marilyn or for her benefit. Anita alleges, inter alia, that Eli fraudulently altered records to portray Marilyn as the owner but in fact Marilyn’s companies are “wholly owned, beneficially and legally, directly or indirectly” by Eli.

[3] On October 12, 2018 the defendants brought a motion for summary judgment on the basis that the within action is statute-barred under the Limitations Act, 2002. Section 5 of the Limitations Act 2002 states:

5(1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

i. that the injury, loss or damage had occurred,

ii. that the injury, loss or damage was caused by or contributed to by an act or omission,

iii. that the act or omission was that of the person against whom the claim is made, and

iv. that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[4] Anita’s November 7, 2018 responding affidavit on the summary judgment motion states that her claims only arose when Eli took the position in the matrimonial proceedings, on August 8, 2016, that Marilyn’s companies were owned by Marilyn. Further, she asserts that Eli concealed from her material facts that give rise to this claim.

[5] Anita was cross-examined on her responding affidavit on February 12, 2019. 143 refusals arose from the cross-examination, and the defendants seek on this motion to compel the plaintiff to answer the questions refused. The plaintiff submits that the questions were properly refused on the basis of relevance and privilege.

[6] Unfortunately, counsel failed on this motion to comply with the Rules of Civil Procedure and the Practice Direction in that they failed to provide a proper joint chart outlining the specific questions refused and the reasons for the refusals. There is a chart in each of the parties’ motions records, but it was ignored in counsel’s submissions. Further, the numerous questions were not jointly grouped to permit the court to address the issues and groups in a comprehensive and organized fashion. Even between the dates of hearing, when counsel were instructed to meet with a view to following the rules for the remaining questions, counsel did not do so. Despite the court’s direction to make submissions on either particular groups of questions or specific questions and then to allow the responding party to make their submissions, followed by a Reply, counsel ignored and refused the court’s direction. These reasons will accordingly address the four issues of relevance, privilege, waiver and facts v communications leaving counsel to do the homework that should have been done prior to the hearing. They shall have to agree on which questions fall under each of the categories.

THE LAW

Relevance

[7] It is well established that questions which are relevant to the issues on the summary judgment motion and the evidence filed on the motion, shall be answered, subject to privilege. Specifically, the issue on the summary judgment motion will be discoverability.

[8] Justice Perell in Nicholas v McCarthy Tetrault, 2008 54974 (ON SC), [2008] O.J. No. 4258 (S.C.J), affirmed, 2009 ONCA 692, [2009] O.J. No. 4061 (C.A.), leave to appeal to the S.C.C. refused, [2009] S.C.C.A. No. 476 at para 26 states:

The discoverability principle governs the commencement of a limitation period and stipulates that a limitation period begins to run only after the plaintiff has the knowledge, or the means of acquiring the knowledge, of the existence of the facts that would support a claim for relief: Kamloops v Nielson (1984), 1984 21 (SCC), 10 D.L.R. (4th) 641 (S.C.C.); Central Trust Co. v Rafuse (1986), 1986 29 (SCC), 31 DLR (4th) 481 (S.C.C.); Peixeiro v Haberman, 1997 325 (SCC), [1997] 3 S.C.R. 549. Thus a limitation period commences when the plaintiff discovers the underlying material facts or, alternatively, when the plaintiff ought to have discovered those facts by the exercise of reasonable diligence.

[9] The defendants contend that the plaintiff’s claim was discovered at the time of one or more of the following three events:

1. The plaintiff saw some of Eli’s documents in May 2013, including photos and an organizational chart;
2. The plaintiff had communications with Mary in 2014 and 2015;
3. In February and March 2015 the plaintiff received and reviewed her husband’s financial statements produced within the matrimonial law proceedings.

[10] The moving parties submit that in her Reply and her affidavit dated November 7, 2018 the plaintiff has put into issue her state of mind and therefore any questions touching on her state of mind must, in their view, be answered. The plaintiff submits that the plaintiff has not put her state of mind in issue and the questions are not relevant to the issues raised on the summary judgment motion. The plaintiffs allege that the questions refused do not call for her knowledge of material facts but rather they seek to determine the legal significance of whether and/or when she had a good claim.

[11] The plaintiff’s Reply in relation to the limitations issue states:

6. Anita denies that her claims in this proceeding are statute-barred as alleged by the defendants in their respective Statements of Defence. Anita’s claims arose no earlier than when Eli took the position in the Matrimonial Proceeding that FCMC and Door to Door were owned by his mother Marilyn, not by him. That occurred less than two years before this action was commenced.

7. In any event, Anita alleges that Eli concealed from her material facts that give rise to this claim. As a result, Anita was unable to discover those material facts until a time less than two years before this action was commenced. Anita pleads and relies on the doctrines of fraudulent concealment and discoverability, and on section 5 of the Limitations Act, 2002.

[12] The pleading does not state that Anita is out of time because she told her lawyers and they said that she will not have any problem. She simply alleges that she did not know the facts giving rise to her claim. Relying on Nicholas v McCarthy Tetrault, 2008 54974 (ON SC), [2008] O.J. No. 4258 (S.C.J.) at para 27, affirmed, [2009] O.JK. No. 4061 (C.A.), leave to appeal to the S.C.C. refused, [2009] S.C.C.A. No. 476, the plaintiff submits that what is relevant to discoverability is when the plaintiff learned the underlying material facts giving rise to the claim.

[13] Questions such as when the plaintiff saw the org chart, when she saw Eli’s financial statements, and what the documents said, have all been answered. Questions which call for her dealings with her lawyers, or when she had a good case, seek to determine legal significance and are therefore not relevant. In Tender Choice Foods Inc. v Versacold Logistics Canada Inc., 2013 ONSC 80, [2013] O.J. No. 634 Perell, J. states at para. 59:

However, the discovery of a claim does not depend upon the plaintiff knowing that his or her claim is likely to succeed; the limitation period runs from when the prospective plaintiff has or ought to have had, knowledge of a potential claim, and the later discovery of facts which change a borderline claim into a viable one does not postpone the discovery of the claim; Oakville Hydro Electricity Distribution Inc. v Tyco Electronics Canada Ltd. (2004), 2004 13633 (ON SC), 71 O.R. (3d) 330 (S.C.J.) at paras. 10-13; Giakoumakis v Toronto (City), [2009] O.J. No. 55 at para. 20 (S.C.J.).

He continues at para 61;

The circumstance that a potential claimant may not appreciate the legal significance of the facts does not postpone the commencement of the limitation period if he or she knows or ought to know the existence of the material facts, which is to say, the constitute factual elements of his or her cause of action. Error or ignorance of the law or legal consequences of the facts does not postpone the running of the limitation period; Nicholas v McCarthy Tétrault, 2008 54974 (ON SC), [2008] O.J. No. 4258 (S.C.R.), aff’d 2009 ONCA 692, [2009] O.J. No. 4061 (C.A.), leave to appeal to S.C.C. ref’d [2009] S.C.C.A. No. 476.

[14] Questions which call for the legal significance of the material facts are not relevant to the issue of discoverability. The judge hearing the summary judgment motion will have the plaintiff’s evidence as to what facts she knew and when she knew the facts. He/she will know what facts Anita knew and when she knew the facts as a result of seeing the documents and having conversations with Mary. I find that the questions refused on the grounds of relevance were properly refused and need not be answered

Privilege/Waiver of Privilege

[15] There were numerous questions refused by the plaintiff on the basis of privilege. The defendants asked the plaintiff many questions about lawyers and an expert witness retained by the plaintiff in relation to the matrimonial proceedings. The questions seek information about which lawyers the plaintiff retained, when, and the timing and contents of communications between the plaintiff and her lawyers and the plaintiff and her expert.

[16] The plaintiff submits that those questions call for information that is protected by either solicitor client or litigation privilege. The defendants assert that the plaintiff has waived any privilege that may apply.

[17] Solicitor client privilege is defined in Solosky v The Queen 1979 9 (SCC), [1980] 1 S.C.R. 821 as “(i) a communication between solicitor and client; (ii) which entails the seeking or giving of legal advice; and (iii) which is intended to be confidential by the parties.” In R. v McClure, 2001 SCC 14, [2001] 1 S.C.R. 445 at para. 35 the court held: “Solicitor-client privilege must be as close to absolute as possible to ensure public confidence and retain relevance”. It can be waived only when a legal issue or when the party relying on the law has been put in issue by the person holding the privilege, Solicitor client privilege is a fundamental right which should be interfered with only when absolutely necessary. Permitting free communication between lawyer and client protects the rights of the clients as it encourages free and frank communication. It must be protected.

[18] The onus of proving privilege rests on the person claiming it. The onus of establishing a waiver of privilege rests with the party claiming that privilege has been waived.

[19] The defendants assert that the plaintiff has failed to prove the privilege. The defendants submit that the questions do not call for solicitor client privileged information, nor do they seek disclosure of legal advice. Rather, it is their submission that the questions go to when the plaintiff knew or ought to have known that she had a claim against Marilyn and Eli. Further, and because her state of mind and knowledge obtained from her lawyers are in issue, they assert that they are not subject to privilege. In my view, had the plaintiff led evidence and relied on legal advice, then she would have put her state of mind in issue. Her evidence is that she was unable to draw any conclusions from the documents and she did not fully understand the information provided by Mary. Accordingly, on the facts of this proceeding, the plaintiff has not put her state of mind in issue.

[20] Courts will protect solicitor client privilege unless the moving party can convince the court that there has been a waiver. The defendants must provide evidence in support of the submission of waiver. The court held in R. v McClure,: “if the information is privileged and there has been no waiver – the information shall not be disclosed.”

[21] Here, the defendants submit that if privilege is found, it has been waived. The defendants are asking this court to find a waiver of Anita’s privilege by weighing Anita’s privilege against the defendants’ interest in obtaining disclosure of privileged information that they assert is relevant. They submit that “fairness” trumps Anita’s privilege.

[22] Master McAfee in Brockie v Continental Casualty Co., [2017] O.J. No. 2764 relies on Leadbeater v Ontario, 2004 14107 (ON SC), [2004] O.J. No. 1228 (Ont. S.C.J.) at paragraphs 32 and 51, where Justice Spence states as follows with respect to waiver of solicitor client privilege:

[32] Waiver of solicitor-client privilege may occur even in the absence of any intention to waive the privilege. Privilege will be deemed to have been waived where the interests of fairness and consistency so dictate or when a communication between a solicitor and client is legitimately brought into issue in an action. Ground J. stated the following in Bank Leu AG. Gaming Lottery Corp. (1999), 43 C.P.C. (4th)73 (Ont. S.C.J.) at p. 77, affd (2000), 132 O.A.C. 127 (Div. Ct):

Privilege may be waived expressly or impliedly. In the case at bar it is not disputed that there was no express waiver of privilege by GLC. 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 and litigation privilege. Fairness to a party facing a trial has become a guiding principle in Canadian law. Privilege will be deemed to have been waived where the interests of fairness and consistency so dictate or when a communication between a solicitor and client is legitimately brought into issue in an action. When a party places its state of mind in issue and has received legal advice to help form that state of mind, privilege will be deemed to be waived with respect to such advice.

[51] The principle that solicitor-client privilege is deemed waived when a party has placed its state of mind of knowledge in issue is a particular application of the broader principle that waiver may occur when fairness requires it. Courts have recognized that the issue of fairness to the party facing a trial has become one of the guiding principles that determine what constitutes waiver by implication or deemed waiver; Woodglen & Co. v Owns (1995), 1995 7070 (ON SC), 24 O.R. (3d) 261, 38 C.P.C. (3d) 361 (Gen Div.) at pp. 270-71; Froates v Spears, [1999] O.J. No 77 (QL), 88 O.T.C. 395 (Gen. Div.) at paras 11-12; J. Sopinka, S.N. Lederman and A.W. Bryant, The Law or Evidence in Canada, 2nd ed. (Toronto: Butterworths, 1999 (at p. 758, 14.102

[23] Many cases say that a waiver must be voluntary and be based on a decision by the privilege holder to put its privileged information at issue in the litigation. It is only thereafter that one may consider “fairness and consistency”. Justice Laskin in the solicitor’s negligence case of Ferrara v Lorenzetti Wolfe Barristers 2012 ONCA 851, [2012] O.J. No. 5683 (C.A.) at paras. 77, 79 stated:

…I do not accept that to meet his obligation to put “his best foot forward”, Ferrara was obliged to file the affidavits of his three litigation lawyers. He gave sworn evidence that “none of the said litigation counsel recommended that any action be taken against Schwartz either by way of third party action against Schwartz or otherwise”. By giving this evidence, he impliedly waived the right to claim solicitor-client privilege for any advice his litigation counsel may have given him about suing Schwartz in negligence.

Ferrara voluntarily disclosed that in his communications with his three litigation lawyers, he was not advised he had a potential claim against Schwartz. This disclosure made his knowledge of whether he could sue Schwartz a relevant issue. His disclosure, thus, showed an implied intention to waive his solicitor-client privilege.

[24] Similarly in Creative Career Systems Inc. v Ontario 2012 ONSC 649, [2012] O.J. No. 262 (S.C.J.) at paras. 25-31 the Court emphasized that waiver on the basis of “fairness and consistency” required a voluntary intention by the privilege holder to put her privileged information at issue – such as by expressly relying on her legal advice to support her position in the litigation:

A party will be deemed to have waived privilege on grounds of fairness and consistency when he or she makes their communication with a lawyer an issue in the proceeding…

There is, however, a subtle and profound point here about when a party must answer questions about the occurrence of legal advice in the factual narrative of a case. The subtle and profound point is that there is no waiver of the privilege associated with lawyer and client communications from the mere fact that during the events giving rise to the claim or defence, the party received legal advice, even if the party relied on the legal advice during the events giving rise to the claim or defence. For a party to have to disclose the legal advice more is required.

…It is not enough to constitute waiver that a pleading puts a party’s state of mind in issue and that its state of mind might have been influenced by legal advice. There must be the further element that the state of mind involves the party understanding its legal passion in a way that is material to the lawsuit. In other words, the presence or absence of legal advice itself must be material to the claims or defence to the lawsuit. The materiality of the legal advice to the claims or defences in the lawsuit makes questions about it relevant.

But the materiality of the legal advice, while necessary to make questions about it relevant, is still not sufficient to justify the compelled disclosure of the legal advice. To justify a party being required to answer questions about the content of privileged communications, the party must utilize the presence or absence of legal advice as a material element of his or her claim or defence. The waiver of the privilege occurs when the party uses the receipt of legal advice as a material fact in his or her claim or defence. While the waiver is a deemed waiver, it requires the intentional act that the party makes legal advice an aspect of his or her case…

[25] Although the caselaw appears somewhat conflicted on whether there must be an express or voluntary waiver, caselaw is clear that for a privilege to be waived, the holder of the privilege must have made an issue of the legal advice or understanding of the law before a court can consider whether ‘fairness and consistency’ require a finding of waiver. The element of voluntariness is always a prerequisite before a ‘fairness’ analysis can be undertaken, unless the party has made the communications with their lawyer to be an issue in the proceeding, in which case, privilege will be deemed to be waived on grounds of fairness. The cases are all in agreement that there must be either a deemed or voluntary waiver before the issue of fairness and consistency is reviewed.

[26] Had the plaintiff alleged in the Reply that she was represented by legal counsel who advised her that there was no limitation clock ticking, then privilege would be waived. The defendants here simply allege that because of the photos, conversations and having obtained a copy of Eli’s financial information, she has put her state of mind in issue and she failed to understand the underlying facts of the claim. To put her state of mind in issue, she would have had to allege that her lawyers failed to take steps once the information was forwarded to them.

[27] The defendants also argue that when Anita’s lawyers, at the cross-examination of Mary, noted that that was the first time that Eli had taken the position that Marilyn’s companies were wholly owned by Marilyn, Anita put her and her lawyers’ state of mind in issue. Solicitor client privilege “cannot be displaced as a result of another party’s pleadings and nor can one party force a waiver by the type of questions it asks” (Monks v Zurich Insurance [2001] O.J. No. 5557 (Master) at para 14. Similarly in Davies v American Home Assurance Co. (Divisional Court) 2002 62442 (ON SCDC), [2002] O.J. No. 2696 (Div.Ct.) at paras 26-27, the court held that “a party cannot force a waiver of privilege by putting or attempting to put the privilege holder’s “state of mind” issue. In my view, Anita’s lawyers’ response does not constitute a voluntary disclosure of legal advice, nor was it a declaration by Anita to rely on her lawyers’ advice. It was simply a factual statement about Eli’s conduct in the matrimonial proceeding.

[28] The defendants also submit that the plaintiff’s November 1, 2016 affidavit delivered in the matrimonial law proceedings, in which she provided copies of the documents that she photographed in May 2013 to her lawyers at various times, is evidence of voluntariness. Anita was ordered in those proceedings, in response to an inquiry made by Eli’s lawyers in correspondence dated May 5, 2016, to file the affidavit. The plaintiff did not voluntarily deliver the November 1, 2016 affidavit in the matrimonial proceeding. She was not ordered to reveal any legal advice received or any understanding she and/or her lawyers formed about the legal significance of the documents. Ontario courts have held that disclosure of privileged communications on a non-voluntary basis such as in accordance with a statutory obligation, does not give rise to a waiver of privilege. (S. & K. Processors Ltd. v Campbell Ave. Herring Producers Ltd., 1983 407 (BC SC), [1983] B.C.J. No. 1499 (S.C.) ) Here, the plaintiff’s delivery of those documents was mandatory not voluntary.

[29] I have considered the plaintiff’s claim of solicitor client privilege and the defendants’ assertion of waiver of privilege with the above principles in mind. I am not satisfied, in the circumstances of this case, that privilege has been waived. The plaintiffs have not put into issue their state of mind. The plaintiff has not voluntarily put the privileged information – such as legal advice received or her understanding of her legal rights – in issue. She has not disclosed nor is she relying on legal advice or her understanding of the law in support of her claim or in response to the defendants’ limitations defence. The plaintiff has provided the underlying facts such as what she saw and when, and those questions have been answered. The defendants cannot create a waiver by pleading a limitations defence and then simply arguing that a discoverability analysis automatically puts into issue her state of mind. It is only the plaintiff who can do so.

Facts v Communications

[30] The defendants submit that some refusals seek “facts” as opposed to “communications” about Anita and her lawyers. For example, the plaintiff answered when she found the documents, when she had discussions with Mary and what she and Mary discussed. She refused to answer when or whether she provided this information to counsel.

[31] As noted by Justice Frank in para. 45 of Jetport Inc. v Global Aerospace Underwriting Managers (Canada) Limited, 2013 ONSC 6380, “only facts that have an independent existence outside of solicitor client communications are not protected by the privilege.” The distinction between fact and communications is a fine one but the solicitor client relationship must be protected. By these questions the defendants are really asking the plaintiff whether she was seeking legal advice and what her understanding was of the legal issues. These questions, (for example questions 364, 369, 404, 419 and 438) are all attempts by the defendants to obtain disclosure of irrelevant privileged communications – information which the plaintiff has not put in issue. I find the plaintiff properly provided evidence about the independent facts and properly refused those questions which, if answered, would raise a reasonable risk of disclosure of privileged communications.

[32] For these reasons, the questions refused were appropriately refused and need not be answered.

SUMMARY

[33] Based on the rulings above there are no categories of questions for which the refusals were not justified and therefore the motion is dismissed.

COSTS

[34] The parties exchanged costs outlines following the hearing of the motion. They shall, within thirty days, attempt to agree on the issue of costs. If they are unable to do so, they shall contact my Assistant Trial Coordinator to arrange an attendance to make oral submissions on costs.

MASTER RONNA M. BROTT

Date: February 6, 2020