Way v Ernst & Young LLP ., 2021 ONSC 2746

Court File and Parties

COURT FILE NO.: CV-16-554600 (C-1079-07) DATE: 20210413

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ALVEN WAY Plaintiff

– and –

ERNST & YOUNG LLP, PRICEWATERHOUSECOOPERS INC., and KRUSE, LAWSON & HALLER Defendants

Counsel: Christopher M. B. Graham and A. Sean Graham, lawyers for the plaintiff David Byers and Samaneh Hosseini, lawyers for defendant, Ernst & Young LLP Sean Dewart and Mathieu Belanger, lawyers for defendant, Kruse, Lawson & Haller

HEARD: April 12, 2021

ENDORSEMENT

DIAMOND J.:

Overview

1This matter is scheduled to proceed to trial before me on May 3, 2021, and the trial is to last for up to one month. In advance of trial, the parties scheduled an attendance before me to address certain outstanding evidentiary issues.

2As described in greater detail hereinafter, the defendant Ernst & Young LLP (“EY”) brought a motion seeking leave under Rule 31.11(6) of the Rules of Civil Procedure to read in the transcripts (and answers to undertakings) from the examination for discovery of its corporate representative Harry (Sonny) Kumpf (“Kumpf”) held on June 11, 2013 as part of its trial evidence. Kumpf passed away in September 2020.

3In response to EY’s motion, the plaintiff brought a cross-motion seeking an order that EY produce, inter alia, any and all documents and communications to or from Kumpf, EY and/or its lawyers that contain any facts relevant to the issues in this proceeding (i.e. the events that gave rise to the dispute between the parties).

4Counsel for all parties agreed that the Court first determine the plaintiff’s cross-motion, as the results of that cross-motion could (and likely would) impact the positions taken by the parties with respect to EY’s motion.

5At the conclusion of argument of the plaintiff’s cross-motion, I took my decision under reserve.

Summary of Relevant Facts

6In this proceeding, the plaintiff alleges that he received negligent advice and services with respect to the establishment of a family trust in 1995. The plaintiff alleges that EY (as his accountant) and the defendant Kruse, Lawson & Haller (“KLH”, his lawyers at the time) were both negligent with respect to the advice they provided.

7In 1995, Kumpf was employed by EY and was the only individual involved in the establishment of the family trust for the plaintiff.

8This proceeding was commenced in 2007. At that time, Kumpf was an associate partner at EY.

9In or around June 2012, Kumpf’s employment with EY ended. It is the plaintiff’s position that Kumpf’s employment was in fact terminated, while EY submits that the parties negotiated Kumpf’s exit from the firm, and Kumpf essentially retired at that time.

10In June 2013, Kumpf was examined as EY’s corporate representative for discovery.

11In early 2021, EY brought a production motion which was heard by Madam Justice Steele. After that motion was heard and substantially granted, EY in turn delivered additional productions to the plaintiff including a copy of a Consulting Arrangement dated July 10, 2012 between EY and Kumpf (the “Consulting Agreement”).

12The Consulting Agreement provided that from September 2012 until August 2013, EY would retain Kumpf (through his personal corporation) to (a) provide litigation support in respect of EY’s defence of the within proceeding and (b) consult on certain client matters as mutually agreed by the parties. EY anticipated Kumpf providing up to 50 hours of service, and EY would pay him the sum of $6,083.00 per month for those services (with any additional litigation support or consulting services to be paid at the rate of $250.00 per hour).

13Kumpf’s remuneration was not dependent upon the outcome of this litigation. After Kumpf was examined for discovery, EY ceased any payments to him under the Consulting Agreement (the payments having totaled approximately $73,000.00 up to that point).

14There is no dispute that EY did not produce or list the Consulting Agreement as part of its Affidavit of Documents. When Kumpf was asked on discovery whether any such agreements existed, EY took the question under advisement.

Position of the Plaintiff

15The plaintiff submits that in order to properly respond to EY’s motion, and prepare for trial, a fair result would be for the Court to order production of any documentation between Kumpf, EY and/or its lawyers that evidence any facts relevant to the issues in this proceeding (subject to any redactions for privilege issues).

16The plaintiff also seeks production of any communications, invoices or documents relating to the formation of the Consulting Agreement.

17The plaintiff submits that as Kumpf has now passed away, the plaintiff is at a disadvantage in terms of challenging Kumpf’s factual assertions made at discovery. In the absence of such productions, the plaintiff says that he cannot test Kumpf’s evidence, including its reliability. While the plaintiff is not seeking to obtain any communications which are subject to privilege, he requires production of any facts conveyed to or from Kumpf relevant to the issues giving rise to this litigation.

Position of EY

18EY submits that the plaintiff’s cross-motion is premised upon an ill-founded allegation that EY paid Kumpf to testify at discovery. At Kumpf’s discovery, the plaintiff did not ask any questions relating to the circumstances around Kumpf’s retirement, and did not ask questions relating to any factual communications between Kumpf and EY, its lawyers or other third parties.

19EY has produced a list of communication exchanges between Kumpf and either EY’s in-house counsel, or litigation counsel. EY submits that all of those communications are subject to solicitor/client and/or litigation privilege, and as such cannot be produced in the absence of a clear waiver, which has not occurred.

Decision

20Dealing first with the plaintiff’s request for production of any documentation between Kumpf, EY and/or its lawyers that evidence any facts relevant to the issues in this proceeding, in my view it is too late for the plaintiff to seek production of documentation which was properly the subject matter of the original discovery process (both oral and documentary).

21I do not accept the plaintiff’s argument that only upon being provided with a copy of the Consulting Agreement did the plaintiff come to learn of the potential existence of documentation evidencing Kumpf’s “view of the facts” that gave rise to this proceeding. The terms of the Consulting Agreement are clear, and arise out of Kumpf’s employment with EY coming to an end. While the plaintiff was unaware that Kumpf was being paid any money pursuant to the Consulting Agreement, the existence of the Consulting Agreement does not act as a “springboard” for the pursuit of documentation at this late stage.

22The scope of the plaintiff’s main request – namely “documents and communications concerning any fact and issue from or to Kumpf, EY or its lawyers” is properly part of the discovery process, and not dependent upon the existence of a Consulting Agreement. Kumpf gave factual evidence at discovery, and the plaintiff was always able to try and test that evidence by asking for production of any relevant documentation. He did not, at least in terms of the scope of documents sought on this motion. It is too late in the game to resurrect discovery questions on the eve of trial.

23In addition, while Kumpf is not named as an individual defendant, he was the only individual on behalf of EY with knowledge of the facts giving rise to the dispute between the parties. The plaintiff’s answers clearly bound EY on discovery, and as such any communications between him, EY’s in-house counsel or litigation counsel are protected by either solicitor/client privilege, or at a minimum litigation privilege. It is trite to state that privilege attaches to communications with both in-house counsel and litigation counsel. The way in which a lawyer communicates information to, or receives information from, a client is privileged. As held by Justice Code in 1784049 Ontario Ltd. v. Toronto (City) 2010 ONSC 1204, while factual information in a communication may not be subject to privilege, the document itself is privileged regardless of whether it contains both factual information and legal advice.

24That said, there is merit to the plaintiff’s request for production of communications, invoices or documents related to the Consulting Agreement. As I have yet to hear or decide EY’s motion for leave under Rule 31.11(6), the credibility and/or reliability of Kumpf’s evidence is a relevant consideration under the governing test. As Kumpf was paid for his litigation support services, documentation relating to the formation of the Consulting Agreement may be relevant to the issues to be decided on EY’s pending motion. Accordingly, I am ordering EY to produce copies of any documentation relevant to the formation of the Consulting Agreement, to be redacted to remove any communication to or from Kumpf relating or referencing to legal advice and/or litigation strategy.

25I am reserving the costs of this motion to myself as the trial judge. If the parties are unable to resolve EY’s pending motion, I will hear that motion at the opening of trial along with any other preliminary matters to be raised by the parties.

Diamond J.