COURT FILE NO.: CV-17-583573-00CP
DATE: 20220808
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: LYNN WINTERCORN, PETER NEWMAN, EMILY FLAMMINI and ALEX KEPIC, Plaintiffs
AND:
GLOBAL LEARNING GROUP INC., GLOBAL LEARNING TRUST SERVICES INC. as TRUSTEE OF GLOBAL LEARNING TRUST (2004), ROBERT LEWIS, IDI STRATEGIES INC., JDS CORPORATION, ESCROWAGENT INC., JAMES PENTURN, RICHARD E. GLATT, DENIS JOBIN, ALLAN BEACH, MORRIS KEPES & WINTERS LLP, FASKEN MARTINEAU DUMOULIN LLP, CASSELS BROCK & BLACKWELL LLP, WISE, BLACKMAN LLP, and EVANS & EVANS INC., Defendants
BEFORE: Justice Glustein
COUNSEL: David Fogel and Jonathan Schachter, for the plaintiffs
Jeffrey Leon and Gannon Beaulne, for the defendants Fasken Martineau DuMoulin LLP and Allan Beach
Paul-Erik Veel, Jessica Kras, and Jenna Rumeo, for the defendant Cassels Brock & Blackwell LLP
HEARD: July 19 and 20, 2022
reasons for decision
Nature of motion and overview
[1] The plaintiffs bring the present motion for an order that Allan Beach (“Beach”) and Fasken Martineau DuMoulin LLP (“Fasken”) (collectively, the “Fasken Defendants”) and Cassels Brock & Blackwell LLP (“Cassels”):
(i) provide answers to refusals given at their preliminary examinations for discovery held in September and October 2021, as set out in the refusals charts at Schedules A and B to the notice of motion, and
(ii) produce certain documents, listed in Schedule B of the Fasken Defendants’ and Cassels’s affidavits of documents.
[2] I refer to the Fasken Defendants and Cassels collectively as “GLGI Counsel”.
[3] GLGI Counsel assert solicitor-client privilege over the documents contained in their client files (collectively, the “Client Files”) related to their retainers for the defendant Global Learning Group Inc. (“GLGI”). GLGI Counsel also refuse any questions related to documents in the Client Files or communications with GLGI in the course of their retainers, which they assert are also subject to solicitor-client privilege.
[4] For the reasons that follow, I maintain the GLGI Counsel claims of privilege.
[5] There were numerous privilege issues raised at the hearing. In summary, I conclude:
(i) The documents sought and refusals are prima facie protected by solicitor-client privilege since they seek production of information from the Client Files;
(ii) The future crimes/fraud exception (the “fraud exception”) does not apply.
First, the fraud exception applies only in situations where a client has engaged in fraud (either with counsel or by deceiving counsel) through impugned communications which were “criminal in themselves or intended to further criminal purposes”: Canada (Privacy Commissioner) v. Blood Tribe Department of Health, 2008 SCC 44, [2008] 2 S.C.R. 574, at para. 10. It does not apply to fraud by the client on the lawyer to engage in a civil wrongful act, such as the civil fraud and other wrongful conduct alleged in the present case.
Second, even if the fraud exception applied in the civil context, the plaintiffs have not led sufficient evidence to establish a prima facie case that GLGI had the requisite intent to defraud counsel in order to commit an unlawful act;
(iii) Privilege over documents or communications related to the November 10, 2004 tax opinion provided by Cassels to GLGI (the “Opinion”) is not waived by GLGI’s disclosure of the Opinion to participants in the GLGI Gift Program (the “Gift Program”). The Opinion is a stand-alone document and thus there is no basis to find that without production of all documents or communications related to the Opinion, disclosure of the Opinion would be misleading.
Further, Cassels properly maintained solicitor-client privilege over questions and productions related to its knowledge (if any) of the dissemination of the Opinion arising from privileged communications. Cassels properly produced all documents related to dissemination that it received from non-clients such as participants in the Gift Program. However, Cassels is required to protect GLGI’s privilege over any communications from GLGI relating to dissemination, since GLGI, as the client, has not waived privilege;
(iv) There is no waiver arising from the reliance by Robert Lewis (“Lewis”) on legal advice;
(v) The plaintiffs cannot obtain public documents, pre-existing documents, attachments to emails, and facts contained in the Client Files. While a client cannot refuse to produce documents or answer questions about such matters simply because they were discussed with a lawyer, once documents are part of a lawyer’s file they are privileged because they were provided as part of a “continuum of communications” from the client to obtain legal advice;
(vi) Even if Global Learning Trust Services Inc. (the “Trustee”) is considered to be a client of GLGI Counsel (which I do not address), there is no clear evidence that any advice was provided to the Trustee for the purpose of administering the trust (the “Trust”). Communications related to (a) the tax consequences of the Gift Program as it was proposed by GLGI, or (b) ensuring that GLGI acted in a manner consistent with the Opinion, were for the benefit of GLGI or the Trustee and are not the proprietary information of the Gift Program participants;
(vii) Privilege is not lost for documents and communications that were also disclosed to parties who were part of the team assisting GLGI Counsel, or who had a “common interest” with GLGI. The evidence establishes that those parties (a) were part of a team of advisors essential to the operation of the solicitor-client relationship between GLGI Counsel and GLGI, and (b) had a common interest with respect to the commercial transaction of the Gift Program;
(viii) Beach’s work for Escrowagent Inc. (“Escrowagent”) is also protected by solicitor-client privilege because it was performed by him as counsel in order to ensure compliance with the Opinion and not in a business capacity unrelated to legal advice; and
(ix) The purported waiver by the defendant Denis Jobin (“Jobin”) of any privilege belonging to him or JDS Corporation (“JDS”) does not result in a waiver of privilege on behalf of GLGI.
Facts
The Gift Program
[6] The present class action is brought on behalf of all persons who participated in the Gift Program, a registered tax shelter that operated between 2004 and 2014. Potential participants applied to be capital beneficiaries of a trust that distributed educational courseware. If accepted, participants donated cash and courseware to registered charities and then received two charitable giving tax receipts: one for the cash and the other for the courseware.
[7] The plaintiffs are the representatives of a class of taxpayers who made donations through the Gift Program and whose charitable tax receipts were subsequently rejected by the Canada Revenue Agency (“CRA”).
The Gift Program Defendants
[8] The defendants GLGI, Lewis, Escrowagent, Richard Glatt (“Glatt”), James Penturn (“Penturn”), IDI Strategies Inc. (“IDI”), Jobin, and JDS were the central parties involved in the development and administration of the Gift Program.
[9] GLGI was an Ontario corporation and the promoter of the Gift Program. It carried on business between 2004 and 2014. GLGI was dissolved effective July 27, 2015.
[10] Lewis was formerly the sole officer, director, and principal of GLGI.
[11] Escrowagent performed the mechanical function of holding and releasing documents and property related to the Gift Program. Beach’s evidence is that throughout his involvement with Escrowagent, Escrowagent had a discrete, mechanical, and limited escrow function of monitoring Escrowagent’s corporate email account for automated notices to investors, trust resolutions and distributions, and any requests to revoke applications.
[12] From November 2004, when it was incorporated, until Beach formally transferred control in or about April 2011, Beach was the only director and officer of Escrowagent.
[13] Glatt and Penturn were the principals of IDI, which was contracted by GLGI to perform a broad range of services that were central to GLGI’s business of developing and administering the Gift Program.
[14] According to a services agreement executed between GLGI and IDI on October 28, 2004, IDI’s broad functions included general administrative and support services associated with donations, communications with donors, preparing materials for and presenting the Gift Program to agents, assisting and providing guidance in preparing “all materials, reports, and statutory filings relating to the Business”, and producing and delivering to donors, “in the name of the Company” (i.e., GLGI), “notice of all distributions to them, and such other income tax and other reports, summaries and information to donors, taxation authorities and others as may be requested by the Company”.
[15] The IDI services agreement included a provision that IDI would maintain the confidentiality of information that came into its possession in connection with the work it did with GLGI.
[16] Jobin was the principal of JDS, which was contracted by GLGI primarily to create a database for the purpose of storing information related to the Gift Program. JDS and GLGI entered into a services agreement similar to the IDI services agreement. The JDS services agreement also included a confidentiality provision.
[17] Lewis, Glatt, Penturn, and Jobin were described by Cassels’s affiant, Christopher Norton (“Norton”), as “Team GLGI”, a group of parties that operated as a team to promote, develop, and administer the Gift Program.
Cassels
[18] In October 2004, GLGI retained Cassels to provide a legal opinion concerning the tax implications of the Gift Program (previously defined as the Opinion). The Opinion was authored by Jim Rossiter, a senior tax lawyer at Cassels. It was addressed to GLGI. The Opinion addressed “the principal Canadian federal income tax issues raised by a proposed charitable donation program” to individual Canadian resident taxpayers.[^1]
[19] The Opinion was based on assumed facts about how the Gift Program would be structured and implemented. In addition to other limitations, the Opinion included language prohibiting its dissemination to others and limiting reliance on it by anyone other than GLGI.
[20] In order to prepare its Opinion, Cassels took instruction and received information from Team GLGI, as well as from Beach.
[21] GLGI posted the Opinion on its website.
The Fasken Defendants
[22] The Fasken Defendants were GLGI’s lawyers between 2004 and 2011.
[23] Beach was a corporate/commercial solicitor and a partner at Fasken until he retired in 2013. GLGI retained Beach in late 2004 to be one of its corporate/commercial solicitors. The solicitor-client relationship between Fasken and GLGI was effectively over by the end of 2010 and formally so in 2011.
[24] During the retainer, Beach took instructions from multiple GLGI representatives, including Lewis and senior GLGI employees.
[25] Beach’s corporate/commercial solicitor mandate for GLGI entailed:
(i) preparing some initial commercial documents based on the Opinion,
(ii) monitoring legal issues with respect to the Gift Program’s commercial operations, including holding in escrow and releasing from escrow documents and property, and
(iii) seeing that those operations were in line with the Opinion (thus preserving the Opinion’s applicability).
[26] Beach’s evidence is that all his activity with respect to Escrowagent was part of his solicitor-client relationship with GLGI. Beach, as corporate/commercial solicitor to GLGI, prepared certain commercial documents and monitored the mechanical functions performed by Escrowagent to maintain consistency with the Opinion on behalf of his client, GLGI.
The Claim
[27] The plaintiffs commenced this class action by Statement of Claim issued September 28, 2017. As set out in the Fourth Amended Statement of Claim issued September 16, 2020, the plaintiffs sue the Gift Program Defendants (who were part of Team GLGI) for fraud, conspiracy, unjust enrichment, and fraudulent and negligent misrepresentation, among other claims.
[28] The plaintiffs sue the Fasken Defendants only in negligence, for allegedly creating the Gift Program’s structure and transactional documents. The plaintiffs allege that the Fasken Defendants (i) owed the plaintiffs a duty of care and (ii) breached this duty.
[29] The Fasken Defendants deny that they were negligent, made any misrepresentations, or are otherwise liable. They further plead that (i) they did not owe the plaintiffs or any class members a duty of care; (ii) each class member was a stranger to the Fasken Defendants’ solicitor-client relationship with GLGI; and (iii) neither the plaintiffs nor any class members relied on, or could have relied on, the advice of the Fasken Defendants.
[30] The plaintiffs’ claim against Cassels is also limited to negligence. The plaintiffs plead that Cassels was negligent in preparing the Opinion and ought to have known that the Gift Program was a “sham”. The plaintiffs also allege that Cassels knew the Opinion was prepared for GLGI to include as part of its promotional material for the Gift Program, and that Cassels knew that the Opinion was posted to GLGI’s website.
[31] Cassels denies these allegations. Cassels pleads that:
(i) The plaintiffs were never clients of the firm and thus Cassels owed them no duty of care;
(ii) Cassels did not authorize the dissemination of its Opinion to the plaintiffs or class members or anyone other than GLGI;
(iii) If the Opinion was posted on GLGI’s website, this was done without Cassels’s knowledge or consent, and contrary to the express language in the Opinion;
(iv) Even if Cassels owed a duty of care to the plaintiffs, the Opinion was provided in accordance with the standard of care; and
(v) The Opinion stated that Cassels could provide no guarantees as to the treatment that the CRA would ultimately give to the charitable donations.
Documentary production by GLGI Counsel
[32] On August 26, 2020, Cassels served its affidavit of documents and Schedule A productions. Cassels claimed privilege over 635 documents listed in its Schedule B, which were the documents in its Client File, as retrieved from (i) Cassels’s hard copy file for GLGI, (ii) Cassels’s electronic client file for GLGI, and (iii) custodians at Cassels who worked on the GLGI file.
[33] In October 2020, the Fasken Defendants delivered their affidavit of documents. In their Schedule B, the Fasken Defendants listed the contents of their Client File, consisting of (i) 3,726 hard copy documents from the paper Client File, (ii) 186,998 electronic records on discs in the Client File, and (iii) 923 electronic records from the electronic Client File.
Procedural history of the plaintiffs seeking access to the Client File documents
[34] In 2017, the plaintiffs brought a motion to revive GLGI, appoint a receiver over GLGI, sue various parties through GLGI, including GLGI’s lawyers, and then have the receiver “assume responsibility for and make documentary production in this action”. The motion was dismissed.
[35] On November 17, 2020, the plaintiffs brought two motions to gain access to the Client Files. The motions were heard on March 23, 2021.
[36] On the first motion, the plaintiffs sought orders (i) compelling Lewis to be examined for discovery on behalf of GLGI, and (ii) granting Lewis the authority to waive privilege on behalf of GLGI.
[37] On the second motion, the plaintiffs sought an order for the production of the Client Files on the basis that (i) the fraud exception applied to all of GLGI’s communications with GLGI Counsel or (ii) GLGI waived privilege over its communications with Cassels by disclosing the Opinion.
[38] This court dismissed both motions, without prejudice to the plaintiffs renewing the motions once they had developed a sufficient evidentiary record.
The Jobin Settlement
[39] Jobin and JDS reached a settlement with the plaintiffs. As part of the settlement, Jobin produced approximately one million documents to the plaintiffs, who provided the documents to the defendants. Jobin also agreed to attend for an examination for discovery.
[40] On his discovery, Jobin took the position that if there was any privilege over the documents produced by JDS or himself (which he denied), he waived that privilege. Jobin’s evidence was that he was never told that the documents were to be kept confidential. Jobin denied any solicitor-client relationship with the Fasken Defendants.
[41] The defendants have not had an opportunity to examine Jobin.
Preliminary examinations for discovery of GLGI Counsel in relation to privilege issues
[42] In May 2021, the plaintiffs sought leave to examine Beach (personally and on behalf of Fasken) for up to 15 days and a representative of Cassels for up to 10 days. This court gave the plaintiffs three days with each witness. The plaintiffs examined Beach and Norton, a senior tax practitioner at Cassels, for two days each.
[43] The plaintiffs have not examined any of the non-lawyer defendants who developed and administered the Gift Program, including Lewis (who the plaintiffs acknowledge was “sole officer and director, and the directing mind” of GLGI), IDI (including Penturn and Glatt), or Jim Rossiter, the Cassels lawyer retained to prepare the Opinion.
Analysis
[44] As I set out at para. 5 above, there were numerous issues concerning privilege before the court on this motion. I first review the general principles governing solicitor-client privilege and then review each of the issues raised on this motion.
General principles governing solicitor-client privilege
[45] There is no dispute as to the general principles governing solicitor-client privilege. I summarize the following relevant principles:
(i) Solicitor-client privilege is a principle of fundamental justice: Canada (National Revenue) v. Thompson, 2016 SCC 21, [2016] 1 S.C.R. 381, at para. 17;
(ii) The protection associated with solicitor-client privilege is “indispensable to the continued existence and effective operation of Canada’s legal system. It ensures that clients are represented effectively and that the legal information required for that purpose can be communicated in a full and frank manner”: Thompson, at para. 17; Foster Wheeler Power Co. v. Société intermunicipale de gestion et d'élimination des déchets (SIGED) inc, 2004 SCC 18, [2004] 1 S.C.R. 456, at para. 34;
(iii) Solicitor-client privilege must “remain as close to absolute as possible”: Lavallee, Rackel & Heintz v. Canada (Attorney General); White, Ottenheimer & Baker v. Canada (Attorney General); R v. Fink, 2002 SCC 61, [2002] 3 S.C.R. 209, at para. 36;
(iv) Solicitor-client privilege applies to all communications between solicitor and client that entail the seeking or giving of legal advice and that are intended to be confidential by the parties: Landry et al. v. Her Majesty the Queen in Right of Ontario, 2021 ONSC 1297, at para. 14; Solosky v. Canada, 1979 CanLII 9 (SCC), [1980] 1 S.C.R. 821, at p. 838;
(v) Not all communications between lawyers and clients are privileged: the lawyer must be acting in her professional capacity as a legal advisor: R. v. McClure, 2001 SCC 14, [2001] 1 S.C.R. 445, at para. 36;
(vi) The onus of establishing that privilege exists is on the party asserting it. A defendant cannot establish privilege “by merely asserting it … Broad privilege claims will fail if the party asserting the privilege has failed to meet its burden of proof”: Sky Solar (Canada) Ltd. v. Economical Mutual Insurance Company, 2015 ONSC 4714, at para. 73; General Accident Assurance Company v. Chrusz (1999), 1999 CanLII 7320 (ON CA), 45 O.R. (3d) 321 (Ont. C.A.), at para. 95; see also Canada (Office of the Information Commissioner) v. Canada (Prime Minister), 2019 FCA 95, 2019 CarswellNat 1623, at para. 50; and 1654776 Ontario Limited v. Stewart, 2013 ONCA 184, 114 O.R. (3d) 745, at para. 81;
(vii) Solicitor-client privilege attaches not only to the advice itself, but to all communications passing between client and solicitor relating to the provision of legal advice: Archean Energy Ltd. v. Minister of National Revenue (1997), 1997 CanLII 14953 (AB KB), 202 A.R. 198 (Alta. Q.B.), at para. 5;
(viii) Documents, information, and communications shared or created in a “continuum of communications” for the purpose of obtaining legal advice are privileged. This includes documents that are a “necessary step” in the process of receiving legal advice, that are “incidental” to the obtaining and giving advice, and/or that, if produced, would tend to reveal that advice: 578115 Ontario Inc. o/a McKee’s Carpet Zone v. Sears Canada Inc., 2013 ONSC 4135, [2013] O.J. No. 2785, at paras. 27-30; Concord Pacific Acquisitions Inc. v. Oei, 2016 BCSC 2028, at para. 27; Landry, at para. 14;
(ix) Solicitor-client privilege also protects a lawyer’s work product and prohibits the disclosure of the contents of their client file where that file is compiled with the knowledge or skill of the lawyer and/or the disclosure of the contents of the file would reveal what the lawyer considered in providing legal advice to the client: Sears Canada, at paras. 19-20; Archean Energy, at para. 5; Blank v. Canada (Minister of Justice), 2006 SCC 39, [2006] 2 S.C.R. 319, at para. 49;
(x) There is no distinction between privileged “communications” and unprivileged “facts”. Instead, there is a rebuttable presumption that “all communications between client and lawyer and the information they shared would be considered prima facie confidential in nature”: Canada (Attorney General) v. Chambre des notaires du Québec, 2016 SCC 20, [2016] 1 S.C.R. 336, at para. 40; Foster Wheeler, at para. 42;
(xi) A corporation holds the same privilege as an individual: Sears Canada, at para. 7;
(xii) Just as an individual’s privilege survives death, a corporation’s privilege survives dissolution: Ultra Information Systems Canada Inc. v. Pushor Mitchell LLP, 2008 BCSC 974, 45 C.B.R. (5th) 108, at paras. 17-18 and 21;
(xiii) The right to solicitor-client privilege belongs to the client. Privilege can only be waived by an individual with legal authority to waive privilege as the client: Philip Services Corp v. Ontario Securities Commission (2005), 2005 CanLII 30328 (ON SCDC), 77 O.R. (3d) 209 (Ont. Div. Ct.), at paras. 66-68; York Region District School Board v. Ontario College of Teachers, 2007 CanLII 1881 (Ont. Div. Ct.), at para. 17;
(xiv) The onus to prove waiver or another exception is on the party seeking to displace privilege: Le Soleil Hotel & Suites Ltd. v. Le Soleil Management Inc., 2007 BCSC 1420, at para. 22; Industrial Alliance Securities Inc. v. Kunicyn, 2020 ONSC 3393, 151 O.R. (3d) 306, at para. 27;
(xv) Lawyers have a professional duty to claim and maintain privilege on behalf of their clients. It is improper for a lawyer not to claim privilege on behalf of their client unless it has been shown that privilege has been properly waived: Bell v. Smith, 1968 CanLII 17 (SCC), [1968] S.C.R. 664, at p. 671;
(xvi) Where a third party seeks production from a lawyer of “information pertaining to a solicitor-client relationship”, the “proper course for counsel to follow … is to refuse to do so” unless the client has given clear, valid, and explicit consent to disclose: Kelly Lake Cree Nation v. Canada, 1999 CanLII 9336 (FC), [1999] 1 F.C. 496, 162 F.T.R. 23, at para. 11; and
(xvii) Courts resolve conflicts about whether solicitor-client privilege covers a given document in favour of protecting privilege. The stakes are high in this context. Invoking solicitor-client privilege necessarily imports constitutional and institutional considerations, not merely the balance of convenience or fairness among the parties. Courts “err on the side of non-disclosure if unable to determine whether a communication is or is not privileged”: R. v. Unnamed Respondents, 2008 BCSC 815, at para. 28; Camp Development Corporation v. South Coast Greater Vancouver Transportation Authority, 2011 BCSC 88, [2011] B.C.J. No. 104, at paras. 40-46.
Presumptive protection of the Client Files and refusals
[46] The first step in an analysis of a privilege claim is to determine whether the party asserting privilege has provided sufficient evidence to establish such a claim.
[47] For the reasons that follow, I find that GLGI Counsel has met its onus to establish that the Client Files and refusals arise from the solicitor-client relationship between GLGI Counsel and GLGI. Consequently, the Client Files and refusals are prima facie protected by solicitor-client privilege, subject to the issues of exceptions and waivers raised by the plaintiffs, which I address below.
(i) The applicable law
[48] Once the solicitor-client relationship is established, “solicitor-client privilege (as a class or blanket privilege) prima facie applies to all communications within the framework of that relationship”: Currie v. Symcor Inc., 2008 CanLII 37901 (Ont. Div. Ct.), at para. 45.
[49] It is presumed that “all communications between client and lawyer and the information they shared would be considered prima facie confidential in nature”: Chambre des notaires, at para. 40; Foster Wheeler, at para. 42.
[50] This presumption, and the “continuum of communications” rule, means that courts are spared the need to analyze, at a granular level, every document over which solicitor-client privilege is claimed. If contextual details (even on a category basis) situate a document “within the usual and ordinary scope of the professional relationship”, that document is privileged: Pritchard v. Ontario (Human Rights Commission), 2004 SCC 31, [2004] 1 S.C.R. 809, at para. 16.
[51] Parsing the purpose and intention of each document created or exchanged within the continuum of solicitor-client communications would “frustrate” solicitor-client privilege, “tend[ing] in many cases to permit the opposing side to infer the nature and extent of the legal advice from the tenor of the documents falling within this continuum”: Camp Development, at para. 46.
(ii) Application of the law to the facts of the present case
[52] I find that the documents in the Client Files and all of the refusals (which arise from questions about documents in the files, whether as to content, communications, or conduct) are prima facie protected by solicitor-client privilege.
[53] Beach’s evidence is that (i) the Fasken Defendants were retained as corporate/commercial counsel to GLGI; and (ii) all of the work done by the Fasken Defendants was within the scope of the solicitor-client mandate.
[54] Norton’s evidence is that (i) the scope of Cassels’s retainer was limited to its provision of legal advice, primarily by way of the Opinion, to GLGI; (ii) Cassels did not provide advice with respect to the Gift Program (except for the Opinion); and (iii) Cassels was not retained to give any transactional or business advice to GLGI.
[55] There is no dispute that there was a solicitor-client relationship between (i) Cassels and GLGI in relation to the Opinion, and (ii) the Fasken Defendants and GLGI within the scope of Fasken’s retainer as corporate/commercial counsel. GLGI Counsel has led evidence that the Client Files and refusals arise from those retainers. Consequently, the prima facie presumption of solicitor-client privilege applies.
[56] Once the prima facie presumption of privilege applies, the party seeking production has the onus to establish that privilege either does not apply as a result of an exception, or has been waived. The plaintiffs raised eight bases on which they assert that either all or portions of the Client Files and refusals are not subject to solicitor-client privilege.
[57] I address the plaintiffs’ submissions on each of those eight issues below.
Issue 1: The fraud exception
[58] The plaintiffs submit that the fraud exception applies such that no solicitor-client privilege can attach to the documents in the Client Files or to the refusals. I do not agree.
[59] First, I do not accept the plaintiffs’ submission that the fraud exception applies where a client conspires with or dupes a lawyer in order to engage in an unlawful civil act. The fraud exception is “very limited” and “rare”, and applies only when the client engaged in fraud with or on the lawyer through impugned communications that were “criminal in themselves or intended to further criminal purposes”: Blood Tribe, at para. 10. The plaintiffs’ claim is based on civil wrongs, so the exception does not apply in the present case.
[60] Second, even if the fraud exception could apply to the communications of a client who conspires with or deceives a lawyer for the purpose of committing an unlawful civil act, the plaintiffs have not led sufficient evidence to establish on a prima facie basis that GLGI had the required intent to do so. The mere noting in default of one defendant (GLGI) and the findings of the Tax Court of Canada in Mariano v. The Queen, 2015 TCC 244, do not satisfy the plaintiffs’ onus to establish GLGI’s intent.
[61] I address each of these issues below.
(i) The fraud exception applies only to communications between the client and lawyer which are criminal in themselves or intended to further criminal purposes
[62] The plaintiffs submit that they can rely on the fraud exception based on their pleading of civil fraud against GLGI. I do not agree.
[63] In Blood Tribe, Binnie J. relied on his earlier reasons in R. v. Campbell, 1999 CanLII 676 (SCC), [1999] 1 S.C.R. 565, in which he described the fraud exception as “an exception to the principle of confidentiality of solicitor-client communications where those communications are criminal or else made with a view to obtaining legal advice to facilitate the commission of a crime”: at para. 55.
[64] In Campbell, at para. 57, Binnie J. stated that the exception “can only apply where a client is knowingly pursuing a criminal purpose” (underlining in original). Binnie J. concluded, at para. 56 (citing the following passage from R. v. Cox and Railton (1884), 14 Q.B.D. 153, at p. 168):
In order that the rule [the solicitor-client privilege] may apply there must be both professional confidence and professional employment, but if the client has a criminal object in view in his communications with his solicitor one of these elements must necessarily be absent. The client must either conspire with his solicitor or deceive him. If his criminal object is avowed, the client does not consult his adviser professionally, because it cannot be the solicitor's business to further any criminal object. If the client does not avow his object he reposes no confidence, for the state of facts, which is the foundation of the supposed confidence, does not exist. The solicitor’s advice is obtained by a fraud. [Emphasis added; underlining in original.]
[65] Consequently, it is the “criminal” object of the client that results in the fraud exception. The exception applies only if the client conspires with the lawyer or deceives the lawyer to advance the “future crime”. Privilege is not destroyed merely because an act is later deemed improper or illegal. Solicitor-client privilege continues to protect good-faith consultations with lawyers where a client is not sure of the implications of a transaction or activity: Campbell, at para. 56.
[66] The restriction of the fraud exception to the “rare” and “extremely limited” circumstances of “communications criminal in themselves or intended to further criminal purposes” is consistent with the sanctity of solicitor-client privilege. To permit a party to access solicitor-client communications because a client is alleged to have deceived a lawyer with respect to a civil fraud or other unlawful civil conduct would significantly weaken the privilege. The “future crimes” requirement is an important limitation on the fraud exception which restricts its application to situations when a party can satisfy the court, on the evidence, of a prima facie case that the mens rea requirement for communications intended to further criminal purposes can be met.
[67] The approach in Blood Tribe and Campbell has been followed by Ontario courts. In Carroll v. The Toronto-Dominion Bank, 2022 ONSC 2395, the plaintiff was terminated by the defendant bank after she commenced an investigation relating to alleged excess fees charged by the bank for the administration of certain mutual funds. The bank sought the return of documents it had inadvertently produced, which included solicitor-client privileged communications on the maladministration issue. The plaintiff sought to rely on the fraud exception on the basis that there were communications between the client and counsel which were for the purpose of the “unlawful act” of maladministration.
[68] Patillo J. in Carroll relied on Campbell and rejected the application of the fraud exception since the claim raised no issue of criminal conduct by the bank. He held, at paras. 44-45:
Ms. Carroll submits, based on the future crimes and fraud exception, the privilege cannot apply. The future crimes and fraud exception applies where the communications between the solicitor and his or her client are criminal or else made with a view to obtaining legal advice to facilitate the commission of a crime. The exception can only apply where the client knowingly is pursuing a criminal purpose. See: R. v. Campbell at para. 55 and following.
There is no evidence in the record to establish that the legal advice was sought or provided with a view to facilitation of a crime. Nor do the documents in issue give any indication of that purpose. Ms. Carroll’s allegations of maladministration of the TD Trusts are just that, allegations. In the absence of corroboration, they cannot operate to set aside the privilege. [Emphasis added.]
[69] Similarly, Myers J. in Whitty v. Wells, 2016 ONSC 7716, leave to appeal refused, 2017 ONSC 3682, refused to apply the fraud exception to alleged unlawful civil conduct. In Whitty, the plaintiffs sued for misfeasance in public office and defamation in relation to regulatory charges. The plaintiffs sought production of files on which solicitor-client privilege was claimed, while the Crown sought to “claw back a number of documents that are subject to solicitor-client privilege that it says were released to the plaintiffs in error under the Access to Information Act, R.S.C. 1985, c. A-1”: at para. 3.
[70] The plaintiffs sought to rely on the fraud exception on the basis that “discussions of a Crown lawyer instructing a government investigator to obtain a search warrant and to conduct a search are not privileged [because they] record a tortious action”: Whitty, at para. 29. Myers J. rejected the submission. He relied on Blood Tribe, and held, at para. 31:
Privilege is no longer lost over discussions of unlawful activity. Any breach of contract or tort can be said to be unlawful. The exception is much narrower, “extremely limited” says the Court, so that privilege is lost only for conversations that are “criminal in themselves or intended to further criminal purposes”.
[71] Similarly, in Brome Financial Corporation v. Bank of Montreal, 2013 ONSC 4816, Brown J. (as he then was) refused to apply the fraud exception to require the plaintiffs to answer questions and produce files disclosing solicitor-client communications when the defendant submitted that the plaintiff had breached the deemed undertaking under r. 30.1 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[72] I follow the above cases based on the principles set out in Blood Tribe.
[73] The plaintiffs rely on certain decisions of motion courts which expand the fraud exception to communications between the client and lawyers in which the lawyer is deceived so that the client may engage in “unlawful” or “tortious” conduct. To the extent that such cases were decided before Blood Tribe, I find that the expansion of the exception is inconsistent with the reasons in Blood Tribe and cannot be followed. To the extent that such cases were decided after Blood Tribe, I follow the line of cases under Carroll, Whitty, and Brome Financial Corporation, which I find to be consistent with the very rare application of the fraud exception.
[74] The plaintiffs also rely on the decision of the Divisional Court in Industrial Alliance Securities Inc. v. Kunicyn, 2020 ONSC 3393, 151 O.R. (3d) 306, in which the court reviewed many of the cases that considered the fraud exception prior to Blood Tribe, as well as cases following Blood Tribe, including Whitty and Brome: at paras. 30-38, under the heading “Does the exception extend to civil wrongs”.
[75] However, the court in Industrial Alliance did not reach a conclusion as to the scope of the fraud exception. The motion judge held that the fraud exception should be limited to criminal conduct: at para. 22, but went on to conclude that regardless of whether the fraud exception should be extended to a civil act, the defendant had not made out a prima facie case on the evidence. The Divisional Court noted, at para. 41:
In this case, while the debate about the extent of the fraud/crime exception was put to the motion judge, it is evident from reading her reasons as a whole that she did not decide the motion based on a determination that the exception could not be extended to non-criminal behaviour. This is because she focused her analysis on the next question before her, which was whether, even if the fraud/crime exception could be extended, Ms. Kunicyn had made out a prima facie case that the exception should apply. On this point, the motion judge found that she had not.
[76] The Divisional Court upheld the motion judge’s decision.
[77] Consequently, I do not accept the plaintiffs’ submission that the decision in Industrial Alliance can be taken as extending the scope of the fraud exception beyond the narrow confines set out in Blood Tribe.
[78] For the above reasons, I find that the fraud exception does not apply, as the claim raises no issue of communications between GLGI and GLGI Counsel which are criminal in themselves or intended to further criminal purposes.
(ii) In any event, the plaintiffs have not established a prima facie case that GLGI intended to deceive its counsel so that it could engage in either a criminal or unlawful act
[79] Even if the fraud exception applied to unlawful civil conduct, the plaintiffs have not established a prima facie case that GLGI intended to deceive its counsel to enable GLGI to engage in the alleged civil fraud.
(a) The test to establish prima facie fraud
[80] Under the case law which extends the fraud exception to the civil context, the party seeking to rely on the fraud exception must establish, on a prima facie basis, that (i) the challenged communications related to proposed future conduct; (ii) the client sought to advance conduct that it knew or should have known is unlawful; and (iii) the wrongful conduct under contemplation was clearly wrong: Industrial Alliance, at para. 28.
[81] Consequently, “[i]t is immaterial whether the lawyer was an unwitting dupe or knowing participant in providing the advice underlying the wrongful conduct. … Rather, the key consideration is the intention and state of mind of the client at the time the advice was obtained”: McDermott v. McDermott, 2013 BCSC 534, 46 B.C.L.R. (5th) 121, at para. 76.
[82] In Canbook Distribution Corp. v. Borins, 1999 CanLII 14842 (Ont. S.C.), Ground J. considered the applicable test to establish prima facie fraud on the part of the client in the context of the fraud exception. Ground J. held that a “strong” case was required, given the sanctity of solicitor-client privilege.
[83] In Canbook, Ground J. reviewed:
(i) the decision in Buttes Gas & Oil v. Hammer (No. 3), [1980] 3 All E.R. 475 (Eng. C.A.), in which the court adopted a test based on “requiring strong evidence of fraud such that the court can say: ‘This is such an obvious fraud that he should not be allowed to shelter behind the cloak of privilege’ or ‘something exceptional is called for’”, at para. 21; and
(ii) the decision in O’Rourke v. Darbishire, [1920] All E.R. Rep. 1 (U.K.H.L.), in which the court held that “it is not enough to allege fraud” and “there must be, in order to get rid of privilege, not merely an allegation that [the communications] were made for the purpose of getting advice for the commission of a fraud, but there must be something to give colour to the charge. The statement must be made in clear and definite terms, and there must further be some prima facie evidence that it has some foundation in fact”: at para. 22.
[84] Consequently, Ground J. held that applicant had not established a prima facie case of fraud sufficient to engage the fraud exception, concluding, at para. 23:
It appears to me, however, that the steps are equally consistent with a legitimate business transaction, and where the facts are neutral in that they are equally consistent with either a fraudulent or a legitimate transaction, the plaintiffs, in my view, have not made out a prima facie case of fraud sufficient to set aside solicitor/client privilege. I am supported in this view by the authorities which indicate that in the event of any doubt the court should err on the side of protecting solicitor/client privilege.
(b) Application of the law to the present case
[85] In the present case, the plaintiffs rely on two bases to submit that there is a prima facie case that GLGI deceived GLGI Counsel for the purpose of engaging in a civil fraud: (i) deemed admissions that GLGI made by being noted in default, and (ii) comments by the court in Mariano that the Gift Program was a “sham”.
[86] I agree with GLGI Counsel that neither of these bases supports the “strong” case of fraud that would be required to vitiate solicitor-client privilege under the fraud exception even if it applied to the present case.
- The deemed admissions
[87] GLGI’s deemed admissions arise because they were noted in default. However, even taken at face value, the admissions of GLGI do not establish that GLGI intended to deceive GLGI Counsel when it sought legal advice.
[88] Lewis expressly denies any fraud. GLGI sought the Opinion on the basis of assumed facts, and there is no evidence that GLGI deceived Cassels on the facts provided. There is also no admission that GLGI in any way deceived the Fasken Defendants in relation to their retainer.
[89] Even if the plaintiffs had pleaded that GLGI intended to deceive its counsel during its communications, an admission on default by GLGI would not constitute strong evidence of fraud when all of the defendants who respond to the action deny the fraud and there is no evidence before the court to support such an allegation.
[90] Further, the strength of the existing limited admissions is not strong. The plaintiffs knew when they started this action that (i) GLGI had been inactive for three years, and dissolved for two years; (ii) GLGI likely would not be revived given its debts; and (iii) nobody was left to speak for or direct GLGI in this litigation (because Lewis has been personally sued and has sued GLGI, creating conflicting interests).
[91] Cassels, Lewis, Glatt, Penturn, and the Fasken Defendants all dispute the plaintiffs’ allegations that the Gift Program was fraudulent. They are not bound by GLGI’s deemed admissions.
[92] Consequently, I find that the deemed admissions do not constitute a prima facie case that GLGI deceived GLGI Counsel for the purpose of engaging in a civil fraud.
- The Mariano decision
[93] With respect to the Mariano decision, the finding that a transaction is a “sham” for tax law purposes is not the same as concluding that GLGI’s intent in seeking the Opinion from Cassels (or in obtaining corporate legal advice from the Fasken Defendants) was to perpetrate a fraud.
[94] A “sham” refers to the way in which the tax program is represented to the parties, and “[i]t suffices that parties to a transaction present it as being different from what they know it to be”. Intentional deception is not required: Antle v. Canada, 2010 FCA 280, at para. 20. Finding that the Gift Program was a “sham” under tax law does not establish that GLGI’s intent in seeking legal advice from GLGI Counsel was to deceive them in order to perpetrate the alleged “sham”.
[95] The Tax Court’s primary finding in Mariano was that the applicants did not have the sufficient “donative intent” to claim the tax credits at issue: at paras. 18, 28-50. Justice Pizzitelli stated in obiter that while he did not need to “examine the sham argument in large detail” due to his primary finding, the Gift Program appeared to constitute a sham and the participants were “willfully blind, if not complicit, in perpetrating this sham”: at para. 84. This obiter finding was not central to the decision.
[96] In any event, none of the defendants in the present action (including Lewis, IDI, Glatt, Penturn, Fasken, and Cassels) participated in the Mariano proceeding. Neither the parties nor the court are bound by any findings in that decision. Issue estoppel does not apply: Toronto (City) v. CUPE Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 23.
[97] For the above reasons, I find that even if the fraud exception could apply to unlawful civil conduct (which I do not accept), the plaintiffs have not established a prima facie case that GLGI intended to deceive its counsel so that it could engage in the alleged civil fraud.
Issue 2: Waiver of GLGI’s privilege with Cassels by disclosure of the Opinion or by Cassels’s alleged knowledge of the dissemination of the Opinion
[98] The plaintiffs submit that privilege has been waived over the entire Cassels Client File because GLGI disclosed the Opinion to participants in the Gift Program. I do not agree. The Opinion is a stand-alone document and thus there is no basis to find that production of any documents or communications related to the Opinion (let alone the entire Client File) is required to prevent misleading the plaintiffs or the court.
[99] The plaintiffs further submit, in the alternative, that fairness requires waiver over any documents in the Cassels Client File (or refusals based on solicitor and client communications) relating to Cassels’s knowledge of dissemination of the Opinion. I do not agree. Cassels is duty-bound to protect GLGI’s privilege in the present case as GLGI has not waived privilege.
[100] I first review the applicable law on waiver and then apply that law to the present case.
(i) The applicable law
[101] I summarize the following relevant legal principles for the doctrine of waiver:
(i) The onus to prove waiver is on the party seeking to displace it: Le Soleil, at para. 22;
(ii) Waiver requires that the possessor of the privilege: “(a) knows of the existence of the privilege; and (b) voluntarily evinces an intention to waive that privilege”: S & K Processors Ltd. v. Campbell Ave Herring Products Ltd. (1983), 1983 CanLII 407 (BC SC), 45 B.C.L.R. 218 (B.C. S.C.), at para. 6;
(ii) Solicitor-client privilege “must be as close to absolute as possible to ensure public confidence and retain relevance. … As such, it will only yield to implied waiver in the clearest of cases”: McQueen et al. v. Mitchell et al., 2022 ONSC 649, at para. 73;
(iv) “Solicitor-client privilege is a fundamental civil and legal right belonging to the client. Any attempt to interfere with this special privilege should be limited to what is absolutely necessary in order to achieve the ends sought by the interference”: McQueen, at para. 58; and
(v) Implied waiver to ensure fairness arises only when it is unfair for a party to rely on legal advice by “cherry-picking”, or by disclosing some privileged communications without disclosing related privileged communication. Examples include a party who “impugns legal advice or instructions, puts at issue his reliance on legal advice, or uses privileged documents as a sword”: McQueen, at para. 73.
[102] The underlying principle governing waiver was stated by Sharpe J. (as he then was) in Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1995), 1995 CanLII 7258 (ON SC), 27 O.R. (3d) 291 (Ont. S.C.), at paras. 41-42:
In my view, the plaintiffs have failed to establish waiver and the defendants are entitled to maintain their claim of privilege. With respect to these documents. It is plainly not the law that production of one document from a file waives the privilege attaching to other documents in the same file. It must be shown that without the additional documents, the document produced is somehow misleading: Nova Aqua Salmon Ltd. Partnership (Receiver of) v. Non-Marine Underwriters of Lloyd's of London (1994), 1994 CanLII 19000 (NS SC), 28 C.P.C. (3d) 269, 135 N.S.R. (2d) 71 (S.C.). There is nothing before me to suggest that the disclosed documents are misleading without production of all documents in the C.L.M.S. incorporation file. It is understandable that the opinion letter provided to satisfy the regulatory requirements of the Superintendent of Financial Institutions would have been produced and it certainly stands on its own. The memorandum from the internal legal department is self-contained and readily understood and precedes the next document in the file for which privilege is claimed by five months. There is, in my view, no basis for saying that this document presents a misleading or incomplete picture unless it is the case that any time one document is produced, all the others relating to the same subject must also be produced.
The waiver rule must be applied if there is an indication that a party is attempting to take unfair advantage or present a misleading picture by selective disclosure. However, a party should not be penalized or inhibited from making the fullest possible disclosure. In my view, too ready application of the waiver rule will only serve to inhibit parties to litigation from making the fullest possible disclosure. [Emphasis added.]
(See also McQueen, at para. 70)
(ii) Waiver based on the disclosure of the Opinion
[103] It is not disputed that GLGI waived privilege over the Opinion by posting it on a password-protected portion of its website. However, based on the above principles, there is no unfairness if the Cassels Client File is not produced. It would not be misleading to produce the Opinion without producing the Cassels Client File.
[104] In particular, both the pleadings and the contents of the Opinion itself demonstrate that the Opinion “stands on its own” such that production of the entire file (or any documents or communications about the Opinion) would not be required to ensure fairness.
[105] The plaintiffs plead that they relied on the conclusions contained in the Opinion as a basis for their decision to invest. The plaintiffs were not Cassels’s clients – instead they allege that Cassels prepared a negligent Opinion which Cassels knew or ought to have known was disseminated to the plaintiffs and upon which the plaintiffs relied.
[106] The Opinion itself, as a stand-alone document, is relevant to the issues at trial. However, the privileged communications and documents in the Cassels Client File can have no bearing on the claim, as the plaintiffs assert that they relied on the Opinion itself, and not on any privileged discussions between Cassels and GLGI which would not have been available to them.
[107] Based on the pleadings and the Opinion itself, the plaintiffs do not require, as a matter of fairness, the underlying documents in the Cassels Client File. There is no basis to find that Cassels is “cherry-picking” (as the term is used in McQueen, at paras. 26 and 69) by having the Opinion disclosed without the Cassels Client File, as there is no basis for the plaintiffs to put that file into issue. The claim is not based on the content of the Cassels Client File.
[108] For the above reasons, I do not order production of the Cassels Client File or answers to any refusals arising from the disclosure of the Opinion by GLGI.
(iii) Waiver based on Cassels’s alleged knowledge of dissemination of the Opinion
[109] Cassels properly maintained solicitor-client privilege over questions and productions related to its knowledge (if any) of dissemination of the Opinion arising from privileged communications.
[110] Cassels properly produced all documents related to dissemination that it received from non-clients (such as participants in the Gift Program). However, Cassels must protect GLGI’s privilege over any communications from GLGI relating to dissemination since GLGI has not waived privilege. Cassels has no authority to waive privilege on its client’s behalf. Cassels cannot engage waiver by its client through the defence that Cassels raised in the action.
[111] It is settled law that lawyers have a professional duty to claim and maintain privilege on behalf of their clients. It is improper for a lawyer not to claim privilege on behalf of a client unless it has been shown that privilege has been properly waived: Bell, at p. 671.
[112] Further, neither the plaintiffs nor Cassels can waive GLGI’s privilege. While the plaintiffs raise the dissemination issue, and Cassels has responded to that issue, only GLGI can waive solicitor-client privilege, and it has not.
[113] For the above reasons, I agree with Cassels’s position that privilege is not waived in the Cassels Client File with respect to privileged communications and documents which relate to the dissemination issue.
Issue 3: Waiver by Lewis
[114] The plaintiffs did not pursue this submission at the hearing but raised it in their factum. I address the issue briefly below.
[115] In his Statement of Defence, Lewis pleads that he relied on legal advice from both Cassels and the Fasken Defendants.
[116] However, a former director of a corporation cannot waive privilege on its behalf: Ultra Information Systems Canada, at para. 19; Bre-X Minerals Ltd. (Trustee of) v. Verchere, 2001 ABCA 255, 206 D.L.R. (4th) 280, at para. 65; and Nielsen v. Nielsen, 2017 BCSC 269, at para. 46.
[117] Furthermore, having claimed for contribution against GLGI in this litigation, Lewis is in a conflict of interest with GLGI, such that even if the corporation continued to exist, he would have no such authority: Ultra Marine Systems Canada, at paras. 20 and 22.
[118] For the above reasons, GLGI’s privilege cannot be vitiated by Lewis’s pleading. GLGI has not put its state of mind in issue or otherwise relied on legal advice for its defence.
Issue 4: Production of public documents, pre-existing documents, attachments to emails, and facts contained in the Client Files
[119] In the alternative to the plaintiffs’ position on the fraud exception and waiver, the plaintiffs submit that (i) they are entitled to production of any “non-privileged” documents contained in the Client Files, such as public documents (including reported cases, commentary, CRA bulletins, and any printouts of website pages), pre-existing documents, non-privileged attachments, or case law from those files; and (ii) any questions about such documents should be answered. I do not agree.
[120] The plaintiffs cannot obtain public documents, pre-existing documents, attachments to emails, and facts contained in the Client Files. While a client cannot refuse to produce documents or answer questions about facts or documents simply because they were discussed with a lawyer, once the documents are part of a lawyer’s client file, they are privileged in that client file because they were provided by the client, or obtained by counsel, as part of a continuum of communications from the client to obtain legal advice.
[121] I first review the applicable law and then apply the law to the present case.
(i) The applicable law
[122] It is not contested that a party cannot claim privilege over public or pre-existing documents in their files “simply because they were provided to a lawyer”: West v. Saskatchewan (Minister of Health), 2022 SKCA 18, at paras. 72 and 80.
[123] Similarly, privilege will not “extend to physical objects or ‘neutral’ facts that exist independently of clients’ communications”: Keeler Laundry Ltd. v. Pellerin Milnor Corp. et al., 2006 BCSC 1180, 59 B.C.L.R. (4th) 264, at para. 61.
[124] The above principles prevent a client from refusing to produce relevant non-privileged documents or to answer factual questions, simply because the client discussed the documents or facts with counsel.
[125] However, the above principles do not permit a party to gain access to public or pre-existing documents in the lawyer’s files. Where publicly available documents are contained within a lawyer’s file (which has been compiled by the lawyer in exercise of his or her knowledge and skill for the purpose of providing legal advice), and their disclosure would tend to reveal the lawyer’s legal advice, the documents are solicitor-client privileged: Landry, at para. 14.
[126] Documents provided by a client to a lawyer for the purpose of obtaining legal advice are privileged. The plaintiffs are not entitled to know what GLGI conveyed to GLGI Counsel in order to obtain their advice. In Chambre des notaires, the Supreme Court of Canada rejected an earlier approach which differentiated between “fact” and “communication” in favour of a presumption that “all communications between client and lawyer and the information they shared would be considered prima facie confidential in nature”: at para. 40 (see also Foster Wheeler, at para. 42).
[127] “Neutral” facts and “pre-existing documents” may be compellable from other parties to this litigation, including from the Gift Program Defendants. However, just because information given to a solicitor may be compellable from a client or others does not mean that it is compellable from the lawyer: British Columbia (Minister of Environment, Lands and Parks) v. British Columbia (Information and Privacy Commissioner), 1995 CanLII 634 (B.C. S.C.), 16 B.C.L.R. (3d) 64, at para. 68.
[128] As held by the Divisional Court in Ontario (Freedom of Information & Protection of Privacy Co-Ordinator, Ministry of Finance) v. Ontario (Assistant Information & Privacy Commission), 1997 CarswellOnt 831, O.J. No. 1465 (Ont. Div. Ct.), at para. 16:
The rules of discovery in civil actions and disclosure in criminal and quasi-criminal matters requiring the disclosure of relevant facts do not limit the substantive scope of solicitor-client privilege protected by the Act. Those rules merely provide that where there is a legal obligation to disclose facts, one cannot avoid that obligation on the basis that the facts were given to legal counsel. The distinction is an important one: a client can be asked to disclose facts relevant to a proceeding but that is not the same as forcing the client to divulge what he or she told legal counsel.
[129] The sanctity of the lawyer’s file is of utmost importance to the solicitor-client relationship. The documents a client chooses to deliver to counsel are privileged, regardless of whether the documents themselves, outside the lawyer’s client file, are public or pre-existing. The legal research, commentary, or websites considered by counsel are privileged, regardless of their public availability. The court in Archean Energy summarized the law, at para. 5:
There is little doubt about the nature of a solicitor client privilege. It applies to all direct communication between client and solicitor relating to the provision of legal advice. It also applies to the solicitors’ work product and to his brief gathered for the purpose of giving legal advice. The principle is well stated by the Supreme Court of Canada in [Descôteaux, at pp. 892-3]:
In summary, a lawyer’s client is entitled to have all communications made with a view to obtaining legal advice kept confidential. Whether communications are made to the lawyer himself or to employees and whether they deal with matters of an administrative nature such as financial means or with the actual nature of the legal problem, all information which a person must provide in order to obtain legal advice and which is given in confidence for that purpose enjoys the privileges attached to confidentiality. This confidentiality attaches to all communications made within the framework of the solicitor client relationship, which arises as soon as the potential client takes the first steps and, consequently, even before the formal retainer is established.
(ii) Application of the law to the present case
[130] Based on the above law, the legal research, public documents, pre-existing documents, and any non-privileged attachments became subject to solicitor-client privilege once they were in the Client Files.
[131] By asking GLGI Counsel to produce documents in their files or respond to questions that would reveal the contents of those documents, the plaintiffs seek to compel GLGI Counsel to divulge: (a) what documents or facts GLGI provided to GLGI Counsel for the purpose of obtaining legal advice; and (b) what issues GLGI Counsel believed to be important for the purpose of providing that legal advice. All of this is privileged.
[132] As the plaintiffs acknowledge in their factum, “[e]ach firm received documents from GLGI to consider for the purpose of providing advice”. This is the basis under the case law for maintaining solicitor-client privilege on requests for such documents.
[133] For the above reasons, I find that the plaintiffs cannot gain access to public documents, pre-existing documents, attachments to emails, and facts contained in the Client Files.
Issue 5: Communications or advice concerning the Trust
[134] The plaintiffs submit that to the extent that there are any solicitor-client documents or communications relating to the Trust, they are entitled to production of these documents or communications under the “joint interest principle”, which provides that beneficiaries of a trust have a proprietary interest in communications related to the administration of the trust.
[135] For the purposes of this analysis, I make no finding as to whether either of the GLGI Counsel provided advice to or was retained by the Trustee. That is an issue for trial and there is conflicting evidence on the motion, since GLGI Counsel deny that the Trustee was their client, but both GLGI and the Trustee are deemed to admit the allegations in the Claim that (i) Lewis was the directing mind of both GLGI and the Trustee and (ii) the Trustee’s discretion was improperly delegated to other members of Team GLGI.
[136] Instead, I find that even if the Trustee was a client of GLGI Counsel, the joint interest principle would not apply to order disclosure of any solicitor-client privileged communication related to the Trust.
[137] I review the applicable law and then apply the law to the present case.
(i) The applicable law
[138] The joint interest principle provides that when a lawyer’s advice is given to a trustee or executor for the due administration of a trust or estate, privilege as between the beneficiaries and trustees does not apply because the documents are treated as belonging proprietarily to the beneficiary: Pryden v. Swiss Reinsurance Company, 2010 ONSC 6679, at paras. 65-66; Ontario (Attorney-General) v. Ballard Estate (1994), 1995 CanLII 3509 (ON CA), 26 O.R. (3d) 39 (Ont. Gen. Div.), at para. 2.
[139] In Pryden, the court held, at para. 67, “the joint interest principle applies because the trustee who receives the legal opinion ‘is duty-bound to act in the best interests of the beneficiaries and the legal advice that the trustee sought and obtained from the lawyer was for the purpose of furthering their interests’” (see also Ballard Estate, at para. 9).
[140] If the beneficiaries and trustees do not share an interest in the privileged documents or communication, there cannot be a joint interest: Pryden, at para. 70.
[141] Consequently, if the solicitor-client advice is provided to the trustee as a “plan sponsor” instead of as a “plan administrator”, the privilege does not apply: Pryden, at para. 73.
(ii) Application of the law to the present case
[142] The evidence on the record does not establish that GLGI Counsel gave any advice to the Trustee in its capacity as plan administrator. Rather, any advice was given only for the benefit of GLGI (or possibly the Trustee), who sought legal advice relating to the creation of the Gift Program, whether through the Cassels Opinion or the corporate/commercial legal advice given by the Fasken Defendants. Such advice relates to the role of GLGI or the Trustee as a “plan sponsor”, and not as a “plan administrator”.
[143] Consequently, there is no basis to find that any documents related to the Trust in the GLGI Client Files were provided by or to GLGI or the Trustee in a plan administrator role to manage the Gift Program for the best interests of the plan members.
[144] For the above reasons, I would not order disclosure of documents and communications related to the Trust, based on the current evidentiary record.
Issue 6: Issues arising out of disclosure of privileged information to Team GLGI
[145] The plaintiffs submit that the disclosure of any documents or communications to any person outside the solicitor-client relationship constitutes a waiver of privilege, since, in the plaintiffs’ view, the common interest privilege does not apply. The plaintiffs seek disclosure of all communications and documents from the Client Files related to the non-client disclosure. I do not agree.
[146] I find that the communications in question were shared with Team GLGI (i) as third parties who were contracted or retained by GLGI to assist with the development and administration of the Gift Program and (ii) as third parties with a sufficient common interest in the same transactions. Under either branch, privilege is maintained.
[147] I review each of these two bases for privilege below.
(i) Extension of solicitor-client privilege to third parties
[148] I first review the applicable law and then apply the law to the present case.
(a) The applicable law
[149] In Chrusz, rather than focusing on whether the third party is an “agent” of the client, Doherty J.A. adopted a “functional” approach to determine whether solicitor-client privilege attaches to communications between counsel and third parties who form part of a “channel of communication” with counsel. Doherty J.A. held, at para. 120:
I agree with the Divisional Court that the applicability of client-solicitor privilege to communications involving a third party should not be determined by deciding whether Mr. Bourret is properly described as an agent under the general law of agency. I think that the applicability of client-solicitor privilege to third party communications in circumstances where the third party cannot be described as a channel of communication between the solicitor and client should depend on the true nature of the function that the third party was retained to perform for the client. If the third party’s retainer extends to a function which is essential to the existence or operation of the client-solicitor relationship, then the privilege should cover any communications which are in furtherance of that function and which meet the criteria for client-solicitor privilege.
[150] Courts have therefore extended solicitor-client privilege to third parties who are part of a team working hand-in-hand with counsel as part of counsel’s mandate to provide legal advice.
[151] In Camp Development, the court upheld solicitor-client privilege between a lawyer and a property acquisitions consultant retained by the client to assist with property acquisition. The court held, at para. 63:
[They] worked hand-in-hand, within their respective areas of expertise, on an ongoing basis to advance the interests of the [defendant]. They simply did so under an economic model that caused the [defendant] to outsource part of the project to [the consultant]. All of their activity was undertaken with the knowledge of and at the instance of the [defendant].
[152] In Bank of Montreal v. Tortora, 2010 BCSC 1430, 14 B.C.L.R. (5th) 386, the court extended the solicitor-client relationship to an external consultant who was “intimately involved” in the termination of a bank employee who brought a claim arising from the termination. The court held that the consultant was “essential to the existence of the solicitor-client relationship between [counsel] and the Bank”: at para. 19.
[153] In Trillium Motor World Ltd. v. General Motors of Canada Ltd., 2014 ONSC 1338, General Motors had sought the assistance of various financial and legal advisors in relation to its restructuring. The court extended privilege to “a team of trusted external advisors to provide critical legal, financial and other advice and assistance in connection both with the restructuring, as well as for preparation for a Chapter 11 filing in the US and a CCAA filing in Canada”: at para. 162.
(b) Application of the law to the present case
[154] On the evidence, I find that the members of Team GLGI worked “hand-in-hand” and were “intimately connected” with GLGI Counsel so that GLGI Counsel could provide legal advice.
[155] Each team member applied expertise and performed services to enable the Fasken Defendants to fulfill their legal services mandate. The extension of privilege was formalized through contractually imposed confidentiality duties.
[156] With respect to the legal retainer of the Fasken Defendants, Beach’s evidence was that IDI’s involvement in administering the Gift Program was directly connected to Beach’s mandate from his client. As Beach explained in discovery:
I was retained by GLGI to prepare the corporate commercial documentation relating to the program, some of it, and to the extent corporate commercial documents were prepared by others, to review them and comment on them with a view to ensuring their consistency with the Opinion.
[157] Similarly, Cassels’s evidence supports the extension of privilege to IDI. The evidence demonstrates that Glatt and Penturn functioned as conduits of legal advice between Cassels and GLGI, and held roles essential to the solicitor-client relationship between Cassels and GLGI:
(i) It was Glatt and Penturn who initially approached Cassels to provide an opinion to GLGI with respect to the Gift Program;
(ii) Penturn and Glatt were both part of Team GLGI, described by Norton as “the people with whom [Cassels was] receiving information and instruction” regarding its Opinion on the Gift Program, or “all of the people that Cassels would have been interacting with for the purposes of producing the opinion.” While there were some communications with Lewis, the majority of Cassels’s instructions regarding its Opinion on the Gift Program came from Glatt;
(iii) The IDI services agreement set out the obligation of confidentiality with respect to information received by IDI in its work for GLGI; and
(iv) Beach’s evidence also supports a common agreement to maintain confidentiality over communications exchanged among representatives of GLGI and its professional and other service providers related to the Gift Program.
[158] Based on the above, I conclude that solicitor-client privilege incudes communications and documents exchanged between GLGI Counsel and members of Team GLGI.
(ii) Common interest privilege
[159] Given my conclusion above, it is not necessary to find that common interest privilege would also apply to prevent disclosure of any communications or documents if shared with members of Team GLGI. Nevertheless, I briefly address this issue below as I find that it can also serve as a basis to protect privilege on the facts of the present case.
(a) The applicable law
[160] I summarize the relevant legal principles as follows:
(i) Common interest privilege is established where a lawyer’s communication or advice is shared, on a confidential basis, with a non-client or other “with a sufficient common interest in the same transactions”: Iggillis Holdings Inc. v. Canada (National Revenue), 2018 FCA 51, 420 D.L.R. (4th) 477, at para. 41;
(ii) The concept of common interest privilege originated in the broad context of “parties sharing a goal or seeking a common outcome”: Pritchard, at para. 24;
(iii) “Because the existence of this privilege is so fact-dependent, there can be no hard and fast rules as to when it will or will not arise”: Trillium Motor World, at para. 130;
(iv) Common interest privilege applies when there is an “ongoing interest in completing the transaction which the disclosure was designed to facilitate”. Such an interest may exist through contractual arrangements, including when there is an “ongoing economic relationship”, or when the parties have a “direct pecuniary interest in the transaction”: Maximum Ventures Inc v. De Graaf, 2007 BCCA 510, at paras. 11 and 16; Iggillis Holdings, at paras. 32-34;
(v) Common interest privilege is not a “stand-alone privilege”: Power v. RGMP, 2021 ABQB 877, at para. 20. Communications that are otherwise non-privileged cannot be cloaked in privilege simply because they are exchanged between parties sharing a common interest;
(vi) The underlying solicitor-client privilege attaching to each communication at issue must be established by the party attempting to rely on common interest privilege: Power, at paras. 30-31; and
(vii) The party asserting common interest privilege bears the onus of establishing both the predicate privilege and the common interest intention to maintain confidentiality over the communications: Power, at para. 32.
(b) Application of the law to the present case
[161] I rely on the following to find that common interest privilege applies in the present case:
(i) Solicitor-client privilege applies to the underlying communications between GLGI Counsel and Team GLGI since the evidence is that the communications were for the purpose of providing legal advice;
(ii) Both IDI and JDS contractually agreed to maintain confidentiality over documents and information they received in the course of executing their mandate, which would have included solicitor-client communications from GLGI Counsel; and
(iii) All members of Team GLGI had a common interest in developing, promoting, and administering the Gift Program transaction.
[162] For the above reasons, I find that solicitor-client privilege can be maintained based on common interest privilege.
Issue 7: Privilege attaching to Beach’s work for Escrowagent
[163] The plaintiffs submit that Beach’s work for Escrowagent was conducted in a business capacity and therefore any documents in the Fasken Defendants’ Client File relating to Escrowagent must be produced. I do not agree.
[164] It is settled law that “advice given by lawyers on matters outside the solicitor-client relationship is not protected” and “[n]o solicitor-client privilege attaches to advice on purely business matters even where it is provided by a lawyer”: Campbell, at para. 50.
[165] However, the role of the court is not to parse the activities of a lawyer if the impugned activities are related to the legal mandate of counsel. The court held in Camp Development, at para. 34:
The effort to parse Mr. Hanman’s [counsel’s] role into discrete categories of activity and then suggest they are unrelated to legal services suffers from numerous difficulties. First, it does not recognize the breadth of the retainer that Mr. Hanman has deposed that he and his firm undertook in connection with a major project for the Authority. That role included not only providing advice on expropriation law and procedure but also negotiating with land owners and other necessarily related activities. When viewed in these terms, seeking to segregate or dissect the specific roles and functions undertaken by Mr. Hanman is somewhat artificial. More importantly, it does not detract from the proposition that such activities broadly fell within his retainer and constituted the provision of legal services.
[166] In the present case, the evidence is that Beach was performing work for Escrowagent as part of his legal services within the scope of his engagement with GLGI. Beach’s mandate as corporate/commercial counsel required him to ensure that the administrative tasks performed by Escrowagent were consistent with the Opinion. Preparation of documents delivered to or delivered by Escrowagent were services performed by Beach as part of his legal supervisory role to ensure compliance with the Opinion.
[167] As in Camp Development, the plaintiffs’ attempt to parse Beach’s activity and assert that some of it was not related to legal services is unsustainable. The privilege covering legal advice extends to necessarily related activities, including executing documents. Beach’s work in operationalizing Escrowagent cannot be severed from his work in preparing corporate/commercial documents and monitoring consistency with the Opinion, either in principle or on the record on this motion.
[168] There is no evidence on the present record to contradict Beach’s testimony. The plaintiffs chose to bring this motion before examining any other defendants. In any event, under the settled law any uncertainty as to Beach’s role would be determined in favour of upholding privilege.
[169] For the above reasons, I find that all communications and documents related to Beach’s role at Escrowagent are protected by solicitor-client privilege.
Issue 8: The effect of the Jobin waiver
[170] The plaintiffs submit that “if the other party to the communication (e.g., Jobin) denies any such common interest or confidentiality agreement, it will not apply”. I do not agree.
[171] The issue of whether Jobin can waive privilege over GLGI’s solicitor-client documents in his (or JDS’s) own possession is not before me on this motion. Should Jobin choose to answer questions on such documents, or should the defendants seek an order that Jobin withdraw any documents he has already produced, the court will need to address those issues if they arise.
[172] Even if Jobin could waive privilege over documents in his possession, such a waiver would be limited to Jobin’s documents. Jobin cannot waive privilege on behalf of GLGI with respect to the Client Files in the possession of GLGI Counsel. Only GLGI can do so.
[173] Consequently, I find that any purported waiver of privilege by Jobin does not prevent GLGI Counsel from asserting common interest or solicitor-client privilege.
Order and costs
[174] For the above reasons, I dismiss the motion. If the parties cannot agree on costs, (i) GLGI Counsel shall each deliver written costs submissions of no more than three pages (not including a costs outline) by August 29, 2022; (ii) the plaintiffs shall deliver responding costs submissions of no more than three pages, to each of GLCI Counsel’s costs submissions, by September 12, 2022; and (iii) GLGI Counsel can each deliver reply costs submissions of no more than one page by September 19, 2022.
GLUSTEIN J.
Date: 20220808
COURT FILE NO.: CV-17-583573-00CP
DATE: 20220808
ONTARIO
SUPERIOR COURT OF JUSTICE
LYNN WINTERCORN, PETER NEWMAN, EMILY FLAMMINI and ALEX KEPIC
Plaintiff
AND:
GLOBAL LEARNING GROUP INC., GLOBAL LEARNING TRUST SERVICES INC. as TRUSTEE OF GLOBAL LEARNING TRUST (2004), ROBERT LEWIS, IDI STRATEGIES INC., JDS CORPORATION, ESCROWAGENT INC., JAMES PENTURN, RICHARD E. GLATT, DENIS JOBIN, ALLAN BEACH, MORRIS KEPES & WINTERS LLP, FASKEN MARTINEAU DUMOULIN LLP, CASSELS BROCK & BLACKWELL LLP, WISE, BLACKMAN LLP, and EVANS & EVANS INC.
Defendants
REASONS FOR DECISION
Glustein J.
Released: August 8, 2022
[^1]: Cassels prepared a brief update to the Opinion in 2005, which was also provided to GLGI. However, since it was the Opinion that was disclosed by GLGI, the privilege issues in this case focus on the Opinion and not on the update.