COURT FILE NO.: CV-20-900
DATE: 2023/06/16
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARTINO DENTE, RICCARDO DENTE, THE MARTINO PETER DENTE FAMILY TRUST, THE RICCARDO MARTINO DENTE FAMILY TRUST and OVERLOOK CAPITAL INC. Plaintiffs
– and –
DELTA PLUS GROUP, ONTARIO GLOVE & SAFETY INC. and DEGIL SAFETY PRODUCTS (1989) INC.
Defendants
AND BETWEEN:
DELTA PLUS GROUP, ONTARIO GLOVE & SAFETY INC. and DEGIL SAFETY PRODUCTS (1989) INC.
Plaintiffs by Counterclaim
– and –
NOVEMBER RIDGE CAPITAL INC., MPDEN CONSULTING INC. and
OVERLOOK HOLDINGS INC.
Defendants to the Counterclaim
The Honourable Justice C.D. Braid
Jamie Spotswood, Jordan Dunlop and Camille Beaudoin, Counsel for the Plaintiffs/Defendants by Counterclaim
Sean Sullivan, Jeramie Gallichan and Erica Johnston, Counsel for the Defendants/Plaintiffs by Counterclaim
HEARD: April 4, September 1, December 22 and 23, 2022;
January 16 and 31, 2023;
and written submissions
REASONS ON PRIVILEGE MOTION AND RELATED LEAVE MOTION
I. OVERVIEW
[1] Martino Dente and his son, Riccardo Dente, (“the Dentes”) are the former directors of Degil Safety Products (1989) Inc. (“Degil”) and Ontario Glove & Safety Inc. (“OGS”). Martino and Riccardo sold their shares in Degil and OGS, which they owned through several companies and trusts, to Delta Plus Group (“Delta”) through a Share Purchase Agreement.
[2] The Dentes entered into consulting agreements to continue working with the businesses after the transaction closed, in order to assist with the transition of the new ownership. Before the consulting agreements came to end, the Dentes were terminated or resigned. There were various disputes regarding their services, how the companies were being run, and the earnout owed to the Dentes under the consulting agreements.
[3] Two years after the sale, the Dentes sued Delta, Degil and OGS. The defendants counterclaimed. The action involves eleven parties in a complex commercial dispute regarding the Share Purchase Agreement (“SPA”), the consulting agreements, and events related to those agreements.
[4] The Dentes retained John Murray at Giffen to represent their interests in negotiating and preparing the SPA, and as litigation counsel at the outset of this litigation. The parties disagree whether Mr. Murray also represented Degil and OGS during the sale.
[5] Mr. Murray also provided legal advice to Martino and Riccardo Dente individually, from 2010 onward, regarding legal matters unrelated to the SPA, including the creation of family trusts, estate planning, wills, family matters, employment matters and other personal matters. Prior to the SPA, Giffen had also acted for the Dentes regarding Degil and OGS.
[6] During electronic document review for productions, counsel for the defendants identified 387 documents which may contain solicitor-client communications between the plaintiffs and John Murray or Cynthia Davis (both counsel at Giffen). The defendants segregated the documents, and neither party has reviewed the documents. The parties developed a protocol and retained neutral counsel to review the documents.
[7] The plaintiffs have brought a motion seeking a declaration that these communications are subject to solicitor-client privilege. Prior to that motion being argued, the plaintiffs sought leave to file a new, supplementary affidavit.
[8] In this ruling, I shall first address the plaintiffs’ motion for leave to file a new affidavit after cross-examinations have taken place (“motion for leave to file new affidavit”). After that, I shall address the plaintiffs’ motion to determine whether the documents in the hands of the defendants are protected by solicitor-client privilege (“privilege motion”).
[9] For the reasons set out below, I grant leave to the plaintiffs to file the new affidavit. Upon review of the entirety of the evidence before me, I find that a reasonable person would conclude that Mr. Murray did not represent OGS and Degil (the companies that were being sold to Delta) during the negotiation of the SPA. There was no joint solicitor-client privilege shared between the Dentes and OGS/Degil, and therefore there was no joint privilege to be passed on to Delta when it purchased OGS and Degil. As a result, some of the documents in the possession of Delta are protected by solicitor-client privilege.
II. MOTION FOR LEAVE TO FILE NEW AFFIDAVIT
[10] In the privilege motion, the court must determine whether Mr. Murray represented Degil and OGS during the sale of those companies.
[11] The plaintiffs have previously filed affidavits of Martino Dente, Riccardo Dente and John Murray. In those affidavits, Mr. Murray and the Dentes state that Giffen did not represent Degil and OGS. Materials were filed and cross-examinations took place over four days.
[12] After cross-examinations and shortly before the return date of the privilege motion, the plaintiffs brought a motion for leave to serve and file a supplementary affidavit pursuant to Rule 39.02(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”). The plaintiffs seek leave to file a new affidavit of Martino Dente, sworn January 20, 2022 (“the new affidavit”). The defendants oppose the admission of the new affidavit, stating that it does not meet the threshold for a new affidavit to be admitted after cross-examination has been completed.
Test for Admission of New Evidence After Cross-Examinations
[13] A party who has cross-examined on an affidavit delivered by an adverse party shall not subsequently deliver an affidavit without leave or consent, and the court shall grant leave, on such terms as are just, where it is satisfied that the party ought to be permitted to respond to any matter raised on the cross-examination with evidence in the form of an affidavit: Rule 39.02(2) of the Rules.
[14] The court must consider the following factors in determining whether it is just to grant leave to file a new affidavit after cross-examinations have taken place:
A. Is the evidence relevant?
B. Does the evidence respond to a matter raised on cross-examination, although not necessarily raised for the first time?
C. Would granting leave cause non-compensable prejudice that could not be addressed by imposing costs/terms/an adjournment?
D. Has the moving party provided an adequate explanation why the evidence was not filed earlier?
See 1944949 Ontario Inc. (c.o.b. OMG ON THE PARK) v. 2513000 Ontario Ltd., 2019 ONCA 628, at para. 33.
[15] The court must take a flexible, contextual approach in assessing these criteria, having regard to the overriding principle in Rule 1.04 that the rules are to be interpreted liberally to ensure a just and timely resolution of the dispute. All factors should be weighed and no one criterion is determinative. Even where these factors are not met, the court has residual discretion under Rule 1.04 to permit the evidence if it is in the interests of justice to do so: 1944949 Ontario Inc. at para. 34; DK Manufacturing Group Ltd. (c.o.b. D.K.M.G.) v. Co-Operators General Insurance Co., 2020 ONSC 1259, at para. 11.
[16] The court should avoid an overly rigid interpretation of Rule 39.02, which can lead to unfairness by punishing a litigant for an oversight of counsel. The flexible, contextual approach is to be preferred: DK Manufacturing Group Ltd., at para. 11; Mars Canada Inc. v. Bemco Cash and Carry Inc., 2015 ONSC 8078, at para. 10; Nexim Healthcare Consultants Inc. v. Yacoob, 2018 ONSC 91, at para. 9.
A. Is the Evidence Relevant?
[17] The plaintiffs state that the new affidavit is in response to the assertions made by the defendants in their factum, which states:
Murray used a general matters file that he had for Degil to bill for his services on the transaction. The accounts were addressed to Martino as President of Degil. The accounts were paid by Degil with cheques signed by Martino.
[18] The plaintiffs state that this paragraph contains assertions not previously made or supported by the evidence on the motion, and that are incorrect. The defendants deny that the factum contains new assertions.
[19] The new affidavit contains an invoice from Giffen after the sale of OGS and Degil addressed to the Martino and Ricardo Dente family trusts. The invoice relates to the sale of Degil shares to Delta Plus Group, which is the share transaction that gives rise to this litigation. The defendants rely on the invoices addressed to Degil as indicia of a solicitor-client relationship. However, the plaintiffs submit that this additional invoice demonstrates that Degil was not the only entity invoiced.
[20] I am satisfied that the new affidavit contains evidence that is relevant to the solicitor-client relationship. In determining who was engaged in a solicitor-client relationship, one of the factors to be considered is whether the lawyer rendered a bill and who paid it.
B. Does the Evidence Respond to a Matter Raised on Cross-Examination?
[21] The defendants argue that the new affidavit does not respond to a matter raised on cross-examination because it arose as a result of something that the defendants put in their factum. On the other hand, the plaintiffs submit that it would be an overly narrow interpretation of the rule to say that Rule 39.02 does not apply to this situation.
[22] Leave has been denied in other cases when a supplementary affidavit responds to a legal argument raised by the defendants, rather than being responsive to the cross-examinations: Walsh Construction Company Canada v. Toronto Transit Commission, 2019 ONSC 7041, at para. 21; Tribar Industries Inc. v. KPMG LLP, 2011 ONSC 1699, at para. 19; Powers v. Tufman, 2017 ONSC 7210, at para. 18.
[23] However, the circumstances of this case call out for a flexible approach to the application of Rule 39.02. John Murray has maintained his position that he did not act as counsel to the target entities during the sale transaction. This position is supported by evidence from Martino and Riccardo Dente.
[24] The defendants have provided two invoices dated March 31, 2018 and August 31, 2018, both of which were addressed to Degil and marked to the attention of Martino Dente, President. The defendants ask the court to infer from the invoices that Mr. Murray represented Degil during the sale transaction.
[25] Although technically the issue did not arise during cross-examination, it was the absence of cross-examination that requires further evidence to be put before the court. The defendants ask the court to draw an inference that was not specifically put to the witness during cross-examination. Without the new affidavit, the court would be deprived of information that might show the inference to be unfounded and thus compromise the accuracy of the ruling on the important issue of solicitor-client privilege.
[26] These considerations weigh in favour of admission of the new affidavit.
C. Would Granting Leave Cause Non-Compensable Prejudice?
[27] I am satisfied that the defendants would not suffer any non-compensable prejudice if the new affidavit is admitted. To avoid any further delays, the parties have already conducted further cross-examinations related to the new affidavit. This is not a situation where there could be a back and forth of further affidavits; instead, the new affidavit addresses a discrete issue.
[28] Importantly, the defendants submit that the new affidavit is of marginal relevance,and at best, it supports the proposition that not all invoices for the share purchase transaction were paid by Degil, refuting a position that the defendants did not take in the first place.
[29] In light of the fact that cross-examinations have already taken place on the new affidavit and the defendants’ position that the new affidavit is of minimal relevance, I find that there would be no non-compensable prejudice caused by its admission.
D. Has The Moving Party Provided an Adequate Explanation Why the Evidence Was Not Filed Earlier?
[30] Martino Dente had the new invoice prior to his cross-examination. This invoice is a compilation of three other invoices, including one invoice addressed to Degil only and a second one addressed to Degil and OGS.
[31] Martino states that he read the defence factum and that caused him to locate and produce the additional invoice that was not addressed to or paid by Degil. I accept that the plaintiffs did not anticipate that the defendants would ask the court to draw the inference that they now seek.
Conclusion On Motion for Leave to File New Affidavit
[32] I have considered the principles of Rule 39.02(2), and in particular, the guiding principle in rule 1.04 requiring a just and fair resolution on the merits. A flexible, contextual approach should be taken. I am satisfied that it is in the interests of justice to permit the plaintiffs to file the new affidavit.
[33] The court therefore grants leave to the plaintiffs to serve and file the new affidavit of Martino Dente, sworn January 20, 2022.
III. THE PRIVILEGE MOTION
[34] As mentioned above, during electronic document review for productions, counsel for the defendants identified 387 documents which may contain solicitor-client communications between the plaintiffs and John Murray or Cynthia Davis, both counsel at Giffen.
[35] The plaintiffs have brought a motion seeking a declaration that the communications with their lawyers are subject to solicitor-client privilege. They also seek other related relief. The following issues arise on the privilege motion:
A. What is the review process when potentially privileged documents are in the possession of the other party?
B. Did Giffen represent OGS and Degil in negotiating the SPA?
C. Is Delta the successor-in-rights to solicitor-client communications that existed prior to the SPA closing?
D. Do the Dentes have solicitor-client privilege over communications on the defendants’ email servers?
E. Does solicitor-client privilege exist with respect to the subject documents?
A. What is the Review Process When Potentially Privileged Documents Are in the Possession of the Other Party?
[36] Solicitor-client privilege is fundamental to the proper functioning of our legal system. The privilege ensures that clients are represented effectively. Without the assurance of confidentiality, people cannot be expected to speak honestly and candidly with their lawyers, which compromises the quality of the legal advice they receive: Alberta (Information and Privacy Commissioner) v. University of Calgary, 2016 SCC 53, at para. 20 and 34; Blank v. Canada (Department of Justice), 2006 SCC 39, at 330; R. v. McClure, 2001 SCC 14, at paras. 5, 35.
[37] Solicitor-client privilege is almost absolute. It may be set aside only in very rare and unusual circumstances and should not be interfered with unless absolutely necessary: Alberta (Information and Privacy Commissioner), at paras. 20, 34; Blank, at 330; R. v. McClure, 2001 SCC 14, at paras. 5, 35.
[38] When a lawyer is advised that privileged documents were produced inadvertently, the lawyer must promptly return the material uncopied and, if possible, unread. If there is any issue as to whether privilege is properly asserted, the receiving counsel must seal the documents and any notes made in respect of the documents, and seek further direction from the court: Chan v. Dynasty Executive Suites Ltd., 2006 CanLII 23950 (Ont. Gen. Div.), at para. 74.
[39] The party seeking to assert privilege may have to bring a motion for the return of the documents. Copies of the documents in question should be filed with the court in a sealed envelope to be opened and reviewed by the judge hearing the motion: Calgary (Police Service) v. Alberta (Information and Privacy Commissioner), 2018 ABCA 114, 16 C.P.C. (8th) 265, at para. 3.
[40] The party opposing such a motion should cease any review or analysis of the documents in dispute until after the motion is heard: Celanese Canada Inc. v. Murray Demolition Corp., 2006 SCC 36, [2006] 2 SCR 189, at para. 59.
[41] In this case, the parties agreed on a protocol and engaged the services of a neutral counsel, Gordon McGuire, to review the potentially privileged documents. Mr. McGuire provided copies of the contested documents to the court under seal. The documents were divided into categories in the manner that Mr. McGuire has classified the documents during his review.
[42] The documents were comprised primarily of emails, attachments, and calendar invitations. Of the 387 documents that were reviewed, 89 were categorized as privileged and 46 were categorized as potentially privileged.
[43] The plaintiffs’ motion seeks to protect the documents identified by Mr. McGuire as privileged or potentially privileged. I shall refer to the 135 documents as the “subject documents”.
B. Did Giffen Represent OGS and Degil in Negotiating the SPA?
[44] The key issue on the privilege motion is whether Giffen represented OGS and Degil in negotiating and executing the SPA. The answer to this question significantly impacts the issue of who may assert solicitor-client privilege. If Giffen represented OGS and Degil during the negotiation of the SPA, there is a joint solicitor-client privilege over the subject documents that is shared by the Dentes and Delta.
[45] When two or more persons jointly consult a solicitor, their confidential communications with the solicitor are privileged against the outside world. However, as between those persons, each party may demand disclosure of the communications and the privilege is inapplicable: R. v. Dunbar (1982), 1982 CanLII 3324 (ON CA), 138 D.L.R. (3d) 221 (Ont. C.A.), at para. 56.
[46] Whether a solicitor-client relationship exists is a fact-driven and multifaceted analysis. The court must take a holistic approach, considering the evidence in its totality: Trillium Motor World Ltd. v. General Motors of Canada Limited, 2015 ONSC 3824, at para. 41.
[47] In determining whether a reasonable person would conclude that a lawyer was acting for a party, the court must consider whether the following indicia are present:
i. a contract or retainer;
ii. a file opened by the lawyer;
iii. meetings between the lawyer and the party;
iv. correspondence between the lawyer and the party;
v. a bill rendered by the lawyer to the party;
vi. a bill paid by the party;
vii. instructions given by the party to the lawyer;
viii. the lawyer acting on the instructions given;
ix. statements made by the lawyer that the lawyer is acting for the party;
x. reasonable expectation by the party about the lawyer's role;
xi. legal advice given; and
xii. any legal documents created for the party.
See Hamm v. Baker, 2018 ONSC 2606, at para. 54; Jeffers v. Calico Compression Systems, 2002 ABQB 72, at para. 411-13.
[48] Not all of the indicia listed in the above paragraph need to be present, and the list is non-exhaustive. The question is whether a reasonable person in the position of a party with knowledge of all the facts would reasonably believe that the lawyer was acting for a particular party: Jeffers, at para. 8.
[49] In this case, Giffen has acted for the Dentes on personal and business matters, and on occasion acted for OGS and Degil. However, the Dentes state that counsel John Murray was not retained on behalf of Degil or OGS to represent those companies in the transaction, and there was no need to do so. The SPA stated that Giffen acted for the sellers and did not mention legal representation for Degil and OGS, who were named as guarantors to the benefit of the Dentes’ trusts. The sellers were defined as the Martino Trust, the Riccardo Trust, and Overlook Capital.
[50] John Murray states the scope of his engagement for the transaction was to advise the Dentes, as principals and/or trustees of the sellers, on the sale of their shares in OGS and Degil, and the negotiations and preparation of the SPA. Early in the transaction, Mr. Murray sent an email to Delta’s counsel stating that he was acting for the sellers.
[51] Mr. Murray states that Giffen did not act for OGS or Degil in the transaction, and that he could not have represented both the sellers and guarantors in the SPA. The guarantors would be liable to pay an earnout to the sellers if the buyer did not pay it. This creates a potential adversity of interest between the guarantors and the sellers, which prevents a joint retainer.
[52] Giffen did not have a written retainer with OGS, Degil or the Dentes for the SPA transaction. Invoices for the SPA legal work were sent to the Degil address using a Degil general matters file, addressed to Martino as president of Degil. Prior to the SPA, invoices were paid by Degil using cheques signed by Martino. After the SPA, Martino paid the invoices. The Dentes state that the Giffen invoices were addressed to Martino at Degil’s address because that was their place of business, not because Degil was Giffen’s client. They further state that the work was on behalf of the Dentes as shareholders of the target entities only.
[53] Thomas Hunter, counsel for Delta during the transaction, believed that Mr. Murray was acting for OGS and Degil during the transaction. He states that, in his experience, all signatories to a SPA must be represented by legal counsel. However, Mr. Hunter acknowledged that Mr. Murray never told him that Giffen represented OGS or Degil.
[54] I find that Giffen did not represent OGS and Degil during the negotiation of the SPA. Mr. Murray advised Mr. Hunter that Giffen was acting for the sellers. OGS and Degil were not the sellers. Mr. Murray’s evidence is bolstered by the evidence of the Dentes, who also take the position that Giffen only represented the sellers.
[55] Mr. Hunter’s stated belief and experience regarding legal representation during share purchases does not assist me in determining what actually happened in this case. Mr. Hunter and the defendants have no firsthand knowledge as to why the invoices were addressed to Degil. The SPA contemplates circumstances in which a party to the transaction may not be represented by a lawyer.
[56] I do not accept Mr. Hunter’s opinion that a company that is being sold must be represented in every transaction, especially when the company’s interests do not fully align with the seller’s interests.
[57] The manner in which the invoices were addressed to Martino at Degil is explained by Martino, and does not contradict the evidence of Mr. Murray.
[58] There is insufficient evidence that Giffen represented OGS and Degil for the sale transaction.
C. Is Delta the Successor-In-Rights to Solicitor-Client Communications that Existed Prior to the SPA Closing?
[59] While privilege continues in the situation when a director of a company resigns and becomes adverse in interest to the company, it belongs to the current management and directors of the company and not to the former director: Wintercorn v. Global Learning Group Inc., 2022 ONSC 4576, at para. 45, citing Ultra Information Systems Canada Inc. v. Pushor Mitchell LLP, 2008 BCSC 974; Gardner v. Viridis Energy Inc., 2014 BCSC 204.
[60] Solicitor-client privilege that is held by an original owner passes to a successor-in-title to the business, and is then held by the subsequent owner: Upm-Kymmene Corp. v. Repap Enterprises Inc., [2001] O.J. No. 4220 (S.C.), at para.10.
[61] Generally, after the sale of a corporation, all documents and materials the corporation owns remains with the corporation. When an owner of a company shares the services of counsel with their company prior to closing, there is a joint privilege. The owner can insert a clause in the share purchase agreement that would leave the former owner in sole possession of the privilege upon closing. When they fail to do so, the prior owner cannot claim privilege over documents as against the new owner, who now owns the documents: NEP Canada ULC v. MEC OP LLC, 2013 ABQB 540, at paras. 36, 44.
[62] In this case, the SPA states that Delta became the owner of all books and records of OGS and Degil upon closing. The SPA defines books and records to include only the records related to the business of OGS and Degil. Delta would only be the successor in rights to solicitor-client communications if there was a jointly held privilege that was previously shared by OGS, Degil and the Dentes.
[63] I have concluded that Giffen did not represent OGS and Degil for the SPA. There was no joint privilege over communications with respect to the SPA, and Delta was not the successor in title to these communications. There is a joint privilege over some documents that existed prior to the SPA, as noted in Appendix B to this ruling.
D. Do the Dentes Have Solicitor-client Privilege Over Communications on the Defendants’ Email Servers?
[64] The defendants submit that the Dentes waived privilege over their solicitor-client communications when they continued to use Degil’s system after the closing. I do not accept this submission for the following reasons:
- Any Privileged Documents Left Behind are Inadvertent Disclosure
[65] Martino Dente states that, after the sale transaction closed, he took steps to delete and remove all privileged and confidential documents from the OGS and Degil electronic systems. Riccardo subsequently confirmed that no privileged documents remained on the OGS and Delta systems by the time their systems were integrated with Delta in November 2019. Martino and Riccardo believed that all privileged documents had been deleted from the electronic systems, and stated that they did not intend to leave privileged documents behind.
[66] Although the defendants submit that the court should not accept the Dentes’ bare assertions to prove that they deleted documents, it would be impossible for the Dentes to provide additional evidence to prove their statements. In addition, the fact that Delta did not make any special efforts to retrieve deleted emails or data also does not assist in the analysis. The Dentes’ assertion that they deleted confidential data is not contradicted by the evidence before me.
[67] I find that any privileged documents on Degil’s server were left due to inadvertence. The privileged documents that remained on Delta’s system constitute inadvertent disclosure.
- The Dentes’ Use of the Defendants’ Email Server Does Not Lead to Loss of Privilege
[68] After the sale, the Dentes continued to work for Degil as consultants and continued to use Degil’s email system. The Dentes provided evidence that they subjectively believed that they deleted all personal and confidential emails from the Degil server before they left.
[69] The defendants submit that the Dentes waived privilege by communicating through Degil email addresses which they sold to Delta, and continuing to use them after the sale. This submission is premised on the position that there was an implied waiver of privilege.
[70] Implied waiver requires some act by the person which permits the court to conclude that the person, by his acts or statements, intended to waive any privilege or confidentiality of the communication.
[71] In the lawyer-client relationship, the client is the privilege holder, and only they can waive their right – expressly or implicitly – to solicitor-client privilege. Waiver requires the client’s informed consent: 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. 39; Philip Services Corp v. Ontario Securities Commission (2005), 2005 CanLII 30328 (ON SCDC), 77 O.R. (3d) 209 (Div. Ct.), at paras. 66-68.
[72] Solicitor-client privilege should not be lightly interfered with and should be deemed waived only in the clearest of cases in order to maintain public confidence in a client's right to communicate in confidence with his solicitor. Any conflict with respect to waiving this privilege should be resolved in favour of maintaining the confidentiality: SNC-Lavalin Engineers & Constructors Inc. v. Citadel General Assurance Co. (2003), 2003 CanLII 64289 (ON SC), 63 O.R. (3d) 226 (S.C.), at para. 51; Wintercorn, at para. 45, citing R. v. Unnamed Respondents, 2008 BCSC 815, at para. 28.
[73] Inadvertent disclosure does not waive privilege and the court may exercise discretion in favour of maintaining privilege, notwithstanding the disclosure: Mizzi v. Cavanagh, 2021 ONSC 1594, at paras. 32-33.
[74] In determining whether inadvertent disclosure amounts to waiver of privilege, the court will consider whether:
• the disclosure was actually inadvertent and excusable;
• an immediate attempt was made to retrieve the documents; and
• preserving privilege would cause unfairness to the receiving party.
See Chan v. Dynasty Executive Suites Ltd., at para. 31.
[75] The use of an employer’s computer system to send emails does not create an implied waiver, as demonstrated by the following decisions:
i. In Leroux v. Proex Inc., 2022 ONSC 319, the plaintiff continued to act as CEO for his company after it was sold. He used the company email to communicate with his lawyer. The court held that the plaintiff expected that these emails would be confidential, and that this expectation was objectively reasonable. The plaintiff used the company email for personal emails without complaint from the company; no one at the company would have authority to access and read his emails without his consent; and he had a reasonable expectation of privacy with respect to this email address: at paras. 23-30.
ii. In Milicevic v. T. Smith Engineering Inc., 2016 ONSC 2166, the plaintiffs exchanged communications with legal counsel using their work computers, which flowed through the employer’s server. The court held that the communications related to legal advice were privileged and that there was no waiver of that privilege. TSEI did not have a policy that would allow it to access the personal communications of the employees on its servers, or that the use of the TSEI computers by the employees would result in the employees losing any confidentiality/privilege that the sender/recipient might have had in the communications. It would be unreasonable to expect that a person explicitly or implicitly waived privilege over communications simply because a person’s communication was made using an electronic device which is accessible by a third party. The employer's retrieval of an electronic copy of the communication on the company computers/servers without the consent of the employee would not, by itself, amount to an implied waiver of privilege: at paras. 202-206.
iii. In Martin & Profile Legal Services v. Cordiano, 2011 ONSC 5724, the parties were shareholders in a company. They decided to sever their relationship and entered into a Share Purchase Agreement. Prior to completion of the transaction, the defendant retained a third party to wipe his company laptop clean, which he had previously used for business and for some personal use. He then returned the laptop. The plaintiff discovered two emails between the defendant and his lawyer respecting plans to set up a competing enterprise. The court held that the emails were privileged, and that privilege was not lost or waived by the defendant. Mere loss of possession of privileged solicitor client communications due to inadvertent or negligent disclosure does not automatically waive or terminate the privilege: at paras. 36-44.
[76] In the case at bar, the Dentes continued to use Degil’s email system while they worked as consultants. I have not been provided with evidence of any written or verbal policy that would permit the defendants to access personal communications on Degil’s servers; or a policy stating that use of the Degil servers would result in the Dentes losing any privilege that they might have in the communications; or that the defendants warned the Dentes or complained about them using the Degil email for non-work communications. I do not accept that the alleged property interest overrides solicitor-client privilege.
[77] The Dentes subjectively believed that they deleted all personal and confidential emails from the Degil server before they left. The precautions taken by the Dentes were reasonable, and demonstrate that they intended to retain exclusive rights to privilege concerning these communications. Counsel for the Dentes made immediate attempts to retrieve the documents once they learned of the inadvertent disclosure. The Dentes maintained a reasonable expectation of privacy in those emails.
[78] The Dentes did not explicitly or implicitly waive privilege over communications simply because they sent their communications through the Degil server. Communications on the defendants’ email servers are protected by solicitor-client privilege.
E. Does Solicitor-Client Privilege Exist with Respect to the Subject Documents?
[79] The court must be satisfied, on a balance of probabilities, that the documents are protected by solicitor-client privilege. The court must make a positive finding that a document is not solicitor-client privileged before disclosure is ordered: Bie Health Products v. The Attorney General of Canada et al., 2015 ONSC 3418, at paras. 16-19.
[80] A communication will fall under the protected scope of solicitor-client privilege if:
the communication is between solicitor and client;
the communication entails the seeking or giving of legal advice; and
the communication is intended to be confidential by the client and their lawyer.
See Pritchard v. Ontario (Human Rights Commission), 2004 SCC 31, [2004] 1 S.C.R. 809, at para. 15, citing Solosky v. The Queen, 1979 CanLII 9 (SCC), [1980] 1 S.C.R. 821, at p. 837.
[81] In the case before the court, neutral counsel produced documents to the court in tabbed bound briefs, which have been marked as sealed exhibits. Exhibits 1A, 1B and 1C are bound briefs of documents that neutral counsel identified as privileged. Exhibit 2 is the bound brief of documents that neutral counsel identified as potentially privileged.
[82] Some of the tabs contain the primary communication and others contain the attachments. Where the primary communication is subject to solicitor-client privilege, so too are the attachments.
[83] I have reviewed the documents in Exhibits 1A, B and C, and confirm that they are all protected by solicitor-client privilege. Many of these documents are completely unrelated to the SPA, Degil or OGS. Appendix A to this decision is a chart that reflects my review of the documents in Exhibits 1A, B and C.
[84] In addition, Appendix B to this decision reflects my review of the documents in Exhibit 2. My notations reflect whether or not the documents are protected by solicitor-client privilege.
[85] Exhibits 3A-O are bound briefs of documents that neutral counsel identified as not being privileged. By agreement of the parties, the documents in Exhibits 3A-O are no longer subject to this privilege application and have been unsealed.
[86] In my review of the potentially privileged documents in Exhibit 2, there were four categories of communications that I asked counsel to address in written submissions. Here are my findings with respect to those categories of documents:
a) Draft Emails
[87] I asked counsel to provide written submissions to address whether draft emails were protected by solicitor-client privilege. Upon further review of the documents in question, I have determined that, although they look different than the usual sent email, the documents actually contain a “sent” date and time. I cannot be certain that these emails were not sent; therefore, I have considered them in the same manner as the other emails.
b) Outlook Calendar Meeting Invitations
[88] The parties agree that an invitation or a meeting reminder is not privileged. It is evidence of the fact that a person and their counsel intended to meet on a specific date, which is not privileged information. However, it could be privileged if it contains more information for the purpose of obtaining or providing legal advice.
[89] In this case, there were four calendar invitations and none of them have attachments or contain confidential information. Therefore, none of them are privileged.
c) Communications Between Counsel and the Dentes Together With BMO
[90] I directed counsel to provide submissions regarding whether there may be solicitor-client privilege with respect to correspondence between the lawyer, client and the Bank of Montreal (“BMO”). I have determined that the correspondence involving BMO involves communications that belong to OGS and/or Degil, which means that Delta shares the privilege with the Dentes.
d) Communications Between Counsel and the Dentes Together With KPMG
[91] I further directed counsel to provide submissions regarding whether there may be solicitor-client privilege with respect to correspondence between the lawyer, client and KPMG. I have determined that some of the communications address KPMG’s role in conducting the transaction and therefore are not privileged.
[92] There are two situations in which communications by a third party to a solicitor will be protected by solicitor-client privilege:
Solicitor-client privilege extends to communications by or to a third party who serves as a line of communication between the client and solicitor. In these cases, the third party simply carries information from the client to the lawyer or the lawyer to the client. It also extends to communications and circumstances where the third party employs an expertise in assembling information provided by the client and in explaining that information to the solicitor.
If a client authorizes a third party to direct a solicitor to act on behalf of the client, or if the client authorizes the third party to seek legal advice from the solicitor on behalf of the client, the third party is performing a function which is central to the client-solicitor relationship. In such circumstances, the third party should be seen as standing in the shoes of the client for the purpose of communications referable to those parts of the third party's retainer.
See General Accident Assurance Co. v. Chrusz (1999), 1999 CanLII 7320 (ON CA), 45 O.R. (3d) 321 ( C.A.), at pp. 353-56.
[93] Each case is to be determined on its own unique facts. When a privileged communication from a solicitor to their client is shared with another person, the court may consider the following factors when determining whether solicitor-client privilege has been waived:
Did the client intend the communication from the solicitor to remain confidential when copied to a third party? Did the client intend to waive the privilege?
Did the client intend that the third party would maintain the document as confidential in his hands?
Was the presence of the third party, or the copying of the communication to the third party, required to advance the client's interests? The standard of what is required to advance the client's interests is not a high one.
Does the person to whom the communication is copied have a common interest with the client? What is the nature of the relationship?
The interest of fairness must be considered in determining whether solicitor-client privilege over a communication has been waived.
Although the onus of establishing solicitor-client privilege is on the party asserting the privilege, the onus of establishing waiver of that privilege is on the party asserting waiver.
See SNC-Lavalin Engineers & Constructors Inc., at para. 54.
[94] In the case at bar, many of these factors weigh in favour of the Dentes maintaining solicitor-client privilege over communications between lawyer and client that also included KPMG. The Dentes clearly intended that the communications with their counsel and KPMG remain confidential. These communications with KPMG were intended to advance the Dentes’ interests.
Conclusions On Privilege Motion
[95] In my review of the documents noted as potentially privileged in Exhibit 2, I find that the following documents are either not privileged or are subject to a joint privilege:
a) Tabs 1-5, 13 and 22-31: OGS and Degil shared a joint privilege with the Dentes over these documents. Delta is the successor in rights to that privilege.
b) Tabs 20-21: These documents have already been disclosed to Delta.
c) Tabs 6-8 and 46: These are calendar invitations only and are not privileged.
IV. ORDERS
[96] For all of these reasons, the court makes the following orders on the privilege motion:
- This court orders and declares that the following documents are subject to solicitor-client privilege held by Martino Dente, Riccardo Dente, the Martino Peter Dente Trust, the Riccardo Martino Dente Trust, Overlook Capital Inc. and their lawyers:
i. All of the documents in Exhibits 1A, 1B and 1C; and
ii. Exhibit 2 tabs 9-12, 14-19 and 32-45.
The court declares that the following documents are not privileged: Exhibit 2 Tabs 1-8, 13, 20-31 and 46, and Exhibit 3:
Once the deadline for appealing the decision has passed with no appeal filed (15 days, pursuant to r. 61.03(1)(b)), or until 30 days after any appeal that is brought is exhausted:
i. Neutral counsel Mr. McGuire shall provide copies of the privileged documents in paragraph 1 to the plaintiffs. Even though these documents were last in the possession of the defendants, they were originally the plaintiffs’ documents. Positions may be taken in this litigation that may impact the privilege that exists in those documents, or the plaintiffs may choose to waive privilege. There is no prejudice to the defendants for the plaintiffs to receive copies. In fact, it may benefit the defendants in the long term.
ii. The defendants and/or their lawyers shall not review or produce the documents in paragraph 1 above, and counsel for the defendants shall destroy any electronic, physical or other copies of these documents retained by them or the defendants.
iii. The defendants may review copies of the documents in paragraph 2 (not privileged) in their possession. If the defendants no longer have those documents in their possession, neutral counsel Mr. McGuire shall provide the defendants with copies of those documents. The defendants shall produce these documents in accordance with their obligations under Rule 30.03 of the Rules.
- If any of the parties require further direction regarding the implementation of this order, they may schedule a case conference before me through the trial co-ordinator.
V. COSTS
[97] The plaintiffs were successful on their request for leave to file the new affidavit. I note that counsel worked cooperatively to schedule cross-examinations on the new affidavit. The plaintiffs had to reattend further cross-examinations and both parties had to prepare additional material. The plaintiffs would ordinarily be entitled to costs of their successful motion; however, the defendants incurred costs because the plaintiffs filed the affidavit late. In the circumstances, each party shall bear their own costs of the motion for leave.
[98] On the privilege motion, there was a mixed result. I therefore order that each party shall bear their own costs of the privilege motion.
VI. FINAL COMMENTS
[99] I wish to recognize counsel’s utmost professionalism in this matter. The behaviour of counsel has been in keeping with the highest standards of the bar. Counsel for the defendants notified the plaintiffs immediately upon discovering potentially privileged documents and ceased their review of those documents. Counsel have taken a practical and respectful approach to the proceedings, and have provided very thorough submissions. I am extremely grateful for counsel’s assistance on what has been a complex and challenging set of motions.
Braid, J.
Released: June 16, 2023
Appendix A - Documents that Neutral Counsel Identified as Privileged (Ex.1A,B,C)
Tab
Doc Date
DocID
Begin Attach (Family ID)
Family Indicator
Judicial Notes
1
10/29/2018
MD00005696
MD00005696
Standalone
2
09/17/2019
MD00007909
MD00007909
Standalone
3
09/16/2019
MD00007941
MD00007941
Standalone
4
09/17/2019
MD00008278
MD00008278
Standalone
5
07/16/2019
MD00008886
MD00008886
Standalone
6
07/24/2019
MD00009012
MD00009012
Standalone
Personal matters - wills
7
03/13/2019
MD00009049
MD00009049
Standalone
8
05/03/2019
MD00009194
MD00009194
Standalone
Personal matters - wills etc.
9
06/05/2019
MD00009499
MD00009499
Parent
Personal matters - wills
10
06/05/2019
MD00009500
MD00009499
Child
11
06/05/2019
MD00009501
MD00009499
Child
12
06/05/2019
MD00009502
MD00009499
Child
13
06/05/2019
MD00009503
MD00009499
Child
14
01/07/2019
MD00009605
MD00009605
Parent
Overlook
15
01/07/2019
MD00009606
MD00009605
Child
16
11/02/2018
MD00009647
MD00009647
Parent
17
11/02/2018
MD00009648
MD00009647
Child
Law Firm Logo
18
11/02/2018
MD00009649
MD00009647
Child
19
11/02/2018
MD00009650
MD00009647
Child
20
11/02/2018
MD00009651
MD00009647
Child
No Document at Tab 20
21
11/02/2018
MD00009652
MD00009647
Child
22
11/02/2018
MD00009653
MD00009647
Child
No Document at Tab 22
23
11/01/2018
MD00009654
MD00009654
Parent
24
11/01/2018
MD00009655
MD00009654
Child
25
11/01/2018
MD00009656
MD00009654
Child
26
10/24/2018
MD00009699
MD00009699
Standalone
27
09/17/2018
MD00010118
MD00010118
Standalone
28
08/22/2019
MD00010156
MD00010156
Parent
Overlook
29
08/22/2019
MD00010157
MD00010156
Child
30
08/22/2019
MD00010158
MD00010156
Child
Law Firm Logo
31
11/01/2018
MD00010272
MD00010272
Parent
32
11/01/2018
MD00010273
MD00010272
Child
33
11/01/2018
MD00010274
MD00010272
Child
34
11/01/2018
MD00010275
MD00010275
Parent
35
11/01/2018
MD00010276
MD00010275
Child
36
11/01/2018
MD00010277
MD00010277
Standalone
37
11/27/2018
MD00010296
MD00010296
Parent
Overlook
38
11/27/2018
MD00010297
MD00010296
Child
39
09/27/2018
MD00010353
MD00010353
Standalone
40
06/27/2018
MD00010441
MD00010441
Standalone
41
09/27/2018
MD00010485
MD00010485
Standalone
42
10/17/2018
MD00010538
MD00010538
Standalone
43
12/10/2018
MD00010585
MD00010585
Standalone
44
09/23/2018
MD00010668
MD00010668
Standalone
45
10/31/2018
MD00010678
MD00010678
Parent
Highlights = prior to SPA
Appendix B - Documents that Neutral Counsel Identified as
Potentially Privileged (Ex. 2)
Tab
Doc Date
DocID
Family ID
Family Ind.
Priv?
Judicial Notes
1
02/11/2018
GH00020665
GH00020665
Parent
N - JT
Degil & OGS Documents
2
02/11/2018
GH00020666
GH00020665
Child
N - JT
3
02/11/2018
GH00022405
GH00022405
Parent
N - JT
Degil & OGS Documents
4
02/11/2018
GH00022406
GH00022405
Child
N - JT
5
02/21/2018
GH00022536
GH00022536
Standalone
N - JT
Degil & OGS Documents
6
08/03/2018
MD00006137
MD00006137
Standalone
N
Calender Invite Only
7
08/01/2017
MD00006264
MD00006264
Standalone
N
Calender Invite Only
8
05/13/2019
MD00006396
MD00006396
Standalone
N
Calender Invite Only
9
07/08/2019
MD00008409
MD00008409
Standalone
Y
Onside, Overlook & personal matters
10
07/05/2019
MD00008699
MD00008699
Standalone
Y
Onside, Overlook & personal matters
11
11/22/2018
MD00009945
MD00009945
Standalone
Y
Overlook, MPDEN & November Ridge
12
12/18/2018
MD00009966
MD00009966
Standalone
Y
Overlook
13
11/01/2018
MD00010271
MD00010271
Standalone
N - JT
Email "Degil Disclosure Schedules"
14
11/27/2018
MD00010298
MD00010298
Parent
Y
Re: Overlook
15
11/27/2018
MD00010299
MD00010298
Child
Y
16
12/11/2018
MD00010578
MD00010578
Standalone
Y
referral to another lawyer
17
10/30/2018
MD00010684
MD00010684
Standalone
Y
Murray to KPMG on behalf of Dentes
18
10/28/2018
MD00010725
MD00010725
Standalone
Y
Rico to Tino w advice from Murray
19
10/26/2018
MD00010767
MD00010767
Standalone
Y
20
10/26/2018
MD00010769
MD00010769
Parent
N - JT
attachment is in Hunter affidavit ex K
21
10/26/2018
MD00010770
MD00010769
Child
N - JT
in Hunter affidavit ex K
22
10/11/2018
MD00010792
MD00010792
Parent
N - JT
R: Degil & OGS
23
10/11/2018
MD00010793
MD00010792
Child
N - JT
Degil
24
10/11/2018
MD00010794
MD00010792
Child
N - JT
Degil
25
10/11/2018
MD00010795
MD00010792
Child
N - JT
Degil
26
10/11/2018
MD00010796
MD00010792
Child
N - JT
Degil
27
10/11/2018
MD00010797
MD00010792
Child
N - JT
Degil
28
10/11/2018
MD00010798
MD00010792
Child
N - JT
Degil
29
10/11/2018
MD00010799
MD00010792
Child
N - JT
OGS
30
10/11/2018
MD00010800
MD00010792
Child
N - JT
OGS
31
10/11/2018
MD00010801
MD00010792
Child
N - JT
Degil
32
07/17/2018
MD00010827
MD00010827
Parent
Y
On Side
33
07/17/2018
MD00010828
MD00010827
Child
Y
34
07/17/2018
MD00010829
MD00010827
Child
Y
35
07/17/2018
MD00010830
MD00010830
Parent
Y
On Side
36
07/17/2018
MD00010831
MD00010830
Child
Y
37
07/17/2018
MD00010832
MD00010830
Child
Y
38
10/31/2018
RD00006851
RD00006851
Parent
Y
Tino to Rico forwarding Giffen email
39
10/31/2018
RD00006852
RD00006851
Child
Y
Law Firm Logo
40
10/31/2018
RD00006853
RD00006851
Child
Y
41
10/31/2018
RD00006854
RD00006851
Child
Y
42
10/31/2018
RD00006855
RD00006851
Child
N/A
No Document at Tab 42
43
10/31/2018
RD00006861
RD00006861
Standalone
Y
Murray to KPMG on behalf of Dentes
44
10/24/2018
RD00006957
RD00006957
Standalone
Y
45
10/30/2018
RD00007551
RD00007551
Standalone
Y
Tino to Rico w message from Murray
46
08/03/2018
RD00007689
RD00007689
Standalone
N
Calender Invite Only
Highlights = prior to SPA
COURT FILE NO.: CV-20-900
DATE: 2023/06/16
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARTINO DENTE, RICCARDO DENTE, THE MARTINO PETER DENTE FAMILY TRUST, THE RICCARDO MARTINO DENTE FAMILY TRUST and OVERLOOK CAPITAL INC.
Plaintiffs/Defendants by Counterclaim
– and –
DELTA PLUS GROUP, ONTARIO GLOVE & SAFETY INC. and DEGIL SAFETY PRODUCTS (1989) INC.
Defendants/Plaintiffs by Counterclaim
AND BETWEEN:
DELTA PLUS GROUP, ONTARIO GLOVE & SAFETY INC. and DEGIL SAFETY PRODUCTS (1989) INC.
Plaintiffs by Counterclaim
– and –
NOVEMBER RIDGE CAPITAL INC., MPDEN CONSULTING INC. and
OVERLOOK HOLDINGS INC.
Defendants to the Counterclaim
REASONS ON PRIVILEGE MOTION AND RELATED LEAVE MOTION
Braid, J.
Released: June 16, 2023