Court File and Parties

Court File No.: CV-22-687586-00A1 Date: 2024-03-01 Superior Court of Justice - Ontario

Re: NAQI AHSAN, KANITA ALAM, and L.F.O.C. GROUP INC., Defendants -and- MINDEN GROSS LLP, TAMARA MARKOVIC and ADAM SALAHUDEEN, Third Parties

Before: FL Myers J

Counsel: R. Bruce Boyden, for the defendants Michael R. Kestenberg, for the third parties

Heard: March 1, 2024

Endorsement

[1] The defendants have commenced a third-party claim against the lawyers for the plaintiffs. The third-party claim seeks a remedy because the lawyers for the plaintiffs allegedly pleaded allegations in the plaintiffs’ statement of claim that are protected by settlement privilege and may not be pleaded or relied upon by the plaintiffs.

[2] The lawyers for the plaintiffs move to strike the Third-Party Claim against them under Rule 21.01 (1) (b) of the Rules of Civil Procedure, RRO 1990 Reg 194.

[3] This is not a novel case or a close call.

[4] There is no cause of action available to a party in litigation that allows him or her to sue the other side’s lawyers for improperly including allegations in a pleading that are protected by settlement privilege. Even if the facts pleaded are true, the common law provide no remedy that can be granted in a lawsuit.

[5] There is no claim for negligence available to the defendants because a lawyer in litigation owes no duty of care to the other side’s client. 9383859 Canada Ltd. v. Saeed, 2020 ONSC 4883, at paras. 32 to 35. Neither is there a right to sue because a lawyer may have violated the Law Society of Ontario Rules of Professional Conduct. The Law Society polices its ethical rules.

[6] It is especially telling that the defendants did not sue the plaintiffs for the alleged wrongdoing – just their lawyers. Suing counsel opposite because one does not like how they litigate is generally found to be an abuse of process. Hedary Hamilton PC v. Dil Muhammad, et al., 2013 ONSC 4938, at paras 22 and 23. I agree with Morgan J. that allowing such lawsuits creates a risk of endless further lawsuits. As each new claim is commenced, the defendant in the new claim can then bring third-party, fourth-party, fifth-party or a subsequent proceeding against the counsel opposite ad infinitum and ad nauseum.

[7] The Third-Party Claim is therefore struck for pleading no reasonable cause of action and as an abuse of process.

[8] That is sufficient to decide the motion. I only go on because the lawyers for the plaintiffs raised the doctrine of absolute privilege and the defendants focused their submissions on the doctrine.

[9] The fear of endless tactical lawsuits among participants to a lawsuit in relation to the conduct of the lawsuit is among the reasons why all participants in litigation are protected by absolute privilege. The case law is abundantly clear that the lawyers for the opposite party cannot be sued for wrongdoing committed within the lawsuit (and in some cases for steps leading to a future lawsuit). The content of the proposed claim is not relevant. By definition, a lawsuit claims that some illegal act has been committed. However, no civil claim is available in any such case. That is why the privilege is said to be absolute.

[10] In Amato v. Welsh, 2013 ONCA 258, the Court of Appeal explained the longstanding rule of absolute privilege as follows:

(2) Doctrine of Absolute Privilege

[34] The nature and scope of the doctrine of absolute privilege lies at the heart of this appeal. That this doctrine is well-established at common law is beyond dispute. This court has repeatedly endorsed the definition of the doctrine set out in Halsbury's Laws of England, vol. 28, 4th ed. (London, U.K.: Butterworths, 1997), at para. 97, which reads:

97. Absolute privilege. - No action lies, whether against judges, counsel, jury, witnesses or parties, for words spoken in the ordinary course of any proceedings before any court or judicial tribunal recognised by law. The evidence of all witnesses or parties speaking with reference to the matter before the court is privileged, whether oral or written, relevant or irrelevant, malicious or not. The privilege extends to documents properly used and regularly prepared for use in the proceedings. Advocates, judges and juries are covered by this privilege. However, a statement will not be protected if it is not uttered for the purposes of judicial proceedings by someone who has a duty to make statements in the course of the proceedings. A separate action for malicious prosecution or the malicious institution or abuse of civil proceedings may lie independently of the law of defamation. [Citations omitted.]

[Emphasis added.]

[11] In Amato, a client sued its own lawyer for breach of fiduciary duty. The breach arose in the course of the lawyer acting in a proceeding for a different client. In essence, one client said that his own lawyer preferred the interests of another client and was in a conflict of interest that amounted to a breach of fiduciary duty.

[12] The Court of Appeal carefully distinguished the facts of that case – involving a client suing its own lawyer – from the ordinary application of the doctrine of absolute privilege. At para. 54 of Amato, the Court wrote:

In this province, the doctrine of absolute privilege has never been treated as a rationale for protecting lawyers from negligence suits by their own clients. In Ontario, lawyers can be sued by their clients for their negligent conduct of both civil and criminal litigation.

[13] The Court held that there was a balancing necessary between a lawyer’s fiduciary duties to her client and the policy of absolute privilege. The outcome of that balancing was not self-evident. That meant that a motion to strike under Rule 21 could not succeed because it was not “plain and obvious” that the lawsuit was doomed to fail.

[14] Mr. Boyden argues the same point here. He submits that the law of settlement privilege is based on public policy designed to protect the integrity of civil litigation. There is no way to say today, with no evidence, that in the circumstances of this case, the policy of one privilege necessarily trumps the other.

[15] Assuming the facts to be true on a motion to strike, as Mr. Kestenberg concedes I must, Mr. Boyden submits this case shows the serious mischief that can arise by allowing counsel opposite to violate settlement privilege. Here, he submits, counsel for the plaintiffs have improperly pleaded a cause of action using privileged facts. He submits that the defendants cannot respond fully to the allegations without themselves violating privilege. Moreover, the pleading may make Mr. Boyden a necessary witness and thereby deprive the defendants of counsel of their choice.

[16] Mr. Boyden submits that the lawyers’ wrongdoing is a serious affront to the fairness and integrity of civil justice.

[17] Even if that is so, it seems to me that the answer does not lie in suing counsel opposite. As noted above, there is no cause of action available to the defendants. Moreover, as long as the impugned allegations remain on the record, the mischief continues. Suing the plaintiff’s lawyers does not undue the harm of caused by the unlawful pleading.

[18] Are the defendants proposing to lose some or all of the plaintiffs’ lawsuit because they cannot respond properly to the illegal pleading and then seek damages from counsel for the plaintiffs for causing them to lose?

[19] Isn’t the better answer to strike the offending passages from the pleading? In that way, the mischief never arises.

[20] Rules 25.11 and 21.01 (1) and (3) of the Rules allow a party to move to strike a pleading that contains improper allegations. They provide the remedy for the alleged affront.

[21] Mr. Boyden submits that putting the burden on the innocent party to bring a motion to strike a pleading allows counsel opposite to violate her duties with impunity. I do not agree. Motions are the mechanism to allow parties to deal with process issues that arise in a proceeding. Moreover, the outcome of a motion can and usually will carry cost consequences under s. 131 of the Court of Justice Act, RSO 1990 c C.43. Barring an unusual exercise of discretion to the contrary, Rule 57.03 requires the judge to fix the costs of a motion right away. The law provides that costs will follow the event in all but unusual circumstances. Moreover, if counsel is found to have seriously departed from appropriate conduct, costs can be ordered against the lawyer personally under Rule 57.07.

[22] The fact that there is no epidemic of pleadings with causes of action based on allegations protected by settlement privilege suggests to me that the current rules of pleading and costs are sufficient to keep the risk of mischief in check. The floodgates to impunity remain closed.

[23] Amato involved a client suing his or her own lawyer for wrongdoing during their fiduciary relationship. It has never been applied to allow a party to sue the lawyers for the opposite party in litigation in response to the content of a pleading. Even if there were a cause of action, this is the paradigm case for the application of the doctrine of absolute privilege.

[24] The fact that settlement privilege is supported by the policy of the law does not distinguish it from any other claim. The laws against defamation, fraud, negligence, and all causes of action are supported by underlying public policy objectives. Under the doctrine of absolute privilege, “[n]o action lies…against…counsel…or parties…for words spoken in the ordinary course of any proceedings before any court…[including] documents properly used and regularly prepared for use in the proceedings.” Yet that is precisely what the third-party plaintiffs are trying to claim in this action.

[25] For all the foregoing reasons, there is no uncertainty as to the outcome. It is plain and obvious that the claim cannot succeed. Moreover, there is nothing that the third-party plaintiffs can plead to make this action tenable. Therefore this is not a case for leave to amend.

[26] Mr. Kestenberg’s clients may deliver costs submissions by March 8, 2024. Mr. Boyden’s clients may deliver costs submissions by March 15, 2024. Costs submissions may be no longer than three double-spaced pages with normal margins and no less than 12-point font. All submissions shall be accompanied by a Costs Outline. The parties may also deliver any offers to settle on which they rely for costs purposes. Materials shall be filed through the court’s online portal, uploaded to Caselines, and sent by email to my Judicial Assistant.

FL Myers J Date: March 1, 2024