Court File and Parties

Court File No.: CV-24-00721098-0000 Date: 2025-07-29 Superior Court of Justice

Re: David Diamond, James Diamond, Diamond and Diamond, Appellants And: Kurt Bergmanis, Alan Preyra and Bergmanis Preyra LLP, Respondents

Before: Justice S. Nakatsuru

Counsel: M. Davis, R. Davis, T. Obradovic, for the Appellants H. Meighen, M. Muccilli, for the Respondents

Heard: July 14, 2025

Endorsement

[1] This is an arbitration between law firms that has been going on for a long time. The latest in the saga is this appeal from the Arbitrator, the Honourable Gloria Epstein's decision dated April 30, 2024. The crux of the appeal deals with solicitor-client privilege.

[2] It is unnecessary to review at any length the history of this matter as it is well detailed in the Arbitrator's decision.

[3] Essentially, in 2007, the appellants David and James Diamond practiced plaintiff-side personal injury law in their practice known as Diamond & Diamond. As a part of their retirement plans in wishing to preserve the value of the firm's goodwill and community profile for the benefit of their family members who were lawyers, the appellants entered into a Professional Services Agreement, (the "PSA") with another personal injury law partnership known as Bergmanis Preyra LLP, led by Kurt Bergmanis and Alan Preyra, the respondents.

[4] A key part of the PSA was an agreement whereby the appellants would refer all future personal injury inquiries to the respondents in exchange for 30% of the respondents' counsel fees. The dispute that is being arbitrated is a claim that the appellants did not do that, but sent the referrals rightfully owed to Bergmanis Preyra to other law firms for a fee.

[5] A nephew, Jeremy Diamond who was with Diamond & Diamond as an independent contractor from 2009,[1] also forwarded referrals to the respondents. Article 16 of the PSA appears to state these referrals were to be considered Diamond & Diamond referrals. On June 13, 2018, in response to a summons issued by the respondents in the arbitration, Jeremy Diamond's lawyer provided to Alan Rachlin, counsel for the respondents, 16 spreadsheets for all the lawyers/firms to whom Jeremy Diamond referred files during the relevant time period. These spreadsheets are what has given rise to this appeal.

[6] The two issues on this appeal are: (1) whether the Arbitrator erred in dealing with an objection by the appellants that the spreadsheets sought to be admitted on the arbitration was subject to solicitor-client privilege; and (2) whether the Arbitrator erred in failing to remove the respondents' counsel on the arbitration, Mr. Rachlin, as he received the solicitor-client spreadsheets and has not returned them.

[7] Before turning to these issues, the respondents have raised an issue of jurisdiction. I find that the 2014 Arbitration Agreement provides jurisdiction for this appeal. The respondents take an overly narrow view of the term used in the Arbitration Agreement of a "preliminary motion" which is subject to appeal. Paragraph 27 of the Arbitration Agreement is not an exhaustive list of preliminary motions but matters that must be determined on preliminary motions.

Standard of Review

[8] The standard of review is reasonableness: Intact Insurance Co. v. Allstate Insurance Company of Canada, 2016 ONCA 609, at para. 25; Ottawa (City) v. Coliseum Inc., 2016 ONCA 363, at paras. 32-34; Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7, at para. 45-46. There is no extricable question of law in this case, let alone one of central importance. It is not suggested the Arbitrator got wrong the law on solicitor-client privilege or the removal of counsel. What is challenged is her application of that law to the circumstances before her, a question of mixed law and fact.

[9] In this very same arbitration, Chalmers J. came to a similar conclusion that the standard of review was reasonableness in Bergmanis v. Diamond, endorsement dated March 26, 2021, 2021 ONSC 2375, at para. 30, which was an appeal of the previous arbitrator's quashing of several summons requested by the respondents for similar information from other law firms. On the issue of the standard of review, I do not accept that there is any distinction to be made when it comes to the Arbitrator dealing with the spreadsheets on the grounds of alleged solicitor-client privilege. How she dealt with the issue invariably led to her assessment of the evidence or the lack of evidence in the case before her.

Solicitor-Client Privilege Issue

[10] To begin the analysis, it is important to accurately characterize the Arbitrator's decision on solicitor-client privilege. The appellants submit that she refused to rule on it, citing the need for more evidence. At its core, the appellant contends the Arbitrator erred in law by this refusal.

[11] I do not agree. The Arbitrator in her lengthy and extensive ruling[2] did two things on this issue. On the record before her, she dismissed the motion made by the appellants. She then deferred any final resolution of the issue until evidence was heard on the contractual interpretation of the PSA on provisions relevant to solicitor-client privilege. This is all encapsulated at para. 157 of her decision:

I am dismissing D&D's [Diamond & Diamond] request to expunge the Spreadsheets from the Record and enjoin BP [Bergmanis Preyra] from using any information derived from them without prejudice to my right to reconsider this issue based on the evidence in the Record at the conclusion of the evidentiary portion of this Arbitration.

[12] Her reasons reveal the chain of logic that led her to this conclusion. The decision demonstrates her understanding of the relevant legal analysis surrounding solicitor-client privilege and the type of information that will be protected by this privilege. She outlined the parties' arguments in full. In her analysis, the Arbitrator highlighted Articles 16 and 17 of the PSA. These provisions relate to Jeremy Diamond's ongoing involvement in the appellants' client intake and marketing (Article 16) and an ongoing duty as between the appellants and the respondents to track, record and disclose public telephone enquiries from the public for legal services (Article 17). As discovery had not yet taken place and the record before her did not have enough information to determine the interpretation of Articles 16 and 17, the Arbitrator concluded that "there may be additional evidence that would bear upon my determination of the complex issues surrounding privilege, the PSA, and the import of the issue." As the appellants' motion failed to provide the evidence necessary to determine this issue, the Arbitrator came to her conclusion noted above.

[13] The appellants submit that she did not need evidence for contractual interpretation. They are wrong in taking such an absolutist position. Contractual interpretation can require objective evidence of the factual matrix that is relevant to contractual interpretation encompassing facts that were known or reasonably ought to have been known by the contracting parties at or before the date of contracting: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, at para. 58; Earthco Soil Mixtures Inc. v. Pine Valley Enterprises Inc., 2024 SCC 20, at paras. 28-30. The Arbitrator made no error in considering this factor in her decision.

[14] The interpretation of Articles 16 and 17 mattered for the determination of solicitor-client privilege. Reasonably inferred from her overall decision, is the Arbitrator's concern about interpreting these two Articles since they were key to the central issue regarding the merits of the arbitration itself. It is understandable that she would be loathed to determine this on what was essentially an evidentiary issue even though it raised the important issue of solicitor-client privilege. Again, noteworthy is that discoveries had not yet been held. While it is true that James Diamond was not cross-examined on his affidavit, the Arbitrator was cautious about its untested nature and recognized that the evidentiary substrata could reasonably change. Whether that be true or not, certainly it would be fuller, more detailed, and complete. This was not speculative on her part as it is contended by the appellants on this appeal.

[15] Far from failing to decide or deciding on a speculative basis, it seems clear to me that the Arbitrator dismissed the motion but reserved the right to decide this issue at a later point in the hearing when further evidence was called. Although both parties submitted that the record for this issue was complete, it fell within the Arbitrator's discretion to determine the best way forward on this issue along with the other issues that needed to be decided in the arbitration.

[16] I appreciate that in getting to that stage of the proceeding, the Arbitrator's ruling may have practical ramifications that may make the discoveries more complex. However, there was no unfairness to the parties in the Arbitrator's decision since if the spreadsheets are ultimately ruled inadmissible or expunged from the record, the Arbitrator will be well-placed to ignore any improper evidence or fashion some other remedy to ensure the integrity of the Arbitration. Indeed, taking a birds-eye view of the decision placed in the context of the overall arbitration, it may well have been the fairest approach for all involved.

[17] The arbitral tribunal has broad discretion to "determine the procedure to be followed in the arbitration in accordance with [the] Act": Arbitration Act, 1991, S.O. 1991, c. 17, at s. 20(1). In my opinion, her decision on the solicitor-client privilege issue was well within her scope of discretion in the private arbitration. Arbitrators must be afforded significant deference and judicial intervention in arbitrations is constrained. As stated by Doherty J.A. in Popack v. Lipszyc, 2016 ONCA 135, 262 A.C.W.S. (3d) 841, at para. 26, the private consensual nature of the arbitration is linked to the need for judicial deference to the result of that arbitration in the sense that the "parties' selection of their forum implies both a preference for the outcome arrived at in that forum and a limited role for judicial oversight of the award made in the arbitral forum." The same principle applies to the procedures determined by the arbitrator.

[18] I find that the Arbitrator committed no error in proceeding the way she did. It was a reasonable decision in the circumstances.

Removal of Counsel Issue

[19] This brings me to the second issue. The resolution by the Arbitrator of the first issue, rationally, intelligibly, and transparently led to her decision not to remove Mr. Rachlin. The appellants had failed to satisfy her of the test in Celanese Canada Inc. v. Murray Demolition Corp., 2006 SCC 36, at para. 206. She was unable to conclude that Mr. Rachlin retained solicitor-client privileged spreadsheets. Moreover, on a separate issue but one relevant to the removal motion, she could not yet finally determine whether certain impugned emails received by the respondents further buttressed the position for his removal. Looked at holistically, the Arbitrator's decision on this was reasonable.

Loss of Jurisdiction

[20] Finally, there is little merit to the argument that the Arbitrator lost jurisdiction by failing to exercise her jurisdiction. In arguing a loss of jurisdiction, the appellants rely on the case of Thames Valley District School Board v. Elementary Teachers' Federation of Ontario (Thames Valley Local), 2011 ONSC 1021, at para. 12, which involved the judicial review of a labour arbitrator's decision where the arbitrator had expressly stated that he was "unable to reach a conclusion with respect to a number of the complainant's allegations", which ultimately formed the basis for the reviewing Court's finding that the arbitrator had declined to exercise his jurisdiction. No such circumstance exists in this case. The Arbitrator clearly ruled on the issues. Moreover, Thames was a final decision on the merits of the case, not an interlocutory motion.

[21] I find that the Arbitrator did exercise her jurisdiction. The real complaint of the appellants is that she did not exercise it to their liking.

Decision

[22] The appeal is dismissed.

[23] The parties are encouraged to come to an agreement as to costs. If no agreement is reached, the respondents will have two weeks from the date of the release of this decision to make submissions on costs. The appellants will have two weeks from the respondents' submission to respond. Each costs submission will be no longer than 3 pages not including any attached bill of costs.

JUSTICE S. NAKATSURU

Released: July 29, 2025.

[1] This was a finding made by H. Spiegel, the previous arbitrator hearing this case before G. Epstein took over.

[2] The decision also dealt with other issues raised by the parties.