CITATION: Specialty Life Inc. v. Daumier Financial Services Inc., 2026 ONSC 1869

COURT FILE NO.: CV-23-00707720-00CL

DATE: 20260327

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Hamza Mohamadhossen and Alexander Rose, for the Plaintiffs/Responding Parties

SPECIALTY LIFE ~~INSURANCE~~ INC. and INSURANCE SUPERMARKET INC.

Plaintiffs

– and –

DAUMIER FINANCIAL SERVICES INC., DAUMIER FINANCIAL SERVICES LTD., 13399613 CANADA INC., 14743334 CANADA INC. d/b/a PALMICHE’S FARM INC., 15019745 CANADA INC., LISET RODRIGUEZ, CARLOS DE ZAYAS, CARMEN SIRLEY MUNOZ-GUTITIERREZ, ANA HUANG YU, ANDRES HERNANDEZ, MAYLIN RODRIGUEZ PEREZ, SAMUEL OSEI, KRISTOFF SUJBALLI, MICHAEL LUE, WILFREDO JIMENEZ GOMEZ, IVETTE RODRIGUEZ, LIZ ELVIGIA VALDIVIA MONTES, JOHN DOE 1 TO 5 and ABC CORP. 1 TO 5

Defendants

Kishan Lakhani, for the Defendants/Moving Parties Michael Lue and 15019745 Canada Inc.

Nancy Tourgis and Joanne Islander Salmoon, for the Defendant Daumier Financial Services Inc.

HEARD: March 19, 2026

CAVANAGH J.

REASONS FOR JUDGMENT

1This motion is brought by Michael Lue and 15019745 Canada Inc. The moving parties are defendants in this action, with other defendants. Mr. Lue is the sole director of 15017945 Canada Inc.

2The responding parties are the plaintiffs, Specialty Life Inc. and Insurance Supermarket Inc. (together, “SLI”).

3On this motion, the moving parties allege that SLI and its lawyers, Stikeman Elliott LLP (“Stikeman”), obtained access to their communications with their former lawyers, McCarthy Tetrault LLP (“McCarthy”), which are subject to solicitor-client privilege. They seek remedies as a result of such access.

4Stikeman obtained access to communications with McCarthy in a related arbitration commenced by SLI as applicant in which two other defendants in the action, Daumier Financial Services Inc. and Daumier Financial Services Ltd. (together, “Daumier”), are respondents.

5The arbitral tribunal (the “Tribunal”) had concluded that Daumier, through reliance by one of its principals, Carlos de Zayas (another defendant in the action), on privileged communications with McCarthy in support of a motion to stay the arbitration based on a challenge to the jurisdiction of the Tribunal, was deemed to have waived privilege in respect of four categories of communications regarding certain matters.

6As a result of this conclusion, the Tribunal made an interim award dated June 9, 2025 (the “Interim Award”) ordering Mr. de Zayas to disclose communications falling within the four categories to the Tribunal. The Tribunal also ordered that a notice be issued to Hannah Young, a lawyer at McCarthy, requiring her to attend at the hearing of the arbitration and provide documents relating to the knowledge of Daumier of matters within the four categories.

7After the Interim Award was made, McCarthy sent a letter dated June 17, 2025 to the Tribunal and to Stikeman. The letter stated that the firm had received communications from its former clients advising that they do not consent to the disclosure of information from the firm’s file.

8In this letter, McCarthy advised that the firm acted for more clients than Daumier, the respondent in the arbitration, by way of a joint retainer. McCarthy advised that the jointly held privilege that attaches to their communications with their former clients cannot be waived by one or more beneficiaries acting unilaterally, without the consent of all of the other beneficiaries. McCarthy requested further information and clarity with respect to the joint retainer issue and whether all of their former clients have waived the jointly held privilege.

9The Interim Award was recognized and enforced by an Order dated July 10, 2025 made in an application by SLI.

10A case conference was held in the arbitration on July 11, 2025 to address these issues. Following the case conference, the Tribunal issued a Seventh Procedural Direction dated July 14, 2025 ordering Ms. Young to produce certain documents to the Tribunal, and simultaneously copy SLI via Stikeman, and Daumier via Mr. de Zayas. The Tribunal directed its administrator to forward the documents provided by Mr. de Zayas pursuant to the Interim Award to Stikeman. McCarthy provided access to the McCarthy documents (more than 200 documents) to Stikeman on July 14, 2025, one day before the hearing of Daumier’s stay motion in the arbitration.

11Lawyers at Stikeman quickly reviewed the McCarthy documents to select those to use at the hearing of Daumier’s stay motion, where Mr. de Zayas would be cross-examined.

12At a case conference in the action held on December 16, 2025, the moving parties (and, at that time, other proposed moving parties), through their legal counsel, advised of their intention to seek removal of Stikeman as the lawyers for SLI because the firm had obtained access to and reviewed their privileged documents. This motion was brought by notice of motion dated January 23, 2026.

13SLI opposes this motion on various grounds. The evidence of the lead lawyer at Stikeman is that the McCarthy documents were not provided to SLI. He deposes he has little recollection of the McCarthy documents apart from what is written in the Tribunal’s decision on Daumier’s stay motion and he does not recall seeing documents with information that could be used to the prejudice of the moving parties.

14The McCarthy documents that were provided to Stikeman can be identified. A confidential brief containing these documents was provided to me for use at the hearing of this motion. I decided that it was necessary and appropriate for me to review the documents that the moving parties identified as those that would lead to significant prejudice in the action, and I did so.

15For the following reasons, I conclude that (i) Stikeman obtained access to the moving parties’ privileged documents; (ii) SLI has not discharged its onus of rebutting the presumed prejudice flowing from access by Stikeman to the privileged documents, and (iii) the appropriate remedy is to disqualify Stikeman from acting as counsel for SLI in the action and in the arbitration.

Procedural Background

The Action

16On October 12, 2023, SLI obtained an interim Mareva Order against Daumier, Liset Rodriguez, Carlos De Zayas, Mr. Lue, and other defendants.

17On October 13, 2023, SLI commenced this action by a Notice of Action.

18On October 23, 2023, the interim Mareva Order was ordered to remain in effect unless varied or set aside by further order of the court.

19On November 28, 2023, SLI was granted leave on consent to amend its Notice of Action to add other entities as defendants to the action.

20On December 1, 2023, SLI issued the Statement of Claim in this action.

21On or about April 15, 2024, a Statement of Defence was filed on behalf of 13399613 Canada Inc., 14743334 Canada Inc. d/b/a Palmiche's Farm Inc., 150, Liset Rodriguez, Mr. De Zayas, Michael Lue, Wilfredo Jimenez Gomez, Ivette Rodriguez, and Liz Elvigia Valdivia. When the Statement of Defence was filed, the law firm McCarthy Tétrault LLP (“McCarthy”) was the lawyer of record for these defendants.

22In or around October 2024, McCarthy ceased to represent all of the firm’s clients. The former McCarthy clients jointly retained Loopstra Nixon LLP (“Loopstra”) to represent them in the action. Loopstra later ceased to represent these parties in the action.

The Arbitration

23On November 28, 2023, SLI commenced an arbitration pursuant to a Notice of Arbitration. The subject matter of the arbitration overlaps considerably with the subject matter of the action. The respondent in the arbitration is Daumier.

24A three-person panel was appointed as the Tribunal.

25McCarthy represented Daumier in the arbitration proceeding until in or around October 2024. After that, Loopstra began representing Daumier in the arbitration. On or around March 27, 2025, Loopstra advised the Tribunal that it was no longer representing Daumier in the arbitration.

The Tribunal’s Interim Award with respect to waiver of privilege

26On or about May 23, 2025, Mr. De Zayas, one of the principals of Daumier, brought a motion on behalf of Daumier in the Arbitration seeking, among other things, a stay of the Arbitration due to lack of jurisdiction. In support of this stay motion, Mr. De Zayas affirmed an affidavit on May 19, 2025. In this affidavit, Mr. De Zayas asserted that his former legal counsel at McCarthy “acted irresponsibly and frequently made decisions without consultation". He asserted that "I did not sign, nor did I authorize my former counsel to sign, any arbitration agreement”. He asserted: that “I was not personally informed of this process, did not consent to arbitration, and was unaware of any such deadlines after they had passed."

27By email dated May 23, 2025, SLI requested that the Tribunal make an order that Daumier produce all correspondence with McCarthy relating to (i) the positions taken relating to the jurisdiction of the arbitration; (ii) negotiations relating to the terms of the arbitration; (iii) the basis for the arbitration, including any agreements to arbitrate; and (iv) the timing delays associated with advancing the proceedings. SLI took the position in this email that this information, which would ordinarily be protected from disclosure by solicitor and client privilege, should be produced because privilege had been waived.

28Mr. De Zayas denied that he or Daumier had waived privilege. He asked for an oral hearing. The Tribunal scheduled a hearing which was held on June 5, 2025. Mr. De Zayas did not attend. Counsel for SLI attended and made submissions.

29On June 9, 2025, the Tribunal issued it’s the Interim Award on SLI’s motion. The Tribunal decided that there had been a deemed waiver of privilege through the disclosure by Mr. De Zayas, in the motion material filed on behalf of Daumier, of some of his communications with McCarthy without disclosing all them.

30The Tribunal ordered Mr. De Zayas to forthwith disclose to the Tribunal all of his communications with McCarthy regarding specified matters. The Tribunal ordered that notice be provided to Hannah Young, a lawyer from McCarthy, to attend the hearing and provide the documents requested by SLI.

Letter to Tribunal from McCarthy

31On June 17, 2025, the General Counsel of McCarthy wrote to the members of the Tribunal, Daumier (by email to Mr. De Zayas), and counsel for SLI. The letter concerned the notice directed to Ms. Young to attend the hearing and provide the documents requested by SLI.

32In this letter, McCarthy advised that the firm had received various communications from its former clients advising that they do not consent to the disclosure of any information from the firm’s file.

33McCarthy noted that during the course of the firm’s retainer, it acted for more clients than the two respondents in the arbitration by way of a joint retainer. McCarthy advised that the privilege that attaches to the firm’s communications with their former clients can only be waived by agreement or conduct of all of them, and that jointly held privilege cannot be waived by one or more beneficiaries acting unilaterally, without the consent of all of the other beneficiaries of the privilege. McCarthy advised that any order for production of communications with the firm would undoubtedly involve communications with all of the firm’s clients.

34McCarthy advised of the firm’s obligation to safeguard the privilege that attaches to its communications with all of the firm’s former clients and that it must be satisfied that all of them have waived privilege, or have been validly deemed to do so.

35McCarthy requested further information and clarity from the Tribunal with respect to (i) the firm’s joint retainer and the impact it has on the conclusion that there was a waiver of privilege with respect to portions of the firm’s file; (ii) whether the firm’s former clients have waived the jointly held privilege of which they are joint beneficiaries; and (iii) any deadline for providing any documents in response to the notice.

SLI’s application for recognition and enforcement of the Tribunal’s Interim Award

36By Notice of Application issued on June 20, 2025, SLI sought an order recognizing and enforcing the Interim Award. Daumier and Ms. Young were named as respondents. The application was heard on July 9, 2025.

37Ms. Young was represented at the hearing of this application. She filed an affidavit in which she affirmed that McCarthy had represented Daumier and other defendants in the action under a joint retainer in which the firm acted for and communicated with all or some combination of all of the clients at the same time. Ms. Young deposed that she is not aware that any of the former clients other than Mr. de Zayas have waived the privilege that attaches to their communications with McCarthy. Ms. Young deposed that neither she nor McCarthy take any position on the relief sought on the application.

38On July 10, 2025, this Court released an endorsement recognizing and enforcing the Tribunal’s Interim Award. The Order does not provide for production of McCarthy documents directly to SLI or Stikeman.

Case Conference before Tribunal on July 11, 2025 and Seventh Procedural Direction

39On July 11, 2025, a case conference was held before the Tribunal that was attended by counsel for SLI, Mr. De Zayas on behalf of Daumier, and counsel for Ms. Young.

40After the case conference, the Tribunal issued a Seventh Procedural Direction dated July 14, 2025. As stated in this procedural direction, the July 11, 2025 case conference was held to address matters related to the implementation of the Court’s July 10, 2025 Order and to address procedural matters related to Daumier’s stay motion which was scheduled to be heard on July 16, 2025.

41In the Seventh Procedural Direction, the Tribunal directed and ordered that Ms. Young produce documents relating to the timing delays associated with advancing the arbitration proceedings. The Tribunal directed and ordered that Ms. Young shall provide such documents to the Tribunal, simultaneously copied to SLI via its counsel, and to the respondents in care of Mr. De Zayas, no later than end of day on July 14, 2025. The Tribunal directed the administrator of the arbitration, ADR Chambers, to forward to counsel for SLI the documents delivered to the Tribunal by Mr. De Zayas in accordance with the Tribunal’s prior Interim Award.

42On July 15, 2025, counsel to McCarthy provided to counsel for SLI a link to the documents being disclosed by McCarthy.

Tribunal’s Decision on Daumier’s Stay Motion

43On July 18, 2025, the Tribunal released its decision on Daumier’s stay motion. The motion was dismissed.

Arbitration Hearing and Release of Award

44The arbitration hearing proceeded between July 21-24, 2025. The Tribunal released its Award dated August 5, 2025.

Retainer of new legal counsel by moving parties and other defendants

45As of August 19, 2025 the defendants 13399613, 14743334, 15019745, Michael Lue, Wilfredo Gomez, Ivette Rodriguez were represented by Kramer Simaan LLP (“Kramer”). Kishan Lakhan was a lawyer at that firm.

46On November 17, 2025, the moving parties and other defendants who had been represented by Kramer provided notice that they appointed Kishan Lakhani of Burych Lawyers as lawyers of record.

Analysis

47The moving parties submit that they are entitled to a remedy on this motion because SLI and/or Stikeman obtained access to their privileged information and they have not rebutted the presumed prejudice that follows as a result of such access.

48In their notice of motion, the moving parties seek an order staying the action or, in the alternative, staying SLI’s claims against them. They also seek an order removing Stikeman as solicitors of record for the Plaintiffs.

General principles with respect to solicitor-client privilege

49In R. v. Fox, 2026 SCC 4, the Supreme Court of Canada reviewed the general principles regarding solicitor-client privilege. The Court held, at para. 31, that solicitor-client privilege describes a client's right to communicate with their lawyer in confidence. The Court held that solicitor-client privilege belongs to the client and can be waived only by the client with informed consent.

50In Fox, at paras. 34-35, the Supreme Court of Canada explained the purpose of solicitor-client privilege in the protection of individual rights by facilitating full and frank communication in the seeking and giving of legal advice and its systemic importance as a necessary and essential condition of the effective administration of justice.

51In Fox, at para. 40, the Supreme Court of Canada described solicitor-client privilege as “the strongest privilege protected by law”, one that is “near-absolute”, and one that must be “jealously guarded”.

Legal analysis where a party alleges that an opposing party obtained unauthorized access to privileged information

52In Continental Currency Exchange Canada Inc. v. Sprott, 2023 ONCA 61, at para. 31, the Court of Appeal confirmed that the test to decide the appropriate remedy where privileged information is received by an opposing party or its counsel is set out in Celanese Canada Inc. v. Murray Demolition Corp., 2006 SCC 36, [2006] 2 S.C.R. 189, and MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235. The Court of Appeal held that the focus of the analysis is on trial fairness and the integrity of the adjudicative process.

53There are three stages to the analysis.

54At the first stage, the moving party must prove that the opposing party obtained access to their privileged materials. At the second stage, once the moving party has established that the opposing party obtained access to privileged materials, there is a rebuttable presumption of prejudice. The party who obtained access to privileged materials bears the onus to rebut the presumed prejudice flowing from receipt of the privileged information. The third stage of the analysis is to fashion an appropriate remedy. See Continental Currency, at paras. 33-45.

Did SLI and/or Stikeman receive access to relevant privileged information?

55McCarthy formerly represented the moving parties and other defendants, including Daumier, in the action as counsel of record. McCarthy also represented Daumier as the respondent in the arbitration until October 2024.

56In the McCarthy letter dated June 17, 2025 sent to the Tribunal and Stikeman, McCarthy confirmed that it formerly represented Daumier in the arbitration. McCarthy advised that, together with Daumier, the firm was jointly retained by other clients, defendants in the action, who had advised the firm that they do not consent to the disclosure of any information from the firm’s file. McCarthy advised that given the joint retainer, the firm is obliged to safeguard the privilege that attaches to their communications with all of their former clients and be satisfied that all of them have waived privilege or have been validly deemed to have done so.

57There is no dispute that McCarthy provided to Stikeman, as counsel to SLI, many electronic documents from its file that would be subject to solicitor-client privilege if the privilege was not waived or deemed to have been waived.

58A jointly held privilege cannot be waived by one holder of the privilege for other holders of the privilege without their consent. See Chan v. Dynasty Executive Suites Ltd., at para. 71.

59The moving parties submit that there is no evidence that they waived privilege. They submit that in the absence of waiver or deemed waiver of privilege by them, they have satisfied their onus at the first stage of the analysis.

60SLI submits that the moving parties have not established that SLI or Stikeman obtained access to relevant privileged materials, for several reasons.

61First, SLI relies on the fact that the moving parties have failed to adduce evidence of the terms of the moving parties’ joint retainer. SLI also contends that the moving parties refused to produce documents that would go to the moving parties’ knowledge and/or consent to the production of documents by Daumier. SLI submits that the only inference that may be drawn is that is that Mr. de Zayas had the necessary authority to make all decisions relating to the arbitration, including to disclose communications with McCarthy.

62In respect of this submission, SLI relies on a letter dated January 19, 2026 sent by Stikeman to counsel for the moving parties. In this letter, Stikeman asserted that the moving parties have acknowledged that they were notified at the time that McCarthy would be producing the McCarthy documents. Stikeman requested production of (i) communications between the moving parties and Daumier, including its principals, Mr. de Zayas and Ms. Rodriguez, with respect to the production of the McCarthy documents and the various arbitral and court decisions relating thereto, and (ii) communications between the moving parties and McCarthy and its legal counsel which relate to the moving parties’ knowledge of and involvement in the process relating to the disclosure of the McCarthy documents. Counsel for the moving parties responded in a letter dated January 21, 2026 that his clients did not acknowledge that they were notified that McCarthy would be producing privileged documents and, as such, the requested documents, to the extent they exist, are irrelevant and, moreover, would be subject to privilege.

63The moving parties were not required to produce privileged information concerning their joint retainer of McCarthy or concerning their knowledge that the McCarthy documents would be produced. Whether or not they were advised in advance that the Tribunal had directed McCarthy to produce the McCarthy documents to Stikeman would not affect whether the documents are subject to privilege. No adverse inference should be drawn in the circumstances.

64Second, SLI submits that the moving parties, by not taking steps to preserve their privilege and prevent access to privileged documents, effectively waived any objection to the disclosure of the documents by McCarthy.

65SLI submits that if the moving parties believed that their interests as non-parties to the arbitration were impacted, it was open to them to raise those objections before the Court. SLI submits that where the moving parties knew that Stikeman was seeking production of documents from the file of McCarthy, they could have followed several procedural paths to preserve their rights before the McCarthy documents were produced, including raising concerns at the hearing of the application for enforcement of the Tribunal’s Interim Award or preventing Daumier from proceeding with its stay motion. SLI submits that the failure by the moving parties to take such steps is compounded by their failure to take steps to recover the McCarthy documents for five months.

66SLI submits that the moving parties, through their approach, acted abusively and violated the principles of judicial economy, finality, and upholding the integrity of the administration of justice. SLI submits that the moving parties have created a situation in which preserving the privilege at this stage would cause incredible unfairness to SLI. SLI submits that the moving parties, by failing to take steps to protect the confidentiality of communications with counsel, waived the privilege.

67In support of the submission that the moving parties were required to take steps to protect the confidentiality of the communications with McCarthy, SLI cites Chan v. Dynasty Executive Suites Ltd., 2006. In Chan, privileged documents of a party were produced by the party’s lawyers to the plaintiffs’ lawyers in error. The receiving lawyers refused to return the documents and reviewed them. The producing party moved for an order disqualifying the plaintiffs’ counsel. The motion judge, at para. 31, considered whether the privilege was waived and held, citing Sopinka, Lederman and Bryant, The Law of Evidence in Canada, (2nd ed., 1999) at 14.122, that one factor to be considered is “whether an immediate attempt has been made to retrieve the documents”.

68I disagree with SLI’s submission that for the moving parties to preserve privilege they had an obligation to take steps to prevent production of the McCarthy documents or retrieve them. When SLI first moved before the Tribunal for production by Daumier of communications with McCarthy, Stikeman knew that McCarthy represented other defendants than just Daumier. As joint clients of McCarthy, these other defendants held privilege in the communications with McCarthy. The McCarthy letter, received by Stikeman after the Tribunal’s Interim Award and before Stikeman obtained access to communications with McCarthy, makes clear that McCarthy acted for more clients than Daumier by way of a joint retainer, and that jointly held privilege cannot be waived by one or more beneficiaries acting unilaterally without the consent of the other beneficiaries.

69In such circumstances, the issue of the joint retainer by non-Daumier clients of McCarthy was a matter to be addressed by Stikeman with the Tribunal. It was incumbent on SLI and its counsel, Stikeman, and not the obligation of the moving parties, to take care to ensure that privileged information was not disclosed and reviewed. See Celanese, at para. 50.

70Stikeman did not take care to ensure that the firm did not receive access to the moving parties’ privileged information. Instead, after receiving the McCarthy letter, Stikeman proceeded at the July 11, 2025 case conference before the Tribunal to seek an order requiring production to it of the requested communications between McCarthy and its clients. Stikeman’s request was granted and the Tribunal’s Seventh Procedural Direction was given. As a result, McCarthy produced to Stikeman documents over which the moving parties held a joint privilege.

71SLI relies on the affidavit of Aaron Kreaden, lead counsel for SLI in the action and the arbitration. Mr. Kreaden deposes that he recalls that the Tribunal considered McCarthy’s concerns relating to its joint engagement by Daumier and the Non-Daumier defendants as set out in the McCarthy letter. He cites notes taken at the case conference by another Stikeman lawyer that refer to this issue. The Tribunal’s Seventh Procedural Direction does not refer to the issue raised in the McCarthy letter concerning the joint privilege held by non-Daumier clients.

72Unlike in Chan, the moving parties did not provide privileged documents to SLI or Stikeman in error. Stikeman did not obtain access to the McCarthy documents through inadvertence. Stikeman obtained access to the McCarthy documents through its request for the procedural direction of the Tribunal and promptly reviewed them. In these circumstances, the moving parties were not under an obligation to attempt to retrieve the McCarthy documents to avoid waiving privilege.

73The fact that several months passed before the moving parties sought to schedule this motion does not constitute waiver of privilege by the moving parties. Once the privileged documents were produced to Stikeman and reviewed, any prejudice would have presumptively occurred. I reject SLI’s submission that the moving parties, by not bringing this motion until several months after the privileged documents were produced, engaged in an abuse of process that has the effect of waiving or otherwise vitiating their privilege.

74I conclude that the moving parties have met the test at the first stage of the analysis by showing that Stikeman obtained access to relevant privileged information.

Has SLI rebutted the presumption of prejudice?

75In Continental Currency, the Court of Appeal, at paras. 34-37, articulated the test at the second stage of the analysis:

At the second stage, once the respondents establish that the appellants obtained access to privileged material, there is a rebuttable presumption of prejudice: Celanese, at paras. 42-43, 48. The respondents need not prove the risk of significant prejudice or “the nature of the confidential information” that was disclosed beyond the requirement to prove access by the appellants: Celanese, at paras. 42, 48. Instead, the appellants bear the onus to rebut the presumed prejudice flowing from receipt of the privileged information: Celanese, at para. 48.

The presumption of prejudice can be rebutted by identifying to the court “with some precision” that: (i) the appellants did not review any of the privileged documents in their possession; or (ii) they reviewed some documents, but the documents reviewed were not privileged; or (iii) the privileged documents reviewed were nevertheless “not likely [to] be capable of creating prejudice”: Celanese, at para. 53.

The evidence adduced must be “clear and convincing” such that “[a] reasonably informed person would be satisfied that no use of confidential information would occur”: MacDonald Estate, at pp. 1260 to 1263; see also, Celanese, at para. 42. “A fortiori undertakings and conclusory statements in affidavits without more” do not suffice: MacDonald Estate, at p. 1263.

Any “[d]ifficulties of proof” in rebutting the presumption of prejudice “should fall on the heads of those responsible for the search [in this case, the appellants], not of the party being searched”: Celanese, at para. 55.

76SLI submits that the privileged documents reviewed by Stikeman are not likely to be capable of creating prejudice and that it has adduced clear and convincing evidence demonstrating why a reasonably informed person would be satisfied that no use of confidential information would occur.

77Mr. Kreaden provided evidence that Stikeman only briefly accessed the McCarthy documents solely for the purpose of defending Daumier’s stay motion.

78Mr. Kreaden’s evidence of his current recollection of the content of the McCarthy documents is that many were highly responsive to the four categories identified by the Tribunal in its Interim Award. He deposes that he focused on the issues directly relevant to the stay motion, and the specific documents he can recall are those that were expressly described in the Tribunal’s Interim Award. Mr. Kreaden recalls one document where McCarthy asked the non-Daumier defendants to sign off on a statement of defence in the action and the response to the arbitration but he does not recall seeing comments from the defendants, advice from McCarthy, or anything about the drafts. Mr. Kreaden’s evidence is that he does not recall seeing any document relating to a Financial Services Regulatory Authority of Ontario (“FSCO”) investigation (that Mr. de Zayas alleged was included in the McCarthy documents). Mr. Kreaden deposes that he has no recollection of any documents that contain legal advice or legal strategy, or anything that would otherwise be relevant or applicable to any further steps required to be taken by any party in the action, or any information capable of creating prejudice.

79In MacDonald Estate v. Martin, [1990] 3 SCR 1235, the Supreme Court of Canada addressed the quality of evidence needed to rebut the presumption of prejudice and held:

A fortiori undertakings and conclusory statements in affidavits without more are not acceptable. These can be expected in every case of this kind that comes before the court. It is no more than the lawyer saying "trust me". This puts the court in the invidious position of deciding which lawyers are to be trusted and which are not. Furthermore, even if the courts found this acceptable, the public is not likely to be satisfied without some additional guarantees that confidential information will under no circumstances be used. In this regard I am in agreement with the statement of Posner J. in Analytica, supra, to which I have referred above, that affidavits of lawyers difficult to verify objectively will fail to assure the public.

This passage was cited with approval and followed in Celanese, at para. 42.

80I regard Mr. Kreaden’s evidence as falling into the category described in MacDonald Estate. Mr. Kreaden’s assurances that he does not recall reviewing any information capable of creating prejudice to the moving parties are conclusory and, without objective verification, require the court to decide whether these statements should be accepted as true. A reasonably informed member of the public would not be satisfied without some additional guarantees that no significant confidential information was reviewed.

81In Celanese, at para. 53, the Supreme Court of Canada observed that it is sometimes possible for the lawyers who obtained access to privileged information to show the court what privileged information they had seen and satisfy the court that the privileged material is insignificant. The Court noted that where the significance of the privileged information accessed by the lawyers is difficult to evaluate, “the motions judge might properly call on the defendant (in the absence of the lawyers for the searching party if appropriate) to explain why such material could lead to significant prejudice”.

82On this motion, unlike in Celanese or Continental Currency, it is possible to identify with precision the privileged documents provided to and reviewed by Stikeman. These documents were provided to the court in a confidential brief and made available for review.

Whether the McCarthy documents contain privileged information that would be significantly prejudicial to the moving parties

83At the hearing of this motion, I referenced Celanese, at para. 53, and decided that in order to determine whether SLI had met its onus of showing that the presumption of prejudice is rebutted, it would be necessary for me to review the privileged documents that were obtained and reviewed by Stikeman and determine whether one or more of them is capable of creating significant prejudice. Following the hearing of this motion, I released an endorsement and called on the moving parties to (i) provide me with a written statement identifying which of the allegedly privileged documents to which Stikeman obtained access could lead to significant prejudice, and (ii) provide a concise explanation for why such documents could lead to significant prejudice.

84Following release of this endorsement, I received from counsel for the moving parties a statement which identifies 11 documents or groups of documents included in the McCarthy documents which the moving parties submit are solicitor-client privileged communications which are capable of causing significant prejudice to the moving parties. In respect of each document or group of documents, I received from counsel for moving parties an explanation for why the documents are capable of causing significant prejudice.

85I have reviewed the 11 documents or sets of documents. They are emails between McCarthy and certain defendants, including Mr. Lue, Mr. de Zayas and Ms. Rodriguez. Many of the emails are redacted. Some of the emails were produced more than once, and the redactions on different versions are not always consistent.

86Included in the 11 documents is an unredacted email exchange in which McCarthy sends a draft arbitration response and a draft discovery plan in the action to Mr. de Zayas, Ms. Rodriguez and Mr. Lue, and requests their comments. The unredacted response from Mr. Lue with his comments is included as well as the responses from McCarthy to his comments. Other versions of these emails in the McCarthy documents contain significant redactions, which seems to show that Stikeman should not have received the unredacted version.

87The emails include requests for legal advice from McCarthy and provision of legal advice to Mr. Lue and other defendants. The documents include reports from McCarthy on confidential matters. Not all of the advice requested and given relates only to the arbitration. Several emails refer to aspects of the strategy of the defendants in the litigation. One email discloses Mr. Lue’s assessment of the relative strengths of the parties’ positions in the arbitration. The unredacted portions of the emails are not limited to information concerning whether Mr. de Zayas authorized McCarthy to agree to the arbitration.

88The moving parties rely on the fact that one of the 11 sets of documents (an exchange of emails with McCarthy) contains information that was confidential to the defendants and, after the McCarthy documents were produced to Stikeman, Stikeman used the information in this email exchange at a case conference in the action to support their submission that the defendants had made incomplete or otherwise misleading representations to the court on prior motions. This shows that on this occasion, Stikeman used information subject to the moving parties’ jointly held privilege in a way that would be prejudicial to them.

89When I consider the 11 documents or sets of documents identified by the moving parties from the collection of McCarthy documents (more than 200) produced to Stikeman, I am satisfied that they are not all insignificant and incapable of resulting in prejudice.

90In conclusion at this stage of the analysis, Stikeman reviewed the moving parties’ privileged documents that were produced to the firm. On one occasion, privileged information was used in a way that would be prejudicial to the moving parties. SLI has not shown that all of the privileged documents are not likely to be capable of creating prejudice. SLI has not established that a reasonably informed person would be satisfied that no further use of confidential information would occur. I conclude that SLI has not discharged its onus of rebutting the presumption of prejudice.

The Appropriate Remedy

91The third stage of the analysis is to fashion an appropriate remedy. At this stage, the question is not whether there is prejudice but how to rectify it to ensure fairness. See Continental Currency, at paras. 40-41.

92In Continental Currency, at paras. 43-45, the Court of Appeal explained how a motion judge should determine the appropriate remedy:

42A party seeking a stay (namely, the respondents) has the burden to show “special circumstances” to justify a stay as a stay is only granted where there is

(i) prejudice to the right to a fair trial or the integrity of the justice system and (ii) no alternative remedy to cure the prejudice: Etco Financial Corp. v. Ontario, [1999] O.J. No 3658 (S.C.), at para. 3; R. v. Babos, 2014 SCC 16, 367 D.L.R (4th) 575, at para. 32.

43Before imposing a stay, remedies that are less serious must first be considered as a stay is an extraordinary remedy that should be reserved for the clearest of cases: Celanese, at para. 56. It is a remedy of last resort to be imposed only to prevent ongoing prejudice, unfairness to a party or harm to the administration of justice: Law Society of Saskatchewan v. Abrametz, 2022 SCC 29, 470 D.L.R. (4th) 328, at paras. 83-85.

44In Celanese, at para. 59, the Supreme Court set out a number of non-exhaustive factors to be considered in determining the appropriate remedy. Celanese contemplated whether to remove counsel for the appellants who gained access to the respondents’ privileged documents in executing an Anton Piller order. While in this case, the appellants, not their counsel, were in receipt of the respondents’ privileged materials, the factors from Celanese nonetheless remain helpful. Those factors include:

i. How the documents came into the possession of the appellants or their counsel;

ii. What the appellants and their counsel did upon recognition that the documents were potentially subject to solicitor-client privilege;

iii. The extent of review of the privileged material;

iv. Contents of the solicitor-client communications and the degree to which they are prejudicial;

v. The stage of the litigation; and

vi. The potential effectiveness of a firewall or other precautionary steps to avoid mischief.

Is a stay of the action, or a stay of the action as against the moving parties, an appropriate remedy?

93Mr. Kreaden deposes that SLI has never received access to the McCarthy documents or the contents thereof. He deposes that he has no recollection of discussing any of the McCarthy documents with SLI. Mr. Kreaden deposes that the firm conducted searches of email accounts of lawyers working on this file and there is no record of the McCarthy documents having been sent to SLI.

94Mr. Kreaden deposes that in January 2026 when the moving parties brought this motion, Stikeman immediately verified that SLI did not receive access to the McCarthy documents and restricted its own access to them. Out of an abundance of caution, Stikeman personnel took all available steps to delete all emails containing links or copies of the McCarthy documents and removed all access to the folder with the McCarthys documents.

95The moving parties submit that SLI has not offered clear or convincing evidence that SLI did not receive the McCarthy documents. The moving parties raise concerns about the evidence of Mr. Kreaden, noting that after his affidavit was sworn, Stikeman discovered an email from one of its lawyers transmitting the McCarthy documents to the Tribunal that had not yet been deleted. The moving parties submit that it is possible that an email transmitting the McCarthy documents to SLI was deleted before a search was undertaken.

96I accept Mr. Kreaden’s evidence that the McCarthy documents were not sent to SLI. There is no evidence showing otherwise. Even though there were references to some of these documents during the cross-examination of Mr. de Zayas for use on the stay motion in the arbitration, in the presence of executives from SLI, I am not satisfied that these references show that the moving parties’ right to a fair trial is prejudiced or that call into question the integrity of the administration of justice if no stay is ordered.

97I conclude that this is not one of the clearest of cases where the extraordinary remedy of a stay of the action is the only appropriate remedy.

Is an order disqualifying Stikeman an appropriate remedy?

98SLI submits that the factors identified in Celanese support their submission that there is no basis for a remedy of disqualification of Stikeman.

(a) How the McCarthy documents came into the possession of Stikeman

99First, SLI relies on the fact that the documents were produced pursuant to the Interim Award, a decision of the Tribunal, as enforced by this Court with notice given to the moving parties. SLI notes that the Tribunal held a further case conference following the order recognizing and enforcing the Interim Award to consider the issue of the joint retainer and to discuss the mechanics of further production, and issued the Seventh Procedural Direction in this regard. SLI submits that in these circumstances, there is no basis for an order disqualifying Stikeman.

100I note that the Interim Award does not provide for production of the McCarthy documents, or any documents, to SLI or Stikeman. It provides for documents to be provided by Mr. de Zayas to the Tribunal and for Ms. Young to appear before the Tribunal with the McCarthy documents. The Order of the Court recognizing and enforcing the Interim Award does not provide for production of documents to SLI or Stikeman. It was left to SLI to decide how to address the issues concerning the moving parties’ jointly held privilege raised in the letter from McCarthy and, if SLI intended to seek a further direction from the Tribunal, to address these issues with the Tribunal before the McCarthy documents were produced to Stikeman.

101In Celanese, at para. 57, the Supreme Court of Canada cited Coulombe v. Beard (1993), 16 O.R. (3d) 627 (Gen. Div.) where Nordheimer J., as he then was, noted the reluctance of courts to impose the drastic remedy of disqualification of the lawyers who inadvertently obtained access to privileged information where “the nature of the privileged material inadvertently disclosed is not significant”. The Supreme Court of Canada held that this case shows that even where a party received a privileged document in error, the court will still take care to review the privileged document to assess the risk of prejudice.

102SLI and Stikeman failed to take care to ensure that they did not obtain access to the moving parties’ privileged documents. The fact that the moving parties held a joint privilege in the McCarthy documents was made clear to SLI and Stikeman in the McCarthy letter. Instead of taking such care, SLI, through Stikeman, chose to seek access to such documents by asking the Tribunal to direct McCarthy to produce the McCarthy documents to Stikeman. The Tribunal gave this direction in the Seventh Procedural Direction, without addressing in the written direction the issue of the jointly held privilege.

103By obtaining access to the McCarthy documents in this way, it cannot be said that Stikeman obtained such access through error or inadvertence, or that Stikeman was blameless in receiving the McCarthy documents. When Stikeman chose to seek access to documents over which the moving parties held a joint privilege, it took the risk that the moving parties may seek a remedy. The circumstances by which Stikeman obtained access to the McCarthy documents do not, as SLI submits, lead to the conclusion that no remedy should be imposed.

104Second, SLI relies on the fact that the McCarthy documents were produced only after reviews by McCarthy lawyers and lawyers representing McCarthy in respect of the privilege issue, who were alive to the categories of documents requested by SLI. SLI submits that McCarthy only produced documents that it determined were responsive.

105Whether the privileged documents produced to Stikeman by McCarthy were limited to those that were responsive to categories in SLI’s request for production of documents does not show that a remedy should not be imposed. This depends on whether it has been shown that the privileged documents produced to Stikeman could not be significantly prejudicial to the moving parties. As explained above, I have concluded that SLI has not shown that disclosure of the McCarthy documents to Stikeman is not capable of being significantly prejudicial to the moving parties.

106Third, SLI submits that Stikeman was unaware of any potential production of documents outside of the identified categories. SLI notes that the McCarthy documents were produced one-half day before the hearing of the stay motion, leaving Stikeman only hours to triage the production, prepare cross-examinations, and finalize submissions. SLI states that Mr. de Zayas had made attacks on the arbitration process and the Tribunal and, given these attacks, Mr. de Zayas’ “vague objections” appeared tactical and self-serving.

107Whether or not Stikeman regarded the position taken by Mr. de Zayas on Daumier’s stay motion and the Tribunal’s Interim Award to be tactical and self-serving, it could not simply ignore the joint privilege held by the moving parties in the McCarthy documents. Stikeman needed to take proper care to ensure that it was not obtaining access to the moving parties’ privileged documents. It failed to do so.

(b) What Stikeman did upon recognizing that the McCarthy documents were potentially subject to the moving parties’ solicitor-client privilege

108SLI submits that the actions taken by Stikeman upon recognizing that the McCarthy documents were potentially privileged militates against disqualifying Stikeman as counsel for SLI.

109SLI relies on the evidence from Mr. Kreaden that once the moving parties clearly set out their position in respect of the McCarthy documents, Stikeman promptly took all available steps to lock down the McCarthy documents so that they could not be used in any manner.

110I accept that this factor does not support the remedy of disqualification of Stikeman.

(c) The extent of review of privileged information; Contents of the solicitor-client communications and the degree to which they are prejudicial

111With respect to these two factors, Stikeman submits that they do not support a stay of the action or disqualification of Stikeman because Stikeman only briefly accessed the McCarthy documents which minimized any potential risk of prejudice. SLI notes that after the stay motion, Stikeman did not review the McCarthy documents and its lawyers have no meaningful recollection of any of them. SLI submits that Stikeman’s brief handling of the McCarthy documents resulted in, at most, minimal risk of prejudice, which was entirely eliminated following the steps taken by Stikeman to restrict and delete all access to the McCarthy documents.

112As I have noted, the McCarthy documents were identified with precision and made available to the court for review, if necessary, in a confidential brief. Further to my endorsement following the hearing of this motion, counsel for the moving parties identified 11 documents, or groups of documents, from the McCarthy documents which, they submit, are capable of causing significant prejudice to the moving parties. I have concluded that SLI has not shown that the McCarthy documents are not likely to be capable of creating prejudice. SLI has not established that a reasonably informed person would be satisfied that no use of confidential information would occur.

(d) The stage of the litigation

113SLI notes that it is at the stage of an application to the Court for recognition and enforcement of the final award in the arbitration. SLI relies on the fact that Stikeman has been counsel to SLI during the course of the action and the arbitration during which it has obtained extensive knowledge of the evidence, issues and strategy.

114Even though the action remains at the pleading stage and has not progressed to documentary and oral discovery, I accept that the action is at a stage where disqualification of Stikeman would be harmful to SLI.

(e) The potential effectiveness of a firewall or other precautionary steps to avoid mischief

115I am not satisfied that the actions taken by SLI to delete the McCarthy documents will be effective to prevent use by Stikeman of information gained from reviewing the McCarthy documents.

116As I have held, I am unable to accept that Mr. Kreaden’s evidence that he has only a limited recollection of the content of the McCarthy documents from his review of them is sufficient to rebut the presumption of prejudice to the moving parties, for the reasons expressed in Celanese, at para. 42, citing Macdonald Estate, at p. 1263.

117In Celanese, at para. 56, the Supreme Court of Canada confirmed that if a remedy short of removing the lawyers who received privileged information will cure the problem, it should be considered. The Court noted that the right of a party to continue to be represented by its counsel of choice is an important element of our adversarial system.

118SLI submits that that consideration of the Celanese factors shows that this is not one of the rare cases where removing counsel would be appropriate. SLI submits that in other cases, where the disclosure at issue was far mediation prejudicial and the conduct of the recipient more nefarious, Courts have declined to order removal of counsel. SLI cites two cases in support of this submission.

119In Morneault v. Dynacorp Acquisition Ltd., 2006 ABQB 831, a party obtained access to the opposing party’s privileged documents through means described as improper. Nevertheless, the motion judge declined to order disqualification of counsel because he concluded that the privileged documents were “relatively harmless”. On this motion, I am unable to conclude that the privileged documents received and reviewed by Stikeman are relatively harmless or, put another way, that any prejudice from Stikeman having had access to such documents is not capable of being significant.

120In Drake Holdings Ltd. v. Chubb Insurance Company of Canada, 2018 ONSC 4494, a lawyer for a party reviewed two short, privileged documents which she viewed as significant. The motion judge held that a reasonably informed member of the public would be satisfied by the imposition of lesser remedies than removal of counsel that no use of confidential information would occur. The motion judge ordered that the lawyer undertake not to directly or indirectly relay to any person any information she possesses as a result of having reviewed the privileged documents and that the lawyer not conduct any examinations of the opposing party’s witnesses or in the preparation of such examinations by other counsel. On this motion, I am not satisfied that a reasonably informed member of the public would be satisfied that no use of confidential information would occur if similar remedial measures were ordered.

121In Celanese, at paragraph 34, the Supreme Court of Canada explained the danger arising from solicitor-client information winding up in the wrong hands:

Whether through advertence or inadvertence the problem is that solicitor-client information has wound up in the wrong hands. Even granting that solicitor-client privilege is an umbrella that covers confidences of differing centrality and importance, such possession by the opposing party affects the integrity of the administration of justice. Parties should be free to litigate their disputes without fear that their opponent has obtained an unfair insight into secrets disclosed in confidence to their legal advisors. The defendant’s witnesses ought not to have to worry in the course of being cross-examined that the cross-examiner’s questions are prompted by information that had earlier been passed in confidence to the defendant’s solicitors. Such a possibility destroys the level playing field and creates a serious risk to the integrity of the administration of justice. To prevent such a danger from arising, the courts must act “swiftly and decisively” as the Divisional Court emphasized. Remedial action in cases such as this is intended to be curative not punitive.

122I conclude that there are no precautionary steps, short of disqualifying Stikeman from acting as counsel for SLI, that would avoid the mischief resulting from use of the moving parties’ privileged information.

123I conclude that the appropriate remedy to be imposed is that Stikeman be disqualified from acting for SLI in the action. The subject matter of the arbitration overlaps considerably with the subject matter of the action and, although the moving parties are not respondents in the arbitration, their interests are affected by the outcome of the arbitration. I conclude that Stikeman should also be disqualified from acting for SLI in the arbitration and related proceedings.

Disposition

124For these reasons, I order that Stikeman be disqualified from acting for SLI in the action and in the arbitration, and in related proceedings.

125I ask counsel to confer and provide me with an approved form of order to be signed to give effect to this decision. Stikeman is granted leave to engage in this process.

126If the parties are unable to resolve costs, the parties may make written submissions (with reasonable page limits) according to a timetable to be agreed upon by counsel and approved by me. Stikeman is granted leave to make costs submissions on behalf of SLI.

Cavanagh J.

Date: March 27, 2026