Zitia Developments Inc. et al v. Halyk et al, 2026 ONSC 2057

CITATION: Zitia Developments Inc. et al v. Halyk et al, 2026 ONSC 2057

COURT FILE NO.: CV-22-00691951-0000

DATE: 20260407

BETWEEN:

ZITIA DEVELOPMENTS INC.; ZITIA DEVELOPMENTS (2010) INC.

Plaintiffs

– and –

PAUL HALYK; 2156083 ONTARIO INC.; IOANNIS ANTONOPOULOS, AKA John Antonopoulos; SPEROS KANELLOS; JOHN ALEXANDER EVANS; ROSS & MCBRIDE LLP; WILLIAM DUNLOP

Defendants

Daniel Rosenbluth, Adam Iggers for the Plaintiff(s)/Moving Parties

Richard Campbel, for the Defendant(s)/Responding Parties

HEARD: March 17, 2026

JUSTICE Carissima Mathen

1This is a motion for relief after one party accessed another party’s privileged information.

2The plaintiffs/defendants by counterclaim, Zitia Developments Inc. and Zitia Developments (2010) Inc. (collectively, “Zitia” or the “Zitia Group”), seek a stay of proceedings and related relief in their litigation against the defendants/plaintiffs by counterclaim Paul Halyk et al.

3The two individuals pertinent to this matter are Peter Labiris and Paul Halyk. I refer to them, respectfully, by their first names. There are named defendants in addition to Paul. Peter advised that proceedings against them were discontinued, but the style of cause has not been updated.

4Peter and Paul are former business partners who have been in litigation since 2021. They are also brothers-in-law – Paul married Peter’s sister who is now deceased.

5In March 2023, Peter discovered that Paul had accessed Peter’s personal email account for years. The messages in that account included privileged correspondence between Peter and his lawyers.

6Paul admits that he accessed and reviewed the emails and says he regrets doing so.

7Peter has already brought one motion for similar relief. In 2023, this court found that Paul had committed abuse of process: 2177546 Ontario Inc. v. 2177545 Ontario Inc., 2023 ONSC 5984 (“545 (ONSC)”). Chalmers J. struck Paul’s company’s Notice of Appearance in the partition application, barred Paul from filing evidence, and ordered the partition application to proceed undefended. The Court of Appeal for Ontario upheld that decision: see 2177546 Ontario Inc. v. 2177545 Ontario Inc., 2023 ONCA 5984, 487 D.L.R. (4th) 550 (“545 (ONCA)”).

8In 2023, Peter conceded that the motion did not relate to other matters pending between the parties. Accordingly, Chalmers J. ordered that:

a. The findings on that motion would not apply to those other proceedings; and

b. In each proceeding, the court must consider afresh the legal test to grant the remedy Peter seeks.

545 (ONSC), at para. 102.

9The current motion seeks relief in three related proceedings, which are elaborated below.

10Unlike the motion in 545 (ONSC), Peter has put before the court the contents of the email account, subject to a sealing order. Peter says he did so “in order to better demonstrate the serious prejudice resulting from Paul’s review”. The parties have starkly divergent views about the legal implications of that development. Paul says that it alters the burden on him to demonstrate prejudice. Peter says it does not.

11Briefly, Peter’s motion is granted. I find Paul accessed privileged information that has greatly prejudiced Peter; and the only proper remedy is to stay the proceedings initiated by Paul, or strike Paul’s pleadings for the proceedings initiated by Peter. The fact that Peter has now disclosed the privileged information does not affect Paul’s burden to rebut the presumption of prejudice. Even if it did affect the burden, Peter has proved serious and sustained prejudice, as well as damage to the administration of justice, which justifies the remedies imposed.

BACKGROUND

12At the beginning of the motion, the parties agreed that I may rely on the introductory facts as articulated by Chalmers J.

The Parties

13As stated above, Peter and Paul are former business partners in a group of real estate development companies known as the Zitia Group. The Group consists of the two plaintiffs on this motion: Zitia Inc. and Zitia 2010. .

14Currently, Peter is the sole director and officer of those entities. The entities’ shares are split between a holding company, 2156082 Ont. Inc. (“082 Ontario”) owned by Peter’s mother, Voula Labiris, and Paul’s company, 2156083 Ontario Inc. (“083 Ontario”).

15The parties’ relationship began to break down in 2016. Peter and Voula removed Paul as a director and officer of the Zitia companies at a shareholders’ meeting in 2021.

The Proceedings

16In 2023, Peter brought a motion regarding an application made under the Partition Act, R.S.O. 1990, c. P.4. That application concerned a property in Simcoe, Ontario, valued in the tens of millions of dollars. In early 2021, an application to the local Committee of Adjustment, that both Peter and Paul signed, asked to sever the Simcoe property into two equal parcels. When Paul later took the position that he had not signed the application, Peter commenced an application for partition. As noted above, Chalmers J. ordered the matter to proceed undefended.

17The remaining proceedings are:

a. Paul’s claim that his holding company is a 50% indirect shareholder, not 33.33%, of Zitia Developments and Zitia 2010, pursuant to an oral trust agreement; and for $20 million in damages arising out of his removal as a director and officer of Zitia:

i. Paul alleges that Zitia 2010 was originally owned by three men: Peter, Paul and Ioannis Antonopoulos. Paul and Ioannis’ shares were to be held in trust by Peter’s mother, Voula. Paul says he later purchased Ioannis’ shares, bringing his own shares up to 50%. This transaction does not appear to have been formally documented. Paul says that the portion of shares formerly belonging to Ioannis, and still owned on paper by Voula, are held in trust for Paul. Paul seeks a $20 million oppression remedy. Paul argues that his removal as a Director/Officer was in reprisal for his claims and seeks a wind-up.

ii. Zitia’s defence is that: Ioannis was always a lender, never an owner. Therefore, the papering of the shares reflects reality. Furthermore, Peter and Voula removed Paul after discovering troubling issues, such as missing funds. Peter argues that the parties’ respective motivations would be a significant triable issue.

iii. Affidavits of Documents were exchanged in 2022. No examinations have occurred.

b. An action commenced by Zitia against Paul and others on December 20, 2022 (the “2022 Action”) for improperly registering cautions which interfered with Zitia’s efforts to sell certain properties:

i. This matter concerns a property owned by Zitia located at 71 Dundas St. East in Paris, Ontario. A corporation called Southside offered to buy it for $6 million. Peter alleges that Paul interfered with the transaction.

ii. Peter says that, at the time he commenced the action, he had no idea Paul was reading his emails. It was during the negotiations with Southside that Peter realized that Paul must have been accessing confidential information. Peter alleges that Paul succeeded in scuttling the Southside purchase and buying it for himself. Paul paid the same price that Southside offered. Nevertheless, Peter says Paul owes him for significant expenses caused by Paul’s interference, which was aided by Paul’s access to privileged information.

c. An action commenced by Paul and his holding company for a forced liquidation of Zitia 2010’s real estate assets (the “2024 Action”):

i. This action involves a property located at 72 Dundas St. East in Paris, Ontario, owned by Zitia. Paul disapproved of how Zitia handled this asset. He alleges that, in July 2024, a prospective buyer was prepared to offer $9 million for it. To Paul’s “shock and dismay,” Zitia refused to entertain the offer. Paul alleges that Zitia did not want to sell because Peter personally owns the land adjoining the real property of 72 Dundas. Paul says that Peter was self-dealing.

ii. Peter says that 72 Dundas was always a long-term asset. Peter claims that some of the privileged communications Paul accessed go directly to the parties’ reasonable expectations about how the property was to be managed.

d. An action commenced in 2025 by Zitia 2010 and Peter against Paul and his company, 2207164 Ontario Ltd. Peter does not seek any relief for this action on this motion and, therefore, I will not discuss it further.

18None of the above proceedings have gone to discovery.

19Peter commenced the within motion in late 2023, after the Court of Appeal for Ontario dismissed Paul’s appeal from 545 (ONSC).

The Email Accounts

20The following information is borrowed from 545 (ONSC), at paras. 10-13.

21In 2005, the Zitia Group created an email account; zitia@zitiagroup.com. Paul’s personal email account is paul.halyk@zitiagroup.com. When the litigation between Peter and Paul began, Peter created a separate account: p.labiris@zitia.ca. However, Peter continued to use zitia@zitiagroup.com as his personal account. Paul knew Peter did not use the p.labiris@zitia.ca email account. When Paul sent messages to Peter, he would send them to the zitia@zitiagroup.com email account.

22Paul has said that the zitia@zitiagroup.com email account was not a private account. He states that he had access to the account since it was created in 2005, and that both he and Peter would send emails from it, signing their own names to the emails.

23In September 2016, Francis Kopke, an IT consultant, began providing services to Zitia including repairing and connecting computer equipment. In May 2017, he migrated Zitia’s computer system to Office 365. The email addresses were migrated to Office 365 at that time. In April 2023, Mr. Kopke deposed that he believed that the zitia@zitiagroup.com was a shared email address.

24On April 29 or 30, 2021, Mr. Kopke went to Paul’s home to assist him in setting up a domain name and new email accounts for Paul’s company, H3 Capital. Mr. Kopke ensured that Paul continued to have access to the zitia@zitiagroup.com mailbox. This access was set up on Paul’s Apple computer. On August 23, 2022, Mr. Kopke also added the zitia@zitiagroup.com email to Paul’s cell phone.

25Paul says that he has never denied that he “continuously used” the zitia@zitiagroup.com email account.

How Peter discovered the breach

26The following information is borrowed from 545 (ONSC), at paras. 15-22.

27In March 2023, after suspicious and unexplained conduct, Peter became concerned that Paul was acting on confidential information to strengthen his position in the parties’ litigation.

28For example, Paul took steps to register notices and cautions on title to the Zitia property at 71 Dundas Street discussed earlier in these reasons. Zitia had sold the property with a closing date of March 23, 2023. Peter did not disclose that date to Paul. On March 22, 2023, one day before the scheduled closing, Paul served a motion for a certificate of pending litigation.

29Peter contacted Mr. Kopke, on March 23, 2023. Mr. Kopke advised Peter that he had granted Paul full access to the zitia@zitiagroup.com email account in April 2021. Peter was “shocked” by this discovery. Over the years he had sent and received thousands of emails through this email account, including communications with his lawyers about the various legal proceedings between him and Paul.

30On March 24, 2023, Peter’s lawyer, Mr. Rosenbluth, sent an urgent letter to Paul’s then lawyer, Mr. Dunlop. Mr. Rosenbluth wanted Paul to immediately submit to an examination under oath concerning the scope of his access to Peter’ email account and to turn over his electronic devices for review by independent forensic experts.

31Mr. Dunlop advised that he was unable to continue to act for Paul. Paul retained his current counsel, Mr. Campbell. On March 27, 2023, Mr. Campbell advised Mr. Rosenbluth that none of the communications in the zitia@zitiagroup.com email had been used by Mr. Campbell and that no communications from the email account shaped Paul’s litigation strategy. Mr. Campbell did not advise that Paul did not access the email account or had not reviewed Peter’ emails.

32Peter argues that it remains unclear to what degree Paul shared privileged material with his former counsel. In cross-examination for the within motion, Paul was asked to require Mr. Dunlop to provide copies of any privileged correspondence he received. Paul never provided an answer.

Prior attempts to clarify the extent of Paul’s review

33The following information is borrowed from 545 (ONSC), at paras. 23-41.

34After Peter commenced the original motion before Chalmers J., the parties had several case conferences before Koehnen J.

35Prior to those case conferences, Peter produced an affidavit from a digital forensics expert, who said that if he could physically analyze Paul’s computer and/or phone, he could probably determine whether Paul had saved any files from the email account to his hard drive and whether Paul had forwarded any messages from the email account to any other email.

36On April 24, 2023, Paul’s current counsel, Mr. Campbell, advised Koehnen J. that Paul had sent him privileged email correspondence.

37Koehnen J. recommended to Paul that he provide his devices for inspection to determine the scale of the privilege breach. The parties could not agree on terms for the inspection.

38On May 1, 2023, Koehnen J. directed Paul to produce hard copies of the emails he printed from the zitia@zitiagroup.com account.

39Paul did not produce the hard copies, leading to a third case conference on May 11, 2023.

40On the day before the third case conference, Paul deposed in an affidavit that he “never accessed anything which was in the nature of legal advice from any of [Peter’s] lawyers to him, in my opinion.” At the same time, Paul produced four email threads he had previously printed out from the zitia@zitia.group.com email account.

41Koehnen J. gave Paul until May 15, 2023, to provide access to all of his electronic devices for the purpose of imaging them, failing which Paul would be deemed to have refused access.

42The parties arranged for Mr. Vranesh of Froese Forensic to attend Mr. Campbell’s office on May 15, 2023. The iPhone provided was damaged and would not stay on for longer than one minute. Halyk advised he obtained a new iPhone in early May 2023. That phone was not provided to Mr. Vranesh.

43The parties were unable to agree on terms for imaging Paul’s laptop.

ISSUES

44The issues on this motion are:

a. Did Paul obtain access to privileged materials?

b. If so, did prejudice result?

c. If prejudice resulted, what is the appropriate remedy?

45The parties agree that Paul obtained access to privileged materials. They disagree about:

a. The test in relation to prejudice. In particular, does Paul bear the burden to rebut a presumption of prejudice?

b. The appropriate remedy should I find prejudice.

ANALYSIS

46The facts as I find them are contained in the following analysis.

The Law

47The test that governs when privileged information is received by an opposing party is set out in Celanese Canada Inc. v. Murray Demolition Corp., 2006 SCC 36, [2006] 2 S.C.R. 189, and, more recently, in Continental Currency Exchange Canada Inc. v. Sprott, 2023 ONCA 61, at paras. 31-45, leave to appeal refused, [2023] S.C.C.A. No. 142.

48A breach of privilege “creates a serious risk to the integrity of the administration of justice” which the courts must act “swiftly and decisively” to prevent: Continental Currency, at para. 31, citing Celanese, at para. 34.

49In Continental Currency, relying on Celanese and MacDonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235, the Court of Appeal for Ontario reiterated the three-part test for resolving issues of unauthorized access to privileged documents. Like the parties do, I refer to those parts as ‘Stages’.

50At Stage One, the moving party must establish that the responding party obtained access to relevant privileged material.

51At Stage Two, the risk of significant prejudice is presumed. That means that the moving party does not have the onus of proving “the nature of the confidential information” disclosed: Continental Currency, at para. 34, citing Celanese, at paras. 42, 48. Rather, the responding party must rebut the presumed prejudice flowing from receipt of privileged information: Continental Currency, at para. 34, citing Celanese, at para. 48.

52The responding party can rebut the presumption of prejudice by identifying, “with some precision”, that:

a. they did not review any of the privileged documents in their possession;

b. they reviewed some documents, but the documents were not privileged; or

c. the privileged documents reviewed were nevertheless “not likely [to] be capable of creating prejudice.”

[Emphasis added.]

Continental Currency, at para. 35, citing Celanese, at para. 53.

53The evidence must be “clear and convincing” such that “[a] reasonably informed person would be satisfied that no use of confidential information would occur”: Continental Currency, at para. 36, citing MacDonald Estate, at pp. 1260-63; see also Celanese, at para. 42. The responding party cannot simply offer “a fortiori undertakings and conclusory statements in affidavits without more”: MacDonald Estate, at p. 1263.

54As the Court of Appeal held, in Continental Currency, at para. 39, a reverse onus applies because:

a. requiring the party whose privileged information has been disclosed or accessed to prove actual prejudice would require them to disclose further confidential or privileged materials;

b. placing the burden on the [party who accessed the privileged information and] who has access to the privileged information is consonant with the usual practice that “the party best equipped to discharge a burden is generally required to do so”; and

c. the party whose privileged information was accessed should not have to bear “the onus of clearing up the problem created by the [other party’s] carelessness”.

55At Stage Three, the court must fashion an appropriate remedy. A party seeking a stay must show “special circumstances”. A stay is only granted where there is prejudice to the right to a fair trial or the integrity of the justice system, which no alternative remedy can cure: Continental Currency, at paras. 40-42; see also Etco Financial Corp. v. Ontario, [1999] O.J. No. 3658 (S.C.), at para. 3, and R. v. Babos, 2014 SCC 16, [2014] 1 S.C.R. 309, at para. 32.

56The factors going to an appropriate remedy include:

a. How the documents came into the possession of the responding party or their counsel;

b. What that party and their counsel did upon recognizing that the documents were potentially subject to solicitor-client privilege;

c. The extent of review of the privileged material;

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

e. The stage of the litigation; and

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

Continental Currency, at para. 44, citing Celanese, at para. 59.

57Where the party in receipt of privileged documents fails to identify what documents they reviewed, they put the court in the “invidious position” of being unable to determine the extent of the actual review of the material and the degree of resulting prejudice, which triggers a presumption that the third and fourth factors weigh against that party: Continental Currency, at para. 45, citing Celanese, at paras. 62-63, and MacDonald Estate, at p. 1263.

58Paul argues that this case requires a different approach under Stage Two than the above caselaw would suggest. He says that the rebuttable presumption protects a moving party from being “burdened with proving what was reviewed”: Paul’s Factum, at para. 14. In this case, “Peter voluntarily assumed that burden, and voluntarily confirmed that the emails which he has chosen to produce are the only relevant ones”: Paul’s Factum, at para. 14. Therefore, there is no reason for the presumption – the court “can assess the prejudice which might arise from any potential review of those emails by Paul as an exercise in fact-finding”: Paul’s Factum, at para. 13. I address this argument below.

Application

Stage One: Did Paul obtain access to privileged materials?

59There is no dispute that Paul obtained access to Peter’s privileged materials. Paul admits as much: Paul’s Factum, at para. 15.

60Peter argues that “[t]he seriousness of the wrongdoing and prejudice is remarkable”: Peter’s Factum, at para 4.

61Paul has been reading Peter’s personal emails for years. I am satisfied that Paul was aware of what he was doing. His actions are an egregious breach of both privacy and privilege.

Stage Two: If so, did prejudice result?

62I will now consider what prejudice results from the breach of privilege.

What is the Burden of Proof?

63As stated above, cases like Continental Currency, Celanese and MacDonald Estate direct that, at Stage Two, the person who breached privilege faces a rebuttable presumption that prejudice has occurred. Paul argues that that presumption does not apply when the court has access to the privileged materials. At the hearing, Paul’s counsel suggested that the burden in such a case is shared.

64Paul did not point to a case directly in support of his argument. There is no law before me to suggest that the rebuttable presumption shifts simply because the moving party elects to provide the court with information. Instead, Paul invites me to parse the language of the above cases, and to apply logic and common sense.

65When I look at the cases, however, I do not find that their text, logic, or common sense more generally, leads to Paul’s conclusion.

66It is useful to go back to first principles. In these cases, the court is seized with a question of abuse of process going to the heart of the adversarial system. That system depends on a zone of robust protection for persons’ communications with counsel in order to fully press and/or defend their case.

67Recall the three reasons why a rebuttable presumption is appropriate:

a. Requiring the party whose privileged information has been disclosed or accessed to prove actual prejudice would require them to disclose further confidential or privileged materials;

b. Placing the burden on the party who accessed the privileged information and has access to the privileged information is consonant with the usual practice that “the party best equipped to discharge a burden is generally required to do so”; and

c. The moving party should not have to bear “the onus of clearing up the problem created by the [responding party’s] carelessness”.

68Paul emphasizes point (a), which rests on the idea that someone who has suffered a loss of privilege should not be forced to compound that harm by revealing even more confidential information. Paul argues, essentially, that the choice rests with that person, and once they decide to reveal those confidences, the rationale for the presumption disappears.

69The problem with Paul’s analysis is that it elides points (b) and (c). In particular:

a. Paul argues that Peter is in the best position to demonstrate prejudice because the emails are now in the record. However, Paul ignores that he has failed to respond to questions about the parameter of the breaches since he failed to compel his former solicitor to describe what information he received from Paul. Therefore, I do not accept that, in this case, Peter is better equipped to “discharge the burden” than Paul.

b. Paul’s approach does not fit well with the idea, noted in para. 50 of Celanese, that “putting the onus on the party in receipt of the confidential information rather than on the party being searched, increases the incentive on its part to take care to ensure that privileged information is not reviewed in the first place.”

c. Paul’s approach does not appreciate that he who creates a mess has the obligation to clean it up. Paul stresses that, by putting the record before the court, Peter has created the ‘universe’ to which the privilege analysis applies. Paul shifts responsibility for the motion based on Peter’s litigation choices – but it is Paul’s choice to review confidential information which has made this motion necessary.

70On a deeper level, Paul’s argument implies that the more extensive is the initial breach, the more work the wronged party faces if they decide to put the evidence before the court. That works a perverse result – the person who breaches a large tranche of information can sit back and wait for the wronged party to present their theory of prejudice.

71In addition, Paul’s approach does not respect judicial economy. The record in this case contains thousands of emails. It is inefficient for the court to have review such a large record without specific guidance from the person who breached the privilege.

72Therefore, I do not accept Paul’s argument that the onus changes depending on whether the court has access to the privileged material. For completeness, if I did accept that the burden is shared, Paul has not discharged his burden, and Peter has. I explain why below.

Analyzing prejudice in this case

73To begin, I will address what information Paul offers about prejudice.

74Unlike the motion before Chalmers J., Paul has reviewed the emails contained in the sealed brief. His November 28, 2025, affidavit includes an 11-page chart that breaks out each document in the brief, with a one-line description of it and a notation of whether his access to it was “Mundane”, “Significant”, and/or “Not Privileged”.

75Certainly, Paul’s review gives the court a better idea of what information he accessed than was the case in 2023. Nevertheless, for the following reasons, Paul’s review does not satisfy the requirement, in Celanese at para. 53, that he address the question of prejudice “with some precision”:

a. In reviewing the prior motion decision, the Court of Appeal stated that Paul “could and should have rebutted the presumption of prejudice by disclosing what documents they accessed, what was done with them and when”: 545 (ONCA), at para. 39. Paul’s chart fails to do this; it does not detail when Paul first accessed the information, what he did with the information, and when.

b. Paul still has not specified which materials were forwarded to his prior counsel, Mr. Dunlop.

c. Paul does not explain the notations in the chart itself. For example, he admits that 97 emails are “Significant”. What does that mean? How is significance being assessed? Is it a uniform standard, or a contextual one? How do the emails relate to the different proceedings under consideration on this motion? All of that is unclear.

76Therefore, I find that Paul has not delineated “with some precision” what exactly he did with the information he improperly accessed.

77Even if I agreed that Paul did not bear the entire burden to demonstrate a lack of prejudice, I am satisfied that Peter has demonstrated the fact of prejudice. First of all, I agree with Peter’s description of what the emails show:

Finally, a review of the actual contents of the emails shows that many of them are very significant. They include highly sensitive discussions between Peter and his litigation counsel which lie at the very core of the continuum of privileged communications. They relate to: (i) Peter’s attitudes towards specific settlement proposals involving Paul and the Proceedings;¹ (ii) Peter’s priorities and approach to disposing of disputed assets owned by the Zitia Group entities, which is the sole issue in the 2024 Action;² (iii) Peter seeking legal advice in preparation to remove Paul as a director of Zitia and Zitia 2010, the decision which precipitated the 2021 Action;³ and (iv) important strategic and substantive aspects of the Proceedings.⁴

78More particularly, with respect to the three proceedings:

a. The 2021 Action launched by Paul against Zitia et al for oppression and wind-up: Having reviewed the evidence, I am satisfied that Paul accessed privileged information directly relevant to how Peter intended to defend against Paul’s claim. Paul viewed an email from Peter that goes into great detail about Peter’s perspective on the claim and the history (as Peter sees it) between the parties.⁵ The email includes information that Peter received from a mortgage lender about representations Paul had made to them. The Email Brief also includes a privileged email where Peter responds to Paul’s allegation that Peter was in an affair with someone pertinent to the case.⁶

b. The 2022 Action launched by Peter regarding Paul’s interference with the sale of 71 Dundas: I am satisfied that, after reading several privileged emails from Peter’s lawyer, Paul began registering notices on title to 71 Dundas to prevent its sale. Those privileged emails discussed in detail the effects of Paul’s refusal to cooperate with the sale, the timing of how Paul’s certification notices would be processed, and an explanation of the possible defects that any notices Paul did file might have.⁷ I am satisfied on a balance of probabilities that Paul modified his notices after reading the information provided to Peter about those possible defects. I am further satisfied that Paul had privileged information that the closing date for 71 Dundas changed to December 7, 2022, and filed a new caution on that same day. Finally, I am satisfied that Paul saw an email from Peter where Peter stated an amount at which he would be willing to settle with Paul.⁸

c. The 2024 Action launched by Paul in relation to 72 Dundas Street East: I am satisfied that the privileged information Paul accessed influenced his decision to launch yet another claim against Peter, this time for Zitia’s refusal to accept an offer to purchase 72 Dundas. By this point in the litigation, the proceedings had become intertwined. I am satisfied that Paul’s access to privileged information would have created prejudice to Peter’s ability to defend against the claim that he was self-dealing because of his adjoining property.

79Therefore, I am satisfied that, had it been incumbent on Peter to discharge a burden to show prejudice – a proposition I do not accept – Peter has done so.

80I will now address a different point Paul makes about prejudice. Paul argues that, because of how well he knows Peter from their years-long relationship, he gained no advantage from reading Peter’s confidential and privileged emails.

81In particular, Paul’s affidavit sworn November 28, 2025, attests that:

a. The parties “worked and planned and dreamed a business together – at the office, over family meals, on vacation together…virtually everywhere and at virtually all times.”: at para. 53.

b. “[A]t least in matters of business, we had no secrets from each other.”: at para. 54.

c. “It is through this close, shared history together that I have come to know so much about Peter, and he undoubtedly knows just as much about me.”: at para. 55.

d. “[T]here are situations where business partners have a falling-out…in circumstances where they have only ever made minimal, necessary disclosure [...] That is not how it worked with Peter and me….When we made plans, we each knew everything, about everything.”: at paras. 87-88, 90.

e. Although access to confidential emails is “troubling to the Court…[w]ith the intimate knowledge which Peter and I had, and have about each other, I never lacked insight into his motivations, his objectives or his strategies.”: at paras. 113-14.

82I do not agree that past closeness between the parties can mitigate prejudice flowing from access to privileged information. There is no case before the court to support that proposition, and the idea seems neither sensible nor sound. First, if Paul’s proposition were accepted, it would alter the understanding of prejudice in a wide swath of cases, such as family law, where parties are former intimates. Second, a close personal relationship between the parties has little bearing on prejudice where, as here, the breaching party passed information on to their lawyer. Third, if a party possessed such superior insight into the other party’s thinking, it is puzzling why they would choose to access privileged information in the first place.

83In conclusion, I find that Paul’s breach of Peter’s privileged information created profound and sustained prejudice.

Stage Three: If prejudice resulted, what is the appropriate remedy?

84Peter asks that: Paul’s proceedings against him be stayed; and that his claims against Paul proceed on an undefended basis. Peter acknowledges that these are serious remedies, but that they are amply justified given the sheer scale of prejudice and of damage to the integrity of the justice system.

85Paul argues that:

a. The court’s primary concern is that cases be decided on their merits if at all possible.

b. Remedies for breach of privilege must be forward-looking. A stay is punitive and backward-looking.

c. There is no evidence that a trial on the merits would be unfair.

d. Paul was already punished for his breach of privilege – when Justice Chalmers ordered Peter’s Partition Applicant to proceed undefended.

86To determine what remedy to impose, I will apply the six factors from para. 44 of Continental Currency.

How the documents came into the possession of the respondent

87There is no dispute that Paul deliberately read emails Peter sent to his lawyers. Paul also sent at least part of that information to his own lawyers. Paul’s conduct was intentional.

88This factor does not favour Paul.

What the respondent did upon recognition that the documents were potentially subject to solicitor-client privilege

89For years, Paul did not let anyone know that he was accessing privileged information. He only admitted it when Peter discovered the breach in 2023. Paul knew that the information was confidential and privileged.

90This factor does not favour Paul.

The extent of the review of the privileged material’s contents of the solicitor-client communications

91The emails have been provided to the court in a sealed brief of over two thousand pages. Peter has taken the court through some of the materials. Paul provided a chart that lists the emails and his annotation of whether they are mundane, significant and/or not privileged. The court has reviewed some but not all of the emails.

92At Stage Two, above, I found that Paul has not addressed the materials with the required level of precision mandated in prior caselaw. Importantly, Paul has not clarified what information he sent to counsel.

93I find that this factor weighs against Paul.

The degree to which the privileged material is prejudicial

94Paul has not identified the materials with sufficient precision to inform my conclusion about the degree of prejudice.

95At Stage Two, above, I detailed the prejudice that resulted. Paul had a crucial window into Peter’s communications and litigation strategy with Peter’s counsel in relation to the parties’ many proceedings. The privileged material is inherently and overwhelmingly prejudicial against Peter. This factor weighs heavily against Paul.

The stage of the litigation

96The proceedings are at an early stage. There has been no discovery. No other dates have been set. To the extent that prejudice discovered at a later stage is more difficult to remedy, this factor favours Paul.

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

97There is no possible firewall in this case. Paul cannot disabuse himself of the knowledge he gained.

98Paul argues that an adequate precautionary step is to appoint a case management judge. He says that the judge can decide future steps, as required, if Peter objects to something on the basis that Paul is trying to capitalize on the breach.

99Peter argues that an alternative remedy would be for the court to appoint an advocate to argue the case for Paul and bar Paul from further participation in the case. Peter stresses that he does not favour this outcome, but it is the only thing he can think of.

100I do not find either of the suggested alternatives really respond to what happened in this case. As Peter points out, this case has already been under case management. Therefore, Paul’s alternative is not a remedy at all. It is the status quo.

101As for Peter’s suggestion, I do not see the utility of appointing an advocate to act for Paul without the ability to interact with him. But, of course, if the advocate did interact with Paul, the risk is that Paul might rely on the privileged information to discuss and develop strategies in the pending litigation.

102This factor does not favour Paul.

Conclusion

103In Continental Currency, where the privilege breach was by the plaintiffs, the court held that the only appropriate remedy was to stay the plaintiffs’ action: at para. 76.

104In the parties’ prior motion, Chalmers J. found that, where the breach is by a defendant, allowing them to oppose a claim where they have enjoyed access to privileged emails would be unfair: 545 (ONSC), at para. 96. Accordingly, Chalmers J. directed that Paul’s responding materials be struck and the matters proceed as though they are undefended.

105While it is important for cases to be decided on their merits, that cannot be the principal consideration in an abuse of process claim. The breach of privilege in this case is egregious and, in my view, irremediable.

106Paul argues that a stay would be punitive, and he has been punished once already. I do not find this persuasive. The reason that a similar remedy is still required is (a) the parties have a complicated litigation picture and (b) the scale and duration of Paul’s breach of privilege makes any lesser remedy insufficiently responsive to the potential unfairness to Peter and the damage to the administration of justice.

107Given that the remaining proceedings involve Paul as both plaintiff and defendant, I find that the only appropriate result is to order the remedies as sought.

ORDER

108In conclusion, I make the following order:

a. The motion is granted as follows:

i. The action commenced by the defendants/plaintiffs by counterclaim on May 13, 2021 bearing Court File No. CV-21-00076045-0000 is stayed.

ii. The action commenced by the defendants/plaintiffs by counterclaim on March 20, 2023 bearing Court File. No. CV-23-00000368-0000 is stayed.

iii. The action commenced by the plaintiffs/defendants by counterclaim on December 20, 2022 bearing Court File No. CV-22-00691951-000 may proceed as undefended.

b. The parties are encouraged to come to an agreement on costs. Failing that, they may each submit argument of no more than 5 pages within 45 days. There shall be no right of reply.

c. The plaintiffs/defendants by counterclaim may submit an order for my signature within 14 days.

Mathen, J.

Released: April 7, 2026

COURT FILE NO.: CV-22-00691951-0000

DATE: 20260407

ONTARIO

SUPERIOR COURT OF JUSTICE