Breach of deemed undertaking does not fit within crime and fraud exception to s-c privilege

On July 16th Justice D. M. Brown of the Ontario Superior Court of Justice dismissed a motion to compel answers to three cross examination questions that were refused based on a solicitor-client privilege claim. He dismissed an argument that the evidence sought was a communication between lawyer and client in furtherance of crime or fraud because the communication was for the purpose of breaching the deemed undertaking rule. Justice Brown said:

The deemed undertaking rule is a most important one in the civil litigation process balancing, as it does, the public interest in getting at the truth in a civil action with the privacy interest of the person subject to examination for discovery and the compelled production of documents. Its importance is underlined by the fact that the undertaking is one given to the court. But the breach of the deemed undertaking does not attract any penal sanction. Although Rule 30.1 does not specify the sanctions for its breach, case law exists in which courts have stayed subsequent proceedings which used evidence in breach of the deemed undertaking rule, and other remedies may include striking pleadings or bringing a civil contempt motion.

That is to say, a breach of the deemed undertaking rule does not give rise to a cause of action against the party in breach, but the aggrieved party may seek a process-related remedy before the court in an existing action, such as the present one.
In my view, the nature of the conduct involved in any alleged breach of the deemed undertaking rule does not come anywhere close to that narrow cohort of “future crime and fraud” misconduct in respect of which communications between a client and its lawyer would not enjoy the protection of solicitor-client privilege

Brome Financial Corporation v Bank of Montreal, 2013 ONSC 4816 (CanLII).

ABQB finds grievance response privileged

On February 26th the Alberta Court of Queen’s Bench held that a grievance response is issued by an employer as part of the settlement process and is therefore privileged:

If these meetings are to be open in an attempt to resolve the grievance it seems clear that the discussions and documents flowing therefrom should remain confidential. The decision letter of April 30 is part of a settlement negotiation which falls within the protected category of settlement privilege and is not producible.

The Court denied production in a civil action brought by the grievor. The employer argues the subject matter of the action is within the exclusive jurisdiction of a labour arbitrator.

Thomson v University of Alberta, 2013 ABQB 128 (CanLII).

Master Glustein contextualizes privilege finding in Trillium Motor World

On June 17th, Master Glustein of the Ontario Superior Court of Justice confirmed that the finding in Trillium Motor Worldthat legal information (versus advice) conveyed from a firm to its client was not privileged – was driven by a unique context:

[9] Plaintiffs’ counsel sought to rely on the recent decision in Trillium Motor World Ltd. v. Cassels Brock & Blackwell LLP, 2013 CarswellOnt 3828 (“Trillium”), in which Justice Belobaba ordered that documents that disclosed “legal information” would not be subject to privilege. However, Justice Belobaba did not set out a general principle that when a client seeks advice for general legal information, rather than a particular legal situation, privilege is waived.

[10] In Trillium, an issue in the class action was whether the defendant law firm (“Cassels”) had been retained by the plaintiff dealers or whether Cassels had been retained by the Canadian Automobile Dealers Association (“CADA”). The issue before Justice Belobaba on the motion was whether CADA properly asserted privilege on documents between CADA and Cassels.

[11] Justice Belobaba distinguished between “legal advice” sought by CADA from its counsel (which would be privileged) and “legal information” obtained by CADA to understand the effect of the General Motors bailout in 2009 to better assist its dealer-members (which would not be privileged). Justice Belobaba held (Trillium, at para. 13):

Thus, if CADA sought and received advice from its counsel at CBB about its role and responsibility as a national dealer organization and its rights and duties given its mandate and jurisdiction, or sought and received advice with respect to the content of the memos it proposed to send out to its membership (to ensure they were legally accurate and did not expose CADA to legal liability), that would certainly amount to “legal advice” as described above. However, if CADA was simply asking its counsel for information about the federal bankruptcy process”or the CCAA in order to better understand the situation and thus better assist its dealer-members, that would not be legal advice as defined in the case law.

[12] Consequently, the distinction relied upon by Justice Belobaba was whether certain “legal information” was not advice to the client but rather information to better assist its members. It was in that context that Justice Belobaba distinguished between the terms “legal information” and “legal advice”, as those terms were put forward by Cassels and CADA.

[13] In that context, the term “legal information” (as defined by CADA and Cassels) consisted of “providing answers regarding the law generally, the options available, and the relevant legal procedures that might pertain” and “how it would affect the dealers”. The term “legal advice” was defined as “advice that is given with respect to the client’s legal rights and duties and is given on the understanding that it may well be followed” (Trillium, at paras. 11-12).

[14] In other words, Justice Belobaba did not reduce the scope of solicitor-client privilege to allow disclosure of general legal information sought by a client since he included in the term “legal advice” any advice “with respect to the client’s legal rights and duties and [which] is given on the understanding that it may well be followed” or any advice “from its counsel at CBB about its role and responsibility as a national dealer organization and its rights and duties given its mandate and jurisdiction, or sought and received advice with respect to the content of the memos it proposed to send out to its membership (to ensure they were legally accurate and did not expose CADA to legal liability” (Trillium, at paras. 12-13).

[15] Consequently, in Trillium, legal advice would include both general legal advice to understand rights and particular advice on a particular problem. The disclosure of “legal information” was not privileged in Trillium because it had not been obtained to advise CADA but was general information to be transmitted to its dealers.

[16] If Trillium were read to reduce the scope of solicitor-client privilege to allow production of any general legal information provided by counsel for the purpose of advising a client as to its rights or obligations, it would be a dramatic change to the sanctity of solicitor and client privilege protected under the principles in Guelph discussed above.

Master Glustein also reviews a number of other principles that govern solicitor-client privilege.

578115 Ontario Inc o/a McKee’s Carpet Zone v Sears Canada Inc, 2013 ONSC 4135 (CanLII).

Five principles from the SCC’s settlement privilege decision

Here are five principles endorsed by the Supreme Court of Canada in its June 21st settlement privilege decision (quoted loosely from the decision itself):

  • Settlement privilege is a class privilege associated with a prima facie presumption of inadmissibility; exceptions will be found “when the justice of the case requires it.”
  • Settlement privilege extends beyond documents and communications expressly designated to be “without prejudice”; what matters instead is the intent of the parties to settle the action.
  • Settlement privilege protects documents and communications from production to other parties to the negotiation and to strangers, and extends as well to admissibility, and whether or not a settlement is reached.
  • Settlement privilege extends to the negotiated settlement itself.
  • To come within an exception to settlement privilege, a party must show that, on balance, “a competing public interest outweighs the public interest in encouraging settlement.”

The Court held that, in the circumstances before it, there was an insufficient interest favouring the disclosure of settlement amounts to two non-settling defendants in a multi-party dispute.

Sable Offshore Energy Inc v Ameron International Corp, 2013 SCC 37 (CanLII).

The scope of solicitor-client privilege, advice versus information and Trillium Motor World

Here’s a handout for an internal (Hicks Morley) talk I’m doing tomorrow on solicitor-privilege, “the continuum of communications” concept and the Ontario Superior Court of Justice’s recent decision in Trillium Motor World.

In Trillium Motor World the Court held that legal information (versus advice) conveyed from a firm to its client was not privileged. In short, my conclusion is that the decision is an outlier driven by a unique context and that in more ordinary circumstances a court will not (and should not) parse the subject matter of communications related to an ongoing retainer so delicately.

Yesterday’s post on Justice Stratas’s recent Canada (Public Safety and Emergency Preparedness) decision is another good one to read on this topic.

FCA opines on breadth of continuum of communications protected by s-c privilege

On April 17th the Federal Court of Appeal issued a judgement that nicely illustrates the scope of the continuum of communications that are protected by solicitor-client privilege. Justice Stratas explained that operational policies that are the product of legal advice are not privileged unless they truly embody the legal advice:

[28] In determining where the protected continuum ends, one good question is whether a communication forms “part of that necessary exchange of information of which the object is the giving of legal advice”: Balabel, supra at page 1048. If so, it is within the protected continuum. Put another way, does the disclosure of the communication have the potential to undercut the purpose behind the privilege – namely, the need for solicitors and their clients to freely and candidly exchange information and advice so that clients can know their true rights and obligations and act upon them?

[29] For example, where a Director of a government department receives legal advice on how certain proceedings should be conducted and the director so instructs those conducting proceedings, the instructions, essentially cribbed from the legal advice, form part of the continuum and are protected: Minister of Community and Social Services v. Cropley 2004 CanLII 11694 (ON SCDC), (2004), 70 O.R. (3d) 680 (Div. Ct.). Disclosing such a communication would undercut the ability of the director to freely and candidly seek legal advice.

[30] In some circumstances, however, the end products of legal advice do not fall within the continuum and are not privileged. For example, many organizations develop document management and document retention policies and circulate them to personnel within the organization. Often these are shaped by the advice of counsel. However, such policies are usually disclosed, without objection, because they do not form part of an exchange of information with the object of giving legal advice. Rather, they are operational in nature and relate to the conduct of the general business of the organization.

[31] Similarly, an organization might receive plenty of legal advice about how to draft a policy against sexual harassment in the workplace. But the operational implementation of that advice – the policy and its circulation to personnel within the organization for the purpose of ensuring the organization functions in an acceptable, professional and business-like manner – is not privileged, except to the extent that the policy communicates the very legal advice given by counsel.

The Court held that a protocol negotiated between the DOJ and  RCMP that dealt with the civil production of documents held by the RCMP was not privileged except for its first three paragraphs, which memorialized legal obligations for the benefit of DOJ and RCMP personnel working under the protocol.

Canada (Public Safety and Emergency Preparedness) v Information Commissioner of Canada, 2013 FCA 104 (CanLII).

Role of investigators does not support solicitor-privilege claim

On May 15th, Justice Ramsay of the Ontario Superior Court of Justice denied a claim that an investigation report was subject to solicitor-client privilege. He explained the difference between the kind of third party conduit whose role is essential to the solicitor-client relationship and an ordinary fact finder:

If the third party’s retainer extends to a function which is essential to the existence or operation of the client-solicitor relationship, then the privilege should cover any communications which are in furtherance of that function and which meet the criteria for client-solicitor privilege. Examples given in Chrusz are psychiatrists who examine the client and accountants who examine the client’s books (¶116).

On the other hand (¶22), “[i]f the third party is authorized only to gather information from outside sources and pass it on to the solicitor so that the solicitor might advise the client, or if the third party is retained to act on legal instructions from the solicitor (presumably given after the client has instructed the solicitor), the third party’s function is not essential to the maintenance or operation of the client-solicitor relationship and should not be protected.”

Both of the paragraph references above are to the Ontario Court of Appeal decision in Chrusz.

Weinmann Electric Ltd v. Niagara Falls Bridge Commission, 2013 ONSC 2805 (CanLII).

Ontario master questions state of jurisprudence on OSR privilege

On January 22nd, Master Muir of the Ontario Superior Court of Justice held that answers to discovery questions that would disclose information contained in the Ontario Student Records of non-party students should not be answered based on the statutory privilege in section 266 of the Education Act.

Master Muir held that he was bound by Pandremenos v Riverdale Collegiate Institute, [1998] OJ No 1480 (GD), but not without expressly stating his disagreement with an interpretation of section 266 that precludes access to information contained in an OSR (as opposed to an OSR itself). He said:

In my view, the relevant portions of the Act make it clear that it is the OSR file itself that is privileged and not necessarily all of the information that may find its way into the OSR. Section 266(2) of the Act creates the privilege. It provides that “a record [that is, the OSR] is privileged” [emphasis added]. It says nothing about the specific information that section 265(1)(d) of the Act requires the principal to collect for inclusion in the OSR. This is to be contrasted with sections 266(9) and 266(10) of the Act. Section 266(9) states that “no person shall be required in any trial or other proceeding to give evidence in respect of the content of a record” [emphasis added]. Section 266(10) provides that “every person shall preserve secrecy in respect of the content of a record” [emphasis added]. It is noteworthy that the word “content” is absent from section 266(2).

In my view, if the legislature had intended to extend the privilege to any piece of information that may end up in an OSR (such as something as basic as a student’s address or date of birth, for example) it would have used much broader language that would clearly extend the privilege to the contents and to all information that may be found in an OSR. In my view, the interpretation suggested by Northmount could lead to an absurd situation where certain basic information about an individual could never be disclosed or introduced into evidence in a civil proceeding simply because he or she happens to be a student to whom the Act applies and the information in question can also be found in his or her OSR.

Master Muir noted other decisions by the Court in which discovery was allowed because the information at issue was not required to be contained in the OSR by the Ministry’s guideline. Master Muir said these decisions are distinguishable from cases in which the information at issue is required to be contained in the OSR as in Pandremenos and the matter before him.

Robinson v Northmount School for Boys, 2013 ONSC 1028 (CanLII).

Ontario decision deals with scope of litigation privilege, keyword searches and other e-discovery issues

On March 25th, the Ontario Superior Court of Justice issued a decision in which it held that that communications sent and received in order to build a public relations strategy ancillary to ongoing litigation were not subject to litigation privilege. Master McLeod stated:

I am not however persuaded that strategy associated with public relations, media relations or lobbying ancillary to litigation would or should be protected.  The notion of the adversarial advocate and the zone of privacy cannot be stretched so far as to protect the strategy of the party in the court of public opinion.

This is the most principled finding in a decision that also canvasses and provides helpful comment on a number of issues related to the production of e-mails. Master McLeod remarks, for example, that a search for documents containing keywords is a means of discovering relevant and privileged documents but does not “render the document automatically relevant” or “answer the question of privilege.”

Coincidentally, Craig Ball recently posted on the same issue in, “Are Documents Containing Agreed-Upon Keywords Responsive Per Se?” Ball urges counsel to address the  responding party’s access to responsive documents expressly in the discovery planning process. He also raises the motivation a party may have to demand a full set of responsive documents:

We may be gravitating to a place where counsel’s countermanding a machine’s “objective” characterization of a document as responsive will be viewed with suspicion. Responding parties see electronic culling as just an extension of counsel’s judgment; but, requesting parties often see electronic culling as an objective arbiter of responsiveness. Face it: requesting parties believe that opponents hide documents.

If you follow e-discovery developments, both this case and the Ball post are worth a good read.

Kaymar Rehabilitation v Champlain CCAC, 2013 ONSC 1754 (CanLII).

Recent OCA journalist-source case a “squeaker” with good statements of principle

The Court of Appeal for Ontario’s March 27th decision in 1654776 Ontario Limited v Stewart is a journalist-source privilege decision in which the Court made some significant statements of principle in protecting a journalist’s confidential sources.

The case is about whether the Court would reveal the identities of two insiders to the attempted takeover of BCE in 2008. The insiders provided information about the tenor of confidential negotiations to the Globe and Mail, who published the information and protected its sources. The plaintiff claimed the insiders breached the Securities Act by making false and materially misleading statements. He sought their identities, stressing that the insiders were not whistleblowers leaking information about wrongdoing and, rather, had merely given business information to a journalist and used the Globe to manipulate the markets.

Here are the statements of principle Justice Juriansz made on behalf of the Court:

  • It is an error of law to apply an elevated standard in the first step of the Norwich Pharmacal test because an expressive interest is involved; at the first step, an applicant must merely demonstrate a bona fide claim. This finding weighs against protection.
  • Courts should recognize that “generally” the relationship between a journalist and a confidential source should be “sedulously fostered”; concerns about the value of the specific source-journalist relationship at issue should be considered in weighing competing interests. This finding weighs in favour of protection.

On the facts, Justice Juriansz protected the sources, noting the case was “difficult.” The lack of evidence to support the plaintiff’s assertions was significant to Justice Juriansz as was the plaintiff’s alternative potential remedy against several corporate actors. Justice Juriansz did not devalue the journalist-source claim because the insiders were not whistleblowers; making information about the transaction available was in the public interest, he held. However, given the plaintiff’s attack on the quality of the sources’ information, Justice Juriansz held that the public’s right to know was a neutral factor in the circumstances. It seems, therefore, that if the plaintiff had a stronger factual basis for his claim lawsuit he would have prevailed in his quest to identify the anonymous sources.

1654776 Ontario Limited v Stewart, 2013 ONCA 184 (CanLII).