Date: 20070710
Docket: T-1791-06
Citation: 2007 FC 735
Vancouver, British Columbia, July 10, 2007
PRESENT: The Honourable Mr. Justice O'Reilly
BETWEEN:
MID-WEST
QUILTING CO. LTD.
Plaintiff
and
HER
MAJESTY IN RIGHT OF CANADA
Defendant
REASONS FOR ORDER AND ORDER
[1]
The
plaintiff has requested an order relieving it from the requirement to produce
all documents requested in a Direction to Attend served on the plaintiff on
February 26, 2007, on the basis that the requested documents, in whole or in
part, are privileged, irrelevant and unduly onerous to produce.
(a) Context of the motion
[2]
The
plaintiff, Mid-West Quilting Co. Ltd., has made an application under Part II,
s. 14(1) of Manitoba’s Limitation of Actions Act, C.C.S.M., c. L150 for
leave to begin an action against Her Majesty for abuse of public authority and
negligence relating, at least in part, to actions that took place prior to the
six-year limitation period provided in s. 2(1)(n) of the Act (see Annex
for relevant statutory provisions). Prior to the plaintiff’s application being
heard, the defendant served on the President of Mid-West, Mr. Paul Knight, a
Direction to Attend dated February 26, 2007 asking him to appear for
cross-examination on his affidavit of October 5, 2006. He was asked to bring
with him all written or electronic communications, “including notes, memoranda,
letters or e-mail, concerning requests for, receipt of, and actions taken based
upon, legal advice from any all legal advisors” during the period from January
1, 1988 and October 24, 2005. Mid-West refused on the grounds that the
communications were privileged, irrelevant and unduly onerous to produce. It
brought this motion seeking relief from the Direction to Attend.
[3]
In order
for it to succeed on its application for leave under Part II of the Act,
Mid-West must establish that not more than 12 months have elapsed between “the
date on which it first knew, or, in all the circumstances of the case, ought to
have known, of all material facts of a decisive character upon which the action
is based” and “the date on which the application was made to the court for
leave” (s. 14(1)). “Material facts of a decisive character” include facts
“which a reasonable person of [the plaintiff’s] intelligence, education and
experience, knowing those facts and having obtained appropriate advice in
respect of them” would have regarded as giving rise to a cause of action which
would have a “reasonable prospect of succeeding and resulting in an award of
damages or remedy sufficient to justify the bringing of the action” (s. 20(3)).
[4]
In his
affidavit of October 5, 2006, Mr. Knight said that he had sought legal advice
in 1989 or 1990 and “was not advised to commence any legal proceeding, nor was
it suggested that I initiate an access to information request”. He went on to
say that he had “received a second opinion from another law firm to the same
effect”. In a subsequent affidavit, he clarified that he sought legal advice
from the first firm in 1989 or 1990 and from the second firm in 1994. He has a
letter from the first solicitor dated March 19, 1990 and a letter from the
second dated May 18, 1994.
(b) Mid-West’s claim that it has
not waived privilege
[5]
The
parties agree that the communications in issue are governed by solicitor-client
privilege. However, the defendant argues that the plaintiff has impliedly
waived privilege. The plaintiff disagrees.
[6]
The
defendant argues that Mid-West has impliedly waived privilege in two ways.
First, by virtue of the wording of the statutory provision on which Mid-West
relies, it must present evidence about the advice it received. As mentioned, to
succeed on its application under Part II of the Act, Mid-West must persuade the
Court that it filed its application not more than 12 months after it knew or
ought to have known “the material facts of a decisive character” (s. 14(1)).
The definition of “material facts of a decisive character” imports a
consideration of what a reasonable person knowing the facts and “having
obtained appropriate advice in respect of them” would have understood. In
essence, the statute places the burden on Mid-West to show, based on the facts
at its disposal and the advice it received, that it acted in keeping with what
a reasonable person would have understood about the well-foundedness of its
cause of action. Accordingly, the defendant asserts that the legal advice
Mid-West received is clearly relevant and, to the extent Mid-West relies on the
Act to ground its application, it has waived solicitor-client privilege.
[7]
Second,
the defendant argues that the plaintiff has impliedly waived its privilege,
given that Mr. Knight expressly referred to the legal advice he received in his
affidavits and, at least indirectly, relied on the content of that advice in
pursuing his application under Part II of the Act.
[8]
Courts
sometimes find that solicitor-client privilege has been impliedly waived where
considerations of fairness and consistency so require. In essence, this means
that, where a party relies on legal advice to nourish an action or to support a
defence, the party opposite should have disclosure of that advice. For example,
to defend against a claim of negligence, a party may rely on the legal advice
it received in order to show due diligence. If so, the advice must be disclosed
to the other party. Otherwise, a party could try to rely on legal advice to
justify its conduct without having to disclose what the advice really was. This
could be unfair to the other side and, if so, a finding that the privilege has
been impliedly waived by the party’s conduct may be justified: Apotex Inc. v.
Canada (Minister of Health), 2003 FC 1480, [2004] 2
F.C.R. 137, [2003] F.C.J. No. 1921 (T.D.) (QL); aff’d 2004 FCA 280, [2004]
F.C.J. No. 1431 (C.A.) (QL).
[9]
Regarding
the first alleged ground of implied waiver, I cannot conclude that Mid-West’s
reliance on Part II of the Act can have the consequences suggested by the
defendant. True, the burden of proof lies on Mid-West. The facts it knew and
the advice it received are relevant to its application. But that does not mean
that it is bound to put in evidence privileged communications. It may choose to
do so in order to discharge its burden. Or, it can choose not to rely on them.
If it takes the latter course, it may risk failing to meet its burden or,
possibly, invite an adverse inference. Obviously, it is premature to say what
the consequences, if any, of a decision to insist on maintaining privilege
might be. Suffice to say, mere reliance on Part II of the Act should not be
interpreted as implied waiver of solicitor-client privilege (although it may
amount to waiver of litigation privilege: St. Vital School Division No. 6
v. Trnka, [1998] M.J. No. 563 (Q.B.) (QL)).
[10]
Regarding
the second alleged ground of waiver, I believe that Mid-West has put in issue
the advice it received in 1990 and 1994. It has relied on that advice to make
the argument that it did not have such “material facts of a decisive character”
to commence an action against the defendant until much later. Mr. Knight
referred to the content of that advice when he stated in his affidavit that he
was “not advised to commence any legal proceeding” or to “initiate an access to
information request”. In my view, Mid-West cannot rely on the legal advice it
received to advance its position and simultaneously claim privilege over it. To
do so would give rise to the kind of unfairness and inconsistency which courts
have rightly recognized as grounds for finding an implied waiver of privilege.
Therefore, in respect of the advice it received in 1990 and 1994, I find that
Mid-West has impliedly waived solicitor-client privilege.
[11]
However, I
cannot find that the same is true regarding any other advice that Mid-West
received during the period covered by the Direction to Attend. The Direction is
cast in sweeping terms and catches solicitor-client communications that go well
beyond what Mid-West has put in issue. To that extent, I would excuse Mr.
Knight from complying with its terms.
(c) Relevance and Hardship
[12]
In my
view, the advice Mid-West received in 1990 and 1994 is clearly relevant to its
application under Part II. Any other advice it may have received thereafter may
be relevant as well but, as discussed above, it remains subject to
solicitor-client privilege. The defendant cannot demand its production.
[13]
It is
unnecessary for me to decide, therefore, whether it would be unduly onerous to
require Mid-West to produce all of the legal advice it received. Mid-West does
not suggest that producing the letters it received in 1990 and 1994 would
impose any hardship.
ORDER
THIS COURT ORDERS that
1.
The motion
is allowed in part;
2.
The
plaintiff shall comply with the Direction to Attend dated February 26, 2007
only in relation to the legal advice it received in 1990 and 1994;
3.
The
plaintiff is relieved from complying with the remainder of the Direction to Attend;
4.
Each party
shall bear its own costs of the motion; and
5.
Counsel
shall indicate their availability for a case management teleconference to
discuss the timing of the underlying application.
"James
W. O'Reilly"
Annex
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Limitation
of Actions Act,
C.C.S.M., c. L150
Limitations
2.(1) The
following actions shall be commenced within and not after the times
respectively hereinafter mentioned:
…
(n) any
other action for which provision is not specifically made in this Act, within
six years after the cause of action arose.
Extension of time in certain
cases
14.(1)
Notwithstanding any provision of this Act or of any other Act of the
Legislature limiting the time for beginning an action, the court, on
application, may grant leave to the applicant to begin or continue an action
if it is satisfied on evidence adduced by or on behalf of the applicant that
not more than 12 months have elapsed between
(a) the
date on which the applicant first knew, or, in all the circumstances of the
case, ought to have known, of all material facts of a decisive character upon
which the action is based; and
(b) the
date on which the application was made to the court for leave.
Nature of material facts
20.(3)
For the purposes of this Part, any of the material facts relating to a cause
of action shall be taken, at any particular time, to have been facts of a
decisive character if they were facts which a person of his intelligence,
education and experience, knowing those facts and having obtained appropriate
advice in respect of them, would have regarded at that time as determining,
in relation to that cause of action, that, apart from any defence based on a
provision of this Act or any other Act of the Legislature limiting the time
for bringing an action, an action would have a reasonable prospect of
succeeding and resulting in an award of damages or remedy sufficient to
justify the bringing of the actions.
|
Loi sur la prescription, C.P.L.M. c. L150
Prescription
2.(1) Les actions suivantes
se prescrivent par les délais respectifs indiqués ci-dessous :
[…]
n) une autre action qui ne fait pas explicitement l'objet
d'une disposition de la présente loi, se prescrit par six ans, à compter de
la naissance de la cause d'action.
Prolongation du
délai dans certains cas
14.(1) Par dérogation à
toute disposition de la présente loi ou d'une autre loi de la Législature
ayant pour effet d'établir une prescription, le tribunal peut, sur demande,
autoriser le requérant à intenter ou continuer une action, lorsque le tribunal
conclut, sur la foi de la preuve fournie par le requérant ou en son nom,
qu'une période maximale de 12 mois s'est écoulée entre les dates
suivantes :
a) la
date à laquelle le requérant a eu connaissance pour la première fois, ou
celle à laquelle il aurait dû avoir connaissance, compte tenu des
circonstances, de tous les faits pertinents sur lesquels s'appuie l'action;
b) la
date de la présentation de la demande de prolongation au tribunal.
Nature des faits
pertinents
20.(3) Pour les besoins de la présente partie, les faits
pertinents se rattachant à une cause d'action doivent être considérés comme
des faits de nature déterminante, lorsqu'il s'agit de faits à l'égard
desquels une personne possédant le niveau d'intelligence, d'instruction et
d'expérience qui lui sont propres, et connaissant ces faits et ayant obtenu
des conseils opportuns au sujet de ceux-ci, aurait considérés à ce moment-là
comme concluants pour donner lieu de croire raisonnablement à la réussite
d'une action et à l'octroi de dommages-intérêts, ou à une réparation dont
l'ampleur justifierait les procédures judiciaires qui seraient
requises. Toutefois, il n'est tenu compte d'aucune défense pouvant
être fondée sur une prescription établie par la présente loi ou par une autre
loi de la Législature.
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