Simon's Megalomaniacal Legal Resources

Evidence - Privilege - Solicitor-Client (7)

. One York Street Inc. v. 2360083 Ontario Limited [appellate SOR]

In One York Street Inc. v. 2360083 Ontario Limited (Ont CA, 2026) the Ontario Court of Appeal allowed an appeal, here involving "the issue of whether the respondents’ conduct in litigation gives rise to a deemed waiver of solicitor-client privilege over legal advice received when they entered into a commercial lease".

Here the court considers the appellate SOR categorization of an issue of waiver of solicitor-client privilege, and generally that for issues of privilege:

[67] As I explain below, a question of whether a deemed waiver of privilege has occurred is an issue of mixed fact and law. Applying Housen leads to the following conclusion about the standard of review. Whether the motion judge applied the correct legal standard or test for deemed waiver of privilege is reviewable on a correctness standard. If a motion judge applied the correct legal standard, their findings of fact are entitled to deference. The findings of fact and ultimate conclusion of whether a deemed waiver has occurred are reviewable on the palpable and overriding error standard.

[68] In R. v. Delchev, 2015 ONCA 381, 126 O.R. (3d) 267, this court considered the standard of review applicable to an issue of whether settlement privilege applied to certain communications. The court described the standard of review as follows, at para. 23:

The question of whether evidence is privileged involves the identification of legal principles, and the application of those principles to the facts as drawn from the evidence. The trial judge’s identification of the applicable legal principles will be assessed on a correctness standard, though deference is owed to her application of those principles to the facts[.]

[69] In my view, the same standard of review applies to whether there has been a waiver of solicitor-client privilege.

[70] The appropriateness of the application of the palpable and overriding error standard of review is particularly clear with respect to questions of whether a deemed waiver of solicitor-client privilege has occurred. As I have outlined above, the jurisprudence is clear that the analysis requires a case-specific assessment of all of the circumstances. Gordon D. Cudmore aptly describes why the mixed fact and law palpable and overriding error standard of review is appropriate to issues of deemed waiver in the Civil Evidence Handbook, release no. 1 (Toronto: Thomson Reuters, 2026), at §6:36:

The question of whether privilege has been implicitly waived requires identification of matters of substance by reference to the material facts and the law that governs the client’s claim or defence, as well as an examination of considerations of fairness and consistency, and any litigation advantage that may arise from the enforcement of the privilege. That assessment takes place in the context of the legal standards that govern the rule of solicitor-client privilege. Thus, whether there has been an implied waiver of privilege is a question of mixed fact and law, reviewable on a standard of palpable and overriding error[.]

[71] Although the decisions of appellate courts across Canada are not uniform, several appellate courts have concluded that the palpable and overriding error standard of review applies in appellate review of the application of the law of privilege to particular documents or communications: Nova Scotia v. Cameron, at paras. 26-27; Thomson v. University of Alberta, 2013 ABCA 391, 561 A.R. 391, at para. 11; The Blood Tribe v. Canada (Attorney General), 2010 ABCA 112, 487 A.R. 71, at para. 12; R. v. Matthews, 2022 ABCA 115, 413 C.C.C. (3d) 178, at para. 33; Girouard v. Canadian Judicial Council, 2019 FCA 252, at para. 15.[5]

[72] In sum, while a judge at first instance must apply the correct legal principles to the assessment of whether there has been a deemed waiver of privilege, their findings of fact that are the basis of a finding that a deemed waiver has or has not occurred are entitled to deference.

[73] I would add that in this case, the motion judge was particularly well-placed to make the case-specific factual findings required for the deemed waiver analysis. The motion judge was also the case management judge. Her ongoing supervision of this case placed her in an advantageous position to engage in the case-specific assessment of whether there was a deemed waiver of privilege by the respondents.

. One York Street Inc. v. 2360083 Ontario Limited [waiver of solicitor-client privilege]

In One York Street Inc. v. 2360083 Ontario Limited (Ont CA, 2026) the Ontario Court of Appeal allowed an appeal, here involving "the issue of whether the respondents’ conduct in litigation gives rise to a deemed waiver of solicitor-client privilege over legal advice received when they entered into a commercial lease".

Here the court extensively (and usefully) canvasses the law of waiver of solicitor-client privilege:

1. Legal principles applicable to waiver of solicitor-client privilege

[32] Solicitor-client privilege is fundamental to the operation of our legal system. The privilege protects the right of a client to seek and obtain legal advice. In order to obtain legal advice, a client must be able to communicate freely and fully with their counsel for the purpose of obtaining advice, secure in the knowledge that the communications will not be divulged without their consent: Solosky v. The Queen, 1979 CanLII 9 (SCC), [1980] 1 S.C.R. 821, at pp. 833-35; Smith v. Jones, 1999 CanLII 674 (SCC), [1999] 1 S.C.R. 455, at paras. 45-50; Blank v. Canada (Minister of Justice), 2006 SCC 39, [2006] 2 S.C.R. 319, at para. 26.

[33] The privilege is not absolute. But this case does not concern exceptions to privilege; rather, it concerns when privilege will be treated as being waived by the client.

[34] Solicitor-client privilege can be waived. As with any claim of waiver of privilege, the burden to establish waiver rests on the party claiming there has been a waiver of solicitor-client privilege: Smith v. Jones, at para. 46.

[35] There are two types of waiver: express waiver and deemed or implied waiver. I use the term deemed waiver throughout these reasons.

[36] An express waiver arises where the privilege holder knows of the existence of the privilege and voluntarily conveys their intention to waive it: Matthew Gourlay et al., Modern Criminal Evidence, ed by Brian H. Greenspan & Vincenzo Rondinelli (Toronto: Emond, 2022), at p. 497; David M. Paciocco, Palma Paciocco & Lee Stuesser, The Law of Evidence, 8th ed. (Toronto: Irwin Law, 2020), at p. 292.

[37] By contrast, deemed waiver does not require that the holder intend to waive privilege. Deemed waiver will be established when a party’s conduct of litigation is inconsistent with an intention to maintain confidentiality: Gourlay, at p. 497; Paciocco, at p. 293; Nova Scotia (Attorney General) v. Cameron, 2019 NSCA 38, 434 D.L.R. (4th) 521, at para. 51, leave to appeal refused, [2019] S.C.C.A. No. 214.

[38] This appeal involves an allegation of deemed waiver of privilege. For this reason, I turn now to more detail on what is required to establish deemed waiver.

[39] Wigmore explains the conceptual basis for deemed waiver as follows. In deciding whether there is a deemed waiver of privilege,

regard must be had to the double elements that are predicated in every waiver, i.e., not only the element of implied intention, but also the element of fairness and consistency. A privileged person would seldom be found to waive, if his intention not to abandon [privilege] could alone control the situation. There is always also the objective consideration that when his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not.

See John T. McNaughton, Wigmore on Evidence, vol. 8 (Boston: Little, Brown and Company, 1961), §2327 at p. 636.

[40] The “voluntary intention” or “implied intention” referred to by Wigmore and in the deemed waiver jurisprudence does not require an intention to waive privilege. Rather, it refers to the voluntary decision by a party to rely on the receipt of legal advice as part of their claim or defence or to rely on their understanding (or lack of understanding) of their legal position as part of their claim or defence: Creative Career, at para. 29; S. &. K. Processors Ltd. v. Campbell Ave. Herring Producers Ltd. (1983), 1983 CanLII 407 (BC SC), 45 B.C.L.R. 218 (S.C.), at para. 10; Nova Scotia v. Cameron, at para. 61; Sidney N. Lederman, Michelle K. Fuerst & Hamish C. Stewart, Sopinka, Lederman & Bryant: The Law of Evidence in Canada, 6th ed. (Toronto: LexisNexis, 2022), at paras. 14.168-14.170. Where a party has voluntarily relied in their claim or defence on receipt of legal advice or their understanding of their legal position, that reliance gives rise to a deemed waiver of privilege because it would create an unfair litigation advantage to allow the party to inject their understanding of their legal position into the claim or defence while shielding legal advice that bears on those assertions. The party’s reliance on legal advice, or on their understanding (or lack of understanding) of their legal position when they, in fact, received legal advice on the relevant issue, is inconsistent with maintaining privilege over that advice.

[41] In Creative Career, Perell J. framed the analysis as follows, at para. 30:

Thus, a deemed waiver and an obligation to disclose a privileged communication requires two elements; namely: (1) the presence or absence of legal advice is relevant to the existence or non-existence of a claim or defence; which is to say that the presence or absence of legal advice is material to the lawsuit; and (2) the party who received the legal advice must make the receipt of it an issue in the claim or defence.

[42] The second branch carries the weight of the analysis, as Perell J. went on to emphasize at para. 31 of Creative Career:

Waiver does not occur because the party discloses that he or she received legal advice, nor does it occur because the party admits that he or she relied on the legal advice; it occurs because the party chooses to use the legal advice as a substantive element in his or her claim or defence.

[43] The requirement of reliance on legal advice or the absence of legal advice is also explained in Paciocco, at p. 293:

The issue of implied waiver often arises when one party puts their state of mind into issue and explains that state of mind by mentioning the legal advice they may or may not have received – for example, by claiming to have signed an agreement without legal advice when there is evidence that they in fact obtained advice, or by alleging that they acted in good faith upon the advice of legal counsel. [Emphasis added.]

[44] Relevance alone is not sufficient to overcome the protection of solicitor-client privilege. If it were, the privilege would have no substance: see for example R. v. Dosanjh, 2022 ONCA 689, 163 O.R. (3d) 401, at paras. 150-52. In other words, by its nature, the doctrine of solicitor-client privilege protects otherwise relevant information from disclosure because of countervailing values, in particular, the need for parties to litigation to be able to speak freely to counsel to obtain legal advice: Paciocco, at pp. 287, 298; Gourlay, at pp. 483, 485-86.

[45] The assessment of whether a party has relied on legal advice or their understanding (or lack of understanding) of their legal position such that consistency and fairness require it be treated as a deemed waiver of privilege is necessarily a case-specific analysis. This is so because the analysis is based on a party’s conduct of the litigation, the nature of the legal claims and defences and factual basis for them, and whether in the particular circumstances it would be unfair to maintain the privilege because the party’s actions are inconsistent with maintaining the privilege: Gourlay, at p. 497; Paciocco, at pp. 292-93; Roynat Capital Inc. v. Repeatseat Ltd., 2015 ONSC 1108, 125 O.R. (3d) 596 (Div. Ct.), at para. 84.

[46] Much of the jurisprudence in relation to deemed waiver of privilege considers situations where a party relies on the fact that they received legal advice as an aspect of their claim or defence. Usually, where a party is relying on the fact of having received legal advice as part of their claim or defence, they do so expressly.

[47] This appeal, by contrast, involves circumstances where it is argued that the respondents relied in their defence and counterclaim on a lack of understanding of their legal position, but in fact, had received legal advice. As a result, there is no express reliance by the respondents on having received legal advice. Further, after the June 2023 amendments to the statement of defence and counterclaim, there is no express statement in the respondents’ pleadings to not understanding the lease extension and not having received legal advice. Consequently, the issue is whether the respondents’ defence and counterclaim asserts a lack of understanding of their legal position at the time they signed the lease and extension, and if so, whether that position gives rise to a deemed waiver in relation to legal advice received at that time.

[48] In my view, the same principles apply in circumstances where a party: (i) relies on receipt of legal advice about an issue in the litigation as an element of their claim or defence; or (ii) relies on their lack of understanding of their legal position about an issue in the litigation as an element of their claim or defence, but they, in fact, received legal advice on that issue at the relevant time.

[49] Both situations involve a party relying in their claim or defence on their state of mind or knowledge in relation to their understanding of their legal position about an issue in the litigation. It is this reliance by a party on their state of mind in relation to their understanding of their legal position that gives rise to a deemed waiver of privilege as a matter of consistency and fairness. This is because a party who injects their understanding of their legal position into a case by relying on it in their claim or defence cannot then shelter legal advice which might be used to challenge their assertions about their understanding of their legal position.[2]

[50] Three cases help illustrate this point.

[51] The first case is Rogers v. Bank of Montreal (1985), 1985 CanLII 141 (BC CA), 62 B.C.L.R. 387 (C.A.). Rogers was cited with approval by the Supreme Court in R. v. Campbell, 1999 CanLII 676 (SCC), [1999] 1 S.C.R. 565, at para. 69. In Rogers, the bank put a defaulting customer into receivership. The customer sued both the bank and the receiver. The bank and the receiver launched third-party proceedings against each other. The bank claimed it relied on advice from the receiver in putting the customer into receivership. The receiver denied detrimental reliance on its advice and argued that it was entitled to know what other professional advice the bank had received at the relevant time, and in particular, what legal advice the bank had received from its own lawyers when it put the customer into receivership. The British Columbia Court of Appeal rejected the bank’s claim of solicitor-client privilege. In relying on a defence that its decision to put the customer into receivership had been made based on legal advice provided by the receiver, the bank voluntarily injected the issue of its legal knowledge at the relevant time into the case.

[52] Justice Binnie, writing for the court in Campbell, summarized the holding in Rogers as follows:

It appears the court in Rogers found that any privilege with respect to correspondence with the bank’s solicitors had been waived as necessarily inconsistent with its pleading of reliance, even though the bank itself had not referred to, much less relied upon, the existence of advice from its own solicitors. [Emphasis added.]

[53] Thus, in Rogers, there was a deemed waiver of privilege of the bank’s legal advice from its own lawyers because the bank chose to rely in its defence on an asserted lack of understanding of its legal position induced by its reliance on the receiver’s advice regarding legal matters. Despite the bank not having relied on or referred to its own legal advice, the pleading of reliance on other legal advice in circumstances where the bank also had its own legal advice, gave rise to a deemed waiver of privilege over its own legal advice.

[54] The second case is Roynat. In Roynat, the litigation arose out of a financial transaction in which the plaintiffs loaned money to the defendant corporation on certain conditions. One of the conditions required the defendant corporation to raise additional equity funds before the loan funds were advanced. The plaintiffs also sued the law firm who had acted for the corporate defendant on the transaction, alleging negligent misrepresentation. The plaintiffs claimed that a lawyer at the firm confirmed to them that the equity fund condition had been met, and that the plaintiffs relied on that representation in advancing the loan funds. At his examination for discovery, the representative of the plaintiffs refused to answer questions about the advice the plaintiffs received from their own lawyers about the alleged confirmation of the equity fund condition.

[55] The Divisional Court upheld the finding by the motion judge (reversing the decision of an associate judge) that the plaintiffs’ allegation of reliance on a representation by the defendant corporation’s law firm gave rise to a deemed waiver of privilege regarding legal advice from the plaintiffs’ own lawyers about the confirmation of the equity fund condition. By pleading reliance on the alleged confirmation of the equity fund condition by the defendant’s law firm, the plaintiffs put in issue their state of mind in relation to their legal position about the confirmation. Maintaining privilege over legal advice that the plaintiffs received from their own lawyers about whether the equity fund condition had been satisfied would be inconsistent with the plaintiffs’ assertion that they relied on the defendant’s law firm’s representation because, if the plaintiffs’ own lawyers provided them with legal advice on the same issue, their reliance on the defendant’s law firm’s alleged confirmation would not be reasonable: see, in particular, at paras. 58-59.

[56] A deemed waiver was found in Roynat despite the plaintiffs not pleading reliance on their own legal advice because they relied in their claim on their state of mind with respect to their legal position. Allowing the plaintiffs to shield their own legal advice on the issue of the equity fund confirmation would be unfair to the defendant law firm and inconsistent with the plaintiffs’ claim that it relied on a representation from that firm.[3]

[57] The third case is Soprema Inc. v. Wolrige Mahon LLP, 2016 BCCA 471, 90 B.C.L.R. (5th) 318. In Soprema, the plaintiff sued the defendant, an auditor, for negligent misrepresentation. The plaintiff alleged that the defendant made false representations about the accuracy of certain financial statements that the plaintiff relied on in deciding whether to purchase shares in a company. A required element of the plaintiff’s claim of negligent misrepresentation was that the plaintiff reasonably relied on the defendant’s misrepresentations. The defendant denied that the plaintiff relied on its representations and that any reliance was reasonable. The defendant argued that the plaintiff had waived privilege over the legal advice it received in relation to the share purchase by putting its state of mind in issue.

[58] In the result, the British Columbia Court of Appeal found there was not a waiver of privilege. The factual basis for this conclusion is important. The plaintiff had put in issue its state of mind in a general sense by pleading negligent misrepresentation because reasonable reliance on the representation is an element of that cause of action. However, it was common ground between the parties that the plaintiff had not pleaded reliance on the defendant for legal advice or that the representations by the defendant had affected the plaintiff’s understanding of its legal position: at para. 6. The Court of Appeal held that there was no waiver because the plaintiff’s reliance on state of mind in general (arising from the pleading of negligent misrepresentation) was not sufficient to ground a deemed waiver of privilege in the absence of the plaintiff putting in issue its state of mind in relation to legal advice or its understanding of its legal position.

[59] The reasoning of the court in Soprema is helpful on the distinction between a party putting in issue their state of mind in a general sense and putting in issue their state of mind regarding their understanding of their legal position about an issue in the litigation at the relevant time. The former does not suffice to ground a deemed waiver. Only reliance on state of mind in relation to a party’s understanding of their legal position can ground a deemed waiver of privilege. Harris J.A. stated the principle as follows, at para. 28:

I am of the view it is apparent that the cases which actually find waiver typically involve a party voluntarily making its own understanding of the law, or its reliance on legal advice it received, a material issue…. Indeed, on my review of the cases, there is a weighty argument that underlying the reasoning in those cases is the view that a party will impliedly waive privilege only if it has voluntarily put in issue its understanding of its legal position. It is in those circumstances that it would be inconsistent with the conduct of the party to maintain privilege and unfair to do so, because in those circumstances maintaining privilege would indeed confer an “unfair” litigation advantage. [Emphasis added.]

[60] In sum, the issue that a court assessing a claim of deemed waiver must consider is not whether a party has expressly or explicitly referred to legal advice or the absence of legal advice in a pleading or some other step in a proceeding. Rather, the question is whether the party relies in its claim or defence on its understanding of its legal position. Although such reliance is likely to be easier to see where a party expressly or explicitly relies on the receipt of legal advice, the reliance need not be express. If a party relies in its claim or defence on its state of mind or understanding (or lack of understanding) with respect to its legal position about an issue in the litigation and it obtained legal advice on that issue at a time relevant to its asserted state of mind, then as a matter of fairness, the party’s choice to rely on its understanding or lack of understanding of its legal position makes it inconsistent and unfair for the party to maintain privilege over legal advice received regarding the issue on which it injected its understanding of its legal position into the litigation.

[61] I note that some of the jurisprudence on deemed waiver refers to a party “putting its state of mind in issue” as shorthand for a party relying in its claim or defence on its state of mind in relation to its legal position. The motion judge used similar shorthand in places in her reasons. There is nothing wrong with such shorthand, but one must not lose sight of the legal principle: a party putting in issue their state of mind in some general sense does not give rise to a deemed waiver. Rather, what is required is that the party put in issue in their claim or defence their state of mind with respect to their legal position about an issue in the litigation.

[62] Some passages of the Divisional Court reasons could be read as suggesting that for a party to put in issue its state of mind in relation to its legal position such that it can give rise to a deemed waiver of privilege, the party must do so explicitly. It is not clear that the Divisional Court was stating an “explicitness” requirement as a matter of law. It may be that the Divisional Court’s references to “explicit” reliance on legal advice or the absence of legal advice were simply addressing the factual matrix in this case – that after the pleading was amended, it no longer contained an explicit reference to the respondents not understanding the lease extension and not having obtained legal advice prior to signing it. In any event, for the reasons explained above, it is not a necessary requirement for deemed waiver of privilege that the party alleged to have waived privilege explicitly refer to legal advice or the lack of legal advice in a pleading or other step in litigation. What is required is that the party rely on their understanding of their legal position as an element of their claim or defence.