Ontario Divisional Court to Consider Whether Solicitor-Client Privilege Can be Waived on a Limited Basis

The Ontario Divisional Court has granted leave to appeal in Kaganovsky v. 2057057 Ontario Inc., which raises an interesting question as to whether there can be a conditional or partial waiver of solicitor-client privilege with respect to communications with a lawyer that a party has put in issue. In other words, once the privilege has been waived, is it necessarily waived in its entirety, or can the waiver be limited?

Background

This question arises out of a motion by certain of the defendants (the "Khan Defendants") for an order granting them leave to amend their statement of defence. The plaintiff opposed the motion, on the basis that certain of the proposed amendments amounted to withdrawals of admissions. Pursuant to the Rules of Civil Procedure, an admission may be withdrawn with leave of the court under Rule 51.05, which requires that the party show, among other things, that the admission was inadvertent or that the lawyer who made the admission was wrongly instructed. If a proposed amendment does not amount to the withdrawal of an admission, it would be made under Rule 26.01 and would not require a showing of inadvertence or wrong instruction.

The Khan Defendants took the position that none of their proposed amendments amounted to withdrawals of admissions, that leave under Rule 51.05 was therefore not required, and that their proposed amendments could instead be made under Rule 26.01. Nonetheless, the Khan Defendants filed a supporting affidavit by the defendant, Khan, in which he deposed that their original lawyer either misunderstood or ignored their instructions and that their statement of defence was factually incorrect. The plaintiff then moved, prior to the hearing of the Khan Defendants’ motion to amend, for a declaration that Khan, in filing the supporting affidavit, had thereby waived solicitor-client privilege over communications relating to the alleged misunderstanding.

Decisions Below

In his endorsement on the plaintiff’s motion, Master Muir wrote that Khan’s affidavit could be relevant only to the issue of whether the proposed amendments amounted to withdrawals of admissions, and that it would be unfair to allow Khan to assert that his instructions were misunderstood by the original lawyer but then to “hide behind” solicitor-client privilege when the plaintiff sought to explore this assertion. Accordingly, Master Muir held that privilege had been waived, and that the plaintiff was entitled to production of certain documents and to examine Khan and the original lawyer on the alleged misunderstanding. Master Muir further observed that the privilege had been waived, regardless of whether or not the proposed amendments actually amounted to withdrawals of admissions, which was an issue “for another day,” to be determined at the hearing of the Khan Defendants’ motion to amend.

On appeal, Corrick J. set aside Master Muir’s decision and held that the matter should be returned to the Master hearing the Khan Defendants’ motion to amend, and that the plaintiff’s motion for disclosure of solicitor-client communications could be granted only if the amendment to the statement of defence was made under Rule 51.05.

In granting leave to appeal Corrick J.’s decision, the Divisional Court noted that Corrick J. had implicitly held that, if the amendment was made under Rule 26.01, the plaintiff could not rely on the waiver of solicitor-client privilege, even though those communications had been placed in issue by the filing of Khan’s affidavit. According to the Divisional Court, there is reason to doubt that “whether or not there is waiver depends on the rule pursuant to which the amendment is ultimately made.”

Potential Significance

As recognized by the Divisional Court, solicitor-client privilege is fundamental to the administration of justice. The Divisional Court’s decision will clarify whether a waiver of solicitor-client privilege is an all-or-nothing proposition, such that, once waived with respect to an issue, the privilege no longer exists at all with respect to that issue.

Case Information

Kaganovsky v. 2057057 Ontario Inc., 2011 ONSC 6210

Ontario Divisional Court Docket: 398/11

Date Leave Granted: October 18, 2011

amend statement of defence Ontario Divisional Court partial waiver of solicitor-client privilege

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