In July of this year, the Supreme Court of Canada removed counsel from the record because counsel had reviewed privileged doducments obtained through the execution of an Anton Pillar order. The case is called Celanese Canada Inc. v. Murray Demolition Corp.. As GFN noted at the time, Courts are more and more willing to kick counsel off a case because s/he has come into possession of privileged documents from the other side. This is in sharp contrast to the old days, where privilege was often viewed as irretrievably lost upon review by a third party, regardless of the circumstances under which the third party came to do so.
A recent case follows this trend of hard-nosed protection of privilege. It comes from the Ontario Superior Court, and is called 2000768 Ontario Inc. v. 514052 Ontario Limited.
In 2000768, counsel for the plaintiff erroneously provided counsel for the defendant with copies of all documents listed in his client's affidavit of documents, including those listed in Schedule "B", which were privileged and thus should not have been produced. The response of counsel for the defendant was not to immediately inform his opponent that privileged documents had been recieved. On the other hand, he didn't go out of his way to hide the fact. Instead, he seems to have taken a half-way course that involved making some vague asides to his opponent regarding receipt of documents passing between counsel and client. He also used the documents in questioning the plaintiff's representative at discovery, albeit without pointing out that they were listed in Schedule B and on their face covered by privilege. Counsel for the plaintiff did not object to the questioning and indeed provided some undertakings in respect of these questions.
At some point after the discoveries counsel for the plaintiff realized his mistake and brought an application to recover the privileged documents and remove counsel for the defendant from the record.
Justice Van Melle allowed the application. She had no qualms about holding that privilege was not lost simply because a third party came into possession of the documents. Indeed, this point was accepted as obvious. The real question was whether counsel for the plaintiff had in effect waived privilege by virtue of his behaviour and whether counsel for the defendant had acted appropriately upon receipt of the documents.
Van Melle J. held that privilege was not waived, and that counsel for the plaintiff genuinely did not realize that the documents were in the possession of the defendant. In doing so, she cut counsel some slack. In particular, his failure to object when the representative of his client was being asked questions about the documents at discovery suggests waiver. But she accepted that counsel made a mistake, as opposed to having realized and accepted that the documents were in the possession of the opposing party. The holding on this point is of interest because it shows that even fairly severe negligence by the party claiming the privilege does not necessarily lead to waiver.
The real problem on the facts was that counsel for the defendant failed to take proper steps upon realizing that he was in receipt of the documents. The ethical rules in several provinces, including B.C. (Rule 15, Chapter 5, Professional Conduct Handbook), require counsel to inform the other side immediately and not to review the documents pending a resolution of the privilege issue. A direct approach here would have clarified immediately whether privilege was being claimed. 2000768 demonstrates that waiting in the weeds, and even darting out of the weeds now and then, is a risky business.
The price that defence counsel - and his client - paid for this strategy was severe. Justice Van Melle granted the application to remove him from the record. In doing so, she applied the test in em>Celanese Canada Inc. v. Murray Demolition Corp., which involves looking at factors such as how the documents came into counsel's possession, steps taken by the privilege-holder to retrieve the documents upon recognition that privilege was at risk, review made of the material, the contents of the privileged communication and the degree to which they are prejudicial, the stage of litigation and the potential effectiveness of any firewall set up by the recipient. Most importantly, she adopted the Celanese approach whereby the onus is on the recipient to present clear and convincing evidence to rebut the presumption that use of the privileged information would occur at trial. Counsel for the defendant was unable to do so, and so was turfed from the case.
Justice Van Melle was not unappreciative of the harm that her order caused. The case was ready to be litigated, and indeed the motion was heard on the first day of the trial. Removing counsel was a heavy blow indeed for the defendant. But the fault for this predicament lay with defendant's counsel, and so his client had to bear the consequences. As Van Melle J. stated: "... had the proper procedures been followed when [counsel for the defendant] discovered that he was in possession of documents over which solicitor-client privilege had been claimed, we would not be dealing with this issue on the eve of trial."
The message sent by Celanese, 2000768 and a growing number of Canadian cases is clear: counsel who receives documents that might be privileged must immediately take steps to clarify the matter with opposing counsel and must not review the documents in the meantime. Failure to do so can be very detrimental to the interests of counsel's client. Failure to do so can also be very detrimental to the interests of counsel. Not only does s/he lose a client, but there is a good argument to be made that the burden in terms of cost should fall on counsel himself or herself, and not on the client. In fact, a complaint to the law society in such a case would not be out of place.
A word of advice to the Law Society of Upper Canada: consider adding an ethical rule concerning what to do where a lawyer receives privileged documents from the other side. It is true that the case now now provides a clear answer to this situation. But providing additional guidance in the rules of professional conduct is easy to do, and may help to prevent disaster for lawyers who find themselves in this position, not to mention their clients. Following the lead of B.C. and Alberta on this matter makes sense.
