Judgments

Decision Information

Risi Stone Ltd. v. Croupe Permacon Inc. (T.D.)

Collection Judgments
Date 1990-03-06
Report citation [1990] 3 F.C. 10
File numbers T-1005-89
Subjects Practice

Decision Content

T-1005-89
Risi Stone Ltd. and Unites Prefabriques St-Luc Limitee (Plaintiffs)
v.
Groupe Permacon Inc. (Defendant)
INDEXED AS: RISI STONE LTD. V. GROUPE PERMACON INC. (T.D.)
Trial Division, Reed J.—Toronto, December 18, 19 and 20, 1989; Ottawa, March 6, 1990.
Practice — Privilege — Solicitor-client — Patent infringe ment action — Defendant's affidavit referring to lawyer's opinion letter to demonstrate acted in good faith — Waiver of privilege — Prothonotary erred in ordering disclosure of entire document — Correct procedure to file copy of document with Judge determining whether privilege exists — Reference to English, Canadian texts as to extent of disclosure required Purpose for requiring disclosure — Degree of certainty, not accuracy, of counsel's opinion is at issue — Two aspects of communication severable — Claim for privilege regarding undisclosed portions properly made.
This was an appeal from the prothonotary's decision that an opinion letter sent to the defendant by its solicitors be disclosed in its entirety to the plaintiffs. An officer of the defendant had referred to the opinion letter in his affidavit to show that the defendant had acted in good faith in producing and selling its Minitalus building blocks which are used in constructing retaining walls. The reference was made in response to the allegation that the defendant was purposefully infringing the plaintiffs' patent. The defendant produced the opinion letter with a number of deletions. Disclosure was ordered to enable counsel for the plaintiffs to answer the defendant's claim that the undisclosed parts of the document were privileged. The issue was the extent to which solicitor-client privilege had been waived by making reference to the opinion letter in an affidavit.
Held, the appeal should be allowed.
Where solicitor-client privilege is claimed, a document should not be ordered disclosed to the other side for the purposes of argument as to the document's privileged status. The appropriate procedure is for the claiming party to file a copy of the document with the Court. The Court should then determine whether privilege exists without disclosing the docu ment to counsel opposing the claim. Sometimes such a determi nation can be made without filing a copy of the document, for example on the basis of the title of the document alone.
Whether or not a copy must be seen is for the Court to determine.
The purpose for requiring disclosure of an entire document, is to prevent the unfairness that would result if one side were to cite only those portions of a document which were in its favour. The same subject-matter rule was enunciated in the Great Atlantic Insurance case where the Court could not determine the relevance of the excised parts of the document in the absence of argument by counsel. Here, the legal opinion is being put forward to show good faith on the part of the defendant. What is relevant to that issue is the degree of assurance which the defendant received from its solicitors; any statements in the letter which would contradict or qualify the conclusions which appear in the parts of the opinion letter which have been disclosed would be relevant to that issue. The legal reasons upon which the solicitor reached his conclusions are not relevant. Such reasons can be considered to be a separate subject-matter. It is not the accuracy of counsel's opinion which is in issue, but the degree of certainty which counsel communicated to the defendant in giving his opinion. The two aspects of the communication to the defendant by its solicitors could be severed and the defendant had accurately done so.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Charter of Human Rights and Freedoms, R.S.Q. 1977,
c. C-12, s. 9.
Code of Civil Procedure, R.S.Q. 1977, c. C-25.
CASES JUDICIALLY CONSIDERED
DISTINGUISHED:
Great Atlantic Insurance Co v Home Insurance Co, [1981] 2 All ER 485 (C.A.).
CONSIDERED:
Lapointe v. Canada (Minister of Fisheries and Oceans), [1987] 1 F.C. 445; (1986), 6 F.T.R. 134 (T.D.); Rogers v. Bank of Montreal, [1985] 4 W.W.R. 508; (1985), 62 B.C.L.R. 387; 57 C.B.R. (N.S.) 256 (B.C.C.A.); Doland (George) Ltd v Blackburn Robson Coates Et Co (a firm), [1972] 3 All ER 959 (Q.B.); Burnell v. British Transport Commission, [1956] 1 Q.B. 187 (C.A.).
REFERRED TO:
Risi Stone Ltd. v. Omni Stone Corp. (1989), 23 C.P.R. (3d) 398 (Ont. S.C.); Nowak v. Sanyshyn et al. (1979), 23 O.R. (2d) 797; 9 C.P.C. 303 (H.C.); Kennedy et al. v. Diversified Mining Interests (Canada) Limited et al., [1948] O.W.N. 798 (H.C.); Crysdale et al. v. Carter- Baron Drilling Services Partnership et al.; Jones et al.; Third Parties (1987), 61 O.R. (2d) 663; 22 C.P.C. (2d) 232 (S.C.).
AUTHORS CITED
Phipson, Sidney L. Phipson on Evidence, 13th ed., London: Sweet & Maxwell, 1982.
Sopinka, John & Lederman, Sidney N., The Law of Evidence in Civil Cases, Toronto: Butterworths, 1974.
COUNSEL:
Weldon F. Green, Q.C. and W. Lloyd Macll- quham for plaintiffs.
Daniel J. Gervais and Robert Brouillette for defendant.
SOLICITORS:
Weldon F. Green, Q.C., Toronto, for plain tiffs.
Clark Woods Rochefort Fortier, Montreal, for defendant.
The following are the reasons for order ren dered in English by
REED J.: The defendant appeals a decision of the prothonotary, Mr. Giles, ordering that the full text of an opinion letter sent by solicitors to the defendant be disclosed to counsel for the plaintiffs. As I understand that decision, the disclosure was ordered to enable counsel for the plaintiffs to properly prepare argument to answer the defend ant's claim that the undisclosed parts of the docu ment are privileged.
The argument took a slightly broader approach before me. Both counsel addressed the question of whether there had been a waiver of privilege with out reference to the limitation which I understand to be inherent in Mr. Giles' order. That is, the argument of counsel was not directed to whether the full text of the document should be disclosed to counsel to enable him to argue that the undisclosed parts did not retain their privileged character. Rather, the argument before me was on the sub stance of the issue, that is, whether the parts of the letter in question were in fact still privileged or whether a waiver had occurred. This argument proceeded without counsel for the plaintiffs having access to the full text of the letter.
With respect to the procedure for dealing with claims of solicitor-client privilege, I would first of all note, that, it is my practice not to allow disclo sure of a privileged document to counsel for the other side for the purposes of argument with respect to the document's status. It is my practice to require that a copy of the document be made available to the Court for review without disclo sure to the other side. This does hobble counsel who is opposing a claim for solicitor-client privi lege in making argument. However, in general claims of this nature can be determined by the judge without extensive argument thereon and dis closure to counsel, even for the purposes of argu ment only, can render any subsequent finding that the document is privileged academic.
In my view, when a claim for solicitor-client privilege is being considered, whether it be by a judge or by a prothonotary, the appropriate proce dure is for the claiming party to file a copy of the document with the Court. The Court, then, should make a determination as to whether privilege exists without disclosing the document to the coun sel opposing the claim. Sometimes such a determi nation can be made without filing a copy of the document with the Court, for example, on the basis of the title of the document alone. Whether or not a copy is required for review is, of course, a matter for the Court to determine in each case.
I turn then to the substantive issue before me. As noted, counsel agree that the letter in question was originally privileged. The issue is the extent to which that privilege has been waived. In addition, representations were made that there is a differ ence between the nature of solicitor-client privilege in Ontario (under the common law) and in Quebec (under the Code of Civil Procedure [R.S.Q. 1977, c. C-25] and the Quebec Charter of Human Rights and Freedoms [R.S.Q. 1977, c. C-12] sec tion 9). It was argued that while at common law the concept of solicitor-client privilege is a rule of evidentiary exception only, in Quebec the rule is a substantive right. It was argued that the Quebec
rule applies in this case and that under that rule waiver is not possible.
I do not need to deal with the interesting ques tions raised respecting the possible differences be tween the law of Quebec and the common law if, in any event, under the latter the circumstances here in question do not constitute a waiver. I accordingly will consider that issue first.
Waiver of the solicitor-client privilege which existed in the letter is claimed because Mr. Cas- tonguay, an officer of the defendant, in an affida vit dated July 26, 1989, stated:
[TRANSLATION] 10. However, before marketing Minitalus blocks Permacon, concerned about the rights of third parties, asked for and obtained from its counsel an opinion on potential infringement of third parties' patents or industrial designs. This opinion reassured Permacon that the Minitalus block was not infringing any patent or industrial design currently valid and in effect in Canada, in particular those of Risi mentioned in the plaintiffs pleadings. [Underlining added.]
And, in response to the plaintiffs' request that the legal opinion given to the defendant, on which this assertion was based, be produced, counsel for the defendant provided the plaintiffs with a copy of the opinion letter, with a number of deletions made therefrom:
[TRANSLATION]
January 17, 1989
GROUPE PERMACON INC.
7811, boul. Louis-H. Lafontaine
Bureau 210
Ville d'Anjou (Quebec)
H1K 4E4
Attention Mr. Alain Ratte
RE: Opinion on infringement of patent No. 1,182,295 and
industrial design No. 51,313
Title: RETAINING WALL SYSTEM
Our file: 527-8
Dear Mr. Ratte
You requested an opinion regarding infringement of the aforementioned Canadian patent and industrial design. In par ticular, you want to know whether the manufacture and/or sale of the building block shown in Appendix 1 ("Block A") in Canada would be an infringement of this patent and industrial design.
CONFIDENTIAL [portion of letter deleted] Canadian patent 1,182,295
Before considering the patents and industrial designs found in detail, the field of protection offered by the claims of patent '295 must be determined. The first claim of this patent reads as follows:
"1) In an interlocking block for a retaining wall structure wherein like blocks are laid in horizontal courses one upon the other in end to end relation with the upper blocks interlocking with the lower blocks and displace- able therealong is sliding fit and therebeyond to overlap the adjacent ends of the lower blocks and to extend upwardly as such wall structure is erected at a selected uniform inclination to the vertical said block having;
an axis terminating in spaced apart end walls and bounded by generally flat top and bottom walls arranged in parallel relation to said axis and to each other and by front and rear facings extending from end wall to end wall and so separated as to provide a substantially uniform cross section throughout the axial extent of same;
— projecting means upstanding from said top wall and extending axially of said block between said and walls and spaced inwardly from said front facing to present an uninterrupted flat top wall portion therebetween
— said bottom wall having recess means therein likewise spaced inwardly from said front facing and extending axially of said block between said end walls;
— said projecting means and said recess means having a configuration and extent so as to matingly interlock in sliding fit when such blocks are disposed in horizontal courses one upon the other and in overlapping relation to present said projecting means upwardly;
— said projecting means being spaced rearwardly in rela tion to said axis a selected extent exceeding that of said recess means whereby each overlying horizontal course is automatically uniformly set back from the next below horizontal course so as to define a uniformly inclined wall structure at a selected angle to the vertical."
[TRANSLATION] For there to be a literal infringement of a claim, each component of the claim must be present in the object in question.
CONFIDENTIAL [portion of letter deleted]
There is thus no literal infringement of this claim.
CONFIDENTIAL [portion of letter deleted]
We consider there is thus no infringement by applying the
theory of equivalents.
CONFIDENTIAL [portion of letter deleted]
Industrial design 51,313
It must be borne in mind that an industrial design protects the ornamental or esthetic aspect of an object, not its utilitarian characteristics.
The extent of the monopoly is determined by considering the designs and description. The description is supposed to relate to
whatever distinguishes the industrial design from what is known.
Consequently, for there to be an infringement of the said industrial design, the object in question must have essentially the same characteristics as those mentioned in the description and shown in the designs.
CONFIDENTIAL [portion of letter deleted]
In our opinion the visual characteristics of our block are so different as not to be an infringement of industrial design 51,313.
CONFIDENTIAL [portion of letter deleted]
Do not hesitate to get in touch with Robert Brouillette or the undersigned if further information is required.
Yours truly,
CLARK, WOODS
per: Louis Dube
The plaintiffs argue that the reliance by Mr. Castonguay, in his affidavit, on the legal opinion which was provided to the defendant, Permacon, constitutes a waiver and that the defendant must disclose the opinion letter in its entirety. As I understand the reason for the defendant's refer ence to the legal opinion, it was made by Mr. Castonguay to demonstrate that the defendant had acted in good faith in producing and selling its Minitalus blocks. It was given in response to the plaintiffs' allegation that their patent was being purposefully infringed by the defendant and that punitive damages should therefore be awarded against the defendant.
There is really no dispute that there has been a waiver of solicitor-client privilege in the legal opin ion which was given to the defendant, the question is whether the defendant is required to disclose the contents of the opinion letter in its entirety. The plaintiffs rely on jurisprudence which has applied the principle that when a privileged communica tion is pleaded or relied upon by one party, the entire document as well as documents relating thereto must be disclosed: Lapointe v. Canada (Minister of Fisheries and Oceans), [1987] 1 F.C. 445 (T.D.), per Cullen J.; Risi Stone Ltd. v. Omni Stone Corp. (1989), 23 C.P.R. (3d) 398 (Ont. S.C.), per Master Garfield; Nowak v. Sanyshyn et al. (1979), 23 O.R. (2d) 797 (H.C.), per Grange J.; Kennedy et al. v. Diversified Mining Interests (Canada) Limited et al., [1948] O.W.N. 798 (H.C.), per LeBel J.; Crysdale et al. v. Carter- Baron Drilling Services Partnership et al.; Jones
et al.; Third Parties (1987), 61 O.R. (2d) 663 (S.C.), per Master Peppiatt.
In the Lapointe case, Mr. Justice Cullen dealt with a situation where the defendants had pleaded that they had acted as they had because they were of the belief that they were entitled in law and on the basis of the facts to do so. Mr. Justice Cullen held that by so pleading the defendants had waived the solicitor-client privilege with respect to the legal advice they had received. He ordered that each and every legal opinion given to the defend ants by legal counsel should be made available to the plaintiffs [at page 448]:
How can anyone fairly judge whether the defendants or either of them or their servants or agents acted maliciously, or whether they acted in belief that they were entitled in law in acting as they did unless one has access to the legal opinions?
Mr. Justice Cullen referred to Rogers v. Bank of Montreal (1985), 62 B.C.L.R. 387 (C.A.) where it was held that [at pages 448-449 F.C.]:
By raising the defence of reliance on the legal opinion of the receiver respecting its appointment and the timing of the demand for payment, the bank made its knowledge of the law relevant to the proceedings. The bank's right of solicitor-client privilege respecting the advice it received from its solicitors concerning those matters ought, therefore, to be removed for the purposes of the application. However, the restriction in the order to documents given to the bank by its solicitors was not justified and the order was extended to include disclosure of communications from the bank to its solicitors.
• • •
... "the bank's assertion that it relied on legal advice given by the receiver necessarily puts in issue the rest of the bank's knowledge of the relevant law and therefore the nature of the legal advice it received from others".
The other decisions referred to by counsel for plaintiffs are to a similar effect.
I was not referred, by counsel for the plaintiffs to any Canadian cases which discussed the extent of disclosure which must be made. Phipson on Evidence, 13th ed., (London: Sweet & Maxwell, 1982) contains the following passage at pages 305-306:
The [solicitor-client] privilege may, however, as we have seen, (Ante, § 15-06) be waived by the client (though not by the solicitor), either expressly or impliedly—e.g. by the client being examined by his counsel as to the privileged matter. It has been suggested that if the witness is examined only as to part of the document, he cannot be cross-examined as to the residue, (Bate v. Kinsey, 1 C.M. & R. 38; M'Donnel v. Conry, Ir. Cir. Rep. 807; R. v. Leverson, 11 Cox 152; Lyell v. Kennedy, 27 Ch. D. 1), but this is clearly incorrect if the residue deals with the same subject matter. The effect of cross-examining on the residue is to make the whole document evidence. (Post § 33-42.) Cross-examination does not necessarily bring in other statements mentioned in the document .... Merely to refer to a document in a pleading is not tantamount to waiving privilege in respect of it (though it is otherwise if the terms of the document are set out). (Butter Gas & Oil Co. v. Hammer (No. 3), [1980] 3 All E.R. 475 (C.A.)).
• • •
The court will permit severance of the various parts of the document, and thus the retention of privilege for the concealed part, only if the subject-matter is wholly distinct. [Underlining added.]
In Sopinka and Lederman, The Law of Evidence in Civil Cases, at page 182, the following is found:
If the holder of the privilege does waive it, then the solicitor will be compelled to disclose the confidential communication. Waiver of the legal professional privilege, however, will not, without more, result in the waiver of another corresponding privilege. In George Doland Ltd. v. Blackburn Robson Coates & Co. et al., the plaintiff company called their solicitor to testify about a telephone conversation between him and its managing director. Geoffrey Lane J. ruled that although that constituted waiver of the solicitor-client privilege, it did not in addition vitiate the plaintiff's privilege relating to documents subsequently prepared for the purposes of litigation. [Footnote omitted.]
The Doland [Doland (George) Ltd v Blackburn Robson Coates Et Co (a firm), [1972] 3 All ER 959 (Q.B.)] case referred to in Sopinka and Leder- man dealt with a situation in which the plaintiff admitted evidence concerning a telephone conver sation which had taken place between the manag ing director and the plaintiff's solicitor. It was held that the defendant's counsel could cross-examine on any matter contained in the telephone call but not with respect to documents which came into existence subsequently or with respect to subse quent oral conversations.
The purpose behind requiring disclosure of the whole document when part has been disclosed was
discussed in Burnell v. British Transport Commis sion, [1956] 1 Q.B. 187 (C.A.) [at page 190]:
It would be most unfair that cross-examining counsel should use part of the document which was to his advantage and not allow anyone, not even the judge or the opposing counsel, a sight of the rest of the document, much of which might have been against him. [Underlining added.]
In Great Atlantic Insurance Co v Home Insur ance Co, [1981] 2 All ER 485 (C.A.), several paragraphs of privileged document were read into the record. The Court held [at pages 490-492]:
The second question is whether, the whole of the memoran dum being a privileged communication between legal adviser and client, the plaintiff may waive the privilege with regard to the first two paragraphs of the memorandum but assert privi lege over the additional matter. In my judgment severance would be possible if the memorandum dealt with entirely different subject matters or different incidents and could in effect be divided into two separate memoranda each dealing with a separate subject matter. The judge with the experience of 14 days of the trial and after reading the whole of the memorandum came to the conclusion that the first two para graphs of the memorandum and the additional matter dealt with the same subject matter. Knowing far less about the circumstances, I would be slow to come to a different conclu sion. Having read the whole memorandum, I agree with him. Indeed the affidavit of the plaintiffs' English solicitors makes this plain.
Counsel for the plaintiffs argued that severance is permissi ble where the part disclosed is only an account of a discussion which itself is not privileged. But, once it is decided that the memorandum deals with only one subject matter, it seems to me that it might be or appear dangerous or misleading to allow the plaintiffs to disclose part of the memorandum and to assert privilege over the remainder. In the present case the suspicions of Heath which have not unnaturally been aroused by the disclosure of only part of the memorandum can only be justi fied or allayed by disclosing the whole. It would be undesirable for severance to be allowed in these circumstances. In my judgment, the simplest, safest and most straightforward rule is that if a document is privileged then privilege must be asserted, if at all, to the whole document unless the document deals with separate subject matters so that the document can in effect be divided into two separate and distinct documents each of which is complete.
• • •
It is true that in the present case the first two paragraphs can be divided from the remainder of the memorandum but they deal with the same subject matter. Waiver of part of a docu ment is bound to lead to grave difficulties for all parties and to many unjustified suspicions.
. .
In Nea Karteria Maritime Co Ltd v Atlantic and Great Lakes Steamship Corpn (11th December 1978, unreported) decided by Mustill J the judge succinctly summarised the position as follows:
`I believe that the princile underlying the rule of practice exemplified by Burnell v British Transport Commission is that, where a party is deploying in court material which would otherwise be privileged, the opposite party and the court must have an opportunity of satisfying themselves that what the party has chosen to release from privilege repre sents the whole of the material relevant to the issue in question. To allow an individual item to be plucked out of context would be to risk injustice through its real weight or meaning being misunderstood. In my view, the same princi ple can be seen at work in George Doland Ltd v Blackburn Robson Coates & Co in a rather different context.'
I agree and would only add that it would not be satisfactory for the court to decide that part of a privileged document can be introduced without waiving privilege with regard to the other part in the absence of informed argument to the contrary, and there can be no informed argument without the disclosure, which would make argument unnecessary.
Counsel for the plaintiffs attempted to distinguish the deci sions in Burnell v British Transport Commission and George Doland Ltd v Blackburn Robson Coates & Co on the grounds that it was necessary in those cases for the whole statement to be disclosed in order that the consistency of the testimony of a witness could be scrutinised. In my judgment, however, the rule that privilege relating to a document which deals with one subject matter cannot be waived as to part and asserted as to the remainder is based on the possibility that any use of part of a document may be unfair or misleading, that the party who possesses the document is clearly not the person who can decide whether a partial disclosure is misleading or not, nor can the judge decide without hearing argument, nor can he hear argu ment unless the document is disclosed as a whole to the other side. Once disclosure has taken place by introducing part of the document into evidence or using it in court it cannot be erased. [Underlining added.]
It must be noted, then, that the purpose for requiring disclosure of a whole document, when part only is released, is to prevent unfairness to the other party, to prevent one side citing only those portions of a document which are in its favour. The reason the Court enunciated, what I will call, the same subject-matter rule in the Great Atlantic Insurance case was because it was of the view that the relevance of the excised parts of the document could not be determined by the judge, in the absence of argument by counsel thereon.
In the present case, the legal opinion tendered is being put forward to show good faith on the part of the defendant. What is relevant to that issue, then, is the degree of assurance which the defend ant received from its solicitors; any statements in the letter which would contradict or qualify the conclusions which appear in the parts of the opin ion letter which have been disclosed would be relevant to that issue. If the defendant acted in the face of a qualified opinion or in defiance of an opinion which indicated that there was no right to do so (despite the portions of the letter which have been disclosed indicating otherwise) then those other portions would have to be disclosed. The legal reasons upon which the solicitor reached his conclusions however, (e.g. amount of prior art searched) are not relevant to this issue. In my view, such reasons can be considered to be a separate subject-matter. It is not the accuracy of counsel's opinion which is in issue but the degree of certainty which counsel communicated to the defendant in giving an opinion.
In my view, the two aspects of the communica tion to the defendant by its solicitors (the qualified or unqualified nature of the opinion and the legal grounds therefor) can be severed and counsel for the defendant has accurately done so. This is not a case where there is need for argument from coun sel before it is possible for a judge to determine the relevance of the severed portions and whether they address the same or different subject-matters. In my view, the defendant has disclosed portions of the communication connected to the aspect of that communication which was put in issue by the waiver. The claim for privilege with respect to the undisclosed portions is properly made.
While the matter is being dealt with on motion, as a preliminary issue, that does not preclude the Trial Judge reconsidering the issue should evi dence at that stage be such as to indicate that this would be appropriate. Accordingly, the copy of the letter will be placed in a sealed envelope marked confidential—for the eyes of the Court only. In the absence of further order of the Court, it will remain so.
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