Nixon v. Timms, 2012 ABQB 65

Court of Queen ’ s Bench of Alberta Citation: Nixon v. Timms, 2012 ABQB 65 Date: 20120125 Docket: 0703 02447 Registry: Edmonton Between: Jason Nixon Plaintiff - and - Michael Timms Defendant _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice Peter Michalyshyn _______________________________________________________ [ 1 ] The Plaintiff seeks a ruling permitting him to examine the Defendant's former lawyer in the face of claims of solicitor-client privilege.

For reasons which follow the application succeeds although the scope of the examination will be limited. Background [ 2 ] For purposes of this interlocutory ruling the facts may be stated briefly. The Plaintiff ("Nixon") and Defendant ("Timms") were parties to a commercial real estate purchase contract dated September 16, 2005. Nixon as purchaser paid deposits of $5,000 to a realtor and $25,000 to the vendor Timms' former lawyer. The deal did not close. In due course Nixon sued Timms. Timms was noted in default, then judgment was entered against him.

Timms now moves to set aside the noting in default and judgment. That application will be heard in due course.

[3] In support of his application Timms swore an affidavit July 25, 2011. Timms' affidavit is silent with regard to anycommunications he had with his former lawyer. However, examined on his affidavit on August 29, 2011, Timms answered questionsabout certain instructions he gave his former lawyer. [4] Timms was asked about a letter of January 9, 2006 to Nixon's lawyer from Timms' former lawyer. The letter enclosed certainconveyancing documents. Timms testified he was unaware his former lawyer sent the documents to Nixon's lawyer. Timms denied hegave his former lawyer instructions to send the documents.

Timms testified he had hever seen or heard of the January 9, 2006 letter. [5] Further, Timms testified he told his former lawyer verbally he did not wish to close the transaction. At the same time, hetestified, he told his lawyer to return the $25,000 deposit to Nixon's lawyer. Timms testified he also told the realtor to return the initial$5,000 deposit then in the realtor's possession. The evidence could be clearer just when these conversations took place. It appearshowever to have been at a point earlier than February, 2006.

The instructions were given verbally in the former lawyer’s office. (Timmsundertook at questioning to provide through counsel the date of his meeting with his former lawyer. The answer to that undertaking, ifany, is not before me.) [6] At questioning Timms agreed that as between his lawyer and the realtor, "…if they didn't release those deposits until 2011,both of those parties ignored [my] instructions…" [7] Timms testified that as of February, 2006 he believed the transaction was not proceeding. His belief was informed in part bythe fact he had instructed his former lawyer not to close.

He testified his belief was also informed in part by the fact "I hadn't heard fromanybody about anything". Finally, his belief was informed by the fact that in either January or February, 2006 he had a telephoneconversation with Nixon. In his affidavit Timms states he "followed up with Nixon at a later date … [Nixon] informed me that heconsidered the matter was closed." In questioning Timms testified he told Nixon that he would instruct his former lawyer and the realtorto return the deposits. [8] Timms testified he learned only in July, 2011 that his former lawyer had not returned the deposit in 2006.

Timms was askedif his former lawyer told him he had not sent the money back. Timms answered that his former lawyer "…didn't remember anythingabout it". Any further questions on what he told his former lawyer or on what Timms was told, were objected to on the basis of solicitor-client privilege. [9] In a letter of September 13, 2011 Timms' former lawyer was asked in writing by Nixon's lawyer to provide certain evidencein response to Timms' answers on questioning. As to the former lawyer's response, the only evidence properly before me is his reply ofSeptember 21, 2011 to Nixon's counsel.

The former lawyer’s reply indicates that information around Timms' instructions to him, if any,was privileged. Issues [10] The issues are: (

a) whether Timms' instructions to his former lawyer are themselves protected by solicitor-client privilege; (b)if so, was that privilege waived; and (

c) if so, what is the extent of the waiver? [11] Numerous authorities were argued before me. Referred to by the applicant: Canada v. Solosky (SCC), [1979]S.C.J. No. 130; Angus Partnership Inc. v. Salvation Army (Canada) 2011 ABQB 512; Canada (Minister of National Revenue v.Newport Pacific Financial Group Inc. 2010 ABQB 568; Coulee Creek Consulting Inc. v. Minion Estate 2010 ABQB 583; Petro CanOil & Gas Corp. v. Resource Service Group Ltd. [1988] A.J. No. 336. Referred to by the Respondent: Ridge Development Corp. v. HajiHoldings Inc. 2009 ABQB 664; Pritchard v.

Ontario (Human Rights Commission) 2004 SCC 31; Angus Partnership Inc. v. SalvationArmy (Canada) 2011 ABQB 512. Referred to by the court: Stuart Olson Construction Inc. v. Sawridge Plaza Corp. [1996] A.J.No.1160; Iozzo v. Weir 2004 ABQB 259; Bentley v. Stone; Paterson et al., Third Parties (ON SC), [1998] O.J.No. 4823; Lac La Ronge Indian Band v. Canada (SK KB), [1996] S.J. No. 555; Talisman Energy Inc. v.Petro-Canada Inc. 2000 ABQB 147; Freyberg v. Fletcher Challenge Oil and Gas Inc. 2007 ABQB 80; Schwartz Estate v. Kwinter2009 ABQB 128; H.H. v. R.L. [1997] A.J. No. 570; Bank of America Canada v.

Mutual Trust Co. [1995] O.J. No. 73; Klingbeil(Litigation guardian of) v. Worthington Trucking Inc. (ON SC), [1999] O.J. No. 867; Souter v. 375561 B.C. Ltd.

(BC CA), [1995] B.C.J. No. 2265 (C.A.); Hansen v. Stierle [1996] B.C.J. No. 941; Land v. Kaufman [1991] O.J. No.1658; Biehl v. Strang 2011 BCSC 213 , [2011] B.C.J. No. 274; Walji v. Quraishi 2007 ABQB 643; Newman v. Nemes [1978]O.J. No. 3101. [12] Several propositions relevant to this application are worth noting at the outset while others will be discussed in the balance ofthese reasons. [13] Major J. in Pritchard v. Ontario (Human Rights Commission) sets out the following general propositions: 14 Solicitor-client privilege describes the privilege that exists between a client and his or her lawyer.

Clients must feel free and protectedto be frank and candid with their lawyers with respect to their affairs so that the legal system, as we have recognized it, may properlyfunction: see Smith v. Jones, (SCC), [1999] 1 S.C.R. 455, at para. 46. 15 Dickson J. outlined the required criteria to establish solicitor-client privilege in Solosky v. The Queen, (SCC), [1980]1 S.C.R. 821, at p. 837, as: "(

i) a communication between solicitor and client; (ii) which entails the seeking or giving of legal advice; and(iii) which is intended to be confidential by the parties". Though at one time restricted to communications exchanged in the course oflitigation, the privilege has been extended to cover any consultation for legal advice, whether litigious or not: see Solosky, at p. 834. 16 Generally, solicitor-client privilege will apply as long as the communication falls within the usual and ordinary scope of theprofessional relationship. The privilege, once established, is considerably broad and all-encompassing.

In Descôteaux v. Mierzwinski, (SCC), [1982] 1 S.C.R. 860, the scope of the privilege was described, at p. 893, as attaching "to all communicationsmade within the framework of the solicitor-client relationship, which arises as soon as the potential client takes the first steps, andconsequently even before the formal retainer is established". The scope of the privilege does not extend to communications: (1) wherelegal advice is not sought or offered; (2) where it is not intended to be confidential; or (3) that have the purpose of furthering unlawfulconduct: see Solosky, supra, at p. 835. 17 As stated in R. v.

McClure, [2001] 1 S.C.R. 445, 2001 SCC 14, at para. 2: Solicitor-client privilege describes the privilege that exists between a client and his or her lawyer. This privilege is fundamental to thejustice system in Canada. The law is a complex web of interests, relationships and rules. The integrity of the administration of justicedepends upon the unique role of the solicitor who provides legal advice to clients within this complex system. At the heart of thisprivilege lies the concept that people must be able to speak candidly with their lawyers and so enable their interests to be fullyrepresented.

The privilege is jealously guarded and should only be set aside in the most unusual circumstances, such as a genuine risk of wrongfulconviction. 18 In Lavallee, Rackel & Heintz v. Canada (Attorney General), [2002] 3 S.C.R. 209, 2002 SCC 61, this Court confirmed that theprivilege must be nearly absolute and that exceptions to it will be rare. Speaking for the Court on this point, Arbour J. reiterated what wasstated in McClure: ... solicitor-client privilege must be as close to absolute as possible to ensure public confidence and retain relevance.

As such, it will onlyyield in certain clearly defined circumstances, and does not involve a balancing of interests on a case-by-case basis. [Emphasis inoriginal.] (Arbour J. in Lavallee, supra, at para. 36, citing Major J. in McClure, at para. 35.)

[ 14 ] As noted in Angus Partnership Inc. v. Salvation Army in Canada, privilege can be waived in criminal or civil proceedings by a party either expressly or by implication.

Implied waiver occurs where a party: 1. voluntarily puts its state of mind at issue, as distinct from cases in which the state of mind is put in issue by the party seeking to have the privilege waived; 2. relies upon privileged communications to ground its claim or base its defence; or 3. attempts to support a good faith argument by undisclosed advice from legal counsel. [ 15 ] The onus of proving that privilege has been waived is on the applicant Nixon; the burden is a heavy one: Freyberg v. Fletcher Challenge Oil and Gas Inc.

Were Timms' instructions privileged? [ 16 ] I am satisfied that the instructions Timms gave to his former lawyer are protected by solicitor-client privilege. I have no reason to conclude those instructions were other than within the continuum of communication regarding a real estate transaction for which the lawyer was providing legal advice and services. [ 17 ] There is some suggestion in obiter in the brief decision in Newman v.

Nemes that instructions to send a letter or to make an offer are not privileged " … because the instructions, if given, were in respect of a matter that was not confidential, but was by its very nature to have been communicated to the other side": Newman v. Nemes , supra , at para. 8. The weight of authority however is to the contrary. The cases before me dealing with privilege around instructions to a client's lawyer are decided on the basis the privilege exists, but may be waived explicitly or implicitly as the case may be: Bentley v. Stone ; H.H. v. R.L. ; Bank of America Canada v.

Mutual Trust Co. ; Klingbeil v. Worthington Trucking Inc. ; Hansen v. Stierle ; Souter v. 375561 B.C. Ltd. ; Biehl v. Strang ; Iozzo v. Weir . Was Timms' privilege waived? [ 18 ] The real question is whether Timms waived privilege in his answers to questioning on August 29, 2011. [ 19 ] Timms denies any waiver. He argues that counsel for Nixon raised the issue of Timms' instructions to his former lawyer only during questioning. Until then, Timms had said nothing about communications to or with his former lawyer.

Timms notes his affidavit of July 25, 2011 is silent with regard to what he told his former lawyer or indeed with regard to any communications with him. It is only on being examined on that affidavit that he answered questions put to him by Nixon's counsel, the first of which was, in connection with conveyancing documents: "Did your lawyer have instructions [to send the documents] … " Similar questions followed with regard to Timms' instructions regarding the return of the $25,000 deposit. [ 20 ] Timms argues he is not using this evidence as a "sword" or as part of his defence to Nixon's claim.

Timms argues rather that he was simply answering questions put to him by examining counsel. It was open to Timms however to refuse to answer the question set out above, and the several that followed. He could have refused to answer on the basis of solicitor-client privilege. Having decided to answer, there is now evidence of communications to his lawyer that Timms says - and a trier of fact will doubtless be asked to agree - supports his state of mind that the transaction was off. In that sense, Timms' answers are relevant to, or support his defence to the action.

In that sense he put his state of mind in issue or at least allowed it to be. Whether or not that was his intention when he provided his answers, it certainly is the effect, at least potentially, in the action. [ 21 ] Many cases note the unfairness that may result if a party in his pleadings or evidence raises the issue of instructions given to counsel, then on the basis of solicitor-client privilege resists any examination of the lawyer on the very point raised: e.g., Petro Can Oil & Gas Corp. v. Resource Service Group Ltd. ; Iozzo v. Weir ; Walji v. Quraishi .

[22] I find therefore that Timms did waive solicitor-client privilege when he answered certain questions in his examination onaffidavit August 29, 2011. What is the extent of the waiver? [23] Many of the cases proceed on the basis that when raising the issue of instructions given or advice received the client issomehow critical of or faulting his or her former lawyer. I do not see the element of fault as an absolute prerequisite to a finding ofwaiver. Here Timms is not obviously taking issue or finding fault with his former lawyer.

He does not explicitly blame his former lawyerfor sending the conveyancing documents, or for failing to return the deposited funds. Though presumably Timms expected his formerlawyer to act on his instructions, as he now argues before me, other reasons may exist to explain why the conveyancing documents weresent, or to explain why the $25,000 deposit was not returned. Further, whether any failure to act materially affects Nixon's position in thelitigation is not before me on this interlocutory application.

I am not therefore deciding the ‘extent of waiver’ issue in the context of analleged error or mistake on the part of the former lawyer. [24] What's more, there is no evidence that in providing his instructions Timms relied on whatever his former lawyer told him, ifanything, about the transaction at that point in time. Indeed, the only evidence before me is that Timms told his former lawyer certainthings. [25] There are numerous cases in which clients waive privilege not over just instructions but also over the legal advice related tothose instructions. As noted, this is not such a case.

Neither for example is Hansen v. Stierle, also arising from a real estate transaction.In that case a party testified in discovery regarding instructions to its lawyer, but refused on the basis of solicitor-client privilege to testifyregarding any legal opinions around the same transaction. Melnick J. held privilege was waived regarding the instructions but was notsatisfied on the evidence that any waiver extended to opinions given in connection with the transaction. As here, the refusing party inHansen v. Stierle did nothing to put the lawyer's legal advice in issue. [26] Likewise, in Bentley v.

Stone the Defendant disputed she instructed her lawyer to settle her case. The Plaintiff was entitled to"check the accuracy" of that assertion: Here, the Defendant has chosen to testify about what was not included in her instructions to her solicitor and by doing so, she has waivedprivilege. It would be unfair if it was otherwise. In the result, the solicitor … is compellable as a witness to answer questions with respect to the narrow issue as to whether he wasinstructed to deliver the offer to settle of May 5, 1998.

The examination [of the solicitor] may not go beyond questions relatingthereto. (at page 5, emphasis added) [27] Other cases may allow a somewhat broader examination of otherwise privileged communications. For example, Iozzo v.Weir was a case dealing with an application to withdraw an admission, the test for which involves four inquiries as set out in Dwyer v.Fox (1996) 1996 ABCA 95 , 181 A.R. 223 (C.A.). In Iozzo v.

Weir Slatter J. (as he then was) held that notwithstanding waiverwas established: … privilege is lost [only] over any communication that has a relevant and material connection to the issue being brought forward ...Where a party indicates that an admission was made in error, and the error was the doing of counsel, then in my view privilege is lostover all communications relevant to the parts of [the Dwyer] test. (at paragraphs 21, 23) [28] Similarly, in H.H. v. R.L. the client facing a delay application argued his former lawyer failed to advance the action as he hadbeen instructed to do so.

Veit J. ordered solicitor-client privilege waived only as it related to communications that dealt with instructionsand delay. One can readily foresee the larger scope of waiver of communications relevant to “instructions and delay”. [29] It seems to me on the other hand that the scope for waiver in cases such as Hansen v. Stierle or Bentley v. Stone, or indeed as

in the case before me, may be significantly narrower. Conclusion [ 30 ] Timms' instructions to his former lawyer were protected by solicitor-client privilege. Timms voluntarily waived that privilege by answering certain questions on examination. I have considered the scope or extent of the waiver mindful of the cases discussed above, and the test of waiving privilege over communications that are relevant and material to the issue being brought forward.

This approach is consistent with the description of solicitor-client privilege as a "nearly absolute”right of the client to which exceptions will be rare: Pritchard v.

Ontario (Human Rights Commission) at paragraph 18 , but protects the party opposite’s reasonable expectation of fairness when otherwise privileged communications are raised to that party’s potential detriment. [ 31 ] I agree with Timms' position that in the circumstances I should interfere with his right to solicitor-client privilege only to the extent necessary to achieve fairness. [ 32 ] As such, Timms' former lawyer can give evidence whether he received instructions from Timms to send the conveyancing documents to Nixon’s lawyer as referred to in Timms' questioning of August 29, 2011.

Similarly, the former lawyer can be asked if Timms told him the transaction was off, and if in January or February, 2006 he received instructions from Timms, verbally and in the former lawyer’s office, to return the $25,000 deposit to counsel for Mr. Nixon. [ 33 ] Based on what little is before me, I hesitate to order a more sweeping waiver of solicitor-client privilege.

Strictly vis a vis his former lawyer, Timms raised no issues such as why or on what basis he did not give certain instructions regarding the conveyancing documents, or why or on what basis he gave other instructions regarding the deposit (other than of course that Timms says he said the transaction was off). Further, there is no evidence Timms relied on his former lawyer's advice, if any, in connection with the instructions he says he did or did not give. Timms simply denied giving certain instructions, and asserted he gave other instructions and information, verbally and at the former lawyer’s office.

Nixon is entitled to “check the accuracy” of that evidence. I am not persuaded that on this record there is much if any other relevant and material privileged communications Nixon is entitled to examine. [ 34 ] This being said, nothing of course prevents the trial judge hearing this matter from revisiting whether questioning of the former lawyer should be broadened, depending on the evidence and circumstances which may later unfold, and which Timms may bring forward, at the trial of this matter. [ 35 ] If they are unable to agree the parties may of course speak to costs. Heard on the 2 nd day of December, 2011.

Dated at the City of Edmonton, Alberta this 24 th day of January, 2012. Peter Michalyshyn J.C.Q.B.A. Appearances:

Appearances: Teri Lynn Bougie/Steven Ho Ahlstrom Wright Oliver & Cooper LLP for the Plaintiff (Applicant) Edward R. Feehan Duncan & Craig LLP for the Defendant (Respondent)