Gault Estate (Re), 2016 ABQB 53

Court of Queen ’ s Bench of Alberta Citation: Gault Estate (Re), 2016 ABQB 53 Date: 20160126 Docket: 1401 09603 Registry: Calgary Between: James Emsley Thomas Hooton, as Litigation Representative of the Estate of Carol Mary Lascelles Gault Plaintiff/Defendant by Counterclaim - and - Sebastian Gault as Trustee for the Estate of Leslie Gault Defendant/Plaintiff by Counterclaim _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Bryan E.

Mahoney _______________________________________________________ Introduction [ 1 ] The Estate of Carol Gault (“Carol”) claims for unjust enrichment and seeks a declaration that the Estate of her late husband Leslie Gault (“Leslie”) holds property for her under a resulting or constructive trust as a result of a joint family venture.

[ 2 ] In response to that claim, Leslie filed a defence and counterclaim denying the unjust enrichment claim and seeking enforcement of a written marriage contract. In the alternative, Leslie claims that in fact it was Carol who was unjustly enriched from a joint family venture. Leslie seeks a declaration that Carol holds property for him under a constructive trust. [ 3 ] Leslie has brought an Application for

Summary Dismissal, and brings this application for procedural orders to:

a) require a non-party, Richard Gilbert, an accountant, and his company, 1512873 Alberta Ltd. (together, “Gilbert”), retained by Carol, to produce documents and attend for questioning;

b) require the production of documents by the law firm Bennett Jones LLP, also retained by Carol. [ 4 ] Leslie claims that the relief he asks for is relevant to his

summary dismissal application set for hearing before a Master in March, 2016. Leslie seeks the dismissal of Carol’s claim on the grounds that it is Limitations Act statute-barred and that Leslie was not unjustly enriched by Carol. [ 5 ] Carol opposes this procedural application, submitting that:

a) the requested records and examination are not relevant to the limitations question;

b) alternatively, if the Court finds that the requested records and examination are relevant, they are subject to litigation privilege in respect of Gilbert and solicitor-client privilege in respect of Bennett Jones; and

c) Carol has not waived privilege. Application to Question Gilbert [ 6 ] Leslie’s procedural application asks for an order:

a) Compelling Gilbert to attend to be questioned pursuant to Rule 6.8 in respect of Leslie’s application for

summary dismissal, to answer queries in respect of the following: i. the timing and terms of the engagement by Carol Gault of Richard Gilbert/1512873 Alberta Ltd. to provide accounting services in furtherance of a future claim by Carol Gault against Leslie Gault for his alleged under-contribution towards household expenses; ii. the purpose of the engagement; iii. the intended use of the results of the engagement; iv. the specific discussions in which Carol Gault expressed that the engagement was to provide accounting calculations in furtherance of a future claim she intended to pursue against Leslie Gault; v. the documentation and information provided to assist in achieving the purpose and intended use of the engagement; vi. the results of the engagement, including any documentation prepared; vii. the contents of the files in furtherance of the engagement; viii. the calculations respecting the contributions of Leslie Gault to household expenses; ix. the calculations respecting the contributions of Carol Gault to household expenses;

x. the termination of household expenses throughout the marriage; xi. the contents of the "Booklet of Accounting" prepared in furtherance of the anticipated claim by Carol Gault against Leslie Gault; xii. the payments made by Carol Gault for the accounting services performed; xiii. copies of all documents and calculations prepared in furtherance of the engagement.

b) In the alternative, Leslie seeks an order compelling Gilbert to attend to be questioned pursuant to Rule 6.8 regarding the timing, specific terms and purpose/use of the engagement, to address and respond to the litigation privilege claimed by Carol.

c) In addition, Leslie seeks an order compelling Gilbert to provide the records referenced in the Rule 6.8 Appointment. [ 7 ] With respect to subparagraph (

c) above, Leslie seeks from Gilbert: All files and documents relating to Leslie Henderson Gault (as engaged/directed by Carol Mary Lascelles Gault), including, but not limited to, books or booklets of accounting, electronic documents, and correspondence (the “Gilbert Records”). [ 8 ] I agree with the Carol’s submissions that the Gilbert Records can be divided into two categories:

a) Books or booklets of accounting (the “Gilbert accounting records”); and

b) Other information and communications pertaining to Gilbert’s engagement with Carol (the “Other Gilbert Records”). [ 9 ] In this procedural application, Leslie has also applied for relief against Bennett Jones, seeking a third-party records order: Requiring the Respondent to produce to the Applicant certain "records" (as defined in the Rules of Court) in the possession or control of the Respondent, wheresoever such records are located, that are relevant and material to the matters at issue in this Action. The records sought by the Applicant include: (

i) any records provided by Carol Mary Lascelles Gault (the “Plaintiff'”) to Bennett Jones LLP relating to Leslie Henderson Gault, or his estate, (ii) any document that identifies the terms of engagement (redacted as necessary); (iii) any Statements of Account rendered by Bennett Jones LLP identifying the services rendered and the corresponding date for such service, in respect of the engagement (amounts redacted as necessary) (the “Bennett Jones Records”). [ 10 ] Although not set out in the application against Bennett Jones, in his brief Leslie seeks an order to examine Bennett Jones lawyer, Lexy Wong, about the “terms, purpose, objective and products of her engagement by Carol Gault respecting a prospective claim against Leslie Gault.” [ 11 ] The Other Gilbert Records and Bennett Jones Records are sought by Leslie in an attempt to show that Carol’s claim is statute- barred.

In particular, Leslie says that evidence of Carol’s retention of professional services in 2011, and of the scope of Gilbert’s engagement and Bennett Jones retainer, is relevant to the discoverability provisions of the Limitations Act , RSA 2000, c L-12. Leslie also seeks the Gilbert Records to “address the issues of unjust enrichment.” [ 12 ] In response, Carol argues that the Other Gilbert Records and the Bennett Jones Records are irrelevant for such an inquiry.

In doing so, Carol refers to Section 3(1) of the Limitations Act which sets out the general rule on whether a claim is statute-barred: Subject to subsections (1.1) and (1.2) and

section 11, if a claimant does not seek a remedial order within (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, (

i) that the injury for which the claimant seeks a remedial order had occurred, (ii) that the injury was attributable to conduct of the defendant, and (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding, or (b) 10 years after the claim arose, whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim. [ 13 ] I agree with Carol’s submission that in the case of unjust enrichment, proceedings are not warranted under section 3(1) (a)(iii) of the Limitations Act until all three elements of the cause of action have occurred.

For unjust enrichment, these are: (1) an enrichment of

the defendant, (2) a corresponding deprivation of the plaintiff, and (3) the absence of a juristic reason for the defendant’s enrichment:Salna v Awad, 2011 ABCA 20 at para 30. [14] The Alberta Court of Appeal has held that a claim for unjust enrichment arises generally at the date of the parties' separationbecause the spouses will generally not know the extent of the unjust enrichment and corresponding deprivation until there is aseparation, and it would be contrary to public policy to require that suits for unequal contributions during the course of a maritalrelationship be filed during the marriage: Milavsky v Milavsky, 2011 ABCA 231 at para 26. [15] Where parties did not suffer a marriage breakdown, but were instead separated by death, a cause of action for unjustenrichment does not arise until the deceased's death, which is the triggering event to start the limitations clock: Skippon v Krueger Estate(1985), (SK KB), 43 Sask R 201 at paras 14 and 17, quoting Deglman v Guaranty Trust Co of Canada, (SCC), [1954] SCR 725 at 735 and 736, and GHL Fridman and JG McLeod, Restitution (Toronto: Carswell, 1982) at 600. [16] In this case, Carol and Leslie were married for over 38 years until Leslie died on January 16, 2014, and Carol became hiswidow.

There is no evidence of a breakdown in their marital relationship. Leslie entered into long term eldercare in January 2009. Bynecessity they no longer lived under the same roof. Nevertheless, their marital relationship continued until Leslie's death. [17] On that basis, I agree with Carol’s submission that disclosure of the Other Gilbert Records and Bennett Jones Records isirrelevant to the limitations inquiry.

Whatever communications she had with her lawyer and accountant in relation to possible litigationagainst Leslie's Estate could not affect a claim that could only arise on a breakdown of their marriage or on Leslie’s death. [18] I accept that communications with experts and lawyers are not evidence of knowledge of a cause of action that does not yetexist.

Paragraph 7 of the affidavit of James Emsley Thomas Hooton, Carol’s son and litigation representative, filed on June 4, 2015,states at paragraph 7: Both of the non-party respondents in these applications were retained by my mother in contemplation of possible litigation in the eventthat her husband Leslie Gault did not adequately provide for her upon his death in a testamentary document or otherwise. [19] The Other Gilbert Records and Bennett Jones Records may disclose Carol's fear that Leslie on his death would provide for hischildren from a previous marriage but not for her.

Fear that someone may not adequately meet their equitable obligation is not sufficientto warrant bringing proceedings that would start the clock under section 3(1)(

a) of the Limitations Act. The mere fact that Carolconsulted or retained a lawyer and an accountant is not germane to the limitations issue in this case. [20] For these reasons, the Other Gilbert Records and the Bennett Jones Records are not relevant to any limitations inquiry. Leslie'sapplications for their disclosure and the related examination is dismissed on that basis alone. [21] The Gilbert Accounting Records are arguably relevant to the defence that Leslie was not unjustly enriched, but as discussedbelow, they are privileged.

Solicitor-Client Privilege [22] It is commonplace to say that solicitor-client privilege is strongly entrenched and considered fundamental to the justice systemin Canada. It promotes full, free and frank communications between clients and their lawyers, which is essential for the effectiveadministration of justice: Blank v Canada (Minister of Justice), 2006 SCC 39 (“Blank”) at paras 24 and 26. Solicitor-client privilege hasbeen elevated to a fundamental and substantive rule of law: R v McClure, 2001 SCC 14 , [2001] 1 SCR 445 at para 17.

It isnearly absolute and exceptions to it are rare: Pritchard v Ontario (Human Rights Commission), 2004 SCC 31 (“Pritchard”) at paras 15-16 and 18. [23] Solicitor-client privilege applies to (

i) any communication between a client and a solicitor; (ii) which entailed the seeking orgiving of legal advice; and (iii) which the client intended to be confidential: Pritchard at para 15. In communications between solicitorsand clients, confidentiality is the usual expectation: Manson Insulation Products Ltd v Crossroads C&I Distributors, 2014 ABQB 634 atpara 58.

It arises as soon as potential client takes the first steps, even before the formal retainer is established: Descôteaux v Mierzwinski, (SCC), [1982] 1 SCR 860 at 893. [24] Once established, solicitor-client privilege applies to any communication that falls within the framework of the professionalrelationship. It covers any consultation for legal advice, whether litigious or not. It is broad and all-encompassing: Pritchard at para 16. Litigation Privilege [25] Litigation privilege is intended to ensure and promote the efficacy of the adversarial process.

Courts have recognized that aprotected area (or “zone of privacy”) is required in relation to pending, apprehended or actual litigation: Blank at para 34. Parties tolitigation or anticipated litigation must be allowed to prepare their case in private without adversarial interference or fear of prematuredisclosure. Blank at para 27. [26] This form of privilege applies to communications with a third party and any record that was prepared or gathered for thedominant purpose of actual or contemplated litigation: Blank at paras 58-62. Canadian courts have taken a broad view of when litigationis contemplated.

The party asserting litigation privilege need only have looked thoughtfully at the possibility of litigation. Theevidentiary burden of establishing the privilege against disclosure of an otherwise relevant document rests with Carol, the party claimingprivilege: CIT Financial Ltd v JDS Uniphase Corp, [2003] OJ No 2991 (Master) at paras 6-8. Waiver

[27] I accept that solicitor-client and litigation privilege can be waived. But it is only done in the most unusual circumstances:Pritchard at para 17. Further, waiver will only be established in the clearest of cases: Scott & Associates Engineering Ltd v Ghost PineWindfarm LP, 2011 ABQB 339 at para 53. Waiver of privilege may be made either expressly or by implication, but in all cases, theperson with the privilege claim must make the waiver voluntarily. Since waiver must be voluntary, it is unfair to find that evidenceobtained from questioning at an examination amounts to a waiver.

This is so because such evidence is compelled and not “voluntary”.Courts have generally been reluctant to find that waiver occurs during questioning: Manson at para 64. Manson is authority for theproposition that evidence given at questioning does not constitute a waiver because it is compelled, not voluntary. There must be a fully-informed, clear intention of foregoing the privilege. [28] Litigation privilege can be waived by a party expressly or impliedly. Implied waiver occurs where a party:

a) voluntarily put its state of mind at issue in the litigation;

b) relied upon privileged communications to ground its claim or base its defence; and

c) attempted to support a good faith argument using undisclosed advice from counsel: Angus Partnership Inc v Salvation Army, 2011ABQB 512 at paras 10. See also Ed Miller Sales & Rentals Ltd. v Caterpillar Tractor Co. (1992), (AB KB), 3 AltaLR (3d) 210 (QB) (“Ed Miller”) at paras 7-10. [29] Leslie argues that there has been a waiver of privilege because:

a) Carol disclosed certain cheques she wrote to Gilbert in her production and allowed them to be marked as exhibits at herquestioning;

b) Carol brought the terms, purpose, objective and products of Gilbert's engagement directly in issue; and

c) According to Leslie’s brief, Carol answered “detailed questions at her cross-examination about the terms, purpose, objective andproducts” of her engagement with Gilbert. [30] Even where courts have found that there has been a waiver of privilege, it is limited, rather than blanket in nature. When aparty waives privilege over one document, this does not mean that it automatically waives privilege over all associated documents or allof its privileged records, as Leslie suggests.

The scope of the waiver only applies to those records that fall within the same subject matteras the initial record over which privilege was waived. Fairness and consistency require a “subject matter” waiver to avoid selectivedisclosure that could mislead the parties and the court.

In O’Scolai v Antrajenda, 2008 ABQB 77 (“O’Scolai”) at para 16 this courtstated: ...Common sense and the case law dictate that there cannot be a general rule that waiver of any one document in a file automaticallywaives privilege on the entire file. ... [31] There is no dispute that Carol retained Gilbert in contemplation of possible litigation against Leslie. As such, I find that thetest for litigation privilege has been met, and privilege covers all communications with Gilbert, including the terms of engagement andall records gathered and prepared by him.

It extends to the entirety of Gilbert’s files and precludes disclosure of the requested GilbertRecords which comprise, among other things, the terms of engagement, communications with Carol about her claim, records reliedupon, the results and calculations arising from such an engagement. [32] I find that Leslie cannot rely on the disclosure of a few cheques and cheque stubs produced on discovery to justify a blanketwaiver of litigation privilege. Payments made by cheque to lawyers or accountants are not themselves privileged.

However, disclosure ofthese non-privileged records does not amount to a waiver of the privileged records. [33] Leslie relies on Ed Miller for the argument that “[t]he solicitor-client privilege does not extend to the very issue of an action”.Leslie states at paragraph 34 of his Brief: The terms, purpose, objective and products of the engagement of Richard Gilbert are central to, and necessary for the proper adjudicationof, the limitations issue in the Action.

In particular, they may inform the commencement of the two-year discoverability period under theLimitations Act and, if Carol Gault's claims are statute-barred, will dispose of her claims in their entirety. [34] I disagree with this submission. Ed Miller stands for the proposition that where solicitor-client communications are broughtinto issue by virtue of a party's reliance on them, that same party is taken to have waived privilege over those specific communications.In Ed Miller, the defendants’ pleading voluntarily placed the defendants’ state of mind in issue.

Nevertheless, the Court dismissed theplaintiff’s application because it had failed to show that the defendants had relied on privileged communications so as to bring them intoissue. The Court stated at paras 22-25: . . . The court will not lightly penetrate the shield of solicitor-client privilege in reliance upon [a] unilateral assertion of an issue by anadverse party.

In the case at bar, I am of the view that the communications between the Caterpillar defendants and their solicitors are not legitimatelybrought in issue in this action in any fashion - neither by voluntary injection by the Caterpillar defendants nor by unilateral assertion ofthe plaintiff .... I am mindful of the pleadings, of the testimony of the witnesses to date, and of the writings received in evidence. The Caterpillardefendants rely neither on the acts and representations of the plaintiff, nor, for any purpose, upon the legal advice received by them fromtime to time from their solicitors.

During the course of argument, counsel for the Caterpillar defendants stated: “There is no defence put forward that Caterpillar relied on

legal advice, that its actions were lawful under Canadian law, U.S. law, or any law in the Caterpillar world, so to speak.” In answer to aquestion put by the court, he went on to confirm that the Caterpillar defendants do not introduce or interject the question of legal adviceas a defence or as supporting their positions. [35] In contrast, in Nowak v Sanyshyn (1979), (ON SC), 23 OR (2d) 797 (HCJ)., cited in Ed Miller, the plaintiffalleged that she signed documents without any legal assistance.

By doing so she “voluntarily placed in issue the legal advice she obtainedbefore she signed the documents” and waiver resulted: Ed Miller at para 18. [36] Carol does not claim that she received no legal advice from Bennett Jones or no accounting advice from Gilbert. Nor is thereany evidence that Carol injected her state of mind into the proceedings, raised an excuse of good faith reliance on professional advice orrelied on privileged communications to ground her claim.

Carol’s answers to questions put to her by Leslie's counsel confirmed thatGilbert “crunch[ed] some numbers” for her in relation to contributions and expenses between Carol and Leslie. This is merely adescription of the work Gilbert did, and does not amount to express or implied waiver of privilege. [37] I agree with Carol’s submission that the Bennett Jones Records are subject to solicitor-client privilege because:

a) Carol retained Bennett Jones to provide legal advice about possible litigation against Leslie;

b) the Bennett Jones Records constitute communications under that retainer; and

c) given the circumstances that these communications were made between solicitor and client for the purpose of giving and receivinglegal advice, Carol intended for such communications to be confidential. Carol's intention is clearly obvious when she responded at herquestioning, “if I go to a law firm, it's privileged, isn't it?”. [38] Leslie says that Carol waived privilege for two reasons. First, Leslie points to one cheque (with a matching cheque stub) fromCarol to Bennett Jones in her production, found amongst thousands of other cheques. There is no authority to suggest that the disclosureof a single cheque addressed to a law firm amounts to a blanket waiver to:

a) any records provided by the client to his or her the lawyer;

b) any document identifying the terms of engagement; and

c) any statements of accounts rendered by the law firm. [39] As this Court similarly held in O’Scolai, discussed above, common sense and fairness dictate that disclosure of this onedocument cannot, and does not, automatically waive privilege to the entire file. [40] Carol has not relied on the cheque in any way. The cheque is nothing more than a document produced as proof she consulted alawyer, which she admits.

This is not a case where Carol has set up a claim based on privileged communications so that fairness andconsistency dictate that there has been an implied waiver without which Leslie is left with no reasonable method of exploring the validityof Carol’s unjust enrichment claim. [41] It would be a fundamental change to all solicitor-client relationships if the disclosure by a client of a single cheque duringquestioning, without more, could open up all other privileged communications. Under the circumstances, there is no basis for anydisclosure of the Bennett Jones Records.

Examination of Gilbert and Wong [42] I deny Leslie’s application to question Gilbert because none of the Gilbert Records are discoverable because they are eitherirrelevant, privileged, or both. [43] There is no application to examine Lexy Wong of Bennett Jones. Even if there was, none of the Bennett Jones Records arediscoverable because they are also irrelevant and privileged.

Both the production of records and the request to examine Lexy Wong aredismissed. [44] I have read the briefs filed on behalf of Gilbert and Bennett Jones. [45] Counsel for Gilbert raises an interesting argument regarding Leslie’s abuse of process in resorting to an attempt to circumventRule 5.17 and obtain pre-trial discovery of Gilbert through the use of the Rule 6.8. Given these reasons, it is not necessary to delve intothe propriety of using Rule 6.8 to examine non-parties for a

summary dismissal application. [46] Counsel for Carol conceded that the historical documents and financial records given to Gilbert are not subject to litigationprivilege. If not already produced, I direct production for the historical documents and financial records that are not subject to privilege. Conclusion [47] Leslie's Applications for procedural orders is dismissed.

[ 48 ] Costs, if not agreed, can be spoken to at the next case management hearing. Heard on the 24 th day of November, 2015. Dated at the City of Calgary, Alberta this 26 th day of January, 2016. Bryan E. Mahoney J.C.Q.B.A. Appearances: Daniel J. McDonald, Q.C. and Joanne Luu, Burnet, Duckworth & Palmer LLP for the Plaintiff/Defendant by Counterclaim Ariel Z. Breitman and Jonathan J. Bourchier, MacPherson Leslie & Tyerman LLP for the Defendant/Plaintiff by Counterclaim Michael A. Waite, Carbert Waite LLP for Richard Gilbert and 1512873 Alberta Ltd. Perry R. Mack, Q.C., Peacock Linder Halt & Mack LLP for Bennett Jones LLP and Lexy Wong