2013 ONSC 1342, 2013 ONSC 1342

CITATION : Fountain Healthy Aging v. 1633935 Ontario, 2013 ONSC 1342 COURT FILE NO.: 10-47959 DATE: March 4 th , 2013. SUPERIOR COURT OF JUSTICE - ONTARIO RE: FOUNTAIN HEALTHY AGING, INC. et. al., Plaintiffs AN D: 1633935 ONTARIO CORPORATION et. al., Defendants BEFORE: MASTER MACLEOD COUNSEL: Pierre Champagne, for the plaintiffs Mandy E. Moore, for the defendants Boehm, Doe & Gowlings HEARD: In writing ENDORSEMENT [ 1 ] At the request of the parties I undertook to review the documents listed in

Schedule B of the third supplementary affidavit of documents of the plaintiffs. It was anticipated this would be an efficient

summary method of determining the validity of the claims for privilege. [ 2 ] All 32 documents listed in the

Schedule B are communications between Paul Hunston, principal officer of the plaintiffs, and James Parsons, a lawyer with Parsons Burnett Gjordahl LLP in Spokane, Washington. All of the documents are either information conveyed to Mr. Parsons or requests for information by Mr. Parsons or they contain legal advice based on such information. Ordinarily all of these documents, with the possible exception of documents confirming a public filing such as the filing of the 10Q or 10K with the SEC, would be privileged.

The law holds that while the work preparatory to preparing a public filing may be privileged the fact of the filing and obviously the form as filed is not. Thus the document at Tab 28 which is simply Jim Parsons sending the SEC confirmation that the Form 10Q has been filed and accepted by the SEC would not in my view be a privileged document. [ 3 ] The balance of the documents are ostensibly covered by privilege. The pertinent question is whether the privilege has been waived and the documents must nevertheless be produced? It is of course not sufficient that the document be relevant.

One cannot pierce the other party’s privilege simply one’s own pleading. Waiver occurs if the party claiming privilege has itself pleaded in a manner that puts the receipt of legal advice in issue. [ 4 ] In this case Fountain claims it was owed a duty by the defendants notwithstanding the plaintiffs were never formally clients of the firm. In paragraphs 17 and 31 of the Statement of Claim it is specifically pleaded that Gowlings gave legal advice to the plaintiffs. More importantly, it is pleaded that Fountain and Oak were not represented by lawyers in this transaction.

The fact that there was ongoing communication between Paul Hunston (himself an English solicitor) and Jim Parsons during the relevant period of time, is therefore highly relevant.

[ 5 ] This by itself would not necessarily constitute waiver over the contents of the communication. It is evident from the dates on the documents that there was ongoing communication between June and September of 2009. If all that was necessary was to show that Fountain and Oak had regular access to their U.S. counsel the content of the documents might not matter. In my view however the pleading puts in issue whether or not Mr. Parsons gave any transactional advice or could have done so had he been asked.

Thus there may be waiver over the content of the communications to the extent that the communication shows involvement or potential involvement by Mr. Parsons in transactional advice. [ 6 ] Turning to the documents themselves, Document 1 is an e-mail dated July 6, 2009 in which Mr. Parsons is advised about the status of negotiations for a proposed private placement, is told he will be faxed a copy of the subscription agreement and there is discussion about whether or not the funds will be paid through Mr. Parsons’ office.

Although the second paragraph deals with a separate issue, the filing of a 10Q with the SEC, it remains intertwined with the issue of the subscription. This is an important document as it shows that on July 6 th Mr. Parsons was involved with the proposed transaction as it existed at that time. Privilege over this document has therefore been waived and it is to be produced. [ 7 ] Documents 2 – 4 are concerned primarily with Fountain’s financial statements and SEC filings and with payment of the accountant.

Frankly they are innocuous but in my view there is no waiver over the content of communication dealing with the corporate filings for Fountain or legal work associated with its financial statements. It is sufficient to know that there was ongoing work and involvement by Mr. Parsons. These documents remain privileged and need not be produced. Similarly Document 27 is about the SEC filing which is then communicated in Document 28. 27 remains privileged. 28 is not. [ 8 ] Document 5 is part of another e-mail chain though it again deals partly with the SEC filing but the attached e-mail from Mr. Hunston to Mr.

Parsons dated July 22 nd , 2009 is very important. It contains a “closing agenda” for the proposed funding “from the Canadian Group”, forwards an e-mail from Gowlings to Dunn Capital and asks for legal advice. Any privilege over this document has been waived and it is to be produced. [ 9 ] Documents 6 – 8 deal with locating records having to do with the shares of Mr. Bouch. This is in connection with the original acquisition of the shares of Fountain when it was called Celtic Cross. There is no waiver over the content of these documents. The dates of the communications have been disclosed.

Similarly Documents 15 – 25 relate to attempts to locate the transfer of Mr. Bouch’s shares or to validate that the transfers took place. These documents remain privileged. [ 10 ] Document 26 is not a privileged document. It is an e-mail dated August 10 th , 2009 in which Mr. Parsons advises he will be out of the office and unavailable from August 17 th – 20 th . As the availability of legal advice is in question this is relevant and is to be produced. [ 11 ] Document 29 is communication to Mr. Parsons on September 10 th , 2009 of the signed promissory note from Dunn capital.

Tab 30 is a draft of a letter from Mr. Parsons to Gowlings in respect of the failure to pay by Dunn capital and the release of the shares by Mr. Boehm. The draft is for input from the client preparatory to sending a lawyer’s letter. The contents of these communications remain privileged although once again the dates may be important and have been disclosed. Documents 31 & 32 have no real significance as they are simply inquiries by Mr. Parsons as to whether or not the Dunn funds had been paid. They are not documents over which privilege has been waived. [ 12 ] In

summary, documents 26 & 28 are not privileged and are to be disclosed. Documents 1 & 5 are documents that were privileged but over which privilege has been waived. They are also to be produced. The remaining documents are properly the subject of privilege and need not be produced. The dates of all communication with or from Mr. Parsons and the general purpose of the communication is evident either from the affidavit of documents or from these reasons but the specific content of the documents and the legal advice sought or given remains privileged. ___________________________ Master MacLeod March 4 th , 2013.