2012 QCCA 1738, 2012 QCCA 1738

Ontario Teachers' Pension Plan Board c. BCE inc. 2012 QCCA 1738 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-022928-121 (500-17-047317-089) DATE: September 28, 2012 PRESIDING : THE HONOURABLE ALLAN R. HILTON, J.A. ONTARIO TEACHERS' PENSION PLAN BOARD PROVIDENCE EQUITY PARTNERS VI INTERNATIONAL LP MADISON DEARBORN CAPITAL PARTNERS V-A, L.P. MADISON DEARBORN CAPITAL PARTNERS V-C, L.P. MADISON DEARBORN CAPITAL PARTNERS V EXECUTIVE-A, L.P. 6796508 CANADA INC. PETITIONERS – Defendants v. BCE INC.

RESPONDENT – Plaintiff JUDGMENT [ 1 ] Pursuant to articles 29 and 511 C.C.P., the petitioners seek leave to appeal two interlocutory judgments of the Superior Court rendered on July 17, 2012 by the Honourable Mr. Justice Joel A.

Silcoff that: • sustained objections raised by the respondent BCE Inc. during the course of several examinations on discovery after defence; • deferred the adjudication of objections to the trial on the merits; and, • referred various conclusions in the petitioners' Amended Motion Seeking Various Orders that were not otherwise disposed of in the preceding judgment to the trial on the merits, if appropriate and so requested. [ 2 ] Before addressing the issues raised by the petitioners' application, it is appropriate to set out the context in which they arise. [ 3 ] BCE claims $1,200,000,000 from the petitioners as a pre-determined contractual termination fee arising out of the failure of its proposed privatization.

On its face, the claim is straightforward: it will be either be granted or dismissed for the amount claimed. [ 4 ] BCE relies on the relevant provision in the contract between the parties that entitles it to the $1,200,000,000 it seeks to recover. As the petitioners allege in their motion for leave to appeal, both parties affirm that the terms used in the contract are consistent with their

interpretation of it.

In the end, Silcoff, J. will be called upon to decide whether BCE is entitled to the recovery of $1,200,000,000 in the circumstances under which the proposed privatization was terminated in light of the parties' common intention, [1] as he determines that intention to be. [ 5 ] Various legal issues relating to the approval of the plan of arrangement contemplated by the transaction that subsequently failed were canvassed in the Superior Court, [2] this Court [3] and the Supreme Court of Canada in BCE Inc. v. 1976 Debenture Holders . [4] Silcoff, J. was the judge of the Superior Court in that case who presided at a 29-day trial.

The Supreme Court of Canada ultimately affirmed his judgment. [ 6 ] From the petitioners' perspective, as defendants in the Superior Court, it is essential that they elicit BCE's true intention ( volonté réelle ) during the negotiations that preceded the formation of the contract. It has therefore proceeded to the examination on discovery after defence of 15 representatives of BCE, including its external legal and financial advisors at the relevant time, all of whom are described as having been on the "front line" of the negotiations of the agreement.

The objections that the trial judge maintained and his related orders for which leave to appeal is sought arose during the context of those discoveries. [ 7 ] To illustrate the extent to which the parties have both engaged in the discovery process, I was informed at the hearing that 30 witness have been examined over 48 days, that 770 undertakings have already been satisfied, and that some 7,000 documents have already been exchanged between the highly competent counsel acting on behalf of the parties.

[8] On January 23, 2009, Chief Justice Rolland designated Silcoff, J. as the case-management judge and, if need be, the trialjudge. To say that he is ideally suited to try this case is an understatement. Since his designation by the Chief Justice, Silcoff, J. haspresided over a significant number of hearings during which he has adjudicated objections arising out of discoveries and dealt with awide array of case-management issues.

The argument before him that led to the two judgments for which leave is sought lasted 10 days.The lengthy trial is scheduled to begin on January 13, 2013. [9] The two judgments of Silcoff, J. are intimately related. There are various categories of orders within them that the petitionershave identified in their motion and oral argument before me. [10] The essence of the petitioners' contentions is that Silcoff, J. misapplied relevant principles of law as they relate to professionalsecrecy and related concepts.

Here is how Silcoff, J. described his understanding of the law to be applied to the matters before him:[5] [28] The Court has previously addressed some of the issues raised for determination in this judgment. In particular, in the Beauregardjudgment,[6] the Court examined, inter alia, the relevant principles of law and authorities regarding: (

i) professional secrecy and the scope thereof; (ii) litigation privilege; and (iii) relevance. [29] To the extent applicable and in particular regarding the matters of professional secrecy and litigation privilege, the Court'sanalysis contained in the Beauregard judgment and the authorities referred to therein are adopted herein by reference to form part hereof. [30] The Court has also examined and sought guidance from the following additional authorities in its determination of the issuesaddressed by counsel, not previously decided, and referred to in the Tables of Objections. [31] It is trite law that one of the objectives of attorney-cient privilege is to permit parties to consult an attorney in full confidence andto permit him or her to perform their duties and mandate in respect of this confidence.

To perform such mandate, whether in the contextof litigation or, as in the present case, of a transactional context, attorneys must work within a certain zone of privacy and haveconfidence that such privacy will be respected. [32] See in this regard: Royer, J.C., La Preuve Civile, 4th ed.5, including authorities cited by the author in footnotes 348 and 349 ofthe text: Pour remplir adéquatement son rôle, un avocat doit pouvoir agir en toute liberté dans le secret de son cabinet, sans être forcé de révéler àla

partie adverse et au tribunal, ni les informations confidentielles reçues de son client, ni le contenu de son dossier. S'il en étaitautrement, les avocats éviteraient de préparer ou de conserver des documents préjudiciables à leurs clients, ce qui aurait pour effet denuire à l'exercice de leur profession. [p. 1004] [Internal references omitted] [33] It is generally agreed that, in the context of litigation, communications between lawyers of the same firm are regarded as part ofthe lawyer's brief (or work product) and accordingly subject to litigation privilege.

This privilege covers, inter alia, all internalmemoranda, drafts of opinions, handwritten notes, working papers, copies of the relevant case law, etc. It also includes all internalcommunications among the lawyers of the same firm. [34] See in this regard: Susan Hosiery Limited v. Susan Hosiery Limited v. Minister of National Revenue (CAEXC), [1969] C.T.C. 353 (Ex.

T.) para. 10: Turning to the "lawyer's brief" rule, the reason for this rule is, obviously, that, under our adversarial system of litigation, a lawyer'spreparation of his client's case must not be inhibited by the possibility that the materials he prepares can be taken out of his file andpresented to the court in a manner other than that contemplated when they were prepared. [...] If lawyers were entitled to dip into eachother's briefs by means of the discovery process, the straightforward preparation of cases for trial would develop into a mostunsatisfactory travesty of our present system. [35] See as well: Hickman v.

Taylor 329 U.S. 495 (1946), pp. 510-511; Keefer Laundry Ltd. v. Pellerin Milnor Corp. et al. 2006BCSC 1180 . [36] Although aside from Royer, cited above, there appears to be little jurisprudential authority on the subject involving negotiationsbetween opposing lawyers in a transactional context, the Court finds the principles adopted to protect litigation privilege areappropriately applied by reference, with necessary modifications, in the particular circumstances of the present dispute.

Commenced in atransactional context, the dispute has now evolved and clearly morphed into a litigation context with monetary claims in the order of $1.2billion very much in dispute. [37] Counsel argues in Plaintiff's Outline of Argument: 100. The rationale for the lawyer's brief privilege applies equally to the present case and should be relied upon to conclude that theinternal reports prepared by lawyers for the sole benefit of their colleagues are privileged even in a transactional setting.

As alreadysubmitted, from an institutional or legal system perspective the need for confidentiality in a transactional context is as great as in alitigation context. [38] The Court concurs. [39] The same principles find application with respect to internal discussions within a law firm among attorneys involved in

performing a particular mandate. [40] In Defendants' Plan of Argument counsel addresses what he contends is the limited scope of communications subject to professional secrecy. In support of his arguments seeking the dismissal of Plaintiff's objections to the numerous questions requiring answers to what he characterizes as "alleged pure matters of fact not covered by professional secrecy", counsel cites an extensive extract of the Beauregard Judgment and the authorities cited therein6.

Additional reference was made to, and the Court has examined, an extensive list of authorities in support of Defendants' assertions regarding the non-confidential nature of pure matters of fact passing between a client and his attorney. [41] Counsel argues in particular at paragraphs [163] to [166] of its Defendants' Plan: [163] Plaintiff, in instituting the present action, has indeed put in issue its volonté réelle i.e. its true intention in proposing certain terms in the negotiation of the contract and ultimately accepting to be bound by the contractual provisions at issue.

As outlined above, no representative of the Plaintiff examined thus far seems to be in a position, or has been permitted by the Plaintiff, to provide any serious and credible evidence on this topic.

This is the context in which the Court must consider the Plaintiff's objections. [164] Fundamentally, many of the objections raised by the Plaintiff relate to non-privileged facts and information which by definition simply cannot be viewed as confidential and to which the Defendants are entitled in the preparation of their defence. [165] The Plaintiff's volonté réelle constitutes an objective fact or set of facts which cannot, by definition, be conceived of as something confidential. [166] The contrary notion would be entirely absurd and would mean that a party to a contract could forever conceal the fact of its true contractual intention throughout the negotiations leading to the conclusion of the contract, simply by involving a lawyer in the process. [42] The Court concurs, in part, with counsel's assertions cited above.

However, the generalities of these assertions regarding "objective facts" do not always find application in the present circumstances.

While it may be true that Plaintiff's volonté réelle in proposing certain provisions of the Definitive Agreement may very well be one of the relevant issues to be determined on the merits of these proceedings, the fact that, as Defendants contend, ...no representative of the Plaintiff examined thus far seems to be in a position, ... to provide any serious and credible evidence on this topic, does not, for this reason alone, cause such information, when communicated to an attorney for the purpose of and in the performance of his mandate, to lose the otherwise confidential nature of the communication.

A confidential communication by a client to his attorney in the performance of his mandate does not cease to be confidential and become a non-privileged "objective fact" simply because certain non-lawyer witnesses examined to date are unable to provide the evidence sought to be obtained by Defendants. [43] Defendants' contentions regarding their inability to discover Plaintiff's volonté réelle from the non-lawyer witnesses examined to date do not, for this reason alone, permit an attorney to breach his obligation of confidentiality. [44] Other legal principles not previously addressed in detail in previous judgments disposing of objections raised during various examinations on discovery conducted in this action, relate to: (

i) the circumstances in which attorney-client privilege can be extended to include external legal and financial advisors, members of what Mtre.

Turcotte defined as the "BCE Transaction Team" and (ii) whether, in the context, Plaintiff has discharged its evidentiary burden to establish the factual and legal basis for its assertion of privilege on the documents sought to be discovered emanating from its external financial advisors. [45] These legal principles along with others are addressed in the Court's judgment dealing with Defendants' Amended Motion Seeking Various Orders rendered contemporaneously with this judgment. [7] [ 11 ] The lengthy grounds of appeal the petitioners propose should leave be granted are set out in their motion as follows: 14.

As detailed more fully in

Part I below, the Petitioners respectfully submit that the judge at first instance, in reaching his conclusions:

a) Made various significant errors of law, inter alia with respect to the principles of solicitor-client privilege and settlement privilege.

b) Made significant mixed errors of law and palpable and overriding errors of fact and law, notably in assessing the nature and sufficiency of the evidence adduced by the Respondent to sustain claims of privilege over specifically identified documents requested by the Petitioners, and in failing entirely to address two key pieces of evidence adduced by the Petitioners (EXHIBIT-204 and EXHIBIT-205).

c) Did not exercise his discretion in a reasonable manner in holding that the deferral of numerous Objections and the deferral of the Motion Seeking Various Orders to " The evidentiary hearing on the merits " were appropriate in the circumstances and that the fundamental rights of the Defendants were protected. 15. More specifically:

a) The court below made a significant error of law in applying the concepts of "zone of privacy " and "lawyer's brief" to objections based on solicitor-client privilege, when those concepts only apply in the context of litigation privilege.

b) Compounding the previous error, the court below made another significant error of law in extending the notions of prima facie burden and resulting prima facie presumption of solicitor-client privilege set forth by the Supreme Court of Canada in Foster Wheeler [8]

to documents prepared by non-attorneys and communications between non-attorneys, such as financial advisors.

c) Further compounding the previous errors, the court below made a significant mixed error of law and fact or a palpable and overriding error of fact, in failing to take into account two key documents presented to him during the hearing, namely presentations made to the Respondent's Board of Directors and Strategic Oversight Committee by its financial advisors (EXHIBIT-204 and EXHIBIT-205, which were disclosed to the Petitioners but which the Respondent now asserts are privileged), which documents clearly demonstrate that the concept of solicitor-client privilege as applied by the Respondent is overbroad, incorrect, and results in relevant, non-privileged documents being improperly withheld from the Petitioners.

d) The court below made a significant error of law in entirely ignoring the legal principles allowing him to order that non-privileged facts be disclosed from documents that may otherwise be protected by solicitor-client privilege, including by way of redacted documents, which is supported by ample precedent, or alternatively, he exercised his discretion unreasonably, in failing to order, as requested, that the Respondent provide such information to the Petitioners, without offering any grounds whatsoever to deny such request.

e) The court below made another significant error of law or error of mixed law and fact in ruling on the issues before him without reviewing, as required by Foster Wheeler , the specific documents at issue over which Respondent asserts privilege. [ 12 ] Two reasons lead me to conclude that the motion should be dismissed. [ 13 ] First, only those parts of the judgments of Silcoff, J. that sustained objections to questions or the production of documents or undertakings are not susceptible of being remedied on the merits to the extent that no further discovery could be pursued on those issues.

The latter two parts of his judgments referred to in paragraph [1] are susceptible of being remedied during the trial, even if this were to mean that further discovery could take place outside the context of the trial itself. There is therefore no sound reason to grant leave with respect to the latter two categories of objections or orders. [ 14 ] Second, neither the allegations in the motion nor the oral argument at the hearing persuade me that the petitioners' right to a full and complete defence at trial will be compromised by the dismissal of their motion for leave to appeal.

I say this while acknowledging that the proposed questions enumerated in paragraph [11] are ones of general interest which, absent other considerations, might well justify leave being granted. The real issue is whether it is preferable that the Court treat them now, or in the more complete context of a possible interlocutory appeal during the trial, or after a judgment on the merits, assuming, of course, that Silcoff, J. renders judgments adverse to the petitioners. [ 15 ] An examination on discovery serves multiple purposes.

At the head of the list is that of discovery – to ascertain what the case of the opposing party is that the examining party must meet at trial.

Other purposes include eliciting admissions adverse to the opposing party's interest, or establishing an account of events that the examining party may be able to contradict at trial by its own evidence. [ 16 ] Under any of these scenarios, it is hard to imagine that the petitioners, having already conducted extensive discoveries of 15 of BCE's representatives and "front-line" advisors, as well as having obtaining numerous undertakings and documents, are not going to be able to mount a full and complete defence to BCE's claim.

The discovery process in Quebec is not meant to be the equivalent of a mini- trial before a trial, but an exploratory exercise that gives the examining party a fuller understanding of the opposing party's position. The petitioners might well obtain further information if leave were granted and the Court allowed their appeal, but I cannot see that they will be bereft of the means to meet the case against them by refusing leave. [ 17 ] Although not dispositive, another factor weighs against leave being granted at this stage of the proceedings.

If leave were granted, the inevitable effect would be to delay the commencement of the trial, for which the daily rate of interest running is in the hundreds of thousands of dollars. [ 18 ] It is one thing, as both counsel suggest, that the Court order an expedited hearing of any appeal I might authorize. It is quite another, however, to establish a realistic timetable for facta to be filed, a date for hearing to be fixed that allows the members of a specially constituted panel adequate time to prepare for the hearing, and have a reasoned judgment rendered, all before January 13, 2013.

To that extent, and without it being the fault of either party, a hearing of the proposed appeal has a degree of unreality to it from a practical point of view. [ 19 ] I appreciate the petitioners' argument that they were more or less forced to accept a trial date before they had the assurance that discoveries would be completed.

Nevertheless, in a case of this magnitude and apparent complexity, it was well within the purview of Silcoff, J., both as the case-management and trial judge, to so order. [ 20 ] Finally, I note that the parties have in fact settled this litigation on a conditional basis, subject to regulatory approval that remains forthcoming. Absent compelling circumstances that I do not see here, I would be reluctant to mobilize the Court's limited resources on an expedited basis to prepare for and hear an appeal that may turn out to be moot. The petitioners' motion for leave to appeal is therefore dismissed with costs.

ALLAN R. HILTON, J.A.

Mtre James A. Woods Mtre Bogdan Catanu Mtre Éric Bédard Mtre Neil Peden Mtre Christopher Richter WOODS LLP For the petitioners Mtre Pierre Bienvenu Mtre Sophie Perreault Mtre François-David Paré Mtre Dominic Dupoy Mtre Rachel Bendayan NORTON ROSE OR For the respondents Date of hearing: August 29, 2012