2018 QCCA 342, 2018 QCCA 342

9114-8965 Québec inc. c. O'Connor 2018 QCCA 342 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-027319-185 (500-11-029529-068) DATE: March 2, 2018 IN THE PRESENCE OF THE HONOURABLE GUY GAGNON, J.A. 9114-8965 QUÉBEC INC. MONROI INC. PETITIONERS – Defendants/cross-plaintiffs And BRANA GIANCRISTOFARO-MALOBABIC PETITIONER – Defendant v. DANIEL F.

O’CONNOR RESPONDENT – Plaintiff/cross-defendant And 4278020 CANADA INC. ( Dissolved ) IMPLEADED PARTY – Impleaded party JUDGMENT [ 1 ] The petitioners have asked me to grant them leave to appeal from a 23-page interlocutory judgment which adjudicates more than a dozen evidentiary objections (Hon. Michel A.

Pinsonnault, J.S.C.). [1] In their view, the judge erred in refusing production of a December 6, 2007 letter written by the respondent O’Connor [2] and a June 28, 2006 email from the same party [3] . [ 2 ] As background, let us simply say that the application for leave with which I am seized is rooted in a dispute, begun in 2006, between the respondent and three corporate entities that considered themselves oppressed. In defence, the petitioners invoke, among other things, breaches of ethical rules by the respondent who acted as counsel for one of the parties involved in these proceedings.

These breaches, according to counsel for the petitioners, bring justice into disrepute to the point that the respondent should be excluded from the proceedings undertaken pursuant to ss. 241 and following of the

Canada Business Corporations Act [4] . [ 3 ] At first glance, this result sought by the petitioners seems, to me, distant from the issues normally raised in oppression proceedings and rightly identify by the judge as follows: [17] Defendants are essentially alleging O’Connor never had the status of “ complainant ” pursuant to

section 238 of the CBCA as he has never been a shareholder of MontRoi nor has he ever been entitled to such shares as a beneficial shareholder or otherwise given, inter alia , that he never made any monetary investment in MonRoi while violating his contractual obligations and duties towards Defendants. […] [ 4 ] The dispute on the merits essentially concerns the production of evidence of various documents, including two litigation documents (D-87 and D-138).

More specifically, the dispute concerns the application of Litigation Privilege, solicitor/client Privilege, and the Settlement Privilege. [ 5 ] In order to adjudicate their motion, the petitioners ask me, above all, to consider ten or so written exhibits that they group in their pleading under the heading “additional evidence”. They submit that these documents support the merits of their arguments on appeal.

However, some of these exhibits are contested, others were produced late, and at any rate, none of them were discussed by the judge for the purposes of its decision. [ 6 ] I am of the view that this evidence, his context of which I am largely unaware and which the respondent challenges as irrelevant, may not be relied upon in adjudicating the application for leave. [ 7 ] Before diving further into the analysis, it is worth to mention that the pleading before me is filed in a dispute marked by the parties’ blatant inefficiency in a matter begun nearly 12 years ago and for which the trial reach only “the first phase” [5] . [ 8 ] To return to the question at hand, the petitioners submit that the leave sought would ultimately ask the Court to determine whether Litigation Privilege applies to two litigation documents.

They add that, at any rate, they have shown prima facie misconduct on the part of the respondent the nature of which would permit lifting this privilege. In sum, they submit that the judge misapprehended the evidence.

[ 9 ] This is how the judge addressed Litigation Privilege in adjudicating the objection concerning the production of Exhibit D-138: [27] Another Exhibit (D-138) raised particularly strong objections from O’Connor’s lawyer again based on the Litigation Privilege and the solicitor/client Privilege as the email also involved Schenke that had been retained to represent all Plaintiffs in the upcoming litigation that was clearly contemplated in the said written communication.

It became clear during the arguments voiced on both sides that Defendants intended to produce more similar documents for the purpose of establishing the involvement of O’Connor among the various Corporate Plaintiffs as their lawyer providing legal advice in connection with the present litigation and especially in connection with the various settlement negotiations that unfolded throughout the proceedings, accusing O’Connor of thwarting the negotiations.

Those settlement negotiations will be the object of the second group of objections based on the Settlement Privilege that the Court shall deal with hereafter. [28] Exhibit D-138 is an email dated June 28, 2006, sent by O’Connor to various persons who invested in MonRoi through Morisco, BEC and InvestorCo in which he reported on his recent discussion with “ our counsel, Steve Schenke ”.

O’Connor essentially communicated to the various investors the report that he had received from their lawyer (retained by himself and by all Corporate Plaintiffs Morisco, BEC and InvestorCo) on Schenke’s unsuccessful attempts to secure the issuance of the shares of MonRoi, indicating that it would be necessary to contemplate the filing of legal proceedings in Court if further attempts to avoid litigation were to prove unsuccessful. Then, O’Connor identified certain elements (or remedies) to be considered by all for inclusion in direct relation the proposed litigation.

Finally, O’Connor indicated having already received the financial contribution of some investors (including Mooseberger) inviting the other recipients of the email to provide him with their respective contribution for the legal fees to be paid to Schenke, O’Connor undertaking to send their monetary contributions to McCarthy Tétreault. [29] Exhibit D-138 is clearly protected by the Litigation Privilege being a written communication among future members of a litigation having a common interest against Defendants in preparation of the litigation that will ultimately be initiated in December 2006 through Schenke who will become Plaintiffs’ attorney ad litem who was also copied on this email communication. [30] To all intents and purposes, the Litigation Privilege aims at creating a “zone of privacy” protecting communications between parties to a litigation (pending or apprehended) and their lawyer as well as parties between themselves that share a common interest in a proposed litigation 18 . ______________ 18 Groupe Intersand Canada inc. c.

Schenker du Canada ltée (Schenker International) , 2013 QCCS 1444 , par. 13 and following. [ 10 ] The judge essentially returned to the same analysis in adjudicating the objection regarding Exhibit D-87 : [88] Exhibit D-87 is a letter from O’Connor to Trihey dated December 6, 2007 [89] This letter is clearly protected by the Settlement Privilege as it was not only sent to Trihey with the heading “ Without Prejudice ” but O’Connor concluded the same on what could not be more clearer terms: The foregoing is sent in the context of negotiations only, and is without prejudice to any of the rights and recourses of the undersigned or InvestorCo. [90] Yet, Defendants want to use the same, inter alia, to support their claim that O’Connor was acting as counsel for InvestorCo. because of the introductory paragraph to this letter that reads as follows: I refer to our recent telephone discussions and your request for a letter to specify the position of the undersigned personally and 6384366 Canada Inc . ("InvestorCo"), which company the undersigned represents as counsel, although not as attorney of record in the instant proceedings. [Emphasis added] [91] O’Connor has already admitted that he acted as corporate counsel for InvestorCo commencing in 2006 when he no longer had a mandate to represent the Defendants.

This letter which deals exclusively with matters that are protected by the Settlement Privilege adds absolutely nothing to the present case given the aforesaid admission. Moreover, it would be somewhat ludicrous for the Defendants to use a letter clearly sent without prejudice but sent as well by O’Connor at the request of Trihey their then attorney who had sought the comments of O’Connor personally and those of InvestorCo regarding settlement issues. [ 11 ] The judge also applied these same rules to the other evidentiary objections discussed in his judgement, and for which no leave has been sought.

This, to me, is a clear indicator that the petitioners do not seriously challenge the law applied by the judge. [ 12 ] As for the critique that the judge misapplied the prima facie standard of evidence applicable to the respondent’s misconduct, the judgment in question reads as follows: [38] Many reproaches made by Defendants against O’Connor that would give rise to the blameworthy conduct mentioned above, are serious ethical breaches committed against Defendants during his mandate and after. [39] In rebuttal to this argument, O’Connor’s lawyer referred the Court to a decision rendered by the Bureau du Syndic du Barreau du Québec (the “Syndic”) dated May 13, 2010 , in virtue of which the Syndic over a 7-page letter analyzed the 5 ethical complaints filed against O’Connor by Malobabic and informed the latter that it would not submit O’Connor’s conduct for examination by the Disciplinary Council after concluding that, inter alia , O’Connor did not place himself in a conflict of interest, that the management of his trust account was not improper, that he did not abuse the process in instituting the present proceedings in oppression remedy nor did he

breach the Attorney-Client Privilege. [40] On October 13, 2010, the Review Committee of the Quebec Bar composed of two lawyers and of a member of the public rejected Malobabic’s request for a revision of the aforesaid decision of the Syndic and concluded as well that there was no cause to lodge a complaint against O’Connor with the Disciplinary Council. [41] O’Connor’s lawyer also advised the Court that Mooseberger, a former shareholder of InvestorCo who decided to settle out of court with Defendants subsequently filed similar ethical complaints with the Syndic that were all dismissed as well. [42] Under such circumstances, there can hardly be prima facie evidence that O’Connor’s professional conduct would constitute actionable misconduct that would give rise at the outset to Defendants having unrestricted access to documents and information protected by the Litigation Privilege and solicitor/client Privilege. […] [51] With all due respect, a prima facie showing of actionable misconduct by the other party in relation to the proceedings with respect to which Litigation Privilege is claimed must be based on more than simple allegations and speculations or on the firm subjective belief that Plaintiff’s action is clearly unfounded in fact and in law and therefore is abusive.

A trial on the merits where both parties will be able to present their respective evidence will enable the judge to make a proper determination to that effect, not at this stage of the proceedings. [Internal citation omitted] [ 13 ] Clearly, the judge meticulously and exhaustively analysed the two questions raised by the petitioners. To respond, the judge had to evaluate the disputed documentary evidence and also consider its context. This is an area in which our Court is always called to show great deference, due to the rigorous standard of review applicable to questions of fact.

After a careful reading of the application, I consider that the petitioners have shown no palpable error in the judge’s evaluation of the evidence capable of affecting the outcome of the judgment. [ 14 ] Neither does the application establish an error of law on the part of the judge. Moreover, in insisting on the sufficiency of prima facie evidence led at trial, the petitioners have implicitly demonstrated that the judge directed himself properly in law on the question of Litigation Privilege and that only a disagreement with respect to the evaluation of the evidence remains.

At the risk of repetition, this is the specialised domain of the trial judge that rarely warrants the intervention of this Court. [ 15 ] Indeed, the petitioners invite the Court to reconsider the judge’s analysis without having demonstrated a potential weakness in his reasoning capable of justifying intervention. [ 16 ] In addition, I highlight that throughout his judgment the judge was careful to assure the parties as to the true scope of these interlocutory decisions: [43] This being said, that does not mean that Defendants are prohibited from otherwise adducing evidence and arguing on the merits of this case the existence of abuse of process and/or actionable misconduct on the part of O’Connor that could potentially give rise to the remedies sought by the Defendants in their contestation as well as in the Corporate Defendants’ cross-demand.

They must do so in the respect of the applicable rules of evidence. […] [48] The Court must stress the fact that the present ruling must not be construed as a ruling in any manner whatsoever on the merits of O’Connor’s proceedings or on Defendants’ contestation and Cross-Demand. [49] The present judgment serves only to insure the proper continuance of the present trial with the respect of the rights and recourses of all parties herein in the forefront but, also keeping in mind the respect of the rules of evidence that have been edicted to ensure that trials are conducted in a fair manner and equitable manner for all concerned. [50] The denial by the Court of the production of exhibits that violate the class privileges of Litigation, solicitor/client and Settlement Privileges must not be interpreted as a denial of justice against one party in favor of the opposing party.

Again, such rules are there to ensure a fair and equitable trial for all. […] [98] Finally, the Court wants to once again stress the fact that by allowing or dismissing any of the objections mentioned in the present judgment, it does not express any opinion in any manner whatsoever or any judgment on the merits of this case and on the arguments made by each party herein. [ 17 ] In light of the above, I conclude that the challenged decisions in the judgment under appeal do not determine, even in part, the outcome of the dispute.

In addition , the petitioners have not convinced me that their application for leave raises a question that should be submitted to the Court [6] . FOR THESE REASONS, THE UNDERSIGNED: [ 18 ] DISMISSES the motion for leave to appeal, with legal costs.

GUY GAGNON, J.A. Mtre Richard Friedman Bell Rudick & Friedman For 9114-8965 Québec inc. and Monroi inc. Brana Giancristofaro-Malobabic In person Mtre Luc Séguin Fonds d’assurance responsabilité professionnelle For the Respondent Date of hearing: February 22, 2018