CPC Networks Corp. v McDougall Gauley LLP, 2023 SKCA 90

Court of Appeal for Saskatchewan Docket: CACV4047 Citation: CPC Networks Corp. v McDougall Gauley LLP , 2023 SKCA 90 Date: 2023-08-10 Between: CPC Networks Corp. Appellant (Plaintiff) And McDougall Gauley LLP and Robertson Stromberg LLP Respondents (Defendants) Before: Richards C.J.S., Tholl and Kalmakoff JJ.A. Disposition: Appeal allowed Written reasons by: The Honourable Chief Justice Richards In concurrence: The Honourable Mr. Justice Tholl The Honourable Mr.

Justice Kalmakoff On appeal from: QBG 1004 of 2013, Saskatoon Appeal heard: February 16, 2023 Counsel: Larry Ayers and Jack Adams for the Appellant Randall Sandbeck, K.C., and Ramses Miki-Hanson for the Respondents Richards C.J.S. I. INTRODUCTION [ 1 ] This appeal raises a question about the extent to which a client owns the contents of their lawyer’s file. [ 2 ] The respondent law firms, McDougall Gauley LLP and Robertson Stromberg LLP, acted for the appellant, CPC Networks Corp. CPC Networks asked them for its files.

Robertson Stromberg provided its entire file but McDougall Gauley declined to provide “solicitor’s notes and inter-office memoranda” on the basis that those documents are the property of the firm, not of CPC Networks. A Court of Queen’s Bench Chambers judge sustained McDougall Gauley’s position. [ 3 ] CPC Networks now appeals to this Court, arguing that the Chambers judge took an erroneously narrow view of the scope of its ownership interests and contending that McDougall Gauley should be obliged to turn over additional documents. [ 4 ] As explained below, I agree with CPC Networks.

At least some of the documents falling within the broad scope of “solicitor’s notes and inter-office memoranda” could well be owned by CPC Networks. A further review of the documents is required in order to sort out the ownership question. II. BACKGROUND [ 5 ] CPC Networks was the owner and operator of a fiber-optic network in Saskatoon. Larry Ayers and Jack Adams were its founding shareholders. [ 6 ] An extended and acrimonious dispute among CPC Networks’ shareholders and directors began in 2009 when Mr. Ayers and Mr.

Adams alleged that a majority shareholders group was maneuvering to obtain their shares. [ 7 ] McDougall Gauley was retained in 2010 by the directors who were the majority shareholders to represent CPC Networks in litigation rooted in this dispute. McDougall Gauley withdrew from representing CPC Networks in 2013 and Robertson Stromberg was then retained. [ 8 ] CPC Networks went through liquidation proceedings. Mr. Ayers and Mr. Adams ultimately came to be its only shareholders and directors. They caused CPC Networks to file a statement of claim.

It alleged that, during the course of their legal work, both McDougall Gauley and Robertson Stromberg had breached duties that they owed to CPC Networks. [ 9 ] CPC Networks asked McDougall Gauley and Robertson Stromberg to turn over its files. They declined to do so. This refusal led to a Queen’s Bench application and an appeal. To make a long story short, in CPC Networks Corp. v McDougall Gauley LLP , 2021 SKCA 127 , [2022] 3 WWR 291 [ CPC #1 ], this Court ultimately rendered a decision generally endorsing CPC Networks’ view of the situation.

Justice Barrington-Foote, writing for the Court, explained the nature of a lawyer’s possessory lien on client property under The Legal Profession Act, 1990 , SS 1990-91, c L-10.1 , and held that, “[a]bsent such a lien, a lawyer is not entitled to retain those parts of their client’s file that belong to the client, and a court may order that they be delivered to the client pursuant to s. 66(5) of The Legal Profession Act, 1990 ” (at para 29).

However, Barrington-Foote J.A. did not consider in any depth what documents belong to a client, preferring that any dispute between the parties be resolved by the Court of Queen’s Bench. The formal judgment of the Court said this: 2. The Respondents shall deliver CPC Network Corp.’s files to the Appellant forthwith, subject to the proviso that if the Respondents have removed any documents from the Appellant’s files or claim that they are now entitled to do so before delivering the files to it, they shall identify the documents that have been withheld and the basis for doing so.

Any dispute that arises in that respect may be resolved by

the Court of Queen’s Bench. [ 10 ] Robertson Stromberg then delivered all of the material in its physical files to CPC Networks.

For its part, McDougall Gauley withheld what it described as all “solicitor’s notes and inter-office memoranda” on the basis that such documents were its property, not CPC Networks’ property. [ 11 ] In response, CPC Networks filed a notice of application wherein it asked what was then the Court of Queen’s Bench for the following relief: … That McDougall Gauley LLP, Clayton Barry and Ronald Miller, shall forthwith deliver up to the applicant/plaintiff, all solicitors’ notes, witness statements and memoranda resulting from meetings or telephone attendances, with representatives of CPCN or other persons pertaining to the files for which McDougall Gauley LLP was retained and for which CPCN was billed.

III. THE CHAMBERS DECISION [ 12 ] The Chambers judge relied heavily on a discussion of the law found in Archibald v Archibald (28 February 2017) Regina, QBG 1348 of 2016 (Sask QB) [ Archibald SKQB ]. In that case, Krogan J. had written as follows: Even aside from the above conclusions which prohibit access to the documents sought by Barrie, there remains a further bar to some of the documents requested. Insofar as the relief sought by Barrie seeks the production of solicitor's notes, because these notes are prepared for the benefit or protection of solicitors, they are not producible.

In Bowman v Rainy River (Town) , 2007 CarswellOnt 1053 (Ont Sup Ct) (WL) , the Ontario Superior Court of Justice was asked to determine whether certain documents from a law firm ought to be produced to the applicant. In concluding that the working notes of a solicitor were not producible, the court stated, commencing at para. 14: 14 It is well-settled that the working notes of a solicitor as well as documents that have been prepared by the solicitor are not the property of the client and are not producible. 15 In the Aggio v. Rosenberg [1981 CarswellOnt 407 (Ont.

Master) ] case, Master Sandler referred to and adopted the law as set out in Cordery, Law Relating to Solicitors (5th ed.) which contains the following excerpts: Documents prepared by the solicitor for his own benefit or protection, the preparation of which is not regarded as an item chargeable against the client, belong to the solicitor. Entries of attendance, tape recordings of conversations, etc. interoffice memoranda partner to partner, partner to staff, entries in diaries, office journals and books of accounts belong to the solicitor under category (ii).

See also Tersigni v Circosta , 1997 CarswellOnt 1725 (Ont Ct J) . Relying on these authorities, I conclude that a solicitor’s working notes, including, entries of attendances, inter-office memoranda, entries in diaries, office journals and books of account are not producible documents as they did not belong to Margaret and are the property of the solicitors. Archibald SKQB was upheld on appeal by this Court.

See: Archibald v Archibald , 2018 SKCA 86 [ Archibald SKCA ]. [ 13 ] I note, parenthetically, that the analysis in Archibald SKQB conflates the question of the ownership of documents with the question of the obligation to produce documents in the course of litigation.

The Chambers judge appears to have been alert to this issue because, in ruling against CPC Networks, she said that “while [CPC Networks] is not entitled to the solicitor’s notes and memoranda by way of ownership in accordance with the order made by the Court in QBG 1004 of 2013, it may become entitled to disclosure of them in its action against the defendants in QBG 1535 of 2017” (at para 14). IV. ANALYSIS [ 14 ] In order to come to grips with the questions raised by this appeal, I will: (

a) survey the arguments advanced by the parties and note the relevant authorities; (

b) summarize the principles governing file ownership that are relevant here; and (

c) apply those principles to the circumstances of this case. A. The arguments and the authorities [ 15 ] CPC Networks submits that the Chambers judge overstated the extent to which McDougall Gauley owns the contents of its files. In this regard, I note that, by dismissing CPC Networks’ application, the Chambers judge must be taken to have found that all of the documents held by McDougall Gauley and falling under the umbrella of “solicitor’s notes and inter-office memoranda” are owned by McDougall Gauley.

At the end of the day, therefore, the root issue in this appeal is whether the Chambers judge erred in so finding. [ 16 ] The first element of CPC Networks’ submission is that the Chambers judge should not have proceeded as if this Court, on appeal, had validated the discussion concerning file ownership found in Archibald SKQB . In this regard, CPC Networks points to paragraph 12 of the Chambers judge’s decision where she said that Krogan J.’s view of the law had been “upheld” on appeal.

I agree that this was a misreading of Archibald SKCA . [ 17 ] Archibald SKQB and Archibald SKCA involved a dispute about certain testamentary dispositions. A disappointed heir, the son

of the deceased, applied for an order requiring the law firm that had acted for his mother to produce any and all documents in its possession that were related to her or her estate. This was done in a procedurally unorthodox manner. One of the son’s arguments in support of the requested order was that he and his mother had jointly retained the law firm. Justice Krogan dismissed the application, in part, on the basis of the reasoning about the ownership and production of documents reproduced above at paragraph 12. The appeal to this Court was concerned with three issues: (

a) whether the proper procedure had been followed; (

b) whether Krogan J. had erred by finding that no joint retainer had existed; and (

c) whether the law firm should be obliged to provide a list of the documents in its possession. In other words, the ownership of the documents held by the law firm was not in issue. The Court ultimately upheld the bottom line of Krogan J.’s decision but in doing so it said nothing about file ownership. Thus, and in short, the Chambers judge erred by seeing the Court’s decision as endorsing what Krogan J. had said about the ownership of the material in a lawyer’s file. [ 18 ] CPC Networks relies, in particular, on Zeitoun v Falconeri , 2016 ONSC 5360 .

That case, however, is of little assistance in that it was grounded on an application by a former client to obtain internal notes, memos and emails from a lawyer who was the defendant in a lawsuit brought by the former client. As Master Short observed at paragraph 58 of his decision, “[t]his case concerns an action for negligence against the previous lawyer. Accordingly, ownership of the document ought to be largely irrelevant”. In other words, the case turned on the question of the law firm’s obligation to produce documents in the discovery process, not on the question of who owned the documents in issue.

As noted above, this appeal is about file ownership, not about the scope of McDougall Gauley’s obligation to produce the contents of its files. [ 19 ] CPC Networks goes on to argue that the Court should simply endorse what is said about the ownership of lawyers’ files in Frederic T. Horne’s Cordery’s Law relating to Solicitors , 8th ed (London: Butterworths, 1988) [ Cordery ], a text often referred to in the case law in this area and also relied on by McDougall Gauley in its submissions.

The key aspects of Cordery ’s discussion on the issue of file ownership are set out below: Documents in existence before the retainer commences and sent to the solicitor by the client or by a third party during the currency of the retainer present no difficulty since their ownership must be readily apparent. The solicitor holds them as agent for and on behalf of the client or third party, and on the termination of the retainer must dispose of them (subject to any lien he may have for unpaid costs—see pp. 236, et seq., post) as the client or third party may direct.

Documents which only come into existence during the currency of the retainer and for the purpose of business transacted by the solicitor pursuant to the retainer, fall into four broad categories:

i) Documents prepared by the solicitor for the benefit of the client and which may be said to have been paid for by the client, belong to the client. ii) Documents prepared by the solicitor for his own benefit or protection the preparation of which is not regarded as an item chargeable against the client, belong to the solicitor. iii) Documents sent by the client to the solicitor during the course of the retainer, the property in which was intended at the date of despatch to pass from the client to the solicitor, belong to the solicitor. iv) Documents prepared by a third party during the course of the retainer and sent to the solicitor (other than at the solicitor’s expense), belong to the client. … Examples of documents falling under the foregoing categories are as follows: Category (i) (Client) The current practice whereby solicitors base their charges to their clients on an expense rate which includes a proportion of the total overhead expenses of running the office has the result that the client can be said to pay for all draft and copy documents and letters, in addition to cases, instructions and briefs in contentious, and deeds and documents in noncontentious, matters.

Category (ii) (Solicitor) Copies of letters written to the client, entries of attendances, tape recordings of conversations and proofs of evidence, inter office memoranda , entries in diaries, time sheets, computerised records, office journals and books of account. Category (iii) (Solicitor) Letters, authorities and ‘instructions written or given’ by the client to the solicitor. Category (iv) (Client) Letters, receipts and vouchers for disbursements made by the solicitor on behalf of his client. The solicitor seeking to retain the documents must show that:

a) he was under no duty to prepare them,

b) they were not in fact prepared for the benefit of the client, and

c) the client cannot be regarded as being liable to pay for them specifically, as part of his expense rate, or under any general item in the bill of costs. Conversely the client must show that:

a) the documents were a necessary part of the business transacted, e.g., a draft lease submitted to the lessee for agreement, and

b) he has in fact paid (or is liable to pay) in one form or another for their preparation. (at 89–90, footnotes omitted, italics in original, underlining added) [ 20 ] CPC Networks suggests that the “solicitor’s notes and inter-office memoranda” in issue here should be seen as falling in

Cordery’s category (

i) and as therefore belonging to it. McDougall Gauley, for its part, points to the fact that Cordery lists “inter officememoranda” as being category (ii) documents and says that this means the “solicitor’s notes and inter-office memoranda” are its property.However, I do not see Cordery’s reference to “inter office memoranda” as being helpful to McDougall Gauley. Those words cannot betaken to mean that every memorandum sent internally from one person at a law firm to another person at the firm belongs to the firm.Any such

interpretation would be irreconcilable with the basic proposition articulated in Cordery that a document prepared for the benefitof the client, and for which the client pays, is the property of the client.

Read in context, I take the reference to “inter office memoranda”in Cordery to be a reference to internal memoranda dealing with the business-type administration of a file as opposed to dealing with thelegal or factual substance of the file or its procedural or process aspects. [21] McDougall Gauley also points to a number of decisions that are said to support the notion that a lawyer’s “working files”belong to the lawyer. One such case is Aggio v Rosenberg (1981), 24 CPC 7 (WL) (Ont SC) [Aggio]. There, the plaintiff, a former client,sought to recover documents held by the defendant law firm.

In dealing with this issue, Master Sandler reproduced, and adopted as goodlaw, passages from the sixth edition of Cordery’s Law relating to Solicitors. This commentary is effectively the same as that found in theeighth edition reproduced above.

Master Sandler also went on to quote, and to apparently endorse, the following commentary on thequestion of whether a particular document falls into Cordery’s category (i), documents prepared for the benefit of the client and thereforebelonging to the client, or Cordery’s category (ii), documents prepared by the lawyer for the lawyer’s own benefit or protection andthereby belonging to the lawyer: Cases, instructions and briefs prepared by the solicitor and delivered to counsel belong to the client within category (i).

Drafts and copies made by the solicitor of deeds or other documents in non-contentious business belong to the client within category (i). Copies made by the solicitor of letters received by him, if paid for by the client belong to the client under category (i). Copies made by the solicitor of letters received by him, if not paid for by the client belong to the solicitor under category (ii). Copies made by the solicitor of letters written by him to third parties, if contained in the client’s case file and used for the purpose of theclient’s business belong to the client under category (i).

Copies made by the solicitor of letters written by him to third parties, if contained only in a filing system of all letters written in thesolicitor’s office belong to the solicitor, under category (ii). Entries of attendance, tape recordings of conversations, etc., inter-office memoranda partner to partner, partner to staff, entries in diaries,office journals and books of account belong to the solicitor under category (ii). … (at para 16, emphasis added) These comments are helpful here.

The phrase “inter-office memoranda” clearly does not refer to all inter office memoranda regardless ofwhy they were prepared or who benefited from their preparation. [22] McDougall Gauley also relies on Bowman v Rainy River (Town), 2007 CarswellOnt 1053 (WL) (Sup Ct J) [Bowman #1], adecision referenced by the Chambers judge and cited by Krogan J. in Archibald SKQB. It is another case that conflates the production ofdocuments with the ownership of them but which nonetheless does make observations about ownership.

The plaintiff sought damagesagainst her former employer, the Town of Rainy River, for wrongful dismissal from the position of Clerk-Treasurer. The Town brought amotion to obtain an order for the production of certain documents and particulars from the law firm acting for the plaintiff that related tothe firm’s representation of the Town in proceedings involving an individual who had been the previous Clerk-Treasurer.

The law firmclaimed that it had refused to release only “material consist[ing] of internal notes, memoranda, dockets, diaries, office journals and booksof account which are not the property of the Town and are not producible” (at para 12). Justice Smith dismissed the Town’s application ina very brief decision.

Citing Tersigni v Circosta (1997), 12 CPC (4th) 407 (Ont Ct J (Gen Div)) [Tersigni], and Spencer v Crowe (1986), (NS SC), 74 NSR (2d) 9 (WL) (SC (TD)) [Spencer], he stated that “[i]t is well-settled that the working notes of asolicitor as well as documents that have been prepared by the solicitor are not the property of the client and are not producible” (at para14). I note here that I cannot see how the authorities cited by Smith J. support this sweeping proposition.

Justice Shaw expressed the sameconcern in dismissing the Town’s application for leave to appeal to the Divisional Court in Bowman v Rainy River (Town), 2007CarswellOnt 1913 (WL) (Sup Ct J) [Bowman #2]. There, he said, at paragraph 33, that Smith J.’s statement was “too wide”. [23] It should be observed that, in Bowman #2, Shaw J. offered some of his own assessment of the file ownership issue: 33 On the issue of production and particulars I am not satisfied that the Town has established that there is good reason to doubt thecorrectness of the decision of Smith J.

The law as stated in Tersigni, Spencer, Aggio and Cordery is, in my opinion, accuratelycharacterized by Smith J. as “well-settled.” While I am of the view that the statement of Smith J. that “documents that have been preparedby the solicitor are not the property of the client and not producible,” is too wide, that statement does not affect the correctness of thedecision on the issue before him. There are certain documents which are prepared by a solicitor which do in law belong to the client, asdetailed in Cordery at. p. 119.

However, the specific documents which were under review by Smith J. do not fall within those classiccategories of documents producible to a client. The evidence of the nature of those documents was set out in the affidavits filed on behalfof WMN. They were solicitors’ notes, time dockets, internal memoranda, internal emails and the firm’s computer generated internalbilling records. These documents belong to the solicitor. (Emphasis added) These comments, like those in Bowman #1, cite to Cordery.

Again, however, they do so without recognizing that Cordery suggests notesand other documents that are prepared for the benefit of a client belong to the client. [24] McDougall Gauley also refers to Tersigni. The plaintiff in that case was a minority shareholder in a residential development

corporation. He sued various officers and directors of the corporation and sought the working papers of the corporation’s accountant,KPMG, for a forensic accounting investigation. The Court refused to grant the order, reasoning by analogy to its understanding of theownership of a lawyer’s working notes: 6 Let us presume that there was no shareholder dispute between the parties and they were suing the joint venture charteredaccountants, KPMG, for negligence in relation to some bad income tax advice.

In that hypothetical situation, let us further assume thatthey sought production and/or discovery of the working papers of KPMG on that specific file. They are not producible: see LeicestershireCounty Council v. Michael Faraday & Partners Ltd., [1941] 2 All E.R. 483 (Eng. C.A.) and Chantry Martin & Co. v. Martin, [1953] 2Q.B. 286 (Eng. C.A.). These authorities have been applied in Canada by the Nova Scotia Supreme Court, Trial Division in the context of asolicitor’s confidential working notes: see Spencer v. Crowe (1986), (NS SC), 74 N.S.R. (2d) 9 (N.S. T.D.).

In theabsence of any Ontario jurisprudence to the contrary, I would be reluctant to digress from these English authorities, especially in light ofthe good sense which they convey on the issue.

As MacKinnon, L.J. states at p. 487 of the Leichestershire case, supra: These pieces of paper, as it seems to me, cannot be shown to be in any sense the property of the plaintiffs, any more, as suggested tocounsel for the plaintiffs during argument, than his solicitor clients or his lay client could assert that his notes of the careful and strenuousargument which he addressed to us here could be claimed to be delivered up by him when the case is over, either to the solicitor or to thelay client.

They are documents which he has prepared for his own assistance in carrying out his expert work, but they are not documentsbrought into existence by an agent on behalf of his principal, and, therefore, documents which it can be said are the property of theprincipal. (Emphasis in original) [25] One additional case, not cited directly by either CPC Networks or McDougall Gauley, is Spencer. The plaintiff there sought anorder requiring the defendant, her former lawyer, to release the contents of her file. Justice MacIntosh began his analysis by reproducingalmost the whole of Aggio.

He then quoted jurisprudence from the United Kingdom dealing with the status of an accountant’s file insupport of the proposition that a professional person’s working notes or memoranda are not the property of the client: 19 In support of the defendant’s contention that notes prepared by the solicitor in this instance are the property of the solicitor,reference was made to the following cases: Chantrey Martin v. Martin [1953], 2 Q.B. 286; and Leicestershire County Council v.

MichaelFaraday & Partners, Ltd., [1941] 2 K.B. 205. 20 At page 293 of the Chantrey decision, Jenkins, L.J., stated: Even in the case of a solicitor there must, we should have thought, be instances of memoranda, notes, etc., made by him for his owninformation in the course of his business which remain his property, although brought into existence in connection with work done forclients. 21 Further at p. 487 in the Leicestershire case, MacKinnon, L.J., stated: If an agent brings into existence certain documents while in the employment of his principal, they are the principal’s documents, and theprincipal can claim that the agent should hand them over.

This, however, is emphatically not a case of principal and agent. It is a case of aclient and a professional man to whom the client resorts for advice. I see no reason at all (and I think that it would be entirely wrong) toextend to such a relationship what may be the legal result of the quite different relationship of principal and agent.

These pieces of paper,as it seems to me, cannot be shown to be in any sense the property of the plaintiffs, any more, as I suggested to counsel for the plaintiffsduring the argument, than his solicitor clients or his lay client could assert that his notes of the careful and strenuous argument which headdressed to us here could be claimed to be delivered up by him when the case is over, either to the solicitor or to the lay client.

They aredocuments which he has prepared for his own assistance in carrying out his expert work, but they are not documents brought intoexistence by an agent on behalf of his principal, and therefore, documents which it can be said are the property of the principal. 22 While these two cases involved working notes of chartered accountants and valuers, the same principle should apply to solicitors.They are all professional people rendering services to clients. 23 I find that the working notes or memos in this instance prepared by the defendant solicitor are in the category of solicitor propertyand not available to the plaintiff.

I agree with counsel for the defendants that to decide otherwise would “create an intolerable situation forthe legal practitioner”. [26] Price v Lambrinos, 2012 ONSC 4856 [Price], should also be mentioned. The plaintiff, a lawyer, sued his former client forunpaid fees. The defendant then requested the lawyer to deliver his file. The lawyer refused and based his refusal on a solicitor’s lien.Master Short began his brief decision by reproducing much of Aggio and paragraph 33 of Bowman #2.

He went on to order the delivery ofthe file to the client but commented as follows: 41 That being said, I do accept the limitation suggested by Justice Shaw [in Bowman #2] with respect to production of documentationin cases such as this. As a consequence, the solicitor is not required to deliver up pursuant to this order, the “solicitors’ notes, time dockets,internal memoranda, internal emails and the firm’s computer generated internal billing records.

These documents belong to the solicitor.” [27] I should also note that there is limited appellate discussion of the question of who owns the contents of a lawyer’s file. TheCourt of Appeal of Manitoba in Bank of Nova Scotia v Imperial Developments (Canada) Ltd. (1987), (MB CA), 46DLR (4th) 190 (Man CA), commented that “[t]he principles set out in Cordery’s Law Relating to Solicitors, 7th ed. (1981), atpp. 99-101, may afford useful guides for determining which documents in an open file belong to the client and which to the lawyer” (atpara 8).

In Nova Scotia (Attorney General) v Royal & Sun Alliance Insurance Company of Canada, 2005 NSCA 34, 251 DLR (4th) 483,the Nova Scotia Court of Appeal referred to many of the decisions noted above in acknowledging that “[t]here is certainly authority forthe view that working papers prepared by a professional person in the course of carrying out his or her mandate do not necessarily becomethe property of the client” (at para 20). However, the Court also remarked that “[i]t all depends on the particular engagement and itsterms” (at para 20).

Finally, in Kaddoura v Hanson, 2015 ABCA 154, [2015] 6 WWR 535, the Court of Appeal of Alberta dealt with anissue concerning what parts of a defendant lawyer’s files were producible in the context of a civil action. In the course of its decision, the

Court made the following observation about the ownership of certain file materials: [36] The appellants cite case law which discusses the “ownership” of a lawyer’s file. Original documents that the client delivers to the lawyer to enable him or her to provide legal services likely remain the property of the client. The client can usually make a proprietary claim to transactional documents prepared by the lawyer at the expense of the client.

The lawyer can likely claim an interest in working papers, notes, and other internal documents prepared in the course of providing legal services : A Lawyer’s Authority Over Documents on Termination of Retainer (1981), 15 Law Soc. Upp. Can. Gaz. 103; Price v Lambrinos , 2012 ONSC 4856 at paras. 18-21 (M). (Emphasis added) [ 28 ] Let me also refer to a helpful Australian case, Wentworth v De Montfort (1988), 15 NSWLR 348 (CA), in which Hope J.A. made a number of points relevant to the present appeal.

It concerned a situation where a client had brought proceedings seeking the return of various documents from a law firm that had represented her. After reviewing what was said in Cordery and the same older English decisions noted in Spencer and Tersigni , Hope J.A. concluded that several considerations were relevant to the question of who owns a particular document in a lawyer’s file. Those were said to include whether the client was charged for the creation of the document and whether the lawyer had created the document for the benefit and protection of the client or for their own benefit and protection.

Justice Hope also noted that “[i]t is apparent that in many if not most cases a solicitor would have mixed reasons for creating a document” (at 355), and said “there are no doubt cases where questions of degree are involved, and where predominant purpose may resolve the issue” (at 359). See also Alexiou v White (t/as HWL Ebsworth Lawyers) , [2021] NSWSC 485 at para 36 [ Alexiou ]. [ 29 ] As for the ownership of the particular documents in issue in the case before him, Hope J.A. resolved matters by finding that the documents belonging to the law firm included: (

a) cheque requisition forms; (

b) printouts of the firm’s financial records; (

c) internal memoranda with respect to work done or to be done; (

d) photocopy requisitions; and (

e) the firm’s financial reconciliation documents. [ 30 ] Of particular relevance here, Hope J.A. observed that notes made by a lawyer concerning telephone conversations with persons other than the client could fall into an almost indefinite number of classes. On the one hand, a statement taken from a witness would be the property of the client while, on the other, a note with respect to a solicitor’s conversation with counsel about the payment of fees would belong to the law firm.

He concluded on this issue, at page 359, by writing as follows: It appears from this discussion that it is not possible to give a single answer to the question [of] whether a document falling within this category is the property of [the client] or of the solicitors unless its nature and the relevant facts are known. Some guidance however may be obtained from the particular examples which I have discussed.

Justice Hope went on to say that the ownership of records of personal attendances on persons other than the client and communications between the law firm and persons other than the client had to be determined using the same basis as he had taken with respect to the ownership of notes made of telephone attendances. [ 31 ] In the course of his analysis, Hope J.A. acknowledged that charging a client for the creation of the document may be insufficient to establish client ownership depending on the purpose of its creation.

Speaking of internal “records and memoranda as to work done or work to be done”, Hope J.A. explained as follows: These records in my opinion fall within the category of documents which are created by solicitors for their own benefit and not for the benefit of their client, and there is no principle upon which Ms Wentworth could base her claim to ownership. If there were no special arrangement as to fees, I do not think that the solicitor would be entitled to charge for making these records.

If there is an arrangement that fees are to be charged upon a time basis which would include the time for making these records, I do not think that on that account alone, the records would become the property of the client. Thus a barrister may make written notes of arguments he proposes to submit to a court and if he charges upon a time basis for out of court work, the client has in a sense been charged for that work.

However I do not think that that makes those notes the property of the client; they would be made by the barrister entirely for his own professional purposes even though they are made in the course of carrying out work for the client. … (at 359) [ 32 ] I also note that, although the Law Society of Saskatchewan cannot prescribe the ownership of the documents in lawyers’ files, its sense of this issue is nonetheless useful.

In an ethics ruling titled “Ownership of Client’s File and Lawyer’s Duty when Client Wishes to Change Lawyers”, 1000 SKLSPC 22, the Society explained file ownership, in a manner paralleling Cordery , but not citing it, as follows: When a client changes lawyers the file, as a general rule, belongs to the client if he or she can show he or she has paid for the lawyer’s work. The file should therefore be delivered either to the client or to the lawyer of his choice as soon as possible after the request is made. To retain documents from a client’s file a lawyer must show: (

i) he/she was under no duty to prepare the document for his client, or (ii) the documents were not, in fact, prepared for the benefit of the client.

Examples of materials falling in this class would include entries of attendances, tape recordings of conversations, inter-office memoranda and entries in diaries, office journals and books of account as well as written instructions given by the client to his lawyer. [ 33 ] The Law Society’s publicly available website also offers the following description of the files that must, or may, be returned to a client (“File Transfers”, online: Law Society of Saskatchewan <www.lawsociety.sk.ca/for-the-public/common-client-concerns/file- transfers> (19 July 2023)): Lawyers are required to deliver all papers and property to which the client is entitled in an orderly and prompt manner.

As a general rule, the client owns the entire contents of the file. However, the former lawyer and the former law firm may be entitled to withhold some documents that are rightfully the lawyer’s own property. Notwithstanding the lawyer’s or law firm’s right to withhold certain documents,

there is nothing preventing the lawyer or law firm from providing those documents to the successor lawyer or to the client, if the lawyer or law firm so choose. The former lawyer generally owns any documents that the lawyer created for the lawyer’s own benefit, and for which the client was not charged. They may have been created in relation to work done for the client’s benefit, but they remain the lawyer’s property. They include: The lawyer’s working notes, created, for example, to aid the lawyer’s memory; Ethical consultations with the Law Society.

The former law firm generally owns any documents that the lawyer created for the law firm’s benefit and for which the client was not charged . They include: Time entry records; Calendar entries; Accounting records; Conflict searches; Office administration forms (pre-bills, cheque requisitions, etc.); Intra-office memos, and; Communications between lawyers at the former law firm. The remaining documents on the file belong to the client and should be transferred along with the file.

They include, without limitation: All documents created before the lawyer was retained; Memoranda of law; Court documents; Witness statements; Notes from meetings or telephone attendances with clients or other persons outside of the lawyer’s firm, and; Correspondence (client instructions, advice given, opinion letters, general letters, emails, disbursements receipts, expert witness statements, reports). (Emphasis added) [ 34 ] As a final point in this survey of relevant authorities, I also wish to refer to the cases that discuss who should bear the burden of establishing the ownership of a document in a lawyer’s file.

In this regard, I note that in Bowman #1 , Smith J., confusing the concepts of ownership and production, placed the onus on the applicant client to demonstrate “that there is anything more than suspicion that [the solicitor] is withholding documents and/or particulars that are properly producible” (at para 18). However, in CPC #1 , Barrington-Foote J.A. required that McDougall Gauley “identify the documents that have been withheld and the basis for doing so” (at para 102).

In Aggio , Master Sandler, in awarding costs against the solicitors, rightly commented on how the “action was necessary in order for the client to have delivered up to her her property” and that document ownership is “‘a matter of law’, and who better than a solicitor should know or be able to ascertain what the law is” (at para 19). Finally, I observe that, in Alexiou , Cavanagh J. noted how the solicitor is in the best position to adduce direct evidence on its billing practices and the purpose of the creation of a document. B.

The governing principles [ 35 ] As is apparent, there are a limited number of cases that deal with the question of who owns what in a lawyer’s file. Few, if any, of those cases, especially the Canadian ones, have looked at the issue in any depth. Cordery is commonly referenced but it has often been endorsed rather unquestioningly and, as noted above, it seems to have been frequently misunderstood or cited selectively. There is, to be sure, a vein of authority to the effect that lawyers’ “working files” belong to the lawyer. However, that line of authority, in my respectful view, is suspect in that (

a) it does not make clear what does and does not come within the ambit of the term “working file”, (

b) the Canadian cases in this line have often been based on an incomplete reading of Cordery , (

c) the older English cases may reflect a level of deference to the “professional man” that does not reconcile easily with contemporary values and with the fiduciary obligations of a lawyer as presently understood, and (

d) the comments about “working files” do not seem to reflect current practices in the legal world whereby it is common that effectively everything a lawyer does on a file is recorded in segments of one-tenth of an hour with that time then being billed out to the client. As a result, I conclude that this line of authority must be approached with significant caution. [ 36 ] It is not easy to draw bright lines that will, in all situations, neatly separate documents that belong to a lawyer from those that belong to their client.

However, it is possible to identify the principles that should be used to sort out file ownership issues. In this regard, I find that Cordery offers a very helpful overall framework but that it nonetheless requires some qualification and nuance in its application. [ 37 ] Accordingly, considering the authorities and commentary discussed above, I conclude that the broad principles bearing on the disposition of this appeal can be stated as follows: (

a) Documents in existence prior to the retainer and provided by the client to the lawyer remain, in the absence of some proof to the contrary, the property of the client.

(

b) Documents prepared by a lawyer for the benefit of the client belong to the client. This would include, for instance: legal research memoranda; pleadings, briefs and other documents filed in court; witness statements; and notes of conversations with the client, other counsel or third parties concerning matters that relate to the substance of the file or to the business of advancing the file toward a conclusion. (

c) Documents prepared by a lawyer for their own benefit or protection belong to the lawyer. This would include, by way of example, things such as accounting records, conflict searches, time entry records, and financial administration records like draft statements of account and cheque requisitions. Internal communications and notes concerning administrative matters such as the role that various lawyers and staff will play on the file may also fall into this category. (

d) That said, documents will often be prepared for, or will serve, more than one purpose. For example, a file note setting out instructions received from a client will both benefit the client by helping to ensure that their wishes are clearly understood and benefit the lawyer by memorializing the mandate received from the client. In such circumstances, the predominant purpose should be controlling.

Any doubt about the predominant purpose should be resolved in favour of the client with the result being that “documents prepared for the benefit of the lawyer” is likely to be quite a narrow class of material in most files. In this regard, one helpful way to assess if a document belongs to the client may be to ask whether, when it was created, a new lawyer taking over the file at that time would have wanted to have had the document in order to properly and efficiently manage the file and advance the client’s interests.

If the answer is “yes”, and particularly if the client paid for the time involved in generating the document, then it should be seen as belonging to the client. (

e) The fact that the client has been billed for the time involved in preparing a document will be a significant factor, but not necessarily a decisive one, weighing in favour of the conclusion that the document belongs to the client. In this regard, it is difficult to see how a document prepared for the benefit of the client and for which the client was billed would not be the property of the client. However, that said, I doubt that the same is true with respect to documents prepared for the benefit or protection of the lawyer.

For example, and without endorsing this sort of billing practice, if the lawyer happens to record and charge out the time involved in doing a conflict of interest check to confirm that they can act for the client, the document reflecting the result of that conflict of interest check would nonetheless belong to the lawyer. (

f) The burden of showing that a document in a file is the property of the lawyer should rest with the lawyer. They will understand the circumstances in which the document came to be created and will be in possession of the information about who it was intended to benefit. C.

Application of the principles [ 38 ] In light of the foregoing, it can be readily seen that the Chambers judge erred by holding that everything falling within the broad category of documents described by McDougall Gauley as being “solicitor’s notes and inter-office memoranda” is necessarily its property. [ 39 ] The term “solicitor’s notes” includes a potentially very broad range of material.

For example, it would cover notes made in the course of interviewing a witness in circumstances where the time expended by the lawyer in that regard was charged by McDougall Gauley to CPC Networks – clearly a document that belongs to CPC Networks. At the same time, it would also include a note from a McDougall Gauley lawyer to the firm’s accounting department explaining to whom CPC Networks wants its statements of account directed – obviously a document that would belong to McDougall Gauley.

In short, the Chambers judge should not have treated all solicitor’s notes as being of the same character and as having the same ownership status. [ 40 ] This same line of reasoning also applies to “inter-office memoranda”, the other category of document in which McDougall Gauley claims ownership. At one end of the spectrum, documents falling under this label could include a legal research memorandum for which CPC Networks was billed – doubtless a document that CPC Networks owns.

At the other end of the spectrum, it could include a memorandum for which no billable time was recorded and by which a lawyer working on a CPC Networks’ file noted ethical advice received from a senior partner – clearly a memorandum prepared for the benefit of McDougall Gauley and belonging to McDougall Gauley. [ 41 ] Those points made, let me turn more directly to the specifics of this appeal. In this regard, it must be noted that, in its factum, CPC Networks has sharpened or narrowed its request for documents somewhat by framing the relief it seeks as follows: 45(

b) The Respondent McDougall Gauley LLP shall, within two days of this decision, deliver up to the Appellant, CPC Networks Corp. all of the original file notes and memoranda which resulted from all telephone calls and meetings between its own solicitors, between its own solicitors and any directors or shareholders of CPCN, between its own solicitors and any third parties, including third party solicitors, concerning CPC Networks Corp. files, and for which CPC Networks Corp. was billed or for which McDougall Gauley LLP’s solicitors had a duty to make for their client. [ 42 ] In my view, this request, in its own way, fails to properly map the limits of the file materials that CPC Networks can be said to own.

To explain this conclusion, it is useful to separately consider the “was billed for” and “had a duty to make” tracks referenced by CPC Networks. Let me start with the first of these. [ 43 ] “All” file notes and memoranda for which CPC Networks was billed that “resulted” from “all” telephone calls and meetings between McDougall Gauley lawyers, between those lawyers and CPC Networks’ directors and shareholders and between those lawyers and third parties could readily include documents that are the property of McDougall Gauley.

For instance, if two McDougall Gauley lawyers met to discuss and confirm the billing rates that would be charged for work to be done for CPC Networks, the memorandum recording the agreed approach would belong to McDougall Gauley even if those lawyers were so fiscally aggressive as to docket and bill for the time involved in the meeting.

As discussed above, the fact that a client was charged for the time spent in generating a document is a consideration in determining the ownership of the document but is not a controlling or necessarily determinative consideration. [ 44 ] The situation with respect to file notes and memoranda that McDougall Gauley lawyers had a “duty” to make for CPC Networks stands on somewhat different ground. Although it is not entirely clear what sort of duty is being referenced by CPC Networks, it

is nonetheless difficult to conceive of a duty arising in these circumstances that is something other than one that flows from the terms of the retainer agreement between CPC Networks and McDougall Gauley. So, for example and speaking more generally, it can be seen that a lawyer retained to draft a contract will have a duty to prepare the contract and that the client owns the document in which the contract is ultimately reflected.

That said, it is challenging here, when CPC Networks is seeking only “file notes and memoranda”, to see how McDougall Gauley would have been under a duty to prepare any such note or memorandum. However, if that turns out to have somehow been the case, I accept that the note or memorandum would belong to CPC Networks. [ 45 ] I respectfully conclude, therefore, that the Chambers judge erred by holding, in effect, that all of the “solicitor’s notes and inter- office memoranda” in McDougall Gauley’s files necessarily belong to McDougall Gauley. The situation is more complicated than that. V.

CONCLUSION [ 46 ] I would allow CPC Networks’ appeal on the basis set out above. In order to determine which, if any, of the “solicitor’s notes and inter-office memoranda” in the possession of McDougall Gauley belong to CPC Networks, McDougall Gauley is hereby directed to review those documents and to do so through the lens of the principles identified in this decision. McDougall Gauley shall then deliver to CPC Networks the additional documents, if any, determined to be owned by CPC Networks.

If there are documents that McDougall Gauley concludes are its property, it shall identify them, and the reason for withholding them, with the same sort of specificity as might be employed in listing them in an affidavit of documents prepared pursuant to Rule 5-6 of The Queen’s Bench Rules . Any dispute that might arise out of all of this will have to be resolved by the Court of King’s Bench. However, in this regard, CPC Networks should remember that, regardless of who owns a document, McDougall Gauley may well be obliged to produce it as this litigation unfolds. [ 47 ] CPC Networks was given leave to have Mr.

Ayers make submissions on its behalf. It can be presumed that CPC Networks did not pay for that representation. Given that CPC Networks, not Mr. Ayers, is the plaintiff in this litigation, there will be no order with respect to costs. “Richards C.J.S.” Richards C.J.S. I concur. “Tholl J.A.” Tholl J.A. I concur. “Kalmakoff J.A.” Kalmakoff J.A.