CITATION: Nova Chemicals et al. v. CEDA-Reactor Ltd. et al.

, 2014 ONSC 3995

COURT FILE NO.: 3249-11
DATE: 2014/07/09

ONTARIO

2014 ONSC 3995 (CanLII)

SUPERIOR COURT OF JUSTICE

B E T W E E N: )
)
NOVA CHEMICALS (CANADA) LTD., ) John Downing, for the Plaintiffs
NOVA CHEMICALS CORPORATION )
AND NOVA CHEMICALS INC. )
)
Plaintiffs )
)
- and - )
)
)
CEDA-REACTOR LTD. AND CEDA ) Ryan Morris and Kristian Ali for the
INTERNATIONAL CORPORATION ) Defendants
)
)
)
)
)
)
Defendants )
)
)
) HEARD: December 2, 2013

LEACH, J.

[1] Before me are two motions, (one brought by the “NOVA” plaintiffs and one brought by
the “CEDA” defendants), relating to disputed documentary production and disclosure.

Background and Nature of Dispute

[2] The motions have been brought in the wider context of substantial litigation stemming
from an unexpected shutdown of the plaintiffs’ petrochemical facility in Corunna, (near Sarnia,
Ontario), in January and February of 2009.
 -2-

[3] The shutdown is said to have been caused by repair work done at the facility, shortly
before the shutdown, by employees of one or both defendants pursuant to a long term service
agreement.

[4] In particular, the plaintiffs say that a leak in a steam condensate pipe was addressed

2014 ONSC 3995 (CanLII)

improperly by the defendants during the construction of an enclosure, (surrounding the leaking
area of the pipe), into which excessive sealing material was injected. The sealing material
allegedly then made its way into other areas of the steam piping system, resulting in
accumulations and blockages that brought about decreases in pressure and flow. That in turn is
said to have triggered shut down of several high pressure boilers, and consequential shut down
and restart of compressor trains, causing further damage and more widespread interruption of the
facility’s operations and production.

[5] In the result, the plaintiffs initiated this litigation in January of 2011. Their prayer for
relief includes a claim for $11.9 in damages.

[6] In essence, the defendants deny responsibility for the facility shutdown and any
corresponding damages, which they attribute to alleged mismanagement, imprudence and
negligence on the part of the plaintiffs. Particulars set forth in the statement of defence,
(formally delivered in June of 2012), include allegations that the plaintiffs failed to follow the
defendants’ recommendations and/or applicable safety standards and procedures, improperly
ceased to use required filters, engaged in poor maintenance and cleaning practices, and/or
engaged in other operational and training errors.

[7] In the course of subsequent preliminary sparring between counsel, (which included
requests for inspection and associated allegations of spoliation, initial failure to agree on
scheduling and a Discovery Plan, disputes about who would be produced by the defendants for
oral discovery examinations, and the defendants’ initial refusal to produce insurance
documentation), the plaintiffs took issue with the extent of initial documentary disclosure offered
by the defendants.

[8] In that regard, plaintiff counsel asserted that the defendants’ initial production of 33
documents was clearly deficient, and reflected less than adequate efforts by the defendants to
ensure proper compliance with production obligations.

[9] In support of that position, plaintiff counsel highlighted such matters as the defendants’
failure to mention a single external or internal email, (despite indications that various individuals
employed by the defendants may have communicated in that manner), and the defendants’
failure to produce insurance documentation.

[10] Of more immediate relevance to the present motions was plaintiff counsel’s reliance on
the defendants’ failure to mention or address, in their unsworn affidavit of documents, a number
of known items, emanating from the defendants, which already had been identified and included
in the plaintiffs’ formal productions. This included external correspondence generated by the
defendants’ in-house counsel, four specified written statements from individuals employed
and/or formerly employed by the defendants, material data safety sheet information, and other
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documents. In circumstances outlined in more detail below, the material in question had been
supplied to the plaintiffs many years earlier, (shortly after shutdown of the plaintiffs’ facility in
January-February of 2009), by individuals employed by the defendants.

[11] Defence counsel then responded with vehement assertions, (disputed with equal

2014 ONSC 3995 (CanLII)

vehemence by plaintiff counsel), that material previously provided to the plaintiffs remained
subject to claims of privilege by the defendants. In particular, it was said that, despite any
possible “inadvertent and unintentional” disclosure, there had been no waiver of privilege in
relation to such material.

[12] The resulting impasse between the parties led to the motions currently before me.

[13] The plaintiffs were first off the mark, moving for an order directing implementation of a
discovery plan, production of a specified employee of the defendants for oral discovery
examination, and the defendants’ delivery of a sworn affidavit of documents that would confirm
formal production of specified documentation, including:

a. correspondence exchanged between the parties’ respective in-house counsel;

b. the defendants’ insurance documentation;

c. a failure investigation report prepared by the defendants and entitled “Incident Bulletin”;

d. any witness statements of employees or former employees of the defendants with respect
to issues raised in the action, (including the known written statements of Dan Rankin,
Drue Ritchie, Ted Bailey and Pedro Morey);

e. a specified material data safety sheet;

f. emails relevant to issues raised in the action; and

g. a specified chronology prepared by the defendants, dated January 27, 2009.

[14] In response, the defendants moved for a declaration upholding their claims of solicitor-
client and/or litigation privilege. The defendants also requested consequential orders directing
the plaintiffs to destroy all copies of any such privileged documentation, and “restraining the
plaintiffs from using information contained in or derived from the Privileged Documents in the
course of this action”. (To underscore that request, the defendants also sought an order
compelling the plaintiffs to serve a revised affidavit of documents omitting any reference to the
documents in question.)

[15] By the time the motions were argued before me, the parties commendably had been able
to resolve a number of their production and discovery disputes.

[16] However, no such agreement was possible concerning the “Incident Bulletin” and four
specified written statements mentioned above.
 -4-

[17] The plaintiffs maintain their position that those documents were not and are not subject to
any valid claim of privilege, and that any possible privilege in that regard was deliberately and
voluntarily waived by the defendants long ago.

[18] The defendants maintain that those documents were and are subject to a claim of

2014 ONSC 3995 (CanLII)

solicitor-client and/or litigation privilege that has never been waived, and that their disclosure in
fact was inadvertent, unintentional and unauthorized.

Circumstances of Disclosure

[19] Before turning to evidence relied upon by the defendants as to what should and should
not have happened in terms of disclosure, (addressed by the affidavit evidence tendered by the
defendants), I think it helpful to start with consideration of what actually occurred in that regard,
and the context in which direct communications between the parties were taking place.

[20] Extensive evidence of such matters is found in the affidavit of Edward Cooper, (a
Regional Maintenance Services Leader employed by the first named plaintiff), sworn August 8,
2013, and the documents attached as exhibits thereto.

[21] The defendants did not cross-examine Mr Cooper on his affidavit, and in my view, except
in relation to important matters concerning the timing and purpose of document creation, (to
which I will return in more detail during my analysis below), the evidence tendered by the
plaintiffs was not really contradicted or challenged in any material way.

[22] Its more relevant aspects can be summarized in the following chronology:

 The underlying “Miscellaneous Work Agreement” went into effect on February 1,

2007.

 On January 7, 2009, the plaintiffs telephoned Dan Rankin, (employed by the defendants
in their Sarnia office), to request repairs in relation to a defective steam condensate leak
pipe. Mr Rankin dispatched two of the defendants’ technicians, (Drue Ritchie and Pedro
Morey), to attend at the plaintiffs’ facility. Investigation and repair work, involving
construction of a “Custom T Box”, was followed by injection of sealant on January 21,
2009.

 The unplanned shutdown of the plaintiffs’ facility, (which would last for approximately
four weeks), began on Friday, January 23, 2009. According to Mr Rankin’s written
statement, he was contacted that afternoon by Mark Harrison, (employed by the
plaintiffs at their facility), who reported blockages and requested further information
concerning the sealant injected by the defendants’ technicians.

 On Saturday, January 24, 2009, Mr Rankin was contacted again by Mr Harrison, who
indicated that the blockage material was the sealant injected by the defendants’
technicians. Mr Rankin’s statement indicates that he attended at the plaintiffs’ facility
that morning, looked at the blockage material, and it appeared to be “E.S. 804”, (a liquid
 -5-

rubber sealant apparently used in the repair work). Shortly after noon that day, Mr
Rankin faxed Mr Cooper a copy of the Material Safety Data Sheet relating to that
product.

 According to the written statement prepared by Ted Bailey, (a Division Manager

2014 ONSC 3995 (CanLII)

employed by the defendants in their “Specialty Services and Emergency Response
Services” in Sarnia), Mr Rankin called him between 7:30am and 8:00am on the morning
of Monday, January 26, 2009, to inform Mr Bailey about the problem at the plaintiffs’
facility, and its possible connection to the sealant injected into the enclosure installed by
the defendants. At approximately 8:45am that same morning, Mr Bailey then spoke by
telephone with Mr Harrison at the plaintiffs’ facility, and was advised that the blocking
agent, (being sent for analysis), was either sealant injected by the defendants or another
product developed by the plaintiffs. At 1:17pm that afternoon, Mr Bailey then followed
up by sending an email to Mr Harrison. The email was copied by Mr Bailey to two other
individuals employed by the defendants; i.e., Dan Rankin and Ross Potvin, (the Director
of the defendants’ Canadian operations relating to “Specialty Services and Emergency
Response Services, who was based in Edmonton). The substantive text of the email
reads as follows: “I would like to take this opportunity to inform you that we at CEDA
are undertaking our own internal investigation into the design, manufacture and
installation of the Custom T Box above EA2205B in the Olefins Cold Side. Upon
completion, we will ensure that a copy is forwarded to you. In the interim should you
have any questions at all, please do not hesitate to contact me immediately.” [Emphasis
added.]

 According to Mr Bailey’s statement, he was informed by Mr Harrison, on Tuesday,

January 27, 2009, that “it was sealant that had plugged the line”. Mr Bailey then
indicates in his written statement that “At this time, the Technicians involved in the
installation & injection of the t-box where (sic) required to sit and put on paper the
procedures followed.” [Emphasis added.] At 1:54pm that afternoon, Mr Bailey then
sent another email to Mr Harrison, once again copying his message to Mr Potvin and Mr
Rankin. The substantive text of the email reads as follows: “Attached is the report as
promised re: the design, manufacture and installation of the Custom T Box”. [Emphasis
added.] Should you have any questions or require additional information, do not hesitate
to contact me.” The attached one page report, (repeatedly described in the motion
material as “the Chronology”), is dated January 27, 2009, and is addressed to Mr
Harrison from Mr Bailey. It sets out the investigation and repair work carried out by Mr
Ritchie and Mr Morey on January 7, 20 and 21, 2009.

 In his statement, Mr Bailey says that, “for the remainder of the week”, i.e., January 27-
30, 2009, he then was in contact with Mark Harrison “on a daily basis”.

 According to Mr Bailey’s statement, he then met with Mr Harrison at the plaintiffs’

facility on Friday, January 30, 2009, “at which time the job was discussed”. The
plaintiffs were “still in the process of coming back on line and had additional problems”.
 -6-

Mr Harrison indicated to Mr Bailey that Mr Ritchie should not attend at the plaintiffs’
facility for the foreseeable future.

 Mr Bailey’s statement indicates that, on Saturday, January 31, 2009, he then received a
telephone call from Mr Potvin, informing Mr Bailey that someone named Chris

2014 ONSC 3995 (CanLII)

MacGregor, (whose affiliation does not seem to be indicated in the material before me),
had called Brian Fitzmaurice, (a senior vice-president with the defendants), to indicate
that the plaintiffs were “going to sue” the defendants. In response, Mr Bailey told Mr
Potvin that he “would be in touch with Mark Harrison on Monday to follow up on this
information”.

 According to Mr Bailey’s statement, he was en route to the plaintiffs’ facility on

Monday, February 2, 2009, when he was able to reach Mark Harrison by telephone at
home. (Mr Harrison had gone home after working a night shift.) According to Mr
Bailey:

o He asked Mr Harrison if the defendants could obtain a photograph of the

enclosure associated with the incident. Mr Harrison replied that Mr Rankin
could obtain one for the defendants, so long as he checked with Mr Cooper first.

o Mr Bailey informed Mr Harrison about the call made by Mr McGregor to Mr

Fitzmaurice, indicating that the plaintiffs intended to sue the defendants. Mr
Harrison replied that rumors were always “going around”, and that if such a
decision was made, it would be made “by others higher up the ladder”.

o Mr Bailey told Mr Harrison that the defendants were “pursuing this matter
aggressively and would be putting out an incident bulletin. Mr Harrison
responded by indicating that he would appreciate a copy of the document once it
was completed.

 According to Mr Bailey’s written statement, on Wednesday, February 4, 2009, (during

the ongoing shutdown of the plaintiffs’ facility), he attempted to contact Mr Cooper by
telephone “as per Ross Potvin’s direction”, but had no success. (This generally
conforms with Mr Cooper’s sworn evidence that, at some unknown time prior to
February 4, 2009, Mr Bailey left a telephone message indicating that Mr Bailey wanted
to meet with Mr Cooper to discuss the incident. According to Mr Cooper, the telephone
message from Mr Bailey also indicated that someone at the plaintiffs had contacted Mr
Fitzmaurice, indicating that the plaintiffs were “going to sue” the defendants with
respect to the incident.)

 Later that same day, (i.e., at 8:56AM on Wednesday, February 4, 2009), Mr Bailey then
sent an email to Mr Cooper, openly copying it to Mr Potvin. The substantive text of the
email reads as follows: “I realize this is a very hectic time for you, however, our
Canadian Operations Manager, Ross Potvin, is in Sarnia. Ross was directed by our
Senior V.P., Brian Fitzmaurice, to follow-up on the telephone call that Brian received.
 -7-

All of us are very concerned with our standing with Nova as you can well imagine. Ross
and I would appreciate the opportunity of meeting with you to discuss the current
situation. Ross and I are both more than willing to meet with you on site or after hours
so that Ross can inform Brian of the status.” [Emphasis added.]

2014 ONSC 3995 (CanLII)

 At 6:02PM on Wednesday, February 4, 2009, Mr Cooper responded to the email Mr
Bailey had sent earlier that morning. Mr Cooper copied his response to Mr Potvin as
well. Mr Cooper indicated, inter alia, that his “main priority” for the time being was
damage assessment and getting the plaintiffs’ facility running again. In terms of meeting
as requested to discuss the situation, Mr Cooper responded as follows: “As far as the
incident that caused the outage, that’s not really my focus right now but I’m pretty
confident it will be. We’ll need to pull some data together from our end and complete an
investigation. There is no doubt we will need to discuss it once that has been completed.
I have no idea when we will be in that position but I would anticipate another 2-3 weeks
for this place to level out. We haven’t even assessed the damage to our Crude or DPG
units as yet. Hope the info helps. If I have time in the next couple of days, I’ll give you
a call. As far as the night time, by the time I get home, I’m spent.” According to Mr
Bailey’s written statement: “For the remainder of the week, [February 4-6, 2009], an
incident bulletin was drafted and forwarded to the legal department. Suggestions made
and changes incorporated.” [Emphasis added.]

 According to Mr Bailey’s written statement, he then spoke with Mr Cooper “on various
occasions” in the period of February 9-12, 2009. During the conversations, Mr Cooper
expressed happiness with work done by the defendants in relation to additional
enclosures, but “as for the original enclosure”, he was “still concerned with getting the
plant up and running”. There also apparently was further talk of a meeting to discuss the
situation. However, Mr Cooper indicated that there would be a meeting “once
everything [came] together” and the plaintiffs completed their own internal
investigation.

 On Friday, February 13, 2009, anticipating his absence from work the following week,
Mr Bailey then emailed Mr Cooper to provide his “home phone number, cell number
and home e-mail address in the event that anything should be required”. Later in the
day, Mr Cooper called to indicate that he would “be in touch” if anything was needed,
but “didn’t feel there would be a need”.

 According to Mr Bailey’s written statement, Mr Cooper emailed him on February 24,

2009, suggesting a meeting at Mr Cooper’s office, on March 16, 2009, to “go over the
situation”. Mr Bailey informed Mr Potvin of the situation, and then “replied … in the
affirmative”.

 There is nothing in the material before me to indicate or suggest that any meeting took
place on March 16, 2009. Instead, Mr Cooper’s sworn evidence is that, on Friday,
March 20, 2009, Mr Bailey called him, again requesting a meeting to discuss the
incident. Mr Cooper responded with an indication that he could not meet that day
 -8-

because of other commitments. However, shortly after the telephone call, Mr Bailey
nevertheless “showed up” at the plaintiffs’ facility, asking to meet with Mr Cooper and
Mr Harrison. During the brief meeting that ensued, Mr Bailey provided Mr Cooper with
a copy of a document described as “the Incident Bulletin”. Mr Bailey indicated that the
document was to be shared with other CEDA office managers in order to prevent

2014 ONSC 3995 (CanLII)

recurrence of a similar event elsewhere. Mr Bailey did not say that the document was
privileged, (although the document itself is headed “PRIVLEGED (SIC) AND
CONFIDENTIAL”). Nor did Mr Bailey seek to restrict distribution of the document
within the plaintiffs’ organization, or suggest that there were any conditions under which
he was providing the document. To the contrary, Mr Bailey indicated that the
defendants were hoping for further exchanges of information on a co-operative basis, to
assist in the investigation. (That same sentiment is conveyed in the final paragraph of
the document itself, which reads: “Investigation continues, with efforts to obtain the
missing information noted above. We require NOVA’s cooperation in order to fill in
knowledge and factual gaps as to the circumstances surrounding the excess sealant, and
are making all efforts to determine the cause of the incident as soon as possible.”
Emphasis added.) According to Mr Cooper, Mr Bailey made it clear that he was
concerned about potential issues regarding the repair work carried out by the defendants,
and wished to address those concerns in order to maintain the defendants’ position as a
service provider, not only for the plaintiffs, but also for other area customers who had
been making inquiries about the incident. That was why the defendants were conducting
an internal investigation and providing documentation to the plaintiffs.

 On Monday, March 23, 2009, Mr Cooper followed up on the aforesaid meeting by

sending Mr Bailey an email regarding “Investigation Items”. The substantive text of the
email reads as follows: “Hi Ted. I appreciate the information that you shared with Mark
and I on Friday. I’m sure that will be helpful when we start to review the incident in
detail. Your document indicated that you have a detailed sequence of events that
actually occurred. I was wondering if I could get a copy of that information. It will be
helpful in piecing all the items together.” [Emphasis added.] The document being
referred to by Mr Cooper would seem to be the “Incident Bulletin” prepared by the
defendants, which includes, under the heading “INVESTIGATIVE ACTION”, the
following remarks: “Upon notification of the possible seriousness of the occurrence, a
meeting with the technicians involved, management and supervision was held. A
timeline was set down as to the sequence of events.” [Emphasis added.]

 According to the sworn evidence of Mr Cooper, at an unspecified time “shortly after”

the aforesaid meeting on March 20, 2009, Mr Bailey then returned to the plaintiffs
facility and delivered the written statements of Dan Rankin, Drue Ritchie, Ted Bailey
and Pedro Morey. Mr Bailey once again did not indicate that the statements were
privileged, or that they were being provided under any other terms or conditions.
Rather, Mr Cooper was given to understand that Mr Bailey considered the statements “to
be supporting information for the Incident Bulletin and part of his stated intention to
provide disclosure to NOVA regarding the Incident”.
 -9-

 On or about April 17, 2009, Mr Bailey also sent the plaintiffs an email, (apparently via
Mr Harrison and Mr Cooper), forwarding copies of the new “Leak Suppression Forms”
the defendants were “incorporating into [their] procedures”.

 On or about June 22, 2009, the plaintiffs sent a “demand letter”, alleging that the

2014 ONSC 3995 (CanLII)

defendants had caused approximately $9.7 million US in damages. In later
correspondence dated September 23, 2009, the defendants’ then in-house counsel, (and
later affiant in relation to these motions), indicated that “this entire matter began with
[that] demand letter”.

 By July 14, 2009, an adjuster representing the defendants’ insurer was calling and
writing the plaintiffs’ in-house legal counsel, requesting information relating to the
repairs and alleged resulting damages. This included requests for any reports prepared
by staff employed by the plaintiffs.

 On October 8, 2009, during the course of further correspondence exchanged between

the parties’ in-house legal counsel, the defendants repeated their request for a response to
various outstanding inquiries, including production of “a copy of any and all
investigation/incident reports and corresponding material” concerning the incident.

 As noted above, the plaintiffs issued their statement of claim on January 19, 2011.

 As also noted above, the defendants delivered their statement of defence on or about
June 5, 2012.

 The defendants supplied copies of their intended productions, (33 documents), to

plaintiff counsel on or about April 16, 2013.

 Plaintiff counsel reviewed the defendants’ productions and, on May 8, 2013, as outlined
above, sent a letter to defence counsel asserting that the defendants’ productions were
“deficient on a number of known bases”, triggering the further exchange of
correspondence leading to the current motions.

 The defendants’ first formal assertion of privilege in relation to the witness statements
referred to by plaintiff counsel seems to have taken place in a letter sent by defence
counsel on May 14, 2013. The defendants’ first formal assertion that any actual
disclosure of the Incident Bulletin and Witness statements was inadvertent and
unintentional, and not the result of any waiver of privilege, seems to have taken place in
a letter sent by defence counsel on June 10, 2013; i.e., approximately 4 years and 3
months after the documents had been given to the plaintiffs.

[23] Apart from an affidavit sworn by a legal assistant, (attaching copies of the defendants’
unsworn affidavit of documents and correspondence exchanged between counsel asserting that
the documents in question were subject to a claim of privilege that had not been waived), the
 - 10 -

defendants relied primarily on an affidavit without exhibits sworn by Shelley Nixon on August 9,
2013, (and upon which Ms Nixon subsequently was cross-examined, on October 16, 2013).

[24] Ms Nixon is a lawyer, not currently employed by the defendants, who nevertheless acted
as their in-house corporate legal counsel from March 2008 to October 2011.

2014 ONSC 3995 (CanLII)

[25] While I have reviewed and considered Ms Nixon’s affidavit and the transcript of her
corresponding cross-examination in their entirety, I think the more salient points of her evidence
may be summarized as follows:

 For whatever reason, Ms Nixon apparently reviewed no documentation other than the
pleadings in this litigation prior to swearing her affidavit. She had no access to “any
files, documents [or] emails” maintained by the defendants, and therefore no opportunity
to refresh her memory by looking at such material, more than 2 years after leaving the
defendants’ employment, and before giving evidence concerning matters that had taken
place at least 4-5 years earlier. She had not seen Mr Cooper’s affidavit, prior to her
cross-examination. Nor did she look at the Incident Bulletin either before or during the
cross-examination. (Defence counsel refused to permit any questions relating to the
document itself, so it was not shown to Ms Nixon.) She confirmed at various points
during that cross-examination that she had no notes available, that she was doing her best
to recall events “purely by memory”, and was unable to give any “specifics” about such
matters as the “dates or times of meetings”. Questions put to her in cross-examination,
(e.g., about participation in other meetings, other possible conversations with others
employed by the defendants or plaintiff representatives, and the existence and/or details
of memos and policies), frequently were met with answers of “I can’t recall” and “I don’t
recall”.

 Notwithstanding such limitations, Ms Nixon said she knew that, during her time with the
defendants, the president of CEDA international, (Bruce Rintoul), “had made a number
of communications, announcements, instructions to all business units that any legal
matters, disputes, claims, contractual items, any of the items that the legal department
looked after or anything beyond pure operations, in terms of things that needed to be
looked after, needed to go through legal in Calgary”. Ms Nixon could not recall whether
or not there were any written policies, procedures, memos or emails to that effect.
However, she believed the president had made it clear that “matters other than purely
operational would be handled through the legal department”; i.e., that “the operations
people or business lines” had “no independent decision making in connection with legal
advice that was provided”. She says that message “was communicated often” at
operations meetings, in daily and weekly calls, and in her department’s monthly
meetings.

 Ms Nixon says that she first became aware of the unplanned shutdown of the plaintiffs’
facility sometime in February of 2009. She was unable to recall a specific date in that
regard, or even whether her awareness came towards the beginning, middle or end of that
month. Nor could she recall how she learned of the incident. However, she says that she
 - 11 -

“immediately recognized the potential for litigation and contemplated the potential of a
legal dispute or claim in respect of the incident”.

 In cross-examination, Ms Nixon acknowledged that she did not recall or did not know
about communications made by Mr Bailey, or internal investigations already commenced

2014 ONSC 3995 (CanLII)

by Mr Bailey, prior to her learning of the incident in February of 2009. In her words: “I
don’t know what he did. I can’t instruct anything until I know about it in February.”
[Emphasis added.]

 Ms Nixon says that, upon learning of the incident, at that unspecified time in February of
2009, she informed Mr Potvin and Mr Bailey by telephone of the following points, and
instructed them to relay the points in turn to other relevant CEDA employees:

o all external communications relating to the incident needed to be “streamlined and

vetted” through Ms Nixon;

o any communication with any third-party, including the plaintiffs, was “prohibited
unless it was first approved and authorized” by Ms Nixon;

o they needed to gather all information, details and documents relating to the
incident, and provide such information to Ms Nixon immediately; and

o responsibility for “investigating and addressing the incident” within the

defendants was “under the control of CEDA’s internal legal department”.

 Ms Nixon asserts that the above steps were taken “not only in contemplation of
anticipated litigation and for the dominant purpose of litigation but also in order to gather
and obtain information necessary for the purpose of providing legal advice to CEDA and
to eventually seek and receive legal advice from external legal counsel in respect of
anticipated litigation”. She says that she followed up with Mr Potvin and Mr Bailey
“many, many times” about whether they were complying with her “recommendations”,
but could not provide any specifics of such conversations.

 As far as the “Incident Bulletin” is concerned, Ms Nixon recalled “working on” a draft
Incident Bulletin at some unspecified time in February of 2009. In cross-examination,
Ms Nixon said the document was prepared both “by” her and “for” her, in that she
“requested that we have an investigation that we put together, gather the facts and we’d
have a place to put them all”. According to her, the document was “all drafted at [her]
instruction”, and the “overall preparation of the document” was in her “purview, so to
speak”. She says she told Mr Potvin and Mr Bailey that the document “was privileged
and could not be forwarded or set to any third party including anyone at NOVA”. She
asserts that the document “was created in contemplation of litigation, for the dominant
purpose to assist in such litigation and for the purpose of being used to give and receive
legal advice in connection with the incident”. However, she had no recollection
 - 12 -

whatsoever of when it was completed, (either exact or approximate), what she did with it,
or who she gave it to.

 In relation to witness statements from CEDA employees, Ms Nixon says that she spoke
with Mr Potvin about this at some unspecified date in February of 2009. In particular,

2014 ONSC 3995 (CanLII)

she says that she asked for “written statements from employees on site at the Corunna
Facility at the time of the incident”, and “written statements from any other CEDA
employees who had any knowledge of the Incident”. She says that she explained the
need for each statement to be obtained as soon as possible, and signed “in order to be
authenticated”. She also swears that she explained to Mr Potvin that the statements were
being obtained “in contemplation of litigation for the dominant purpose to assist in such
litigation and to give and receive legal advice”, and that they were “to remain privileged”,
with no permitted disclosure “to any third-party, including anyone at NOVA”. Ms Nixon
says she saw the four written statements before she left the defendants’ employment, but
had no knowledge of when she first would have received them.

 Based on the above, Ms Nixon asserts more generally that, if any disclosure of privileged
documents has occurred, that disclosure was not authorized by CEDA “to [her]
knowledge”, and was “contrary to [her] instructions”. At no time has she been “aware of
any evidence” that the defendants advised any third party of a waiver or intended waiver
of privilege with respect to such documents.

 In cross-examination, Ms Nixon confirmed that Brian Fitzmaurice was a Senior Vice

President in the CEDA organization, senior to Mr Potvin in the management hierarchy,
but less senior than the president Mr Rintoul. Ms Nixon could not recall having any
conversations with Mr Fitzmaurice about the incident, or whether her instructions had
been conveyed to Mr Fitzmaurice.

 Ms Nixon also indicated in cross-examination that she could not recall whether she was
aware of any efforts being made by Mr Potvin and Mr Bailey to meet with Mr Harrison
or Mr Cooper about the incident. Nor could she recall whether she had been made aware
of a meeting on March 20, 2009, between Mr Bailey, Mr Cooper and Mr Harrison.
However, she knew that Mr Potvin and Mr Bailey did attend the plaintiffs’ facility, with
her awareness, after she became involved and began communicating with the plaintiffs’
in-house counsel. Ms Nixon could not recall any disciplinary action being taken against
Mr Potvin or Mr Bailey as a result of their communications or interactions with the
plaintiffs.

 Ms Nixon also confirmed in cross-examination that, back in 2009, the defendants had a
“quality control” or “quality assurance” program in place. One purpose of the program
was to improve processes, including the taking of steps to avoid future incidents
involving performance issues. It was an operational program, not carried out under Ms
Nixon’s instructions.
 - 13 -

 Ms Nixon indicated her understanding that Mr Potvin was no longer employed by the
defendants, (although she did not know why or when he had left). She could not recall
whether Mr Bailey was still employed by the defendants when she left. There otherwise
was no evidence whatsoever before me to indicate whether or not Messieurs Rintoul,
Fitzmaurice, Bailey, Rankin, Ritchie and/or Morey were still with the defendants.

2014 ONSC 3995 (CanLII)

Analysis

[26] Before embarking on a more extended consideration of privilege and waiver that might
apply in the above circumstances, I make a general observation that the time and expense
obviously devoted to these motions, (unfortunately compounded by my inability to render a
finalized decision before now), seems largely unproductive and therefore regrettable.

[27] In particular, it seems to me that most of the information set forth in the 1½ page Incident
Bulletin, and in the 7 pages of witness statements, is simply factual information – including
known details of information provided by relevant witnesses, (regardless of whether they are
current or former employees of the defendants) - which the defendants would have been obliged
to disclose to the plaintiffs in any event during oral discovery examinations. See, in that regard,
Rule 31.06 addressing the scope of oral discovery examination, and authorities such as
Leerentveld v. McCulloch (1985), 4 C.P.C. (2d) 26 (Ont. Master); Tax Time Services Ltd. v.
National Trust Co. (1991), 3 O.R. (3d) 44 (Gen.Div.); Air Canada v. McDonnell Douglas Corp.
(1995), 22 O.R. (3d) 140 (Master), affirmed 22 O.R. (3d) 382, additional reasons 23 O.R. (3d)
156 (Gen.Div.). In other words, even if the documents themselves remain subject to an
unwaived claim of privilege, the defendants would be obliged to disclose much if not most of
their essential content, in compliance with other discovery obligations.

[28] The few remaining and relatively brief statements in the documents which are not strictly
factual, (e.g., indicating desired information not yet available, and interim precautions being
taken pending determination of causation), would appear to be relatively benign and
inconsequential, insofar as the merits of the litigation are concerned.

[29] Moreover, nothing done at this stage to limit formal reference to the documents
themselves can erase the reality that the plaintiffs have fully digested and no doubt will
remember their content, regardless of whether all copies thereof are returned or destroyed.

[30] In short, from a practical perspective, whether I find that the documents themselves must
be “formally” disclosed, (because they are not subject to an unwaived claim of privilege), or find
instead that the documents themselves should be treated as formally withheld pursuant to a valid
and unwaived claim of privilege, my ruling seems unlikely to alter the course of this litigation in
any material way.

[31] The hard fought motions before me therefore appear to serve little purpose, except to
underscore the parties’ inability and/or unwillingness to move beyond unproductive posturing on
both sides; (posturing that was all too evident during a number of unfortunate exchanges between
counsel during the cross-examination of Ms Nixon).
 - 14 -

[32] Notwithstanding these apparent realities, the parties obviously are entitled to a ruling on
the privilege and waiver issues formally raised by their motions.

[33] As emphasized by plaintiff and defence counsel during the course of submissions, the
parties did not really dispute the general law and principles governing such issues, (as opposed to

2014 ONSC 3995 (CanLII)

their suggested application in this instance).

[34] In relation to solicitor-client privilege, applicable general principles include the

following:

 Such privilege applies only to confidential communications between a client and his or
her solicitor. It exists at any time a client seeks legal advice from his or her solicitor,
whether or not litigation is involved. The interest underscoring the protection from
disclosure, of such communications, is the interest of all citizens to have full and ready
access to candid legal advice. The privilege is intended to allow the client and lawyer to
communicate in confidence. It is not intended to protect all communications or other
material deemed useful by the lawyer to properly advise his or her client. See General
Accident Assurance Co. v. Chrusz (1999), 45 O.R. (3d) 321 (C.A.), at paragraphs 23 and
127.

 It is incumbent on the party asserting such a privilege to establish an evidentiary basis for
it. See General Accident Assurance Co. v. Chrusz, supra, at paragraph 95.

 Such privilege requires that the communication must in fact be a communication between
a lawyer and client, for the purpose of seeking or obtaining legal advice, which was
intended to be confidential. If any one of these three characteristics is missing, then there
is no solicitor-client privilege. See Solosky v. Canada, [1980] 1 S.C.R. 821, at p.837;
Maranda v. Richer, [2003] 3 S.C.R. 193, at paragraph 42; Humberplex Developments
Inc. v. TransCanada Pipelines Ltd., [2011] O.J. No. 5876 (Master), at paragraph 20; and
Kaymar Rehabilitation Inc. v. Champlain Community Care Access Centre, [2013] O.J.
No. 1443 (Master), at paragraph 47.

 Each situation must be assessed on a case-by-case basis to determine if the circumstances

were such that the privilege arose. Whether or not the privilege will attach depends on
the nature of the relationship, the subject matter of the advice, and the circumstances in
which it is sought and rendered. In relation to in-house counsel, the privilege may arise,
but will not apply to situations where the lawyer effectively gives advice in an executive
or non-legal capacity; e.g., concerning matters of policy outside the realm of legal
responsibilities. See Pritchard v. Ontario, [2004] 1. S.C.R. 809, at paragraphs 19-20.

 Simply depositing a document with counsel, or supplying counsel with a copy of a

document, does not cloak the original document with privilege. The court must always
examine the underlying realities to determine whether the three basic criteria for solicitor-
client privilege have been established. Documents prepared for purposes other than the
seeking of legal advice will not attract solicitor-client privilege, even when supplied or
 - 15 -

copied to a lawyer. See Blank v. Canada, [2006] 2 S.C. R. 319, at paragraphs 49-50;
Humberplex Developments Inc. v. TransCanada Pipelines Ltd., supra, at paragraphs 41-
42, 49 and 53; and Kaymar Rehabilitation Inc. v. Champlain Community Care Access
Centre, supra, at paragraph 47.

2014 ONSC 3995 (CanLII)

[35] General principles relating to litigation privilege include the following:

 Litigation privilege applies to communications of a non-confidential nature between a

solicitor and third-parties. It applies only in the context of litigation itself, (actual or
contemplated). Its purpose is geared directly to the process of litigation and the needs of
the adversarial trial process; it is based upon the need for a protected area to facilitate
investigation and preparation of a case for trial by the adversarial advocate. However,
that need must be balanced with the competing need for disclosure to foster a fair trial.
See General Accident Assurance Co. v. Chrusz, supra, at paragraphs 23 and 33; and
Blank v. Canada, supra, at paragraph 27.

 Such privilege will apply only if a document was created for the dominant purpose of
preparing for litigation. If the purpose of preparation for litigation was secondary or
equal to another purpose, the privilege does not arise. See Waugh v. British Railways
Board, [1979] 2 All E.R. 1169 (H.L.), at pp.1173-1174; General Accident Assurance Co.
v. Chrusz, supra, at paragraphs 30-32; Blank v. Canada, supra, at paragraph 60; and
Lattanzo v. Jones, [1989] O.J. No. 88 (Dist.Ct.), at paragraph 8.

 A party asserting litigation privilege bears the onus of establishing the pre-requisites for
its application. In particular, such a party must not only establish that the document was
created for the dominant purpose of existing, contemplated or anticipated litigation, but
also that it was created: in answer to inquiries made by an agent for the party’s solicitor;
at the request or suggestion of the party’s solicitor; for the purpose of being laid before
counsel for the purpose of obtaining his or her advice; or to enable counsel to prosecute
or defend an action or prepare a brief. See Kennedy v. McKenzie, [2005] O.J. No. 2060
(S.C.J.), at paragraphs 16, 20 and 23; and Bartucci v. Lindsay, [2010] O.J. No. 3533
(S.C.J.), at paragraph 11.

 A determination of the dominant purpose for the preparation of a document is made by

assessing all of the circumstances at the time of the document’s creation. “Window
dressing” by counsel cannot create a purpose and a privilege that does not otherwise
exist. For example, counsel cannot create litigation privilege by the simple expedients of
advising the creator of a document that the sole purpose of the document will be
litigation, directing that the document be sent to counsel, channeling documents and
communications through legal counsel, and/or by simply copying or undertaking the
collection of documents. See General Accident Assurance Co. v. Chrusz, supra, at
paragraphs 36-37; Sobeys Land Holdings Ltd. v. Harvey & Co., [2002] N.J. No. 227
(T.D.), at paragraph 31; Friend v. Watters (2009), 178 A.C.W.S. (3d) 934 (Ont.Master),
at paragraph 10; and Sable Offshore Energy Inc. v. Ameron International Corp. (2012),
329 N.S.R. (2d) 205 (S.C.), at paragraphs 198-199.
 - 16 -

[36] In my view, the evidence offered by the defendants in support of their claims for
solicitor-client and litigation privilege is far from satisfactory, and neither has been made out in
relation to the documents in question.

[37] My reasons in that regard include the following:

2014 ONSC 3995 (CanLII)

 I agree with the general observation of Justice Edwards in Bartucci v. Lindsay, supra, at
paragraph 12, that a party bearing the onus of asserting privilege generally should put
something far more substantial before the court than bald and conclusory assertions as to
preparation for the purpose of obtaining legal advice, preparation in contemplation of
litigation, and/or dominant purpose, such as those set out repeatedly in Ms Nixon’s
affidavit. In my view, any strength of Ms Nixon’s sweeping assertions in that regard is
also undermined considerably by the general frailties in her evidence noted above, (such
as passage of time, failure and/or inability to refresh memory by reference to
contemporaneous documentation, and frequent lack of recall in relation to important
matters, such as why she may have requested preparation of the Incident Bulletin, or what
may have been done with it), and the adamant and repeated refusal of defence counsel to
permit any meaningful cross-examination in relation to those assertions.

 For similar reasons, the “Privleged (sic) and Confidential” heading applied to the Incident
Bulletin, although relevant to a determination of intentions regarding the document,
cannot be regarded as conclusive – particularly when one takes into consideration the
need to look behind possible “window dressing” to look at underlying realities, and the
fact that confidentiality alone, no matter how earnestly desired and clearly expressed,
does not make a communication privileged from disclosure. See Straka v. Humber River
Regional Hospital (2000), 51 O.R. (3d) 1 (C.A.), at paragraph 59.

 I readily accept that, as noted in Western Assurance Co. v. Canada Life Assurance Co.
(1987), 63 O.R. (2d) 276 (Master), at paragraph 17, privileged communications between
a client and lawyer certainly may include whatever one may say to the other as to matters
of fact, and that such content alone will not negate the possibility of privilege over the
document itself. However, the content of the Incident Bulletin and witness statements
includes little or nothing to suggest preparation for the purpose of obtaining legal advice,
or preparation in contemplation of litigation. Apart from Mr Bailey’s notation indicating
involvement of the legal department for the limited purpose of providing advice
concerning finalization of the Incident Bulletin, (discussed below), there appear to be no
references whatsoever to legal counsel or legal advice. Similarly, apart from the
references in Mr Bailey’s statement to Mr Fitzmaurice having received a telephone call
indicating that the plaintiffs were “going to sue”, (a call which fueled rather tempered
efforts by the defendants’ management personnel to diffuse the crisis through open
communication and voluntary exchanges of information), there also seem to be no
references to contemplated litigation and any need for corresponding preparation.
Instead, the content of the Incident Bulletin and statements is directed primarily to
recitation of facts, technical determination of causation, and the taking of precautions to
prevent similar incidents in the future. To me, all of this is entirely consistent with the
 - 17 -

workings of a “quality control” and “quality assurance” program, such as the one which
existed within the defendants’ business structure, outside the purview of its legal
department. It is also consistent with contemporaneous indications in the correspondence,
and similar indications in Mr Bailey’s statements, that the documentation really was
created from a business operations standpoint and for a business-oriented purpose; i.e.,

2014 ONSC 3995 (CanLII)

for the dominant purpose of preserving an important business relationship, preserving the
defendants’ commercial reputation with the plaintiffs and other customers, and heading
off any formal dispute by co-operative dialogue, the voluntary exchange of information,
and assurances regarding future practices and procedures. Through increasingly
aggressive and determined efforts, (not always met with enthusiasm by representatives of
the plaintiff whose time and attention were focused elsewhere), management of the
defendants were intent on demonstrating to the plaintiffs that they were concerned,
willing to help in addressing the problem, and capable of being trusted in the future. That
intention was openly and consistently expressed by the defendants’ commencement of an
active investigation, repeated communications and requests for communication, repeated
attendances and requests for meetings, and repeated promises and acts of voluntary
disclosure, (e.g., of the MSDS, chronology, Incident Bulletin, Leak Suppression Forms
and witness statements), both before and after involvement of the defendants’ lawyers.
Regardless of whether it conformed to any legal advice being received, I find that these
business and reputation maintenance goals were the consistently dominant purpose of all
the defendants’ management personnel known to have been involved in addressing the
situation.

 In relation to the Incident Bulletin, I am struck in particular by the fact that a sizeable
portion of the document is clearly directed towards the future, rather than the past; i.e.,
emphasizing the intention to implement, on a go-forward basis, various specified
technical precautions, compliance with the defendants’ mandated standards for
paperwork completion before and after jobs, and equipment checks. Placed in context,
the stated efforts to investigate causation of the incident experienced by the plaintiffs
seem driven by a desire to avoid any similar mistakes in the future. In “pith and
substance”, I think the document predominantly has the character of an “operations”
document, rather than one associated with any request for the provision of legal services
or preparation for litigation. This, and the plaintiffs’ stated desire to work co-operatively
with the plaintiffs to investigate the immediate problem, (echoed in the statements made
by Mr Bailey in the meeting that took place on March 20, 2009), are entirely consistent
with an intention to share the document with the plaintiffs and others, as part of the
defendants’ operational quality control investigation and “damage control” business
strategy – which, again, I find to have been the dominant purpose or purposes of the
document’s creation. I also think it very telling that, according to Mr Bailey’s statement,
a draft of the Incident Bulletin was shared with the defendants’ legal department
sometime in the period of February 4-6, 2009, for the purpose of receiving that
department’s suggestions and making corresponding changes. Common sense and a
consideration of legal ethics dictates a conclusion that the defendants’ lawyers were not
suggesting changes to reported facts, or the implementation of technical measures and
precautions outside the normal purview of legal expertise and capacity. A far more likely
 - 18 -

scenario is vetting of the draft Incident Bulletin by legal counsel, (e.g., to avoid formal
admissions of responsibility), prior to the document’s intended external circulation.
Such an intention is, by itself, sufficient to negate any solicitor-client privilege that
otherwise may have attached to the document.

2014 ONSC 3995 (CanLII)

 In relation to the witness statements, I am influenced by strong indications that the
statements actually were created in whole or in part prior to any suggestion of litigation,
and/or any involvement of the defendants’ in-house counsel, (which in turn supports a
finding that they were created for the same dominant purpose of quality control
investigation and business relationship or reputation preservation, rather than any
preparation for the purpose of obtaining legal advice and/or preparation for litigation).
In that regard:

o Mr Bailey’s statement indicates that, on January 27, 2009, (before the

involvement of Ms Nixon and her department, which admittedly occurred no
earlier than February of 2009), all technicians involved in the incident were
obliged “to sit and put on paper” the procedures that had been followed.

o A careful comparison of the written statements and the “Chronology” provided by

Mr Bailey to Mr Harrison later that afternoon, (on January 27, 2009), shows that
the Chronology frequently incorporates, in chronological order, wording similar
or identical to that employed in the written statements of Messieurs Rankin,
Ritchie and Morey. This in turn strongly suggests that the Chronology was
drafted by someone making reference to those written statements, the substantive
content of which therefore already had been prepared by the time the Chronology
was finalized and shared with the plaintiffs.

o The statement of Mr Bailey is typed, and contains dated chronological entries,

(more suggestive of a progressive log than a written “statement”). The entries
extend well into February of 2009. A number of those entries therefore describe
communications, events and developments which may have taken place after Ms
Nixon’s stated initial awareness of the incident sometime that month, and her
resulting involvement. However, the detailed entries prior to February of 2009
strongly suggest that Mr Bailey independently was maintaining a detailed log of
such information prior to any involvement or desired involvement of the
defendants’ legal department, or the receipt of any legal instructions relating to
any preparation for litigation.

o The handwritten statement of Mr Morey bears no signature and no date. The

handwritten statement of Mr Rankin bears a signature, next to which is written, in
brackets, “Dan Rankin, March 3/09”. The handwritten statement of Mr Ritchie
bears a signature, next to which is written “March 3/09”. The typed statement of
Mr Bailey bears, at the conclusion of the typed portions, a handwritten notation of
“Ted Bailey March 4/09”. The date notations are not only expressed in the same
manner, but in what clearly appears to the same handwriting; handwriting which
 - 19 -

obviously differs from the handwriting in the body of the Rankin and Ritchie
statements, but which seems to correspond to the handwriting used to write “Ted
Bailey” at the end of Mr Bailey’s statement.

o Ms Nixon suggested in cross-examination that she directed the preparation of

2014 ONSC 3995 (CanLII)

these witness statements. In her affidavit, however, she indicates that she
“requested” written statements from the relevant employees, and explained to Mr
Bailey that the statements “needed to be signed”.

o In my view, the evidence therefore strongly suggests that, by the time Ms Nixon
made her requests, the substantive content of the witness statements already had
been created, (for purposes other than the seeking of legal advice and/or
preparation for litigation), and that they simply were copied to Ms Nixon after a
coordinated effort made by Mr Bailey to add signatures to the various statements,
(including his own), next to which Mr Bailey then put date notations.

o Ms Nixon made have considered the statements, in fact already prepared, to be

necessary and useful for the purpose of providing her client with legal advice,
and/or in preparation for litigation. She may have collected them, and placed
them in the legal department’s file. However, that does not alter the fact that they
were not prepared in circumstances giving rise to any privilege.

[38] Even if I am mistaken in the above conclusions, and one or more of the documents in
question initially was covered by a valid claim of solicitor-client or litigation privilege, I am
satisfied that any such claim was waived by the defendants in the particular circumstances of this
case.

[39] More than 30 years ago, in S. & K. Processors Ltd. v. Campbell Avenue Herring
Producers Ltd., [1983] B.C.J. No. 1499 (S.C.), at paragraph 6, Justice McLachlin, (as she then
was), outlined the test for waiver as follows:

Waiver of privilege is ordinarily established where it is shown that the possessor

of the privilege: (1) knows of the existence of the privilege; and (2) voluntarily
evinces an intention to waive that privilege. However, waiver may also occur in
the absence of an intention to waive, where fairness and consistency so require.

[40] In R. v. Youvarajah (2011), 107 O.R. (3d) 401 (C.A.), at paragraphs 146-147, our Court
of Appeal expressly referred to Justice McLachlin’s decision with approval, while clarifying and
refining its own articulation of the test for waiver in the following terms:

An express waiver of privilege will occur where the holder of the privilege (1)
knows of the existence of the privilege and (2) voluntarily evinces an intention to
waive it … Despite these requirements, an implied waiver of … privilege may
occur where fairness requires it and where some form of voluntary conduct by the
privilege holder supports a finding of an implied or objective intention to waive it.
[Emphasis added.]
 - 20 -

[41] More recently, the same approach was emphasized in Ebrahim v. Continental Precious
Minerals Inc., [2012] O.J. No. 716 (S.C.J.), at paragraphs 23-24, where the court endorsed the
following summary, by the editors of The Law of Evidence in Canada, (3d ed.), of our law
relating to waiver of privilege:

2014 ONSC 3995 (CanLII)

It was once thought that certain requirements should be established in order for
waiver of the privilege to be established; for example, the older of the privilege
must possess knowledge of the existence of the privilege which he or she is
forgoing, have a clear intention of waiving the exercise of his or her right of
privilege, and a complete awareness of the result. But, as will be pointed out,
other considerations unique to the adversarial system, such as fairness to the
opposite party and consistency of positions, have overtaken these factors.

An obvious scenario of waiver is if the holder of the privilege makes a voluntary

disclosure or consents to disclosure of any material part of a communication. …

It has also been said that clear intention is not in all cases an important factor. In
some circumstances, waiver may occur even in the absence of any intention to
waiver the privilege. There may also be waiver by implication only.

Whether intended or not, waiver may occur when fairness requires it …

[42] In approaching the application of these general waiver principles to this particular case, I
am mindful of the principle that, where an ostensible privilege has been established, a party
seeking to set aside the privilege bears the onus of demonstrating why this would be appropriate
in the circumstances. See Smith v. Jones, [1999] 1 S.C.R. 455, at pp.474-475; General Accident
Assurance v. Chrusz, supra, at paragraph 170; and Kennedy v. McKenzie, supra, at paragraphs
21-23.

[43] However, I think the evidence filed by the plaintiffs makes it abundantly clear that the
circumstances of disclosure in this case are more than sufficient to support a conclusion of
express and/or implied waiver, in the sense required.

[44] In that regard, the facts of this case are far removed from those relied upon by the
defendants.

[45] For example, this is not a case like Airst v. Airst (1997), 37 O.R. (3d) 654 (Gen.Div.),
where correspondence between a client and his lawyer accidentally was included in material
forwarded to a third party valuator. At paragraphs 4 and 20 of the decision, the court made it
clear that the parties and their respective counsel agreed that the disclosure was inadvertent, and
there was “no issue” in that regard.

[46] Similarly, this is not a case comparable to Tilley v. Harris (1993), 12 O.R. (3d) 306
(Gen.Div.), where both parties to the shareholder dispute worked for the same corporate
employer, and a memorandum from one party, (expressly addressed from that party to his lawyer
about “clearly contemplated” litigation with the opposing party, and providing instructions
 - 21 -

regarding the lawyer’s conduct of that anticipated dispute), “fell into the hands” of the opposing
party when the company receptionist, who typed the memorandum for the party on company
letterhead, voluntarily but inappropriately delivered it to the opposing party. The confidential
nature of the communication was “apparent on its face”, and the court could find no evidence of
any “clear and conscious intention on the part of the applicant to waive privilege or to consent to

2014 ONSC 3995 (CanLII)

the production of the document”. At paragraphs 15 and 22 of the decision in particular, the court
emphasized its view that the case therefore was governed by authorities “where such
communications are disclosed either inadvertently or through improper conduct”, “without the
consent of the client”, and that “the surreptitious delivery of confidential material cannot be
sanctioned”.

[47] Nor is the situation before me akin to that in Agrico Canada Ltd v. Northgate Insurance
Brokers Inc., [1994] O.J. No. 2334 (Gen.Div.). In that case, without the plaintiff’s knowledge or
authorization, an investigator employed by an underwriter of the plaintiff’s insurer created a
memorandum containing sensitive information, failed to create and maintain a separate file for
such information, and inadvertently disclosed that document to another investigator in violation
of “Chinese Wall” arrangements that should have been in place. By further “pure inadvertence”,
the memorandum was in turn then included in a brief of documents circulated during a discovery
examination. At paragraph 19 of the decision, the court noted that “because of the total
inadvertence” of the document’s delivery during the discovery examination, all counsel agreed
that “such an act did not constitute waiver of any privilege which may have existed in the
memorandum”. At paragraph 37, the court also found that the plaintiff’s original privilege over
the information could not be lost through the unknown and “inadvertent” conduct of a third
party, acting “without permission”, and “without being cloaked in any guise of ostensible
authority”. [Emphasis added.]

[48] I also think it inappropriate to characterize this case as similar to that of Elliot v. Toronto
(2001), 54 O.R. (3d) 472 (S.C.J.), where a city council’s privileged solicitor-client
communications made their way into the hands of reporters, without any evidence as to whether
they were inadvertently given to reporters by city staff or deliberately leaked, and where the
unauthorized nature of any such disclosure, (even by a single councilor), was definitively made
clear by applicable legislation. In such circumstances, the court relied on authorities
emphasizing the need to discourage “underhanded and improper conduct” to obtain unauthorized
disclosure.

[49] In the case before, the uncontroverted and unchallenged evidence tendered by the
plaintiffs makes it abundantly clear that, contrary to the suggestions of defence counsel, there
was absolutely nothing “surreptitious”, “inadvertent” or “unintended” about Mr Bailey’s actions
in supplying Mr Harrison and Mr Cooper with copies of the Incident Bulletin and witness
statements made to the plaintiffs.

[50] According to the evidence before me, Mr Bailey quite deliberately meant to give those
particular documents to the plaintiffs.
 - 22 -

[51] Mr Bailey was not some type of external third party, who had happened to acquire the
defendants’ documentation. He obviously was in the direct employ of the defendants.

[52] Nor was Mr Bailey some form of low level clerical employee. To the contrary, he was
not only the defendants’ Division Manager, but also someone clearly charged and entrusted with

2014 ONSC 3995 (CanLII)

a large measure of “damage control” responsibility by even more senior management personnel
of the defendants; i.e., Mr Potvin, (Director of the defendants’ Canadian operations), and Mr
Fitzmaurice, (a Senior Vice-President in the defendants’ organization). With their knowledge
and encouragement, Mr Bailey was contacting and meeting with representatives of the plaintiffs
to engage in co-operative dialogue and the voluntary exchange of information – all with a view
to preserving a business relationship with the plaintiffs, maintaining the reputation of the
defendants, and heading off the threatened possibility of litigation.

[53] In short, Mr Bailey clearly was cloaked with ostensible authority when he deliberately
and unconditionally supplied the Incident Bulletin and witness statements to the plaintiffs.

[54] All of this is sufficient, in my opinion, to meet the plaintiffs’ onus of establishing that the
defendants intended to waive any privilege in the documents.

[55] To avoid such a conclusion, it is not enough, I think, for the defendants to rely on Ms
Nixon’s somewhat vague evidence of undocumented earlier standing directions from the
defendants’ president, (to the effect that matters of a legal nature generally should be entrusted to
in-house counsel, and that the recommendations of in-house counsel generally should be
followed), or her evidence of later advice and instructions given by her to Mr Bailey and Mr
Potvin in relation to this particular matter.

[56] The reality is that clients are not bound to follow the advice of their legal counsel, and do
not always do so.

[57] The same is true where the client is a corporation, being advised by in-house counsel.
Those ultimately in charge of the corporation may well decide, in relation to a particular matter,
and despite the recommendations of in-house counsel, that the corporation’s broader business
interests would best be served by strategies not entirely consistent with the strict assertion of
legal rights and entitlements at every turn.

[58] In this case, senior management of the defendants, (including Mr Fitzmaurice and Mr
Rintoul), may or may not have been aware of Ms Nixon’s advice, and/or have specifically
authorized the taking of certain actions in this particular case despite her advice and
recommendations.

[59] Defence counsel essentially suggested that Mr Rankin, Mr Bailey, Mr Potvin and/or Mr
Fitzmaurice, even if cloaked with ostensible authority, must have “gone rogue”, disclosing or
directing disclosure of the documents in question without actual authority and contrary to
binding instructions.
 - 23 -

[60] However, I agree with the submission of plaintiff counsel that, if the defendants intended
to counter the plaintiffs’ evidence with such a suggestion, it was incumbent on the defendants to
tender direct evidence to that effect from those immediately involved, or indicate why such
evidence may not be available.

2014 ONSC 3995 (CanLII)

[61] In that regard, various authorities confirm that, in civil disputes, an adverse inference may
be drawn against a party who fails to adduce material evidence without satisfactory explanation.
See, for example: Pizza Pizza v. Gillespie (1990), 75 O.R. (2d) 225 (S.C.J.), at p.238; and Walek
v. Guardian Storage Inc., [2010] B.C.J. No. 491 (S.C.), at paragraph 46.

[62] In particular, as noted in Misco Holdings Inc. v. Bank of Nova Scotia, [2010] O.J. No.
4814 (S.C.J.), at paragraphs 51-52:

In the absence of an explanation, the Court can draw an unfavourable inference

when a defendant does not testify, or from the failure of the defence to call a
witness who would have knowledge of the facts and would be assumed to be
willing to assist that party.

The failure of the Defendant to produce any witness with knowledge of the
matter, who might have more accurate information as to the events [involved], or
of the defence to call them as material witnesses, where this Court was not told
those individuals were no longer employed with the Defendant, amounts to an
implied admission that the evidence of those absent witnesses would be contrary
to its case, or at least would not support it.

[63] In this case, apart from a passing indication by Ms Nixon in cross-examination that Mr
Potvin may no longer be employed by the defendants, for reasons unknown, no evidence has
been provided to suggest that the other defendant personnel involved in this matter, (Messieurs
Rankin, Bailey, Fitzmaurice and Rintoul), are no longer with the defendants and/or that their
evidence is not available.

[64] Instead of providing direct evidence from those individuals as to whether or not the
relevant disclosures were in fact authorized by management on this particular occasion, (with the
individuals then being exposed to appropriate cross-examination), the defendants chose instead
to tender evidence only from their former in-house counsel, whose ability to address such
matters was inherently limited.

[65] In my view, the appropriate adverse inference to be drawn is that Mr Bailey, Potvin and
Mr Fitzmaurice were given actual authority to do what they did in this particular case,
notwithstanding any general directions that may have been issued in the past, and/or the legal
advice given in relation to this particular matter by Ms Nixon.

[66] Beyond such considerations, determinations regarding alleged waiver of privilege also
involve, as noted above, more general considerations of fairness.
 - 24 -

[67] In the situation now before me, I think acceding to the submissions of the defendants
would be unfair to the plaintiffs, in that it would deprive them of the ability to make continued
use of evidence which came into their possession, without any fault or improper conduct
whatsoever on their part, long before the plaintiffs’ ultimate decision to proceed with
commencement of formal and expensive high stakes litigation.

2014 ONSC 3995 (CanLII)

[68] In particular, as in the case of Bennett Mechanical Installations Ltd. v. Toronto, [2001]
O.J. No. 1777 (S.C.J.), this is a case where the documents in question have been in the plaintiffs’
possession for quite some time; i.e., over 5 years now, (with well over 4 years passing between
receipt of the documents and the defendants’ first indication of an intention to assert a claim of
privilege in that regard). The documents in question have been reviewed, digested and studied
at length by the plaintiffs and their counsel, and the effect of waiver cannot easily be eradicated.

[69] If there was ever a valid basis for assertion of privilege over the Incident Bulletin and/or
witness statements, any such claims therefore should be treated as having been irrevocably
waived by the defendants.

Conclusion

[70] For the reasons outlined above, the plaintiffs’ motion is granted, insofar as the relief
requested at sub-paragraphs 4(c) and 4(d) of the plaintiffs’ notice of motion is concerned, and the
defendants’ motion is dismissed.
 - 25 -

Costs

[71] Because my decision was reserved, the parties were unable to make any submissions
regarding costs of the parties’ motions. If the parties are unable to reach an agreement on costs
in that regard:

2014 ONSC 3995 (CanLII)

a. the plaintiffs may serve and file written cost submissions, not to exceed five pages in
length, (not including any bill of costs), within three weeks of the release of this
decision;

b. the defendants then may serve and file responding written cost submissions, also not
to exceed five pages in length, within three weeks of service of the plaintiffs’ written
cost submissions; and

c. the plaintiffs then may serve and file, within two weeks of receiving any responding
cost submissions from the defendants, reply cost submissions not exceeding two
pages in length.

[72] That extended timetable seems advisable on an exceptional basis, given the time
of year and the possibility that counsel and/or their instructing principals therefore may not be
readily available.

[73] If no written cost submissions are received within three weeks of the release of
this decision, there shall be no costs of the motions.

“Justice I. F. Leach”
Justice I. F. Leach

Released: July 9, 2014