Solicitor-Client Privilege Waived by Discussing Bills with Owners

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A few weeks ago I spoke as part of a panel at CCI National’s Conference. The case that I spoke about was a decision of the Ontario Condominium Authority Tribunal (CAT) about solicitor-client privilege. Given the frequency at which I see clients inadvertently waive solicitor-client privilege, I thought it might be good to review the case in this post.

The Facts

The case was an appeal from a decision of the CAT. The owner requested copies of all legal bills referencing his own unit. He made the request after the condominium wrote a letter to all owners concerning legal expenses that it had incurred. In the letter the condominium suggested that a “small group of owners” was responsible for the increased legal fees. The Tribunal adjudicator found that, given the size of the building, it was reasonable to assume many if not most of the unit owners knew the members of the small group who caused the legal costs to be incurred.

The letter described the board’s efforts to manage the increased legal costs for record requests since the amendments were made in November of 2017. It blamed the small group for trying to micromanage and undermine the efforts of the board by “abusing their right to records”. The letter explained that each of the 28 requests required input from legal counsel and suggested that the condominium had spent $17,698.71 in legal costs to review the records requests that could have been used on other projects. The board acknowledged the right to request records, but strongly objected to fishing expeditions.

Tribunal

The condominium denied the request on the basis of common law solicitor-client and litigation privilege. It also relied upon s.55(4)(b) of the Condominium Act, 1998, which relates to records related to actual or contemplated litigation. The Tribunal concluded that the condominium was required to disclose the requested records because it had waived privilege by sending the letter to all owners. The Tribunal adjudicator ordered the condominium to produce the legal invoices but it could redact any reference to the substance of legal advice.

Appeal

The condominium appealed the decision. The Divisional Court concluded that the CAT adjudicator did not err in law when she determined that the condominium waived privilege to the legal invoices. The appeal was dismissed and the condominium paid the owner $10,000 toward his legal costs.

The Divisional Court decision focuses primarily on waiver of privilege. It reaffirmed basic principles about solicitor-client privilege, such as solicitor-client privilege resides in the client and may only be waived by the client. Waiver of part of a communication may be held to be waiver of the entire communication. Given the scope of information contained in the condominium’s letter to all owners, it was appropriate to conclude that the condominium had waived privilege over the individual bills documenting the legal expenses incurred. By permitting redaction of the legal advice contained in the bills, the adjudicator protected the privileged advice itself.

The Divisional Court also upheld the decision in relation to the Condominium Act, 1998, finding that subsection 55(6) of the Act should be read as consistent to common law principles of waiver. This includes the principle that when some disclosure of a protected document has occurred, fairness and consistency may require that the remainder of a communication be disclosed.

Takeaways

Condominiums must be careful when discussing or disclosing anything related to advice sought from the condominium’s lawyer, including invoices or the subject-matter of advice sought. This is especially true where there is ongoing litigation or contemplated litigation.

I still see clients sending entire unredacted invoices to owners when charging the costs back to the owner for non-compliance of some sort. Stop that. Condominiums should either redact the entries that contain the privileged information or ask the lawyer to provide an invoice without any detail (i.e. just the total owing). Once you send that invoice out you will have waived privilege to it and possibly any advice described within the invoice. If you have any doubts about which records and information may be privileged ask the lawyer involved.

Can Unit Owners Examine Opinions or Invoices from the Condominium’s Lawyer?

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Owners are entitled to examine records of the condominium. Subsection 55(3) of the Condominium Act, 1998, gives owners the right to examine or obtain copies of the condominium’s records, subject to certain limits described in subsection 55(4). Subsection 55(4) excludes certain records, including records related to other owners or units and records “relating to actual or contemplated litigation”. These provisions are designed to balance the competing interests of the owners and protect the condominium’s interests. Continue reading

CAT Says Being Self-Managed is Not an Excuse

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In a recent decision the Condominium Authority Tribunal (CAT) was asked to rule on an owner’s request for records. The owner requested several records, including audited financial statements, budgets, board meeting minutes, AGM minutes, the most recent PIC, by-laws, employment agreements with any directors, and management contract. The condominium suggested that many of the issues raised by the owner were due to the condominium being self-managed. Spoiler: this was not a reasonable excuse for not providing records. Continue reading

Modified Record Request Process

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We hear complaints about the new record request process regularly from our clients and owners. The process is cumbersome with the new prescribed forms and timelines. The process takes longer than it did before in many cases (in part because it takes time for people to fill out the forms correctly). Many clients are confused about when they can and cannot charge the requester for labour and copying charges. All of these feelings are completely normal.

The regulations are confusing. Parts described in ten pages could have easily been described in one or two pages if charts were used instead of long, repetitive paragraphs referring the reader to check various other sections of the Act and regulations before they can determine the answer to what was a seemingly straightforward question. Before you know it you’ve spent 20 minutes trying to figure out the answer to a question that used to take 2 minutes.

There is a solution to all your record request problems: The condominium and owner can agree to modify the process. Hooray! Continue reading

The Black Hole of Record Requests

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Many good managers and directors have been pulled into the black hole that is record requests under the amendments to the Act. Since November 1, 2017 there is a new process for requesting records and providing copies or access to them. Unfortunately, the new process is complicated and time-intensive, which will likely to lead to more disputes than the old process.

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The Condo Act Forms are Available!

fireworksThe moment we have all been waiting for is almost here! The first phase of amendments to the Condominium Act, 1998, come into force on November 1, 2017. For weeks we have all been speculating as to whether the implementation date would be delayed again or not. The main reason? We didn’t have the forms yet. Well, guess what? On Tuesday afternoon the forms were released!!  Continue reading

Reg#2 Released for Comment

feedbackAs you probably know by now, the government intends to release draft regulations to go along with the amendments to the Act. The purpose of releasing the draft regulations is to allow for public comment. The first draft regulation, which was released in December, addressed the mandatory licensing of managers.For the first draft regulation, the deadline for comments has passed.

The second draft regulation, which was released this week, is aimed at common condominium issues: communications from condominiums to owners and mortgagees; mandatory disclosures and training for directors; meetings and voting; and record retention and access to records. The government posted the full draft regulation and a reader-friendly version on its website. The deadline for public comments for the second draft regulation is March 30th, 2017. In the next few posts, I’ll describe some of the key features of the second draft regulation.

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