Quebec Superior Court hands down important judgment with regard to solicitor-client privilege

Franchises le Biftèque inc. c. 2532-6976 Québec inc., 2010 QCCS 4552.

On September 30, 2010, the Honourable Guy Cournoyer, J.C.S. of the Superior Court of Quebec released a judgment that for the first time in the province recognizes that a party implicitly renounces its claim to solicitor-client privilege when it invokes its state of mind in proceedings. The judgment found that the party not only renounces the privilege of the counsel being sued but of all others lawyers who may have given advice on an issue relevant to the state of mind of the party.

The history of the dispute dates back to 2005 when Michael Seltzer sold a number of companies that operate under the name "Le Biftheque". A Quebec numbered company and Seltzer Management Services Inc., both indirectly owned by Mr. Seltzer, owned the rights to Le Biftheque franchise. In 2007, Mr. Seltzer signed documents approving the sale of Le Biftheque Restaurant in the Sheraton Hotel in Toronto, which had not been part of the original 2005 transaction. The complainants alleged that the sale was concluded with the advice of Robert Raich and his law firm Spiegel, Sohmer Inc. even though Mr. Raich had a conflict of interest because he was also acting for other interested parties in the transaction.

In their defence, Mr. Raich and Spiegel, Sohmer Inc. alleged that Mr. Seltzer had consulted two other lawyers from two other law firms which gave him advice on the risks and advantages of signing the sale documents. During Mr. Seltzer's examination, a number of questions were asked and documents requested relating to the advice received from the two other law firms. A request was also made to examine one of the lawyers who had given advice. Mr. Seltzer recognized that in suing Mr. Raich and Spiegel, Sohmer Inc. he had renounced to the privilege owed by the attorneys sued but argued that he did not renounce to the privilege of other lawyers who may have given advice on the same issue.

The Court held that by institution the action and implicitly putting in question his state of mind when signing the sale documents, Mr. Seltzer had implicitly waived any claim to solicitor-client privilege for the two other law firms who had given advice that may have affected Mr. Seltzer's state of mind when signing the sale documents.

Justice Cournoyer found in favour of the defendants and dismissed the objections based on solicitor-client privilege.

Stéphanie Lapierre of Fasken Martineau is counsel to the defendants Robert Raich and Spiegel, Sohmer Inc. in these proceedings.