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Catch 22 or catch 30 Million? One lawyer’s dilemma

Catch 22 or catch 30 Million? One lawyer’s dilemma
This case touches upon a narrow procedural rule in Family Court, but it bears a unique set of facts involving a husband and wife who reunited after getting divorced, the husband suing the wife’s lawyer for defamation, the lawyer being  caught between a rock and hard place, a judge who overstepped his mandate …. oh, and a secret $30 million lottery win by the husband.

The husband and wife started living together in 1994, married in 1998, and divorced in 2004. The divorce was not defended by the wife, but it turns out the husband was concealing a $30-million lottery prize from her, so she claimed that she was duped into not defending.

The wife accordingly retained a lawyer to represent her in a matrimonial action to re-negotiate the terms of the divorce and equalization so that it included her claim for part of the lottery prize. Toward that end, she provided her lawyer with a number of documents, but the matrimonial litigation was settled prior to trial. The documents – which included Affidavits, 119 CDs of recorded conversations, and medical records – remained in the lawyer’s possession.

It appears that after settling, the parties reconciled their relationship. Because of the large lottery win the case garnered some media attention and was the subject of a story in the Globe and Mail newspaper. The wife’s lawyer was interviewed for the article, and was quoted as saying that the husband’s version of the facts was a perjured one. The husband sued the wife’s lawyer for defamation (along with the Globe and Mail, and its publisher, the reporter, and the editor-in-chief).

In order to defend himself against that defamation action, the wife’s lawyer wanted to use the documents that he had been given by the wife, and which were still in his possession.

Technically, however, the lawyer’s hands were tied: under what is known as the “deemed undertaking rule”, the justice system imposes a stipulation that certain documents, evidence or information produced by a person for one proceeding (here, the matrimonial litigation) will not be used for a different proceeding (the defamation action). Indeed, this principle has been embodied in the Rules that govern Ontario court proceeding, although there can be an exception in cases where the person’s privacy interests are outweighed by the need to do justice between the various parties.

The wife refused to waive her right to insist on application of the deemed undertaking rule, so the lawyer brought the matter before a motions judge, who first of all held that some of the documents simply did not fall within the category of information to which the deemed undertaking rule would apply. That part was easy enough.

However, for certain other documents, the court noted the lawyer was in a quandary: he had to honour the deemed undertaking rule, but for the purposes of the defamation action (and pursuant to yet another court Rule) was also required disclose any documents that were in his possession, control or power. These two Rules essentially contradicted each other in this case.

So the motions judge devised a plan which he called an “escape route”: he ordered the lawyer to simply return the contentious documents to the wife (which rendered them unavailable to the lawyer for his defamation action). The lawyer appealed that order.

The Court of Appeal – applying the relevant Rules of court – held that the deemed undertaking did not apply to the evidence at all; the specific documents in issue simply did not fall within the category of materials to which the Rule is stated to apply.

More importantly, the Appeal Court also found that the motion judge’s directive to have the lawyer return the documents to the wife – as part of the “escape plan” – was not appropriate. This was not a remedy that had been requested by any of the parties, and it was in appropriate for the motions just to have ordered it. Simply put, the motion judge was not entitled, of his own accord, to craft a remedy that had not been asked for.

The motion judge’s order was set aside.

(No word on how the husband intended to spend the $30 million, though).

For the full text of the decision, see:

Sobeski v. Mamo, 2012 ONCA 560   http://canlii.ca/t/fsh03