Executive Summary: Key Legal and Evidentiary Issues

• Whether emails involving David Wu’s counsel and various TAC/NEP/CIBC-related individuals met the strict test for solicitor-client privilege as a predicate to any claim of common interest privilege.
• Adequacy of evidentiary foundation where the defendants asserted privilege without affidavits, relied on bare assertions in their factum, and offered only limited, non-specific transcript excerpts to support their privilege claims.
• Scope and limits of commercial “common interest privilege” in complex corporate financing and transaction structures, including whether non-party advisors and corporate actors shared a sufficiently mutual legal interest in closing the Purchase and Sale Agreement.
• Discoverability of a joint defence tolling agreement (JDTA) and whether such an agreement, allegedly affecting discovery and limitation rights, must be disclosed because it alters the litigation landscape or may affect the quality and motivations of witness evidence.
• The plaintiff’s entitlement to more complete discovery through an order compelling production of unredacted Schedule A and B documents and the JDTA, with only narrow monetary redactions permitted.
• The obligation of defendant David Wu to answer a key outstanding advisement (Advisement #39) by identifying specific documents relied upon to conclude that NEP, rather than mezzanine lenders, required termination of the OCEF option rights.

Background and parties

The litigation arises from a commercial dispute in the Ontario Superior Court of Justice, where Ottawa Credit Exchange Limited (OCEL), as assignee of OCEF Corp., sues David Wu and Opus Fitness Investments Inc. over a failed investment structure tied to a fitness club chain originally known as TAC, later reorganized as Movati Athletic Group Inc. OCEF commenced the action in November 2014, claiming $18 million in damages and later assigning the claim to OCEL in November 2022. The matter before Associate Justice Perron is not the trial of the main claim, but an interlocutory motion over privilege, production, and an outstanding discovery advisement.

Facts and transactional context

The core underlying transaction is an Option Agreement entered in March 2014 in connection with a loan from OCEF to Opus. Under that agreement, OCEF received stock options that could give it an ownership stake in what became Movati. In July 2014, the parties executed a Purchase and Sale Agreement (PSA) by which Opus repurchased the OCEF options and related rights. OCEF now seeks to rescind the PSA and related agreements, alleging that the defendants deprived OCEF of the chance to exercise its option by failing to disclose a contemplated sale of TAC to a third-party investor, NEP. The plaintiff says that, had it known about the NEP transaction, it would have exercised the option and would not have agreed to the PSA. The period from May 2014 to August 1, 2014 is critical, both because it coincides with negotiations leading to the PSA and because it is the time frame for the redacted Schedule A and B communications over which the defendants asserted common interest privilege. During this period, TAC and related entities were engaged in a complex financing and restructuring, including a management buyout of shareholder Al Quesnel, raising new capital, securing additional financing from CIBC and mezzanine lenders, and contemplating or negotiating investment by NEP. The plaintiff accepts that it knew TAC was raising funds for the Quesnel buyout, opening new clubs and that CIBC would fund the buyout, but maintains it was never told about NEP’s prospective investment and the steps that would affect the value of its option.

The motion and documents in dispute

On this motion, OCEL sought three main forms of relief. First, it asked for production of the redacted Schedule A and Schedule B documents, which were emails from or involving Mr. Wu’s lawyer, John Groenewegen, on which various TAC and financing actors (such as TAC’s CFO, Dan Pompilii; counsel for TAC shareholders, Michael Stevenson; TAC CEO, Chuck Kelly; CIBC counsel, Ken Rosenstein; and others) were copied. Second, OCEL asked for production of a joint defence tolling agreement (JDTA) said to have been entered around April 25, 2016, when Mr. Pompilii, Mr. Kelly and a corporate Movati entity were released from the action as part of settlement motions. Third, OCEL sought an order requiring Mr. Wu to answer one remaining disputed discovery item—Advisement #39—relating to which materials led him to conclude that NEP, rather than mezzanine lenders, insisted on termination of the OCEF option. The defendants filed a factum but no responding motion record and no affidavit evidence. They argued that the Schedule A and B communications were properly redacted because they were subject to solicitor-client privilege preserved by common interest privilege among Mr. Wu, Opus, TAC and certain shareholders, lenders and advisers, all said to be aligned in completing the PSA and correcting what they regarded as an error in the original Option Agreement. They also resisted production of the JDTA, characterizing it as privileged, irrelevant and not required for production, and disputed the need to answer Advisement #39 beyond Mr. Wu’s existing general description.

Legal framework on solicitor-client and common interest privilege

The court set out the applicable law on solicitor-client privilege as a predicate to any claim of common interest privilege. For communications to be protected as solicitor-client, they must be between lawyer and client, for the purpose of seeking or providing legal advice, and intended to be confidential. The judge emphasized that, while courts often infer these elements when a communication is clearly between a lawyer and client with no third-party circulation, such inferences are not readily available when the communication appears on its face to include independent third parties, particularly where those third parties are separately represented. In those circumstances, the party asserting privilege bears an evidentiary burden to establish that the shared communications still fall within the protected continuum of legal advice and confidentiality. The decision also reviewed the principles of common interest privilege in commercial transactions, including that: it is not a stand-alone privilege; it presupposes underlying solicitor-client privilege; it applies only where parties share sufficient common legal interest (often in completing a transaction) and intend confidentiality; and it is deeply fact-specific. Common interest privilege can extend to advisory teams and non-parties to the primary contract, but only where evidence shows they are genuinely working together in a coordinated way to obtain or facilitate legal advice on a confidential basis in respect of a defined transaction.

Failure to establish solicitor-client privilege over the emails

The judge focused first on whether the defendants had demonstrated that the disputed Schedule A and B communications were themselves protected by solicitor-client privilege. On their face, many of the emails were not simply bilateral communications between Mr. Wu and his counsel. Some excluded Mr. Wu altogether and involved exchanges between counsel and TAC’s CFO or other actors. There were no affidavits from Mr. Wu, his lawyer, or any recipient explaining the nature, purpose or confidentiality of these communications. The defendants relied instead on contextual inferences from transactional documents and limited transcript excerpts from the examinations of Mr. Pompilii and Mr. Kelly. Those excerpts, however, largely described the overall financing and restructuring efforts rather than detailing any role in giving or facilitating legal advice to Mr. Wu or Opus, and they did not speak to instructions, confidentiality protocols or advisory roles vis-à-vis Mr. Groenewegen. The court was critical of the defendants’ factum, which contained sweeping assertions that the communications formed part of a solicitor-client advice continuum and were not mere status updates or factual exchanges, but did not include pinpoint references to evidentiary support. Nor did Mr. Wu provide sworn evidence; his brief statement in an undertakings chart that the redacted words were communications for providing legal advice on a common interest among multiple entities was treated as a bald assertion, insufficient to prove privilege. In this evidentiary vacuum, and given that the communications were widely shared and sometimes did not even include the ostensible “client,” the judge refused to presume that they entailed legal advice or that they were intended to be confidential. Without proof of underlying solicitor-client privilege, the defendants could not satisfy the threshold requirement for invoking common interest privilege.

Additional obstacles to common interest privilege

Even assuming some solicitor-client privilege could be shown, the court identified further problems with the defendants’ common interest claim. The defendants’ description of the relevant “transaction” shifted over time: at various points it was said to be the NEP-related deal, then the Option Agreement and PSA, and later, more narrowly, the negotiation and completion of the PSA plus related reorganization steps. This morphing narrative undermined the reliability of their position. The evidence also showed that several separate but closely timed commercial steps occurred after the PSA, including NEP’s financing of the management buyout, amalgamation of TAC to form Movati, NEP’s option and loan agreements with numbered corporations, and other financing moves. Against that backdrop, and without concrete evidence of a shared legal strategy, the judge was not prepared to infer that all individuals copied on the communications had a sufficient mutual legal interest specifically in closing the PSA, as opposed to pursuing their own overlapping but distinct commercial objectives. The court stressed that the mere existence of a commercial transaction—and a general desire to see deals close—is not enough to establish a common legal interest for privilege purposes. In the result, even on the broader privilege test, the defendants failed to demonstrate that the communications fell within a protected common interest framework.

Order to produce Schedule A and B documents

Because the defendants did not prove that the disputed emails were protected by solicitor-client privilege or by common interest privilege, the court ordered that the redacted Schedule A and Schedule B documents be produced in unredacted form, as identified in Tab 11 of the plaintiff’s motion record. The decision applies globally to all affected documents, as an item-by-item review was not practical and the outcome of the legal analysis was determinative across the set.

The joint defence tolling agreement and disclosure obligations

The second major issue concerned the joint defence tolling agreement entered on April 25, 2016, the same day some former defendants (including Mr. Pompilii, Mr. Kelly and the Movati entity) were released from the action via settlement motions. The defendants conceded that the JDTA was separate from the tolling agreement with OCEF and from any common interest agreement, but maintained that beyond acknowledging its existence they had no obligation to disclose it, asserting vaguely that it was privileged and irrelevant. They argued that the JDTA affected only discovery rights and limitation periods, not the “litigation landscape.” The court disagreed. Drawing on appellate authority, the judge noted that any agreement that changes the adversarial posture of parties into a cooperative one, or that may affect the quality, motivation or apparent neutrality of witnesses, must be disclosed notwithstanding confidentiality clauses. Cooperation or tolling agreements may fall within common interest privilege in content, but that privilege must yield where fairness to the trial process requires disclosure, particularly if the agreement contains evidentiary arrangements, releases, covenants not to sue, reservations of rights, or terms that make the true adversarial alignment of parties different from what the pleadings suggest. In this case, the timing of the JDTA—coinciding with settlement and removal of certain defendants—persuaded the court that it did alter the litigation landscape. The defendants’ description suggested it governed discovery rights and limitation issues, implicating evidentiary arrangements and reservations of rights. The judge also noted that the defendants had indicated a willingness to produce a redacted version, which undercut their position that the agreement was entirely irrelevant and privileged. In light of these considerations, the court ordered production of the JDTA, subject only to redaction of any specified monetary amounts paid under the agreement, rejecting broader redactions that would prolong production disputes.

Advisement #39 and the duty to identify relied-upon documents

The final issue concerned Adversiment #39 arising from Mr. Wu’s examination. He had originally testified that he was told mezzanine lenders required termination of OCEF’s options, but later, “based upon a review of the productions in this litigation,” concluded that it was NEP that required termination. The plaintiff asked him to identify which documents in the productions led to this revised conclusion and to produce any such documents not already disclosed. Mr. Wu responded that he did not rely on any specific document and had simply reviewed “documents in the record that appear to demonstrate NEP’s dissatisfaction” with the Option Agreement. The court found this answer inadequate. Given that cancellation of the Option Agreement is a central liability issue, and that Mr. Wu himself stated that his conclusion was informed by documents in the record, fairness required that he identify which documents he had in mind. Simply telling the plaintiff to search a large database for anything showing NEP’s dissatisfaction was unreasonable, especially if some of the documents might be privileged and thus invisible to the plaintiff. The judge therefore ordered Mr. Wu to answer the advisement by pinpointing the specific documents in the productions that informed his conclusion and, where he relied on any unproduced documents, to produce those as well.

Outcome and implications

In conclusion, the court granted the plaintiff’s motion in full. Within 30 days, the defendants must provide unredacted versions of the Schedule A and Schedule B documents over which they had asserted common interest privilege, produce the JDTA subject only to redaction of monetary compensation terms, and cause Mr. Wu to respond properly to Advisement #39 and produce any additional documents thereby engaged. The court reserved on costs, setting a timetable for short written submissions from both sides and a brief reply from the plaintiff, leaving any costs award to a later determination. As a result, while OCEL (as assignee of OCEF) is the successful party on this discovery and privilege motion, no specific monetary sum—whether for costs or damages—was fixed or ordered in its favour in this decision, and the total amount ultimately recoverable remains to be determined in further costs rulings and at the resolution of the underlying $18 million claim.