Peoples Trust Company c. Berger

2022 QCCS 2958

SUPERIOR COURT

(Civil Division)

CANADA

PROVINCE OF QUÉBEC

DISTRICT OF MONTREAL

No.:

500-17-109876-196

DATE: 3 August 2022

_____________________________________________________________________

PRESIDED BY THE HONOURABLE AZIMUDDIN HUSSAIN, J.S.C.

_____________________________________________________________________

PEOPLES TRUST COMPANY

Plaintiff

v.

JACOB BERGER, ABRAHAM (AVI) ICZKOVITS,

-and-

BORUCH MOSES ROSENBERG et al.

Defendants / Plaintiffs in warranty / Defendants in warranty

-and-

BEN ZION SCHWARTZ

-and-

JOSEPH GROSSMAN

Defendants in warranty

-and-

BORUCH MOSES ROSENBERG et al.

Plaintiffs in warranty

v.

DAN DERHY

Defendant in warranty¹

_____________________________________________________________________

JUDGMENT

(PROFESSIONAL SECRECY, OBJECTIONS DURING PRE-TRIAL EXAMINATIONS)

_____________________________________________________________________

1

A complete list of the parties with their respective party statuses is found in Annex A.

500-17-109876-196

PAGE: 2

TABLE OF CONTENTS

I.

II.

III.

OVERVIEW...........................................................................................................3

CONTEXT.............................................................................................................4

ANALYSIS.............................................................................................................8

Distinction between objection to discovery questions and professional

secrecy preventing Mtre. Derhy’s full answer and defence.............................8

AUTHORIZATION TO RELEASE MTRE. DERHY FROM HIS OBLIGATION

OF PROFESSIONAL SECRECY..................................................................10

Mtre. Derhy’s right to full answer and defence against the Declaration of

Forced Intervention in Warranty.............................................................10

a) The law regarding professional secrecy and the exception for full answer

and defence...........................................................................................12

b) Application of the law to the facts of the present case...........................13

Mr. Iczkovits’s renunciation of professional secrecy ..............................15

DISCOVERY QUESTIONS SUBJECT TO AN OBJECTION BASED ON

NOTARIAL PROFESSIONAL SECRECY.....................................................17

DISCOVERY QUESTIONS OBJECTED TO ON GROUNDS OTHER THAN

NOTARIAL PROFESSIONAL SECRECY.....................................................22

Martin Mallich.........................................................................................22

Dovid Muller...........................................................................................30

Ervin Hofman.........................................................................................34

Joseph Grossman..................................................................................36

Ben Zion Schwartz.................................................................................38

Abraham (Avi) Iczkovits.........................................................................38

Jacob Berger .........................................................................................50

ANNEX A LIST OF PARTIES AND THEIR RESPECTIVE PARTY STATUSES............73

500-17-109876-196

PAGE: 3

I.

OVERVIEW

In the context of a multi-party dispute involving multiple recourses, some of the

[1]

parties who are defendants-in-warranty/plaintiffs-in-warranty are suing in warranty the

notary Mtre. Dan Derhy for professional liability because of alleged faults in connection

with a contract that the notary drafted and to which they are parties.

[2]

One of the parties in the present case, Mr. Iczkovits, who was a client of Mtre.

Derhy but is not suing him, refuses to release Mtre. Derhy from the professional secrecy

imposed on the notary by virtue of the notary-client relationship that led to the preparation

and signing of the contract.

[3]

In light of one party’s refusal to release Mtre. Derhy from the professional secrecy

that binds the notary, the latter applies for court authorization to be released from the

obligation so that he can defend himself against the lawsuit.

[4]

For the reasons set out below in section III.B, the Court grants Mtre. Derhy’s

application.

[5]

Aside from Mtre. Derhy’s application to be released from the obligation of notarial

professional secrecy, various parties seek adjudication of a plethora of objections to

questions posed during pre-trial examinations involving seven witnesses. One category

of the application for adjudication of objections relates back to notarial professional

secrecy. The decision of the Court in connection with that category is set out in section

III.C.

[6]

The decisions of the Court on the various other objections are set out in section

III.D.

II.

CONTEXT

[7]

Mtre. Derhy is but one party in the present proceedings, which is a complex

litigation involving 29 parties. Many of these parties have multiple statuses in the

proceedings given the number of recourses, such as being defendants, defendants-in-

warranty, and plaintiffs-in-warranty simultaneously, and multiple statuses in the contract

known as the “Master Agreement”,²such as owner, director, guarantor, etc. The Master

Agreement is dated 1 January 2016, and signed by various parties in March 2016.

[8]

At its origin, the dispute relates to a loan made in 2010 by the Plaintiff People’s

Trust Company (Peoples) to Société en commandite Portage (Portage)³for the

2

Exhibit P-12. This is also referred to as the Indemnification Agreement, see Defendant’s Abraham

(Avi) Iczkovits Application to Call in Simple Warranty at para 5.

Also described in the Re-Amended Judicial Demand to Institute Proceedings (Re-Amended Demand)

3

as the Nominee Borrower.

500-17-109876-196

PAGE: 4

purchase of an immoveable residential complex (Property) in the city of Saguenay. The

loan was secured by a hypothec in favour o Peoples.

[9]

While there were separate proceedings for the receivership of Portage, the present

court file was initiated by Peoples against the Defendants Jacob Berger, Abraham

Iczkovits, and 6811728 Canada Inc. (681 or General Partner⁴) seeking to recover

$4,208,000 allegedly due by them as guarantors of the loan to Portage.

[10] In addition to suing the Defendants Messrs. Berger and Iczkovits, and 681,

Peoples is also suing a group of defendants it refers to as the “Beneficial Owners”

(known under the Master Agreement’s Schedule B as “Real Owners”, the term is used

interchangeably with the latter in this judgment⁵) on the basis of the Master Agreement,

a group of 24 parties⁶made up of individuals,⁷numbered companies, and a family trust.

[11] As an aside, it should be noted that the list of Real Owners at Schedule B of the

Master Agreement is not to be conflated with the list of Real Owners appearing at pages

1-3 of the Master Agreement, despite the same nomenclature, since the latter list contains

the names of two people who do not appear in the list in Schedule B and Peoples’ list of

Beneficial Owners, Messrs. Joseph Grossman and Ben Zion Schwartz. There will be

more discussion about the various subsets of parties below.

[12] Peoples claims a total of $7,379,850.49 against the Beneficial Owners, the sum

being divided according to the alleged proportionate share of liability of each of the

Beneficial Owners.

[13] The Master Agreement essentially purports to be a counter letter within the

meaning of articles 1451-52 of the Civil Code of Québec (CCQ), and Peoples seeks to

avail itself of it in its action against the Real Owners. The Master Agreement is also

invoked in the various other actions within the Court file.

[14] The Master Agreement is the third in a trilogy of prête-nom agreements covering

the 2010-2016 period (collectively, Counter Letters) and creating what is referred to in

the proceedings as a “tiered prête-nom system”,⁸such that, in 2010, when Portage acted

4

This party is unrepresented in the proceedings and it is not suing Mtre. Derhy. It is the general partner

of Portage.

5

It should be noted that Peoples is suing an individual, Liba (Winternitz) Sanders, who actually is not a

party to the Master Agreement and does not appear on the list of Real Owners contained in Schedule

B to the Master Agreement. In its Re-Amended Demand at para 14, in the table of Beneficial Owners,

Peoples lists her on the same line as Mr. Chaim Sanders, her husband, who is a party to the Master

Agreement and appears in Schedule B.

6

Schedule B of the Master Agreement contains a list of 23 Real Owners, but the missing party, Boruch

Moses Rosenberg, appears in the list of Real Owners at the beginning of the document, his name

having been handwritten.

The list of Real Owners includes Messrs. Berger and Iczkovits. They have multiple statuses under the

7

Master Agreement and in the proceedings since they are defendants to the suit by Peoples as

guarantors of the loan granted by Peoples, they are among the Real Owners under the Master

Agreement, and they are “First Level Nominees” for the Real Owners under the Master Agreement.

8

See e.g. Declaration of Forced Intervention in Warranty against Mtre. Derhy at para 7.

500-17-109876-196

PAGE: 5

as the contractual counterparty vis-à-vis Peoples for the loan to purchase the Property, it

was actually acting as agent for the Real Owners, who remained undisclosed to Peoples.

[15] A subset of parties⁹who are the Beneficial Owners, as well as Ben Zion Schwartz

and Joseph Grossman,¹⁰are being sued in warranty (Group Defendants-in-Warranty)

respectively by Mr. Berger and Mr. Iczkovits¹¹for indemnification of any amount the latter

might have to pay to Peoples. There are 26 parties among the Group Defendants-in-

Warranty.

[16] The action by Mr. Iczkovits against the Group Defendants-in-Warranty is an

important piece of the puzzle in the analysis of his litigation position refusing to renounce

the professional secrecy to which Mtre. Derhy is bound. More will be discussed about this

in section III.B, below.

[17] Just as the Master Agreement is the contractual basis for the suit by Peoples

against the Beneficial Owners, so too is it the basis for the action-in-warranty by Messrs.

Iczkovits and Berger.

[18] In turn, a subset¹²of 20 parties from the Group Defendants-in-Warranty,

constituting itself as plaintiffs-in-warranty (Group Plaintiffs-in-Warranty), is itself suing

in warranty Messrs. Berger and Iczkovits for various faults in connection with the Property:

misrepresentation of condition, value, and own experience, and mismanagement of the

Property.

[19] In addition to other alleged faults, Messrs. Berger and Iczkovits are also alleged

by the Group Defendants-in-Warranty to have disclosed the Counter Letters to Peoples,

thereby increasing the liability of the Beneficial Owners.

[20] Thus, the Group Plaintiffs-in-Warranty wear the hats of both defendants-in-

warranty (against the applications of Mr. Berger and Mr. Iczkovits) and plaintiffs-in-

warranty (against Mr. Berger and Mr. Iczkovits, in relation both to their applications and

the application of Peoples).

9

Messrs. Berger and Iczkovits are themselves part of the Beneficial Owners, hence the reference to a

“subset” of the Beneficial Owners. The Beneficial Owners consist of individuals, numbered companies,

and a family trust.

10

The two are signatories to the Master Agreement and designated in it as “New Apparent Owners”

(see Master Agreement, Articles 3(a)(vi) and 7(c)) and the new principals of Portage, which in turn acts

as prête-nom/nominee (see Master Agreement, Articles 3(a)(i) and 4) of the Real Owners, but they are

not sued by Peoples.

11

Mr. Berger’s Application in Forced Intervention in Simple Warranty includes Mr. Iczkovits and the

Iczkovits Family Trust as part of the Group Defendants-in-Warranty. The application of Mr. Iczkovits

and the Iczkovits Family Trust, entitled Defendant’s Abraham (Avi) Iczkovits Application to Call in

Simple Warranty, does not include Mr. Berger as part of the defendants-in-warranty named in their

application.

12

Ms. Miriam Kuperstein, Mr. Chaim Hershkowitz, and 681 are not suing Messrs. Berger and Iczkovits.

They are not represented in the proceedings.

500-17-109876-196

PAGE: 6

[21] A complexity, if not a procedural curiosity, in the Group Plaintiffs-in-Warranty’s

Declaration of Forced Intervention in Warranty is that in addition to the relief of

indemnification in connection with the claim of Peoples against them, which is naturally

the essence of a warranty application, they also seek the relief of indemnification against

Messrs. Berger and Iczkovits’s own claim of indemnification against them. In other words,

the Group Plaintiffs-in-Warranty seek indemnification against Messrs. Berger and

Iczkovits for any indemnification they must make to the latter.

[22] The issues before the Court for the present judgment do not require a

disentangling of these various recourses.

[23] The reason for Mtre. Derhy’s application to be released from the obligation of the

professional secrecy to which he is subject is that he is being sued by way of a Declaration

of Forced Intervention in Warranty by almost¹³all of the Group Defendants-in-Warranty,

who in turn are constituted by almost all of the Beneficial Owners,¹⁴by way of an action

in warranty (Group Plaintiffs-in-Warranty-against-Notary).

[24] There are 20¹⁵parties who constitute the Group Plaintiffs-in-Warranty-against-

Notary. They allege that they paid for the services of Mtre. Derhy “via Portage”.¹⁶

[25] The action in warranty against Mtre. Derhy alleges various professional faults

against him in connection with the Master Agreement, which he drafted. Some of the

alleged faults are the following:

 clerical, conceptual, and conflictual errors in the Master Agreement;

 errors in the Master Agreement which increased the potential liability of the

Group Plaintiffs-in-Warranty-against-Notary;

 unclear and vague hold-harmless and release provisions in the Master

Agreement leading to potentially absurd scenarios;

 comprehensive release of Mr. Iczkovits in connection with his management of

the Property before he commenced that management, and failure to explain

this aspect of the Master Agreement;

 design of prête-nom structure potentially exposing the solidary liability, as

opposed to joint liability in proportion to their ownership interest, of the Group

13

Ben Zion Schwartz, Joseph Grossman, Miriam Kuperstein, Chaim Hershkowitz, and 681 are not suing

the notary even though they are part of the Group Defendants-in-Warranty. Mr. Berger is not suing the

notary and he is not part of the Group Defendants-in-Warranty.

Mr. Berger, Mr. Iczkovits, and the Iczkovits Family Trust are part of the Beneficial Owners but Mr. Berger

14

is not part of the Group Defendants-in-Warranty. None are suing the notary.

Liba (Winternitz) Sanders is part of the group suing the notary, she is part of the Group Plaintiffs-in-

15

Warranty, the Group Defendants-in-Warranty, and the Defendants, but she is not among the Real

Owners under the Master Agreement.

Declaration of Forced Intervention in Warranty at para 10.

16

500-17-109876-196

PAGE: 7

Plaintiffs-in-Warranty-against-Notary for the claims of Messrs. Berger and

Iczkovits, and failure to explain this aspect of the Master Agreement;

 failure to ascertain the level of education, knowledge, and experience of the

individuals constituting the Group Plaintiffs-in-Warranty-against-Notary prior to

having them sign the Master Agreement;

 failure to read the Master Agreement with or to any of the individuals

constituting the Group Plaintiffs-in-Warranty-against-Notary, and failure to

explain to them the legal consequences of signing the Master Agreement.

[26] The action in warranty against Mtre. Derhy seeks an indemnification for:

 any amount that they would have to pay under the action by Peoples against

the Beneficial Owners, a maximum of around $7,379,850.49,¹⁷and

 any amount that they would have to pay under the action in warranty by Messrs.

Berger and Iczkovits against the Group Defendants-in-Warranty, a maximum

of $4,208,000.

[27] Mr. Berger, Mr. Iczkovits, and the Iczkovits Family Trust, all of whom signed the

Master Agreement, are not suing Mtre. Derhy.

[28] Mr. Joseph Grossman and Mr. Ben Zion Schwartz, who also signed the Master

Agreement, are not suing Mtre. Derhy, even though they are being sued by Messrs.

Berger and Iczkovits as part of the Group Defendants-in-Warranty. Mr. Joseph

Grossman’s son, Mr. Abraham Grossman, is suing the notary as part of the Group

Plaintiffs-in-Warranty-against-Notary.

[29] Only Mr. Iczkovits refuses to renounce professional secrecy in respect of Mtre.

Derhy’s role regarding the Master Agreement. Since Mr. Iczkovits has not sued the notary,

he takes the position that he cannot be deemed to have renounced professional secrecy.

[30] Given the complexity of the proceedings, a useful colour-coded list of the parties

with their respective statuses, notably from the perspective of who is/is not suing Mtre.

Derhy and who has/has not renounced professional secrecy, was provided by Mtre.

Derhy. The Court relied on this summarizing document in preparing the list that appears

in Annex A.

17

Since the Group Plaintiffs-in-Warranty-against-Notary does not include Mr. Berger, Mr. Iczkovits, the

Iczkovits Family Trust, Miriam Kuperstein, and Chaim Hershkowitz, but that the latter are being sued

by Peoples as part of the Beneficial Owners, the maximum amount that could be claimed against the

notary would need to take into account a deduction for the proportionate share of their liability.

500-17-109876-196

III. ANALYSIS

PAGE: 8

DISTINCTION BETWEEN OBJECTION TO DISCOVERY QUESTIONS

AND PROFESSIONAL SECRECY PREVENTING MTRE. DERHY’S FULL

ANSWER AND DEFENCE

[31] We now come back to the two categories of applications before the Court as they

relate to notarial professional secrecy. The third application consists of objections to pre-

trial examination questions unrelated to notarial professional secrecy.

[32] The first application relating to professional secrecy is Mtre. Derhy’s application to

be released from the obligation of notarial professional secrecy so that he can make full

answer and defence against the lawsuit he faces.

[33] The second application relating to professional secrecy concerns the objections to

pre-trial examination questions invoking notarial professional secrecy.

[34] The two applications are actually distinct, although they were not presented that

way by the parties. The distinction between the two is important because the analysis of

professional secrecy is different depending on which of the two applications is being

analyzed. That being said, there is a convergence in the result in that Mtre. Derhy is

released from the obligation of notarial professional secrecy and the objections to pre-

trial examination questions based on notarial professional secrecy are dismissed.

[35] The distinction between the two categories should be understood as follows.

[36] Mtre. Derhy’s application is made because for him to be able to set out his grounds

of defence and make proof under those grounds, he needs to be released from his

obligation to maintain the professional secrecy of his clients, almost all of whom are suing

him.

[37] It is impossible for Mtre. Derhy to defend himself otherwise. As he describes it in

the relief sought in his application:

Lever le secret professionnel de Me Dan Derhy afin de lui permettre de témoigner

en toute liberté et de produire tout document propre à cette fin, le cas échéant, afin

qu’il bénéficie du droit à une défense pleine et entière.¹⁸

[38] The Court grants his application. The Court’s reasoning is set out in section III.B,

below.

[39] The second application referring to notarial professional secrecy is distinct. The

pre-trial examination questions to which objection was made on the basis of notarial

professional secrecy raise no issue of full answer and defence of the notary since the

questions were not posed to Mtre. Derhy.

18

Demande du défendeur en garantie Me Dan Derhy pour lever le secret professionnel at 5.

500-17-109876-196

PAGE: 9

[40] Rather, the objections prevent the witnesses (Messrs. Grossman, Schwartz, and

Iczkovits) from answering the questions posed to them. The objections were made

variously by Mr. Iczkovits and Mtre. Derhy to questions about witnesses’ knowledge of

the relationship with Mtre. Derhy. All three witnesses are parties to the Master Agreement

but are not suing the notary.

[41] In summary, for the Court to deal with the objection based on professional secrecy,

since it was made in respect of questions posed to other individuals during their pre-trial

examinations, it does not need to address Mtre. Derhy’s dilemma of having to divulge

confidential information for his defence. It is for this reason that the Court makes a

distinction between the two applications involving notarial professional secrecy.

[42] That being said, the objection to pre-trial questions invoking notarial professional

secrecy is also dismissed.

AUTHORIZATION TO RELEASE MTRE. DERHY FROM HIS

OBLIGATION OF PROFESSIONAL SECRECY

[43] Mtre. Derhy is being sued by 20 parties alleging that he committed professional

faults in connection with notarial services provided to them. The services in question are

Mtre. Derhy’s drafting of the Master Agreement and steps he took (or omitted to take)

leading up to the finalization and signature of the Master Agreement by the various parties

in March 2016 (Mandate).

[44] Mtre. Derhy’s application seeks the Court’s authorization for him to be released

from his obligation of professional secrecy in relation to the Mandate. There are two

reasons to grant the application and dismiss Mr. Iczkovits’s contestation:

1) Mtre. Derhy needs to be released from his obligation of professional secrecy in

order to be able to make full answer and defence against the lawsuit directed at

him, and

2) Mr. Iczkovits actually renounced professional secrecy in suing the Group

Defendants-in-Warranty on the basis of the Master Agreement, which was

prepared by Mtre. Derhy.

[45] The reasons set out above are interrelated in that Mtre. Derhy would not need to

apply to be released from the obligation of professional secrecy if he had not been sued,

and he would not have been sued had Mr. Iczkovits (as well as others) not sued the Group

Defendants-in-Warranty. The two foregoing points are addressed in turn.

[46] While the Court authorizes the release of Mtre. Derhy from the obligation to

maintain professional secrecy to which he is subject in connection with the Mandate, the

Court emphasizes that the release is limited to the extent necessary for Mtre. Derhy to

make full answer and defence, notably to file defence proceedings, testify about all

relevant facts, and produce all relevant documents, against the Declaration of Forced

Intervention in Warranty dated 14 April 2021.

500-17-109876-196

PAGE: 10

Mtre. Derhy’s right to full answer and defence against the

Declaration of Forced Intervention in Warranty

[47] Mr. Iczkovits is the only party contesting Mtre. Derhy’s application. He is a party to

the Master Agreement as one of the Real Owners, both in his personal capacity and as

trustee for the Iczkovits Family Trust.

[48] The other hats worn by Mr. Iczkovits under the Master Agreement or one of the

instruments in the loan from Peoples are: New Apparent Owners (as defined in the Master

Agreement), shareholder and director of the General Partner, unitholder of Portage, and

personal guarantor of the obligation to reimburse the loan to Peoples.

[49] Mr. Iczkovits is not suing Mtre. Derhy, and therefore his position is that he cannot

be deemed to have renounced professional secrecy.

[50] The end result of Mr. Iczkovits’s contestation, should it prevail, would essentially

be to have Mtre. Derhy held hostage to professional secrecy while 20 plaintiffs get the

benefit of what would amount to a judgment by default since Mtre. Derhy would not be

able to make allegations to contest the lawsuit. The situation is untenable from the point

of view of basic fairness and the law does not support Mr. Iczkovits’s position.

[51] The fact that the notary faces the jeopardy of a potential damages award of

almost¹⁹$7,379,850.49 and a blot on his professional reputation potentially affecting his

future earning capacity are not per se relevant in the analysis.

[52] However, these factors do serve to bring into sharp relief the issues at stake as

Mr. Iczkovits refuses to renounce professional secrecy.

[53] As a factual matter, the following response to a question from the lawyer for

Peoples during pre-trial examinations provides a window on how Mr. Iczkovits perceives

his relationship with the notary:

Q. So you mandated Me Derhy then, am I understanding correctly?

A. Me or me and Mr. Berger. I mean, if we were the ones on the loan and we

wanted indemnification from the rest of the parties, so then it would have been

somehow a collaboration on all our parts between us on one side and them on the

other, but yes, the outcome being the same.²⁰

19

See footnote 17, above, for the explanation of why it would not be the entire amount of $7,379,850.49.

Examination of Abraham (Avi) Iczkovits (13 September 2021) at 166. It should be noted that Mr. Berger

20

waived professional secrecy explicitly during the pre-trial examination of Mr. Joseph Grossman by way

of a stipulation on record through his lawyer: “our client was not the one who mandated Notary Derhy.

So to that extent, we felt that there was never any privilege, and if there was, it was certainly waived on

our part.” See Examination of Joseph Grossman (20 October 2021) at 60. The stipulation that Mr.

Berger did not mandate Mtre. Derhy contradicts Mr. Iczkovits’s testimony and the allegation made by

the Group Plaintiffs-in-Warranty-against-Notary to the effect that the notary was “mandated by Berger

in order to prepare and see to the signature of the Master Agreement” (Declaration of Forced

500-17-109876-196

PAGE: 11

[54] As for how the Group Plaintiffs-in-Warranty-against-Notary perceive their

relationship with Mtre. Derhy, the various faults that they allege against him are listed

further above, and they also allege that they paid the notary’s fees, through Portage, in

connection with Mandate.²¹

[55] Both Mr. Iczkovits and the Group Plaintiffs-in-Warranty-against-Notary assert

being clients of Mtre. Derhy in relation to the Mandate.

a)

The law regarding professional secrecy and the

exception for full answer and defence

[56] The law on professional secrecy applicable to notaries is clear and uncontested.

The issue in the present case is not whether there is any doubt about the general

application and importance of professional secrecy in the notary-client relationship.²²

[57] Rather, the issue is how to reconcile a conflict where a group of clients renounce

the right to secrecy, but one client insists on maintenance of the secrecy, and the result

of that conflict is that the notary will be deprived of the right to make full answer and

defence against the lawsuit directed against him.

[58] Professional secrecy has two objectives: protecting the confidentiality of the

relationship between a professional and his/her client, and ensuring the non-divulgation

in legal proceedings of the confidential information arising from that relationship.²³

[59] It is also clear and uncontested that a notary, or any other professional bound by

secrecy, has the right to consider secrecy to be renounced when sued for professional

liability by the clients who benefit from the right:

le notaire placé dans un état de nécessité qui doit, par exemple, se défendre à

l’encontre d’une action en responsabilité, peut vraisemblablement dévoiler tout ce

qui est nécessaire à sa défense pleine et entière.²⁴

[60] In Dominion, the Court of Appeal referred to a professional’s right to make full

answer and defence as “la primauté du droit à une défense pleine et entière”.²⁵

Intervention in Warranty at para 9). This will be decided on the merits of the dispute, and it does not

influence the analysis for the release of the obligation of professional secrecy.

Declaration of Forced Intervention in Warranty at para 10.

Charter of Human Rights and Freedoms, c C-12, s 9; Notaries Act, CQLR, c N-3, s 14.1; Code of ethics

21

22

of notaries, CQLR c N-3, r 2, ss. 35-40; Professional Code, CQLR, c C-26, s 60.4; Tanzer c Spector,

2017 QCCA 1090.

23

See Jean-Claude Royer & Sophie Lavallée, La preuve civile, 4th ed (Cowansville: Yvon Blais, 2008) at

para 1155; Canada (A.G.) v Chambre des notaires, 2016 SCC 20; both of the foregoing were cited by

the Court of Appeal in Dominion Nickel Investments c Mintz, 2016 QCCA 1939 at para 21 (Dominion).

That case dealt with professional secrecy applicable to lawyers and accountants, but the principles are

the same.

24

Paul-Yvan Marquis, La responsabilité civile du notaire (Cowansville, Yvon Blais, 1999) at para 291; see

also Michel Jetté, “Le secret professionnel et la pratique notariale” (1989), 1 C.P. du N. 121 at para 83.

Dominion, supra note 23 at paras 41-43.

25

500-17-109876-196

PAGE: 12

[61] However, the unusual issue in the present case arises from the fact that not all of

the clients of the notary are suing him, and among those not suing him, one client takes

the position that his right to professional secrecy must continue to be respected and that

he cannot be deemed to have made any renunciation.

[62] Therefore, there is a tension between the right to professional secrecy of one client

and the right of the notary to make full answer and defence against a lawsuit filed by other

clients within the same file giving rise to the lawsuit.

b)

Application of the law to the facts of the present case

[63] The Court of Appeal’s judgment in the Dominion case is instructive, if not

determinative, for the present analysis. It is worth delving into the details of that case as

part of the exercise of applying the law to the facts of the present case.

[64] In Dominion, the client Dominion Nickel Investments Ltd. (Dominion) sued its

former lawyers, Barry Mintz and his firm, Kaufman Laramée LLP, as well as its former

accountant, Jeffrey Mandel, for alleged professional negligence involving a tax planning

structure that was supposed to allow for a significant tax deduction. The Canada Revenue

Agency disallowed the deduction and the company was assessed an amount of

$18,937,699.64.

[65] By way of an action in warranty, the accountant Mandel sued three lawyers and

their respective two firms. Among his various allegations, he alleged that the lawyers

Stanley Kugelmass and Paul L. Schnier were also involved in the analysis and

implementation of the tax planning structure in that they gave their opinion and

recommendation in favour of it.²⁶

[66] The client suing the accountant Mandel, Dominion, had previously confirmed

through the communication of documents prior to pre-trial examinations that the lawyers

Kugelmass and Schnier, among others, advised on the “acceptability of the

transactions”.²⁷The representative of Dominion also admitted in pre-trial examination that

these two lawyers, among others, reviewed the proposed structure.²⁸

[67] However, Dominion did not sue the lawyers Kugelmass and Schnier. It chose to

sue the accountant Mandel and the lawyer Mintz. The accountant Mandel then sued the

lawyers Kugelmass and Schnier in warranty.

[68] During the pre-trial examination of Dominion’s representative, objections based on

professional secrecy were made to questions about the respective roles of the

professionals, including the lawyers Kugelmass and Schnier.

26

Dominion, supra note 23 at para 11.

Ibid at para 12.

Ibid at para 13.

27

28

500-17-109876-196

PAGE: 13

[69] The Court of Appeal confirmed the judge in first instance in dismissing the

objections. It referred to the principle of the “primauté du droit à une défense pleine et

entière” as allowing for access to information that would otherwise be subject to

professional secrecy.²⁹

[70] The Court of Appeal stated that the lawyer Mintz and the accountant Mandel had

the right to put questions to Dominion’s representative with the objective of breaking down

the respective liabilities among the professionals involved, or to contest the causal link

between the alleged professional fault and damages.³⁰

[71] Moreover, the Court of Appeal also stated that the lawyers Kugelmass and

Schnier, being sued in warranty by the accountant Mandel, must be allowed to defend

themselves “pleinement et entièrement”, and that the questions posed to the

representative of Dominion by them sought to exclude their liability.³¹

[72] The principle of full answer and defence articulated by the Court of Appeal in

Dominion applies in the present case. Mtre. Derhy must be allowed to make full answer

and defence against the lawsuit he faces.

[73] An analogy with the Dominion case is that just like in that case where the client

was arguing that it should not have to disclose secret information in connection with an

action in warranty that it is not involved with, so too in this case, Mr. Iczkovits is arguing

that secrecy should continue to apply since he is not part of the action in warranty against

Mtre. Derhy.

[74] The argument cannot serve to defeat the principle of full answer and defence.

Mr. Iczkovits’s non-involvement in the suit against Mtre. Derhy does not mean that he

should be allowed to impair the latter’s ability to defend himself.

[75] The reasoning is perhaps best expressed through a description in stark terms of

the implication of such an argument: Should Mtre. Derhy be asked to run the risk of a

monetary award against him and judicial conclusions affecting his reputation as the price

to be paid for Mr. Iczkovits’s right to professional secrecy? As the French expression

goes, Poser la question c’est y répondre.

[76] In Dominion, the Court of Appeal deals with the right of full answer and defence as

an adjunct of the concept of renunciation of professional secrecy by the client, as set out

in the following two paragraphs:

[41] L’appelante affirme que le juge de première instance a erronément fait primer

le droit à une défense pleine et entière des différents intimés sur son droit au

respect du secret professionnel.

29

Ibid at paras 41-49.

Ibid at para 46.

Ibid at para 47.

30

31

500-17-109876-196

PAGE: 14

[42] Elle a tort. La divulgation autorisée par le juge de première instance est le

résultat de la renonciation implicite de l’appelante au respect du secret

professionnel. […]³²

[77] The topic of renunciation of the right to professional secrecy is addressed in the

next section, below. In the present judgment, renunciation is treated distinctly from the

right of full answer and defence because they exist as distinct concepts, at least on the

facts of the present case.

[78] The right of full answer and defence is treated distinctly from renunciation because

even if Mr. Iczkovits had not sued in warranty those who make up the Group Plaintiffs-in-

Warranty-against-Notary, the latter would still have sued Mtre. Derhy since they are also

being sued by Peoples and Mr. Berger.

[79] Accordingly, Mtre. Derhy would still have invoked the right of full answer and

defence in order to be released from the obligation of professional secrecy, even if Mr.

Iczkovits were absent from the warranty proceedings.

Mr. Iczkovits’s renunciation of professional secrecy

[80] Renunciation in the present case is a subsidiary basis for the Court to hold that

Mtre. Derhy must be released from the obligation of professional secrecy. Mr. Iczkovits

renounced professional secrecy when he sued the Group Defendants-in-Warranty, a

subset of which then constituted itself as Group Plaintiffs-in-Warranty-against-Notary. The

Court of Appeal’s reasoning in the Dominion case supports this conclusion, as set out

below.

[81] Mr. Iczkovits decided to sue in warranty the Group Defendants-in-Warranty for

indemnification in case he loses his defence against Peoples’ lawsuit.³³The basis for his

application in warranty is the Master Agreement. His theory of the case is that if he is

liable to Peoples under the personal guarantee³⁴he gave to secure the loan for the

purchase of the Property, then the Group Defendants-in-Warranty are liable to him under

the Master Agreement.

[82] Normally, the invocation of a legal instrument as the basis for a recourse by a

plaintiff against given defendants does not entail renunciation of professional secrecy

surrounding the relationship that led to that legal instrument coming into existence.

[83] However, the wrinkle for Mr. Iczkovits in this case is that the Group Defendants-in-

Warranty themselves had the same notary, i.e. a single professional, playing the role of

legal advisor to the entire group of parties to the Master Agreement.³⁵The situation was

32

Ibid at paras 41-42.

33

Defendant’s Abraham (Avi) Iczkovits Application to Call in Simple Warranty, supra note 11.

That guarantee is found in the suretyship section of the Deed of Hypothec, Exhibit P-3, alleged in the

34

Re-Amended Demand at para 23.

See e.g. the Declaration of Forced Intervention in Warranty against Mtre. Derhy at paras 10-22; and

35

the testimony of Ben Zion Schwartz, 18 October 2021 (examined by Mtre. Mailloux) at 123: “No one

500-17-109876-196

PAGE: 15

the equivalent of a jointly retained legal advisor, with the implications for secrecy that that

represents.

[84] In turn, for a subset of the Group Defendants-in-Warranty, namely the Group

Plaintiffs-in-Warranty-against-Notary to defend themselves against Mr. Iczkovits’s claim

based on the Master Agreement, they consider it necessary to sue the notary, Mtre.

Derhy, who prepared the Master Agreement.

[85] Upon being sued by the Group Plaintiffs-in-Warranty-against-Notary, Mtre. Derhy

asks to be released from the obligation of professional secrecy in order to defend himself.

[86] It was clearly one of the reasonably foreseeable possibilities that if Mr. Iczkovits

sued the other parties to the Master Agreement, they would in turn sue the legal

professional who prepared the Master Agreement. That professional would then need to

be released from his obligation of secrecy so that he could defend himself. This

reasonably foreseeable chain of events is why it can be said that Mr. Iczkovits renounced

professional secrecy when he decided to sue the Group Defendants-in-Warranty.

[87] The above reasoning is supported by the reasoning of the Court of Appeal in

Dominion.

[88] The Court of Appeal in that case said that the plaintiff party, Dominion, renounced

the right of professional secrecy that existed between it and its lawyers Kugelmass and

Schnier, and this even though Dominion did not sue the latter lawyers.

[89] The essence of the Court of Appeal’s reasoning was that since Dominion sued the

lawyer Mintz and the accountant Mandel, there is an implicit renunciation by Dominion of

its right to professional secrecy throughout the chain of proceedings, even in connection

with the lawyers Kugelmass and Schnier, whom it did not sue.³⁶

[90] Regarding the latter aspect, i.e. lawyers Kugelmass and Schnier being released

from their obligation of secrecy, the Court of Appeal did not address directly the argument

that is being made in the present case to the effect that the client is not suing them and

so there should not be a deemed renunciation. However, the Court of Appeal arrived at

the general conclusion that the lawyers Kugelmass and Schnier need to be able to defend

themselves fully, notably because their client admitted their involvement in connection

with the relevant facts.³⁷

[91] Implicit in the above conclusion is that the Court of Appeal applied a wide scope

of renunciation under the following implicit reasoning. If Dominion had not sued the lawyer

Mintz and the accountant Mandel, the accountant Mandel would not have sued in

was represented by anybody other than Dan Derhy, if he was representing us. Nobody had another

counsel.”

Dominion, supra note 23 at para 42.

Ibid at para 47.

36

37

500-17-109876-196

PAGE: 16

warranty the lawyers Kugelmass and Schnier. The latter in turn would not have needed

to defend themselves with information about the professional relationship with Dominion.

[92] Accordingly, the plaintiff Dominion was deemed to have renounced the right to

professional secrecy both in relation to the lawyer Mintz and the accountant Mandel

(principal defendants), as well as the lawyers Kugelmass and Schnier (defendants-in-

warranty).

[93] A similar reasoning regarding implicit renunciation applies in the present case.

[94] Mr. Iczkovits is suing the Group Defendants-in-Warranty. Partly because of his suit

against them (and partly because of Mr. Berger’s suit and Peoples’s suit against them), a

subset of the Group Defendants-in-Warranty is suing Mtre. Derhy in warranty.

[95] The renunciation that Mr. Iczkovits is deemed to have made as part of his suit

against the Group Defendants-in-Warranty is extended to the suit that the Group

Plaintiffs-in-Warranty-against-Notary instituted against Mtre. Derhy since that action in

warranty must be seen as a form of defence against Mr. Iczkovits’s action.

DISCOVERY QUESTIONS SUBJECT TO AN OBJECTION BASED ON

NOTARIAL PROFESSIONAL SECRECY

[96] The above resolves the application made by Mtre. Derhy to be released from the

obligation of professional secrecy in connection with the action in warranty against him.

[97] We now turn to the discovery questions relating to the Mandate, which were

objected to on the basis of notarial professional secrecy. These questions were posed to

Messrs. Grossman (by Peoples), Ben Zion Schwartz (by Peoples), and Iczkovits (by

Peoples and by the Beneficial Owners).

[98] The questions under objection based on notarial professional secrecy are the

following:

Joseph Grossman

Question

by

Court’s Decision

Undertaking/Question

Peoples

I don’t want to put words in the Objection dismissed

witness’ mouth, but he said it was

Mr. Iczkovitz and Berger that were in

communication with Me Derhy

[Note by the Court: the foregoing is

the text of the question as presented

to the Court by the parties, but it is

not actually a question]

Peoples

Did Me Derhy explain the document Objection dismissed

at length? Did he read the document

500-17-109876-196

for the purposes of the people in

PAGE: 17

attendance in the room?

Peoples

So to your knowledge, did other Objection dismissed

people raise questions, issues, with

that document during that meeting?

Okay.

Were there any other Objection dismissed

discussions to that effect? Or just,

you know, and Dan Dehry told you?

Were there meetings to discuss that

fact after? That he was not to be

released.

Ben Zion Schwartz

Question

by

Court’s Decision

Undertaking/Question

Peoples

And who mandated Mr. Derhy for Objection dismissed

the drafting of this document, to your

knowledge?

Peoples

Do you know who Dan Derhy Objection dismissed

communicated with at Peoples

Trust?

Abraham (Avi) Iczkovits

Question

by

Undertaking/Question

Court’s Decision

Peoples

UND -33 - So as Undertaking 33, I Objection dismissed

would ask for a copy of, if it exists,

the mandate letter to Me Derhy for

the drafting of the document.

Beneficial

owners³⁸

Were there any drafts of this Objection dismissed

agreement which were circulated

(by anyone) to which you were

copied?

Beneficial

owners

Have you communicated with Me Objection dismissed

Derhy at all since the proceedings

38

It should be noted that the parties submitted the objections tables indicating questions posed by the

lawyer for the “Beneficial Owners”, even though this is essentially a shorthand term when used in the

tables. The term is inaccurate for the tables because that lawyer does not represent Mr. Iczkovits, the

Iczkovits Family Trust, Jacob Berger, Hirsch Schwartz, Miriam Kuperstein, and Chaim Hershkowitz, all

of whom are part of the Beneficial Owners. That lawyer represents the Group Defendants-in-Warranty

and the Group Plaintiffs-in-Warranty, as well as the Group Plaintiffs-in-Warranty-against-Notary. The

Court has kept the reference to “Beneficial Owners” so that there is no confusion if the parties refer

back to the tables they provided to the Court.

500-17-109876-196

PAGE: 18

were taken in February 5 of 2020?

(“ […] I’m not asking about

anything pertaining to his

attorney-client relationship.”)

Beneficial

owners

Have you communicated with Me Objection dismissed

Derhy at all since the month of

April 2021, when you received the

group Defendants’ Action in

Warranty?

[99] Mr. Iczkovits and Mtre. Derhy object to the above questions, invoking notarial

professional secrecy. They do not object on the basis of the identity of the party posing

the question, i.e. the fact that some of the questions are posed by Peoples even though

Peoples is not suing the notary. In other words, their objection is based on professional

secrecy, regardless of which party is asking the question. Therefore, the Court will

address only that objection.

[100] Mtre. Derhy objects out of a perceived obligation to protect secrecy on behalf of

the entire group of clients of Mtre. Derhy. However, Messrs. Grossman and Schwartz do

not object to the questions posed to them relating to the Mandate. They are not suing

Mtre. Derhy, they are not being sued by Peoples, but they are being sued in warranty by

Messrs. Iczkovits and Berger. Their respective sons, Abraham Grossman and Hirsch

Schwartz, are suing Mtre. Derhy, are being sued by Peoples, and are being sued in

warranty by Messrs. Iczkovits and Berger.

[101] No one among the clients of Mtre. Derhy objects to the questions relating to the

Mandate, other than Mr. Iczkovits. Therefore, Mtre. Derhy’s objection serves no separate

purpose other than to buttress the objection of Mr. Iczkovits.

[102] The fact that only Mr. Iczkovits is objecting among the clients (or putative clients³⁹)

of Mtre. Derhy undermines the objection he makes, at least insofar as the questions

posed to Messrs. Grossman and Schwartz are concerned. The Court dismisses the

objection for the reasons set out as follows.

[103] If Messrs. Grossman and Schwartz are the holders of confidential information in

connection with the relationship with Mtre. Derhy, it is either because they were clients

(in which case it is open to them to renounce the right to secrecy, which they explicitly did

during pre-trial examinations), or if they were not clients, then the confidentiality of the

39

Mr. Iczkovits takes the position that Joseph Grossman and Ben Zion Schwartz were not clients of Mtre.

Derhy (see e.g. Examination of Joseph Grossman, 20 October 2021, examined by Mtre. Mailloux

(lawyer for Peoples) at 59, and Examination of Ben Zion Schwartz, 18 October 2021, examined by

Mtre. Mailloux at 121), although they themselves take the position that they were clients. This is

discussed below. Furthermore, in an email exchange (Exhibit PG-18) between Mtre. Derhy and Mr.

Schwartz some months after the Master Agreement, when discussing pending items in relation to

Peoples, Mtre. Derhy stated: “Again, moving on paperwork is (1) obligatory as I was mandated by the

20 investors and Berger and his corp (to stop working, I would need everybody to instruct me to do

so)”.

500-17-109876-196

PAGE: 19

information was not protected by whoever was the beneficiary of the right to professional

secrecy, the information was transmitted in the ordinary course of interactions, and so

they can proceed to testify as to what they know.

[104] Messrs. Grossman and Schwartz took the position during pre-trial examinations

that they were clients of Mtre. Derhy.⁴⁰In order to negate the renunciation that they would

have the right to make as clients, Mr. Iczkovits takes the position that they were not

clients.⁴¹

[105] However, even if it were taken as true that Messrs. Grossman and Schwartz were

not clients of Mtre. Derhy, Mr. Iczkovits must then address the reality that these witnesses

as ostensible non-clients have information relating to the Mandate. If they have that

information, then it obviously is no longer secret, by definition.

[106] If information that would otherwise be covered by privilege is found within the

knowledge of a non-client, that witness cannot be prevented from testifying as to what he

knows unless he obtained the information in question through some kind of fraud, theft,

or inadvertent disclosure.⁴²That is not the case here. Rather, Messrs. Grossman and

Schwartz have knowledge of the Mandate by virtue of their own interactions with Mtre.

Derhy. To the extent that they are not objecting, Mr. Iczkovits has no basis to object on

their behalf.

[107] It is as if Mr. Iczkovits is invoking a veto that could override the renunciation of

professional secrecy or willingness of Messrs. Grossman and Schwartz to answer the

questions posed to them about the Mandate. Neither the authorities nor logic support

such a veto, and therefore Mr. Iczkovits’s argument does not hold by reason of authority

or by authority of reason.

[108] There are indeed authorities that implicitly speak of a veto held by one client among

a group holding the right to professional secrecy, but the present case has features that

do not seem to have been contemplated by those authorities.

[109] A seminal text on the situation of a notary and the question of a veto belonging to

each client in the group is the 1963 text on professional secrecy, “Le secret professionnel

du conseiller juridique” by Jean-Louis Baudouin (professor at the time of publication,

subsequently judge of the Court of Appeal of Québec), the underlining below being

particularly relevant to the point about a veto:

40

See e.g. Examination of Joseph Grossman, 20 October 2021, examined by Mtre. Tessier (lawyer for

Mtre. Derhy) at 6-7 (“Q. So at that time, you do recognize that there was a mandate given to Dan Derhy

and it does relate to the properties in Jonquière? A. Correct.”), Examination of Ben Zion Schwartz, 19

October 2021, examined by Mtre. Tessier at 6 (“Q. …what was the mandate given to Dan Derhy,

according to you, with regard to adding you as a guarantor? A. According to me, the mandate was to

take over the control, the ownership of the corporation. We didn’t want a company that a group of

owners owned and it be controlled by somebody who…”).

41

See supra note 39.

42

Léo Ducharme, L’administration de la preuve, 4th ed (Montreal: Wilson & Lafleur, 2010) at paras 444,

447-448.

500-17-109876-196

PAGE: 20

En ce qui concerne les actes où plusieurs personnes sont parties (vente,

transaction, etc...), l'obligation du notaire est double et absolue. Elle est double,

parce que chaque partie à l'acte est créancière de l'obligation au secret dont le

notaire est le débiteur. L'obligation étant double il semble qu'il faille le double

consentement des parties à l'acte pour relever le notaire de son obligation.

Cependant, une distinction s'impose. Si le notaire est requis de produire un tel acte

dans une instance mue entre l'une des parties et un tiers, nous pensons qu'il doit

exiger auparavant d'être formellement dispensé d'observer le secret par les

parties; au contraire, si l'action est mue entre les parties à l'acte, l'autorisation

d'une seule des parties suffit. La notion de propriété intervient ici; le notaire n'est

pas propriétaire des documents il n'en est que simple dépositaire.⁴³

[110] A similar point is made by Prof. Léo Ducharme in the context of a joint consultation

by clients of a lawyer: “dans le cas d’un litige entre l’un des titulaires et un tiers, le

consentement de tous serait requis pour qu’il y ait renonciation”.⁴⁴

[111] In a case involving a suit by a co-owner of the family home against the hypothecary

lenders who were alleged to have been parties in bad faith to the husband’s transfer of

the title, the Court of Appeal of Quebec endorsed the latter point made by Prof.

Ducharme,⁴⁵but it still held that any communications between the lenders and the notary

who prepared the deed of hypothec was no longer covered by professional secrecy since

the lenders had renounced it. In other words, although the Court of Appeal did not

specifically use the word “veto”, it essentially held that the husband had no veto over the

renunciation made by the lenders, even though he was also a party to the deed of

hypothec.⁴⁶

[112] To use the formulation from the Baudouin text quoted above, the present case is

a combination of “instance mue entre l’une des parties et un tiers” (the Real Owners—

parties to the Master Agreement—being sued by Peoples, a third party to the Master

Agreement) and “action est mue entre les parties à l’acte” (Messrs. Iczkovits and Berger

suing in warranty Messrs. Grossman and Schwartz and the Real Owners, all parties to

the Master Agreement).

[113] The above-cited authorities do not support a veto belonging to Mr. Iczkovits.

[114] As a matter of logic, the respective recourses (principal action by Peoples and the

various actions-in-warranty) are so intertwined as to justify the description of the case as

being one in which a significant part of the case is a dispute among the various parties to

the Master Agreement invoking different interpretations of the instrument and different

narratives on what the notary did and did not do, and what he ought to have done.

43

Jean-Louis Baudouin, “Le secret professionnel du conseiller juridique” (1963) 65:10 R du N at 508, as

cited in Chambre des notaires du Québec c Canada (PG), 2010 QCCS 4215 at para 38 (emphasis

added).

44

Ducharme, supra note 42 at para 457.

The passage from the 2006 edition of Ducharme is cited with approval by the Court of Appeal in MBl v

45

RB, 2017 QCCA 1543 at para 10.

Ibid at para 15.

46

500-17-109876-196

PAGE: 21

[115] Accordingly, Mr. Iczkovits has no veto of objection as regards the questions posed

to Messrs. Grossman and Schwartz. Their renunciation as clients or, if they are not

clients, their knowledge of information about the Mandate obtained through their own

experience, constitutes the basis for the Court’s rejection of Mr. Iczkovits’s objection.

[116] In light of the reasoning above, the procedure regarding the disclosure of

professional secrets set out by the Supreme Court in the Foster Wheeler case is not

applicable.⁴⁷As for Mr. Iczkovits’s objection to the questions posed to him regarding the

Mandate, the same reasoning regarding renunciation of professional secrecy set out in

section B.2, above, applies.

DISCOVERY QUESTIONS OBJECTED TO ON GROUNDS OTHER THAN

NOTARIAL PROFESSIONAL SECRECY

[117] The following witnesses were asked pre-trial examination questions that are

subject to objections based on grounds other than notarial professional secrecy: Martin

Mallich (representative of Peoples), Dovid Muller (representative of 120305 Canada Inc.,

one of the Beneficial Owners), Ervin Hofman (representative of 123645 Canada Inc., one

of the Beneficial Owners), Joseph Grossman, Ben Zion Schwartz, Avi Iczkovits, and

Jacob Berger. The objections are adjudicated as follows.

[118] The Court conducts its analysis of the objections according to the general

principles applicable to pre-trial examinations: a large and liberal interpretation of the

concept of relevance, with the objectives of pre-trial examination being to promote as

complete a disclosure as possible within the limits of proportionality.⁴⁸

Martin Mallich

[119] Mr. Mallich was examined as the representative of Peoples, the principal plaintiff.

The following questions posed to him were subject to objections, the Court’s decision on

the objections is provided in the last column on the right:

47

Foster Wheeler Power Co. v Société intermunicipale de gestion et d’élimination des déchets (SIGED)

inc, 2004 SCC 18, cited in MBl v RB, supra note 45 at paras 9, 15.

Campagna c Procureur général du Québec, 2021 QCCA 1134 at para 18.

48

500-17-109876-196

PAGE: 22

Question

by

Objection Undertaking/ Objection

Objection

by

Court’s

Decision

Objection

N^o& Page

O-2

Question

Beneficial

GDU-1

– Settlement Jacob

Owners⁴⁹

(p. 18)

Provide

Privilege

Berger

& maintained

copies of all

communicatio

ns between

Peoples

counsel

for

Jacob Berger

and either the

Plaintiff

and/or

the

Plaintiff’s

counsel.

What

Beneficial

Owners

O-3

(p. 21)

Settlement Jacob

Objection

& maintained

precipitated

Privilege

Berger

the receipt of, Litigation

at the very Privilege

Peoples

least,

Master

the Solicitor-

client

Agreement on privilege

November

fifth

(5th),

twenty-

nineteen

(2019)?

Were

any meetings client

held either privilege

internally or Settlement

with Mr. Privilege

Beneficial

Owners

O-5

(p. 33)

there Solicitor-

Jacob

Berger

Peoples

Objection

& maintained

Berger and/or

Mr. Iczkovits

or

anybody

representing

them

concerning

my clients in

twenty-

eighteen

(2018),

twenty-

nineteen

(2019)?

500-17-109876-196

PAGE: 23

Objection

Beneficial

Owners

O-7

(p. 38)

Was

there Solicitor-

Jacob

Berger

Peoples

any form of client

agreement or privilege

understanding Settlement

& maintained

in

place Privilege

between

Peoples Trust

and Jacob

Berger and/or

His counsel

which

precipitated

the disclosure

of

these

documents?

Avi

Iczkovits

O-20

(p. 183)

U-44 - Advise Litigation

Peoples

Objection

maintained in

part

Me

Neil privilege

Oberman

what

discussed

with

was

the

witness'

superior

regarding any

possibility of

assisting the

borrower.

[120] The questions subject to objections O-2, O-3, O-5, and O-7 above seek to obtain

evidence of the circumstances of Mr. Berger’s disclosure of the Counter Letters to

Peoples.

[121] The Group Plaintiffs-in-Warranty, which encapsulate almost all of the Beneficial

Owners,⁵⁰allege that Mr. Berger breached the confidentiality provision of the Master

Agreement⁵¹and thereby increased their liability from $4,208,000 to $7,379,850 given the

action in damages against them by Peoples.⁵²They argue that the questions posed are

relevant to that allegation.

[122] The Group Plaintiffs-in-Warranty also argue that there is a requirement of good

faith for Peoples to rely on art. 1452 CCQ, which allows third persons in good faith to avail

49

The parties submitted the table with the column indicating that the lawyer for the “Beneficial Owners”

posed the questions, but it should be kept in mind that this is a misnomer, see supra note 38.

See supra note 38 on “Beneficial Owners” being a misnomer in these tables.

Master Agreement, Article 11.

Declaration of Forced Intervention in Warranty at para 29.

50

51

52

500-17-109876-196

PAGE: 24

themselves of a counter letter. The requirement of good faith in order to avail itself of the

Counter Letters is admitted by Peoples.⁵³

[123] If Peoples knew about the existence of the Counter Letters and the Real Owners

under the Master Agreement, yet did not take action when they learned of the

arrangement, this goes to its good faith and legal ability to invoke the Counter Letters,

and notably the Master Agreement, as the basis for their addition of the Beneficial Owners

to their suit, so the argument goes.

[124] Mr. Berger and Peoples invoke settlement privilege for O-2, O-3, O-5, and O-7,

and for two of the questions (O-5 and O-7), they also invoke solicitor-client privilege, i.e.

professional secrecy, as a subsidiary argument. As a further subsidiary argument for O-

3, they invoke litigation privilege.

[125] Peoples and Mr. Berger also make the argument that the discovery by Peoples of

the Master Agreement was inevitable because the Master Agreement was invoked by Mr.

Berger in his action in warranty against the Group Defendants-in-Warranty. They

therefore make a supplementary argument of relevance, in connection with their

argument on settlement privilege.

[126] The Group Plaintiffs-in-Warranty reply to this by saying it is “revisionist” to argue

that the Master Agreement would have been disclosed anyway, and that it would have

been possible to file it under seal.

[127] It should be clear that the Group Plaintiffs-in-Warranty do not need the answers to

the above discovery questions in order to discharge their burden of establishing as a

matter of fact that Mr. Berger disclosed the existence of the Master Agreement to Peoples.

This has already been admitted by way of a lawyer’s letter from Peoples stipulating the

dates of communication by Mr. Berger (20 April 2018; 5 November 2019; 2 December

2019) and the names of the various documents that were communicated (respectively:

Initial Nominee Agreement, Master Agreement and Holding Structure Sale, Agreement of

Sale and Initial Transfer Agreement).

[128] The above arguments regarding O-2, O-3, O-5, and O-7 are addressed in turn

below.

[129] The main argument relates to settlement privilege. This privilege exists as a matter

of judicial policy for the sound administration of justice: “La bonne administration de la

justice requiert que les parties règlent elles-mêmes leurs différends avant l’institution

d’une procédure judiciaire ou encore pendant une instance.”⁵⁴

[130] The judicial policy behind the privilege has been confirmed by legislative policy

expressed in the Code of Civil Procedure (CCP): “Parties who opt for a private dispute

53

Re-Amended Demand at paras 40-42.

Catherine Piché & Jean-Claude Royer, La preuve civile, 5th ed (Montréal: Yvon Blais, 2016) at para

54

1256; Union Carbide Canada Inc v Bombardier Inc, 2014 SCC 135.

500-17-109876-196

PAGE: 25

prevention and resolution process […] undertake to preserve the confidentiality of

anything said, written or done during the process”.⁵⁵

[131] The basic point of the existence of the privilege protecting settlement

communications is that if parties did not have the reassurance that their compromising

communications will be shielded from disclosure and will not be used against them,

settlements would be much more difficult, if not impossible, to achieve.

[132] There are three conditions to be met for settlement privilege to apply: 1) there must

be a real or eventual litigation; 2) a written or verbal communication made with the

intention of settling a dispute; and 3) an express or presumed intention that the

communication not be disclosed without the consent of the parties.⁵⁶

[133] The three conditions are met in the present case. At the time of the communication

of the various Counter Letters, i.e. 20 April 2018, 5 November 2019, and 2 December

2019, Portage was on notice for having failed to pay its monthly instalments since August

2017.⁵⁷Mr. Berger was the principal shareholder and sole director of the General Partner

of Portage.

[134] In light of the alleged default of Portage in August 2017, and the demand letter

sent by Peoples at the time, it was clear for both Mr. Berger and Peoples in April 2018,

the time of the first communication of one of the documents of the Counter Letters, that

litigation was possible. Mr. Berger received a demand letter in his capacity as guarantor

in August 2018.⁵⁸Receivership proceedings against Portage began in September 2018.⁵⁹

[135] As for the second criterion, the objecting parties assert that the communications

requested in the discovery questions were made with the intention of settling a dispute

between Mr. Berger and Peoples. The question posed by the Group Plaintiffs-in-Warranty

under O-7 recognizes this since it asks whether “any form of agreement or understanding”

was in place between Peoples and Mr. Berger prior to the disclosure of the Counter

Letters.

[136] The third criterion, an express or presumed intention that the communications not

be disclosed without the consent of both parties, is satisfied in light of the fact that both

parties to the communications, i.e. Mr. Berger and Peoples, are saying in unison that they

intended their communications to be protected against disclosure.

[137] That the three criteria of settlement privilege are met is not contested by the Group

Plaintiffs-in-Warranty. They argue that settlement privilege was renounced by Peoples

when it informed them by way of lawyer’s letter that Mr. Berger communicated the

documents of the Counter Letters on various dates.

55

Article 4 CCP, see also arts 1(3) and 148 CCP.

Piché & Royer, supra note 54 at para 1259.

Re-Amended Demand at para 25.

Ibid at para 36.

56

57

58

59

Ibid at para 27, court file 150-11-004866-182.

500-17-109876-196

PAGE: 26

[138] There was no renunciation of privilege by Peoples in providing the above

information. The fact that the lawyer’s letter did not explicitly invoke settlement privilege

on any other, related information that might be asked for, does not constitute a

renunciation of privilege in relation to that information. In fact, a general caveat was made

in the letter:

The information provided above is communicated strictly under reserve of our

client’s rights, and shall not be interpreted as an acceptance of the appropriateness

of your request or an acknowledgment or undertaking to provide any other

documents or information outside of the process agreed to […] ⁶⁰

[139] Aside from the renunciation argument, the arguments of the Group Plaintiffs-in-

Warranty for obtaining the answers to their questions essentially amount to the position

that their interests in proving that Mr. Berger breached the confidentiality provision of the

Master Agreement and proving that Peoples does not have the requisite good faith under

art. 1452 CCQ prevail over the interests of Mr. Berger and Peoples in wanting to maintain

the privilege.

[140] As the Supreme Court of Canada observed in Sable Offshore Energy Inc. v

Ameron International Corp. (Sable), the exception to settlement privilege involves

showing that “a competing public interest outweighs the public interest in encouraging

settlement”.⁶¹The Court in Sable also noted that that settlement privilege applies

regardless of whether a settlement is achieved,⁶²and it applies even in the context of

litigation regarding a third party.⁶³

[141] The reasoning of the Court in Sable is instructive in response to the argument of

the Group Plaintiffs-in-Warranty regarding their interest in obtaining answers to the

questions under objection.

[142] Sable involved a lawsuit by an owner of offshore structures and onshore gas-

processing facilities in Nova Scotia. The lawsuit alleged defective paint application

against some 14 contractors and applicators. The plaintiff entered into settlement

agreements with three of the defendants.⁶⁴

[143] Two of the defendants who did not settle wanted access to the settlement figures

found in the settlement agreements. They already had access to the rest of the contents

of the agreements. The defendants argued that they needed the settlement figures to

conduct their litigation.

60

Exhibit PH-13, Letter from BLG to Oiknine & Associés dated 5 March 2021.

Sable Offshore Energy Inc v Ameron International Corp, 2013 SCC 37 at para 19.

Ibid at para 17.

Ibid at para 20ff.

61

62

63

64

These agreements are referred to as “Pierringer Agreements” when they occur in a multi-party litigation

where one or more but not all of the defendants settle with the plaintiff. The agreement are named for

a 1963 case out of the U.S. state of Wisconsin, Pierringer v Hoger, 124 NW (2d) 106 (Wis 1963), cited

in Sable, ibid at para 6.

500-17-109876-196

PAGE: 27

[144] The Court rejected their argument, stating that access to the settlement figures will

not materially affect the non-settling defendants’ ability to know and present their case.⁶⁵

[145] In the present case, Mr. Berger and Peoples invoke privilege in relation to the

question of whether there is an agreement between them (O-7). The Group Plaintiffs-in-

Warranty have not established that their case will be materially advanced by knowing the

answer to this question and the three other questions (O-2, O-3, O-5) under objection.

[146] The Group Plaintiffs-in-Warranty want to prove Mr. Berger breached the Master

Agreement by disclosing it to Peoples. It is already admitted that he disclosed it. Naturally,

if Mr. Berger eventually seeks to invoke his communications with Peoples as part of his

defence against the action by the Group Plaintiffs-in-Warranty, he will be foreclosed from

doing so given his invocation of settlement privilege over those same communications in

order to prevent the Group Plaintiffs-in-Warranty from obtaining them in discovery.

[147] The Group Plaintiffs-in-Warranty, who are among the defendants being sued by

Peoples in the principal action, want to explore whether Peoples has the requisite good

faith under art. 1452 CCQ to be able to invoke the Counter Letters in its action against

them. The argument is that if Peoples learned of the existence of the Counter Letters at

an earlier stage, through its discussions with Mr. Berger, then its good faith is somehow

affected with the lapse of time between its knowledge of the existence of the Counter

Letters and amendment of its Judicial Demand to Institute Proceedings in order to include

the Beneficial Owners as defendants.

[148] The flaw in this argument is that the Group Plaintffs-in-Warranty have it backwards:

if bad faith can be ascribed to Peoples by virtue of its knowledge of the existence of the

Counter Letters, then that bad faith actually entails a requirement that Peoples avail itself

of the Counter Letters and not the apparent agreement.⁶⁶In other words, the Group

Plaintiffs-in-Warranty cannot argue that bad faith on the part of Peoples prevents it from

availing itself of the Counter Letters. Bad faith prevents it from availing itself of the

apparent contract.

[149] A further flaw in the argument of good faith is that any lapse of time between

knowledge of the Counter Letters and filing of an action against the Beneficial Owners is

a question of prescription, not good faith.

[150] As for the reply by the Group Plaintiffs-in-Warranty to the point made by Peoples

and Mr. Berger to the effect that the Master Agreement would have been disclosed in any

event since Mr. Berger filed an action in warranty against the Group Defendants-in-

Warranty on the basis of that contract, the Group Plaintiffs-in-Warranty do not make a

convincing argument.

65

Sable, supra note 61 at para 27.

See Noël c Bérard, 2021 QCCA 299 at para 12: “seuls les tiers qui ignoraient l’existence de la contre-

66

lettre peuvent invoquer le contrat apparent.”

500-17-109876-196

PAGE: 28

[151] There is nothing revisionist about what Peoples and Mr. Berger are saying. As a

factual matter, Mr. Berger has filed an action against the Group Defendants-in-Warranty.

That action depends on the Master Agreement as its juridical basis.

[152] Therefore, if Mr. Berger had not communicated its existence in November 2019, it

would have been available to Peoples when he filed his action in warranty in March 2020.

Peoples would then have amended its action to include the Beneficial Owners as

defendants. There is nothing in the record to indicate that the counter-factual would have

been different.

[153] In light of that reality, and against the backdrop of settlement privilege, it is difficult

to see how the Group Plaintiffs-in-Warranty can be materially advanced in their litigation

by digging further into the communications between Mr. Berger and Peoples regarding

the disclosure of the Counter Letters.

[154] As for the subsidiary reply argument made by the Group Plaintiffs-in-Warranty,

namely that the Master Agreement could have been filed under seal in Mr. Berger’s action

in warranty, this presumes that filing under seal would have survived a challenge by

Peoples under the principle of open access to court proceedings, an unlikely scenario.⁶⁷

[155] Accordingly, objections O-2, O-3, O-5, and O-7 are maintained on the basis of

settlement privilege. The subsidiary grounds of litigation privilege invoked for O-3 and

professional secrecy for O-3, O-5, and O-7 are not necessary to address given the ruling

on settlement privilege.

[156] Objection O-20 is the last objection in the above table regarding Mr. Mallich. The

objection is maintained only in part.

[157] The question posed by Mr. Iczkovits seeks to know what was discussed with Mr.

Mallich’s superior regarding the possibility of assisting the borrower, Portage, after the

default in August 2017. The objection invoked by Peoples is litigation privilege.

[158] For communication or a document to be validly covered by litigation privilege, it

must be for the dominant purpose of litigation and the litigation must be pending or

reasonably apprehended.⁶⁸

[159] The justification given by Mr. Iczkovits for posing the question is that he wants to

explore what measures were taken by Peoples to mitigate its damages after the default

in August 2017. He argues that art. 221 CCP calls for a large and liberal approach to the

discovery process, and so disclosure is the rule.

[160] It is possible to reconcile the question with litigation privilege. In asking what was

discussed with Mr. Mallich’s superior, Mr. Iczkovits wants to know what measures were

taken to mitigate the damages to be suffered by Peoples. In other words, what he wants

67

Art 11 CCP.

68

Lizotte v Aviva Insurance Company of Canada, 2016 SCC 52 at para 33.

500-17-109876-196

PAGE: 29

to know is the opposite of communications whose dominant purpose is litigation. He wants

to know whether anything was discussed that would avoid litigation.

[161] Accordingly, the objection is maintained only in part. The witness can answer what

was discussed with his superior regarding any possibility of assisting Portage, to the

extent that the content was not for the dominant purpose of preparing for litigation and

was for the purpose of reducing the damages to be suffered by Peoples.

Dovid Muller

[162] Mr. Muller was examined as the representative of 120305 Canada Inc., one of the

Real Owners under the Master Agreement. It is part of the Group Defendants-in-Warranty

in the action in warranty by Mr. Berger and by Mr. Iczkovits, and it is part of the Group

Plaintiffs-in-Warranty against the latter. The company is the holding company for Mr.

Muller’s investments.

[163] The following are the questions posed to Mr. Muller that are under objection. The

Court’s decision on the objections appears in the column on the right. The entry for O-13

is provided in strike-out because the item was withdrawn from the Court’s consideration

during the hearing.

Question Objection

Undertaking/

Question

Objection Objection

by

Court’s

Decision

by

N^o&

Page

Jacob

Berger

O-1

(p. 5)

Q16:

When

you Fishing

120305

Objection

dismissed

received the cheques, expedition Canada

am I safe to assume

that you made the

appropriate tax filings

and declared this as

income?

Inc.

Jacob

Berger

O-2

(p. 6)

Q17: Did you ever Fishing

claim operating losses expedition Canada

120305

Objection

dismissed

in your taxes with

Inc.

respect

to

the

property?

Jacob

Berger

O-3

(p. 6)

Q18: Which years Fishing

would you

incorporated

120305

have expedition Canada

Objection

dismissed

the

Inc.

operating losses in

your taxes?

Jacob

Berger

O-4

(p. 7-8)

U-10: For the periods of Fishing

2010 until 2019, the tax expedition Canada

filings for 120305 Inc.

120305

Objection

dismissed

Canada Inc., in which

we would be able to

500-17-109876-196

PAGE: 30

Question Objection

Undertaking/

Question

Objection Objection

by

Court’s

Decision

by

N^o&

Page

see whether or not

there were capital – the

income was disclosed

and whether or not the

operating losses were

disclosed.

Avi

O-1

U-11 - To provide a Fishing

copy of the Minute expedition Canada

120305

Objection

maintained

in part

Iczkovits (p. 2)

Book

for

120305

Inc.

Canada Inc. from the

years 2010 to 2021

Avi

O-11

Okay. Let’s just explore Hearsay

Jacob

Objection

Iczkovits (p. 48)

this

very

quickly

Berger

maintained

because we have a

limited amount of time

here, sir. Did you hear

that Mr. Berger was

involved — and I am

not saying that I am

suggesting this, for the

record, because it

would

be

an

inappropriate allegation

on my part, but I would

like to know whether

you heard that Mr.

Berger was involved in

some

difficulties

financial

resulting

from some business

deals that might have

gone

badly

in

Cleveland? Is that the

information that you

would have had in your

possession at that

time?

Avi

O-12

And did you hear that Hearsay

he had to leave

Cleveland because of

those problems? Is that

your knowledge?

Jacob

Berger

Objection

maintained

Iczkovits (p. 50)

500-17-109876-196

PAGE: 31

Question Objection

Undertaking/

Question

Objection Objection

by

Court’s

Decision

by

N^o&

Page

Avi

O-13

U-21 - To verify if the All

Counsel

Iczkovits (p. 53)

Deponent or his entity, documents for

or any entity under his in

beneficial

control, directly or possession owners

indirectly, had any of

the

business dealings with witness

Mr.

Jacob

Berger will

be

and/or

Hampton provided

Properties and/or any under

other corporation, reserve.

general partnership or

other legal structure in

which Mr. Jacob Berger

would

have

been

involved with, directly

or indirectly, and to

provide a copy of all

supporting documents

Well, let me ask you Fishing

this question; did you expedition Canada

to

those

Avi

O-18

120305

Objection

dismissed

Iczkovits (p. 81)

instruct

your

Inc.

accountant to take any

losses associated with

this investment; yes or

no?

Avi

O-20

Did you file any Fishing

elections with either the expedition Canada

Federal or Provincial

Government seeking to

take a loss against your

120305

Objection

maintained

in part

Iczkovits (p. 81)

Inc.

corporate entity; yes or

no? And to produce a

copy of the same.

U-27 - To provide a

Avi

O-21

Fishing

expedition Canada

Inc.

120305

Objection

dismissed

copy of the Deponent’s

Iczkovits (p. 81)

financial

statements

from the year 2010 to

the year 2021 with

respect to the named

Plaintiff / Defendant in

Warranty, to see how

the investment is listed

500-17-109876-196

PAGE: 32

Question Objection

Undertaking/

Question

Objection Objection

by

Court’s

Decision

by

N^o&

Page

in

said

financial

statement

[164] Objections O-1 (p. 5), O-2, O-3, O-4, O-1 (p. 2), O-18, O-20, and O-21 can be

grouped together since the purpose of the questions is the same and the objection is the

same.

[165] The purpose of the questions is for Mr. Berger and Mr. Iczkovits to understand the

evidentiary basis for the allegations made by the Group Plaintiffs-in-Warranty, of which

120305 Canada Inc. is a part, to the effect that they did not have significant experience

in the real estate market⁶⁹and that they were never informed of any problems with the

Property.⁷⁰

[166] The questions seek to ascertain whether it is actually the case that Mr. Muller, as

representative of his holding company, did not have significant real estate experience and

was never informed of any problems with the Property, by asking him whether his holding

company recorded losses in the tax filings in relation to the Property.

[167] If losses in relation to the Property were recorded in the tax filings of his holding

company, and if the corporate minute book reflects this as well, this would mean that Mr.

Muller was aware of problems with the Property and he had sufficient experience in real

estate matters to understand that the nature of the problems with the Property translates

into the possibility for claiming losses in the tax filings of the company, or at the very least

merits a discussion with the company’s tax accountant.

[168] The questions under objections O-1 (p. 5), O-2, O-3, O-4, O-1 (p. 2), O-18, O-20,

and O-21, covering income, losses, and the corporate minute book, are relevant and do

not constitute a fishing expedition to the extent that they are restricted to the Property.

Accordingly, the objections are dismissed. The objections to O-1 (p. 2) and O-20 are

maintained in part in order to make it clear that only the aspect related to the Property is

required to be answered. Anything in the responsive documents that is unrelated to the

Property may be redacted.

[169] The Court gives effect to the offer by Mr. Berger to file under seal, should a party

wish to put into evidence, any documents obtained under the above questions. It will be

for the judge on the merits to decide eventually whether the seal should remain in place.

[170] Objections O-11 and O-12 in the above table, based on hearsay, are addressed

as follows.

[171] The two questions seek to establish past ostensibly wrongful conduct of Mr. Berger

in another jurisdiction, in relation to other matters, through the testimony of Mr. Muller

69

Declaration of Forced Intervention in Warranty at para 11.

Ibid at para 21.

70

500-17-109876-196

PAGE: 33

stating what he heard from others. This obviously calls for hearsay evidence and it is

inadmissible.⁷¹

[172] Mr. Berger also argued that the questions seek to elicit similar-fact and bad-

character evidence, and therefore they must be excluded for that reason also. These

grounds were not invoked at the time that the hearsay objection was made. In any event,

it is unnecessary to address those grounds here given the ruling based on the hearsay

objection, and they are dealt with further below in connection with similar questions posed

to Mr. Berger directly.

Ervin Hofman

[173] Mr. Hofman was examined as the representative of 123645 Canada Inc., which is

one of the Real Owners under the Master Agreement. It is part of the Group Defendants-

in-Warranty in the action in warranty by Mr. Berger and by Mr. Iczkovits, and it is part of

the Group Plaintiffs-in-Warranty against the latter. Mr. Hofman is the representative of the

company, which is a holding company for his investments.

[174] The questions under objection posed to Mr. Hofman are similar to those posed to

Mr. Muller:

Question Objection

Objection Objection

by

Court’s

Decision

Undertaking/

Question

by

N^o&

Page

Jacob

Berger

O-6

(p. 4-5)

U-27: A copy of the Overly

company and/or broad

your tax filings and fishing

Ervin

& Hofman

(123645

Objection

maintained

in part

the annual financial expedition Canada

statements of the

company, for the

years in which the

Inc.)

witness

company

question,

or

the

in

123645

Canada Inc., has

declared the loss or

has treated the loss.

Jacob

Berger

O-7

(p. 7-8)

U-28: For the years Overly

in which the cash broad.

calls were made, to

Ervin

Hofman

(123645

Objection

maintained

in part

obtain a copy of the (answered Canada

company

123645 that it was Inc.)

Canada

Inc.’s added to

financial statements the

net

to see how these investment)

71

Article 2869 CCQ.

500-17-109876-196

PAGE: 34

Question Objection

Objection Objection

by

Court’s

Decision

Undertaking/

Question

by

N^o&

Page

cash calls were

treated

by

the

company in respect

of its own financials,

if it was considered

as

supplementary

investment

whatnot.

or

Avi

Iczkovits

O-15

(p. 37)

Sir, did you ever Fishing

instruct your expedition Hofman

Ervin

Objection

dismissed

accountant to write

off for tax purposes

your investment in

(123645

Canada

Inc.)

the

Jonquière

properties?

Avi

Iczkovits

O-16

(p. 38)

And I reiterate again, Fishing

if my colleague is expedition Hofman

Ervin

Objection

dismissed

prepared

withdraw

to

his

(123645

Canada

Inc.)

objection, are you

prepared to confirm

whether you have in

fact written off your

investment in the

Jonquière

properties?

[175] Mr. Hofman argued that his objections to the above questions on the tax treatment

by his holding company of the losses related to the Property are made for the same

reasons as those of Mr. Muller, addressed above. For the reasons given above regarding

the dismissal of the objections to the questions posed to Mr. Muller, the objections O-15

and O-16 are dismissed, with O-6 and O-7 being maintained in part in order to make clear

that only information related to the Property can be compelled. All information unrelated

to the Property may be redacted. The same mechanism as for Mr. Muller of filing under

seal must be used in relation to exhibits to be filed emanating from answers obtained to

the above questions.

Joseph Grossman

[176] Mr. Grossman is part of the Group Defendants-in-Warranty in the action–in-

warranty by Mr. Berger and by Mr. Iczkovits, and he is part of the Group Plaintiffs-in-

Warranty against them. The questions posed to Mr. Grossman for which notarial

professional secrecy was invoked by Mr. Iczkovits have been dealt with further above.

500-17-109876-196

PAGE: 35

The remaining question is the following, the second one being in strikeout because it was

resolved between the parties during the hearing:

500-17-109876-196

PAGE: 36

Question Objection

Undertaking/

Question

U-35 - Provide a full Many

copy of file related to grounds

Objection Objection

by

Court’s

Decision

Objection

by

N^o& Page

O-10

Avi

Joseph

Iczkovits (p. 92)

Grossman maintained

in part

Place du Portage

(litigation

privilege,

solicitor-

client

privilege,

fishing

expedition)

Avi

O-11

U-36 - Provide a Overly

copy of whatever broad

Joseph Grossman

Joseph

Grossman

Iczkovits (p. 94)

has

in

his

possession

from

Immomarketing

related to the object

properties

Jonquiere

in

[177] On the face of it, the question subject to objection O-10 is very wide and can touch

upon documents that are privileged or confidential for some other reason.

[178] Mr. Iczkovits explains that the reason to ask for the full copy related to the Property

is to show that Mr. Grossman had knowledge of the state of the Property.

[179] It is useful to remember that Mr. Grossman is not a Real Owner under Schedule B

of the Master Agreement, although he is listed as such at page 1 of the contract. He is

among the Group Plaintiffs-in-Warranty suing Messrs. Iczkovits and Berger, and he is

among the Group Defendants-in-Warranty being sued by them. In the allegations of the

Group Plaintiffs-in-Warranty, they assert that they relied on Mr. Berger’s representations

as to the good condition of the Property and that they were never informed of problems

with the Property.⁷²

[180] Since the main point of asking for Mr. Grossman’s file is to show that he had

knowledge of the problems related to the Property, that is the subset of documents

required to be communicated. Accordingly, Mr. Grossman is required to communicate

those documents, and extracts of documents, from his file on the Property that relate to

any problems regarding the Property. As for the rest, the objection is maintained.

72

Declaration of Forced Intervention in Warranty at paras 11 and 21.

500-17-109876-196

PAGE: 37

Ben Zion Schwartz

[181] Mr. Schwartz is part of the Group Defendants-in-Warranty in the action-in-warranty

by Mr. Berger and by Mr. Iczkovits, and he is part of the Group Plaintiffs-in-Warranty

against the latter. The questions posed to Mr. Schwartz for which notarial professional

secrecy was invoked by Mr. Iczkovits have been dealt with further above.

[182] The remaining question is under objection O-16, with O-11 having been decided

verbally during the hearing and O-14 in strikeout being agreed to by Mr. Schwartz to be

provided under reserve of objection:

Question Objection

Undertaking/

Question

Are you married Relevance Mr.

Objection Objection

by

Court’s

Decision

Objection

maintained

by

N^o& Page

O-11

Avi

Iczkovits (p. 32)

separate

property?

as

to

Schwartz

Avi

O-14

Did you take that as Relevance Mr.

Iczkovits (p. 34)

a loss on your and private Schwartz

income tax?

life

Avi

O-16

Okay. Who came up Relevance Mr.

Objection

Iczkovits (p. 38)

with the funds for

that particular

investment?

Schwartz

maintained

[183] Mr. Iczkovits argues that the purpose behind the question under objection O-16 is

to show that Mr. Schwartz had a certain level of expertise in real estate investment,

contrary to the allegation that he relied on Mr. Iczkovits. The question does not relate to

investment in the Property, but rather a different project altogether.

[184] The question of who is at the origin of funds for an investment different from the

one in the Property is so irrelevant as to amount to an abusive question. Whether the

witness is the source of funds or someone else is does not help in understanding the level

of expertise of that witness in real estate investment matters, still less if the investment

does not even relate to the case at hand. Accordingly, objection O-16 is maintained.

Abraham (Avi) Iczkovits

[185] Mr. Iczkovits is one of the defendants to the lawsuit by Peoples, he is a plaintiff-in-

warranty against the Group Defendants-in-Warranty and a defendant-in-warranty against

the Group Plaintiff-in-Warranty.

[186] The questions posed to Mr. Iczkovits for which notarial professional secrecy was

invoked have been dealt with further above. The remaining questions are the following,

O-29 having been decided verbally during the hearing, and O-22 and O-23 (p. 118) in

strikeout as items withdrawn from the Court’s consideration during the hearing:

500-17-109876-196

PAGE: 38

Question Objection

Undertaking/

Question

UND-4 - Me Oberman, Attorney-

I would have copies, if client &

it’s applicable, if it work-

exists, obviously — related

Objection Objection

by

Court’s

Decision

Objection

maintained

by

N^o& Page

O-2

Avi

Iczkovits

(Jacob

Peoples

(p. 41)

Berger and

Group

copies

of

any privilege

communications with

Plaintiffs-

in-

Warranty

consent to

communica

tion)

—

Iczkovits

between

Mr.

and

Tobenstein.

Beneficial O-2

Do you recall whether Relevance Avi

Objection

owners

(p. 6)

Mr. Berger would have &

Iczkovits

maintained

ever signed a Deed of legitimate

Sale for that property interest

on Gagnon?

Beneficial O-3

I’m going to show you Relevance Avi

Objection

owners

(p. 7)

a public document,

which is your Deed of

Sale, dated June the

4th, 2012. Are you

Iczkovits

maintained

aware

of

this

company, 9263-7156

Québec Inc.?

Beneficial O-4

Do you have an Relevance Avi

Objection

owners

(p. 7)

interest

company (9263-7156 legitimate

Québec Inc.)? interest

“Here is the REQ for Relevance Avi

9263-7156 Québec & Iczkovits

in

this &

Iczkovits

maintained

Beneficial O-6

owners

Objection

maintained

(p. 8)

Inc. as at 2:41 p.m. this legitimate

afternoon, and I see interest

that

shareholder of this

company is the

the

sole

Iczkovits Family Trust

and the sole director is

yourself.

Is

that

accurate?”

Beneficial O-7

I’m going to go back Relevance Avi

Objection

owners

(p. 9)

then to this Deed of &

Sale. Do you have any

Iczkovits

maintained

500-17-109876-196

PAGE: 39

idea why it says that legitimate

it’s being — that the interest

company, 9263-7156

Québec Inc. is being

represented by Jacob

Berger

for

the

signature of the Deed

of Sale?

Beneficial O-9

U-1: verify whether a Relevancy Avi

partnership agreement and Scope Iczkovits

Objection

maintained

in part

owners

(p. 11)

exists

between – should

yourself, Mr. Berger be limited

and/or your respective to the

companies or entities property in

and, if so, to kindly dispute

communicate it.

Beneficial O-11

owners (p. 14)

Beneficial O-12

owners (p. 16)

What were they [the Relevance Avi

Objection

maintained

Objection

maintained

deals]?

Iczkovits

Have you invested in Relevance Avi

any other deals with &

Iczkovits

Mr.

Portage?

Berger

after legitimate

interest

Beneficial O-13

owners (p. 16)

In general, without Relevance Avi

Objection

maintained

going into too many &

Iczkovits

details, how did your legitimate

investments with Mr. interest

Berger work out? Did

you ever lose money?

Beneficial O-19

owners (p. 57)

Have you done this Relevance Avi

Objection

maintained

(reinvesting

your &

Iczkovits

finder’s fee into equity legitimate

in the property) in interest

other

deals

also

involving Mr. Berger or

just this one

Beneficial O-23

owners (p. 80)

Did you invest in any Relevance Avi

deals with Mr. Berger & Iczkovits

after 2015-2016? legitimate

Objection

maintained

interest

Beneficial O-20

owners (p. 61)

Have

you

ever Relevance Avi

Objection

maintained

in part

invested, in your part &

experience,

Iczkovits

either legitimate

through a corporation interest

or through what’s

500-17-109876-196

PAGE: 40

called

a

limited

partnership?

Beneficial O-29

Did you review Exhibit Attorney-

P-12, being the Master client

Agreement, with a privilege

Avi

Iczkovits

Objection

maintained

owners

(p. 102)

legal

professional

before signing it and

obtain an explanation

from

that

professional?

Beneficial O-18

owners (p. 95)

Do you have an Litigation

agreement in place privilege

Avi

Iczkovits

Objection

dismissed

with

Mr.

Lazarus Common

whereby you agreed interest

not to collect on any privilege

judgments, should you Settlement

obtain it, against him? privilege

Beneficial O-22

If a vote wasn’t taken, Asked and Counsel

owners

(p. 117)

how was it done?

answered

for

Avi

Iczkovits

Beneficial O-23

How

mandated

were

by

you Already

the asked and Iczkovits

Avi

owners

(p. 118)

group to negotiate and answered

to make the proposal

of delaying capital

payments to Peoples

Trust?

Beneficial O-25

Do you know why your Solicitor-

counsel did not appear client

to contest the order privilege

that was sought by Litigation

Avi

Iczkovits

Objection

dismissed

owners

(p. 121)

Peoples Trust?

privilege

Beneficial O-26

Do you know if in — Solicitor-

pursuant — let’s say client

the year 2018 and privilege

through 2020, was

Avi

Iczkovits

Objection

dismissed

owners

(p. 122)

your

counsel

communicating with

Peoples Trust and/or

its counsel?

Beneficial O-27

UND-45

- “That is

Avi

Iczkovits

Objection

maintained

in part

owners

(p. 123)

communicate a copy protected

of all correspondence by a form

between

yourself of

500-17-109876-196

PAGE: 41

and/or your attorney attorney-

and Peoples Trust client

and/or its attorneys privilege or

between January 20, derivative

2018 and January thereof.”

2020.

[187] The question under objection O-2 (p. 41) seeks any communications between

Mr. Iczkovits and Mtre. Tobenstein, given the latter’s drafting of the Initial Nominee

Agreement (P-9). While Mr. Iczkovits recognizes that he did not mandate the lawyer, he

objects on the basis of professional secrecy. He also argues that there is no usefulness

to the question.

[188] Peoples posed the question, and it argues that since Mr. Iczkovits admits that he

did not mandate Mtre. Tobenstein, professional secrecy does not apply.

[189] The arguments were thin on both sides, Peoples even left it to the discretion of the

Court at the end of its arguments on this question.

[190] Since professional secrecy is at issue, Peoples was required to be more detailed

as to the justification for the question and the ways in which the witness should not be

seen as a client of Mtre. Tobenstein. This was not forthcoming. No specific argument was

provided as to why exactly all of the correspondence between the witness and the lawyer

was necessary to materially advance Peoples’ case in the litigation.

[191] Accordingly, objection O-2 (p. 41) is maintained.

[192] Objections O-2 (p. 6), O-3, O-4, O-6, O-7, O-9, O-11, O-12, O-13, O-19, O-23 (p.

80), O-20 were grouped together for the purposes of arguments made during the hearing.

[193] During the hearing, Mr. Iczkovits agreed to answer the question that is subject to

objection O-9 but only insofar as the Property is concerned. Therefore, whether a

partnership agreement exists between Mr. Iczkovits and Mr. Berger, or their respective

companies/entities, will be answered and the relevant document will be provided, if there

is anything responsive that exists in connection with the Property.

[194] The Court gives effect to that undertaking and accordingly maintains objection O-

9 to the extent that the question goes beyond the Property. As for the other objections in

the above group until O-23 (p. 80), they are maintained. Objection O-20 is maintained in

part. The reasoning is set out below.

[195] In the above grouping of objections, the objections until O-23 (p. 80) relate to

questions having the aim on the part of the Group Plaintiffs-in-Warranty to prove an

overall partnership arrangement between Mr. Iczkovits and Mr. Berger (the Partnership

Questions). They argue that if it is shown that there was a partnership between the two

on other investment projects, then it is more likely that there was one here.

500-17-109876-196

PAGE: 42

[196] In turn, the Group Plaintiffs-in-Warranty argue that a finding of a partnership

arrangement is important to the theory of their case because they can then impute to Mr.

Iczkovits the knowledge and duties that Mr. Berger is alleged to have in their action-in-

warranty. In this regard, they face the legal limitation of a partner’s liability towards third

persons where the latter are unaware of a partnership.⁷³

[197] The Court addresses the Partnership Questions as follows.

[198] First, it should be observed that the paragraphs of the Declaration of Forced

Intervention in Warranty relating to the claim against Mr. Iczkovits do not contain an

explicit allegation of any overall partnership arrangement between him and Mr. Berger

across various investment projects. The legal attributes of a contract of partnership are

set out in the Civil Code of Québec.⁷⁴

[199] Even for the investment in the Property, there is nothing explicit regarding a

partnership for that particular project, but there is an allegation that “Iczkovits helped

Berger syndicate the deal and find investors to purchase the Property and was one of the

people responsible for inducing the Defendants in Warranty who invested in the Property

to invest in same with Berger”.⁷⁵

[200] One is left having to draw the conclusion, albeit tentative, that the verbs

“syndicate”, “find”, and “inducing”, in one sentence in one paragraph, somehow add up to

an allegation of a partnership between Mr. Iczkovits and Mr. Berger, even though it would

have been rather simple to allege it explicitly.

[201] The thinness of the allegation regarding a partnership is one strike against the

argument of the Group Plaintiffs-in-Warranty seeking answers to a wide scope of

questions on other investment projects. The thin nature of the allegation is further

highlighted by the fact that article 2253 CCQ creates an obstacle for the argument of the

Group Plaintiffs-in-Warranty in wanting to impute Mr. Berger’s knowledge and duties to

Mr. Iczkovits. One would have thought that the allegations would have been much more

extensive to overcome that obstacle.

[202] In addition to the fact that the allegation regarding a partnership is thin, if not

invisible, a second point needs to be made.

[203] The Group Plaintiffs-in-Warranty refer the Court to caselaw on similar-fact

evidence in civil matters⁷⁶to make the argument that if they can establish that there was

a partnership between Messrs. Iczkovits and Berger in other investment projects, then

there is a greater likelihood of one here.

73

Art 2253 CCQ.

74

See arts 2186-2266 CCQ, and notably arts 2250-2266 CCQ on undeclared partnerships.

Declaration of Forced Intervention in Warranty at para 30.

Caron c Voyer, 2013 QCCA 1335 at paras 72-77; Romanowski c Gewurz, 2014 QCCS 1085 at paras

75

76

19-23; Ébénistrie classique inc c Société en commandite Gaz Métro, 2013 QCCS 1107 at paras 29-54.

500-17-109876-196

PAGE: 43

[204] The Court rejects this argument.

[205] The caselaw on similar-fact evidence referred to by the Group Plaintiffs-in-

Warranty all relates to situations where the defendant in question was alleged to have

orchestrated a larger wrongful scheme. In that context, it was relevant for the trier of fact

to have evidence of other projects because the wrongfulness of the alleged acts is

informed by alleged acts in other projects. The similarity of other facts has to rise to the

level of establishing a modus operandi of wrongful conduct of the defendant.

[206] The three cases cited by the Group Plaintiffs-in-Warranty refer to an alleged

wrongful modus operandi of the defendants in those cases. The distinction with the

present argument is obvious at the outset of the determination of the applicability of this

caselaw to the present case: the allegation is not that Messrs. Berger and Iczkovits

conspired to execute a wrongful scheme connected to a larger modus operandi, but

rather, that they formed a partnership across various investment projects and the Group

Plaintiffs-in-Warranty wants to avail itself of legally designated benefits that it claims

accrue to it from that legal vehicle.

[207] In other words, the caselaw shows that wrongfulness needs to be alleged if similar-

fact evidence is to be allowed. As can be seen in the review below, even an allegation of

wrongfulness is not enough on its own. In the present case, the Group Plaintiffs-in-

Warranty are not alleging that the two individuals were wrongful in having a partnership,

if they had a partnership at all.

[208] Justice Brossard in Romanowski c Gewurz provides a useful review of the criteria

that need to be met for similar-fact evidence to be admitted:

 [L]a preuve d’actes similaires est recevable si elle établit un modus

operandi chez le défendeur et si ces actes sont si reliés à celui qui fait l’objet

du litige qu’ils permettent de démontrer le système suivi par le défendeur en

l’espèce;⁷⁷

 La preuve qu’un défendeur aurait commis d’autres fautes que celles

reprochées, plus ou moins semblables à celles-ci, n’est pas admissible si elle

vise à faire la démonstration de son mauvais caractère et à amener le tribunal

à en conclure à l’existence d’un comportement fautif dans le cadre dont il est

saisi;⁷⁸

 [L]a preuve d’actes similaires sera permise si elle a une fin pertinente au litige,

autre que de démontrer une propension du défendeur à commettre des fautes,

et si sa valeur probante n’est pas surpassée par son effet préjudiciable

résultant de l’établissement du mauvais caractère du défendeur.⁷⁹

77

Romanowski, ibid at para 21.

Ibid at para 20.

Ibid at para 22.

78

79

500-17-109876-196

PAGE: 44

[209] Justice Brossard in his judgment refers to some examples where similar-fact

evidence has been allowed:

 À titre d’illustration, dans le cadre d’un litige opposant la faute lourde à une

clause de limitation de responsabilité, la preuve sera permise de faits

similaires qui tendent à prouver une nonchalance chronique des préposés du

défendeur et à ainsi établir le caractère insouciant du comportement de ce

dernier lors de l’incident en litige;⁸⁰

 Il peut s’agir par exemple de représentations faites à d’autres personnes dans

des circonstances identiques et contemporaines.⁸¹

[210] A further example can be found in the conclusion of the Court of Appeal in Caron

c Voyer allowing similar-fact evidence to be adduced, in a context where two contradictory

versions (prête-nom versus loan) of a juridical fact were being proffered by the parties.

[211] After stating that the admissibility of evidence of similar facts must be evaluated in

light of its relevance and that a fact is relevant when it helps the trier of fact evaluate the

probative value of testimony, the Court of Appeal concludes that similar-fact evidence is

admissible because the past conduct involves the same instruments as those at issue,

the same issuing corporation, the same forms, and the same method of payment, all

within a common time frame. ⁸²

[212] The Partnership Questions do not fall within the scope of the caselaw passages

reviewed above. This is strike two against the arguments of the Group Plaintiffs-in-

Warranty.

[213] A third point is to be observed about the scope of the Partnership Questions.

[214] It should be remembered that Mr. Iczkovits is willing to answer the question under

objection O-9, whether a partnership agreement exists, if he has an agreement with Mr.

Berger in connection with the Property. The answer will go to the heart of the inquiry of

Group Plaintiffs-in-Warranty. The answer will be determinative and obviate the need to

seek answers to questions about various other investment projects.

[215] This is strike three against the arguments provided in support of the Partnership

Questions.

[216] We now leave the Partnership Questions and turn to the question under objection

O-20 (p. 61). The Group Plaintiffs-in-Warranty ask Mr. Iczkovits if he ever invested in the

past through a corporation or a limited partnership. The objection invokes relevance and

legitimate interest in refusing to answer.

[217] The argument provided in support of this question is that the Group Plaintiffs-in-

Warranty have a theory of how the investment in the Property should have been

80

Ibid.

Ibid at para 21.

Caron, supra note 76 at para 77.

81

82

500-17-109876-196

PAGE: 45

structured. They want to know if Mr. Iczkovits is familiar with the legal vehicle of a limited

partnership and the possibility of grouping the Real Owners in the Master Agreement

within a limited partnership and then having a prête-nom agreement between Portage

and the limited partnership, rather than directly with the individual investors.

[218] The question is not fit for purpose. It is too wide for the purpose sought to be

achieved because it asks if he ever invested in the past through a corporation or a limited

partnership.

[219] However, what the question seeks to know is whether the witness has knowledge

of the existence of the legal vehicles of a corporation and a limited partnership. Investment

experience of using those legal vehicles is something larger that includes knowledge of

those vehicles, i.e. if one has experience with them, one has knowledge of them by virtue

of that very experience.

[220] The converse is not true: one can have knowledge of those legal vehicles without

having investment experience with them.

[221] Accordingly, the objection is maintained in part. The witness need not answer

about past investment experience with a corporation or a limited partnership, but must

answer whether he has knowledge of these.

[222] Objection O-29 was maintained through an oral judgment at the time of the

hearing.

[223] Objection O-18 invokes various forms of privilege (litigation privilege, common-

interest privilege, settlement privilege) against the question of whether Mr. Iczkovits has

an agreement with Mr. Lazarus, a named Real Owner under the Master Agreement but

whose signature does not appear on it, whereby the former would have agreed not to

collect on any favourable judgment against the latter.

[224] The question is posed by the Beneficial Owners. Mr. Lazarus is listed as a Real

Owner⁸³in Schedule B to the Master Agreement, although his signature does not appear

on the copy filed as Exhibit P-12. Presumably, he has a position on whether he has an

agreement with Mr. Iczkovits and that he is asking the question because he wants to

obtain confirmation from the latter. The other Beneficial Owners are asking because they

want to know if there is any impact on solidary liability, as discussed below.

[225] Litigation privilege and common-interest privilege are obviously inapplicable to the

question since Mr. Iczkovits is suing Mr. Lazarus, and vice-versa. There is no common

interest between the two, and litigation privilege protects communications “whose

dominant purpose is preparation for litigation”.⁸⁴The purpose of a communication

between the two as regards the execution of a future judgment favourable to Mr. Iczkovits

cannot possibly be for the purpose of preparation for litigation.

83

The term is used interchangeably with Beneficial Owners.

Lizotte, supra note 68 at 36.

84

500-17-109876-196

PAGE: 46

[226] For the sake of efficient use of judicial resources, the parties should note that it is

important not to pile on irrelevant objections on top of a relevant one, in the hopes that

one of them will stick.

[227] The objection invoking settlement privilege is relevant, in contrast with the other

privileges invoked. Whether Mr. Iczkovits has an agreement with Mr. Lazarus not to

execute against the latter any favourable judgment that the former might obtain against

the Group Defendants-in-Warranty gives rise to the question of whether settlement

privilege applies.

[228] Settlement privilege does not apply to the question at hand because there is an

exception to the privilege that applies. There is a public interest in ensuring that

defendants not be deprived of their right of subrogation against co-debtors and that the

plaintiff not be overcompensated.⁸⁵

[229] Where settlement privilege shields the fact that a plaintiff has released one of the

defendants and that the plaintiff has received sums or other consideration from one of the

co-defendants in settlement of the claim against that one defendant, then an unfairness

can result. The plaintiff can end up depriving the other defendants of their right to claim

reimbursement from the released defendant based on their respective shares for the

liability and the plaintiff can end up being overcompensated if the other co-defendants are

required by a judgment to pay the original claimed amount.

[230] In the present case, Mr. Iczkovits seeks indemnification against the Group

Defendants-in-Warranty for any amounts that he is ordered to pay to Peoples. The claim

is made on an in solidum basis,⁸⁶sometimes referred to as imperfect solidarity,⁸⁷meaning

that the debtors are alleged to be solidarily liable to the creditor but on the basis of

mutually distinct juridical grounds.

[231] The law calls for a reduction of the claim that can be made against solidary debtors

where one or more of them benefit from a release of the obligation by the creditor. ⁸⁸This

area of the law applies regardless of whether the liability is in solidum rather than perfect

solidarity.⁸⁹

[232] As a parenthetical aside, the Court notes that the allegations in the action in

warranty filed by Mr. Iczkovits do not explain what those mutually distinct juridical grounds

are, i.e. what makes the liability in solidum rather than solidary. The allegations refer to

Article 9 of the Master Agreement, and that the Group Defendants-in-Warranty are

“collectively liable” (para 7), that they “all” agreed to indemnify Mr. Iczkovits (para 8), that

85

Sable, supra note 61 at para 19; arts 1531 and 1690 CCQ.

Defendant’s Abraham (Avi) Iczkovits Application to Call in Simple Warranty at paras B, C, D of the

86

conclusions.

87

Frédéric Lévesque, L’obligation in solidum en droit privé québécois (Cowansville: Yvon Blais, 2010) at

115.

88

Arts 1531 and 1690 CCQ.

Lévesque, supra note 87 at 152.

89

500-17-109876-196

PAGE: 47

they were “all” included in discussions regarding the Master Agreement (para 10), and

that they are “all” bound by the Master Agreement.

[233] There is no allegation of the juridical distinction that might exist between the Real

Owners, on the one hand, and Messrs. Ben Zion Schwartz and Joseph Grossman, on the

other, as regards their alleged liability towards Mr. Iczkovits. In this regard, Mr. Berger for

his part, seems to have covered all bases by seeking in his action-in-warranty, a first

conclusion for indemnification against the Group Defendants-in-Warranty without

specifying whether this is on a joint, solidary, or in solidum basis, and then a second

conclusion on an in solidum basis. The Court closes the parenthetical observation about

the allegations in Mr. Iczkovits’s action-in-warranty. The issue may very well have to be

addressed by the trial judge.

[234] As mentioned above, given the law on solidarity and the reduction of the claim

where there is a release of the obligation or renunciation of solidarity, Mr. Iczkovits must

disclose whether there is a settlement agreement with Mr. Lazarus to the effect that the

former will not execute against the latter any favourable judgment in the present

proceedings. If such a settlement agreement exists, Mr. Iczkovits must disclose it, either

through a redacted version of the agreement or by way of stipulated answers if the

agreement is verbal, the nature and extent of any release of obligation or renunciation of

solidarity. He is not required to disclose any amount paid as part of the settlement.⁹⁰

[235] Objection O-25 is made by Mr. Iczkovits in response to the question of “why your

counsel did not appear to contest the order that was sought by Peoples Trust”. The

grounds invoked for the objection are professional secrecy and litigation privilege.

[236] The Court dismisses the objection. The question does not seek to obtain

communications between Mr. Iczkovits and his lawyer. The reference to “your counsel” is

made simply because the witness himself said that he forwarded the receivership order

issued by Justice Banford from court file 150-11-004866-182 to his lawyer. This was in

response to the question posed to the witness as to whether he was made aware in

September 2018 that Peoples was going to seek a receiver for the Property. The witness

said his lawyer would have acted upon it.

[237] It is following that answer that the Group Plaintiffs-in-Warranty asked why Mr.

Iczkovits’s lawyer did not appear to contest the order sought by Peoples.

[238] This was the lead-up to the question. The reason for the Court’s dismissal of the

objection based on professional secrecy and litigation privilege is that the question has

nothing to do with those privileges. The question simply seeks to know why Mr. Iczkovits

did not contest the receivership order.

90

The Sable case, supra note 61, contains a discussion of the principles governing solidarity among

debtors and settlements in multi-party litigation in a common-law context, but the analysis is no different

in the context of Quebec civil law: see Société du Vieux-Port de Montréal inc. v Patel, 2019 QCCA at

paras 46-55; and Canuel c 9127-9521 Québec inc. (Bistro Tapageur), 2017 QCCS 3835 at paras 30-

34.

500-17-109876-196

PAGE: 48

[239] In fact, Mr. Iczkovits himself put the question in play when he sent a letter to the

Real Owners on 9 April 2019. On page 2 of that letter, he states:

In keeping with the Lender’s continuous failure and/or refusal to inform us of

developments, both of these Orders [the Receivership Order and a previous order

concerning financing repairs] came about without our effective input. They were

the products of motions served to us on the eve of the hearings conducted in

Chicoutimi, depriving us of any realistic chance to digest and determine a course

of action based on the information alleged by the Lender. In the circumstances, it

did not make sense to seek to appeal these Orders.⁹¹

[240] The question under objection O-25 is simply a request to elaborate on what Mr.

Iczkovits already told the group in the passage above, and notably an elaboration on the

last sentence of the passage.

[241] Moreover, Mr. Iczkovits continues on the theme when he gets to page 5 of his

letter, where he states:

They [Peoples] quickly and aggressively enforced their security on the Property.

This culminated in a book-length legal motion and over 40 exhibits to the Court for

appointment of a receiver, served only very briefly before the hearing was

conducted (and order issued) on September 21, 2018.⁹²

[242] It is clear that Mr. Iczkovits is complaining about how Peoples conducted itself in

getting the receivership order. It is relevant then to ask why the order was not contested.

[243] Objections O-26 and O-27 invoke professional secrecy against questions from the

Group Plaintiffs-in-Warranty seeking answers about communications with Peoples

between 2018 and 2020. It seems that because the questions simply mention

Mr. Iczkovits’s lawyer, Mr. Iczkovits invokes lawyer-client privilege. He also invokes its

“derivative thereof”.

[244] The latter term was used in the examination at the time the objection was made. It

was explained during arguments that what was meant by this was litigation privilege and

settlement privilege. Those two forms of privilege are not derivative of lawyer-client

privilege, but the Court is willing to consider that the objecting lawyer misspoke and

actually meant other forms of privilege, not derivative forms of privilege.

[245] Communications between Mr. Iczkovits’s lawyer and Peoples or its lawyer cannot

be subject to professional secrecy given that the privilege protects communications

between the lawyer and his client, not between the lawyer and an adverse party.

Accordingly, the Court dismisses the objection invoking professional secrecy.

[246] As for litigation privilege and settlement privilege argued for O-27 during the

hearing, there is a distinction to be made between the two. It is difficult to see how litigation

91

Exhibit AI-12 at 2.

Ibid at 5.

92

500-17-109876-196

PAGE: 49

privilege can attach to correspondence between Mr. Iczkovits (or his lawyer) and Peoples

(or its lawyers). These are parties adverse to each other, they are not preparing for a

litigation together.

[247] As for settlement privilege, this may very well attach to correspondence between

Mr. Iczkovits and Peoples in the 2018-2020 period. Peoples had already sent a demand

letter to Portage in August 2017. Mr. Iczkovits refers to this in his letter of 9 April 2019 to

the Real Owners.⁹³The receivership proceedings occurred in September 2018.

[248] Mr. Iczkovits specifies on the last page of his letter of 9 April 2019 that the Real

Owners should consider retaining a separate lawyer since his own lawyer has been

retained to advise him personally and does not purport to act for anyone else. The

passage goes on to express the hope that Mr. Iczkovits’s interests and the interests of

the others remain aligned, thus implying that they may diverge.

[249] In light of the above, the Court concludes that question under objection O-27 must

be answered, subject to the caveat that any communications between Mr. Iczkovits (or

his lawyer) and Peoples (or its lawyers) can be redacted or excluded if it contains

settlement communications. Accordingly, the objection is maintained in part.

Jacob Berger

[250] Like Mr. Iczkovits, Mr Berger is defendant to the lawsuit by Peoples, a plaintiff-in-

warranty against the Group Defendants-in-Warranty and a defendant-in-warranty against

the Group Plaintiff-in-Warranty.

[251] The following questions posed to Mr. Berger are under objection; the entries in

strikeout having been withdrawn during the hearing:

Question Objection Undertaking/

Objection

by

Avi

Iczkovits

(Jacob

Court’s

Decision

by

N^o& Page

O-3

Question

Plaintiff

U-17 I would Litigation

like a copy of privilege

any and all Solicitor-

(p. 64)

exchanges

between

defendants

regarding the

drafting,

commenting

relating to the

initial nominee

agreement,

Colleague,

client

the privilege

Berger and

Beneficial

Owners

consent to

communi-

cation)

please.

93

Ibid at 2.

500-17-109876-196

PAGE: 50

Objection

Beneficial

Owners

O-3

(p. 10)

U-40

-

to Relevance, Jacob

Berger

please verify fishing

maintained

and

whether

confirm expedition,

you not in duty

were ever sued of

in

Cleveland undertaking

and/or

the given that

State of Ohio it's public

for any matters information

relating to real and clearly

estate. In the not in his

affirmative, and possession

by the way, my

question

is

whether civilly

or criminally. In

the affirmative,

to provide the

docket

number, and

any documents

which would be

in

your

possession

relating

to

those lawsuits.

Was he (Mr. Solicitor/client Jacob

Fred Schwartz) privilege; Berger

representing

relevance⁹⁴

you in the

context of any

Beneficial

Owners

O-5

(p. 20)

Objection

maintained

litigation

Ohio?

in

Beneficial

Owners

O-6

(p. 21)

U-3 (U-42) - Solicitor/client Jacob

verify whether privilege; Berger

Mr.

Fred relevance⁹⁶

Schwartz was

ever the

Objection

maintained

94

The table of objections submitted by the parties does not mention “relevance” as a basis of objection,

but the transcript clearly shows that this question is essentially the same as the next one, and at that

point, an objection is made “on the same basis of the first undertaking requested”, i.e. U-40, which was

objected to on the basis of relevance. This is how the objection was debated at the hearing.

The table of objections submitted by the parties indicates “solicitor/client privilege” as the basis for the

objection, but this seems to be an error since the transcript indicates an objection “on the same basis

of the first undertaking requested”, i.e. U-40, which was objected to on the basis of relevance. This is

how the objection was debated at the hearing.

96

500-17-109876-196

PAGE: 51

attorney

of

record on your

behalf or on

behalf of your

wife for any

litigation

in

Ohio, involving

allegations of

fraud,⁹⁵and if

so, to please

communicate

the

docket

number.

Beneficial

Owners

O-7

(p. 23)

U-4 - verify Solicitor/client Jacob

Objection

maintained

whether

Dick

Mr. privilege;

Bokart relevance

Berger

ever

represented

you or any of

your

companies in

any sort of

litigation

Ohio, and if so,

to please

communicate

in

the

docket

numbers.

Beneficial

Owners

O-10

(p. 67)

Were you ever Relevance

selling metal in (Abuse

Jacob

Berger

Objection

maintained

Cleveland,

were

under

you section 230)

involved in the

sale of metals

in Cleveland?

Beneficial

Owners

O-13

(p. 70)

Ever

involved in a

company

been Relevance

Jacob

Berger

Objection

maintained

known

as

South Euclid

Properties,

E-U-C-L-I-D?

Beneficial

Owners

O-14

(p. 71)

Ever

involved in a

been Relevance

Jacob

Berger

Objection

maintained

95

The particularization “involving allegations of fraud” was added during the hearing.

500-17-109876-196

PAGE: 52

company

known

as

Coventry

Estates?

Beneficial

Owners

O-1

(p. 1)

Concerning the Abusive

questions

asked you last

Jacob

Berger

I

week

your

about

involvement in

Cleveland, is

there anything

you would like

to

about

change

your

answers? I’m

giving you the

opportunity.

Beneficial

Owners

O-6

My

only Legitimate

Avi

Objection

maintained

question, Mr. commercial Iczkovits

Berger, is do interest

you know why

(p. 25)

you signed the

Deed of Sale

on behalf of the

company

9263-7156

Quebec Inc. or

just

the

property?

Beneficial

Owners

O-10

O-11

(p. 52)

U-101 - copies Litigation

of all and

correspondence settlement

between your privilege;

attorney and relevance

the attorney for

Jacob

Objection

Berger & maintained

Peoples

Peoples Trust

between 2018

and

January

2020.

Beneficial

Owners

O-14

O-15

(p. 75)

Why was that “You’re

done? (with asking why

regards to the a third party

Jacob

Berger

Objection

maintained

witness’s

did

counsel

something”.

communicating

500-17-109876-196

PAGE: 53

a copy of the Litigation

initial nominee privilege;

agreement to settlement

Peoples Trust) privilege⁹⁷

Beneficial

Owners

O-16

(p. 76)

Did

you Solicitor-

Jacob

Berger

authorize your client

attorneys

to privilege

communicate a

copy of that

agreement?

Beneficial

Owners

O-17

(p. 77)

Did you instruct Solicitor-

your attorneys client

Jacob

Berger

to do that?

privilege

Beneficial

Owners

O-18

(p. 77)

Were

you Settlement

Jacob

Objection

promised any privilege

concessions,

Berger & maintained

Peoples

economic

incentives or

leniency by the

bank, namely

Peoples

Trust ?

Beneficial

Owners

O-19

(p. 79)

Did the bank Settlement

promise you or privilege

offer you any

concessions,

Jacob

Objection

Berger & maintained

Peoples

economic

incentives or

leniency in any

lawsuit

or

action against

you

revealed

if

you

the

identities of the

beneficial

owners?

Have

Beneficial

Owners

O-20

(p. 79-80)

you Relevance; Jacob

Objection

Berger & maintained

Peoples

directly

Potential

communicated settlement

the identities of privilege

any of the

beneficial

owners

to

97

These two privileges were not listed in the table submitted by the parties, but the transcript clearly

indicates that they were invoked as grounds of objection.

500-17-109876-196

PAGE: 54

anyone from

the bank?

Beneficial

Owners

O-21

(p. 81)

I’m going to Document

ask you, have speaks for

Jacob

Berger

you

Exhibit

where

read itself

P-12

I’m

highlighting?

Are you aware

that

3(b)

section

states

that:

“The

confirm

their

parties

that

understandings

and

agreements

shall

remain

strictly

confidential

and not to be

disclosed

to

Peoples Trust.”

Beneficial

Owners

O-22

(p. 82)

Are you aware Document

Jacob

Berger

Objection

maintained

as to whether

your counsel

speaks for

itself; wrong

communicated witness

a copy of the

Master

Agreement

and the

Holding

Structure Sale,

P-12 and P-13,

to Peoples

Trust?

Beneficial

Owners

O-23

(p. 83)

What

precipitated

the

Settlement

privilege

Jacob

Objection

Berger & maintained

Peoples

communication

of these

documents to

Peoples Trust?

500-17-109876-196

PAGE: 55

[252] The questions under objections O-3 (p. 10), O-5, O-6 (p. 21), O-7, O-10, O-13,

and O-14 can be grouped together as relating to the theme of prior litigation involving Mr.

Berger in the U.S. state of Ohio. The other objections, namely O-6 (p. 25), O-10, O-11,

O-14, O-15, O-16, O-17, O-18, O-19, O-20, O-21, O-22, and O-23, relate to the theme of

the Counter Letters as well as communications with Peoples regarding the existence of

the Beneficial Owners.

[253] Regarding the first theme, namely prior litigation involving Mr. Berger in Ohio, the

objections are maintained. Any probative value of the questions is outweighed by the

prejudicial effect of leading the Court down a tangential path to cases in the past, from

another jurisdiction, involving other parties, with the real risk that Mr. Berger will be tarred

as having a bad character, or a propensity to commit wrongs, rather than being judged

on the merits of the facts of the present case. On top of this, there is the prejudicial effect

of judicial time and resources being spent on fact-finding regarding other cases on a

tangent from the present one.

[254] The caselaw⁹⁸on similar-fact evidence discussed above under the section dealing

with questions posed to Mr. Iczkovits applies here.

[255] Where evidence of similar facts from other cases has been admitted, it relates to

situations where the defendant in question was alleged to have orchestrated a larger

wrongful scheme. In that context, it was relevant for the trier of fact to have evidence of

other projects because the wrongfulness of the alleged acts is informed by alleged acts

in other projects. The similarity of other facts has to rise to the level of establishing a

modus operandi of wrongful conduct of the defendant. As mentioned in the section on Mr.

Iczkovits, there is a distinction here with the caselaw that admits similar facts: the

allegation is not that Mr. Berger executed a wrongful scheme connected to a larger modus

operandi.

[256] The second theme of the questions relates to the Counter Letters as well as

communications with Peoples regarding the identity of the Beneficial Owners.

[257] The first objection in this category, O-6 (p. 25), is made by Mr. Iczkovits based on

legitmate commercial interest. Mr. Berger also would have objected, on the grounds of

relevance, had Mr. Iczkovits not objected first.

[258] The question posed by the Beneficial Owners is why Mr. Berger signed the deed

of sale regarding a different property (125 Gagnon, not the Property at issue in this case),

on behalf of a numbered company. The question is similar to the question subject to

objection O-2 (p. 6), an objection made by Mr. Iczkovits when a similar question was

posed to him.

[259] Just as the latter objection was maintained, the Court also maintains O-6 (p. 25).

The question relates to a different property and creates the risk of a tangential fact-finding

process that will waste judicial time and resources. The Beneficial Owners have not made

98

Romanowski, supra note 76; Caron, supra note 76.

500-17-109876-196

PAGE: 56

out a case for relevance that overrides the legitimate commercial interest that Mr. Berger

has in not answering a question related to his other commercial projects.

[260] The objections O-10, O-11, O-14, O-15, O-18, O-19, O-20, O-22, and O-23 relate

to the theme of communications with Peoples regarding the existence of the Beneficial

Owners. The debate is the same as the one in relation to similar questions posed to the

representative of Peoples, Mr. Mallich. The Group Plaintiffs-in-Warranty pose the

questions because they have alleged breach of the confidentiality obligation in the Master

Agreement and they assert wanting to explore whether Peoples is in good faith in relying

on the Master Agreement. Peoples and Mr. Berger invoke settlement privilege.

[261] For the same reasons set out in the discussion on the objections invoking

settlement privilege against questions posed to Mr. Mallich, objections O-10, O-11, O-14,

O-15, O-18, O-19, O-20, and O-23 are maintained on the grounds of settlement privilege.

Regarding O-22, this objection was maintained during the hearing for reasons set out

orally.

FOR THESE REASONS, THE COURT:

[262] GRANTS the application of the Defendant-in-Warranty Dan Derhy entitled

Demande du défendeur en garantie Me Dan Derhy pour lever le secret professionnel

dated 30 November 2021;

[263] RELEASES the Defendant-in-Warranty Dan Derhy from the obligation of notarial

professional secrecy to which he is subject in connection with his mandate regarding the

Master Agreement dated 1 January 2016, Exhibit P-12, to the extent necessary for him

to make full answer and defence, notably to file defence proceedings, testify about all

relevant facts, and produce all relevant documents, against the Declaration of Forced

Intervention in Warranty dated 14 April 2021;

[264] DISMISSES the objections based on notarial professional secrecy to the following

questions:

Joseph Grossman

Question

by

Court’s Decision

Undertaking/Question

Peoples

I don’t want to put words in the Objection dismissed

witness’ mouth, but he said it was

Mr. Iczkovitz and Berger that were in

communication with Me Derhy

[Note by the Court: the foregoing is

the text of the question as presented

to the Court by the parties, but it is

not actually a question]

Peoples

Did Me Derhy explain the document Objection dismissed

at length? Did he read the document

500-17-109876-196

for the purposes of the people in

PAGE: 57

attendance in the room?

Peoples

So to your knowledge, did other Objection dismissed

people raise questions, issues, with

that document during that meeting?

Okay. Were there any other Objection dismissed

discussions to that effect? Or just,

you know, and Dan Dehry told you?

Were there meetings to discuss that

fact after? That he was not to be

released.

Ben Zion Schwartz

Question

by

Court’s Decision

Undertaking/Question

Peoples

And who mandated Mr. Derhy for Objection dismissed

the drafting of this document, to your

knowledge?

Peoples

Do you know who Dan Derhy Objection dismissed

communicated with at Peoples

Trust?

Abraham (Avi) Iczkovits

Question

by

Undertaking/Question

Court’s Decision

Peoples

UND -33 - So as Undertaking 33, I Objection dismissed

would ask for a copy of, if it exists,

the mandate letter to Me Derhy for

the drafting of the document.

Beneficial

owners

Were there any drafts of this Objection dismissed

agreement which were circulated

(by anyone) to which you were

copied?

Beneficial

owners

Have you communicated with Me Objection dismissed

Derhy at all since the proceedings

were taken in February 5 of 2020?

(“ […] I’m not asking about

anything

pertaining

to

his

attorney-client relationship.”)

Beneficial

owners

Have you communicated with Me Objection dismissed

Derhy at all since the month of

April 2021, when you received the

group Defendants’ Action in

Warranty?

500-17-109876-196

PAGE: 58

[265] WITH LEGAL COSTS against Abraham (Avi) Iczkovits in respect of his

contestation of Defendant-in-Warranty Dan Derhy’s application and his objection to the

above questions based on notarial professional secrecy;

[266] ADJUDICATES the objections made by the parties to the pre-trial examination

questions posed to the seven witnesses as set out in the column "Court's Decision" in the

tables below:

1. MARTIN MALLICH

Question

by

Beneficial

Owners

Objection Undertaking/ Objection

Objection

by

Court’s

Decision

Objection

N^o& Page

O-2

Question

GDU-1

– Settlement Jacob

(p. 18)

Provide

Privilege

Berger

& maintained

copies of all

communicatio

ns between

Peoples

counsel

for

Jacob Berger

and either the

Plaintiff

and/or

the

Plaintiff’s

counsel.

What

Beneficial

Owners

O-3

(p. 21)

Settlement Jacob

Objection

& maintained

precipitated

Privilege

Berger

the receipt of, Litigation

at the very Privilege

Peoples

least,

Master

the Solicitor-

client

Agreement on privilege

November

fifth

(5th),

twenty-

nineteen

(2019)?

Were

any meetings client

held either privilege

internally or Settlement

with Mr. Privilege

Beneficial

Owners

O-5

(p. 33)

there Solicitor-

Jacob

Berger

Peoples

Objection

& maintained

Berger and/or

Mr. Iczkovits

or

anybody

representing

them

500-17-109876-196

PAGE: 59

Question

by

Objection Undertaking/ Objection

Objection

by

Court’s

Decision

N^o& Page

Question

concerning

my clients in

twenty-

eighteen

(2018),

twenty-

nineteen

(2019)?

Beneficial

Owners

O-7

(p. 38)

Was

there Solicitor-

Jacob

Berger

Peoples

Objection

& maintained

any form of client

agreement or privilege

understanding

Settlement

in

place Privilege

between

Peoples Trust

and Jacob

Berger and/or

His counsel

which

precipitated

the disclosure

of

these

documents?

Avi

Iczkovits

O-20

(p. 183)

U-44 - Advise Litigation

Peoples

Objection

maintained in

part

Me

Neil privilege

Oberman

what

discussed

with

was

the

witness'

superior

regarding any

possibility of

assisting the

borrower.

2. DOVID MULLER

500-17-109876-196

PAGE: 60

Question Objection

Undertaking/

Question

Objection Objection

by

Court’s

Decision

by

N^o&

Page

Jacob

Berger

O-1

(p. 5)

Q16:

When

you Fishing

120305

Objection

dismissed

received the cheques, expedition Canada

am I safe to assume

that you made the

appropriate tax filings

and declared this as

income?

Inc.

Jacob

Berger

O-2

(p. 6)

Q17: Did you ever Fishing

claim operating losses expedition Canada

120305

Objection

dismissed

in your taxes with

Inc.

respect

to

the

property?

Jacob

Berger

O-3

(p. 6)

Q18: Which years Fishing

would you

incorporated

120305

have expedition Canada

Objection

dismissed

the

Inc.

operating losses in

your taxes?

Jacob

Berger

O-4

(p. 7-8)

U-10: For the periods of Fishing

2010 until 2019, the tax expedition Canada

120305

Objection

dismissed

filings

for

120305

Inc.

Canada Inc., in which

we would be able to

see whether or not

there were capital – the

income was disclosed

and whether or not the

operating losses were

disclosed.

Avi

O-1

U-11 - To provide a Fishing

copy of the Minute expedition Canada

120305

Objection

maintained

in part

Iczkovits (p. 2)

Book

for

120305

Inc.

Canada Inc. from the

years 2010 to 2021

Avi

O-11

Okay. Let’s just explore Hearsay

Jacob

Berger

Objection

maintained

Iczkovits (p. 48)

this

very

quickly

because we have a

limited amount of time

here, sir. Did you hear

that Mr. Berger was

involved — and I am

not saying that I am

suggesting this, for the

record, because it

500-17-109876-196

PAGE: 61

Question Objection

Undertaking/

Question

Objection Objection

by

Court’s

Decision

by

N^o&

Page

would

be

an

inappropriate allegation

on my part, but I would

like to know whether

you heard that Mr.

Berger was involved in

some

difficulties

financial

resulting

from some business

deals that might have

gone

badly

in

Cleveland? Is that the

information that you

would have had in your

possession at that

time?

Avi

O-12

And did you hear that Hearsay

he had to leave

Cleveland because of

those problems? Is that

your knowledge?

Jacob

Berger

Objection

maintained

Iczkovits (p. 50)

Avi

O-18

Well, let me ask you Fishing

this question; did you expedition Canada

120305

Objection

dismissed

Iczkovits (p. 81)

instruct

your

Inc.

accountant to take any

losses associated with

this investment; yes or

no?

Avi

O-20

Did you file any Fishing

elections with either the expedition Canada

120305

Objection

maintained

in part

Iczkovits (p. 81)

Federal or Provincial

Government seeking to

take a loss against your

corporate entity; yes or

no? And to produce a

Inc.

copy of the same.

U-27 - To provide a

Avi

O-21

Fishing

expedition Canada

Inc.

120305

Objection

dismissed

copy of the Deponent’s

Iczkovits (p. 81)

financial

statements

from the year 2010 to

the year 2021 with

respect to the named

Plaintiff / Defendant in

Warranty, to see how

500-17-109876-196

PAGE: 62

Question Objection

Undertaking/

Question

Objection Objection

by

Court’s

Decision

by

N^o&

Page

the investment is listed

in

said

financial

statement

GIVES EFFECT to the offer by the parties and ORDERS them to seal any documents

obtained under the above questions to Mr. Muller that are filed in the Court record;

3. ERVIN HOFMAN

Question Objection

Undertaking/

Question

U-27: A copy of the Overly

company and/or broad

your tax filings and fishing

Objection Objection

by

Court’s

Decision

Objection

maintained

in part

by

Jacob

Berger

N^o& Page

O-6

Ervin

& Hofman

(123645

(p. 4-5)

the annual financial expedition Canada

statements of the

company, for the

years in which the

witness or the

Inc.)

company

in

question, 123645

Canada Inc., has

declared the loss or

has treated the

loss.

Jacob

Berger

O-7

(p. 7-8)

U-28: For the years Overly

in which the cash broad.

calls were made, to

Ervin

Hofman

(123645

Objection

maintained

in part

obtain a copy of the (answered Canada

company 123645 that it was Inc.)

Canada

financial

Inc.’s added to

the net

statements to see investment)

how these cash

calls were treated

by the company in

respect of its own

financials, if it was

considered

supplementary

investment

whatnot.

as

or

Avi

Iczkovits

O-15

(p. 37)

Sir, did you ever Fishing

instruct your expedition Hofman

Ervin

Objection

dismissed

500-17-109876-196

PAGE: 63

Question Objection

Undertaking/

Question

accountant to write

off for tax purposes

your investment in

Objection Objection

Court’s

Decision

by

N^o& Page

by

(123645

Canada

Inc.)

the

Jonquière

properties?

Avi

Iczkovits

O-16

(p. 38)

And

again,

I

reiterate Fishing

Ervin

Objection

dismissed

if

my expedition Hofman

colleague

prepared

withdraw

is

to

his

(123645

Canada

Inc.)

objection, are you

prepared to confirm

whether you have

in fact written off

your investment in

the

Jonquière

properties?

GIVES EFFECT to the offer by the parties and ORDERS them to seal any documents

obtained under the above questions to Mr. Hofman that are filed in the Court record;

4. JOSEPH GROSSMAN

Question Objection

Undertaking/

Question

U-35 - Provide a full Many

copy of file related to grounds

Objection Objection

by

Court’s

Decision

Objection

by

N^o& Page

O-10

Avi

Joseph

Iczkovits (p. 92)

Grossman maintained

in part

Place du Portage

(litigation

privilege,

solicitor-

client

privilege,

fishing

expedition)

5. BEN ZION SCHWARTZ

Question Objection

Undertaking/

Question

Objection Objection

by

Court’s

Decision

Objection

maintained

by

N^o& Page

O-11

Avi

Are you married Relevance Mr.

Iczkovits (p. 32)

separate

property?

as

to

Schwartz

500-17-109876-196

PAGE: 64

Avi

O-16

Okay. Who came up Relevance Mr.

Objection

Iczkovits (p. 38)

with the funds for

that particular

investment?

Schwartz

maintained

6. ABRAHAM (AVI) ICZKOVITS

Question Objection

Undertaking/

Question

UND-4 - Me Oberman, Attorney-

I would have copies, if client &

it’s applicable, if it work-

exists, obviously — related

Objection Objection

by

Court’s

Decision

Objection

maintained

by

N^o& Page

O-2

Avi

Iczkovits

(Jacob

Peoples

(p. 41)

Berger and

Group

copies

of

any privilege

communications with -

between Mr. Iczkovits

and Mr. Tobenstein.

Plaintiffs-

in-

Warranty

consent to

communica-

tion)

Beneficial O-2

Do you recall whether Relevance Avi

Objection

owners

(p. 6)

Mr. Berger would have &

Iczkovits

maintained

ever signed a Deed of legitimate

Sale for that property interest

on Gagnon?

Beneficial O-3

I’m going to show you Relevance Avi

Objection

owners

(p. 7)

a public document,

which is your Deed of

Sale, dated June the

4th, 2012. Are you

Iczkovits

maintained

aware

of

this

company, 9263-7156

Québec Inc.?

Beneficial O-4

Do you have an Relevance Avi

Objection

owners

(p. 7)

interest

company (9263-7156 legitimate

Québec Inc.)? interest

“Here is the REQ for Relevance Avi

9263-7156 Québec & Iczkovits

in

this &

Iczkovits

maintained

Beneficial O-6

owners

Objection

maintained

(p. 8)

Inc. as at 2:41 p.m. this legitimate

afternoon, and I see interest

that

the

sole

500-17-109876-196

PAGE: 65

shareholder of this

company is the

Iczkovits Family Trust

and the sole director is

yourself.

Is

that

accurate?”

Beneficial O-7

I’m going to go back Relevance Avi

Objection

owners

(p. 9)

then to this Deed of &

Sale. Do you have any legitimate

idea why it says that interest

it’s being — that the

Iczkovits

maintained

company, 9263-7156

Québec Inc. is being

represented by Jacob

Berger

for

the

signature of the Deed

of Sale?

Beneficial O-9

U-1: verify whether a Relevancy Avi

partnership agreement and Scope Iczkovits

Objection

maintained

in part

owners

(p. 11)

exists

between – should

yourself, Mr. Berger be limited

and/or your respective to the

companies or entities property in

and, if so, to kindly dispute

communicate it.

Beneficial O-11

What were they [the Relevance Avi

Objection

maintained

Objection

maintained

owners

Beneficial O-12

owners (p. 16)

(p. 14)

deals]?

Iczkovits

Have you invested in Relevance Avi

any other deals with &

Iczkovits

Mr.

Portage?

Berger

after legitimate

interest

Beneficial O-13

owners (p. 16)

In general, without Relevance Avi

Objection

maintained

going into too many &

Iczkovits

details, how did your legitimate

investments with Mr. interest

Berger work out? Did

you ever lose money?

Beneficial O-19

owners (p. 57)

Have you done this Relevance Avi

Objection

maintained

(reinvesting

your &

Iczkovits

finder’s fee into equity legitimate

in the property) in interest

other

deals

also

involving Mr. Berger or

just this one

500-17-109876-196

PAGE: 66

Beneficial O-23

Did you invest in any Relevance Avi

deals with Mr. Berger & Iczkovits

after 2015-2016? legitimate

Objection

maintained

owners

(p. 80)

interest

Beneficial O-20

owners (p. 61)

Have

you

ever Relevance Avi

Objection

maintained

in part

invested, in your part &

experience,

Iczkovits

either legitimate

through a corporation interest

or through what’s

called

a

limited

partnership?

Beneficial O-29

Did you review Exhibit Attorney-

P-12, being the Master client

Agreement, with a privilege

Avi

Iczkovits

Objection

maintained

owners

(p. 102)

legal

professional

before signing it and

obtain an explanation

from

that

professional?

Beneficial O-18

Do you have an Litigation

agreement in place privilege

Avi

Iczkovits

Objection

dismissed

owners

(p. 95)

with

Mr.

Lazarus Common

whereby you agreed interest

not to collect on any privilege

judgments, should you Settlement

obtain it, against him? privilege

Do you know why your Solicitor-

counsel did not appear client

Beneficial O-25

Avi

Iczkovits

Objection

dismissed

owners

(p. 121)

to contest the order privilege

that was sought by Litigation

Peoples Trust?

privilege

Beneficial O-26

Do you know if in — Solicitor-

pursuant — let’s say client

the year 2018 and privilege

through 2020, was

Avi

Iczkovits

Objection

dismissed

owners

(p. 122)

your

counsel

communicating with

Peoples Trust and/or

its counsel?

Beneficial O-27

UND-45

- “That is

Avi

Iczkovits

Objection

maintained

in part

owners

(p. 123)

communicate a copy protected

of all correspondence by a form

between

yourself of

and/or your attorney attorney-

and Peoples Trust client

and/or its attorneys privilege or

500-17-109876-196

PAGE: 67

between January 20, derivative

2018 and January thereof.”

2020.

7. JACOB BERGER

Question Objection Undertaking/

Objection

by

Court’s

Decision

Objection

maintained

by

N^o& Page

O-3

Question

U-40

please verify fishing

Beneficial

Owners

-

to Relevance, Jacob

Berger

(p. 10)

and

whether

confirm expedition,

you not in duty

were ever sued of

in

Cleveland undertaking

and/or

the given that

State of Ohio it's public

for any matters information

relating to real and clearly

estate. In the not in his

affirmative, and possession

by the way, my

question

is

whether civilly

or criminally. In

the affirmative,

to provide the

docket

number, and

any documents

which would be

in

your

possession

relating

to

those lawsuits.

Was he (Mr. Solicitor/client Jacob

Fred Schwartz) privilege; Berger

representing relevance

you in the

context of any

Beneficial

Owners

O-5

(p. 20)

Objection

maintained

litigation

Ohio?

in

Beneficial

Owners

O-6

(p. 21)

U-3 (U-42) - Solicitor/client Jacob

verify whether privilege; Berger

Mr. Fred relevance

Schwartz was

Objection

maintained

500-17-109876-196

PAGE: 68

ever

attorney

the

of

record on your

behalf or on

behalf of your

wife for any

litigation

in

Ohio, involving

allegations of

fraud, and if so,

to

please

communicate

the

docket

number.

Beneficial

Owners

O-7

(p. 23)

U-4 - verify Solicitor/client Jacob

Objection

maintained

whether

Dick

Mr. privilege;

Bokart relevance

Berger

ever

represented

you or any of

your

companies in

any sort of

litigation

Ohio, and if so,

to please

communicate

in

the

docket

numbers.

Beneficial

Owners

O-10

(p. 67)

Were you ever Relevance

selling metal in (Abuse

Jacob

Berger

Objection

maintained

Cleveland,

were

under

you section 230)

involved in the

sale of metals

in Cleveland?

Beneficial

Owners

O-13

(p. 70)

Ever

involved in a

company

been Relevance

Jacob

Berger

Objection

maintained

known

as

South Euclid

Properties,

E-U-C-L-I-D?

Beneficial

Owners

O-14

(p. 71)

Ever

involved in a

company

been Relevance

Jacob

Berger

Objection

maintained

500-17-109876-196

PAGE: 69

known

Coventry

Estates?

My

as

Beneficial

Owners

O-6

only Legitimate

Avi

Objection

maintained

question, Mr. commercial Iczkovits

Berger, is do interest

you know why

(p. 25)

you signed the

Deed of Sale

on behalf of the

company

9263-7156

Quebec Inc. or

just

the

property?

Beneficial

Owners

O-10

O-11

(p. 52)

U-101 - copies Litigation

of all and

correspondenc settlement

e between your privilege;

attorney and relevance

the attorney for

Jacob

Objection

Berger & maintained

Peoples

Peoples Trust

between 2018

and

January

2020.

Beneficial

Owners

O-14

O-15

(p. 75)

Why was that “You’re

done? (with asking why

regards to the a third party

Jacob

Berger

Objection

maintained

witness’s

did

counsel

something”

communicating Litigation

a copy of the privilege;

initial nominee settlement

agreement to privilege

Peoples Trust)

Beneficial

Owners

O-18

(p. 77)

Were

you Settlement

Jacob

Objection

promised any privilege

concessions,

economic

Berger & maintained

Peoples

incentives or

leniency by the

bank, namely

Peoples

Trust ?

500-17-109876-196

PAGE: 70

Objection

Berger & maintained

Peoples

Beneficial

Owners

O-19

(p. 79)

Did the bank Settlement

promise you or privilege

offer you any

Jacob

concessions,

economic

incentives or

leniency in any

lawsuit

or

action against

you

revealed

if

you

the

identities of the

beneficial

owners?

Have

Beneficial

Owners

O-20

(p. 79-80)

you Relevance; Jacob

Objection

Berger & maintained

Peoples

directly

Potential

communicated settlement

the identities of privilege

any of the

beneficial

owners

to

anyone from

the bank?

Beneficial

Owners

O-22

(p. 82)

Are you aware Document

Jacob

Berger

Objection

maintained

as to whether

your counsel

speaks for

itself; wrong

communicated witness

a copy of the

Master

Agreement

and the

Holding

Structure Sale,

P-12 and P-13,

to Peoples

Trust?

Beneficial

Owners

O-23

(p. 83)

What

precipitated

the

Settlement

privilege

Jacob

Objection

Berger & maintained

Peoples

communication

of these

documents to

Peoples Trust?

[267] WITHOUT LEGAL COSTS in respect of the application to adjudicate the

objections set out in the above tables (paragraph 266).

500-17-109876-196

PAGE: 71

__________________________________

AZIMUDDIN HUSSAIN, J.S.C.

Mtre. Gabrielle Tremblay⁹⁹

BORDEN LADNER GERVAIS LLP

Lawyer for the Plaintiff Peoples Trust Company

Mtre. Nicholas Chine

Mtre. Krystyn Pietras

STEIN & STEIN INC.

Lawyers for the Defendant/Plaintiff-in-Warranty/Defendant-in-Warranty Jacob Berger

Mtre. Sofia Olivia Mercier

SPIEGEL, SOHMER INC.

Lawyer for the Defendants/Plaintiff-in-Warranty/Defendant-in-Warranty Abraham

Iczkovits and the Iczkovits Family Trust

Mtre. Michael Hollander

OIKNINE & ASSOCIÉS

Lawyer for the Defendants/Defendants-in-Warranty/Plaintiffs-in-Warranty Boruch Moses

Rosenberg, Ben Zion Schwartz, Joseph Grossman et al.

Mtre. Philip Smoke

PHILIP SMOKE AVOCAT-ATTORNEY

Lawyer for the Defendant/Plaintiff-in-Warranty/Defendant-in-Warranty 123645 Canada

Inc.

Mtre. Hélène B. Tessier

LAPOINTE ROSENSTEIN MARCHAND MELANÇON LLP

Lawyer for the Defendant-in-Warranty Dan Derhy

Dates of hearing: 27-29 April 2022

Suspension of advisement due to questions posed to the lawyers: 4 May 2022

Resumption of advisement: 11 May 2022

99

Mtre. Tremblay left this firm soon after the matter was taken under advisement. Mtre. Kevin Mailloux

continued representation of Peoples after her departure.

500-17-109876-196

PAGE: 72

ANNEX A

LIST OF PARTIES AND THEIR RESPECTIVE PARTY STATUSES

PEOPLES TRUST COMPANY

Plaintiff

v.

JACOB BERGER *

-and-

ABRAHAM (AVI) ICZKOVITS in his personal capacity and capacity as

trustee of the ICZKOVITS FAMILY TRUST X

-and-

BORUCH MOSES ROSENBERG et al.¹⁰⁰

*

Defendants

JACOB BERGER *

Plaintiff in warranty

v.

ABRAHAM (AVI) ICZKOVITS in his personal capacity and capacity as

trustee X

-and-

BORUCH MOSES ROSENBERG et al. *

Defendants in warranty

-and-

BEN ZION SCHWARTZ * X

-and-

JOSEPH GROSSMAN * X

Defendants in warranty

ABRAHAM (AVI) ICZKOVITS X

Plaintiff in warranty

v.

BORUCH MOSES ROSENBERG et al. *

Defendants in warranty

-and-

BEN ZION SCHWARTZ * X

-and-

JOSEPH GROSSMAN * X

Defendants in warranty

100

For the names covered by “et al”, see detailed list on next page, under “Boruch Moses Rosenberg”.

500-17-109876-196

PAGE: 73

BORUCH MOSES ROSENBERG et al. *

Plaintiffs in warranty

-and-

BEN ZION SCHWARTZ* X

-and-

JOSEPH GROSSMAN* X

Defendants in warranty

v.

JACOB BERGER & ABRAHAM (AVI) ICZKOVITS X

Defendants in warranty

BORUCH MOSES ROSENBERG *

SHIE OPPMAN *

CHARLES SZNICER, a.k.a. CHARLES SNICZER *

REUBEN TOBER *

BERNARD JACOBOVITS *

MIRIAM KUPERSTEIN, a.k.a. MIRIAM KUPFERSTEIN X

ZOLTAN JACOBOVITS, a.k.a. ZOLTAN JAKABOUITZ *

PETER WEINER *

AMROM WINTERNITZ * X

ELLA (ESTHER) WINTERNITZ * X

CHAIM SANDERS * X

LIBA (WINTERNITZ) SANDERS * X

PEARL BAUM * X

HIRSCH SCHWARTZ * X

SOLOMON GRAUSZ *

ABRAHAM GROSSMAN * X

MOSCHE SHAPIRA, a.k.a. MOSHE SHAPIRA, MOSHE SHAPIRO *

120305 CANADA INC. *

123645 CANADA INC. *

CHAIM HERSHKOWITZ X

SHIA GRUNWALD *

ALEX LAZARUS *

6811728 CANADA INC.

Defendants / Defendants in warranty/ Plaintiffs in warranty

v.

DAN DERHY

Defendant in warranty

500-17-109876-196

PAGE: 74

COLOUR CODE

Defendant sued by Peoples, is not represented, but is suing Mtre. Derhy in warranty

Defendants sued by Peoples, are not represened, and are not suing Mtre. Derhy in warranty

Defendants suing Mtre. Derhy in warranty. For the particularities about parties’ statuses under the

Master Agreement, see footnotes 4, 5, 6, 7, 9, 10, 15, and 38, above.

Defendants not suing Mtre. Derhy in warranty

Defendants in warranty not suing Mtre. Derhy in warranty and not being sued by Peoples

X Familial relationship with another party to the proceedings

X Refusal to renounce professional secrecy

* Renounced professional secrecy explicitly or implicitly