One York Street Inc.v.2360083 Ontario Limited Court of Appeal 11 March 2026
The Issue
Can a party claim they did not understand the legal implications of a lease while at the same time refusing to disclose the legal advice they received about that lease?
According to the Court of Appeal for Ontario the answer is “no”.
The Court held that a party may lose solicitor-client privilege if their litigation position relies on their understanding (or misunderstanding) of their legal rights.
The Background
The Landlord leased retail space in a downtown Toronto shopping centre to a company operating Coppa’s Fresh Market.
The lease structure was significant:
- Initial 3-year term
- Four renewal options
- Total potential term of 20 years
Shortly after signing the lease, the parties executed an extension confirming the full 20-year term.
Problems soon developed.
The tenant allegedly fell behind in rent and abandoned the premises. The Landlord sued for unpaid rent and damages.
The Tenant’s Defence
The Tenant argued the lease should not be enforced because the Landlord allegedly made misrepresentations during negotiations, including “guarantees” about the level of foot traffic that would pass through the shopping centre.
In its original defence, the Tenant also claimed:
- it did not understand the ramifications of the lease extension, and
- it signed the agreement without legal advice.
There was one problem.
That statement turned out to be incorrect.
The Tenant had, in fact, received legal advice from a law firm during the lease negotiations.
The Privilege Issue
Once the Landlord learned that legal advice had been given, it argued the Tenant had waived solicitor-client privilege.
Why?
Because the Tenant was relying on its alleged misunderstanding of the lease as part of its defence.
The Landlord therefore sought production of the law firm’s file relating to the lease negotiations.
Before the motion was heard, the Tenant amended its pleadings to remove the statement that it had signed the lease without legal advice.
The tenant argued that this amendment preserved privilege.
The Motion Judge
The motion judge disagreed.
She held that the tenant had implicitly waived solicitor-client privilege and ordered production of the lawyer’s file.
Her reasoning was straightforward:
If a party claims it relied on representations that affected its understanding of the lease, the legal advice received about that lease becomes directly relevant.
It would be unfair to allow the party to rely on its alleged misunderstanding while shielding the advice it actually received.
The Divisional Court
The Divisional Court reversed that decision.
It concluded that because the Tenant had amended its pleading, the reference to lack of legal advice was removed and privilege should be preserved.
The Court of Appeal
The Court of Appeal restored the motion judge’s order. The Court held that the Tenant’s amended pleading still relied on its understanding of the legal effect of the lease.
Specifically, the Tenant alleged that:
- the Landlord made extra-contractual guarantees about foot traffic, and
- the Tenant relied on those guarantees when entering the lease.
By advancing this argument, the Tenant put its understanding of its legal rights under the lease directly in issue.
Because the Tenant had received legal advice at the time, fairness required disclosure of that advice.
The Key Legal Principle
The Court summarized the rule this way:
A party may lose solicitor-client privilege when it relies on its understanding (or lack of understanding) of its legal position as part of a claim or defence.
In those circumstances, the party cannot simultaneously rely on that position and keep its legal advice secret.
What This Means in Practice
This decision is an important reminder for litigants and their counsel.
1. Misrepresentation Claims Can Trigger Privilege Issues
Simply alleging misrepresentation does not automatically waive privilege.
But if the allegation relies on the party’s understanding of the legal effect of the agreement, privilege may be lost.
2. Pleadings Matter
Statements about not understanding a contract or not receiving legal advice can have significant consequences.
Even if those statements are later amended or removed, the court may still find that the party has put its legal understanding in issue.
3. You Cannot Use Privilege as Both Sword and Shield
A litigant cannot:
- claim they misunderstood the legal implications of a contract, and
- refuse to disclose the legal advice they received about that very issue.
Courts will not allow privilege to be used as an unfair litigation advantage.
Brian Madigan LL.B., Broker