In a recent decision in One York Street Inc. v. 2360083 Ontario Limited, 2026 ONCA 176 (“One York Street”) the Court of Appeal for Ontario reinforced an important and often-overlooked principle: a party to litigation cannot assert that its understanding of its legal rights drove its conduct, while also refusing to disclose the legal advice in relation to that very understanding.
In other words, when a party invokes its state of mind about its own legal position into a legal claim or defence, it risks being treated as having “waived” solicitor-client privilege over the legal advice it received at the relevant time.
Brief Summary of the Facts
In May 2017, 2360083 Ontario Limited (the “Tenant”) entered into a lease (the “Lease”) with One York Street Inc. (the “Landlord”) for premises in a shopping centre in downtown Toronto (the “Lease Premises”). The Lease was for an initial term of three years, with multiple options to renew. On the day after the Lease was executed, the Tenant entered into a lease extension agreement with the Landlord (the “Extension”).
In October 2021, the Landlord commenced a claim against the Tenant for defaulting on rent and abandoning the Leased Premises entirely. In their defence, the Tenant alleged that the Landlord induced it to enter into the Lease and Extension, and that the Tenant relied on the Landlord’s extra-contractual representations and “guarantees” about the volume of customer foot traffic that would flow through the Leased Premises. Importantly, the Tenant pled that it entered into the Extension without understanding the legal consequences and without the benefit of legal advice. Ultimately, it was revealed that the Tenant did receive legal advice on the extension. The Landlord then moved for production of the Tenant’s legal file on the basis that the Tenant invoked its state of mind of into its own legal defence, which amounted to its deemed waiver of solicitor-client privilege. The Tenant later sought to amend its defence to remove any explicit reference to a lack of legal advice or a misunderstanding of the Extension (the “Amendments”). However, the allegations about the Landlord’s extra-contractual “guarantees” remained in the Tenant’s pleading. In other words, the Tenant continued to rely on their purported lack of understanding of their legal position.
The motion judge held that, by relying on its understanding of its own legal position, the Tenant was deemed to have waived its solicitor-client privilege. As a result, the motion judge ordered the Tenant to produce its legal file relating to the Lease negotiations and the Extension. This decision was overturned by the Divisional Court but then restored by the Court of Appeal.
The Court’s Ruling
The Court found that the Tenant was deemed to waive its privilege, even in light of the Amendments. What remained in the Tenant’s pleading – the Tenant’s continued reliance on the Landlord’s extra-contractual promises about foot traffic – was enough to sustain a finding of the Tenant’s waiver of privilege. To that end, the Court clarified that a deemed waiver of solicitor-client privilege does not hinge on whether a party has expressly mentioned legal advice, or the absence of it, in its pleadings. Rather, the inquiry is grounded in fairness and consistency: a party waives privilege where two conditions are met – the legal advice it received is relevant to an issue in the litigation, and the party has made its understanding of that advice, or lack thereof, a live issue in its claim or defence.
Going Forward
One York Street is a reminder that solicitor-client privilege, while fundamental, is not absolute. A party cannot use privilege as both a sword and a shield – asserting a narrative about its legal understanding to advance a claim or defence, while simultaneously preventing the opposing party from scrutinizing the advice that informed that understanding.
Parties must carefully consider, before pleading, whether the claims or defences they advance –including allegations of extra-contractual representations or guarantees – place their understanding of their legal position in issue. If they do, and legal advice was received at the relevant time, production of that advice may well follow. Equally, attempting to address the issue through pleading amendments after the fact is unlikely to cure the problem if the underlying theory of the case still depends on the party’s legal understanding.