Canada: The Second Opinion: Absolute Privilege For Lawyers Not So Absolute

Amato v. Welsh, 2013 ONCA 258 marks an interesting development in the law – it suggests the previously inviolable doctrine of absolute privilege which protects lawyers from suit may admit an exception. The Court of Appeal upheld the decision of the lower court, saying that it is possible that a court could find that the duty of loyalty trumps the doctrine of absolute immunity.

The centuries old doctrine of absolute privilege permits lawyers, judges and other players in legal proceedings to shield themselves from suit for words spoken during such proceeding, provided the words were uttered for the purposes of the proceeding and by someone under  duty to make such statements.

This case has interesting wrinkles regarding the application of the doctrine of absolute privilege. The first is whether the doctrine applies so as to bar claims against a lawyer by a client for statements made  by the lawyer in another proceeding. The second is whether the doctrine applies, not to a statement of a lawyer, but the alleged failure to make a statement.


Peter Welsh, Julia Dublin and their law firm, Aylesworth LLP (collectively, "Dublin et al") represented Robert Mander, Peter Sbaraglia, and their several affiliated corporations (collectively, the "Mander Group") in connection with allegations the Mander Group was, in essence, a Ponzi scheme.

The OSC commenced an investigation of Mander and others.  As part of that investigation, OSC representatives examined Mander and Sbaraglia.  Dublin represented both men at their OSC examinations.

Prior to the OSC examinations, S.A. Capital had also retained Dublin because it had invested more than $10 million in the Mander Group and sought Dublin's opinion on whether the existing arrangements between S.A. Capital, its clients and the Mander Group complied with applicable securities laws.

In its Statement of Claim, S.A. Capital alleges that Dublin et al were obliged to tell the OSC about S.A. Capital's involvement as investors in the Ponzi scheme and that the failure to do so amounted to misrepresenting the facts to the OSC.  S.A. Capital contends that if Dublin et al had disclosed, the OSC would have realized that the Ponzi scheme was larger than represented and might have chosen to act.  If this had occurred, S.A. Capital says, its chances of recovering its investment would have been much greater.  S.A. Capital also claims that, but for Dublin et al's breach of their duties, S.A. Capital would have taken steps to protect itself from the Ponzi scheme.  Instead, it alleges it suffered damages in the amount of $14 million.

Because this was a motion to strike, the issue on the appeal was whether it was plain and obvious that the absolute privilege doctrine precludes a client from asserting a cause of action against his or her lawyer for alleged breaches of fiduciary duty and the duty of loyalty based on statements made or omitted by the lawyer while representing different clients in a quasi-judicial proceeding.

The appellant lawyers argued that there are no exceptions to the doctrine of absolute privilege that attaches to a lawyer's statements in court proceedings, regardless of the importance of the duty that is said to have been breached in a particular case by the statements at issue. They also argued that, as a matter of public policy, there is no justification for the recognition of any exception to the privilege.  The Divisional Court, the appellants argued, had erred by unjustifiably recognizing an exception to the absolute privilege doctrine.

The Ontario Court of Appeal disagreed, refused to strike the offending paragraphs and allowed the respondents' claim to proceed to trial.


The Ontario Court of Appeal's decision is notable for its thorough review of the historical development of the both the doctrine of absolute privilege and the duty of loyalty.

Dublin et al did not question the right of the S.A. Capital to sue in negligence, nor did they attack the S.A. Capital's claims of breaches of fiduciary duty and the duty of loyalty per se. Rather, Dublin et al submitted that the latter causes of action may be founded only on the fact of the Dublin's' alleged competing retainer. Dublin et al argued that it was not open to S.A. Capital to found its claims on statements made or omitted by Dublin during the entirely separate OSC proceeding.

The Court found that Dublin's proposed application of the absolute privilege doctrine was novel in the circumstances, and held that "the boundaries of the absolute privilege doctrine are not firmly set.  And its scope and application continue to evolve."  The Court went on to say that:

" is at least arguable that, in a proper case and on a full factual record, the duty of loyalty could be held to trump the immunity afforded by the doctrine of absolute privilege.  In my opinion, when these two important principles come into conflict, the conclusion that absolute privilege necessarily overtakes the lawyer's duty of loyalty is not inevitable."

There was also the question of the applicability of the doctrine of absolute privilege, not in the case of a statement, but in the case of omissions or silence (the alleged non-disclosure of material facts in dealings with the OSC). The Court found that while the "doctrine is intended to ensure that counsel are able to zealously advocate on behalf of their clients without fear of recrimination or liability for doing so" there was no case law with respect to its application to silence.

The Court also found that there was no case law that had considered or decided whether a client ("Client A") may bring a claim against his or her lawyer based on the lawyer's alleged statements or steps in a proceeding on behalf of another client ("Client B").  This question was not considered in in an earlier seminal authority, Demarco v. Ungaro (1979), 21 O.R. (2d) 673 (H.C.J.). Nor was there any authority respecting the claim of the primacy of  absolute privilege

For these reasons, the Court dismissed the appeal and allowed the matter to proceed to trial.

The issue in this case arises from the competing views of the retainer and duty of loyalty. On an expansive view (the one adopted by the Court), the related nature of the OSC investigation to the original retainer required Dublin et al to continue to represent the best interests of the plaintiffs throughout. On the narrower view, the duty of loyalty ought to be solely to the alleged wrongdoer and lawyer and her firm had a duty to zealously represent the alleged wrongdoer without any divided loyalty. These conflicting interpretations of the duty of loyalty, especially in light of the doctrine of absolute privilege, will be closely watched as this case moves forward to trial.

To view original article, please click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.