Privilege At Risk: How Pleading Lack Of Legal Understanding Can Backfire

What happens when a party claims it misunderstood the legal consequences of a contract, but had in fact obtained legal advice at the time it was executed? The short answer is that it can result in a complete loss of solicitor-client privilege.

The Ontario Court of Appeal addressed this issue in One York Street Inc. v. 2360083 Ontario Limited, 2026 ONCA 176, clarifying that a deemed waiver of solicitor-client privilege may arise when a party puts its understanding (or lack thereof) of its legal position in issue. In such circumstances, principles of trial fairness preclude the party from withholding the legal advice that informed that understanding, especially where those communications are necessary to test that assertion.