COURT FILE NO.: 1573
DATE: 20070119
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
FERRIER, GROUND and LOFCHIK JJ.
B E T W E E N:
CLARENCE SMITH
Plaintiff/Respondent
- and -
LONDON LIFE INSURANCE COMPANY
Defendant/Appellant
J.F. O’Brien counsel on behalf of the plaintiff/respondent
Wendy M. Matheson, counsel on behalf of London Life Insurance Company defendant/appellant
HEARD: November 16 and 17, 2006
(at London)
BY THE COURT:
[1] The defendant, London Life Insurance Company, appeals, with leave, from the Order of Thomson J. requiring it to produce on discovery in this action its entire claims file arising from a prior action between the parties, including documents authored by its in-house counsel and other employees.
[2] The defendant claimed before the Motions judge and in this appeal that the documents sought are subject to litigation and/or solicitor/client privilege. It seeks an Order setting aside the Order below and declaring that the documents sought by the plaintiff need not be produced.
[3] In July 1998, Clarence Smith commenced an action against London Life Insurance Company (“London Life”) for benefits owing under a disability policy of insurance as the result of an injury sustained in 1995. The defendant insurer had paid long-term disability benefits until 1997 and then terminated such payments.
[4] The defendant ultimately re-instated long-term disability benefits and the coverage action was settled.
[5] However, before settlement in the coverage action was reached, the plaintiff commenced the within action also arising from the termination of the same benefits, alleging breach of duty of care including duty of good faith and fair dealing in the handling of his claim for benefits and claiming, in this action, special and general damages as well as aggravated and punitive damages based on the insurer’s “unwarranted, willful and high-handed conduct” that was “carried on with conscious disregard for the plaintiff’s rights”.
[6] At the Examination for Discovery of London Life, plaintiff’s counsel asked for production of certain documents. The documents were not produced on the ground of privilege. More specifically, plaintiff’s counsel asked for production of the entire file of Vicky Ramsay, an in-house lawyer and London Life’s legal counsel in the first action. The specific Discovery question was as follows:
I am asking for the entire file and all further claims and notes and e-mails with respect to the first action, including anything authored by Vicky Ramsay.
[7] Two related questions were also refused on the basis of privilege: a request for production of a litigation consultant’s notes and a request for production of a memo prepared by employee Sharon Jackson to assist legal counsel.
[8] The plaintiff brought a motion to compel answers to these three questions amongst others.
[9] By decision dated January 23, 2006, the Motions Judge ordered that the above three questions be answered. He also ordered that some other documents be produced but they are not the subject matter of this appeal.
[10] With respect to the three questions that are the subject of this appeal, the Motions Judge concluded that the privilege that would normally prevent production of the documents had been impliedly waived. The Motions Judge referred to waiver and held that “the defendant did allege that all employees acted in good faith and by making that allegation put its ‘state of mind’ at issue”.
[11] The Motions judge further stated that the general pleading of the defendant that its employees acted in good faith put the “actions of the defendant’s employees at issue, including legal counsel” and it was therefore fair that the entire file be produced.
[12] The Motions judge also appeared to hold that privilege over counsel’s file had come to an end because the first action had concluded and that privileged solicitor/client communications could be ordered disclosed when the interests of justice required it.
[13] The Motions judge ordered London Life to produce:
Its entire file including all claims, notes and e-mails with respect to the first action, including anything authored by Vicky Ramsay.
The Motions judge further ordered that London Life produce the privileged documents requested in the other two questions referred to above.
[14] Leave to appeal was granted by Donahue J. on February of 2006 under rule 62.02(4)(a).
[15] The defendant argues on this appeal that the Motions Judge erred in law in ordering that the contested material be produced. The standard of review with respect to errors of law is correctness: Housen v. Mikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at 247.
[16] In our view the Motions judge erred in making a blanket order for production of the entire claims file.
[17] In Blank v. Canada (Minister of Justice), 2006 SCC 39, [2006] SCJ No. 39, a decision released after the order made by the learned Motions judge, the Supreme Court of Canada quoted with approval the explanation of the differences between litigation privilege and solicitor-client privilege articulated by R.J. Sharpe (now Sharpe J.A.):
It is crucially important to distinguish litigation privilege from solicitor-client privilege. There are, I suggest, at least three important differences between the two. First, solicitor-client privilege applies only to confidential communications between the client and his solicitor. Litigation privilege, on the other hand, applies to communications of a non-confidential nature between the solicitor and third parties and even includes material of a non-communicative nature. Secondly, solicitor-client privilege exists any time a client seeks legal advice from his solicitor whether or not litigation is involved. Litigation privilege, on the other hand, applies only in the context of litigation itself. Thirdly, and most important, the rationale for solicitor-client privilege is very different from that which underlies litigation privilege. This difference merits close attention. The interest which underlies the protection accorded communications between a client and a solicitor from disclosure is the interest of all citizens to have full and ready access to legal advice. If an individual cannot confide in a solicitor knowing that what is said will not be revealed, it will be difficult, if not impossible, for that individual to obtain proper candid legal advice.
Litigation privilege, on the other hand, is geared directly to the process of litigation. Its purpose is not explained adequately by the protection afforded lawyer-client communications deemed necessary to allow clients to obtain legal advice, the interest protected by solicitor-client privilege. Its purpose is more particularly related to the needs of the adversarial trial process. Litigation privilege is based upon the need for a protected area to facilitate investigation and preparation of a case for trial by the adversarial advocate. In other words, litigation privilege aims to facilitate a process (namely, the adversary process), while solicitor-client privilege aims to protect a relationship (namely, the confidential relationship between a lawyer and a client).
R.J. Sharpe, “Claiming Privilege in the Discovery Process”, in Law in Transition: Evidence, [1984] Special Lect. L.S.U.C. 163, at pp. 164-65.
[18] The Supreme Court of Canada in Blank, supra, held that although common law litigation privilege comes to an end upon termination of the litigation that gave rise to the privilege, it cannot be said to have “terminated” in any meaningful sense of that term where litigants or related parties remain locked in what is essentially the same legal combat, that is, where related litigation remains pending or may reasonably be apprehended. All subsequent litigation will remain subject to a claim for privilege if it involves the same or related parties and the same or a related cause of action (or “juridical source”). It will fall within the protective orbit of the “same litigation broadly defined”.
[19] In our view the litigation now before the Court is so closely related to the action concerning payment of disability benefits as to warrant the continuation of any litigation privilege that may attach to the contents of the claims file.
[20] The Supreme Court of Canada in Blank also confirms in its decision that any communication in a litigation file which falls within solicitor/client privilege will remain clearly and forever privileged.
[21] A pleading that the defendant acted in good faith is not sufficient to constitute a waiver of litigation privilege: Davies v. American Home Assurance Co. (2002), 60 O.R. (2d) 512 (Div. Ct.) (para. 36).
[22] Similarly, in our view, merely reciting the chronology of the handling of a claim coupled with a pleading that the employees of the defendant acted in good faith in their dealing with the plaintiff will not constitute a waiver of privilege.
[23] In our view the learned Motions judge erred in law in finding that there was a waiver of privilege in this case.
[24] Nevertheless, the Supreme Court of Canada in Blank noted that litigation privilege:
… would not in any event protect from disclosure evidence of the claimant party’s abuse of process or similar blameworthy conduct. It is not a black hole from which evidence of one’s own misconduct can never be exposed to the light of day.
Even where the materials sought would otherwise be subject to litigation privilege, the party seeking their disclosure may be granted access to them upon a prima facie showing of actionable misconduct by the other party in relation to the proceedings with respect to which litigation privilege is claimed. Whether privilege is claimed in the originating or in related litigation, the court may review the materials to determine whether their disclosure should be ordered on this ground.
[25] There is not sufficient information before this Court with respect to the content of the litigation file sought to be produced to determine whether any privilege applies to any specific document contained in the file. Therefore, it is our view that the matter is best dealt with by the making of an order directing the defendant to deliver an Affidavit of Documents in which the documents over which privilege is claimed are individually listed and the grounds for the privilege are articulated and particularized. Once such an Affidavit of Documents is produced any necessary decision about the privileged nature of documents can be more properly determined.
[26] Thus, in summary, after a determination has been made as to whether or not litigation privilege applies to a particular document, a further review may be required of the privileged documents to determine whether or not the production of such documents may be required on the ground set out by the Court in Blank, referred to in paragraph 24, supra. We are of the view that “a prima facie showing of actual misconduct by the other party in relation to the proceedings with respect to which litigation privilege is claimed” requires something more than merely an allegation in the pleading.
[27] In the result, Order to issue setting aside the Order below and requiring the defendant to deliver an Affidavit of Documents individually listing the documents for which privilege is claimed and particularizing the grounds on which the privilege is claimed, as required by the Rules of Civil Procedure. It shall be open to the plaintiff to bring further proceedings concerning the production of the documents for which privilege is claimed in accordance with these Reasons.
[28] If the parties cannot agree on the issue of costs they may submit brief written submissions within 30 days for consideration by this Court.
FERRIER J.
GROUND J.
LOFCHIK J.
Released: January 19, 2007
COURT FILE NO.: 1573
DATE: 20070119
ONTARIO
SUPERIOR COURT OF JUSTICE
LONDON DIVISIONAL COURT
FERRIER, GROUND and LOFCHIK JJ.
B E T W E E N:
CLARENCE SMITH
Plaintiff/Respondent
- and -
LONDON LIFE INSURANCE COMPANY
Defendant/Appellant
JUDGMENT
BY THE COURT
Released: January 19, 2007