COURT FILE NO.: 259/08

01-CV-215026CM3

DATE: 20080624

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

B E T W E E N:

OZCAN MAMACA, by his Litigation Guardian AHMET MAMACA

Plaintiff

• and -

COSECO INSURANCE COMPANY

Defendant

George Karahotzitis, for the Plaintiff

Theodore P. Charney, for the Defendant

HEARD: May 27, 2008

Pitt J.

R E A S O N S F O R J U D G M E N T

[1] This is a motion by the respondent for leave to appeal the order of J. MacDonald J. upholding the Master’s decision requiring the respondent insurance company to produce certain documents listed in Schedule “B” to the respondent’s Supplementary Affidavit of Documents. The respondent asserted litigation privilege to these documents.

[2] The motion is grounded on rule 62.02(4)(a) and (b) which restricts the availability of leave to appeal:

Grounds on Which Leave May be Granted

(4) Leave to appeal shall not be granted unless,

(a) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or

(b) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.

[3] It is important in the appeal process, and especially in dealing with interim orders, to recognize that appeals are taken against decisions rather than reasons, although wrong reasons often give rise to wrong decisions. In fact, this is just such a case as the appeal judge agreed with the result that the Master arrived at, although he disagreed with some of the Master’s reasons.

The Issue

[4] The appellant (defendant on the action) submits that the appeal judge made three reversible errors of law, which individually or cumulatively meet the test for granting leave. These errors are:

(1) He erred in finding that there are two alternative approaches to determining whether a document is protected by litigation privilege and that a master of judge deciding the motion has the discretion to follow either approach, depending on the circumstances of the case.

(2) He erred in finding that the insurer continues to bear the onus to establish privilege for documents created after the date when the insurer reasonably contemplated litigation.

(3) He erred in finding that the insurer failed to meet its onus, while not giving any weight to the evidence found in the supplementary affidavit of documents and while not inspecting the Schedule B documents.

It is necessary to determine what the appeal judge decided and his reasons for so deciding.

[5] The crux of the appeal judge’s decision can be found in paragraphs 21, 22, part of 23, and part of paragraph 34, of his decision:

[21] The Master or Judge who decides a litigation privilege claim has the discretion to follow either a one step or a two step procedure, depending on the circumstances of the case. This follows from Carthy J.A.’s analysis in Chrusz [supra]. In some cases, it will be appropriate to infer, from the evidence in the case, that litigation privilege applies to documents prepared after litigation was reasonably anticipated. For example, there may be only one issue in dispute between litigants and, after litigation of that one issue was reasonably anticipated, there may have been no other subject addressed by the party asserting litigation privilege in its documents relating to the adverse party. In determining whether litigation privilege applies in this circumstance, it would be reasonable to require the party asserting litigation privilege to establish when litigation was reasonably anticipated, and then to infer that all documents prepared after that in relation to the one issue are subject to litigation privilege. That is the one step process.

[22] In other circumstances, there may be numerous issues between parties with only one of those issues being the subject of a reasonable apprehension that it will be litigated. This case is an example. The appellant is the respondent’s accident benefits insurer and also the insurer responsible for defending his tort claim. In respect of accident benefits claims, the appellant has accepted and is paying a number of different types of ongoing claims, while rejecting and defending against only part of the respondent’s claim that he is entitled to IRB’s. In its documents relating to the respondent, the appellant has addressed many more issues than just IRB’s for the time in dispute. The appellant’s documents relating to the respondent which were prepared after it apprehended litigation may relate to the IRB claim which is in litigation, or to other claims which are not in litigation because it is paying those claims. In this circumstance, it is a reasonable exercise of discretion to use a two step process for the determination of litigation privilege, putting the burden of proof in each step on the person asserting litigation privilege.

[23] The appellant accepts that the person asserting litigation privilege bears the burden of leading evidence to establish when litigation was anticipated. It objects to the two step process, and also to bearing the burden of establishing in the second step that each document was prepared for the dominant purpose of the anticipated litigation. In my opinion, if the two step procedure is followed as it was here, the party asserting litigation privilege properly bears the burden of proof in each step…

[6] In dealing with documents themselves, the appeal judge had this to say in paragraph 34:

[34] … I do not accept the appellant’s argument that the Master must have overlooked the evidence in the affidavit of documents because he made no mention of it. The appellant did not file an affidavit from one of its employees with knowledge of its actions. The evidence which it relied upon consisted primarily of an affidavit from a law clerk in the employ of its counsel. It also relied on the transcripts of the examinations for discovery. In my view, the appellant relied on relatively thin evidence and there is no error in the Master’s conclusion that it simply failed to meet the burden in respect of the documents which are in issue in this appeal.

Analysis

[7] The appeal judge identified this case as one of those in which, of the