Court File and Parties

COURT FILE Nos.:

CV-08–1083-00

** and CV-08–0950-00

and CV-07–3704-00A1

DATE: 20140219

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: XCG Consultants Inc., Plaintiff

AND:

ABB Inc. and Church & Trought Inc., Defendants

AND RE: ABB Inc. XCG Consultants Ltd.

AND:

Hazco Environmental Services a division of CCS Inc. and Hazco Environmental Services Ltd.

AND RE: Sonic Environmental Solutions, Plaintiff

AND:

ABB Inc. and XCG Consultants Ltd.

BEFORE: Ricchetti J.

COUNSEL:
C. Reain and R. Hammond for XCG Consultants Ltd. (XCG)

I. Lawrence for ABB Inc. (ABB)

J. Cosentino and L. Butti for Sonic Environmental Solutions (Sonic)

M. Van Zanderveart for Church & Trought Inc. (Church & Trought)

J. Kelly and R. McGlashan for Hazco Environmental Services a division of CCS Inc. and Hazco Environmental Services Ltd. (Hazco)

HEARD: December 11, 2013

ENDORSEMENT

THE MOTION

[1] A portion of this motion regarding undertakings and certain refusals was dealt with by Justice van Rensburg with written reasons released on November 15, 2013. The balance of the motion before this Court deals with ABB’s refusal to produce documents on the basis the documents are subject to solicitor-client privilege; litigation privilege or are not relevant.

[2] Counsel have categorized the documents in question into three areas:

i. Documents contained in Conestoga-Rovers & Associates files (“Conestoga”);

ii. Documents contained from ABB’s Environmental Steering Committee meetings (“ESC”); and

iii. Documents produced by ABB in a proceeding involving environmental claims by Sealed Air Canada Co. (“Sealed Air”).

THE FACTS

[3] ABB is the owner of certain property on Dixie Road in Mississauga, which contained or contains environmental contamination (the ABB Property).

[4] ABB retained XCG to undertake environmental remediation at the ABB Property. At some point after the work had commenced, a dispute arose and ABB terminated XCG’s contract.

[5] Without getting into the details of the claims, defences, cross-claims and counterclaims in the various actions, in one action, XCG claims $1,685,949.58, the alleged outstanding balance for services and materials supplied to ABB in the remediation of the ABB Property. Church & Trought is also a defendant in this action. ABB defends the claim contending it was justified in terminating XCG’s contract on January 8, 2008. ABB counterclaimed against XCG, alleging breach of contract and negligence in XCG’s work remediating the ABB Property. ABB alleges that XCG’s acts and omissions resulted in further contamination of the ABB Property and cross-contamination onto neighbouring properties. As part of its counterclaim, ABB seeks indemnification for alleged environmental contamination migrating or having migrated from ABB Property.

[6] Hazco was a subcontractor to XCG. Sonic was a subcontractor to Hazco. Each subcontractor has commenced its own construction lien action, claiming payment under their respective contracts and asserting claims against the owner and liens against the ABB Property (Action Nos. CV-08-0950-00 and CV-07-3704-00A1).

[7] Sealed Air is the former owner of a property adjacent to the ABB Property and is the plaintiff in an action against ABB for alleged environmental contamination through migration to Sealed Air’s property.

[8] Turning now to the involvement of Conestoga, the following additional facts are relevant:

i. Conestoga was retained by ABB in 2007 as its oversight consultant for work on the ABB Property. However, when issues arose with respect to the remediation work, Conestoga’s retainer was expanded by ABB to include the design of remedial work, implementation of remedial work and legal support. These responsibilities at times overlapped. Exactly when Conestoga’s retainer was expanded to include legal support is not clear on this record;

ii. As a result, Conestoga’s retainer covers the period of time XCG was performing its work, when litigation was contemplated and after litigation had commenced. As a result, Conestoga was privy to observations, recommendations, work supervision and work which would not be privileged. However, during these periods, Conestoga provided some information to ABB’s lawyers so that ABB’s lawyers could advise ABB;

iii. Conestoga was also copied on communications between ABB and its lawyers, in some cases where business issues were discussed and, in some cases, where ABB’s lawyers were asked to provide or were providing legal advice. In many cases, the communication consisted of factual information or recommendations by Conestoga which would be relevant to both business decisions and ongoing legal advice to ABB’s lawyers.

iv. ABB has refused to produce documents in Conestoga’s files on the basis the documents are privileged because Conestoga provided assistance or “litigation support” to ABB’s lawyers to advise ABB. Further, Conestoga was copied on solicitor-client or litigation privileged documents between ABB and its lawyers to assist Conestoga to provide further legal assistance to ABB’s lawyers. ABB states that portions of the documents (i.e. factual observations) have been provided to XCG (see: para. 11 of ABB’s factum). However, it is clear from para. 12 of ABB’s factum that there are other documents (or parts of documents) which have not been produced (for example, documents with respect to Conestoga’s initial review of the ABB Property); and

v. It was agreed by all counsel during the motion that I should review each document to ascertain whether the document, in whole or in part, is privileged or should be produced.

[9] Turning now to ABB’s Environmental Steering Committee (ESC) documents, the following additional facts are relevant:

i. The ESC was established in 2006 to set policies and processes in place by ABB to:

• assess and monitor legal compliance with environmental matters;

• assess site conditions and options for remediation;

• provide financial, technical and risk management for ABB; and

• incorporate legal oversight and advice in connection with the prior purposes;

ii. The documented ESC role including making: “Types of Decisions made by the Committee include final approval of large contracts for consultants, lawyers, accounting specialists and remediation/demolition contractors; final approval of negotiated settlements with agencies or other parties; and approval of the environmental reserves.” It is clear that the ESC was to make business decisions involving the ABB Property and deal with other environmental issues including the ABB Property;

iii. The ESC’s first meeting took place on January 26, 2006. The initial meeting predates the dispute arising between XCG and ABB but the meetings continued throughout the relevant period. The meetings were scheduled around counsel’s attendance, who regularly participated in the meetings and provided legal advice as needed;

iv. The documents at issue relate to arranging for the meetings, the minutes of the ESC meetings and e-mails relating to those minutes;

v. The ESC documentation includes references to other ABB properties. There is no dispute that such references should be redacted from the ESC documentation as not being relevant to these proceedings; and

vi. Again, counsel agreed that I should review each document to ascertain whether the document, in whole or in part, is privileged.

[10] Turning to the Sealed Air documents, the following additional facts are relevant:

i. The Sealed Air Action involves a claim by Sealed Air against ABB for off-site migration of environmental contaminants from the ABB Property;

ii. In these actions, ABB’s counterclaim includes a claim that: “to the extent that XCG and others for whom XCG is at law responsible have caused any other property to be impacted, ABB is entitled to recover from those parties contribution and indemnity in respect of any claims made by the owners of any such property.”;

iii. At the examination for discovery, ABB stated it would not seek indemnity for the Sealed Air claim but ABB “reserves its right to assert a claim for indemnity in the future, should a new off-site claim be advanced or should the nature of the Sealed Air action change”;

iv. There are two important facts to note:

• The exact limitation of ABB’s position and when it might seek contribution in these actions is not clear; and

• ABB has not formally amended its counterclaim to delete the claim for indemnity regarding the Sealed Air claim;

v. Counsel agreed that, based on the submissions of counsel, the entire group of documents relating to the Sealed Air Action are producible or not producible without me reviewing each individual document.

GENERAL COMMENTS REGARDING MY REVIEW OF THE DOCUMENTS

[11] Counsel for ABB provided me with electronic copies of the documentation. There were 1608 documents in ABB’s Schedule B to its Affidavit of Documents to review. There were additional documents relating to the Sealed Air Action.

[12] For the reasons set out above, I did not review the Sealed Air Action documents.

[13] I reviewed the 1608 documents. Many of the documents contained e-mail chains which assisted putting the document in context, but because of numerous duplications in the e-mail chain, it was impossible to ensure that all documents in every e-mail chain were consistently dealt with in my Schedule A. Such cross-referencing would have taken an extraordinary amount of judicial time and its usefulness would not be proportionate to the issues to be decided.

[14] The review of ABB’s documentation became extremely difficult because ABB chose to have much of the communications go through its legal counsel. This included factual information, observations, business related information, third party recommendations, work implementation information as well as communications where legal advice was sought or given. Let me provide one example: Conestoga provided detailed reports of the conditions at the ABB Property to ABB’s counsel and made recommendations as to what remedial work should be done. The same communication may have also provided technical advice to ABB’s counsel for the purpose of providing legal advice to ABB. In most cases, the communication was also provided directly to ABB’s personnel at the same time it was provided to ABB’s counsel. The reverse also occurred where ABB’s counsel’s communications were directed to ABB personnel and copied to third parties. Some of these communications provided legal advice but many of them dealt with business decisions or just passing information to others.

[15] These communications also included communications relating to the subject of the litigation such as seeking comments on pleadings or productions.

[16] In these circumstances, it was a challenge trying to discern whether the dominant purpose of the document related to legal matters, business matters or a mixture of both.

THE PROCEDURE ADOPTED

[17] Submissions from all counsel were heard on the three categories listed above. There were no submissions with respect to individual documents.

[18] I have reviewed the documents applying the law of privilege set out below. I have made a preliminary determination of the claim for privilege as set out in Schedule A.

[19] The reason for proceeding in this matter are necessary because:

i. Many of the documents were e-mail chains, some with attached documents. As I said above, it may be that there is an inconsistency in the way the same e-mail in the chain or attachment was dealt with. ABB may agree to produce the document where there is such an inconsistent finding (if any) or it may choose to make submissions that all copies of the identified document should be privileged; and

ii. Where a document has been identified as producible, there may be other information which is not readily apparent from the contents of the document or its context in relation to other documents which may have a bearing on the issue of privilege. ABB and other counsel should have an opportunity to make submissions should ABB wish this court to review the specific document and specific submissions on the document.

[20] If ABB wishes to make further submissions it may do so in the following manner:

i. ABB will provide a chart describing the documents from Schedule A which it wishes to make further submissions (making reference not to an e-mail chain but the exact e-mail or precise document). The chart will have a number of columns as follows:

• a column with the ABB document number and a brief but precise description of the document;

• a column for ABB's submissions why the document should be privileged;

• a column for XCG's and other counsel's submissions; and

• a column for the court's decision.

This will be provided electronically to XCG and the other parties. If a document is not included in the chart, my ruling in Schedule A shall apply;

ii. ABB will provide the chart within one month; and

iii. XCG and other counsel will complete the blank column with their submissions within one month.

THE ANALYSIS

THE SEALED AIR DOCUMENTS

[21] I agree that the law set out in Justice van Rensburg’s reasons accurately sets out the applicable law as it relates to answering “relevant” questions at an examination for discovery.

[22] Sealed Air takes no objection to the production of the documents in question.

[23] ABB’s counterclaim against XCG includes a claim for indemnity for damages caused to “any other property to be impacted … in respect of any claims made by the owners of any such property.” There is no dispute that ABB’s counterclaim, as set out would, or could, encompass the Sealed Air claim against ABB.

[24] ABB submits that “many” of the documents relate to groundwater issues on the Sealed Air Property and are therefore, irrelevant. ABB does not explain how or why such groundwater issues are irrelevant to its counterclaim that XCG’s work or failure to do its work properly caused, contributed or continued the contamination of Sealed Air’s Property. Given that ABB’s counterclaim relates to alleged off-site contamination generally, all information relating to the past and present condition of the soil and any migration of contaminants would be relevant to liability and the determination of the quantum of damages under ABB’s counterclaim.

[25] ABB submits it has produced all documents in the Sealed Air action which deals with the status of the ABB property or the work done on the ABB Property. However, all of the documents produced by ABB in the Sealed Air action, including the condition of the Sealed Air soils over the years and any dealings between ABB and Sealed Air involving the alleged contamination, are relevant to ABB’s counterclaim against XCG. In other words, if the documents are relevant as to alleged liability of ABB to Sealed Air or to the quantum of Sealed Air’s claim, they are relevant to ABB’s claim for indemnity from XCG.

[26] I am satisfied that XCG has established that all the Sealed Air documents are relevant to ABB’s counterclaim.

[27] The next issue that should be dealt with is whether ABB has withdrawn its counterclaim as it relates to the Sealed Air property. There is considerable ambiguity as to what ABB’s position is with respect to its claim for indemnity arising from the Sealed Air claim. While ABB’s representative did make such a statement at the discovery, there are two points which are significant:

• The withdrawal is not an unqualified withdrawal. As set out in para. 28(b)(ii) of ABB’s factum, ABB reserves its right to assert a claim for indemnity in the future “should a new off-site claim be advanced or should the nature of the Sealed Air action change.” It is not clear what “change” would be required or what a “new off-site claim” is; and

• ABB’s claim for indemnity for environmental migration has not been formally withdrawn by ABB leaving open the possibility that the claim might be advanced in the future.

[28] ABB’s position with respect to the Sealed Air claim is not a definitive withdrawal or a with prejudice withdrawal of its claim for indemnity and therefore, the Sealed Air action documents remain relevant. It is not reasonable for XCG to have this potential claim remain in the pleading and the possibility of having to deal with it in the future, but not have the documents to review and to respond. ABB chose to advance the counterclaim and must now live with the consequences – production of relevant documents to that counterclaim so that XCG may properly defend such a claim in a timely manner.

[29] The Sealed Air documents shall be produced.

THE CONESTOGA AND ESC DOCUMENTS

Privilege Generally

[30] There is no dispute that the ESC and CRA documents are relevant. Otherwise, the documents would not be listed in Schedule B.

[31] There is no dispute that the onus is on ABB to establish, on a balance of probabilities, that each of the ESC and CRA documents, in whole or in part, are subject to non-disclosure due to solicitor-client privilege or litigation privilege.

[32] In some cases, ABB’s in-house counsel was involved in a number of communications. There is no dispute that communications, where the in-house counsel is involved, are only subject to privilege if ABB establishes that the in-house counsel was acting in a capacity where ABB sought legal advice from the in-house counsel or the in-house counsel provided legal advice to ABB, as opposed to dealing with business issues: see: Sopinka, Ledermen & Bryant, The Law of Evidence in Canada, 3d ed., at para. 14.107.

[33] Privilege has been claimed on two bases: i) solicitor-client privilege; and ii) litigation privilege.

Solicitor-client privilege

[34] The classic statement of solicitor-client privilege is found in J.H. Wigmore, Evidence in Trials at Common Law, ed. by J.T. McNaughton (Boston: Little, Brown, 1961) vol. 8 at 27:

Where legal advice of any kind is sought from a professional legal advisor in his capacity as such, the communications relating to the purpose made in confidence by the client are at his instance permanently protected from disclosures by himself or by the legal advisor, except the privilege be waived?

The rationale for solicitor-client privilege is to allow the client and his or her lawyer to communicate in confidence. It does not extend beyond communications made for the purpose of giving and receiving legal advice to all information relevant to a legal problem.

[35] In Solosky v. The Queen, 1979 9 (SCC), [1980] 1 S.C.R. 821 and repeated in Pritchard v. Ontario (Human Rights Commission), 2004 SCC 31, [2004] 1 S.C.R. 809, at paras. 15, 16, the Supreme Court described the criteria for solicitor-client privilege:

Dickson J. outlined the required criteria to establish solicitor-client privilege in Solosky v. The Queen, 1979 9 (SCC), [1980] 1 S.C.R. 821, at p. 837, as: “(i) a communication between solicitor and client; (ii) which entails the seeking or giving of legal advice; and (iii) which is intended to be confidential by the parties”. Though at one time restricted to communications exchanged in the course of litigation, the privilege has been extended to cover any consultation for legal advice, whether litigious or not: see Solosky, at p. 834.

Generally, solicitor-client privilege will apply as long as the communication falls within the usual and ordinary scope of the professional relationship. The privilege, once established, is considerably broad and all-encompassing. In Descôteaux v. Mierzwinski, 1982 22 (SCC), [1982] 1 S.C.R. 860, the scope of the privilege was described, at p. 893, as attaching “to all communications made within the framework of the solicitor-client relationship, which arises as soon as the potential client takes the first steps, and consequently even before the formal retainer is established”. The scope of the privilege does not extend to communications: (1) where legal advice is not sought or offered; (2) where it is not intended to be confidential; or (3) that have the purpose of furthering unlawful conduct: see Solosky, supra, at p. 835.

[36] As set out in Currie v. Symcor Inc. (2008), 2008 37901 (ON SCDC), 244 O.A.C. 3 (Div. Ct.), at para. 46, once solicitor-client privilege is established, the application is very broad and is not strictly limited to the “legal advice” provided by counsel:

Further, the application of solicitor-client privilege is very broad and includes not just the provision of “legal advice” but also the protection of factual, financial and administrative information provided to legal counsel, for the purpose of allowing legal counsel to give legal advice (so long as the advice is not purely business advice). It is not necessary that the communication specifically request or offer advice, as long as it can be placed within the continuum of communications in which the solicitor tenders advice. The privilege applies when a lawyer negotiates a commercial transaction (such as a share structuring agreement), draws up contracts or communicates with a client in the course of a transaction. Again, no evidence before the learned Master contradicted Eisen’s sworn discovery testimony that his communications with Stikeman about the Shareholders’ Agreement were for the purpose of receiving legal advice.

[37] However, the application of the “broad” protection of communications must be carefully scrutinized and does have limits. The scope of the privilege does not extend to communications:

(1) where legal advice is not sought or offered;

(2) where the communications are not intended to be confidential; or

(3) that have the purpose of furthering unlawful conduct.

[38] Let us take a meeting as an example. Many topics and issues might be discussed during the course of the meeting. Some legal advice was sought at some point and the lawyer did provide the client with legal advice. The communications seeking the legal advice and providing the legal advice are privileged but the entire meeting is not privileged unless that which led to the legal advice was the only issue dealt with during the course of the meeting. It is only those confidential communications during the meeting which relate to the client seeking and or the lawyer providing the legal advice which are privileged. The business communications discussed at the meeting, even if the lawyer was involved in those communications, are not privileged. If third parties are present at this same meeting, it raises the issue whether the communications were intended to be confidential, the third party's role and whether the communication should be protected.

[39] The determination of whether a document is subject to solicitor client privilege becomes more complex when third parties are at the same meeting or originate or are copied in the communications. Third party communications may be essential to the function of the solicitor for the maintenance or operation of the solicitor-client relationship. Solicitor-client privilege when third parties are involved was described in General Accident Assurance Company v. Chrusz (1999), 1999 7320 (ON CA), 45 O.R. (3d) 321(C.A.), at p. 351-52:

The case law involving claims to client-solicitor privilege over third party communications is not extensive. It is also relatively undeveloped beyond a recognition that communications made to or by third parties who are classified as "agents" of the lawyer or the client will be protected by client-solicitor privilege: see Manes and Silver, Solicitor-Client Privilege in Canadian Law, supra, at pp. 73-79; G. Watson and F. Au, "Solicitor-Client Privilege and Litigation Privilege in Civil Litigation" (1998), 77 Can. Bar Rev. 315 at pp. 346-49.

The authorities do, however, establish two principles:

-- not every communication by a third party with a lawyer which facilitates or assists in giving or receiving legal advice is protected by client-solicitor privilege; and

-- where the third party serves as a channel of communication between the client and solicitor, communications to or from the third party by the client or solicitor will be protected by the privilege as long as those communications meet the criteria for the existence of the privilege.

[40] While it is true that solicitor-client privilege can extend to communications between a solicitor or client and a third party, this extension of the privilege is subject to important constraints. In Chrusz, supra, Doherty J.A. (Carthy and Rosenberg JJ.A. concurring on this issue) stated at pp. 356-57:

Client-solicitor privilege is designed to facilitate the seeking and giving of legal advice. If a client authorizes a third party to direct a solicitor to act on behalf of the client, or if the client authorizes the third party to seek legal advice from the solicitor on behalf of the client, the third party is performing a function which is central to the client-solicitor relationship. In such circumstances, the third party should be seen as standing in the shoes of the client for the purpose of communications referable to those parts of the third party's retainer.

If the third party is authorized only to gather information from outside sources and pass it on to the solicitor so that the solicitor might advise the client, or if the third party is retained to act on legal instructions from the solicitor (presumably given after the client has instructed the solicitor), the third party's function is not essential to the maintenance or operation of the client-solicitor relationship and should not be protected.

[41] This analysis using the functional approach was accepted by Liquor Control Board of Ontario v. Lifford Wine Agencies Ltd.(2004), 2005 25179 (ON CA), 76 O.R.(3d) 401 (C.A.) and in Barrick Gold Corp. v. Goldcorp. Inc. 2011 ONSC 1325 where at para. 19, Campbell J. stated:

I accept the general principles set out in the reasons of Justice Doherty in General Accident Asssurance Co., 1999 7320 (ON CA), [1999] O.J. No. 3291 (C.A.) and particularly those paragraphs from the decision cited in paragraph 49 of the factum of the Plaintiff, which emphasize the limitation on third-party privilege that “extends to a function which is a central to the existence or operation of the client-solicitor relationship, then the privilege should cover any communications which are in furtherance of that function and which meet the criteria for client-solicitor privilege.”

Those principles must be applied in context of specific facts and in respect of the documents itself which is the reason for my full review.

[42] This approach has also been accepted in various decisions of the British Columbia courts (See Bank of Montreal v. Tortora 2010 BCCA 129).

[43] Applying the Chrusz functional approach "test" to this case, it must be determined whether Conestoga's function, as a third party, is essential or integral to the operation or maintenance of the solicitor-client relationship between ABB and its solicitors.

[44] First of all let me say that most of the documents would be the subject of a claim for litigation privilege rather than solicitor-client privilege. The majority of the documents arose after litigation was contemplated between ABB and XCG. Most of the documents which have "legal aspects to them" are communications which deal with ABB's litigation process including, defending the various claims; advancing ABB's counterclaim; how and what environment remediation ABB should undertake; what remediation it did undertake on the ABB Property; the status of the ABB Property when XCG terminated the agreement; what options were available to ABB; and what the cost of the work is, all key issues in the litigation. As a result, these types of documents would have to meet the dominant purpose test for the document to be subject to litigation privilege. Let me provide an example. Conestoga provided factual observations or test results to ABB’s lawyers, which facts or test results, were no doubt considered by the lawyers when providing legal advice to ABB generally and with respect to the litigation. But, such information would also be used by Conestoga and ABB to determine what environmental remediation was necessary. In my view, these types of communications were not essential for the maintenance and operation of the solicitor-client relationship. Protection of this type of information is not necessary to permit candid information flowing between the client and the lawyer for the seeking or providing of legal advice. ABB would need and no doubt use the factual observations and test results to make a business decision and proceed to carry out its environmental remediation responsibilities with respect to the ABB Property and would seek to recover such expenses from XCG. This primary use of the information in this communication makes it clear that the communication was neither essential nor integral for the solicitor-client relationship for the purpose of a claim for solicitor-client privilege, nor was it related to the dominant purpose litigation advice.

[45] Where the document is subject to the claim for solicitor-client privilege, I disagree with ABB’s submission that any communication which “entails” seeking or giving legal advice is caught by solicitor-client privilege. In the ESC documents, no third parties were generally present or involved. However, the communications covered many topics, some of which had nothing to do with legal advice. In my view, to broaden solicitor-client privilege to situations where counsel is present because of the potential that the client will seek or receive legal advice is not necessary. It would be much too easy to comingle business and legal matters deliberately and have all the discussion fall under the umbrella of solicitor-client privilege. It is only where the communication discloses that the legal advice is sought or given during the course of the meeting that should attract the protection of solicitor-client privilege – the onus being on the client to demonstrate this and the scope of the communication sought to be protected.

[46] Where the communication was copied to a third party such as Conestoga by ABB or ABB's lawyer, or where the communication flows from the third party to ABB or its solicitors, for the communication to continue to be subject to solicitor-client privilege (provided that the communication is otherwise subject to solicitor-client privilege), ABB would have to demonstrate that the third party's function was essential or integral to the maintenance or operation of the solicitor-client relationship for the legal advice. This requires a review of all the circumstances surrounding the communication and the third party.

[47] This approach, where third party communications are involved, was discussed in Chrusz, at p. 323:

Assuming that the communications between G Co. and E were protected by client-solicitor privilege, the next question was whether this privilege extended to communications between B and E. The authorities established that: (1) not every communication by a third party to a lawyer that facilitates or assists in giving or receiving legal advice is protected by client-solicitor privilege; and (2) where the third party serves as a channel of communication between the client and solicitor, communications to or from the third party by the client or solicitor will be protected by the privilege as long as those communications meet the criteria for the existence of the privilege. The second principle extends client-solicitor privileges to communications by or to a third party acting as a messenger, translator and amanuensis, and includes a third party employing an expert to assemble information provided by the client and to explain it to the lawyer. These two principles, however, were not determinative here because B was not merely a channel of communication and he could not be characterized as translating or interpreting information provided by G Co.; rather, he was gathering information from extraneous sources. Whether he was an agent under the general law of agency was also not determinative.

The determination of the solicitor client privilege and the role of third parties should depend on the third party's function. If the third party's retainer extends to a function essential to the existence or operation of the client-solicitor relationship, then the privilege should cover any communications that are in furtherance of that function and that meet the criteria for client-solicitor privilege. For privilege to attach, the third party must be empowered to obtain legal services or to act on legal advice on behalf of the client. If the third party is authorized only to gather information from outside sources and pass it on to the solicitor so that the solicitor might advise the client, or if the third party is retained to act on legal instructions from the solicitor, then the third party's function is not essential to the maintenance or operation of the client-solicitor relationship and should not be protected; therefore, it is not the case that client-solicitor privilege extends to all material deemed useful by the lawyer to properly advise the client. Further, such an extension of solicitor and client privilege would make litigation privilege redundant. In the circumstances of this case, B's function did not reach inside the client-solicitor relationship between G Co. and E; communications between B and E were not protected by client- solicitor privilege.

[48] Essentially, what must be considered when the communications are made by or transmitted to third parties, is all the circumstances surrounding the communication to determine whether the purpose of the communication was to advance the “full, free and frank communication between those who need legal advice and those who are best able to provide it” – lawyers: see Blank v. Canada (Minister of Justice), 2006 SCC 39, [2006] 2 S.C.R. 319, at para. 26. Some of the factors to be considered will include:

• What was the communication;

• Who made the communication;

• To whom was the communication made;

• Did the communication contain factual information or opinion information;

• If the communication was from a third party, what was the role of the third party when making the communication;

• If the communications was sent to a third party, what was the third party to do with the information in the communication;

• What was the reason for or the intended purpose of the communication;

• Was the communication intended to be confidential;

• How, could or would the information in the communication be used in the seeking or providing legal advice;

• Could the information in the communication be used for another purpose; and

• Was the information in the communication used for a purpose other than seeking or providing legal advice.

[49] Doherty J.A. in Chrusz provided a useful description as to the proper approach to determine whether the communication is subject to client privilege:

In summary, I see the privilege as serving the following purposes: promoting frank communications between client and solicitor where legal advice is being sought or given, facilitating access to justice, recognizing the inherent value of personal autonomy and affirming the efficacy of the adversarial process. Each of these purposes should guide the application of the established criteria when determining the existence of client-solicitor privilege in specific fact situations.

The adjudication of claims to client-solicitor privilege must be fact sensitive in the sense that the determination must depend on the evidence adduced to support the claim and on the context in which the claim is made. A claim to client-solicitor privilege in the context of litigation is in fact a claim that an exception should be made to the most basic rule of evidence which dictates that all relevant evidence is admissible. It is incumbent on the party asserting the privilege to establish an evidentiary basis for it. Broad privilege claims which blanket many documents, some of which are described in the vaguest way, will often fail, not because the privilege has been strictly construed, but because the party asserting the privilege has failed to meet its burden: see Shaughnessy Golf & Country Club v. Drake International Inc. 1986 163 (BC CA), (1986), 26 D.L.R. (4th) 298 at pp. 302-04 and 307-08, 1 B.C.L.R. (2d) 309 (C.A.), per Esson J.A..

It is also necessary to consider the context of the claim, by which I mean the circumstances in which the privilege is claimed. For example, in this case, the insurer claims client- solicitor privilege against its insured in part in respect of the product of its investigation of a possible claim by the insured under its policy. The pre-existing relationship of the insured and insurer and the mutual obligations of good faith owed by each to the other must be considered in determining the validity of the insurer's assertion that it intended to keep information about the investigation confidential vis-à-vis its insured. The confidentiality claim cannot be approached as if the parties were strangers to each other.

Litigation Privilege

[50] The law with respect to litigation privilege is well developed. The distinction between solicitor-client privilege and litigation privilege was described in Chrusz, at pp. 330-31:

R.J. Sharpe, prior to his judicial appointment, published a thoughtful lecture on this subject, entitled "Claiming Privilege in the Discovery Process" in Law in Transition: Evidence, L.S.U.C. Special Lectures (Toronto: De Boo, 1984) at p. 163. He stated at pp. 164-65:

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).

Rationale for Litigation Privilege

Relating litigation privilege to the needs of the adversary process is necessary to arrive at an understanding of its content and effect. The effect of a rule of privilege is to shut out the truth, but the process which litigation privilege is aimed to protect -- the adversary process -- among other things, attempts to get at the truth. There are, then, competing interests to be considered when a claim of litigation privilege is asserted; there is a need for a zone of privacy to facilitate adversarial preparation; there is also the need for disclosure to foster fair trial.

[51] This commentary was approved by the Supreme Court in Blank, at para. 28.

[52] It is clear that, where the dominant purpose of the communication is to “facilitate investigation and preparation of a case for trial by the adversarial advocate” the communication is subject to litigation privilege: Sharpe, at p. 165; Blank, at paras. 59 and 60:

The question has arisen whether the litigation privilege should attach to documents created for the substantial purpose of litigation, the dominant purpose of litigation or the sole purpose of litigation. The dominant purpose test was chosen from this spectrum by the House of Lords in Waugh v. British Railways Board, [1979] 2 All E.R. 1169. It has been adopted in this country as well: Davies v. Harrington reflex, (1980), 1980 2719 (NS SC), 115 D.L.R. (3d) 347 (N.S.C.A.); Voth Bros. Construction (1974) Ltd. v. North Vancouver School District No. 44 Board of School Trustees (1981), 1981 506 (BC CA), 29 B.C.L.R. 114 (C.A.); McCaig v. Trentowsky reflex, (1983), 1983 3070 (NB CA), 148 D.L.R. (3d) 724 (N.B.C.A.); Nova, an Alberta Corporation v. Guelph Engineering Co. (1984), 1984 ABCA 38, 5 D.L.R. (4th) 755 (Alta. C.A.); Ed Miller Sales & Rentals; Chrusz; Lifford; Mitsui; College of Physicians; Gower.

I see no reason to depart from the dominant purpose test.

[53] Where the communications involve third parties, in Chrusz, the majority accepted the following statement from United States of America v. American Telephone and Telegraph Company, 642 F.2d 1285 (1980 S.C.C.A.), at pp. 1299-1300 as the law in Canada:

We do not endorse a reading of the GAF Corp. standard so broad as to allow confidential disclosure to any person without waiver of the work product privilege. The existence of common interests between transferor and transferee is relevant to deciding whether the disclosure is consistent with the nature of the work product privilege. But "common interests" should not be construed as narrowly limited to co- parties. So long as transferor and transferee anticipate litigation against a common adversary on the same issue or issues, they have strong common interests in sharing the fruit of the trial preparation efforts. Moreover, with common interests on a particular issue against a common adversary, the transferee is not at all likely to disclose the work product material to the adversary. When the transfer to a party with such common interests is conducted under a guarantee of confidentiality, the case against waiver is even stronger.

[54] In Blank, at para. 27 the Supreme Court stated:

Litigation privilege, on the other hand, is not directed at, still less, restricted to, communications between solicitor and client. It contemplates, as well, communications between a solicitor and third parties or, in the case of an unrepresented litigant, between the litigant and third parties. Its object is to ensure the efficacy of the adversarial process and not to promote the solicitor-client relationship. And to achieve this purpose, parties to litigation, represented or not, must be left to prepare their contending positions in private, without adversarial interference and without fear of premature disclosure.

[55] In conclusion, the court will have to examine the factors described above, and any other relevant factors, to ascertain whether the dominant purpose of the communication was related to the litigation, actual or contemplated. If third parties are privy to the information, either having originated it or received it, such communications are still subject to litigation privilege if the third party has a common purpose with the "client" and the confidential communication was necessary to ensure the efficacy of the adversarial process. If not, it is to be produced. Again, the onus is on the party claiming privilege to establish it on a balance of probabilities.

THE DOCUMENTS

[56] XCG takes issue with the quality of the evidence with respect to the ESC documents and in particular that the evidence before this court is neither first hand nor compelling as to why such documents should be privileged. I agree that the motion record evidence as to what occurred during the ESC meetings is not the best evidence available.

[57] However, all counsel have agreed that this court should review each document so that the court could ascertain what was discussed and the purpose of the discussions.

[58] ABB alleges that one of the purposes of establishing the ESC was the “incorporation legal oversight and legal advice into the environmental decision making process.” As a result, ABB states that legal issues were discussed and dealt with at these meetings. Essentially, ABB’s position is that because the meetings were “for the purpose of providing legal advice”, the entire meeting, discussions and minutes of the meetings are privileged. There was no attempt to redact any portions of those minutes where legal advice was sought or given by counsel. ABB’s position is that the meetings were within the “framework of the solicitor client relationship” thereby making the entire meeting privileged: see para. 37 of ABB’s factum.

[59] As stated above, I do not accept ABB’s broad sweeping position that where the communication might “entail” legal issues the communication is privileged. As stated above, it is only that specific part of the meetings where legal advice was actually sought or given that is privileged. Further, the onus is on ABB to satisfy this court that the documents, in whole or in part, are covered by solicitor-client privilege or litigation privilege.

[60] In some documents, Conestoga provided litigation support to ABB’s lawyers in the form of comments to pleadings and litigation related letters. Conestoga provided ABB’s lawyers opinions as to the interpretation of environmental legislation generally, so that they could provide legal advice to ABB. In this context for these communications, Conestoga was clearly acting in its capacity as an expert assisting ABB’s lawyers in the context of this litigation. These types of documents would be privileged.

[61] I repeat a concern described above. ABB interposed its lawyers as an intermediary between ABB and third parties such as Conestoga for a number of purposes including to carry out various investigations and work. For example, investigations and observations from third parties were transmitted through the lawyers. The mere fact the communication went to or from ABB's lawyers does not make the communication subject to solicitor-client or litigation privilege unless it meets the criteria described above. In a number of other documents, ABB’s lawyers are simply passing information from one party to another. The documents do not disclose that any legal advice being sought or given by the lawyer – the lawyer was simply acting as an intermediary for the transmission of information and documentation. ABB has created the difficulty in discerning whether the communications involving the third parties relates to one of many “hats” which the third party might be wearing. Given that the onus is on ABB to establish privilege, makes it much more difficult to satisfy this onus.

[62] I agree with the concerns expressed by Doherty J. A. in Chrusz:

The position of the Divisional Court provides incentive to a client who has the necessary means to direct all parties retained by the client to deposit any information they gather with the client's lawyer so as to shield the results of their investigations with client-solicitor privilege. The privilege would thus extend beyond communications made for the purpose of giving and receiving legal advice to all information relevant to a legal problem which is conveyed at a client's request by a third party to the lawyer. This view of client-solicitor privilege confuses the unquestioned obligation of a lawyer to maintain confidentiality of information acquired in the course of a retainer with the client's much more limited right to foreclose access by opposing parties to information which is material to the litigation. Client-solicitor privilege is intended to allow the client and lawyer to communicate in confidence. It is not intended, as one author has suggested, to protect ". . . all communications or other material deemed useful by the lawyer to properly advise his client . . .": Wilson, "Privilege in Experts' Working Papers", supra, at p. 371. While this generous view of client-solicitor privilege would create what clients might regard as an ideal environment of confidentiality, it would deny opposing parties and the courts access to much information which could be very important in determining where the truth lies in any given case.

I make one further observation. If the Divisional Court's view of client-solicitor privilege is correct, litigation privilege would become virtually redundant because most third party communications would be protected by client-solicitor privilege. To so enlarge client-solicitor privilege is inconsistent with the broad discovery rights established under contemporary pre-trial regimes, which have clearly limited the scope of litigation privilege. The effect of that limitation would be all but lost if client-solicitor privilege were to be extended to communications with any third party whom the client chose to anoint as his agent for the purpose of communicating with the client's lawyer.

[63] Given that the onus is on ABB to establish that these documents are privileged, the bald statements in the affidavit of a general nature referring to a group of documents that they seek or receive legal advice is not sufficient to establish that the communication is privileged. "Broad privilege claims which blanket many documents, some of which are described in the vaguest way, will often fail, not because the privilege has been strictly construed, but because the party asserting the privilege has failed to meet its burden: see Shaughnessy Golf & Country Club v. Drake International Inc. (1986), 1986 163 (BC CA), 26 D.L.R. (4th) 298 (B.C.C.A.) at pp. 302-04, 307-08, 1 B.C.L.R. (2d) 309 (C.A.), per Esson J.A." (See: Chrusz, Doherty J.A.)

[64] I note that the minutes do cover a number of properties which have nothing to do with the ABB Property or the issues in these actions. I should repeat that only those portions of the ESC minutes ruled not privileged which relate to the ABB Property, are to be produced.

CONCLUSION

[65] Applying the above principles to the numerous documents, Schedule A hereto sets out my preliminary decision with respect to the documents or part of documents.

COSTS

[66] I will deal with costs after any further submissions are made regarding the documents in Schedule A.

Ricchetti, J.

Date: February 19, 2014