Court File and Parties
COURT FILE NO.: 11-CV-4340231
Heard: May 30, 2014
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Fitzpatrick v. Wang et al
BEFORE: Master Joan Haberman
COUNSEL: Bodnaryk, B. for the moving party Verconich, C. for the responding party
REASONS
Maser Haberman:
[1] On November 20, 2009, Chang Cheng Wang (“Chang”) was involved in a motor vehicle accident while driving a Mercedes truck owned by his father, Ming Wen Wang (“Ming”). Both Chang and Ming have now been sued by Paul Fitzpatrick, the owner and operator of the vehicle with which the truck collided.
[2] Chang’s licence was suspended on May 12, 2009 as a result of unpaid fines and was still under suspension at the time of the accident. His criminal charges flowing from the November accident included failing to have a valid driver’s licence; failing to carry a valid insurance card; and careless driving.
[3] Ming had insurance coverage for his vehicle at the time of loss through Peel Mutual Insurance Company. Peel has defended Ming, but has refused to defend or indemnify Chang, as Ming claims that Chang did not have his consent to operate the vehicle. Ming has defended the action on that basis and he has crossclaimed against Chang and Echelon. Echelon insures the plaintiff and provides coverage to him in situations where an uninsured/ underinsured motorist is involved.
[4] The focus of Ming’s crossclaim will be the issue of consent. If Peel establishes that Chang did not have consent to operate the vehicle, they are not required to defend or indemnify him and Echelon’s policy will be engaged. If, on the other hand, a court finds that Chang did have consent, express or implied, Peel will be bound to provide him with full coverage and Echelon will no longer be a proper or necessary party to this action.
[5] It is in the context of these facts that the current motion arises. Echelon seeks production of a copy of a transcript of evidence given by Ming when he was examined under oath by Peel’s counsel on December 22, 2009. Echelon asserts that this evidence will shed light the central issue of consent. Ming resists the relief sought, claiming privilege.
EVIDENCE of the MOVING PARTY
PERCIVAL’S AFFIDAVIT
[6] The motion is supported by an affidavit from B.A. Percival, counsel for Echelon on this file.
[7] Percival states that, despite the current claim of lack of consent, no criminal charges were ever laid against Chang, nor did Ming advise the police that the truck had been taken without his consent.
[8] When cross-examined about this, Ming maintained that he viewed this as a family matter, so did not want to involve the police.
[9] Percival notes that the accident occurred at 6:45 on a Friday evening, close to an entrance ramp onto Highway 400, so it appears that this was the likely direction that Ming was headed, en route to Toronto. This would support the view that Chang was coming from rather than going to his parents’ home at the time of the accident.
CHANG’S EVIDENCE
[10] Peel retained the law firm of Forget & Matthews LLP to represent them in this matter. On December 22, 2009, their counsel, Sara Missaghie, conducted an examination under oath of Chang on Peel’s behalf. A copy of the transcript of that examination has been provided to Echelon.
[11] Chang did not make the best of witnesses. Though there did not appear to be a comprehension problem, in many instances, the transcript indicates that it was a challenge to pin him down to a particular response and as the examination continued, the level of his cooperation waned.
[12] Chang advised that he was 19 at the time of these events, having arrived in Canada from China 13 years earlier. He was no longer at school and was working part time, on and off, in construction at the time of the accident. Chang had obtained his driver’s licence two years before the accident and he maintained repeatedly throughout this examination that he was unaware that his licence was under suspension at the time of these events.
[13] Chang recalls that in May 2009 he was involved in a car accident, colliding with a parked car. The police attended at the scene and found drugs in his possession so he was taken into custody at that time and his father was called. Chang denies knowing if he was charged with any offence as a result of these events, as he maintains that his lawyer was taking care of everything for him.
[14] Chang notes that he only learned about the licence suspension after this accident, claiming that he was told that this was the result of unpaid parking tickets or possibly a speeding ticket – he indicated that he could not really remember the circumstances leading to the suspension.
[15] On the day of the examination, Chang maintained that he did not physically have a licence as he had lost his wallet two weeks earlier.
[16] In terms of acquisition of the truck, Chang advised that after he move in with his girlfriend, he needed a vehicle to get to work from her place in Scarborough. He was initially unable to be specific about when he moved out of his parents’ house but ultimately stated that he believed it was likely the spring of 2008. He claims that he asked his cousin to lease a car for him and that she agreed to do so. Chang also stated that it was his cousin who made the lease payments.
[17] When discussing why he had left his parents’ home, Chang advised that he and Ming were very different and that they didn’t get along or talk much.
[18] Chang’s evidence regarding his father’s involvement with this car is sketchy at best. Although he claims to have seen the ownership as he kept it in the car, he was not clear as to what his father’s role had been in the context of the acquisition of the car. He believes Ming paid for the car insurance but he was not aware of whether his father was a guarantor on the lease and claims he did not know much about the details. As far as he was aware, his father’s name was not on the ownership.
[19] As it turns out, Ming is shown as the truck owner as of March 31, 2009, so this change of ownership took place before Chang’s licence was suspended.
[20] Chang stated that he kept the truck and the additional key for it at his girlfriend’s house, and he stated that no one else, not even his father or the cousin who had taken out the lease, ever drove the vehicle.
[21] Chang conceded that the vehicle had been parked at his father’s house for 6 months before the accident as he was no longer working and had too many parking tickets like that, and my cousin got concerned. This is followed by the following statement:
I couldn’t afford the car really much more, and then my dad took it back.
[22] In the context of having stated that his father was not on the ownership, was not involved in the acquisition of the car or in making lease payments, the reference to his father having taken the car back is at odds with much of what Chang had said earlier.
[23] Chang also admitted later in the examination that he was not actually living at his girlfriend’s house at the time of the accident. Instead, he claims he was living with a friend at that point. He explained that though he lives with his girlfriend, they sometimes fights so goes over to his friend’s house and lives there for a couple of weeks when that happens.
[24] The examination did not end well. Chang became less interested in responding to questions and more in understanding why they were being asked. Ultimately, counsel wrapped up the examination, noting her concern about Chang’s behaviour.
[25] Although the issue of consent never directly arose, Chang’s evidence suggests that his father had had little to do with the truck, how it was acquired or paid for. He seemed to think – or at least conveyed that impression – that it was his cousin who leased the truck for him and made the lease payments, though he was the primary driver, and that his father paid for the insurance, only. Yet, later on, he discussed the fact that his father took the car back and that it was parked at his parents’ home for 6 months.
[26] On Chang’s evidence, it is difficult to see that Ming would have had any authority to either grant or withhold consent to drive the car. However, other evidence demonstrates that Chang was being less than candid during his examination. In the end, little of what he says can be used by either party for much of anything.
EFFORTS to OBTAIN the TRANSCIPT of MING’s EXAMINATION
[27] Ming was also examined under oath by Peel on December 22, 2009. It is the transcript of that proceeding which forms the subject of this litigation.
[28] On January 7, 2010, Ms. Missaghie, counsel for Peel, wrote to plaintiff’s counsel to advise that Ming’s vehicle had been stolen from his home at the time of the accident so that it was therefore not being used with his consent at that time. The letter did not refer to the relationship between Ming and Chang, and was quite specific about using the word stolen, rather than simply speaking in terms of lack of consent.
[29] A copy of this letter was forwarded to Echelon and on January 26, 2010, Echelon’s adjuster confirmed in a telephone conversation with Ms. Missaghie that the father had been examined under oath about the circumstances surrounding the use of the car.
[30] The adjuster followed up in correspondence the same day, asking for a copy of both Ming and Chang’s examination transcripts and inquiring if the theft was ever reported to the police. Ms. Missaghie’s reply was far from responsive: she alluded to numerous issues preventing the release, including matters of confidentiality, but she never used the word “privilege”. Though she speaks of numerous issues, the only others mentioned are the examiner’s copyright and her inability to do as asked absent Ming’s consent.
[31] Ms. Missaghie did not respond at that time to the inquiry about whether the matter had been reported to the police. Instead, she backed away from her earlier assertion that the car had been stolen, now stating that it was taken without consent and without right. It was not until April 9, 2010 that Ms. Missaughie advised that Ming had not reported the matter to the police because he has no proficiency in the English language. This conflicts with Ming’s own evidence at discovery, where he said that he did not do so as this was a family matter.
[32] This 2008 Mercedes was deemed a total loss in the accident and the property damage claim was paid out. On October 1, 2010, Ms. Missaghie wrote again to confirm that the vehicle had been taken without consent and without right. This time, she included a copy of the declaration page of the Peel auto policy, which shows Ming as the only named driver on the policy at the time of the loss. This letter conflicts with much of Chang’s evidence.
[33] In January 2012, counsel wrote, seeking these transcripts. The response from Peel’s counsel at this time was, again, to refuse, but this time the refusal was predicated on counsel’s assertion that they pertained to a separate matter and are irrelevant. Follow up inquiries as to what that separate matter involved led to a letter from Peel’s counsel, in April 2012, to advise these examinations:
…were conducted by Peel with respect to coverage for the property damage to the Mercedes automobile.
[34] There is no reference here to earlier to concerns about breach of copyright or the need to have Ming’s consent before the transcripts could be released. There is also no reference to concerns about anticipated litigation or privilege. In fact, based on this letter, the dominant purpose of the examination appears to have been to sort out coverage issues pertaining to property damage of the truck.
[35] Mr. Percival responded a few days later to advise that if the examinations dealt with the issue of coverage for property damage, the transcripts were, indeed, relevant. He asked for particulars regarding where and when the examinations were carried out so that he could order a copy, himself, and pay for them directly.
[36] By letter of May 9, 2012, Peel’s counsel agreed to request and provide the transcript of Chang’s examination, while considering the issue of privilege as regards the transcript of Ming’s evidence. This is the first reference to privilege as a basis for withholding the document and it was followed by counsel’s letter of August 27, 2012, which added:
The examination of our client is privileged and was conducted in anticipation of litigation.
[37] This was the first reference to the examination having been conducted in anticipation of litigation, though the transcripts were initially sought in January 2010 – more than 2 ½ years earlier.
MING’S EXAMINATION for DISCOVERY
[38] Discovery of Ming began on October 12, 2012, with the assistance of a Mandarin interpreter. About an hour into the event, Peel’s counsel canceled the discovery as she was apparently concerned about the interpreter’s efficacy.
[39] Echelon’s evidence is to the effect that, during the one-hour of questioning, Ming gave responses that were convoluted and not entirely consistent throughout. Though the interpreter apparently maintained that she was accurately translating his responses, his/Peel’s counsel insisted on aborting the event over the strenuous objections of Echelon’s counsel.
[40] The examination was re-started on December 17, 2012. Ming’s evidence was still difficult to follow and at times, he again contradicted himself. Ming stated that Chang chose the vehicle and that he and Chang’s cousin paid for the lease. He seemed to be of the view that two names were needed on the lease. He also maintained that this was the first car he had ever leased or purchased, though he operated various vehicles that belong to the farm where he works. Later in the examination, however, Ming said that Chang made all the lease payments, himself.
[41] Ming confirmed Chang’s evidence about Chang wanting a vehicle to take to work. He claims that though Chang lived at home from time to time during the lead up period to the accident, he also lived elsewhere, but he was unable to say where. Like his son, Ming seemed unable to recall dates or timeframes.
[42] Ming states that it was Chang who initially made all of the arrangements for the insurance on the vehicle and that the cousin was not involved with that at all. Though he attended at the insurer with his son, Ming was not involved with this transaction in view of his inability to communicate in English. Ming added that it was Chang who paid for the insurance. This, too, conflicts with Chang’s evidence.
[43] During the course of the discovery, it became clear that this arrangement was only in place when the policy was first issued. In April 2009, the policy was reissued in Ming’s name and he was shown as the sole driver of the car, which was listed as being at his address. This accords with Ming have taken over as owner the previous month. There was no mention of Chang at all on the renewal.
[44] With respect to the issue of lack of consent, counsel made a statement to the following effect: the vehicle was originally leased for Chang to have and use but in April 2009, Ming took the vehicle from his son and told him he would not be permitted to drive it any longer. At that point, Ming renewed the insurance in his own name so that he could use the vehicle. At some before that, Ming acquired the second key for the vehicle. This information is difficult to reconcile with Ming’s evidence, to the effect that he paid nothing towards the acquisition of the vehicle yet ended up with both keys.
[45] Nonetheless, Ming stated that he had his son park the truck at the farm where he worked and told him to refrain from using it because he had a lot of speeding tickets. Ming gleaned this information about the tickets from his wife, who was aware of it as all of Chang’s mail still came to the family home. Though the licence suspension notice was likely mailed to the same address, like his son, Ming denied all knowledge of Chang’s licence having been suspended.
[46] From the time that Chang was told he could no longer drive the truck, the vehicle was kept at the farm. Later on in the examination, it was discovered that the family home is located at the farm. Ming told Chang to park it there, as Ming planned to see if the lessor would take the car back.
[47] When the issue of insurance for the vehicle was explored in greater depth, the evidence became more and more murky. According to Ming, the vehicle sat at the farm without insurance for about 4 months, as he and his niece had canceled the insurance. It is unclear why she was involved at this stage if she hadn’t been involved in obtaining the policy at the outset. Ming was unable to explain. Further, the dates that Ming gave do not accord with the paperwork – the ownership was changed over in March 2009, the insurance a month later but the accident was not until November 2009.
[48] Ming did say he and his niece went together to the insurer in the Toyota, a vehicle owned by the farm where he worked, but insured in his name. They then tried to cancel the lease but the dealership was not prepared to take the car back. In the interim, Chang had stopped making lease payments so Ming took over. Ming is unable to say how many lease payment he made, over what course of time or what sum of money was involved.
[49] There is a period of about 8 months from the time Ming’s name appears on the ownership papers until the accident, so it is fair to assume that was the period of time during which he made the lease payments. He stopped making payments after the accident.
[50] In April 2009, Ming insured the truck, though he claims that he never drove it before and though he had the farm’s Toyota for his personal use. After he insured it, Ming says he drove the truck a few times. In fact, he says he decided to insure it for the use of the family members (he has five daughters), as he had been told it was more fuel efficient that his Toyota. Later, however, he stated that the farm paid for his gas use in the Toyota, and that he only paid for gas when taking the family on long outings so it was not clear why he would pay for insurance so he could use a fuel efficient vehicle when he was not responsible for fuel.
[51] Only Ming’s name was on the truck’s insurance policy at the time of the accident. When that was pointed out to him, he retracted his comments about the truck being for the family and stated that actually, only he drove the truck thereafter, but he added that he did not use it very often. He was unable to provide any estimate as the frequency with which he drove that vehicle or indicate when he last used it before the accident.
[52] When discussing the day of the accident, Ming was unable to say if his son had slept at home the night before. The family occupies a 5- bedroom house and Chang still had a dedicated room, though, according to Ming, he was only home sporadically.
[53] Though Ming stated that he had not seen Chang before leaving for work the day of the accident, he was unable to recall if Chang was in the house at that time. He maintains that Chang no longer had a key to the truck, as one set was kept in the house, hanging on the wall, and the other was kept in a drawer in his bedroom. Ming stated that it was his wife who placed it there for safekeeping, so that he would not lose it. He was not sure where this place was as this had been left to her to deal with.
[54] Chang was apparently at his parent’s home before the accident. Ming, however, was unable to say how Chang got there, as he no longer had a vehicle to drive, or why he came to the house that day. Ming claims he has never asked him either question. The accident occurred very near the farm. Ming is not even certain if his son was going to or coming from the farm at the time of the accident – this was something else he never asked him, or apparently his wife, about.
[55] Ming denies that he ever spoke to Chang about any of this. He also denies having asked his wife how Chang managed to drive the truck, as the truck key was still hanging on the wall after the accident. Chang had to have taken the spare key, kept in the bedroom dresser. Ming also claims that he never told his wife that Chang was not allowed to drive the car – he stated that she was a “village woman”, who didn’t know about the law, implying that she was somehow too simple to deal with these issues. Yet Ming stated earlier that it was his wife who had told him, about Chang’s speeding tickets. It is also not clear why Chang would ask his mother for the spare key if there was a key in open view on the wall.
[56] Ming was not aware of when his son was or was not working, and unable to opine as to how Chang had been able to make the earlier lease and insurance payments.
[57] In terms of the claim for litigation privilege, the transcript was not included in schedule B to Ming’s affidavit of documents.
[58] As difficult as this examination appears to have been due to Ming’s apparent memory problems or unwillingness to be more precise in his evidence, the transcript is replete with his counsel taking questions under advisement, many of which did not involve contentious issues. Though it ought to have been abundantly clear to her that the issues of consent and production of the Ming transcript were both areas that would be raised at discovery, she appears to have put little thought into how she would respond to questions about either area in advance of the examination.
EVIDENCE of the RESPONDING PARTY
[59] The responding affidavit was provided by James Wilson, counsel to Ming and, therefore, Peel.
[60] Wilson explained that the vehicle had “all perils” property damage coverage on it but that coverage would not be available if the vehicle was being operated, with the insured’s permission, by anyone not authorised by law to drive. In view of Chang’s licence suspension, he was not authorised by law to drive.
[61] Wilson states that Ming phoned in the accident details on November 24, 2009, so four days after the accident. He was assisted by a Mandarin interpreter at that time and stated that the vehicle in issue had been taken without his consent by his son. He added that the truck had been damaged and was not driveable.
[62] On December 7, 2009, the Peel adjuster heard from Echelon, to the effect that the plaintiff had suffered a broken arm in the accident and had made a claim against Echelon for accident benefits. Peel lost no time in arranging for Hawkins Security Group to interview both Chang and Ming, which they did on December 9, 2009
[63] Wilson states that he was retained on December 15, 2009 and that, by that time, Peel’s reasonable apprehension of litigation had crystalized. He then lists 4 potential suits that were on Peel’s radar:
Following their conversation with Ming, Peel had strong reason to anticipate denial of a property damage claim which could result in litigation against Peel Mutual;
Peel considered paying out Ming and then bringing a subrogated claim against Chang;
After hearing about the plaintiff’s injuries and accident benefits claim, Peel anticipated they may have to defend Ming or Ming and Chang with respect to this tort claim; and
Peel anticipated that if they denied coverage to Chang or to Chang and Ming, they could still be brought into this tort action as a third party or become party to subsequent litigation for indemnity.
[64] Wilson states that he had advised Peel by e-mail of December 15, 2009 that of greater concern than the property damage to the vehicle was the likelihood of a tort claim and the coverage issue in view of Chang not having had consent to drive the truck. It was Wilson who then asked Peel to instruct him to conduct these examinations under oath to explore the consent issue, as it was relevant to both the property damage issue and to liability for negligence in a tort claim. Wilson acted as both defence and coverage counsel simultaneously, which raises other issues.
[65] On December 17, 2009, plaintiff’s counsel put Peel on notice of the tort claim. On the same day, Wilson got instructions from Peel to proceed with the examinations under oath. Wilson maintains the examinations were conducted in anticipation of potential and certain litigation, in view of the notice letter, though the examination was arranged before the notice letter was received. He did, however, decide to waive privilege with respect to Chang’s statement:
…because Chang had not entered a defence in the subject action …and it is clearly in the interest of all parties to have any available evidence from this defendant, which is not otherwise available due to his non-responsiveness to this litigation.
[66] Wilson maintains that he was told by his associate that the first examination of Ming had to be aborted due to translation issues and his review of the transcript of that event confirmed that this was the case. This was based on the reporter apparently telling counsel, who then told Wilson, that she had trouble understanding Ming. A copy of that transcript has not been included in the record before the court.
THE LAW and COUNSELS’ SUBMISSIONS
[67] There is no dispute that for privilege to attach to this transcript, it has to have been created for the dominant purpose of actual or reasonably anticipated litigation (see General Accident Assurance Co. v. Chrusz, 1999 CarswellOnt 2898); Blank v. Canada (Dept. of Justice), [2006] SCR 319).
[68] Thus, it is not sufficient that anticipated litigation was among the reasons for the creation of the document for privilege to attach - it has to have been the dominant, or most significant reason to have that impact. It is also not enough that litigation was simply considered as a possibility – there has have been actual litigation or litigation had to have been reasonably anticipated for the privilege to apply. As a result, the evidence tendered to support the privilege claim is critical.
[69] There is also no dispute that Ming, who asserts the privilege, has the onus of laying the evidentiary foundation for it (see Mamaca (Litigation Guardian of) v. Coseco Insurance Co., 2007 CarswellOnt 1828).
[70] The case law establishes that there is a rebuttable presumption of consent in these cases, such that the onus of showing there was no consent falls on the owner of the vehicle (see Forestall v. Carroll, 2011 ONSC 410).
[71] There is a body of cases stating that production of transcripts from an earlier proceeding is appropriate. In Antongiovanni v. Phung 2001 CarswellOnt 3947, transcripts from the accident benefits and the LTD actions, both arising from injuries sustained in the same motor vehicle accident that led to a tort action, were sought by the defendant in that action.
[72] Master Dash pointed out that these earlier transcripts were clearly relevant to issues in the tort action, including the extent of the plaintiff’s injuries and her ability to return to work. The issue for the Master was whether, regardless of relevance, he was precluded from making the order sought on the basis of the deemed undertaking rule that normally precludes the use of transcripts in a proceeding where the evidence was taken for another purpose.
[73] In assessing the issue, Master Dash looked at the purpose behind the deemed undertaking rule, as articulated by the Court of Appeal in Goodman v. Rossi (1995), 24 OR (3d) 359). There, the court focused on the protection of privacy versus the promotion of full discovery. He also considered the exceptions to the rule, in particular, rule 30.1. 01(8), which allow the court to grant relief from the general rule where the interests of justice outweigh any prejudice that would result to a party who disclosed evidence.
[74] The Master ultimately concluded that production was warranted. In his view, aside from the relevance of the earlier transcripts to two significant matters in issue - the extent of the injuries sustained and the plaintiff’s ability to return to work – the earlier evidence was also important to facilitate cross-examination on prior inconsistent statement.
[75] The Master pointed out that Rule 30.1.01(6) provides for just such a situation, as it provides that the deemed undertaking rule does not prohibit the use of evidence obtained in one proceeding…to impeach the testimony of a witness in another proceeding. I agree with his comments, to the effect that a party cannot complain of prejudice if they are impeached by their own testimony under oath. If a party has been consistent throughout, they have no cause for concern.
[76] As both Master Dash noted in Antongiovanni, supra and Mulligan J. pointed out in Riley v. Tarantello 2010 CarswellOnt 2245, unless the order for production is made, how can the moving party use earlier statements to impeach testimony? Mulligan, J. therefore ordered production of transcripts from the examination for discovery of a previous accident.
[77] In Parniak v. Pendanthanu 2010 CarswellOnt 5838, Gordon J. noted that credibility was an obvious issue in the case and discovery transcripts were a common source for use in trials for that purpose. He therefore believed transcripts from the accident benefits action should be available for the tort action and vice versa.
ECHELON’S SUBMISSIONS
[78] Echelon maintains that a first-party property damage claim is not “litigation”, per se, rather it is a matter between an insured and his insurer and the parties are not adverse in interest. The purpose of the examination in this case was to assess whether or not to pay a claim for the property damage to the vehicle, which was rendered a total loss in this case. This accords with what Echelon was told by counsel in April 2012.
[79] Echelon relies on Meuwissin (Litigation Guardian of) v. Perkin, 2012 CarswellOnt 90 as a basis for their contention that the court will grant access to a transcript though it was created in the context of litigation to which they were not a party. In Meuwissin, the focus was on consistency of evidence and the Master was of the view that the transcripts were relevant, as the applicant should be able to know the evidence given under oath on previous occasions with respect to the same broad general issue.
[80] While this case was appealed and the order overturned, Echelon argues it was on the basis that the Master had applied the former “semblance of relevance” rule, rather than the current “relevance” approach. The court’s approach, on appeal, was to look at what was sought in the context of the old and new rule and on that basis determined that what was sought was not relevant, so therefore not producible.
[81] In fact, Echelon claims they have a stronger case for production than the applicant in Meuwissin, who sought discovery transcripts from a different proceeding. Here, Echelon seeks a transcript based on the same facts, arising from the same accident and on an issue which, if resolved in their favour, would afford either them or Ming with a complete defence to the action. This is more akin to the accident benefits-tort action cases, where the factual matrix of each action is essentially the same.
[82] The insurer also notes that, in view of concerns about potential memory loss which could affect the reliability of evidence, when evidence was acquired is important. In this case, Echelon raised, and I have noted, legitimate issues regarding Ming’s memory and his candour, as demonstrated by the transcript of his examination for discovery- though it was, in effect, “take 2”. On that basis, having access to his fresh evidence, taken soon after the accident while memories are clear, and three years before his examination for discovery, seems more likely to promote the goal of adjudicative fairness. Generally speaking, evidence taken contemporaneous with events tends to be more reliable than evidence adduced years later.
[83] As Echelon notes, the underlying goal of the court is always to get to the truth of the matter. That is why documentary discovery is part of the system (see Kitchenham v. AXA Insurance). Access to the earlier evidence, they say, will facilitate their ability to get to that truth.
[84] Echelon also notes that all of the case law provided by Peel deals with production of transcripts from an examination for discovery, which is not what they are seeking here. An examination under oath by an insurer is not “another action” so should not be treated in an analogous way to the cases like Meuswissin.
RESPONDENT’S SUBMISSIONS
[85] Peel focuses on litigation privilege as the basis for their position. They maintain that their evidence demonstrates that the dominant purpose of the examination was to address reasonably anticipated litigation.
[86] They rely on Wheeler v. Le Marchant (1881), 17 Ch. D. 675 (Eng. C.A) , where the court held that documents are protected if they came into existence after litigation had been commenced or:
…where they have been made with a view to such litigation, either for the purpose of obtaining advice as to such litigation or of obtaining evidence to be used in such litigation, or of obtaining information which might lead to the obtaining of such evidence.
[87] Peel relies on its evidence as demonstrating that anticipated litigation, in the context of 4 possible scenarios, was anticipated at the time Ming was cross-examined. They claim all of this possible litigation was the dominant purpose of the exercise.
[88] Peel also relies on the fact that, as Ming’s insurer, they were subject to a duty of good faith, such that they were bound to continue the process of adjusting the loss while exploring a possible coverage denial. They concede that those documents dealing solely with quantifying and adjusting the claim will not attract litigation privilege but assert that once the reality of litigation has crystalized and the investigation shifts from dual purpose to solely preparing for litigation, litigation privilege will be engaged, as per Kavanagh v. Peel Mutual Insurance Company, 2012 ONSC 4653).
[89] Peel submits that the examination was directed at exploring whether or not Ming had consented to Chang’s use of the truck as the issue of consent is central to Ming’s defence. On that basis, they claim that litigation privilege is engaged.
[90] In the alternative, Peel submits that even if there no privilege is found to arise here, the court should, nonetheless, dismiss this motion. They rely on the Divisional Court’s decision in Sangaralingam v. Sinnathurai, 2011 ONSC 1618, where the court stated that litigation privilege should only be set aside where what is sought is relevant to proving an issue that is important to the outcome of the case and there is no alterative form of evidence that can take its place.
[91] There, production of a witness a witness statement was refused where Herman J. found that examination for discovery was an alternative means to getting the information sought.
[92] Further, Peel asserts that if a document is sought for the sole purpose of finding out what an insured said previously to its insurer, questioning going strictly to credibility will not be permitted (see Sangrathalingam, supra; Greco v. Thornhill, 65 OAC 71. They add that Echelon already has all it needs regarding the issue of consent as they had the opportunity and did examinee Ming at Length about the issue.
ANALYSIS and CONCLUSION
[93] The parties have come at this issue from very different perspectives. Unlike some of the cases relied on by Peel, there is no agreement here as to whether litigation privilege even applies, so that must be the starting point of this analysis.
[94] Peel asserts that the transcript is covered by litigation privilege as factually, their evidence makes it clear that litigation was contemplated in four different contexts at the time Ming’s statement was taken. The accident took place on November 20, 2009, yet initial examinations of both Chang and Ming were arranged and conducted on December 9, 2009. Counsel was retained on December 15, 2009 and he claims that by then, Peel’s reasonable apprehension of litigation had crystalized.
[95] Despite this assertion, Peel’s counsel objected to production of the transcript that resulted from this event on very different grounds for over two and a half years.
• On February 3, 2010, Ms. Missaghie indicated that production was refused for numerous reasons, including matters of confidentiality; the reporter’s copyright; and the need to obtain Ming’s consent in any event. There is no mention at all of privilege, let along that this was the dominant purpose of the examination;
• When the issue arose again two years later, Ms. Missaghie wrote in January 2012 to say the transcripts were not relevant and pertained to a separate matter. Again, there was no reference to privilege as the basis for withholding the document;
• Instead, another Peel counsel wrote on April 13, 2012 to say that the examination had been conducted with respect to coverage for the property damage to the Mercedes automobile.
[96] In fact, there was no mention of litigation privilege until May 9, 2012 – more than two years after the transcript was first sought, following various telephone conversations and an exchange of correspondence about the issue.
[97] It is difficult to reconcile Peel’s evidence filed in response to this motion with the assorted reasons they have given over time for refusing to provide the transcript.
[98] It is also difficult to accept that anticipated litigation was the dominant purpose of the examination, in view of Ms. Missaghie’s statement to the effect that it was conducted with respect to coverage for the property damage claim on the truck. This also seems to be the more logical basis for this examination to have been conducted at that stage. There was an insured waiting in the wings to be paid out following the loss of an expensive leased vehicle. That was the immediate issue for Peel to resolve – whether to pay Ming’s property damage claim. That issue could only be resolved by assessing whether Chang had Ming’s consent at the time of the loss.
[99] While litigation in various forms was certainly a possibility at that time, that is generally the case following a motor vehicle accident where a party has been injured. That does not necessarily mean that all steps taken after an insurer becomes aware that injuries were sustained are taken with the dominant purpose of anticipation of litigation.
[100] In the context of this motion, Wilson has now attempted to minimize the importance of the property damage issue, and while his comments to that effect may be correct in the long term, this examination took place at an early stage and its purpose has to be assessed as at that time frame. Why was the examination being conducted at that time is the question to be posed, rather than considering how else Ming’s evidence has been used since that time in other contexts.
[101] Wilson claims that he recommended to Peel that he conduct an examination under oath of Chang, and that the potential tort action by occupants of the plaintiff’s vehicle was of greater concern than a physical damage claim to the Ming vehicle. He says he pointed all of this out in a letter dated December 15, 2009. This, however, conflicts with Ms. Missaghie’s letter of Aril 2012, where she states that the examination was conducted with respect to the property damage claim for the Mercedes. This discrepancy is not explained in Wilson’s evidence, nor even referred to.
[102] Wilson then lists four potential suits anticipated by Peel at the time Ming was examined under oath to support his assertion that Peel had a reasonable apprehension of litigation. Taking each in turn:
- Following their conversation with Ming, Peel had strong reason to anticipate a denial of property damage claim which could result in litigation against Peel.
[103] This statement raises serious questions about what Ming told Peel at the outset. If he has maintained throughout that Chang did not have his consent to operate the vehicle, why would Peel have strong reason to anticipate that they would deny his property damage claim and that this could result in litigation? This is therefore not reasonably contemplated litigation.
- Peel considered paying out Ming and then bringing a subrogated claim against Chang.
[104] Peel paid out Ming and has brought no such action against his son, who did not even own the vehicle he was driving at the time of the accident. In view of Ming’s age and circumstances, it is difficult to accept that this was ever a serious option on the table.
- After hearing about the plaintiff’s injuries and accident benefits claim, Peel anticipated they may have to defend Ming or Ming and Chang with respect to this tort claim.
[105] Chang did not have a valid driver’s licence at the time of the accident, so defending him was never a likely scenario. Further, as noted above, a law suit is often contemplated after any motor vehicle accident, but the cases have made it clear that there must be something more than just a concern about a potential claim for privilege to arise.
[106] In Mamaca, supra, Master Dash, when discussing the evidentiary onus on a party claiming privilege, states that the best evidence would be an affidavit from the defendant as to when she reasonably anticipated that litigation was likely, such that her ongoing investigation and document creation was to assist with the defence of the litigation.
[107] In Sathiyapalan v. Citadel General Accident Assurance Co., [2004] OJ No, 364 the court noted there cannot be a blanket assertion of litigation privilege where documents were part of the adjusting of a claim rather than preparation for reasonably anticipated litigation.
[108] There is no evidence along the lines of what was discussed in Mamaca here and no basis for suggesting that investigation of the consent issue amounts to preparations for defending litigation that is reasonably anticipated at such an early stage. Of course, this examination appears to have been something likely considered by Peel when they ultimately decided how to approach the litigation that eventually arose. However, in the short term, the examination was intended to assist Peel in deciding whether or not to pay Ming’s property damage claim, as Ms. Missaghie states candidly.
- Peel anticipated that if they denied coverage to Chang or to Chang and Ming, they could still be brought back into this tort action as a third party or become party to the subsequent litigation for indemnity.
[109] There was no tort action at this time that they could have been brought into in any way. This ground involves conjecture upon conjecture and, in my view, does not meet the reasonably anticipated litigation part of the test to give rise to the protection afforded by privilege.
[110] These 4 grounds could only have been in consideration if Peel had not yet concluded that Chang did not have his father’s consent to operate the vehicle. As a result, the consent issue and what flows from it – whether Ming was insured for the third and first party loss - was the dominant purpose of this excise, not any possible litigation that may ensue down the road as a result of how that issue unfolded.
[111] This case is quite unlike what the court was dealing with in Kavanagh, supra, where the litigation was between the insured and her own insurer and where the documents in issue – more than 30 of them – had all been listed in schedule “B” to the insurer’s affidavit of documents.
[112] In Kavanah, the court dealt with possible fraud by an insured against her insurer. The issue in that case was not whether the owner’s child had consent to drive the vehicle involved in the accident but whether the insured and her son had been truthful with her insurer about both of their involvement in the alleged theft of the vehicle. The court was clearly not looking for ways to assist this plaintiff in the context of that scenario. Further, Ferguson J. reviewed the documents in issue (the Chang transcript was not tendered to the court in the case before me) and determined when the reality of litigation crystalized, having noted that more than a suspicion of the possibility of litigation was needed.
[113] It is critical to bear in mind that the dominant purpose test replaced the earlier approach of substantial purpose. As the Supreme Court of Canada stated in Blank v. Canada (Minister of Justice) [2006] 2 RSC 319, though the current approach provides narrower protection, the dominant purpose standard is consistent with the notion that the litigation privilege should be viewed as a limited exception to the principle of full disclosure.
[114] I find that Peel, which had the onus of laying an evidentiary foundation on which to advance their claim for litigation privilege, has failed to meet that onus. The absence of any explanation for two years’ worth of different justifications for their refusal to tender to document sought increases my concerns. In my view, the dominant purpose of this examination was adjusting he claim and the reasonable anticipation of litigation at that stage had not yet crystalized
[115] I also disagree with the assertion in Peel’s factum, to the effect that this document is sought for the sole purpose of learning what Ming said to his insurer rather than eliciting information relevant to material issues. In the context of these facts, I find that a rather astonishing position for Peel assert. Chang’s evidence, when he was examined under oath, is all over the map, and Ming’s discovery evidence is not much clearer. The issue of consent is the primary issue that Echelon has to deal with in terms of its liability vis a vis Ming/Chang and having Ming’s early recollection of what occurred leading up to and following the accident could go a long way in filling in the many gaps in his evidence and clarifying inconsistencies. There is obvious relevance to this transcript.
[116] The relief sought is therefore granted. I therefore find that litigation privilege does not bar Echelon’s access to the Ming transcript, which shall be produced within 20 days.
[117] If the parties are unable to agree as to costs, I can be spoken to.
(original signed)_
Master Joan M. Haberman
Released: July 23, 2014