DATE: 2017 03 16 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: GURMINDER BADESHA, BY HIS LITIGATION GUARDIAN MANPREET BHANDAL, MANPREET BHANDAL, RAVINDER BADESHA, RANJIT KAUR AND HARJIT BADESHA PLAINTIFFS

AND:

JAMIL HAIDER, BEATA LATO, PUROLATOR COURIER INC., SOPHIA GREEN, BYRON DENNIE, AND TRAVELLERS INSURANCE COMPANY OF CANADA DEFENDANTS

AND:

TD GENERAL INSURANCE COMPANY (PURSUANT TO SECTION 258(14) OF THE INSURANCE ACT, R.S.O. 1990, C. I. 8, AS AMENDED) STATUTORY THIRD PARTY

BEFORE: Trimble J.

COUNSEL: Lauren Cullen for the Plaintiff/Applicant, Catherine Longo for the Third Party/Respondent No one appearing for the Defendants

HEARD at Brampton: 15 March, 2016

Endorsement

Introduction

[1] In this Motion, the plaintiff moves for production of TD’s file contents. TD, the Statutory Third Party under the Insurance Act, was the Defendant, Haider’s, motor vehicle liability insurer. TD resists.

The Action

[2] Mr. Badesha claims for personal injuries he sustained caused when he, a pedestrian, was struck by two cars on March 2, 2009, while he was, himself, assisting another pedestrian who had been hit in an earlier pedestrian knock down. Mr. Haider operated one of the two cars that struck the Plaintiff.

[3] TD insured Mr. Haider and defended him for a while. TD eventually took an off-coverage position and itself added as a statutory third party under s. 258 of the Insurance Act on June 25, 2015. In response to TD’s off coverage position, on September 18, 2015 the Plaintiff amended the Statement of Claim to advance a claim against Travellers Ins. Co., his own uninsured/underinsured motorist carrier.

[4] At the insurer’s Examination for Discovery on December 10, 2015, the Plaintiff asked TD to produce many documents that are normally found in an insurer’s file, including Mr. Haider’s signed statement, all correspondence between TD and Mr. Haider, all correspondence between Mr. Haider and TD’s outside adjusting firm, the non-waiver agreement between Mr. Haider and TD. TD claimed litigation privilege and refused to produce a number of things.

[5] The TD adjuster testified that Mr. Haider advised TD of the accident by phone call on March 4, 2009. In that call, Mr. Haider said that he struck a pedestrian who was taken away by ambulance. He produced a signed written statement on 2 September, 2011, after the Statement of Claim was issued on February 22, 2011.

The Motion

[6] At the return of the Motion, the Plaintiff said that the parties had resolved many of the questions in dispute. The remaining questions could be simplified into the following three broad categories:

1. Mr. Haider’s statement to TD,
2. The contents of TD’s file including its outside adjuster’s file, and
3. All correspondence between TD and Mr. Haider.

[7] The motion proceeded based on these three broad categories.

[8] The Plaintiff claims that this information is relevant to the issues of liability in the tort action, to coverage in the action yet to be decided between TD and Mr. Haider, and to the issue of the Plaintiff’s recovery of damages from his UIM carrier. Further, the Plaintiff says that since TD has taken an off coverage position and is no longer defending Mr. Haider, any litigation privilege that may have existed over TD’s investigation and file up to that time no longer exists. Finally, the Plaintiff says that there is no other way that the information contained in TD’s file can be obtained since Mr. Haider has refused to cooperate with anyone in this action.

[9] TD says that privilege is not waived. It belongs to Mr. Haider and TD. In any event, there are other ways of obtaining the same information.

[10] On this motion, the Plaintiff relied on his Motion Record. He produced no law on which he relied. TD provided a Responding Motion Record, Factum and case book.

Order

[11] The Plaintiff’s motion is dismissed for the reasons that follow. The Plaintiff will pay to TD costs, fixed at $1739.60 all inclusive. Each party submitted its preferred form of order in this matter. I have signed the Defendant’s preferred form and sent it to counsel under separate cover.

Discussion and Analysis

[12] As a preliminary matter, with classes of privilege like litigation privilege the party claiming privilege has the onus to justify its claim of privilege, prima facie. Generally, this is done by describing the document in the Affidavit of Documents sufficiently, and the reason for the claim of privilege, or, as in this case, at the Examination for Discovery. Once the party claiming privilege has made the prima facie case for privilege, the party seeking production has the onus to justify production (see Kennedy v. McKenzie para 23). I find that the Defendant has discharged its onus and the Plaintiff has not. The Plaintiff did not refer to any case law. He argued the motion based on factual issues such as relevance of information and an inability to obtain it elsewhere.

Privilege:

[13] Privilege exists and has not been waived.

[14] When approaching a question of litigation privilege, a distinction must be drawn between actions by an insured against his or her own first party insurer, and those in which an insurer is defending its own insured under a third party liability policy because the policy holder is sued in tort. Because the obligations of the insurers differ in these two circumstances, so does the analysis of litigation privilege (see Allan v. CHC Casinos Canada Ltd. at para. 12). In this case, the claim of litigation privilege is advanced by TD, Mr. Haider’s third party liability insurer.

[15] The most expansive treatment of claims about privilege in cases where the Plaintiff seeks production from a third party liability insurer’s file is Panetta v. Retrocom Mid Market Real Estate, 2013 ONSC 2386 (S.C.J.). In that case, the Plaintiffs sought production from the Defendant’s third party liability insurer the statement the insurer took from its insured (the defendant in the tort claim), adjuster’s notes, and contents of the adjuster’s file. The Defendant insured claimed litigation privilege. In that case, much of the file was created before the insured or insurer received notice from the Plaintiff that a claim was being advanced.

[16] Quinn, J., in his comprehensive review of the law, sets out the following principles of law that apply to privilege attaching to documents in a third party liability insurer’s file:

1. In order for a document to be protected from disclosure by litigation privilege it must be prepared with the dominant purpose of defending a claim against the insured (para. 27; see also General Accident v. Chrusz, 45 O.R. (3d) 321 (C.A.), and Kennedy, supra, para. 16.).
2. In circumstances where the document is created by a wrong doer before a claim is made, privilege may well attach where the claim is “anticipated from the outset” (para. 34; and see Blackstone v. Mutual Life of New York, [1944] O.R. 328 (C.A.).
3. Where the document is created by a third party liability insurer before a claim is made, it is reasonable from the moment the accident occurs that a claim will ensue (para. 33 and cases cited therein).
4. The party claiming privilege does not have to demonstrate a connection between the creation of the document and the activities of the “adversarial advocate”. Rather, the document must be created for the dominant purpose of use in litigation existing, contemplated or anticipated (see Blackstone, supra, p. 334; and Kennedy, supra, para. 16 to 20).
5. Whether litigation privilege attaches to a document or class of documents is a fact specific inquiry (para. 37; and see Operon Const.’n Co. v. Alberta (1989), 1989 ABCA 279, 71 Alta. L.R. (2d) 28 (C.A.), at para. 6, and Allan v. CHC Casinos Canada Ltd. (2005), 77 O.R. (3d) 653 (H.C.J.), para.s 8 to 12).
6. In an action defended by an insured under a third party liability file, portions of the file created for investigation, assessment, settlement before claim, and defence are all points along a continuum are all created with a view to adjusting a claim by the claimant against the insured (para. 44; and see Allan, supra, para. 10).

[17] The Plaintiff says that litigation privilege over TD’s file ended when a) TD added itself as a statutory Third Party under the Insurance Act, and b) TD’s solicitors ceased acting for Mr. Haider.

[18] I do not accept this proposition for the following reasons:

1. The Plaintiff has provided no authority for this proposition.
2. There is nothing in the Insurance Act, s. 258 that addresses this.
3. Because an automobile liability insurer is subject to liability up to minimum limits even in the event of a policy breach where the insured in breach of the policy is found liable, s. 258 gives the insurer rights and obligations as if it were the insured named defendant against whom the insurer is taking an off-coverage position. S. 258(15) provides that the insurer can contest the liability of the insured and the damages claimed, can respond to any pleading or any claim against the insured, have production and discovery from any party adverse in interest to the insured, and can examine and cross examine witnesses at trial. In essence, the insurer, because of its exposure up to minimum limits, stands in the shoes of the insured procedurally. Further, where there is a denial of liability under a motor vehicle liability policy, the insurer is required to defend the insured through s. 258. Its defence of the insured is without prejudice to its off coverage position. The validity of that denial is tried after the claim against the insured. It would run contrary to the philosophy behind s. 258 to say that an insurer, having taken an off-coverage position because of the insured’s alleged breach of the policy, loses privilege over its file contents.
4. The Plaintiff’s submission runs contrary to the tripartite relationship between insured/insurer/defence counsel (see discussion, for example in Hopkins v. Wellington Ins. Co.). In that relationship (at least in Canada), the privilege is the insured defendant’s, but extends to the insurer’s file because the insured cedes control of the action under the terms of the insurance contract.

Can Litigation Privilege be Set Aside?

[19] Chruz, supra, permits privilege to be set aside. Under what circumstances can this be done? Chruz suggests the following circumstances:

a. The Public Safety Exception applies, b. Innocence of the Accused Exception applies, c. Where the communications themselves are criminal, d. Where privilege is waived, e. Where litigation privilege is modified, or disclosure is mandated by statute or Rule f. Where the information sought is relevant to the proof of an issue important to the outcome of the case, and there is no reasonable alternative form of evidence that can serve the same purpose.

(see Kennedy, supra, para. 42 top 46).

[20] The Plaintiff relies on f., above. He says that the information in the Haider statement, in the file, and in the correspondence between TD and Haider is relevant to TD’s denial of coverage. This affects the Plaintiff’s recovery from TD in the tort claim, and the Plaintiff’s claim against his own UIM insurer. He says this information is not available elsewhere.

[21] I disagree for several reasons, each of which is sufficient to dispose of the request to order production under circumstance f, above.

[22] First, the Plaintiff’s request is too broad. To ask for all correspondence between Mr. Haider and TD, and for the whole of TD’s file to the date of denial is too sweeping. Further, that the information in that file “may be relevant” is not the test. It must “be” relevant. The Plaintiff’s broad requests are little more than a fishing expedition unless they are particularized to a specific document(s) that relate to an issue in the litigation.

[23] Second, the document(s) requested must relate to an issue in the action in which the person seeking production is involved. The Plaintiff says that the documents are relevant to the issue of damages and the reasons for TD’s denial of coverage to Mr. Haider. The reasons for that denial are relevant to the defences raised by the UIM carrier.

[24] The lis between Mr. Haider and TD does not involve the Plaintiffs. It is a contractual dispute. The Plaintiff is affected by the off coverage position, but the dispute is Mr. Haider’s and TD’s. Until the Plaintiff takes an assignment of Mr. Haider’s rights under the auto policy the Plaintiff has no lis with TD. The Plaintiff, still, is adverse in the action, to TD, but only to the extent that Mr. Haider is adverse to the Plaintiff – namely on issues of liability, defences and damage.

[25] The Plaintiff’s dispute over UIM coverage is affected by TD’s off coverage position, but only in the vernacular. The lis is between the Plaintiff and the UIM insurer and arises only on the finding concerning TD’s coverage position in the lis between TD and Mr. Haider. I doubt whether being ‘affected by’ the outcome of a lis between a party to the action and a stranger to the action makes anything other than the ultimate finding in that coverage dispute “relevant” to the tort claim or the UIM claim.

[26] Third, and more importantly, the Plaintiff has failed to discharge his onus to show that there is ‘no reasonable alternative form of evidence that can serve the same purpose.’ There are alternate sources of information which have been provided including the Crown Brief (which includes Haider’s statement to the Police), the transcripts of Mr. Haider’s trial and conviction under the Highway Traffic Act (including his examination in chief and cross examination), and the Affidavit sworn in support of TD’s motion to have itself added as a statutory third party (which indicates why TD was taking an off coverage position and on which no one chose to cross examine). TD has given summaries of the statements taken from Haider and other witnesses. The Plaintiff examined a representative of TD for Discovery.

[27] Litigation privilege is one of the cornerstone principles of the adversarial system. As was pointed out in Kennedy, supra, the Court should interfere with litigation privilege only in exceptional circumstances, for the clearest of reasons, and only as a last resort. Therefore, the party seeking production of a document protected by litigation privilege must take every reasonable step open to him or her to obtain the information through that alternative source(s).

[28] Here, the Plaintiff has not taken all reasonable steps available to it. Mr. Haider is still around. Counsel for TD advised that Mr. Zietz, solicitor for TD, has been to Mr. Haider’s home. No one appears to have sought to interview him or examine him again. Plaintiff’s counsel admits that they have relied solely on TD’s efforts to locate Mr. Haider. It has not undertaken any investigation of its own, or tried to speak to him. Further, No one cross examined Mr. Zeitz on his Affidavit sworn for the motion to add TD as a Statutory Third Party, and on the reasons he outlined for TD’s off-coverage position.

[29] As pointed out in Kennedy, supra, para. 47, while a document might be privileged, the facts recorded in it, are not. TD has provided summaries of various parts of its file. The Plaintiff either asked, or could have asked, for all the facts TD was relying on in its disputes with any of the parties.

Costs

[30] I asked the parties what each expected the costs should be regardless of who won.

[31] TD said that its partial indemnity costs of $2,839.60, all inclusive, is the appropriate amount, presumably because this was a complex motion on privilege. The Plaintiff says that the appropriate amount is $1,825, all inclusive, presumably because it was straightforward refusals motion.

[32] While the motion was not a straightforward undertakings motion, it did consume almost 2 hours of time. A proportionate, reasonable costs award, fair for the Plaintiff to pay, is $1739.60 all inclusive. This amount is payable within 30 days.

Trimble, J. Date: March 17, 2017