COURT FILE NO.: CV-01-218464
MOTION HEARD: 2018 08 09; 2018 09 20; 2018 11 19
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Atomic Energy of Canada Limited v. Allianz Global Risks US Insurance Company
BEFORE: MASTER R. A. MUIR
COUNSEL: Eric J. Adams for the defendant/moving party David T. Woodfield for the plaintiff/responding party
REASONS FOR DECISION
[1] This is a motion brought by the defendant seeking answers to undertakings and questions refused on the continued examination for discovery of the plaintiff’s representative held in March 2018.
[2] The March 2018 examination for discovery was necessary due to the late disclosure by the plaintiff of various additional and relevant productions. The trial of this action was scheduled to proceed on February 5, 2018 for seven weeks. On February 6, 2018, Justice Cavanagh made an order adjourning the trial and permitting the further discovery of the plaintiff.
[3] Many questions were in dispute at the time notice of this motion was served and a great deal of materials were delivered. Argument of the motion occupied three hearing days. However, by the time argument of this motion had concluded on November 19, 2018, only two refused question remained in dispute. Both of those questions relate to the plaintiff’s claim for privilege over a certain draft internal report prepared by the plaintiff in December 2002 (the “ASD Report”).
[4] This action relates to the construction of the plaintiff’s MAPLE reactors and isotope production facility in 2000 (the “Project”). The Project was being built for the plaintiff’s customer MDS Nordion (“Nordion”). The defendant issued a course of construction insurance policy in relation to the Project. The policy of insurance provided coverage for any property damaged while the Project was ongoing. The policy provided that coverage would expire when nuclear fuel was introduced to the reactors. This took place on February 17, 2000. In April and July 2000 a safety system in the reactors failed apparently due to certain shut-off rods malfunctioning due to jamming incidents. Although these failures took place after the introduction of nuclear fuel, it is the theory of the plaintiff that the failure was a result of particulate contamination that occurred before the introduction of nuclear fuel and therefore while the policy of insurance was in force. The plaintiff seeks significant damages as a result of these jamming incidents.
[5] Prior to commencing this action, the plaintiff initiated a claim against its contractor on the Project, Comstock Canada Limited (“Comstock”). Although the plaintiff’s claim against Comstock was settled many years ago, that claim arose from the very same events that give rise to this claim. The plaintiff takes the position that the December 2002 ASD Report was prepared at the request of its in-house lawyer for the purpose of responding to Comstock’s defence of that action and for the purpose of giving and receiving legal advice generally. The plaintiff takes the position that the report is therefore protected by lawyer/client and litigation privilege and need not be produced.
[6] For the purposes of this motion it is important to emphasize that the party claiming privilege has the onus of showing on a balance of probabilities an evidentiary basis for the privilege. See Intact Insurance Co. v. 1367229 Ontario Inc., 2012 ONSC 5256 at paragraph 14.
[7] I have carefully considered the evidence on this motion and the arguments advanced by the parties. In my view, the determination of the plaintiff’s claim for privilege comes down to a very simple and straightforward conclusion. The plaintiff has failed to provide sufficient evidence for the court to conclude, on a balance of probabilities, that the December 2002 ASD Report was in fact prepared and delivered in response to the request of the plaintiff’s in-house counsel, either to assist with the Comstock litigation or for the purposes of seeking or giving legal advice generally.
[8] The plaintiff’s evidence on this motion was provided by Jean-Pierre Labrie. Dr. Labrie is a former employee of the plaintiff and acted as project director for the Project.
[9] Dr. Labrie’s affidavit evidence with respect to the issue of privilege is very brief. He states that the ASD Report was prepared for the dominant purpose of litigation and was provided to in-house and outside counsel.
[10] Dr. Labrie states that he had a meeting on March 21, 2002 with the plaintiff’s in-house legal counsel, Gregory Sayer. Mr. Sayer was responsible for overseeing this claim and the Comstock claim. Following this meeting, Mr. Sayer sent an email to various employees of the plaintiff and its outside counsel directing that various steps and analyses be taken for the purposes of the Comstock litigation. Dr. Labrie deposed that the steps and analyses requested by Mr. Sayer form the basis of the ASD Report. This is extent of the plaintiff’s affidavit evidence on the issue of privilege.
[11] Dr. Labrie’s evidence was seriously challenged on cross-examination. I do not suggest that Dr. Labrie in any way intended to mislead the defendant or the court but it is my view that his evidence as a whole does not support a conclusion that the ASD Report was prepared in response to the March 21, 2002 request from Mr. Sayer.
[12] The steps and analyses that resulted in the ASD Report were initiated by the plaintiff’s internal requisition document known as a Metallurgical Laboratory Work Instruction dated July 25, 2002. That document has been produced by the plaintiff and was referenced as MET 02-171. That document makes no reference to the work being carried out in relation to a request from Mr. Sayer or with respect to the Comstock litigation. Such documents were generally used by the plaintiff to provide laboratory instructions for many reasons. They were not specific to legal matters. The same is true for the ASD Report itself. ASD reports were documents of a general nature routinely prepared by the plaintiff’s engineers to summarize the results of various analyses and tests. There is no evidence that ASD reports in general were created for the purpose of litigation or to seek and receive legal advice. In fact, the plaintiff has produced at least one other ASD report in the course of this litigation.
[13] On cross-examination Dr. Labrie answered that he was uncertain whether the steps and analyses set out in MET 02-171 were in fact the same steps and analyses requested by Mr. Sayer. Dr. Labrie stated that he did not know if the ASD Report was in fact the document over which privilege is being claimed. He was uncertain and could not remember what the impetus was for the steps and analyses that resulted in the ASD Report. Dr. Labrie confirmed that he had no independent recollection of the events in 2002 that resulted in the ASD Report in December 2002. He was simply providing his evidence on the basis of his review of the documents.
[14] Of course, Dr. Labrie cannot be faulted for his lack of recollection. These events took place many years ago. However, the fact that this privilege issue is only being determined now is a result of the plaintiff’s late disclosure of relevant documents as found by Justice Cavanagh. See Atomic Energy of Canada Limited v. Allianz Global Risks US Insurance Company, 2018 ONSC 906 at paragraph 19.
[15] It is true that a copy of the draft ASD Report was provided to Mr. Sayer in December 2002. This was confirmed by the plaintiff’s answers to under advisements and refusals from Dr. Labrie’s cross-examination. The plaintiff stated in its answer that the ASD Report “was not directed to anyone on its face but was sent to [the plaintiff’s] in-house lawyer, Gregory Sayer, and some members of [the plaintiff’s] management team”. However, simply copying a lawyer with a document does not make it privileged. As Justice Allen noted in Intact Insurance Co. at paragraph 21:
Privilege does not attach to all communications between a lawyer and their client. A party seeking privilege cannot simply cloak notes, documents or communications with privilege merely because a lawyer was involved or handled the documents.
[16] Finally, it appears that the time spent and work undertaken in connection with MET 02-171 was docketed to an internal task code used for the purposes of billing the plaintiff’s customer, Nordion. It is unclear whether Nordion was actually billed for the MET 02-171 work but it is certainly unusual to assign the cost of this work to a third party customer if it was in fact being carried out by the plaintiff for purposes related to legal advice or the Comstock litigation.
[17] In my view, there are simply too many uncertainties with the evidence of Dr. Labrie and the content of the relevant documents, including the MET 02-171 document, to establish a connection between Mr. Sayer’s March 21, 2002 request and the December 2002 ASD Report. The plaintiff’s claim for privilege has not been made out on a balance of probabilities.
[18] I am reinforced in this conclusions by a review of the March 21, 2002 and following email exchanges and the ASD Report itself. At the conclusion of argument, counsel for the plaintiff provided the court with copies of these documents in a sealed envelope. The court is permitted to inspect documents over which privilege is claimed in order to determine the validity of the claim. See Rule 30.04(6) of the Rules of Civil Procedure, RRO 1990, Reg. 194.
[19] From my review of these documents, I can see nothing further that would assist the court in sufficiently connecting the December 2002 ASD Report to the March 21, 2002 meeting with Mr. Sayer and his subsequent email. It is clear on the face of the March 21, 2002 and subsequent email exchanges that they are subject to lawyer/client and litigation privilege. However, there is simply an insufficient basis to connect the meeting with Mr. Sayer and his email with MET 02-171 and the ASD Report so as to make out a claim for privilege as asserted by the plaintiff.
[20] I am therefore ordering that the plaintiff answer refused questions 5271 and 5273 (numbers 12 and 14 on the Chart) from the continued examination for discovery of Dr. Labrie. The plaintiff shall produce a copy of the December 2002 ASD Report to the defendant within 30 days. I am also ordering that the copies of the March 21, 2002 email exchange and the December 2002 ASD Report provided to the court shall be sealed, treated as confidential and not form part of the public record.
[21] It appears that there may be some issue with respect to the production of output and other documents relating to the MET 02-171 investigation, as described on the Chart for refusal no. 14. The plaintiff takes the position that it has produced all such documents in its possession, control or power. The defendant wants the plaintiff to clearly identify those documents. The parties should be able to resolve this issue. If they are unable to do so they shall provide the court with brief submissions in writing by March 1, 2019.
[22] If the parties are unable to resolve the issue of the costs of this motion they shall provide the court with brief submissions in writing. The defendant’s submissions shall be provided by March 1, 2019. The plaintiff’s submissions shall be delivered by March 11, 2019. Any reply submissions from the defendant shall be provided by March 18, 2019. These submissions may be sent directly to me by email.
Master R. A. Muir
DATE: 2019 01 30