COURT FILE NO.: CV-15-65711
DATE: 2022-11-16
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: BARBARA LYNN CARROLL by her litigation guardian SHANNON LUKNOWSKY v. AVIVA CANADA INC. and PILOT INSURANCE COMPANY
BEFORE: Associate Justice A. Kaufman
COUNSEL: Joseph Obagi, for the Plaintiff
Brian G. Sunohara, for the Defendants
HEARD: September 21, 2022
E N D O R S E M E N T
[1] These reasons concern the plaintiff’s motion for disclosure of documents over which the defendants assert litigation privilege. The motion was initially heard by James J., who concluded that the defendants must produce these documents to the Court for inspection pursuant to Rule 30.4(6) of the Rules of Civil Procedure.[^1] James J. directed the defendants to deliver production numbers 146, 147, 164, 168, 458, 465, 490 and 504 of Schedule B of Exhibit “A” to the defendants’ affidavit of documents, to the Court. Because I had previously adjudicated two productions motions in this matter, Justice James requested that I review these productions and determine the defendants’ privilege claim.
[2] The defendants delivered these documents as ordered, and the parties appeared before me on September 21, 2022, and made submissions. For the following reasons, the plaintiff’s motion is dismissed.
Background
[3] On March 28, 2009, the plaintiff, Barbara Carroll (“the plaintiff”), was catastrophically injured when she was struck by a vehicle driven by Robert McEwen. The plaintiff alleged that the McEwens were inadequately insured motorists, which was ultimately proven to be true. The plaintiff added her own insurance company, Pilot Insurance Company (now Aviva Canada Inc.), as a party defendant and sought insurance coverage under the Family Protection Endorsement OPCF 44R. The plaintiff was ultimately successful at trial and was awarded $2.61M, plus costs in the amount of $375,000.
[4] This separate action advances numerous allegations of bad faith in the manner in which Aviva Canada Inc. (also “Aviva”) administered and adjusted the plaintiff’s claim. In my endorsement of October 20, 2020, I summarized the nature of the plaintiff’s claim as follows:
[5] The plaintiff commenced this separate action against Pilot and Aviva on September 11, 2015. She alleges that the defendants breached their duty of good faith by colluding with Traders in the litigation of her tort claim. She argues that Pilot breached its duty of good faith when it retained a joint expert, retained the same counsel and made joint offers to settle with Traders. The plaintiff’s central allegation is that Pilot and Traders made joint offers to settle and refused to disclose their individual contribution to the joint offers. She claims damages in the amount of $1,000,000 for breach of the duty of good faith and $1,000,000 in punitive damages.
[5] The only issue in this motion is whether the defendants’ assertion of litigation privilege should be upheld. The answer to this question turns on whether the plaintiff has established a prima facie case that the defendants engaged in actionable misconduct, which is a recognized exception to litigation privilege.
Litigation privilege and its exceptions
[6] Litigation privilege protects communications between solicitors and third parties, or litigants and third parties, to allow for the preparation of contending positions in private without adversarial interference. Litigation privilege accordingly facilitates the investigation and preparation for trial with the objective of protecting the adversarial process.[^2] It creates a “zone of privacy” in relation to pending or apprehended litigation.[^3]
[7] The documents in issue here are e-mail exchanges between counsel for the defendants in the tort action and their clients (the insurance adjusters). It is common ground that litigation privilege ends upon the termination of the litigation that gave rise to the privilege, absent closely related proceedings. The plaintiff concedes that this action and the tort action are “closely related” and that litigation privilege accordingly survives the termination of the tort action.
[8] The Supreme Court recognized in Blank that litigation privilege does not protect from disclosure evidence of the claimant party’s abuse of process, or similar blameworthy conduct. The Court held that the party seeking disclosure of materials otherwise subject to litigation privilege may obtain access “upon a prima facie showing of actionable misconduct” in relation to the underlying proceedings.[^4] The court may review the documents in question to determine whether their disclosure should be ordered on these grounds.
[9] The rationale underlying this exception is similar to that underlying the crime / fraud exception to solicitor-client privilege: privileged communications cannot be used to shield, from disclosure, evidence of unlawful conduct.[^5]
The Parties’ Positions
[10] The plaintiff relies on the allegations advanced in this proceeding, and on evidence obtained upon discovery, for the proposition that the defendants breached their duty of good faith: Aviva retained the same counsel and expert as the tortfeasors, and it made a joint offer with the tortfeasors. Moreover, despite knowing that the plaintiff’s claim was over the McEwens’ policy limits, Aviva sought to compel the plaintiff to accept a settlement below those limits when it refused to disclose its contribution to the joint offer. The plaintiff contends that this constitutes evidence of bad faith conduct, which justifies the Court ordering the production of all communications between Aviva, its lawyers, the McEwens, their lawyers, and their insurer.
[11] For their part, the defendants argue that the plaintiff was, in fact, aware that Aviva was offering its full limits as a contribution to the joint offer. They add that an insurer has no obligation to settle a claim, because s. 9 of the OPCF 44R provides that the amount recoverable under such a policy is to be determined in accordance with Section 5 – Uninsured Automobile Coverage – of the Ontario Automobile Policy (“OAP 1”). The defendants argue that s. 5.6.3 of OAP 1 explicitly gives insurers the right to ask a court to determine liability and the amount of compensation.
[12] The defendants also argue that Aviva’s liability under the OPCF 44R is limited to the excess amount received from any other source, including from the insurers of the inadequately insured motorist. They say that Aviva could not be expected to negotiate a settlement separately from the McEwens, because it needed to know the amounts offered on their behalf in order to determine whether the excess coverage was engaged.
[13] On this basis, the defendants argue that they have not engaged in any actionable misconduct justifying the disclosure of their privileged documents.
Disposition
[14] The party asserting a privilege bears the onus of demonstrating that the privilege applies.[^6] Here, the documents were filed with the Court and it is apparent, on their face, that they were created for the sole purpose of responding to the plaintiff’s action. I am satisfied that the defendants’ assertion of litigation privilege is well founded.
[15] In this motion, the parties invite me to weigh-in on the merits of their ultimate positions at trial. The plaintiff relies on the same arguments and evidence to establish that an exception to litigation privilege applies on this motion, and to establish the defendants’ liability for breach of its duty of good faith. In my view, it is not necessary for me to make such a determination and these issues should be left to be determined at trial.
[16] I have carefully reviewed the documents over which the defendants assert litigation privilege, and I am satisfied that these e-mails are not evidence of abuse of process or similar blameworthy conduct. Without disclosing their contents, I can state that they are innocuous communications of the kind normally exchanged between co-defendants, and which fall within the “zone of privacy” required to protect the efficacy of the adversarial process. Had they contained evidence of collusion or conspiracy, or any other improper behaviour, I would have reached a different conclusion.
[17] I make no comment on whether the well-known facts of this case (joint retainer, joint expert, joint offer, and alleged refusal to disclose contribution to joint offer) amount to a breach of the insurer’s duty of good faith. This issue should be left to the trial judge.
[18] If the parties cannot agree on costs, they may make brief submissions (3 pages) not including their costs outline. The defendants may send their submissions within 20 days of receiving these reasons, and the plaintiff may send her responding submissions within 15 days of receiving the defendants’ submissions.
Alexandre Kaufman
Associate Justice A. Kaufman
DATE: November 16, 2022
COURT FILE NO.: CV-15-65711
DATE: 2022-11-16
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: BARBARA LYNN CARROLL by her litigation guardian SHANNON LUKNOWSKY v. AVIVA CANADA INC. and PILOT INSURANCE COMPANY
BEFORE: Associate Justice A. Kaufman
COUNSEL: Joseph Obagi, for the Plaintiff
Brian G. Sunohara, for the Defendants
ENDORSEMENT
Associate Justice A. Kaufman
DATE: November 16, 2022
[^1]: R.R.O. 1990, Reg. 194.
[^2]: Blank v. Canada, 2006 SCC 39 (“Blank”), at paras 27-29.
[^3]: Ibid., at para 34.
[^4]: Ibid., at paras 44-45.
[^5]: Alan W. Bryant, Sidney N. Lederman & Michelle K. Fuerst, The Law of Evidence in Canada, 4th ed (Markham, Ont.: LexisNexis Canada Inc., 2014), at para 14.219.
[^6]: Sky Solar (Canada) Ltd. v. Economical Mutual Insurance Company, 2015 ONSC 4714, at para 73.