Court File and Parties

Court File No.: CV-19-00002622-0000 Date: 2024 02 27

Ontario Superior Court of Justice

B E T W E E N:

MICHAEL JONES, LILY JONES, by her Litigation Guardian Michael Jones, MICHAEL JONES, Litigation Administrator of the Estate of MILES JONES, MARGARET BERRIDGE, and VERNICE JONES, Plaintiffs

Counsel for Plaintiffs: W. Harding and A. Vinning

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PAUL MANZON, CHRISTOPHER SCHIFFMANN, Litigation Administrator of the Estate of ALLISON JONES, and SECURITY NATIONAL INSURANCE COMPANY, Defendants

Counsel for Defendants: No one appearing for the Defendants Paul Manzon and Christopher Schiffmann, Litigation Administrator of the Estate of Allison Jones V. Krkachovski, for Security National Insurance Company

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AVIVA INSURANCE COMPANY OF CANADA, added by Order pursuant to section 258(14) of the Insurance Act, R.S.O. 1900, c. I.8, as amended, Statutory Third-Party

Counsel for Statutory Third-Party: C. El-Azzi, for the Statutory Third-Party C. Dunn, coverage counsel for Aviva Insurance Company of Canada

Heard: November 27, 2023

REASONS FOR JUDGMENT RE: PRODUCTION MOTION

DALEY J.

Introduction & The Motion:

[1] This action arises from a motor vehicle accident which occurred on August 4, 2018. The accident resulted in three fatalities and serious personal injuries suffered by the surviving occupant of the plaintiffs’ vehicle.

[2] The plaintiffs moved for production of various documents in the possession of the defendant Paul Manzon’s (“Manzon”) motor vehicle liability insurer, the statutory third-party Aviva Insurance Company (“Aviva”). The plaintiffs’ OPCF 44R insurance carrier, the defendant Security National Insurance Company (“Security National”) supported the plaintiffs’ motion for production of these documents. The motion also sought answers to refused questions from the examination of the representative of Aviva. This aspect of the motion was not addressed on the hearing of the matter, nor will it be addressed in these reasons. In the event the decision on the production of documents set out below does not fully respond to the moving parties’ motion requests, that aspect of the motion shall be treated as having been adjourned sine die.

[3] Aviva, in its capacity as a statutory third-party added pursuant to the Insurance Act, R.S.O. 1990, c. I.8, was represented by counsel Sutherland, although he was not in attendance in court on this motion. Counsel acting in that role, independent of Aviva’s direct interest in this litigation, has a duty to defend the insured driver Manzon, without prejudice to the insurer’s rights as a statutory third-party. Counsel must take all reasonable steps to defend the insured driver despite the off-coverage position taken by Aviva.

[4] The core issue on the plaintiffs’ motion relates to the production of records within the possession of Aviva connected to its investigation of the circumstances of the motor vehicle accident and as well with respect to any policy violations committed by Manzon that form the basis of its off-coverage position. Aviva engaged counsel Dunn as coverage counsel to separately represent its interests on this motion. Although counsel Dunn has no standing in the pending litigation, Aviva was granted permission to have its separate interests on this motion represented by counsel, as counsel Sutherland’s primary duty was to defend Manzon and not to concurrently represent the interests of Aviva.

[5] The plaintiffs’ vehicle was operated by the defendant Allison Jones, now deceased, and the other vehicle involved in the accident was operated by the defendant Manzon.

[6] The plaintiffs seek damages from the defendants Manzon, the estate of Allison Jones and from Security National, the plaintiffs’ underinsured motorist insurer.

[7] A representative of Aviva, as the statutory third-party, was examined at discovery and at that time the witness testified that Aviva was taking an off-coverage position and denying coverage to Manzon based on a material change in risk. It is asserted on behalf of the plaintiffs that Aviva’s witness did not fully disclose the particulars of the material change in risk and the reasons for the resulting denial in coverage beyond the statutory minimum limits.

[8] Counsel Sutherland did not initially take part in the several attendances before the court relating to the motion. However, counsel was later directed to participate in the motion so far as Manzon’s personal liability in tort was at stake and to protect his interests as they arose on this motion.

[9] It is common ground that absent Aviva’s off-coverage position, Manzon otherwise has third-party liability insurance coverage limits of $2 million. Security National has policy limits of $1 million.

[10] At my direction coverage counsel for Aviva provided to the court an in-camera brief of all the records in Aviva’s possession relating to the accident in question and the defendant Manzon, including many documents related to its investigation of the tort claims and coverage issues. The records included material that may arguably be subject to litigation privilege as well as solicitor-client privilege.

[11] A table listing all the documents in the Aviva file, many of which were in dispute on this motion, were shared with all counsel prior to the court receiving final submissions on the motion.

[12] The table had the documents grouped under various topic files such as “the application for insurance”, “correspondence”, “investigation file”, “claim notes”, “experts” and “correspondence with external counsel”. There are several other sub-files in these categories.

[13] Counsel for Aviva, in preparing the table, briefly described each document or group of documents and the insurer’s position regarding the motion for disclosure. If disclosure was opposed, the insurer set out in brief its grounds for the objection, such as “irrelevance”, “litigation privilege” or “solicitor client privilege”.

[14] On the initial appearance before the court on the return of this motion, coverage counsel for Aviva advised that the insurer did not oppose the disclosure of several of the documents listed in the table so long as the disclosure would not have a prejudicial effect upon Manzon’s ability to fully and properly defend the tort claims brought against him.

[15] Coverage counsel proposed that the court, in reviewing documents that the insurer consented to disclosure of, should independently determine whether the disclosure would have any adverse impact on Manzon’s ability to fully defend the tort claims.

[16] I rejected this proposal as it is not for this court to act as the guardian of the defendant’s rights as to document disclosure, specifically having regard to the potentially prejudicial effect on Manzon’s ability to defend the tort claims. That responsibility rests with counsel for the statutory third-party in his role of defending Manzon in the tort action: Ibarra v. Ibrahim, 2016 ONSC 218.

[17] Having determined the responsibility of counsel for the statutory third-party vis-à-vis Manzon’s rights, independent of those of Aviva, counsel was directed to consider all the documents outlined in the table with a view to identifying any prejudicial effect that would arise from the disclosure related to Manzon’s ability to defend the tort action. Counsel was directed to raise any objections as to the disclosure of documents on grounds including, litigation privilege or solicitor-client privilege in the context of the tort action. Counsel for Aviva as the statutory third-party included his submissions on the table of documents on a document-by-document basis noting any prejudice to Manzon’s defence of the tort action that might arise from the disclosure of a particular document or record.

[18] Following the receipt of written and oral submissions from all counsel involved in this motion, I reviewed the table of documents as well as the documents themselves, which were provided to me in a secure format as part of the in-camera brief.

[19] Having considered the documents in dispute and the submissions from counsel for Aviva, as the statutory third-party, regarding documents that might possibly pose prejudice to Manzon’s defence of the tort action, I determined which documents must be produced and my rulings with respect to the documents are incorporated into the table. Where a basis for exclusion was established, based on the date and nature of the document, and whether it was properly protected from disclosure based on litigation or solicitor-client privilege, that was so noted in my ruling in the table.

[20] As the table covered a very large number of documents and records including audio material, I have not provided detailed reasons with respect to each document or record. My rulings on a document-by-document basis have been determined based on the applicable legal framework which is discussed below.

[21] The table setting out my rulings is attached to these reasons as Schedule “A” and it shall form part of this decision.

[22] The terms of my decision including the conclusions stated in the table shall not come into force until 20 days following the release of these reasons so as to allow ample time for counsel to review this decision in the event they wish to take my decision to another court.

Legal Framework & Analysis:

[23] The scope of discovery of a defendant’s insurer, where a plaintiff is pursuing damages for injuries and losses sustained in a motor vehicle accident, differs where the defendant’s insurer is not simply a statutory third-party but rather the plaintiff has additionally pursued its case against the plaintiff’s underinsured motorist insurer in the same action as a party defendant.

[24] The differing scope of discovery, available to a plaintiff, of the defendant’s auto insurer was thoroughly and carefully considered by Associate Justice Graham in his decision in Antony v. Bakthavachalu, 2017 ONSC 4943. In this decision, the court confirmed that the plaintiff may properly seek disclosure of the details of an insurer’s investigation of an accident as well as the circumstances of the insured’s coverage where the plaintiff’s underinsured motorist insurer is a party defendant to the action. If the plaintiff’s underinsured motorist insurer is not a defendant to the proceeding, the plaintiff’s discovery rights would be limited to those provided for in rule 31.06(4) of the Rules of Civil Procedure and the jurisprudence related to that rule.

[25] I agree with and adopt Associate Justice Graham’s analysis and conclusions and therefore have considered the plaintiffs’ motion recognizing the broader scope of discovery available in this case where the underinsured motorist insurer is a defendant. Thus, I have concluded that the plaintiffs are entitled to disclosure of the details of the investigation leading to Aviva’s off-coverage position and its denial of coverage to Manzon, as well as details of the investigation relating to the accident itself.

[26] In response to the plaintiffs’ motion for production of the records in question, Aviva asserts that many of the documents in the table are subject to two types of privilege, namely solicitor-client privilege and litigation privilege.

[27] In reviewing the documents and records referred to in the table, I have determined whether the documents should be produced to the plaintiffs and Security National based on the current state of the law as to the nature and extent of these two forms of privilege.

[28] Dealing firstly with litigation privilege, which is sometimes referred to as “solicitor’s brief” privilege, this form of privilege provides protection that prevents the disclosure of documents which are made in anticipation or for the purpose of litigation.

[29] Despite the name “solicitor’s brief”, a lawyer need not be retained or involved in providing advice with respect to anticipated litigation so long as the documents in question were prepared by a person in anticipation of litigation and meet the two-pronged test: (1) the litigation was reasonably anticipated when the document was created; (2) the dominant purpose for creating the document was for the use in litigation. The test to determine whether these two requirements have been satisfied is an objective one: General Accident Insurance Co. v. Chrusz (1999), 45 O.R. (3d) 321 (C.A.).

[30] Having examined each of the disputed documents, where production is ordered I have determined that the document was prepared in reasonable anticipation of pending litigation and that the dominant purpose for creating the document was for the use in the litigation.

[31] The motor vehicle accident giving rise to this action resulted in tragic loss of life and serious personal injury. On considering the documents in question, it is easily determined that they were prepared in reasonable contemplation of litigation to follow. Similarly, the documents were clearly created for the dominant purpose of use in the anticipated litigation.

[32] In submissions on this motion, counsel raised the question as to whether documents could be severed or redacted in order to allow for portions of documents, that are determined to be non-privileged, to be disclosed. While there is support for this in some decisions on a case-by-case basis, the nature of the documents in question in this case, over which litigation privilege is claimed, do not give rise to proper severability or redaction of otherwise litigation privileged information: Guelph (City) v. Super Blue Box Recycling Corp. (2004), 2 C.P.C. (6th) 276 (Ont. S.C.), at paras. 117-119.

[33] Therefore, as to the documents over which litigation privilege is claimed by Aviva, I see no basis upon which disclosure of a redacted version of any document would be appropriate.

[34] Turning to documents over which solicitor-client privilege is claimed by Aviva, I am satisfied that the claims asserted in respect of the documents referenced in the table are properly asserted both in respect of in-house and outside counsel who were engaged to provide advice to Aviva.

[35] A secondary question was posed by counsel as to whether information gathered during the insurer’s investigation, in respect of the accident and the resulting damages, as well as with respect to issues of insurance coverage vis-à-vis the insured Manzon must be disclosed if the investigative information developed is in turn provided to a lawyer consulted by Aviva.

[36] Based in the submissions of counsel, it appears to be common ground, and the jurisprudence supports this, that when a claim of solicitor-client privilege is properly asserted to preclude disclosure of a protected document, that privilege cannot be used to avoid disclosure of material facts and information obtained in anticipation of litigation and for presentation to counsel: Davies v. American Home Assurance Co. (2002), 60 O.R. (3d) 512 (Div. Ct.), at para. 25.

[37] As counsel for the plaintiffs and Security National seek to have further discovery on any new documents disclosed resulting from the outcome of this motion, if such discovery is granted to them, they will have an opportunity to examine the witness regarding material facts that may be contained in otherwise solicitor-client privileged documents.

Conclusion:

[38] For the reasons outlined above, the plaintiffs’ motion is granted, and the documents ordered produced as set out in the table at Schedule “A”, as attached, shall be produced subject to the proviso as mentioned that this order does not come into force and effect until 20 days following the release of this endorsement.

[39] Furthermore, subject to the paragraph immediately above, counsel for the plaintiffs and Security National are granted leave to conduct a further discovery of the Aviva witness on all reasonable and proper questions arising from the information contained in the documents ordered produced. Furthermore, and for clarity, counsel for the plaintiffs and Security National are entitled to question the Aviva witness with respect to material facts that are contained in otherwise solicitor-client documents, which documents are not ordered to be disclosed.

[40] All counsel shall serve and file their respective submissions as to costs within 40 days from the date of release of this endorsement. The submissions shall be no longer than two pages and shall be accompanied by a Costs Outline. No reply submissions are to be delivered.

Daley J.

Released: February 27, 2024