Date: 20090212
Docket: T-1148-01
Citation: 2009 FC 151
Ottawa, Ontario, February 12,
2009
PRESENT: The Honourable Mr. Justice Russell
BETWEEN:
UNIVERSAL SALES, LIMITED
ATLANTIC TOWING LIMITED
J.D. IRVING, LIMITED
IRVING OIL COMPANY, LIMITED
IRVING OIL LIMITED
Plaintiffs
and
EDINBURGH ASSURANCE CO. LTD.
ORION INSURANCE CO. LTD
BRITISH LAW INSURANCE CO. LTD.
ENGLISH & AMERICAN INS. CO. LTD.
ECONOMIC INSURANCE CO. LTD.
ANDREW WEIR INS. CO. LTD.
INSURANCE CO. OF NORTH AMERICA
LONDON & EDINBURGH GENERAL INS. CO. LTD.
OCEAN MARINE INS. CO. LTD.
ROYAL EXCHANGE ASSURANCE
SUN INSURANCE OFFICER LTD.
SPHERE INSURANCE CO. LTD.
DRAKE INSURANCE CO. LTD.
EAGLE STAR INSURANCE CO. LTD.
STEPHEN ROY MERRITT, AS REPRESENTATIVE OF
UNDERWRITERS SUBSCRIBING TO LLOYD'S POLICY NO. 614/B94656-A/1582
Defendants
REASONS FOR JUDGMENT AND JUDGMENT
[1]
This
motion by the Pleading Defendants (Defendants) is brought under Rules 51, 97
and 232 of the Federal Courts Rules, 1988 to appeal and reverse
in part an order of Prothonotary Lafrenière dated August 6, 2008.
[2]
The
Defendants think that Prothonotary Lafrenière was clearly wrong to conclude
that the document marked as Exhibit “A1” to the examination for discovery of
Mr. W. David Jamieson, which took place on December 20, 2007, was privileged,
and they want the Court to reverse those aspects of his order based upon that
conclusion, and to order Mr. Jamieson to re-appear and submit to further
examination with regard to Exhibit “A1.”
BACKGROUND
[3]
These
proceedings involve an insurance claim dispute between the Plaintiffs (the
insureds) and the Defendants (the insurers) over coverage for certain expenses
incurred by the Plaintiffs related to the sinking and raising of the Irving
Whale. The ship sank in the Gulf of St. Lawrence on September 7, 1970
with a cargo of fuel oil and was raised by the Federal Government on July 31,
1996.
[4]
The
Federal Government took legal action against the Plaintiffs that concluded in a
settlement on or about July 13, 2000. As part of the settlement the Plaintiffs
agreed to pay the government $5 million dollars without admission of liability.
[5]
The
Plaintiffs then sought indemnity from the Defendants for the amount paid to the
Federal Government, as well as legal costs incurred in the government action.
The Defendants denied the insurance claim and the Plaintiffs then commenced the
present proceedings in June 2001 for indemnity under the relevant insurance
policies.
[6]
The
interest in Exhibit “A1” and in having Mr. Jamieson answer questions about that
document arises from that part of the dispute between the parties over who is
responsible for the legal fees incurred by Ogilvy Renault, who represented the
Plaintiffs in the government claim. The document in question is a transcript of
a telephone conversation between Mr. W. David Jamieson (a representative of the
Plaintiffs) and the lawyer at Ogilvy Renault who represented the Plaintiffs in
the government action.
DECISION OF PROTHONOTARY
[7]
In
his decision, Prothonotary Lafrenière concluded that, although Exhibit “A1” had
been disclosed to the Defendants as part of a larger production of documents,
it nevertheless remained privileged and should not be used or relied upon by
the Defendants in these proceedings:
Based on the uncontradicted evidence of
John A. MacDonald, I conclude the Plaintiffs inadvertently disclosed the
documents identified as Exhibit “A1” to the examination for discovery of Mr. W.
David Jamieson. On its face, the document is a confidential record of
communication between a lawyer and her client for the purpose of seeking legal
advice, and prima facie covered by solicitor client privilege. The
Plaintiffs immediately asserted solicitor-client privilege over the document
once they became aware that it had been included as part of a larger production.
The fact that the privileged document contains relevant information is not
germane in the circumstances.
[8]
Prothonotary
Lafrenière ordered the Defendants to return the document and any copies to the
Plaintiffs and not to use the document as evidence in these proceedings.
[9]
The
Defendants say that Prothonotary Lafrenière was clearly wrong to come to these
conclusions because Exhibit “A1” does not record a communication between “a
lawyer and her client” (the government action had been settled and Ogilvy
Renault was no longer acting for the Plaintiffs), and because the communication
was not, on its face, “for the purpose of seeking legal advice” (the
conversation relates purely to facts, and there is no discussion of a legal
nature).
[10]
The
Defendants say that the transcript of the conversation (Exhibit “A1”) does not
contain, on its face, any solicitor-client privileged information or
communication.
STANDARD OF REVIEW
[11]
The
Defendants rely upon the decision of Justice Blais in Groupe Tremca Inc. v.
Techno-Bloc Inc., [1998] F.C.J. No. 1458 (F.C.T.D.) for the proposition
that an error as to the existence of privileged and/or confidential information
or communications constitutes a misapprehension of the facts for the purpose of
the test in Canada v. Aqua-Gem Investments Ltd., [1993] F.C.J. No. 103 (F.C.A.),
so that they are entitled to a hearing de novo on this matter.
[12]
The
Plaintiffs say that if the Prothonotary’s conclusion on solicitor-client
privilege is one of law, then the standard of review should be correctness but
that the result is the same regardless of whether the Court uses correctness on
the Aqua-Gem test because the decision in this case was not clearly
wrong. They say that Prothonotary Lafrenière did not misapprehend the facts
before him and his decision is consistent with the relevant jurisprudence which
stresses the sanctity of solicitor/client communications.
[13]
I
am of the view that, in accordance with Merck & Co. v. Apotex Inc.
(2003), 30 C.P.R. (4th) 40 (F.C.A.) at paragraphs 17-19 and Aqua-Gem,
the issue before me is whether Prothonotary Lafrenière’s decision regarding the
privileged nature of Exhibit “A1” was clearly wrong as being based upon a wrong
principle of law or upon a misapprehension of the facts.
ANALYSIS
[14]
The
Defendants say that Exhibit “A1” does not contain any privileged information
and, even if it did, such privilege was waived when the transcript was provided
to the Plaintiffs’ lawyers.
[15]
As
regards legal advice privilege, the Defendants say that, under Canadian law,
although communications between a solicitor and a client relating to legal
advice benefit from the protection of privilege, communications of pure fact do
not. The Defendants rely upon the decision of Justice Scaravelli of the Nova
Scotia Supreme Court in A.B. v. Home of the Guardian Angel, 2008 NSSC 9
for this distinction. In that case, Justice Scaravelli had the following to say
at paragraphs 11-12:
11 Not everything communicated between
solicitor and client is subject to privilege. In Maranda c. Québec [2003] 3 S.C.R. 193,
Deschamps J. reviewed the scope of privilege at paragraph 42:
Not all communications with a lawyer will be protected by
privilege. In other words, it is not the capacity in which the person is party
to the communication that gives rise to the privilege. Accordingly, a
commercial lawyer who works in an advertising agency and whose time is spent
exclusively on developing products for his or her client will not be able to
claim privilege for promotional work done. Similarly, the mere fact that a client
considers certain information to be confidential will not suffice for it to be
protected by solicitor-client privilege. I mention these examples as a reminder
that the three prerequisites for privilege to attach, as laid down by Dickson .
(as he then was) in Solosky v. Canada (1979), [1980] 1 S.C.R. 82 (S.C.C.),
at p. 837, still apply:
(i) a communication between
solicitor and client; (ii) which entails the seeking or giving of legal advice;
and (iii) which is intended to be confidential between the parties.
12 There
is a distinction between communications for the purposes of obtaining legal
advice and communications of matters of pure fact as well as acts. Manes and
Silver at page 127:
Legal Advice v. Fact
1.01 There is a distinction between a privileged
communication and a communication regarding a matter of fact. Where a
communication to a solicitor is made for the purpose of conveying or receiving
information on matters of fact, the communication is not privileged.
[16]
It
is not entirely clear to me from the A.B. case what is meant by a
distinction between legal advice and “matters of pure fact.”
[17]
In
the present case, however, no such distinction can be made. The transcript
shows clearly that Mr. Jamieson is seeking advice from his lawyer in the government
action on the matter related to paragraph 28 of the Statement of Defence filed
in the present proceedings. Paragraph 28 of the Statement of Defence reads as
follows:
On
or about January 15, 1998, via an agreement concluded between the Plaintiffs and
the Pleading Defendants through their respective counsels, it was agreed that
the Plaintiffs would be entirely responsible for the legal fees incurred by
Ogilvy Renault in defending the Government of Canada’s claim, to the exclusion
of the Pleading Defendants.
[18]
A
discussion concerning the existence of such an agreement cannot, in my view, be
characterized as a discussion about “pure fact,” whatever meaning that term
might have in other contexts. Exhibit “A1” is clearly a record of a discussion
about an issue that arises in the present proceedings and it clearly involves
the communication of information and advice on that issue.
[19]
My
review of the case law suggests that the Plaintiffs are correct to stress the
broad scope of solicitor-client privilege and its application to Exhibit “A1.”
As the Supreme Court of Canada recently held in Canada (Privacy
Commissioner) v. Blood Tribe Department of Health (2008), 294 D.L.R. (4th)
385 (S.C.C.) at pages 393-394, solicitor-client privilege “is now
unquestionably a rule of substance applicable to all interactions between a
client and his or her lawyer when the lawyer is engaged in providing legal
advice or otherwise acting as a lawyer rather than as a business counselor or
in some other non-legal capacity.”
[20]
In Maranda
v. Richer, [2003] 3 S.C.R. 193 (S.C.C.) the Supreme Court of Canada made it
clear that “the scope of the privilege is broad” and “courts should exercise
great caution before trying to circumscribe or create exceptions to that
privilege …” (p. 209).
[21]
The
privilege attaches to all communications made within the framework of the
solicitor-client relationship. The Supreme Court of Canada in Maranda at
page 213 specifically dealt with the dangers of attempting to make the kind of
distinction between facts and other communications that the Defendants are
attempting to make in the present case:
The
protection conferred by the privilege covers primarily acts of communication
engaged in for the purpose of enabling the client to communicate and obtain the
necessary information or advice in relation to his or her conduct, decisions or
representation in the courts. The distinction is made in an effort to avoid
facts that have an independent existence being inadmissible in evidence (Stevens,
supra, at para. 25). It recognizes that not everything that happens in
the solicitor-client relationship falls within the ambit of privileged
communication, as has been held in cases where it was found that counsel was
acting not in that capacity but simply as a conduct for transfers of funds …”.
Sopinka,
Lederman and Bryant, supra,
highlighted the fineness of that distinction and the risk of eroding privilege
that is inherent in using it (at p. 734, 14.53):
The
distinction between “fact” and “communication” is often a difficult one and the
courts should be wary of drawing the line too fine lest the privilege be
seriously emasculated.
[22]
In
the present case, the communication involved a client seeking information from the
client’s lawyer for the purpose of dealing with paragraph 28 of the Statement
of Defence filed by the Defendants. It does not involve neutral facts where a
lawyer is not really acting as a lawyer. As the Federal Court of Appeal pointed
out in Samson Indian Nation and Band v. Canada, [1995] 2 F.C. 762 (C.A.)
at page 769, “it is not necessary that the communication specifically request
or offer advice, as long as it can be placed within the continuum of
communication in which the solicitor tenders advice; it is not confined to
telling the client the law and it includes advice as to what should be done in
the relevant legal context.”
[23]
The
communication in Exhibit “A1” is constrained in nature because of the “Chinese
wall” arrangements devised by the parties in this case, but it remains part of
a continuum within which a solicitor tenders advice to his or her client. It is
not about some neutral fact that can be severed from the solicitor-client
relationship.
[24]
In
my view, then, there is nothing clearly wrong about Prothonotary Lafrenière’s
conclusion that “[o]n its face, the document is a confidential record of
communication between a lawyer and her client for the purpose of seeking legal
advice, and prima facie covered by solicitor-client privilege.” Even if
I apply a standard of correctness and consider this matter de novo, my
decision would still be that Prothonotary Lafrenière was entirely correct to
reach this conclusion. It is the same conclusion that I come to after a review
of Exhibit “A1” in the context of the record placed before me in this motion.
[25]
Having
reached this conclusion it is unnecessary for me to consider whether, in the
context of these proceedings, Exhibit “A1” also attracts litigation privilege.
The only remaining issue is whether the Plaintiffs waived privilege.
[26]
Once
again, on this issue, I have to conclude that Prothonotary Lafrenière was not
clearly wrong, and was in my view clearly correct, in his conclusion that the
inadvertent disclosure that occurred in this case does not constitute waiver:
“The Plaintiffs immediately asserted solicitor-client privilege over the
document once they became aware that it had been included as part of a larger
production.”
[27]
The
uncontradicted evidence of Mr. MacDonald makes it clear that the Plaintiffs
never intended to waive privilege over the communication contained in Exhibit
“A1.” The Plaintiffs and their counsel were simply not aware of the existence
of the transcript on the CD when the large production was disclosed.
Immediately upon learning of the existence of the transcript in the production,
Plaintiffs’ counsel repeatedly asserted privilege over the document.
[28]
As
the Plaintiffs point out, the mere physical loss of custody of a privileged
document does not automatically end privilege, especially in the context of
modern litigation where large quantities of documents, such as the electronic
production of a CD in this case, are exchanged between counsel and accidental
disclosure is bound to occur from time to time.
[29]
In
this case, there was neither knowledge on the part of the Plaintiffs when the
CD was produced to the Defendants, nor any silence when the Plaintiffs learned
of the inadvertent disclosure at the discovery.
[30]
As
the Manitoba Court of Appeal pointed out in Metcalfe v. Metcalfe (2001),
198 D.L.R. (4th) 318 (Man. C.A.), at paragraphs 13 and 14:
13 The privilege arising out of the
solicitor-client relationship belongs to the client, not the solicitor … .
Thus, it is only the client or the client's agent or successor who can waive
the solicitor-client privilege… . It has been said that waiver of privilege
will only occur where the holder of the privilege knows of the existence of the
privilege and demonstrates a clear intention of waiving the privilege … .
14 Thus,
where there is an inadvertent disclosure of a document covered by
solicitor-client privilege, and it is clear that there is no intention of
waiver, the case law has generally upheld the privilege over the document
itself … .
[31]
In
the present case, the uncontradicted evidence of Mr. MacDonald establishes
inadvertent disclosure in the context of a large production, and a clear
intention not to waive privilege that was manifested as soon as the disclosure
was revealed to the Plaintiffs. There is no waiver on these facts.
JUDGMENT
THIS COURT ORDERS AND
ADJUDGES that
1.
The
Defendants’ motion is dismissed.
2.
The
Plaintiffs shall have their costs of this motion (but not on a solicitor-client
basis as requested) payable forthwith within 30 days and in any event of the
cause.
“James Russell”
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