Introduction

Generally, the rules of civil procedure mandate broad disclosure during the discovery process. The “rationale behind a broad discovery process is that it advances the due administration of justice” and helps to narrow the scope of the dispute by disclosing all of the fundamental issues.¹ Broad disclosure rules also serve to reduce surprise, “leading to better and more informed decisions by the parties.”²

These broad disclosure rules are nevertheless subject to certain limitations. One of these limitations is the common law principle of privilege. There are a few recognized forms of privilege which protect certain communications and documents from disclosure, such as: solicitor-client privilege and litigation privilege.³ Such evidentiary rules are therefore discordant with the broad disclosure rules that govern civil litigation.  But, they “operate on the premise that certain protections from disclosure outweigh the public interest in more full disclosure.”⁴ Accordingly, the courts have had to carefully delineate the scope and boundaries of the various forms of privilege while keeping in mind the important objectives broad disclosure seek to advance.

In this article, the authors provide a brief overview of Lizotte v Aviva Insurance Company of Canada⁵ (“Lizotte”), the most recent Supreme Court of Canada decision relating to litigation privilege.

Background

Prior to Lizotte v Aviva Insurance Company of Canada, the Supreme Court of Canada thoroughly discussed litigation privilege in Blank v. Canada (Minister of Justice)⁶ (“Blank”). One of the most significant principles derived from Blank was the Supreme Court of Canada’s proclamation that the distinction between solicitor client privilege and litigation privilege was not just one of terminology, but also of substance.⁷ In other words, the court declared that the two types of privileges were “distinct conceptual animals and not…two branches of the same tree.”⁸ In doing so, the court engaged in a comparative analysis between the two types of privilege. Indeed, in many instances, the Court’s perception of litigation privilege was shaped by its comparisons with solicitor-client privilege.  What arose from this analysis was the strengthening of solicitor client privilege and the narrowing of litigation privilege.

In Lizotte, the Supreme Court of Canada took the opportunity to elevate litigation privilege. The case concerned an inquiry into the conduct of a claims adjuster by the Chambre de l’assurance de dommages (the “Chamber”), which is the regulatory body responsible for overseeing the professional conduct of representatives working in the insurance field.

The syndic of the Chamber received information that one particular adjuster had made errors in managing an insurance claim. In the course of the inquiry, the syndic asked the insurer to provide a copy of its claim file with respect to one of its insured. The request was based on s.337 of Act Respecting the Distribution of Financial Products and Services which read:

337. Insurers, firms, independent partnerships and mutual fund dealers and scholarship plan dealers registered in accordance with Title V of the Securities Act (chapter V‑1.1) must, at the request of a syndic, forward any required document or information concerning the activities of a representative.⁹

Ultimately, the insurer produced a number of documents, but “withheld some on the basis that they were covered either by solicitor‑client privilege or by litigation privilege.”¹⁰ Although both parties accepted that the above provision did not absolve solicitor-client privilege, the issue before Canada’s apex court was whether the above provision abrogated the insurer’s claim of litigation privilege.

Decision

Justice Gascon, writing for a unanimous Court, reiterated that although litigation privilege has sometimes been confused with solicitor-client privilege, the two concepts are distinct.¹¹ That being said, the Court highlighted that solicitor-client privilege and litigation privilege share some important characteristics. Namely, that both forms of privilege “serve a common cause: the secure and effective administration of justice”, which is inextricably linked to the proper functioning of our legal system. ¹² Accordingly, the Court held that litigation privilege, “like solicitor client privilege, cannot be abrogated by inference and that clear, explicit and unequivocal language is required in order to lift it.”¹³ The Court held that a provision that merely refers to the production of “any…documents”, like the provision which the syndic relied upon, did not contain the sufficiently clear, explicit and unequivocal language needed to abrogate litigation privilege. ¹⁴

In reaching this decision, the Supreme Court of Canada provided further clarity on the nature and scope of litigation privilege in three respects:

(1)    Litigation Privilege is a Class Privilege

It is well known that the law recognizes two distinct categories of privilege. The first is “class privilege” and the second is “case-by-case privilege”.  The Supreme Court of Canada defined these categories in R. v Gruenke¹⁵:

“[C]lass” privilege refers to a privilege which was recognized at common law and one for which there is a prima facie presumption of inadmissibility….unless the party urging admission can show why the communications should not be privileged (i.e. Why they should be admitted into evidence as an exception to the general rule). …

The term “case-by-case” privilege is used to refer to communications for which there is a prima facie assumption that they are not privileged (i.e. are admissible). The case-by-case analysis has generally involved an application of the “Wigmore test,” which is a set of criteria for determining whether communications should be privileged (and therefore not admitted) in particular cases. In other words, the case-by-case analysis requires that the policy reasons for excluding otherwise relevant evidence be weighed in each particular case.¹⁶

In Lizotte, Gascon J reiterated that “litigation privilege is a class privilege” and therefore, entails a presumption of non-disclosure once the conditions for its application are met.¹⁷ In the context of litigation privilege, this means that all documents and communications whose dominant purpose is preparation for litigation will be immune from disclosure until the end of litigation, unless an exception applies.¹⁸

The Court provided examples of some of the exception which would apply to litigation privilege such as, the exceptions relating to public safety, to the innocence of the accused and to criminal communications. The Court acknowledged that further exceptions may be recognized in the future and considered the possibility of recognizing an exception based on urgency and necessity, but nevertheless left the actual adoption and detailed analysis of this novel exception to a later date.¹⁹

Regardless of the characterization of a privilege as a “class privilege” or “case-by-case” privilege, the onus still lies with the party asserting the privilege to prove its application. Accordingly, classification of one or the other does not affect which party bears the onus of proof in that respect. That being said, the characterization of a privilege as a “class privilege” or a “case-by-case” privilege is nevertheless important on an evidentiary basis. This is because the legal test, also known as the “Wigmore test”, that must be met to establish case-by-case privilege is much harder to satisfy for the party asserting privilege than it is for the denier of a privilege to prove a narrowly construed exception to class privilege. In other words, class privilege is easier to establish and difficult to bring within an exception, where as establishing case-by-case privilege is more difficult and inherently uncertain.

(2)   Balancing Exercise

The syndic advanced an argument for the adoption of a balancing test to govern the application of litigation privilege.  Gascon J rejected this argument and held that “[i]n the context of privileges, the exercise of balancing competing interests is associated with case‑by‑case privileges, not class privileges.”²⁰ Having characterized litigation privilege as a class privilege, Gascon J held that it is therefore subject to clearly defined exceptions, and not to a case by case balancing test.²¹ Gascon J, quoting Rosenberg JA of the Ontario Court of Appeal, accepted that a balancing test approach would lead to “unnecessary uncertainty and a proliferation of pre-trial motions in civil litigation.”²²

(3)   Litigation Privilege Can Be Asserted Against Third Parties

Lastly, the Court acknowledged that precluding litigation privilege from applying to third parties could result in the disclosure of otherwise protected documents to third parties who do not have a duty of confidentiality.²³ This, the Court expressed, would entail a serious risk for the party who benefits from the protection of litigation privilege as, absent such protection, there would be no other mechanism to prevent the disclosure of these documents to the public by the third party.²⁴  As a result, the Supreme Court of Canada recognized that litigation privilege can be asserted against anyone, not just against the other party to the litigation.²⁵

Conclusion

The Supreme Court of Canada took the opportunity to provide further clarity on the nature and scope of litigation privilege in Lizotte v Aviva Insurance Company of Canada. Although the decision was made in the narrow context of the Act Respecting the Distribution of Financial Products and Services it will invariably have broader implications on statutory disclosure provisions. In holding that litigation privilege cannot be abrogated by statute without clear, explicit and unequivocal language, the Court acknowledged that litigation privilege is equally as vital to the proper administration of justice as solicitor client privilege.

The Court’s reconsideration of the scope of protection afforded by litigation privilege is a reminder for parties faced with a request for production of documents to carefully consider whether the statutory language involved meets the high threshold that the Court proclaimed is necessary to abrogate litigation privilege.

About the authors: Vanessa Gauthier (BA) (LL.B) is a Partner at Lindsay LLP.  Nikta Shirazian (BA) (JD) is an articled student at Lindsay LLP.