Dos Santos v. Sun Life Assurance Co. of Canada,

• Jurisdiction: British Columbia
• Judge: Finch, C.J.B.C., Huddart and Low, JJ.A.
• Neutral Citation: 2005 BCCA 4
• Date: 26 November 2004
• Court: Court of Appeal (British Columbia)

Dos Santos Estate v. Sun Life (2005), 207 B.C.A.C. 54 (CA);

    341 W.A.C. 54

MLB headnote and full text

Temp. Cite: [2005] B.C.A.C. TBEd. JA.019

Jose Vasco Dos Santos, committee of the person and estate of Rita Maria Baptista Valoma Dos Santos and the said Jose Vasco Dos Santos (plaintiff/appellant) v. Sun Life Assurance Company of Canada (defendant/respondent)

(CA31237; 2005 BCCA 4)

Indexed As: Dos Santos Estate v. Sun Life Assurance Co. of Canada

British Columbia Court of Appeal

Finch, C.J.B.C., Huddart and Low, JJ.A.

January 7, 2005.

Summary:

Dos Santos' wife was severely injured in a motor vehicle accident. Dos Santos was appointed her committee and commenced a personal injury action on her behalf. The defendant was found 100% liable for the accident. The issue of quantum was settled at mediation for the global amount of $900,000. A court order approving the settlement specified that the sum of $39,559.29 was to be paid to the wife's long term disability insurer for disability payments received by the committee on the wife's behalf. The insurance policy included a subrogation clause which provided that 75% of the net recovery for loss of income had to be repaid to the insurer to the extent of the benefits paid or payable in the future under the policy. If not repaid, the insurer was entitled to withhold future benefits. A dispute arose about whether a portion of the $900,000 settlement represented compensation for loss of future income and what portion, if any, of the settlement over and above the monies already paid to the insurer, were subject to the subrogation clause. The insurer sought disclosure of the documents underlying the mediated settlement. Dos Santos claimed settlement privilege or, alternatively, litigation privilege.

A Master of the British Columbia Supreme Court, in a decision reported at [2003] B.C.T.C. 1153, concluded that the insurer was only entitled to know what the settlement was and how the settlement was broken down amongst the various heads of damages. The insurer was not entitled to production of all the supporting documents that it claimed a right to see. The insurer appealed.

The British Columbia Supreme Court, in a decision reported at [2003] B.C.T.C. 1378, allowed the appeal and directed Dos Santos to produce all of the documents sought. Dos Santos appealed.

The British Columbia Court of Appeal dismissed the appeal.

Practice - Topic 4578

Discovery - What documents must be produced - Privileged documents - Documents prepared in contemplation of litigation - An insured under a long term disability policy obtained judgment against a tortfeasor for personal injuries - The issue of quantum was settled at mediation for $900,000 - A court order approved the settlement and specified that $39,559.29 was to be paid to the insurer for disability payments - The insurance policy provided that 75% of the recovery for lost earnings was to be repaid to the insurer - The insurer sought disclosure of the documents underlying the mediated settlement to enable it to determine what amount was paid in respect of lost earnings - The British Columbia Court of Appeal rejected an assertion that the settlement offers and mediation summaries/notes were subject to litigation privilege - Protecting these documents under litigation privilege would emasculate and subsume settlement privilege - Unlike litigation privilege, settlement privilege was premised on the special policy considerations of encouraging parties to settle - It was important to keep the two privileges distinct - Further, the test for litigation privilege was difficult to apply to these documents - It was difficult to see how their dominant purpose could be other than furtherance of a settlement and specifically the avoidance of further litigation - Expert reports and economic and actuarial evidence relied on to quantify pecuniary loss could attract litigation privilege if made for the dominant purpose of litigation - However, that dominant purpose was not established - See paragraphs 42 to 51.

Practice - Topic 4580

Discovery - What documents must be produced - Privileged documents - Documents prepared for purpose of settlement - [See Practice - Topic 4578 ].

Practice - Topic 4580

Discovery - What documents must be produced - Privileged documents - Documents prepared for purpose of settlement - The British Columbia Court of Appeal stated that the test for establishing an exception to settlement privilege should not be set too low - To establish an exception, it had to be shown that a competing public interest outweighed the public interest in encouraging settlement - An exception should only be found where the documents sought were both relevant and necessary to achieve either the agreement of the parties to the settlement or another compelling or overriding interest of justice - See paragraphs 17 to 20.

Practice - Topic 4580

Discovery - What documents must be produced - Privileged documents - Documents prepared for purpose of settlement - An insured under a long term disability policy obtained judgment against a tortfeasor for personal injuries - The issue of quantum was settled at mediation for $900,000 - A court order approved the settlement and specified that $39,559.29 was to be paid to the insurer for disability payments - The insurance policy provided that 75% of the recovery for lost earnings was to be repaid to the insurer - The insurer sought disclosure of the documents underlying the mediated settlement to enable it to determine what amount was paid in respect of lost earnings - The British Columbia Court of Appeal stated that the nature of the settlement agreement, which stated little more than the global amount, prevented it from being disentangled from the other settlement communications - The real agreement might have been oral or might have resulted from the culmination of previous written communications - Settlement privilege normally attached to such communications - However, the court concluded that it was appropriate to recognize an exception to the privilege - This was the only way to establish objectively what was awarded for lost earnings and avoid excess recovery - Both relevance and necessity militated in favour of an exception - See paragraphs 14 to 40.  

Practice - Topic 4590

Discovery - What documents must be produced - Settlement documents and other agreements - [See Practice - Topic 4578 and second and third Practice - Topic 4580 ].

Cases Noticed:

Middelkamp et al. v. Fraser Valley Real Estate Board et al. (1992), 17 B.C.A.C. 134; 29 W.A.C. 134; 71 B.C.L.R.(2d) 276 (C.A.), refd to. [para. 8].

British Columbia Children's Hospital et al. v. Air Products Canada Ltd. et al. (2003), 180 B.C.A.C. 129; 297 W.A.C. 129; 11 B.C.L.R.(4th) 28 (C.A.), consd. [para. 15].

Hudson Bay Mining and Smelting Co. v. Wright (1997), 120 Man.R.(2d) 214 (Q.B.), affd. (1998), 131 Man.R.(2d) 133; 187 W.A.C. 133 (C.A.), refd to. [para. 15].

Amoco Canada Petroleum Co. et al. v. Propak Systems Ltd. et al. (2001), 281 A.R. 185; 248 W.A.C. 185; 2001 ABCA 110, refd to. [para. 15].

Berry v. Cypost Corp. et al., [2003] B.C.T.C. 1827; 43 C.P.C.(5th) 275; 2003 BCSC 1827, refd to. [para. 18].

Sun Life Assurance Co. of Canada v. Solypa et al., [2001] B.C.T.C. 1346; 96 B.C.L.R.(3d) 178; 2001 BCSC 1346, refd to. [para. 11].

Ruloff v. Rockshore Investment (1981) Ltd., [2004] B.C.T.C. Uned. 340; 2004 BCSC 751, refd to. [para. 28].

Pete v. Lanouette, [2002] B.C.T.C. 75; 2002 BCSC 75 (Master), refd to. [para. 29].

Confederation Life Insurance Co. v. Juginovic (1996), 48 C.P.C.(3d) 60 (B.C.S.C.), refd to. [para. 30].

Gnitrow Ltd. v. Cape plc, [2000] 3 All E.R. 763 (C.A.), refd to. [para. 31].

Martin et al. v. Listowel Memorial Hospital et al. (2000), 138 O.A.C. 77; 51 O.R.(3d) 384 (C.A.), refd to. [para. 38].

Hamalainen v. Sippola (1991), 9 B.C.A.C. 254; 19 W.A.C. 254; 62 B.C.L.R.(2d) 254, refd to. [para. 43].

Counsel:

W.B. McAllister, Q.C., and J.A. Adelaar, for the appellant;

O. Samuel, for the respondent.

This appeal was heard at Vancouver, British Columbia, on November 26, 2004, by Finch, C.J.B.C., Huddart and Low, JJ.A., of the British Columbia Court of Appeal. Finch, C.J.B.C., delivered the following reasons for judgment for the court on January 7, 2005.