General Accident Assurance Co. et al. v. Chrusz et al., (1999) 124 O.A.C. 356 (CA)

• Judge: Carthy, Doherty and Rosenberg, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: September 14, 1999
• Jurisdiction: Ontario
• Citations: (1999), 124 O.A.C. 356 (CA);1999 CanLII 7320 (NS CA);1999 CanLII 7320 (ON CA);45 OR (3d) 321;180 DLR (4th) 241;[1999] CarswellOnt 2898;[1999] OJ No 3291 (QL);124 OAC 356;38 CPC (4th) 203;92 ACWS (3d) 26

General Accident v. Chrusz (1999), 124 O.A.C. 356 (CA)

MLB headnote and full text

Temp. Cite: [1999] O.A.C. TBEd. SE.030

General Accident Assurance Company, The Sovereign General Insurance Company, Commercial Union Assurance, Wellington Insurance Company and The Canadian Surety Company (plaintiffs/respondents) v. Daniel Chrusz, Daniel Chrusz in trust, Catherine Backen, Gary Mitchell, Mike Filipetti, Jane Doe, John Doe and Poli-Fiberglass Industries (Thunder Bay) Limited (defendants/appellants)

Daniel Chrusz, Daniel Chrusz in trust, Catherine Backen, Gary Mitchell, Mike Filipetti and Poli-Fiberglass Industries (Thunder Bay) Limited (plaintiffs by counterclaim/appellants) v. General Accident Assurance Company, The Sovereign General Insurance Company, Commercial Union Assurance, Wellington Insurance Company, The Canadian Surety Company, Denis Pilotte and Patty Pilotte, John Bourret and C.K. Alexander Insurance Adjusters Limited (defendants by counterclaim/respondents)

(C29463)

Indexed As: General Accident Assurance Co. et al. v. Chrusz et al.

Ontario Court of Appeal

Carthy, Doherty and Rosenberg, JJ.A.

September 14, 1999.

Summary:

An insured made an insurance claim for fire damage. The insurer suspected arson and retained a lawyer. After the insurer made partial payment, a former employee of the insured gave a statement under oath to the insurer's lawyer and the adjuster, alleging fraud by the insured. The employee gave the lawyer a videotape. Thereafter, the insurer sued the insured and others (the insured), alleging, inter alia, concealment, fraud and misrepresentation. The insured counter­claimed against the insurer, the employee and others (the defendants). The insured sought to compel the defendants to produce certain documents set out in Schedule B of their Affidavits of Documents.

The Ontario Court (General Division), in a decision reported 47 O.T.C. 94, held that: (1) all communications between the lawyer and the insurer were subject to solicitor-client privilege; (2) communications by the adjuster to the insurer or the lawyer prior to the employee's statement were not protected by litigation privilege; (3) communications between the adjuster or the insurer and third parties prior to the employee's statement were not privileged; (4) communications between the adjuster and the insurer and the adjuster and the lawyer after the employee's statement were protected by legal profes­sional privilege or litigation privilege; (5) the transcript of the employee's statement was, prima facie, protected by solicitor-client privilege, but such privilege was lost by giving the employee a copy of the transcript; and (6) the videotape was not privileged. The insurer appealed.

The Ontario Divisional Court, in a decision reported [1999] O.A.C. Uned. 555, set aside the order and directed that only the video­tape had to be produced. The insured ap­pealed.

The Ontario Court of Appeal, Doherty, J.A., dissenting in part, allowed the appeal and set aside the orders below. All com­munications between the lawyer and the insurer were protected by solicitor-client privilege. Litigation privilege attached to the initial communications between the adjuster and the lawyer or from the adjuster through the insurer to the lawyer. However, the communications between the adjuster and the lawyer were not protected by solicitor-client privilege. After the insurer made partial payment, the litigation privilege ended. After the employee gave his statement, all the adjuster's communications and reports, whose dominant purpose was directed to litigation, were protected by litigation privil­ege, subject to discovery rules. Similarly any contacts with third parties reported on by the adjuster were protected. The videotape was not privileged. The employee's statement was protected by litigation privilege in the lawyer's hand, subject to the discovery rules, and privilege was not waived. However, the statement in the employee's hand was not protected.

Practice - Topic 4577

Discovery - What documents must be produced - Privileged documents - At­torney-client communications - The On­tario Court of Appeal reviewed the prin­ciples underlying solicitor-client privilege -See paragraphs 1, 88 to 99 and 168.

Practice - Topic 4578

Discovery - What documents must be produced - Privileged documents - Docu­ments prepared in contemplation of litiga­tion - The Ontario Court of Appeal re­viewed the principle of litigation privilege - The court stated that there was no ap­parent reason to inhibit the modern trend towards complete discovery provided that counsel was left with sufficient flexibility to adequately serve the litigation client - Procedure rules as amended from time to time were defining litigation privilege - Judicial decisions should be consonant with those changes and should be driven more by the modern realities of the conduct of litigation and perceptions of discoverability than by historic precedents born in a dif­ferent context - See paragraphs 22 to 28.

Practice - Topic 4578

Discovery - What documents must be produced - Privileged documents - Docu­ments prepared in contemplation of litiga­tion - The Ontario Court of Appeal adopt­ed the dominant purpose test for de­termining litigation privilege - See para­graphs 29 to 32.

Practice - Topic 4578

Discovery - What documents must be produced - Privileged documents - Docu­ments prepared in contemplation of litiga­tion - The Ontario Court of Appeal, per Carthy, J.A., stated that an important ele­ment of the dominant purpose test was the requirement that the document in question be created for the purpose of litigation, actual or contemplated and that it did not apply to copies of nonprivileged docu­ments placed into a lawyer's brief in the course of preparing for litigation - See paragraphs 33 to 41 - Doherty, J.A., dis­sented on this point, but stated that he would leave the question of when, if ever, copies of such documents could be pro­tected to a case where the issue was squarely raised and argued - See para­graphs 135 to 138 - Rosenberg, J.A., ex­pressed reservation on the point, but left the question open - See paragraph 171.

Practice - Topic 4578

Discovery - What documents must be produced - Privileged documents - Docu­ments prepared in contemplation of litiga­tion - The Ontario Court of Appeal stated that in some circumstances litigation priv­ilege may be preserved even though the information is shared with a third party - However a document in the hand of an outsider will only be protected by a priv­ilege if there is a common interest in liti­gation or its prospect - The court approved two excerpts respecting the principle of common interest privilege - See paragraphs 42 to 46.

Practice - Topic 4578

Discovery - What documents must be produced - Privileged documents - Docu­ments prepared in contemplation of litiga­tion - An insurer suspected that a claimant had committed arson and retained a lawyer - After the insurer made partial payment on the claim, the claimant's former em­ployee gave a statement, alleging fraud by the claimant - The insurer sued the claim­ant - The claimant counterclaimed against the insurer, the employee and others (the defendants) - The claimant sought produc­tion of documents set out in Schedule B of the defendants' Affidavits of Documents - The Ontario Court of Appeal held that litigation privilege attached to the com­munications between the insurer's adjuster and lawyer or from the adjuster through the insurer to the lawyer during the period that arson was suspected - That privilege ended after the partial payment - After the employee's statement, new litigation was contemplated and, subject to discovery rules, litigation privilege protected all the adjuster's communications and reports, whose dominant purpose was directed to that litigation - Similarly any contacts with third parties reported on by the adjuster were protected - See paragraphs 50 to 56.

Practice - Topic 4578

Discovery - What documents must be produced - Privileged documents - Docu­ments prepared in contemplation of litiga­tion - An insurer suspected that a claimant had committed arson and retained a lawyer - After the insurer made partial payment on the claim, the claimant's former em­ployee alleged fraud by the claimant and gave the lawyer a videotape, a float book and time sheets - The insurer sued the claimant - The claimant counterclaimed against the insurer, the employee and others and sought production of the video­tape, the float book and time sheets - The Ontario Court of Appeal held that these items were not created or prepared for the purpose of litigation and, accordingly, did not qualify for privilege in the hands of the lawyer, the insurer or the employee - See paragraph 57.

Practice - Topic 4578

Discovery - What documents must be produced - Privileged documents - Docu­ments prepared in contemplation of litiga­tion - After an insurer had made partial payment on a claim, the claimant's former employee gave a statement, alleging fraud by the claimant - The lawyer gave a trans­cript of the statement to the employee and requested a promise of confidentiality - The insurer sued the claimant - The claim­ant counterclaimed against the insurer, the employee and others (the defendants) - The claimant sought production of documents set out in Schedule B of the defendants' Affidavits of Documents - The Ontario Court of Appeal held that the employee's statement was protected by litigation priv­ilege in the lawyer's hand, subject to the discovery rules - The lawyer did not waive privilege by delivering the transcript to the employee - However, the statement in the employee's hand was not protected where the employee did not acquire a common interest privilege - See paragraphs 58 to 60.

Practice - Topic 4583.1

Discovery - What documents must be produced - Privileged documents - Com­mon interest - [See fourth and seventh Practice - Topic 4578 ].

Practice - Topic 4585

Discovery - What documents must be produced - Privileged documents - Waiver - [See seventh Practice - Topic 4578 ].

Cases Noticed:

Hickman v. Taylor (1946), 329 U.S. 495, refd to. [para. 24].

Dionisopoulous v. Provias (1990), 71 O.R.(2d) 547 (H.C.), refd to. [para. 26].

Waugh v. British Railways Board, [1979] 2 All E.R. 1169 (H.L.), folld. [para. 29].

Davies v. Harrington (1980), 39 N.S.R.(2d) 258; 71 A.P.R. 258; 115 D.L.R.(3d) 347 (C.A.), agreed with [para. 30].

McCaig and McCaig v. Trentowsky (1983), 47 N.B.R.(2d) 71; 124 A.P.R. 71; 148 D.L.R.(3d) 724 (C.A.), agreed with [para. 30].

Voth Brothers Construction (1974) Ltd. v. North Vancouver School District 44 (1981), 23 C.P.C. 276 (B.C.C.A.), agreed with [para. 30].

Nova, An Alberta Corp. v. Guelph En­gineering Co. et al. and Daniel Valve Co. et al., [1984] 3 W.W.R. 314; 50 A.R. 199 (C.A.), agreed with [para. 30].

Blackstone v. Mutual Life Insurance Co. of New York, [1944] O.R. 328, consd. [para. 31].

Hodgkinson v. Simms et al. (1988), 55 D.L.R.(4th) 577 (B.C.C.A.), not folld. [para. 33].

Lyell v. Kennedy (1884), 27 Ch. D. 1 (C.A.), not folld. [para. 33].

Ottawa-Carleton (Regional Municipality) v. Consumers' Gas Co. et al. (1990), 74 O.R.(2d) 637; 41 O.A.C. 65 (Div. Ct.), not folld. [para. 40].

Buttes Gas and Oil Co. v. Hammer (No. 3), [1980] 3 All E.R. 475 (C.A.), refd to. [para. 44].

United States of America v. American Telephone and Telegraph Co. et al. (1980), 642 F.2d 1285 (S.C.C.A.), folld. [para. 45].

Canadian Pacific Ltd. v. Canada (Com­petition Act, Director of Investigation and Research), [1995] O.J. No. 4148 (Gen. Div.), refd to. [para. 46].

Anderson Exploration Ltd. et al. v. Pan-Alberta Gas Ltd. (1998), 229 A.R. 191; 61 Alta. L.R.(3d) 38 (Q.B.), refd to. [para. 46].

Archean Energy Ltd. v. Minister of Na­tional Revenue (1997), 202 A.R. 198 (Q.B.), refd to. [para. 46].

Lehman v. Insurance Corp. of Ireland - see Independent Fish Co. v. Manitoba Cold Storage Co. et al.

Independent Fish Co. v. Manitoba Cold Storage Co. et al. (1983), 25 Man.R.(2d) 198; 40 C.P.C. 285 (Q.B.), refd to. [para. 46].

Maritime Steel and Foundries Ltd. v. Whitman Benn & Associates Ltd. et al. (1994), 130 N.S.R.(2d) 211; 367 A.P.R. 211; 24 C.P.C.(3d) 120 (S.C.), refd to. [para. 46].

Almecon Industries Ltd. v. Anchortek Ltd. (1998), 164 F.T.R. 90 (T.D.), refd to. [para. 46].

R. v. Dunbar (1982), 68 C.C.C.(2d) 13 (Ont. C.A.), refd to. [para. 46].

R. v. Fosty and Gruenke, [1991] 3 S.C.R. 263; 130 N.R. 161; 75 Man.R.(2d) 112; 6 W.A.C. 112; 67 C.C.C.(3d) 289, refd to. [para. 66].

Baker v. Campbell (1983), 153 C.L.R. 52 (H.C.), refd to. [para. 88].

Descôteaux et al. v. Mierzwiniski et al., [1982] 1 S.C.R. 860; 44 N.R. 462; 141 D.L.R.(3d) 590; 70 C.C.C.(2d) 385, refd to. [para. 89].

R. v. Campbell (J.) and Shirose (S.) (1999), 237 N.R. 86; 119 O.A.C. 201; 133 C.C.C.(3d) 257 (S.C.C.), refd to. [para. 89].

Susan Hosiery Ltd. v. Minister of National Revenue, [1969] 2 Ex. C.R. 27, refd to. [para. 90].

Grant v. Downs (1976), 135 C.L.R. 674 (H.C.), refd to. [para. 90].

Anderson v. Bank of British Columbia (1867), 2 Ch. D. 644, refd to. [para. 91].

Jones v. Smith, [1999] 1 S.C.R. 455; 236 N.R. 201; 120 B.C.A.C. 161; 196 W.A.C. 161; 132 C.C.C.(3d) 225; 22 C.R.(5th) 203, refd to. [para. 91].

Goodman Estate v. Geffen, [1991] 2 S.C.R. 353; 127 N.R. 241; 125 A.R. 81; 14 W.A.C. 81; 81 D.L.R.(4th) 211, refd to. [para. 92].

Solosky v. Canada, [1980] 1 S.C.R. 821; 30 N.R. 380; 50 C.C.C.(2d) 495, refd to. [para. 92].

L.L.A. v. Beharriell, [1995] 4 S.C.R. 536; 190 N.R. 329; 88 O.A.C. 241; 103 C.C.C.(3d) 92, refd to. [para. 92].

Shaughnessy Golf & Country Club v. Drake International Inc. et al. (1986), 26 D.L.R.(4th) 298 (B.C.C.A.), refd to. [para. 95].

Canadian Indemnity Co. v. Canadian Johns-Manville Co. [1990] 2 S.C.R. 549; 115 N.R. 161; 33 Q.A.C. 161, refd to. [para. 98].

Coronation Insurance Co. et al. v. Taku Air Transport Ltd. et al., [1991] 3 S.C.R. 622; 131 N.R. 241; 6 B.C.A.C. 161; 13 W.A.C. 161, refd to. [para. 98].

Summerville Belkin Industries Ltd. v. Brocklesby Transport, Kingsway Freight­liners Ltd., [1985] 6 W.W.R. 85 (B.C.S.C.), refd to. [para. 99].

Blackstone v. Mutual Life Insurance Co. of New York, [1944] O.R. 328 (C.A.), refd to. [para. 99].

Walters v. Toronto Transit Commission (1985), 50 O.R.(2d) 635 (H.C.), refd to. [para. 99].

Bunbury v. Bunbury (1839), 48 E.R. 1146, refd to. [para. 104].

Russell v. Jackson (1851), 68 E.R. 558, refd to. [para. 104].

Hooper v. Gumm (1862), 70 E.R. 1199, refd to. [para. 104].

Wheeler v. Le Marchant (1881), 17 Ch. D. 675 (C.A.), refd to. [para. 104].

Jones v. Great Central Railway Co., [1910] A.C. 4 (H.L.), refd to. [para. 104].

Goodman and Carr v. Minister of National Revenue, [1968] 2 O.R. 814 (H.C.), refd to. [para. 104].

Alcan-Colony Contracting Ltd. et al. v. Minister of National Revenue, [1971] 2 O.R. 365 (H.C.), refd to. [para. 104].

International Minerals & Chemical Corp. (Canada) Ltd. et al. v. Commonwealth Insurance Co. et al. (1991), 89 Sask.R. 1 (Q.B.), refd to. [para. 104].

Learoyd v. Halifax Joint Stock Banking Co., [1893] 1 Ch. D. 686, refd to. [para. 109].

Calcraft v. Guest, [1898] 1 Q.B. 759 (C.A.), refd to. [para. 109].

R. v. Littlechild (1979), 19 A.R. 395; 51 C.C.C.(2d) 406 (C.A.), refd to. [para. 109].

C-C Bottlers Ltd. v. Lion Nathan Ltd., [1993] 2 N.Z.L.R. 445 (H.C.), refd to. [para. 109].

San Francisco (City) v. Superior Court (1951), 281 P.2d 26 (Cal. S.C.), refd to. [para. 115].

R. v. Perron (1990), 54 C.C.C.(3d) 108 (Que. C.A.), refd to. [para. 117].

Hamalainen v. Sippola (1991), 9 B.C.A.C. 254; 19 W.A.C. 254; 62 B.C.L.R.(2d) 254 (C.A.), refd to. [para. 129].

Nickmar Pty. Ltd. v. Preservatrice Skandia Insurance Ltd. (1985), 3 N.S.W.L.R. 44 (S.C.), refd to. [para. 137].

Commissioner Australian Federal Police v. Propend Finance Pty. Ltd. (1997), 141 A.L.R. 545 (H.C.), refd to. [para. 138].

Yri-York Ltd. v. Commercial Union As­surance Co. of Canada et al. (1987), 17 C.P.C.(2d) 181 (Ont. H.C.), refd to. [para. 140].

Catherwood (Guardian ad litem of) v. Heinrichs (1995), 17 B.C.L.R.(3d) 326 (S.C.), refd to. [para. 140].

Strauss v. Goldsack (1976), 58 D.L.R.(3d) 397 (Alta. C.A.), refd to. [para. 141].

Slavutych v. Baker - see Slavutych v. University of Alberta.

Slavutych v. University of Alberta, [1976] 1 S.C.R. 254; 3 N.R. 587; 55 D.L.R.(3d) 224, refd to. [para. 145].

R. v. Seaboyer and Gayme [1991] 2 S.C.R. 577; 128 N.R. 81; 48 O.A.C. 81; 66 C.C.C.(3d) 321, refd to. [para. 145].

R. v. Stinchcombe, [1991] 3 S.C.R. 326; 130 N.R. 277; 120 A.R. 161; 8 W.A.C. 161, refd to. [para. 145].

Metropolitaine (La) compagnie d'as­surance-vie v. Frenette, Hôpital Jean Talon et un autre, [1992] 1 S.C.R. 647; 134 N.R. 169; 46 Q.A.C. 161; 89 D.L.R.(4th) 653, refd to. [para. 145].

R. v. O'Connor (H.A.), [1995] 4 S.C.R. 411; 191 N.R. 1; 68 B.C.A.C. 1; 112 W.A.C. 1; 103 C.C.C.(3d) 1, refd to. [para. 145].

Cook v. Ip - see Cook v. Washuta.

Cook v. Washuta (1985), 11 O.A.C. 171; 52 O.R.(2d) 289 (C.A.), refd to. [para. 145].

R. v. R.S. - see R. v. Smith.

R. v. Smith (1985), 8 O.A.C. 241; 19 C.C.C.(3d) 115 (C.A.), refd to. [para. 145].

Flack v. Pacific Press Ltd. et al. (1970), 14 D.L.R.(3d) 334 (B.C.C.A.), refd to. [para. 146].

Butterfield v. Dickson (1994), 28 C.P.C.(3d) 242 (N.W.T.S.C.), refd to. [para. 147].

Hickman v. Taylor (1947), 329 U.S. 495, refd to. [para. 149].

R. v. Garofoli et al., [1990] 2 S.C.R. 1421; 116 N.R. 241; 43 O.A.C. 1; 36 Q.A.C. 161; 60 C.C.C.(3d) 161, refd to. [para. 151].

R. v. K.G.B., [1993] 1 S.C.R. 740; 148 N.R. 241; 61 O.A.C. 1; 79 C.C.C.(3d) 257, refd to. [para. 156].

Authors and Works Noticed:

Attorney-Client Privilege, 139 A.L.R. 1250, generally [para. 104].

Canada, Law Reform Commission, Report on Evidence (1977), p. 31 [para. 149, footnote 7].

Lederman, S., Commentary: Discovery-Production of Documents-Claim of Priv­ilege to Prevent Disclosure (1976), 54 Can. Bar Rev. 422, generally [para. 141].

Manes, R. and Silver, M., Solicitor-Client Privilege in Canadian Law (1993), pp. 20 [para. 145]; 21, 22 [paras. 145, 149]; 23 [para. 145]; 73-79 [para. 105]; 100-103 [para. 141]; 127-133 [para. 90]; 170-173 [para. 138].

Manes, R., Judging the Privilege (1999), pp. 14-19 [para. 141].

McCormick on Evidence (4th Ed. 1992), vol. 1, pp. 316 [para. 93]; 317 [paras. 93, 124, footnote 5]; 318 [para. 124, foot­note 5]; 333 [para. 97]; 353 [para. 91].

Sharpe, R.J., Claiming Privilege in the Discovery Process, in Law in Transition: Evidence, L.S.U.C. Special Lectures (1984), pp. 163 [para. 23]; 164, 165 [paras. 23, 149].

Sopinka, Lederman and Bryant, The Law of Evidence in Canada (1992), p. 653 [para. 22].

Watson, G. and Au, F., Solicitor-Client Privilege and Litigation Privilege in Civil Litigation (1998), 77 Can. Bar Rev. 315, pp. 333, 334, 335 [para. 117]; 344, 345 [para. 149]; 346-349 [para. 105].

Wigmore, Evidence (1961), 8 McNaughton Rev. §2292 [para. 89].

Wigram, Points in the Law of Discovery (2nd Ed. 1840), pp. 265, 266 [para. 153].

Williams, N., Civil Litigation Trial Prepa­ration in Canada (1980), 58 Can. Bar Rev. 1, pp. 37, 38 [para. 88].

Wilson, J.D., Privilege in Experts' Work­ing Papers (1997), 76 Can. Bar Rev. 346, pp. 361-365 [para. 109]; 371 [para. 127].

Counsel:

Paul J. Pape and J.D. Young, Q.C., for the appellant;

Stephen J. Wojciechowski, for the respon­dent;

Norma M. Priday, for the respondent, Pilotte.

This appeal was heard before Carthy, Doherty and Rosenberg, JJ.A., of the Ontario Court of Appeal.

On September 14, 1999, the judgment of the Ontario Court of Appeal was delivered and the following judgments were filed:

Carthy, J.A. - see paragraphs 1 to 62;

Doherty, J.A., dissenting - see paragraphs 63 to 166;

Rosenberg, J.A., concurring - see para­graphs 167 to 172.