Canada: Limits To The Inquiry Powers Of A Regulatory Body In Light Of Lizotte v. Aviva Insurance Company Of Canada

In a landmark unanimous judgment released on November 25, 2016, in the case of Lizotte v. Aviva Insurance Company of Canada, 2016 SCC 52 ("Aviva"), the Supreme Court of Canada clarified various aspects of the litigation privilege, a common law rule which gives rise to an immunity from disclosure of documents and communications the dominant purpose of which is preparation for litigation.

In so doing, the Court confirmed, for the first time, that litigation privilege (i) is a class privilege, (ii) can be asserted against third parties, including third party investigators who have a duty of confidentiality, and (iii) is subject to clearly defined exceptions (and not to a case-by-case balancing test). In the words of the Court: "litigation privilege is fundamental to the proper functioning of our legal system and is central to the adversarial system that Quebec shares with the other provinces. The parties' ability to confidently develop strategies knowing that they cannot be compelled to disclose them is essential to the effectiveness of the adversarial process. Litigation privilege cannot therefore be abrogated by inference, and clear, explicit and unequivocal language is required in order to lift it."

The facts

In the course of an inquiry into the conduct of a claims adjuster working for Aviva, the syndic of the Chambre de l'assurance de dommages (the "Syndic") asked Aviva to produce the complete copy of the claim file pertaining to a specific claim handled by the adjuster. The Syndic based its request on s. 337 of the Act respecting the distribution of financial products and services ("ADFPS"), which creates an obligation ("must") to produce "[...] at the request of a syndic, [...] any required document or information concerning the activities of a representative."

In response, the insurer produced a number of documents, but withheld some on the basis that they were covered by solicitor-client privilege and/or by litigation privilege. The Syndic responded to this refusal by filing a motion for declaratory judgment, the purpose of which was to compel Aviva to produce the documents which were subject to litigation privilege. The Superior Court concluded that litigation privilege could not be abrogated absent an express statutory provision. The Court of Appeal upheld the Superior Court's judgment, holding that even though litigation privilege is distinguishable from solicitor-client privilege, it is, to the same extent, a fundamentally important principle which could not be overridden without express statutory language.

The arguments before the Supreme Court

a) Characteristics of litigation privilege

As indicated above, litigation privilege gives rise to an immunity from disclosure for documents and communications whose dominant purpose is preparation for litigation.

The main differences between solicitor-client privilege and litigation privilege are the following:

  • The purpose of solicitor-client privilege is to protect a relationship, while that of litigation privilege is to ensure the efficacy of the adversarial process;
  • Solicitor-client privilege is permanent, whereas litigation privilege is temporary and lapses when the litigation ends; and
  • Litigation privilege is not directed necessarily at communications between solicitors and clients - it applies to any document or communication whose dominant purpose is preparation for litigation.

b) The Syndic's mission to protect the public does not necessarily trump litigation privilege

While the Court agreed that litigation privilege and solicitor-client privilege are to be distinguished, it also recognized that both privileges "serve a common cause: the secure and effective administration of justice according to law." More specifically, litigation privilege serves that cause by "ensur[ing] the efficacy of the adversarial process" and maintaining a "protected area to facilitate investigation and preparation of a case for trial by the adversarial advocate". Both privileges serve an overriding "public interest."

c) Litigation privilege is a class privilege

The Court put an end to years of conflicting case law and doctrine on the issue. It is now clear that litigation privilege is a class privilege and therefore: "Once the conditions for its application are met, that is, once there is a document created for "the dominant purpose of litigation" and the litigation in question or related litigation is pending "or may reasonably be apprehended", there is a "prima facie presumption of inadmissibility"."

Any document that meets the conditions for the application of litigation privilege will de facto be protected by an immunity from disclosure "unless the case is one to which one of the exceptions to that privilege applies. As a result, the onus is not on a party asserting litigation privilege to prove on a case-by-case basis that the privilege should apply in light of the facts of the case and the 'public interests' that are at issue." [Our emphasis]

d) Litigation privilege is not subject to a case-by-case balancing exercise

The Syndic argued that the Court should adopt the balancing test developed by Justice Doherty J.A. of the Ontario Court of Appeal in General Accident Assurance Co. v. Chrusz (1999), 45 O.R. (3d) 321, namely that litigation privilege should be lifted if in given circumstances, the harm flowing from non-disclosure clearly outweighs the benefit accruing from the recognition of the privacy interest flowing from the privilege.

The Supreme Court disagreed with this argument citing the uncertainty that would be caused by a case-by-case approach of balancing the advantages and disadvantages of applying the privilege: "What must be done therefore is to identify, where appropriate, specific exceptions to litigation privilege rather than conducting a balancing exercise in each case."

e) The exceptions to litigation privilege

The Supreme Court recognized the following exceptions to litigation privilege: (i) exceptions relating to public safety, (ii) to the innocence of the accused, (iii) criminal communications and (iv) establishing "the claimant party's abuse of process or similar blameworthy conduct". The Court declined the request to recognize an "urgency exception", namely the existence of an urgent investigation in which extraordinary harm is apprehended during the period in which litigation privilege applies.

f) Litigation privilege can be asserted against third parties

At the hearing, the Syndic submitted that litigation privilege could not be asserted against third parties and that it should apply only to parties to the litigation in question. In the alternative, the Syndic proposed the adoption of an exception to the effect that the privilege could not be asserted against third party investigators who have a duty of confidentiality.

The Supreme Court dismissed these arguments as follows:

"These arguments are unconvincing. I instead agree with the courts that have held that litigation privilege can be asserted against anyone, including administrative or criminal investigators, not just against the other party to the litigation."

The Court explained that if the arguments of the Syndic were adopted, there would be nothing to prevent a third party, to whom documents subject to litigation privilege are disclosed, from subsequently disclosing them to the public or to the other party - "This is the very kind of harm that litigation privilege is meant to avoid".

The Court concludes on this argument as follows:

"It would not be appropriate to exclude third parties from the application of this privilege or to expose the privilege to the uncertainties of disciplinary and legal proceedings that could result in the disclosure of documents that would otherwise be protected. Moreover, even assuming that there is no risk that a syndic's inquiry will result in the disclosure of privileged documents, the possibility of a party's work being used by the syndic in preparing for litigation could discourage that party from writing down what he or she has done. This makes it clear why it must be possible to assert litigation privilege against anyone, including a third party investigator who has a duty of confidentiality and discretion. [...] I would add that any uncertainty in this regard could have a chilling effect on parties preparing for litigation, who may fear that documents otherwise covered by litigation privilege could be made public."

g) Express statutory language is necessary to abrogate litigation privilege

In the Syndic's view, the words "any ... document" in s. 337 ADFPS should be interpreted in light of the statute's purpose, namely the protection of the public, and therefore, that litigation privilege cannot be asserted against the Syndic, because that would interfere with its investigations.

The Court disagreed as follows:

"The requirements discussed in Blood Tribe apply with equal force to litigation privilege. Not only is litigation privilege a class privilege, but it serves an overriding 'public interest' [...] The parties' ability to confidently develop strategies knowing that they cannot be compelled to disclose them is essential [...] In Quebec, as in the rest of the country, litigation privilege is therefore inextricably linked to certain founding values and is of fundamental importance. [...] 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."

Conclusion and takeaways

In conclusion, the Supreme Court ultimately decided that a provision which compels the production of "any ... document" does not contain sufficiently clear, explicit and unequivocal language to abrogate litigation privilege.

This case has deep ramifications on the investigations carried out by any regulated entity. It is now clear that failing clear and explicit statutory language setting aside litigation privilege, regulators may not compel production of documents or communications subject to litigation privilege.

It is therefore important for regulated entities, when applicable, to make sure, in the context of their own investigations, that the documents and communications subject to solicitor-client and/or litigation privilege are properly identified, segregated and excluded from production to regulators.

Éric Azran and Patrick Girard successfully represented Aviva at all court levels, including the Supreme Court of Canada.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions