Canada: Health & Safety: Protection Of Internal Investigation Reports Through The Assertion Of Solicitor-Client And/Or Litigation Privilege

After a workplace accident, injury or fatality, it is quite common for employers to initiate an internal investigation, usually for the purpose of trying to figure out what went wrong and how to avoid a similar incident in future. While conducting an internal investigation is laudable and often advisable from the perspective of maintaining the employer's due diligence, such investigations can give rise to certain legal risks for the employer. One such risk is that in a subsequent prosecution of the employer under health and safety legislation, the prosecution may try to use any negative conclusions in an internal investigation as evidence against the employer.

That is precisely what happened in the case of Bruce Power, who disclosed an internal investigation report (the Report) to their union, Power Workers Union (PWU). However, despite this fact, the Ontario Superior Court of Justice recently dismissed an appeal by the Crown to allow the admission of the Report into evidence at a trial under the Occupational Health and Safety Act (OHSA). The Court held that the Report was covered by solicitor-client and litigation privilege and that neither privilege had been waived by Bruce Power. Accordingly, the Report could not be used as evidence against Bruce Power at trial.

What is the Case About?

This case arises out of OHSA charges filed against Bruce Power, in its capacity as "constructor," and two supervisors in connection with the serious injury of a worker at the Bruce "B" Power Generating Station.

Immediately after the workplace injury occurred, Bruce Power sought legal advice from its external counsel, a specialist in occupational health and safety law (External Counsel). External Counsel advised Bruce Power to conduct an internal investigation into the incident and to prepare a report for her review. She further advised Bruce Power to claim solicitor-client privilege and litigation privilege over the report.

Bruce Power's Accident Review Panel (the Panel), which was made up of both management and PWU representatives, conducted an investigation and prepared the Report. All members of the Panel were told not to release the Report to any third party and to destroy their copies. While the Ministry of Labour was aware that the Report existed, it did not formally request its production during the course of its independent investigation.

A few months after the Report was created, External Counsel released the Report to the PWU and the Society of Energy Professionals (the Society) for the limited purpose of the education of their members. External Counsel again asserted a claim of privilege and confidentiality with regard to the Report.

Shortly thereafter, one of the PWU Panel representatives provided a copy of the Report to the Ministry of Labour, an act for which he was subsequently disciplined. The Ministry then attempted to have the Report entered into evidence at the trial. In response, Bruce Power re-asserted their claims of solicitor-client and litigation privilege over the Report and argued that such claims had not been waived by virtue of the release of the Report to the PWU and the Society. The Justice of the Peace agreed with Bruce Power and ordered a stay of the proceedings.

The ruling of the Justice of the Peace on the privilege issue was upheld by the Ontario Superior Court of Justice on the basis that the Report had been prepared in contemplation of litigation. However, the Superior Court reduced the remedy from a stay of the proceedings to an order excluding the Report from evidence at the subsequent trial.

The Cloak of Solicitor-Client and Litigation Privilege

Solicitor-client privilege is based on the necessity to ensure confidentiality in respect of communications between lawyer and client. Litigation privilege, on the other hand, serves to protect communications made or documents created for the dominant purpose of assisting the client in litigation.

With regard to the issue of solicitor-client privilege, the Superior Court held that the evidence before the Justice of the Peace supported the finding that External Counsel had been retained by Bruce Power and therefore a solicitor-client relationship was in place at the time the Report was created.

In determining whether there was a valid claim of litigation privilege, the Superior Court looked to the dominant purpose test and stated that the real issue before them was:

The Superior Court held that while the Report was clearly focused on providing information and the educational value in the Report was obvious, it was not unreasonable for the Justice of the Peace to have determined that the dominant purpose of the Report was to assist External Counsel in defending its clients. As such, the Superior Court upheld the ruling that:

Waiver (or Lack Thereof) of Solicitor-Client and Litigation Privilege

The second issue before the Superior Court was whether the Justice of the Peace erred in her decision that the solicitor-client/litigation privilege had not been waived despite External Counsel's release of the Report to the PWU and the Society.

Generally, waiver of solicitor-client privilege is established by demonstrating that the client (who holds the privilege) knew of the existence of the privilege and voluntarily demonstrated an intention to waive that privilege.

On the other hand, litigation privilege may generally be waived where all or part of the information in the document or communication in question is imparted to a third party. However, litigation privilege is not waived where a document or communication is provided to a third party who is "closely aligned" with the litigant at the time the information was disclosed to that third party.

On the issue of solicitor-client privilege, the Justice of the Peace held that the intention of External Counsel in releasing the Report was clearly limited to the use of the document for educational purposes without intending any greater waiver of privilege. As such, she held that there had been no waiver — this decision was upheld by the Superior Court.

On the issue of litigation privilege, the Superior Court held that it was reasonable to assume that at the time the Report was prepared and provided to the PWU and the Society, members of the PWU and the Society were also potential defendants. As such, those potential defendants were closely aligned with Bruce Power as they had "a common purpose in defending anticipated litigation." Therefore, the Superior Court held that litigation privilege had not been waived.

Remedy

The Justice of the Peace, in finding that there had been no waiver over the claims of solicitor-client or litigation privilege, decided that the appropriate remedy was a stay of proceedings, a fairly severe remedy given that it precludes the case from being heard on the merits. The Superior Court allowed the appeal on this point and held that this case did not present "the clearest of [circumstances] in which the only appropriate remedy was to enter a stay of proceedings."

The Superior Court focused on the "strong public interest in having matters of occupational health and safety determined on the merits" and the fact that there was insufficient evidence to demonstrate there had been any improper motive on the part of the Ministry in obtaining the Report. In the end, the Superior Court decided that the appropriate remedy in this case, especially given that the Ministry of Labour had assigned a new Crown to the case who had not read the Report, was to order an exclusion of the Report from the evidence. They further ordered that the copy of the Report in the Superior Court's possession be sealed.

Significance of Decision

While it remains to be seen whether the decision of the Superior Court will be appealed, this case has significant, positive implications for the ability of an employer to assert a claim of privilege over internal reports prepared in the wake of a workplace accident or injury.

If an employer would like to assert a privilege claim over such internal reports at a minimum, the following steps should be followed:

1. When it is determined that an internal investigation report is appropriate, the commissioning of the report should be done by legal counsel for the employer (preferably external counsel).
2. When the report is commissioned, it should be made clear to all parties involved that the report is being prepared in anticipation of potential litigation relating to the workplace accident/injury and that the investigation and the subsequent report are subject to solicitor-client privilege, litigation privilege, and confidentiality.
3. Disclosure of the report should only be done through, and with the advice of, legal counsel to the employer.
4. If disclosure of the report is necessary, it must be for an expressly defined, limited purpose (e.g. the education of stake-holders such as the unions).
5. If legal counsel decides that disclosure of the report should occur, the recipient of that disclosure must be expressly advised:
   1. of the limited purpose for which they are receiving the report; and
   2. that the disclosure does not constitute a waiver of the solicitor-client or litigation privilege claimed over the report.

Next Steps

We recommend your organization review its policies and procedures on how internal investigations are conducted and reported in order to minimize the risk of your internal report being used against your organization or you, if health and safety charges are levied. If we may be of assistance in this regard, please contact a member of the McCarthy Tétrault EHS Group.

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.