ICBC Law

Given ICBC’s monopoly over vehicle insurance in BC they typically have to perform multiple roles following a collision including investigating the issue of fault in order to make internal decisions regarding the premium consequences for the customers involved in the crash.  Documents prepared during this ‘investigative‘ stage generally need to be produced during litigation and claims for litigation privilege will fail.  Reasons for judgement were released this week further demonstrating this fact.

In this week’s case (Fournier v. Stangroom) the Plaintiff was injured in a 2007 collision.  In the early days following the crash and well before litigation got underway ICBC retained an engineering firm to inspect the Plaintiff’s vehicle.  The engineering firm communicated their findings to ICBC.  In the course of the lawsuit the Defence lawyer commissioned an expert report from the same firm but did not exchange it with the Plaintiff’s lawyer.

The Plaintiff made the typical document disclosure demands from the Defendants.   These were not complied with in a satisfactory fashion resulting in a Court application.   The Defence lawyer argued that the full file from the engineering firm is subject to litigation privilege.  Master Caldwell disagreed and ultimately ordered better document disclosure inlcuding production of the engineering firms materials documenting their initial investigation.  In making this order Master Caldwell provided the following reasons:

[11] On August 9, 2007 the initial adjuster on the file requested MEA or one of their engineers to examine the plaintiff’s vehicle in order to determine whether the plaintiff was wearing his seatbelt at the time of the collision. The engineer did so, communicated with the adjuster the following day with questions and subsequently reported to the adjuster on September 13, 2007. That adjuster referred to that report as being sufficient for his purposes; the next adjuster, Ms. Madsen referred to the “verbal report” as being “sufficient for the purposes of handling the claim SHORT OF LITIGATION” (emphasis mine).

[12] In early 2011 defence counsel commissioned MEA to prepare an expert report, apparently regarding the seatbelt issue, for possible use at trial; he says that since such a report has now been requested, the engineer’s file material, notes and such are not producible unless and until the report is received and provided to plaintiff’s counsel 84 days before trial.

[13] In cases such as this one, the adjuster or adjusters have duties of investigation on behalf of both the plaintiff and the defendants; there must, almost of necessity, be an initial period of adjusting or investigating to discover the factual matrix within which the adjusters will perform their duties and assess the file and the claims or roles of the interested parties. Absent such period and process of investigation the adjuster can have no reasonable basis upon which to conclude that there is a reasonable prospect of litigation and that all or part of what is done from any given point in time forward is done for the dominant purpose of litigation. In this regard see Hamalainen (Committee of) v. Sippola (1991) 62 BCLR (2d) 254 (BCCA).

[14] These engineers were approached within the first 3 weeks following the collision, clearly within the period of initial investigation and was even seen by at least one of the adjusters as being used for purposes of handling the file short of litigation. The investigative material, notes, correspondence and other such recordings of the engineers were not created at a time when litigation was a reasonable prospect; neither were they created for the dominant purpose of litigation. The fact that counsel has now requested an expert report from MEA does nothing to change that any more than a request to a G.P. or plaintiff’s medical expert that he or she provide an expert report renders that practitioner’s clinical records privileged.

[15] The MEA investigative material, notes, correspondence and working papers which arose between August 9, 2007 and September 13, 2007 inclusive are not subject to a valid claim of litigation privilege; they are ordered to be listed and to be produced to plaintiff’s counsel within 14 days. If there are any other MEA materials which arose between September 14, 2007 and the date when defence counsel commissioned their expert report, those are to be listed with the required clarity, date and description in order that any further claim of litigation privilege can be properly assessed.

Two decisions were released this week by the BC Supreme Court dealing with the issue of litigation privilege in BC personal injury lawsuits.  The first case stressed the importance of lawyers properly identifying and listing documents, the second dealt with evidence gathered by an insurance company during the “investigative stage” following a motor vehicle collision.

In the first case (Craig v. Smith) the Plaintiff was injured in a 2006 motor vehicle collision.   The Defendant claimed privilege over various documents and the Plaintiff brought a motion to produce these.   The parties worked out many of their respective differences before the Court gave judgment but prior to resolving the issues Master Caldwell gave the following guidance stressing the importance of lawyers properly disclosing relevant documents:

[5] It is counsel’s duty to determine relevance and claims of privilege; see G.W.L. Properties Ltd. v. W.R Grace & Co., [1992] B.C.J. No. 2387. There is an obligation to describe documents in sufficient detail to enable other parties to assess the validity of the claim of litigation privilege; see Hetherington v. Loo et al, 2007 BCSC 129 and Nanaimo Shipyard Ltd. v. Keith et al, 2007 BCSC 9. The dominant purpose test is still the appropriate test to be applied in determining litigation privilege but is “more compatible with the contemporary trend favouring increased …mutual and reciprocal disclosure which is the hallmark of the judicial process”; see Blank v. Canada (Minister of Justice), 2006 SCC 39.  This is all well settled law.

In the second case (Pshelensky v. Dion) the Plaintiff was involved in a 2006 collision.  Within a week of the crash the Plaintiff hired a personal injury lawyer to represent her.  Shortly after this the Defendant’s insurance company obtained a statement from the Defendant and witnesses to the crash.  After the lawsuit started the Defendant refused to produce a copy of the statement arguing that since the Plaintiff hired a lawyer a lawsuit was reasonably contemplated when the statements were taken and they were protected by ”litigation privilege“.

Master Taylor disagreed and ordered that the Defendant produce the statements. In doing so the Court provided the following reasons:

[18]         I take the view that the two statements taken from the driver and passenger of the defendant motor vehicle were essentially taken to determine the cause of the accident and, of course, to determine who might be at fault.

[19]         In my view the defendants rely upon the fact that the plaintiff retained counsel early on in these proceedings or shortly after the accident to suggest that litigation was contemplated.  I do not agree with this proposition for in my view it was far too early in the proceedings to make a final determination as to whether or not litigation would be inevitable.

[20]         I further take the view that the statements taken from Badr and Dion were so close to the time of the accident that they were very early in the continuum before the dominant purpose became one of furthering the course of litigation.  Accordingly I find that both statements are not privileged and should be released to the plaintiff applicant.

This is just one in a series of recent cases making it clear that when an insurance company is investigating why a crash happened it will be very difficult to keep statements from the Plaintiff in a subsequent lawsuit.  You can click here to read my archived posts further dealing with the issue of litigation privilege in the context of BC personal injury lawsuits.

Further to my previous posts on the topic of ICBC Claims and Privilege, reasons for judgement were released yesterday by the BC Supreme Court, New Westminster Registry, demonstrating that a party seeking to withhold documents on the basis of ‘litigation privilege’ may face an uphill battle.

In yesterday’s case (Celli v. White) the Plaintiff was a pedestrian who was struck by a vehicle.  The Plaintiff was injured and eventually sued for damages.  In the course of the lawsuit the Defendants refused to produce a number of documents relevant to the Plaintiff’s Claim on the basis that they were protected by ‘litigation privilege‘.

The Plaintiff obtained legal advice almost immediately after the accident.  As a result of this the defence lawyers argued that “litigation was inevitable from the outset.”  On this basis the Defendant refused to produce a number of documents which were gathered by the Defendant’s insurer in the immediate aftermath of this collision.

The Plaintiff applied to Court for production of a number of the allegedly privileged documents.  The Plaintiff was largely successful and the Defendants were ordered to produce a number of documents which were gathered by the Defendants insurer in the 6 months following the collision.  In reaching this decision Master Caldwell summarized the law of litigation privilege in the context of BC Injury Claims as follows:

[8] The leading case in this subject area is Hamalainen v. Sippola (1991), 62 B.C.L.R. (2d) 254 [Hamalainen].  In that case the Court of Appeal held that two factual determinations were required in order to uphold a claim of litigation privilege:

(1)        Was litigation in reasonable prospect at the time the document was produced,

(2)        If so, what was the dominant purpose for its production?

[9] The court indicated that while the first of these requirements would not likely be overly difficult to establish, the second would be more challenging:

22.       I am not aware of any case in which the meaning of “in reasonable prospect” has been considered by this Court. Common sense suggests that it must mean something more than a mere possibility, for such possibility must necessarily exist in every claim for loss due to injury whether that claim be advanced in tort or in contract. On the other hand, a reasonable prospect clearly does not mean a certainty, which could hardly ever be established unless a writ had actually issued. In my view litigation can properly be said to be in reasonable prospect when a reasonable person, possessed of all pertinent information including that peculiar to one party or the other, would conclude it is unlikely that the claim for loss will be resolved without it. The test is not one that will be particularly difficult to meet. I am satisfied it was met in this case in connection with all of the documents in issue. The circumstances of this accident, and the nature of Mr. Hamalainen’s injuries, were such that litigation was clearly a reasonable prospect from the time the claim was first reported on December 1st, 1986.

(b)        What was the dominant purpose for which the documents were produced?

23.       A more difficult question to resolve is whether the dominant purpose of the author, or the person under whose direction each document was prepared, was “… [to use] it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation …”.

24.       When this Court adopted the dominant purpose test, it did so in response to a similar move by the House of Lords in Waugh v. British Railways Board, [1980] A.C. 521. In that case the majority opinion is to be found in the speech of Lord Wilberforce, who agreed “in substance” with the dissenting judgment of Lord Denning M.R. in the Court below. While the Court of Appeal judgments do not appear to have been reported, some excerpts from Lord Denning’s opinion are to be found in the speech of Lord Edmund-Davies, including the following at p. 541 of the report:

If material comes into being for a dual purpose - one to find out the cause of the accident - the other to furnish information to the solicitor - it should be disclosed, because it is not then “wholly or mainly” for litigation. On this basis all the reports and inquiries into accidents - which are made shortly after the accident - should be disclosed on discovery and made available in evidence at the trial.

25.       At the heart of the issue in the British Railways Board case was the fact that there was more than one identifiable purpose for the production of the report for which privilege was claimed. The result of the decision was to reject both the substantial purpose test previously adhered to by the English Court of Appeal and the sole purpose test which by then had been adopted by the majority of the Australian High Court in Grant v. Downs.

26.       Even in cases where litigation is in reasonable prospect from the time a claim first arises, there is bound to be a preliminary period during which the parties are attempting to discover the cause of the accident on which it is based. At some point in the information gathering process the focus of such an inquiry will shift such that its dominant purpose will become that of preparing the party for whom it was conducted for the anticipated litigation. In other words, there is a continuum which begins with the incident giving rise to the claim and during which the focus of the inquiry changes. At what point the dominant purpose becomes that of furthering the course of litigation will necessarily fall to be determined by the facts peculiar to each case.

27.       In that sense there is obviously no absolute rule that the decision to deny liability in such a claim must mark the point in which the conduct of litigation becomes the dominant purpose underlying the production of each and every document of the sort for which privilege was claimed in this case. But I do not read the master’s reasons as invoking any such absolute rule. He was faced with affidavit material filed by the party claiming privilege which was deficient in a number of respects. As already noted it failed to draw any distinction between the purpose underlying the production of individual documents. The risk inherent in that approach was pointed out by Mr. Justice Esson in the Shaughnessy Golf case at p. 319 of the report:

Privilege was claimed for a large number of documents. The grounds for it had to be established in respect of each one. By trying to extend to the whole list the considerations which confer privilege on most of the documents, the plaintiff has confused the issue and created the risk that, because it did not make in its evidence the distinctions that could have been made, it must be held not to have established privilege for any.

28.       Furthermore, the affidavit material concentrated on the repetitious assertion by each deponent of his belief that litigation in the case was inevitable, from which fact the dominant purpose underlying the production of all documents was apparently assumed. As already pointed out that approach to the onus facing the deponent on this question represented a mistaken view of the law.

[10] Gray J. echoed this sentiment at paragraphs 97 and 98 of Keefer Laundry Ltd. v. Pellerin Milnor Corp., 2006 BCSC 1180 as follows:

97.       The first requirement will not usually be difficult to meet.  Litigation can be said to be reasonably contemplated when a reasonable person, with the same knowledge of the situation as one or both of the parties, would find it unlikely that the dispute will be resolved without it. (Hamalainen v. Sippola, supra.)

98.       To establish “dominant purpose”, the party asserting the privilege will have to present evidence of the circumstances surrounding the creation of the communication or document in question, including evidence with respect to when it was created, who created it, who authorized it, and what use was or could be made of it. Care must be taken to limit the extent of the information that is revealed in the process of establishing “dominant purpose” to avoid accidental or implied waiver of the privilege that is being claimed.

[11] This dominant purpose test was also confirmed by Fish J. in the case of Blank v. Canada (Minister of Justice), 2006 SCC 39 at paragraphs 60 and 61:

60. I see no reason to depart from the dominant purpose test. Though it provides narrower protection than would a substantial purpose test, the dominant purpose standard appears to me consistent with the notion that the litigation privilege should be viewed as a limited exception to the principle of full disclosure and not as an equal partner of the broadly interpreted solicitor-client privilege. The dominant purpose test is more compatible with the contemporary trend favouring increased disclosure. As Royer has noted, it is hardly surprising that modern legislation and case law

[TRANSLATION] which increasingly attenuate the purely accusatory and adversarial nature of the civil trial, tend to limit the scope of this privilege [that is, the litigation privilege]. [para. 1139]

Or, as Carthy J.A. stated in Chrusz:

The modern trend is in the direction of complete discovery and there is no apparent reason to inhibit that trend so long as counsel is left with sufficient flexibility to adequately serve the litigation client. [p. 331]

61. While the solicitor-client privilege has been strengthened, reaffirmed and elevated in recent years, the litigation privilege has had, on the contrary, to weather the trend toward mutual and reciprocal disclosure which is the hallmark of the judicial process. In this context, it would be incongruous to reverse that trend and revert to a substantial purpose test.

In ordering that the Defendants produce the relevant documents the Court held that the dominant purpose of much of the defendants insurer’s early investigations was due to ‘adjusting‘ the potential claims as opposed to in response to anticipated ‘litigation‘.

Since ICBC is a monopoly insurer in British Columbia the analysis of the ‘adjusting‘ phase vs. the ‘litigation‘ stage will be triggered in most multi-party motor vehicle collisions.  The lesson to be learned is that many documents which are gathered by ICBC in the early stages which may prove harmful to a Defendant if disclosed may not be protected by privilege if they were gathered by for the dominant purpose of determining how a collision occurred.