Bare Assertion of Contemplated Litigation Does Not "Cloak Investigation" In Privilege

Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, assessing the merits of a claim for litigation privilege.
In today’s case (Buettner v. Gatto) the Plaintiff was injured in a collision and advanced a claim for damages.  The Plaintiff retained counsel.  Liability was initially admitted and then denied by ICBC.  The Plaintiff brought an application for production of various relevant documents and ICBC refused disclosure on the grounds that litigation was reasonably contemplated once Plaintiff counsel was assigned.
The Court rejected this finding this position was based on little more than a bare assertion.  In ordering production of the requested documents Master Caldwell provided the following reasons:

[31]         If this argument is correct, all that any or all adjusters must do in any or all motor vehicle cases is determine, at the instant that the incident is reported, that he or she is going to deny liability and/or the presence of damages without the need to show any basis or accountability for such decision. Having done so, that will virtually ensure that litigation will be required to resolve any claim for loss. Thereafter, having created the virtual certainty of litigation, the defence will be able to reasonably argue that any and all investigations done from the instant that the incident is reported is for the dominant purpose of the conduct of the litigation which they ensured by the arbitrary denial of fault or damage.

[32]         In my respectful view this circular argument runs counter to the letter and spirit of the Hamalainen case, the numerous cases which were cited in and followed by Hamalainen and the numerous cases which have cited and have followed Hamalainen. It runs counter to the stated object of our Supreme Court Civil Rules, B.C. Reg. 168/2009, the securing of the just, speedy and inexpensive determination of every proceeding on its merits. It runs counter to the Supreme Court of Canada decision in Blank v. Canada (Minister of Justice), 2006 SCC 39 and its findings at paras. 60 and 61 where it comments in affirming the dominant purpose test and the role of litigation privilege, that:

The dominant purpose test is more compatible with the contemporary trend favouring increased disclosure.

And,

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

And finally,

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.

[33]         Inherent in the reasonable prospect/dominant purpose test must be the expectation or requirement that there be at least some evidence of bona fides, due diligence or accountability on the part of the party seeking to rely on the prospect of litigation, which was created by their own actions, to support their claim of litigation privilege. Absent such requirement the test itself becomes meaningless. This is particularly of concern where, as here, the same insurer provides coverage for both parties and, presumably, owes each a duty of some form of meaningful investigation and determination of facts before reaching a decision on an issue as important as fault or liability for a motor vehicle accident.

[34]         I find that there is no evidentiary basis provided to support the decision of Ms. Hilliam to deny liability. Her unsupported decision cannot be used as justification for her to conduct a proper investigation into the facts of this motor vehicle accident while cloaking that investigation in a claim of litigation privilege. The time line and analysis of the court in Hamalainen is applicable to this case and to the evidence here, save as to the assertions of Ms. Hilliam which I reject. As in Hamalainen, the claim of litigation privilege regarding documents 4.7 to 4.12 inclusive, which documents were created prior to the June 17, 2013 form letter communicating the denial of liability, fails and all such documents are ordered produced forthwith and unredacted.