Tag: reasonable contemplation of litigation

"Investigative Stage" Trumps Claim to Litigation Privilege Regarding Quantum of Damages Investigation

I’ve previously discussed the difficulty ICBC has trying to withhold documents in a personal injury lawsuit based on their ‘investigative’ responsibilities.  Reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, further addressing this topic.
In this week’s case (Spenst v. Reemeyer) the Plaintiff alleged injury s a result of a motor vehicle/pedestrian incident which occurred in 2010.  In the course of the lawsuit ICBC denied liability on behalf of the motorist.  ICBC refused to produce two ‘investigative reports’ they commissioned arguing these were protected by litigation privilege.  Master Caldwell found the evidence ICBC produced in support of their claim fell short of the mark to obtain the protection of privilege and ordered production of the documents.  After summarizing the legal principles involved Master Caldwell provided the following reasons:
[12]         In short, the determination as to whether litigation is contemplated as a reasonable prospect is not merely subjective and arbitrary but rather must be objective and based upon reasonable information obtained by appropriate investigation.
[13]         What does the evidence before me reveal when viewed in the light of the above tests?
[14]         First, I have absolutely no evidence from that adjuster who apparently had conduct of the file for the first 18 months.  I am not told whether or not any investigations were undertaken during that time as to either the issue of liability or the extent of damages.  Plaintiff’s counsel submitted, and defence counsel did not dispute, that no denial of liability was ever communicated to the plaintiff prior to the delivery of the Response to Civil Claim.
[15]         Second, Ms. Roach notes that the plaintiff retained counsel.  Plaintiffs have a right to obtain legal advice, including legal advice regarding their rights and responsibilities arising out of motor vehicle or personal injury matters. Consultation with counsel is not a direct or even reasonable guarantee that one is on the road to active litigation; the involvement of counsel may well enhance the possibility of resolution short of trial.
[16]         Third, Ms. Roach says that she only handles claims that are being litigated or are likely to be litigated and thus she determined that since the file was transferred to her it would be litigated.  Strangely however, Ms. Roach, in her own correspondence of May 8, 2012 (the day she commissioned the investigations/reports) wrote to plaintiff’s counsel:
To minimize costs, I will work with you to conclude this matter as quickly as possible.  If it is determined that your client is entitled to compensation, I will be prepared to release settlement funds only when the entire claim, including taxable costs and disbursements, has been resolved and the necessary release documentation completed.  I look forward to working with you on this matter.
[17]         At the time Ms. Roach wrote this conciliatory letter referencing concluding the matter, entitlement to compensation and settlement funds in response to a similarly conciliatory letter of introduction from plaintiff’s counsel, action had not yet been commenced, no position on liability had been taken and there is no evidence that any substantive investigation or even basic inquiry had been undertaken regarding any aspect of the plaintiff’s claim.  The mere arbitrary assertion that this file is likely to go to litigation because this adjuster handles only litigation files and she had decided it would go to litigation is not objectively defensible on the evidence before me.
[18]         Fourth, Ms. Roach says that the end of the limitation period was approaching and, by implication, litigation would have to be commenced.  What this assertion fails to recognize is that there is a significant difference between the commencement of an action in order to protect against the expiry of a limitation period and the active conduct of litigation.  In her May 8 correspondence, Ms. Roach expressly confirmed that her letter was not “a waiver or extension of any applicable limitation”.  In order for any legitimate, even-handed settlement discussions to take place, as invited by her letter, it was necessary for plaintiff’s counsel to preserve the plaintiff’s right to claim at law for her alleged injuries in the event that negotiations failed.
[19]         Counsel for the defendant advised in submissions that the investigative reports were obtained not on the issue of liability but rather on the issue of quantum of damages.  There was no evidence in the material to support that submission and counsel failed to indicate why that distinction would make a material difference in regard to the investigation/dominant purpose assessment.
[20]         The evidence before me fails to objectively establish to any certainty that the reports which were commissioned and which are sought by the plaintiff were commissioned for any purpose other than for basic investigation of the plaintiff’s claim.  There is no evidence to indicate that the adjusters had undertaken any type of earlier investigation to determine whether there was a reasonable, objective basis upon which liability should be denied or quantum questioned.  The reports are ordered produced forthwith.

The "Investigative Stage" Bar to Privilege: Plaintiffs vs. Insurers


As recently discussed, claims for litigation privilege can fail when a defendant’s insurer collects statements and information shortly after a collision in what is deemed to be the ‘investigative stage‘.  The simple reason being that such documents typically are not created for the dominant purpose of litigation.
This analysis, however, does not necessarily translate easily to statements obtained by Plaintiffs following a crash because Plaintiffs do not share the same investigatvie responsibilites that insurers do.   This reality was highlighted in reasons for judgement published earlier this year by the BC Supreme Court, Vancouver Registry.
In the recent case (Cliff v. Dahl) the Plaintiff was injured in a 2007 collision.  She hired a lawyer to assist her with her claim.   The lawyer hired an investigator who obtained statements from multiple witnesses to the collision.
ICBC brought an unsuccessful application to force the Plaintiff’s lawyer to produce these documents.  The Plaintiff refused stating these statements were privileged.  ICBC appealed arguing these documents were obtained during the ‘investigative stage‘ and should be produced.  In dismissing the appeal Mr. Justice Smith provided the following reasons highlighting the ‘investigative stage’ and the different duties of Plaintiffs versus insurers:

[22] The Master had before him an affidavit of plaintiff’s counsel which, sketchy as it is, did say that the information was gathered and the statements were gathered for the purpose of preparing for the plaintiff’s case in this action, as opposed to investigating the plaintiff’s case, and the Master apparently inferred from that that litigation was the dominant purpose. Sketchy as that evidence was, I cannot say that the Master was clearly wrong in drawing that conclusion.

[23] Defence counsel refers to a statement of the Master in which he says in effect that it is very hard to see how statements gathered by plaintiff’s counsel once retained would not meet the dominant purpose test. That is probably too broad a statement and certainly if the Master said that it was a general rule of law, that would be a question of law to be reviewable but in my view that is not the basis of the Master’s decision. He made a finding on the evidence before him.

[24] In that regard, I note that while the evidence from plaintiff’s counsel is sketchy, plaintiff’s counsel in this situation is in a somewhat different position from the insurance adjusters whose determination of dominant purpose is often at issue in other cases such as Hamalainen, supra.

[25] The point at which a plaintiff’s counsel moves from the stage of investigating and considering the possibilities of litigation to a firm decision to proceed and the subsequent efforts that have a dominant purpose of litigation depends of course on the information in counsel’s possession. Much of that information must necessarily come directly from the plaintiff and the plaintiff’s counsel must balance the need to show the dominant purpose of the document or the witness statement with the restrictions placed upon him or her by solicitor/client privilege.

[26] I infer from the material before me that the Master reviewed the evidence and found it sufficient to establish a dominant purpose. Whatever decision I might have made had the matter come before me, I cannot say that the Master was clearly wrong.

[27] Those are my reasons for judgment and so the appeal is dismissed.

Of note, this result was revisited after the witness subsequently became a party to the litigation.

"Investigative Stage" Significant Barrier to ICBC Privilege Claims


A trend developing in BC Caselaw is the demonstrated difficulty ICBC has trying to withhold documents in a personal injury lawsuit based on their ‘investigative’ responsibilities.  Reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, further addressing this topic.
In this week’s case (Gilbert v. Nelson) the Plaintiff was injured in a 2005 collision with a vehicle.  The Plaintiff was 13 at the time and was riding a bicycle.  Following the collision ICBC investigated the collision and obtained engineering reports and a further report from an independent adjuster.  In the course of the lawsuit the Defendant had access to these documents.  The Defendant refused to produce them claiming litigation privilege.
The Plaintiff brought an application to have these produced.   Master Taylor granted the application finding the documents were created during ICBC’s investigative stage.  In ordering production the Court provided the following reasons:

[35] Saying that litigation is a certainty is not the test for the dominant purpose.

[36] What I do observe from the facts before me is that no counsel was consulted or retained by the defendant or his insurer until after the notice of civil claim was issued in July, 2010.  While the retainer of counsel is not an absolute test as to whether or not documents were created for the dominant purpose of litigation, it is but one factor in this case that indicates that the defendant and his insurer were not preparing for litigation nor directing the course of the defence of a possible law suit, until a notice of civil claim was issued some five years post accident.  One would have thought that the defendants would have sought to establish the dominant purpose by showing on a balance of probabilities that the dominant purpose of the documents was to obtain legal advice or to aid in the conduct of the litigation.

[37] Most certainly the defendant and his insurer had followed a course of investigating the accident, and its dynamics, but other than telephone conversations Ms. Fall had with Mr. Gilbert on June 13 and 15, 2005, there is no evidence before me that the defendant or his insurer made a formal declaration to the Gilbert family by way of letter that liability for the accident was being denied.  In my view, a reasonable person would expect no less especially after the family was told that an assessment of liability would be made after receipt of the traffic analyst’s report which was anticipated to be received by Ms. Fall in August, 2005.

[38] In all of the circumstances, I find that the defendant hasn’t met the onus on him to satisfy me that there exists over either the CWMS notes or the reports currently listed in Part 4 of the Defendant’s List of Documents a litigation privilege, such that disclosure of the documents up to the date of the first letter from counsel for the plaintiff should not be made to the opposite party.  The only caveat will be that all references to reserves are to be redacted.

[39] The plaintiff shall have his costs for preparation for, and attendance at the hearing.

ICBC Litigation Privilege Claim Fails Due to "Investigative Stage" Finding

Further to my previous article on this topic, reasons for judgement were released last week by the BC Supreme Court, New Westminster Registry, addressing the circumstances when a defence litigation privilege claim will fail due to records being created during ICBC’s “investigative stage” following a collision.
In last week’s case (Bako v. Gray) the Plaintiff was injured in a 2008 collision.  In the course of the lawsuit the Defendant listed several documents as privileged.  These included an ICBC adjuster’s notes and further the notes of an independent adjuster hired by ICBC.  The Plaintiff brought an application to produce these records.  The Defendant refused arguing these records were subject to litigation privilege and that they were created for the dominant purpose of preparing for litigation.
Master Caldwell rejected this argument finding the records were more likely created during ICBC’s investigative stage.  In ordering production of the records the Court provided the following reasons:
[5] In Hamalainen (Committee of) v. Sippola, [1991] B.C.J. No. 3614 (C.A.) the Court of Appeal approved the reasoning and findings of Master Grist (as he then was) that there is an investigative stage and a litigation stage, that it was proper for the Master to determine when litigation became a reasonable prospect and further to determine when in the overall process the dominant purpose for the creation of documents became the preparation for or pursuit of litigation. The court further confirmed that in making that determination the Master was not bound or obliged to accept the adjusters’ opinions on those central issues to be decided…

[21] In his initial entry note in the defendant’s file on November 21, Mr. Matheson includes the following entries:

DICTATED MY NFA, AND A LETTER TO I/A DON UNRAU, WHOM I HAVE ASKED TO BE MY “LIASON” (sic) WITH ZOLTAN, SO LONG AS HE REMAINS UNREPRESENTED;

IN ANY EVENT, THE PLAN IS VERY SIMPLE. MONITOR ZOLTAN’S PROGRESS & OBTAIN UPDATED CLINICALS & REPORTED (sic) PERIODICALLY…AND HOPEFULLY, SETTLE HIM UNREPRESENTED SOMETIME BEFORE THE 2 YEAR LIMITATIONS PRESCRIBES. LOOKS LIKE ZOLTAN IS ASKING HIS GP TO REFER HIM TO DR. ROBINSON (RE: HIS HA’S)…I’LL BOOK A PRECAUTIONARY IME WITH DR. MICHAEL JONES, “JUST IN CASE”

I DON’T HAVE ANY CONCERNS RE:  CREDIBILITY, BASED ON WHAT I HAVE SEEN TO DATE.

[22] On November 25, 2008 Mr. Matheson made further notes to the file, including:

SO LONG AS MR BAKO REMAINS UNREPRESENTED, AND CONTINUES TO WORK, THE RISK EXPOSURE OF THIS FILE IS MODERATE.

I AM GOING TO RETAINED DON UNRAU, INDEPENDENT ADJUSTER, TO ACT AS MY LIAISON WITH THE PLAINTIFF.

I WILL SET UP A PRECAUTIONARY IME WITH DR MICHAEL JONES (NEUROLOGIST)

[23] These entries clearly indicate that as of late November 2008, Mr. Matheson’s focus was on information gathering and settlement, with both being done quickly and before Mr. Bako retained counsel; when litigation type issues did arise they were referred to as “precautionary” or “just in case”, neither of which is at all consistent with his sworn assertion that he “believed this matter would result in litigation” when he first received the file.

[24] Based on my review of the materials, it is of little import whether Ms. McIntosh or Mr. Matheson had charge of the files between November 10, 2008 and March 16, 2009, or for that matter, September 22, 2009 when the Writ was filed and sent for delivery to ICBC. Nothing in the materials supports Mr. Matheson’s assertion that he had a reasonable basis to determine and that he did determine that there was a reasonable prospect of litigation in this case.

[25] Save and except for references to reserves, the CWMS notes are ordered to be produced in unredacted form up to and including September 22, 2009.

[26] All references to the independent adjuster in November of 2008, centered on him simply being a “liaison” between Mr. Matheson and Mr. Bako, at least for so long as Mr. Bako remained unrepresented; the report is dated shortly after Mr. Bako did retain counsel. Again, I see no support for any conclusion other than that his involvement was related directly to Mr. Matheson’s stated intention to settle the file before Mr. Bako retained counsel. The report is ordered produced.

"Investigative Stage" Trumps ICBC's Litigation Privilege Claim


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.





More on BC Injury Claims and Litigation Privilege


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.

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ERIK
MAGRAKEN

Personal Injury Lawyer

When not writing the BC Injury Law Blog, Erik is the managing partner at MacIsaac & Company, based in Victoria, B.C. He is also involved with combative sports regulatory issues and authors the Combat Sports Law Blog.

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