A recent decision of the Ontario Superior Court raises an issue that is of increasing concern to insurers: the loss of litigation privilege.
In Podeszwa et al and D. Preete et al and the Corporation of the City of London, the court held that an engineering report, privileged in one lawsuit, had to be produced to the opposing parties in a second action, following settlement of the first suit. The court said: “whereas solicitor and client privilege protects confidential matters between solicitor and client forever, litigation privilege protects a lawyer’s work product until the end of the litigation”.
You can access a copy of the decision at http://www.canlii.org/on/cas/onsc/2004/2004onsc11652.html
In this case, the City of London had been the defendant in an earlier action arising out of an MVA. An adjuster retained by the City’s insurer commissioned a report from an engineering firm, but did not produce it to the opposing parties.
Some time later, there was another MVA close to the site of the first one. A second legal proceeding was brought as a result of the second accident and the City was again named as a party. (It was in this second litigation that the ruling was made.)
Meanwhile, the City had settled the first action, for which its adjuster had obtained the engineering report. One of the parties in the second action sought production of that report, arguing that when the first lawsuit ended, so too did the “litigation privilege” that had attached to the report. Madam Justice Templeton agreed and ordered the City to produce the engineering report to the parties in the second action, even though it had never been produced in the first action.
This ruling stems from the Court of Appeal’s 1999 finding, in General Accident v. Chrusz, that when litigation is no longer in “contemplation” (even though it remains a possibility), litigation privilege ends. Justice Templeton’s ruling confirms that a document protected from production in one legal proceeding will lose that protection when the litigation is over, even if other litigation then ensues.
What would happen if we changed the facts of Podeszwa slightly? Imagine that there had been only one accident but two lawsuits arising out of it. Would an engineering report obtained by an adjuster in relation to the first lawsuit still be privileged in the second action, even after the first litigation had ended?
We think it would. The test established by the caselaw is whether the dominant purpose of the document being created was “reasonably contemplated litigation”. There is no requirement that a particular lawsuit be contemplated.
There are three points to bear in mind, in the wake of this decision:
1. documents protected by solicitor-client privilege generally remain privileged forever. This privilege is different from the “litigation privilege” that was considered in Podeszwa and applies to confidential communications between solicitor and client for the purpose of seeking or receiving legal advice.
2. the court in Podeszwa appears to have attached some significance to the fact that the engineering report was obtained by an adjuster. It is possible (although not clear from Justice Templeton’s decision) that the outcome might have been different if the report had been obtained by the City’s lawyer, rather than its adjuster. When in doubt, it would be preferable to commission experts’ reports through your counsel.
3. remember that documents you have treated as confidential and protected by litigation privilege (these might include, for example, adjusters’ reports, your own internal claims memoranda, surveillance, etc.) could turn out to be producible in some other lawsuit, after the original litigation has ended.