S.C.C. Reaffirms Primacy of “But For” Test for Causation

Posted on February 8, 2007 by Stephen Cavanagh

In an important ruling for tort litigation, the Supreme Court of Canada today allowed an appeal from a decision of the Alberta Court of Appeal which dealt with the issues of “foreseeability” and “causation”. In the course of its reasons, the Court put the brakes on what some might view as the ascendancy of the “material contribution” test of causation.

In Resurfice Corp v. Hanke, the plaintiff had been severely burned while operating an ice-resurfacing machine. Water had been mistakenly introduced into the gasoline tank of the engine. The explosion and fire resulted from vapourized gasoline escaping and being ignited by an overhead heater.

The plaintiff sued the manufacturer and distributor of the resurfacing machine. His case against them was based on the allegation that the water and gasoline tanks on the machine were situated too close together and were similar in appearance, making it easy to confuse them.

However, in the course of his evidence at trial, the plaintiff admitted that he knew the difference between the two tanks. The trial judge found that he had not, in fact, been confused.

Accordingly, at trial, the action was dismissed. The trial judge said that the plaintiff had failed to show that it had been reasonably foreseeable, that an operator of the ice-resurfacing machine would mistake one tank for the other. He also held that the plaintiff had not proved that the defendants had caused the accident.

On appeal to the Alberta Court of Appeal, a new trial was ordered. The Court of Appeal held that the trial judge had erred in both his foreseeability and his causation analyses.

The Supreme Court of Canada said that the Court of Appeal was wrong and it restored the trial judgment, dismissing the action.

Foreseeability

The disposition of this issue turned largely on the facts. The Court of Appeal felt that the trial judge had not analyzed the evidence properly, failing to give proper weight to some parts of it. The Supreme Court disagreed, finding that the Court of Appeal had been wrong to interfere. One interesting aspect of this part of the case was that the Court of Appeal had said that the trial judge had “failed to to consider policy matters, namely the seriousness of the injury and the relative financial positions of the parties”. The Supreme Court did not mince words in rejecting such an approach:

Foreseeability depends on what a reasonable person would anticipate, not on the seriousness of the plaintiff’s injuries (as in this case) or the depth of the defendant’s pockets.

Causation

The more significant part of today’s judgment was on the issue of causation. The Court of Appeal had suggested that where there is more than one potential cause of an injury, the “material contribution” test must be used and that the trial judge had erred in failing to do so. The Supreme Court disagreed, saying that the Court of Appeal was wrong:

To accept this conclusion is to do away with the “but for” test altogether, given that there is more than one potential cause in virtually all litigated cases of negligence. If the Court of Appeal’s reasons in this regard are endorsed, the only conclusion that could be drawn is that the default test for cause-in-fact is now the material contribution test. This is inconsistent with this Court’s judgments in Snell v. Farrell, [1990] 2 S.C.R. 311, Athey v. Leonati, at para. 14, Walker Estate v. York Finch General Hospital, [2001] 1 S.C.R. 647, 2001 SCC 23, at paras. 87-88, and Blackwater v. Plint, [2005] 3 S.C.R. 3, 2005 SCC 58, at para. 78.

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C.A. Overrules Itself, Says Homeowner Not Liable for Fraudulently-Obtained Mortgage

Posted on February 6, 2007 by Stephen Cavanagh

It is not every day that the Court of Appeal says that one of its earlier decisions was wrongly decided, but that is what happened today. In Lawrence v. Maple Trust Company, a five-member panel of the Court said that its 2005 ruling in Household Realty Ltd. v. Liu was wrong in its result and its reasoning. (It will probably be distressing for Mr. Liu to discover this…)

The Lawrence case garnered a great deal of publicity, probably because the decision struck fear into the heart of any homeowner. Susan Lawrence owned a home that was mortgaged to the TD Bank. In October, 2005, an impostor, posing as Ms. Lawrence, retained a lawyer and gave that lawyer a fraudulent agreement of purchase and sale, under which the impostor was purporting to sell the home for $318,000 to one Thomas Wright (another impostor). Wright applied to Maple Trust Company for a mortgage to finance the acquisition. Maple Trust followed its usual procedures and approved the loan. Neither it nor Ms. Lawrence knew anything about the fraud that was being perpetrated.

The transfer to Wright was registered on title and the mortgage funds were advanced to Wright on the same day. Maple Trust also registered its mortgage (for about $291,000) on title.

Several months later, the real Susan Lawrence discovered the fraud. Shortly after that, Maple Trust began proceedings to enforce its mortgage. Ms. Lawrence brought an action to have the fraudulent mortgage and transfer set aside.

She lost at trial. Mr. Justice Edward Belobaba, considering himself bound by the Court of Appeal’s decision in Household Realty, set aside the transfer to Wright (as having been obtained by fraud) but refused to set aside the mortgage. So, Ms. Lawrence found herself in the position of having had a mortgage fraudulently registered against title to her property, being completely blameless herself, but owing $291,000 to Maple Trust.

On appeal, the case turned on whether registration under the Ontario Land Titles Act provides the registrant with a valid interest, even if the interest was acquired by fraud (and on whether Household Realty was correctly decided).

In an interesting analysis, Madam Justice Eileen E. Gillese, writing for the court, held that someone who registers an interest in land acquires a title that is one of “deferred indefeasibility”. This means that someone who obtains title from a “fraudster” acquires no interest as against the person defrauded (in this case, Ms. Lawrence) because the registrant (Maple Trust) “had an opportunity to investigate the transaction and avoid the fraud”. However, that same person could convey good title to a third person and that conveyance would be “indefeasible” because the third person (“the deferred owner”) would have relied on the register and would have had no opportunity to avoid the fraud.

Applying that theory to this case, the Court held that Maple Trust was not entitled to enforce its mortgage against Ms. Lawrence:

Moreover, unlike the intermediate owner, the homeowner has no opportunity to avoid the fraud. Ms. Lawrence had no ability to discover that her home was being fraudulently sold and mortgaged. By contrast, Maple Trust made the decision to advance money and had the opportunity to avoid the fraud. By interpreting the Act in accordance with the theory of deferred indefeasibility, the law encourages lenders to be vigilant when making mortgages and places the burden of the fraud on the party that has the opportunity to avoid it, rather than the innocent homeowner who played no role in the perpetration of the fraud.

 

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Court Accepts Expert Testimony, Reduces Rule 53.09 Discount Rates for Future Health Care Expenses

Posted on February 5, 2007 by Stephen Cavanagh

In Gordon v. Greig, Justice Bruce A. Glass has assessed damages arising out of catastrophic injuries to two young men who were involved in the same motor vehicle accident. Both were awarded general non-pecuniary damages of $310,000, the maximum available under that head. One had a severe brain injury and the other was a paraplegic. Both men were in the early 20’s and had been ejected from a car being driven by friend whose blood alcohol reading had been between 0.142 and 0.192. Neither plaintiff had been wearing a seatbelt. The parties had settled the issue of contributory negligence prior to the trial, although the reasons of Glass J. indicate that His Honour had not been told what the apportionment was.

The reasons of Justice Glass contain an assessment of damages for such things as non-pecuniary loss, future income loss and future care. It appears that His Honour was singularly unimpressed by the expert evidence led on behalf of the defence (saying of two of the defence witnesses, for example, that they “were left to struggle and in effect try to talk a good line with as much obfuscation as possible when challenging the Plaintiff’s witnesses who had seen and met with Mr. Morrison”). For the most part, he awarded damages under the various heads in the amounts that had been requested by the plaintiffs.

The assessments included awards of $75,000 for the FLA claims of each parent of both injured plaintiffs.

A management fee of 5% was allowed in the Gordon action and a fee of 4% in the Morrison claim.

Interestingly, Justice Glass accepted expert testimony offered on behalf of one of the plaintiffs (Ryan Morrison), that the cost of providing health care will rise in the future at a rate 30% greater than inflation. In relation to the Morrison claim for future care, this led His Honour to reduce by 1% the discount rates then provided for in Rule 53.09 of the Rules of Civil Procedure (the rates are now 0.75% and 2.5%), from 1% for the first 15 years and 2.5% thereafter, to 0% for the first 15 years and 1.5% thereafter. However, in the other action, brought on behalf of the plaintiff Derek Gordon, there was no departure from the Rule 53.09 discount rates, nor was one requested.

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PJI Payable on Damages for Loss of Competitive Advantage?

Posted on February 2, 2007 by Stephen Cavanagh

Last month, Justice Colin McKinnon gave judgment for the plaintiff against the City of Ottawa in a slip-and-fall case: Cerilli v. Ottawa (City). (Justice McKinnon probably did not endear himself to the city fathers (and mothers) with the opening words of his decision: “The month of January does not attract hordes of tourists to the City of Ottawa. It is a cold and miserable month, characterized by falling snow and icy conditions. There is little daylight. It is a happy month for those who enjoy winter sports, but a depressing one for drivers and pedestrians.”)

The plaintiff, a hairdresser, slipped and fell on a city sidewalk, breaking her ankle. His Honour found that because of her injuries, she was no longer able to continue working as a hairdresser. However, the plaintiff had found other work and, by the time of trial, was earning more than she had been earning in her previous career.

Justice McKinnon elected to deal with the claim for future income loss by awarding damages for loss of competitive advantage:

I prefer to deal with the Plaintiff’s future lost income claim on the basis of her loss of competitive advantage.  I am satisfied that because of her injuries Ms. Cerilli will suffer economic loss because of the impairment of her ability to compete for employment: see Borland v. Muttersbach, [1984] O.J. No. 481 at para. 72 (H.C.J.).  Damages for loss of competitive advantage have been awarded where the injury could have some impact on the Plaintiff’s future employability: see O’Day v. Facoetti Estate, [2002] O.J. No. 2274 at para. 67 (S.C.J.).  I would find that Ms. Cerilli’s marketability as an employee has been substantially affected by her injury: see Honey v. Gamache, [1997] O.J. No. 582 at para. 28 (S.C.J.).  The fact that she is now unable to continue to work full-time in the area she chose  work, namely that of being a hairdresser, is compensable in damages. 

Justice McKinnon’s ruling on the issue of costs was released this week. It appears from those reasons that counsel for the City of Ottawa took issue with prejudgment interest having been awarded on the damages for loss of competitive advantage. (The issue was raised in the context of an offer to settle and whether or not the result at trial was better than the offer.) McKinnon J. maintained his view, that interest should be awarded:

Counsel for the Defendant has argued that this is not the case because interest should not have been calculated on the award for competitive advantage, which if correct would reduce the reward to below $260,000 which would arguably be less than the September 2006 offer. I do not agree. The loss of competitive advantage occurred directly as a result of the accident and there is no reason why interest on the amount should not be paid from the date of the accident.

It is an interesting question, whether prejudgment interest should be awarded on damages for loss of competitive advantage. On the one hand, such damages represent compensation, at least indirectly, for future loss of income. Since that loss has not yet been suffered, so the argument goes, the plaintiff has not had the loss of use of the money, which is what prejudgment interest under s. 128 of the Courts of Justice Act is intended to redress.

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C.A. Discusses Principles of Contractual Interpretation and “Piercing the Corporate Veil”

Posted on January 31, 2007 by Stephen Cavanagh

In Dumbrell v. The Regional Group of Companies Inc., the Court of Appeal has reviewed the principles governing contractual interpretation. It has also provided a useful discussion of the circumstances in which the directing mind of a corporation can (and when he or she cannot) be held personally liable.

The plaintiff had been an employee of Regional Realty, a well-known Ottawa real estate business. After leaving the company, Dumbrell sued for payment of commission to which he claimed to be entitled, for a particular commercial real estate transaction (“the Queen Street property”). The trial judge ruled that he was entitled to fifty percent of Regional’s $1 million profit.

Both parties appealed certain aspects of the trial decision and both enjoyed some success in the Court of Appeal. In this commentary, we have focused on the legal issues, rather than the somewhat complicated factual ones.

Contractual Interpretation

The trial judge had held that Regional was liable to compensate Dumbrell for profit earned on  the Queen Street property. But she had based her finding on a case which, the Court of Appeal said, “blends notions of quantum meruit and implied terms of a contract to resolve a problem that the parties had not addressed when establishing their relationship”. Here, said the Court, the parties had considered the nature of their working relationship in entering into an employment contract. Thus, any entitlement to commission on the Queen Street property would have to emanate from the words of the contract.

This led the Court to consider two approaches to the interpretation of commercial contracts. One aims at divining the actual intentions of the contracting parties at the time the contract was made, while the other focuses on the intent that emerges from the words used in the document. The first is referred to as the “intentionalist” approach and the second as the “textual” approach (terminology borrowed from Professor Ruth Sullivan in an article written for the Supreme Court Law Review).

The Court of Appeal expressed its preference for the objective, “textual” approach to interpreting written contracts. However, the Court went on to caution that this kind of analysis is not necessarily confined to a consideration of the dictionary meaning of words. Rather, the meaning must be looked at in the particular context in which the words appear. The Court quoted with approval the following passage from Professor John Swan’s text, Canadian Contract Law:

There are a number of inherent features of language that need to be noted. Few, if any words, can be understood apart from their context and no contractual language can be understood without some knowledge of its context and the purpose of the contract. Words, taken individually, have an inherent vagueness that will often require courts to determine their meaning by looking at their context and the expectations that the parties may have had.

The Court went on to discuss what it meant by the “context” or “factual matrix” of a contract. This would include “the genesis of an agreement, its purpose, and the commercial context in which the agreement was made”. Evidence of context would, it said, aid in the textual interpretation of a contract.

Applying this analysis to the contract in the present case (and we have not summarized the factual discussion), the Court concluded that the plaintiff was entitled to fifty percent of the profit earned by Regional on the Queen Street property.

Piercing the Corporate Veil

The plaintiff had sued not only The Regional Group of Companies but also Steven Gordon, its CEO and directing mind. According to the reasons of the Court of Appeal, in his statement of claim, the plaintiff had alleged breach of contract, but only against Regional. However, the trial judge found both Regional and Gordon liable for breach of contract. The Court of Appeal said that the trial judge’s reasons also suggested that she had found Gordon liable on the alternative ground, that he had induced Regional to breach its contract.

The Court set aside the finding that Gordon was liable in breach of contract, saying:

I have difficulty understanding the basis upon which the trial judge found Gordon liable for breach of contract. She spoke of “piercing the corporate veil” and described Regional as Gordon’s agent for the purposes of the contract. However, she found both Regional and Gordon liable for breaching the contract. I agree with Mr. Zarnett’s submission that if Regional acted as Gordon’s agent for the purposes of the contract, only Gordon could be liable for breaching that contract. The trial judge’s finding that Regional was liable along with Gordon for breaching the contract was also inconsistent with the trial judge’s conclusion, at para. 187, that she should “pierce the corporate veil” and hold Gordon liable. Either Regional had a separate legal persona for the purposes of the contract or it did not.

The Court proceeded to discuss what is meant by “piercing the corporate veil”, as well as the circumstances in which an individual will be viewed as the “agent” of a corporation. It noted that the two concepts are quite different; the latter assumes the distinct legal personae of the corporation and the individual, while in the former case, that difference is ignored.

The panel said that the separate identity of a corporation can be ignored (i.e., the corporate veil “pierced”) where the corporate structure is being used for a fraudulent or dishonest purpose, but that that was not the case here.

Likewise, the ruling rejected the notion that liability could be founded on Gordon having induced a breach of contract:

Cases where an individual has been held liable for inducing a corporation’s breach of contract have nothing to do with piercing the corporate veil or the concept of agency. These cases acknowledge the separate legal identity of the corporation and its directing mind. They hold the directing mind liable for the discrete tort of inducing the breach of contract and not for breach of contract itself. The measure of damages for inducing the breach of contract may or may not be the same as would apply to the breach of contract.

First of all, the Court said, inducing breach of contract had not been pleaded. And on the facts of this case, the Court said that there was no evidence that Gordon’s conduct had not been in the best interests of the corporation, as there would have to be to sustain such a cause of action.

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C.A. Says Motor Vehicle Accident Claims Fund is “Insurer” for Purposes of Dispute Resolution

Posted on January 31, 2007 by Stephen Cavanagh

In two decisions, released today, a five-member panel of the Court of Appeal has held that the Motor Vehicle Accident Claims Fund is, for limited purposes, an “insurer”.

The cases are Allstate Insurance Company of Canada v. Motor Vehicle Accident Claims Fund and Kingsway v. Ontario. In both cases, the Fund had paid statutory accident benefits to claimants and then sought reimbursement from the insurers (Allstate and Kingsway, respectively). When those attempts failed, the Fund commenced arbitration of the disputes, relying on regulation 283/95, which deals with “Disputes Between Insurers”. Both insurers argued that since the Fund was not an “insurer”, the arbitrator had no jurisdiction to hear the cases.

The Court of Appeal noted that, for certain purposes, the legislation already treats the Fund as an insurer. For example, under the Statutory Accident Benefits Schedule, the Fund is deemed to be an insurer for purposes of payment of those benefits. However, it also accepted the insurers’ argument, that either the Fund is an insurer under regulation 283/95 and is bound by all of its provisions (including the prohibition on litigation) or it is not, in which case it cannot take advantage of any of the regulation’s provisions.

After examining the legislation, the Court concluded that the Fund is an insurer for the purpose of resolving disputes over payment of accident benefits, even though it conceded that “literally, of course, the Fund is not an insurer”.

In reaching its decision, the Court of Appeal reconsidered one of its prior decisions, Kalinkine v. Ontario (Superintendent of Financial Services). In that case, another panel of the Court of Appeal had held that the Fund was not an insurer for purposes of dispute resolution of accident benefits claims. Today, the Court of Appeal said that, in so finding, the Court in Kalinkine had been wrong.

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C.A. Adopts Master Beaudoin’s Test for Setting Aside Registrar’s Dismissal Order

Posted on January 31, 2007 by Stephen Cavanagh

In Scaini v. Prochnicki, the Ontario Court of Appeal reviewed the jurisprudence dealing with setting aside an order made by the registrar of the Superior Court, dismissing an action for failure to place it on a trial list within two years after the filing of a statement of defence. In the decision appealed from, the court had identified four criteria for setting aside a registrar’s dismissal order, made under Rule 48.14(1) and had concluded that there are four, all of which must be satisfied. In this case, the motions judge concluded that the plaintiff had met three of the requirements, but not the fourth (“explanation of the litigation delay”).

In allowing the appeal, the Court of Appeal agreed with Master Robert Beaudoin, in Steele v. Ottawa-Carleton (Regional Municipality), that the principle guiding the court in such cases is as follows:

Ultimately, the Court will exercise its discretion upon a consideration of the relevant factors and will attempt to balance the interests of the parties. 

The Court accepted that there are factors which will govern the exercise of discretion, but did not agree that there are only four, nor that the factors will necessarily be the same from case to case. Rather, it advocated a “contextual” analysis to do justice in each set of circumstances.

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C.A. Disallows Law Firm’s $60,000 Premium for Result “Beyond Wildest Expectation”

Posted on January 29, 2007 by Stephen Cavanagh

Last April, we began a post by remarking that “The law firm of Kramer Henderson had a very good day today.” Mr. Justice John Belleghem had allowed an appeal from a decision of an assessment office and had allowed a premium of $60,000 that the law firm had added to its bill to a client, for its services in defending a copyright infringement action. As we said then, His Honour had “lavishly praised the ‘wisdom’, ‘exceptionality in negotiating skills’ and ‘exceptional skill and ability of the law firm, in achieving a ‘result…beyond the client’s wildest expectation’”.

Today’s news was not so good for the law firm. The Court of Appeal allowed the client’s appeal and restored the ruling of the assessment officer (who had disallowed the $60,000 premium). In Henderson v. Salgado, the Court observed that the assessment officer had focused on the fact that the solicitors did not face a risk of non-payment of fees, was not carrying the litigation for the client and was not working at a reduced rate.

The most important factor in the Court’s reasons though, was the fact that the law firm already had an agreement with the client on fees and that agreement did not say anything about a premium. Both the firm and the client had known, before the solicitors had completed their work, that the result of the case was going to be a windfall for the client. The Court said that there had been no attempt by the lawyers, at that point, to try to renegotiate the fee arrangement. The $60,000 premium had simply been added to the bill. In these circumstances, the assessment office was found to have acted properly in disallowing it.

 

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C.A. Says 15-Year “Ultimate Limitation Period” Runs from January 1, 2004

Posted on January 29, 2007 by Stephen Cavanagh

In an important decision, released today, the Court of Appeal in York Condominium Corporation No. 382 v. Jay-M Holdings Limited et al. reversed a ruling by Mr. Justice John Ground and held that if a claim is not discovered until January 1, 2004 but the act or omission giving rise to the claim occurred before that date, the “ultimate limitation period” of fifteen years starts to run as if the act or omission had taken place on January 1, 2004. An earlier post on our site commented on Justice Ground’s decision.

In this action, the plaintiff condominium corporation alleged that the City of Toronto (one of the defendants) had been negligent in its inspection of the condominium building in 1978. It claimed that it did not discover until May, 2004, that the demising walls were not fire-rated in accordance with the Building Code.

In June, 2005, the condominium corporation sued the builder and the City of Toronto. It sued within two years of the date on which it discovered the claim, which would have made the action in time to comply with the two-year limitation period in s. 4 of the Limitations Act, 2002. However, the City of Toronto had successfully argued before Justice Ground, that the 15-year “ultimate limitation period” in s. 15 of the Act meant that the action was prescribed, the negligent act having taken place over 27 years ago.

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Divisional Court Overturns Order Requiring Production of Insurer’s In-house Lawyer’s File

Posted on January 28, 2007 by Stephen Cavanagh

In Smith v. London Life Insurance Company, the Divisional Court reversed an order made by Superior Court Justice Gordon Thomson, who had directed the defendant London Life to produce “its entire claims file arising from a prior action between the parties, including documents authored by its in-house counsel and other employees”. The Court discussed the difference between solicitor-client privilege and litigation privilege and the circumstances in which documents subject to the latter will nevertheless be ordered to be produced. The Court ordered London Life to produce a more detailed affidavit of documents, listing each document with respect to which privilege is claimed, and virtually invited the plaintiff to bring a further motion to have a court review the documents and determine whether their production should be ordered because of “blameworthy” conduct on the part of the insurer. The reasons of the Divisional Court do not make clear just what has to shown before such a  litigant can ask the court to inspect all of an opposing party’s privileged documents, to see if any of them should be ordered to be produced despite being subject to litigation privilege.

Smith had sued London Life in an earlier action, seeking reinstatement of disability insurance benefits. London Life ultimately did reinstate the benefits and that action was settled. While that litigation was still pending, the plaintiff brought another lawsuit against London Life, alleging that the insurer had breached its duty of good faith in terminating insurance benefits. Smith claimed damages, including punitive and aggravated damages.

London Life defended the second action, alleging in its pleading that its employees had acted in good faith.

On a motion brought following London Life’s examination for discovery, Justice Thomson ordered the insurer to produce “[i]ts entire file including all claims, notes and e-mails with respect to the first action, including anything authored by Vicky Ramsay [in-house counsel for London Life]”. The basis for his finding was that London Life had placed its state of mind in issue by pleading that it had acted in good faith and that, by so doing, it had waived privilege attaching to its documents.

Leave to appeal Justice Thomson’s ruling was granted by Justice Joseph Donohue. The Divisional Court panel hearing the appeal was made up of Justices Lee Ferrier, John Ground and Thomas Lofchik. The panel’s decision was unanimous.

The Court referred extensively to last year’s decision of the Supreme Court of Canada in Blank v. Canada (Minister of Justice) and the statements made by the Court in that case about solicitor-client privilege and litigation privilege. Relying on Blank, the Divisional Court in Smith held that litigation privilege that had arisen in the context of the earlier litigation between Smith and London Life continued to protect the documents in the second action, whose subject-matter was closely related. And it cited the Blank case for the proposition that documents protected by solicitor-client privilege (which Justice Thomson had ordered London Life to produce on the basis of waiver of privilege) “will remain clearly and forever privileged”.

Turning to the facts of this case, the Divisional Court held that London Life had not waived privilege, merely by pleading that it had acted in good faith, nor by reciting a chronology of its handling of the claims file.

However, the Court returned to the Blank case for the proposition that, in some circumstances, litigation privilege will not protect a party’s documents:

[T]he Supreme Court of Canada in Blank noted that litigation privilege:

… would not in any event protect from disclosure evidence of the claimant party’s abuse of process or similar blameworthy conduct. It is not a black hole from which evidence of one’s own misconduct can never be exposed to the light of day.

Even where the materials sought would otherwise be subject to litigation privilege, the party seeking their disclosure may be granted access to them upon a prima facie showing of actionable misconduct by the other party in relation to the proceedings with respect to which litigation privilege is claimed. Whether privilege is claimed in the originating or in related litigation, the court may review the materials to determine whether their disclosure should be ordered on this ground.

Unfortunately, neither the Supreme Court in Blank nor the Divisional Court in Smith articulated what evidence would suffice as “a prima facie showing of actionable misconduct” (although the Divisional Court did say that it was “something more than merely an allegation in the pleading”). Nor does either case explain just what is meant by “actionable misconduct…in relation to the proceedings”.

The Court in Smith said that the material before it did not enable it to determine whether privilege properly attached to any particular document in London Life’s file. So, it ordered London Life to deliver a further affidavit of documents, listing the documents over which privilege was claimed and providing a detailed description of the grounds for the assertion of privilege. Then, the Court seems to have invited the plaintiff to bring further proceedings for production of London Life’s documents:

Once such an Affidavit of Documents is produced any necessary decision about the privileged nature of documents can be more properly determined.

Thus, in summary, after a determination has been made as to whether or not litigation privilege applies to a particular document, a further review may be required of the privileged documents to determine whether or not the production of such documents may be required on the ground set out by the Court in Blank, referred to in paragraph 24, supra. We are of the view that “a prima facie showing of actual misconduct by the other party in relation to the proceedings with respect to which litigation privilege is claimed” requires something more than merely an allegation in the pleading.

Comment

We see some problems with this decision. There is no indication in the reasons that the plaintiff had ever challenged the sufficiency of London Life’s affidavit of documents (although it is probably implicit in these reasons, that Schedule B of London Life’s affidavit of documents, listing the privileged documents, did not contain the level of detail required by subrule 30.03(2)). The Court seems to have taken it upon itself to make an order under subrule 30.06(b), for service of a further and better affidavit of documents.

The Court felt that once a further and better affidavit of documents had been delivered by London Life, a determination could be made (by counsel for the plaintiff, presumably) as to whether, in relation to any particular document, privilege had been validly claimed. This part of the decision is still relatively uncontroversial, since the caselaw has held that it should be possible to determine from the affidavit of documents itself, whether a claim for privilege has been properly advanced.

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