Disciplinary law: Litigation privilege in the context of a disciplinary investigation
In a landmark case rendered on November 25th, 2016, the Supreme Court of Canada specified the numerous elements that distinguish litigation privilege from solicitor-client privilege. In addition, the Supreme Court confirmed that litigation privilege is a class privilege that can be asserted against third parties. This being said, litigation privilege can be raised in order to prevent the disclosure of documents and communications prepared for litigation against third party investigators who have a duty of confidentiality, including a syndic of a professional order (Lizotte v. Aviva, Compagnie d’assurance du Canada, 2016 CSC 52).
In the course of an investigation regarding a claims’ adjuster’s professional conduct, the syndic of the Chambre de l’assurance de dommage had asked the insurance company for a complete copy of its claim file by invoking section 337 of the Act respecting the distribution of financial products and services, a disposition providing that any document or information concerning a representative’s activities must be produced to the syndic upon request. The insurer decided to instead communicate only certain documents to the syndic and remove all documents covered by solicitor-client privilege or litigation privilege.
The Superior Court and the Court of Appeal both supported the decision made by the insurer: according to both courts, when the law does not provide an express deviation to the rule, an insurer can legally refuse to communicate any document covered by solicitor-client privilege or litigation privilege. Unfortunately, the two courts did not agree on the scope of litigation privilege, thus giving way to the numerous nuances brought by the Supreme Court of Canada.
To begin, the Supreme Court explained how litigation privilege and solicitor-client privilege differ: (1) litigation privilege creates an immunity from disclosure in order to ensure the efficacy of the adversarial process, whereas solicitor-client privilege aims to protect the relationship between the client and his attorney; (2) litigation privilege lapses when the litigation ends, whereas solicitor-client privilege offers a permanent protection and (3) the application of litigation privilege is not limited to communications between a client and his attorney, but includes all documents and communications whose dominant purpose is the preparation for litigation. However, litigation privilege, much like solicitor-client privilege, aims to maintain “the secure and effective administration of justice according to the law".
In addition, the Supreme Court highlighted that once the conditions justifying the application of litigation privilege were met, namely the existence of a document whose dominant purpose is the preparation of an ongoing or apprehended litigation, the privilege is presumed to be applicable. It is therefore not the burden of the party who invokes litigation privilege to prove its application by demonstrating that the prejudice that would arise from non-disclosure outweighs the prejudice that would arise disclosure, or that the circumstances of the case justify its application.
Furthermore, the Supreme Court rejected the syndic’s argument that litigation privilege could not be asserted against third parties. On this particular point, the Court specified that it would not be appropriate to exclude third parties from the application of the privilege and that even if there is no risk that a syndic’s investigation could bring about the disclosure of privileged information, considering the syndic’s duty of confidentiality and discretion, the mere possibility that a party’s work could be used by the syndic while preparing for litigation could discourage that party from documenting his ideas and have a serious adverse effect on his ability to confidently develop legal strategies.
Finally, the Court concluded that only an express legislative provision can rule out the application of litigation privilege: "any... document" does not contain sufficiently clear, explicit and unequivocal language to abrogate litigation privilege Dubé Légal inc., disciplinary law lawyers.
