Thursday, June 26, 2014

Appeal Court Confirms Litigation Privilege In Regulatory Investigations

In a recent decision, the Alberta Court of Appeal concluded that litigation privilege may be properly claimed by a target of a regulatory investigation.  In TransAlta Corporation v. The Market Surveillance Administrator (2014 ABCA196), the court allowed an appeal from a decision of a chambers judge of the Alberta Court of Queen’s Bench which held that the term “solicitor-client privilege” in section 50 of the Alberta Utilities Commission Act (“Act”) referred only to the privilege dealing with obtaining legal advice and did not extend to litigation privilege. 


In its ruling, the court reaffirmed the importance and protection afforded to litigation privilege claims, recognizing that there is a need for both legal advice and protection of an associated zone of privacy when a party is facing an investigation that could result in a prosecution with serious consequences. 


The facts of this case first arose in the 1990s, when Alberta decided to de-regulate its electricity and natural gas industries.  Alberta established an independent body, the Market Surveillance Administrator (“MSA”) to oversee both industries. 


TransAlta owned several power generation stations in Alberta.  In February of 2011, MSA received a complaint that TransAlta was timing the maintenance shutdown of some of its power plants to occur during periods of high demand to improperly influence the price of electricity. 


MSA initiated an investigation and as part of the investigation, issued a formal request for production of documents.   TransAlta began producing documents in response to this request which continued for several months.  During the course of document production, TransAlta claimed privilege, both solicitor-client and litigation privilege over a number of documents.  MSA disputed the claim for litigation privilege and TransAlta applied to a judge of the Court of Queen’s Bench for an order that it had claimed privilege properly over the documents. 


The issues in dispute before the chambers judge included whether litigation privilege came within the “general rubric” of solicitor-client privilege under section 50 of the Act.


In overturning the chambers judge’s decision, the court of appeal held that she had interpreted section 50 of the Act too narrowly in finding that the term solicitor-client privilege did not include litigation privilege.  The court reasoned that the mere fact that the two privileges may have differences in scope and operation, did not answer the question of interpretation.  The court held that the common law still treated litigation privilege as being an aspect of solicitor-client privilege and that the Alberta legislature would have had this understanding in mind when it drafted the wording contained in the Act. 


Further, even if “solicitor-client privilege” did not include litigation privilege, it was still open to TransAlta to resist production of the documents on the basis of litigation privilege because section 50 of the Act was procedural in nature and did not exclude claims for litigation privilege or for any other privilege recognized at common law. 


Finally, the court held that if TransAlta was entitled to advance a claim for litigation privilege, it was necessary to consider whether there could be a basis for such a claim in the context of an investigation by the MSA.  The court held that while an investigation undertaken by the MSA will not result directly in criminal convictions or prison, nevertheless the consequences of being found guilty of an offence under the Act could result in millions of dollars of fines and other penalties of a very substantial nature.  Indeed, the ongoing business of the company could be put into jeopardy.  Thus, there was an obvious need for legal advice and the zone of privacy contemplated by litigation privilege when a party or parties are facing an investigation which could result in the prosecution of offences with such potential consequences. 



1 comment:

  1. can be especially complex. Not only does the plaintiff have to deal with the legal system, which is slow moving in itself, the plaintiff must also deal with corporations, businesses and insurance companies; Commercial litigation each of whom has a vested interest in prolonging the commercial litigation process and ensuring, if you get paid that they pay you the lowest amount possible. It is not uncommon for those representing the interests of the defendant to intentionally stall and prolong the conclusion of a lawsuit in an effort to force the plaintiff into settle for a dollar amount less than what they deserve. Sadly, this tactic is often successful.