Alberta Court of Appeal Closely Examines Employer's Privilege Claims

The Alberta Court of Appeal recently released its decision in Alberta v. Suncor Energy Inc., 2017 ABCA 221.  The court upheld the importance of lawyer-client and litigation privileges, holding that they play a "central role" in the Canadian justice system,.  However, where an employee had been fatally injured, the court took a closer look at the factual basis for the employer's claims of privilege over documents that formed part of its investigation into the death. 

 

On April 20, 2014, an employee of Suncor Energy Inc. (“Suncor”) was fatally injured at a worksite near Fort McMurray, Alberta.  The Alberta Occupational Health and Safety (“OHS”) officers issued a stop-work order that day.  Immediately after the accident, anticipating litigation, Suncor began an internal investigation and threw a privilege blanket over all information relating to the investigation.  Legal counsel for Suncor directed the investigation team to segregate all documents and to endorse all material as “privileged and confidential”. 

 

The Suncor investigation team interviewed witnesses, recorded statements and collected photographs.  On May 5, 2014, OHS issued a demand under relevant section of the Alberta Occupational Health and Safety Act (the “Act”) for Suncor to provide copies of the witness statements, as well as employees’ names and contact information.  Suncor replied and provided the names and contact information of employees but asserted privilege over the witness statements collected by its investigation team.   Later, nearly a year after Suncor had provided OHS with a copy of its report on the accident, OHS issued another demand for information and copies of witness statements, notes, records, photos and other documents collected by Suncor.   Suncor claimed privilege over certain documents and information.  OHS issued an administrative penalty against Suncor.

 

The province of Albert filed an originating application seeking an order that Suncor provide the refused materials and allow OHS to interview Suncor’s internal investigators or at least provide further particulars about the claims of privilege.  At the return of the application, the judge held that the dominant purpose of Suncor’s internal investigation was in contemplation of litigation and upheld its claim for privilege on that basis.  The judge ordered Suncor to meet with a referee who would assess the claims of privilege and provide recommendations to the court. 

 

Alberta appealed that decision to the Alberta Court of Appeal. 

 

The Alberta Court of Appeal concluded that the application judge had erred in finding that the dominant purpose of Suncor’s investigation was in contemplation of litigation so as to clothe all material “created and/or collected” during the investigation with legal privilege.  However, it also held that the judge had not erred in invoking the referee process under the Alberta Rules of Court. 

The Court of Appeal held that the relevant sections of the Act did not preclude claims of privilege.  After the application judge's decision was issued, the Supreme Court of Canada clarified the law pertaining to lawyer-client privilege and litigation privilege in Lizotte v. Aviva Insurance Company of Canada and in Albert (Information and Privacy Commission) v. University of Calgary.   Those decisions confirmed the central role of legal privilege in the justice system as well as the legal and policy reasons behind why privilege must be protected.  The Supreme Court held that both litigation privilege and lawyer-client privilege “cannot be abrogated by inference and that clear, explicit and unequivocal language is required in order to lift it”.

 

Lawyer-client privilege attaches to confidential communications between a client and a legal advisor that are connected to giving or seeking legal advice.  The communication does not have to be in contemplation of litigation and the privilege is of permanent duration. 

 

Litigation privilege attaches to documents created for the dominant purpose of litigation.  This includes any document created for the dominant purpose of preparing for related litigation that “remains pending or may reasonably be apprehended”.  The object of this inquiry is the purpose for which the document was created or came into existence as distinct from the purpose for which it may have been collected or put to use.   

 

Accordingly, the Court of Appeal held that if legal privilege does not cover particular records or information, and the requirements of the Act apply to those records or information, the question of whether the Act operates to override any aspect of privilege disappears.  Once the procedure for assessing the contested materials is complete, records or information sifted out of the scope of privilege will be subject to consideration under the correct legal interpretation of the Act.

 

In this case, the appeal judges found that the application judge had erred in finding that the dominant purpose of the investigation was in contemplation of litigation and that Suncor created and/or collected documents and material with the dominant purpose that they would assist in any litigation.   It held that a referee appointed under the Alberta Rules of Court must focus on the dominant purpose for creating each document as opposed to the purpose for its collection. 

 

Suncor could not simply by having legal counsel declare that an investigation had been commenced, throw a blanket over all materials “created and/or collected during the internal investigation” so as to clothe them with lawyer-client or litigation privilege.  The Court of Appeal held that where a workplace accident has occurred and the employer has statutory duties under the Act and simultaneously undertakes an internal investigation claiming legal privilege over all materials derived as part of that investigation, an inquiry is properly directed to a referee under the Alberta Rules of Court to determine the dominant purpose for the creation of each document.

Regards,

Blair

 

SCC - Litigation Privilege and Solicitor-Client Privilege Are Substantive Rights

The Supreme Court of Canada released two decisions last week dealing with the issue of privilege:  (1)  Lizotte v. Aviva Insurance Company of Canada 2016 SCC 52 which dealt with the issue of litigation privilege; and (2)  Alberta (Information and Privacy Commissioner) v. University of Calgary 2016 SCC 53 which dealt with the issue of solicitor-client privilege. 

 

In both cases, the court clearly emphasized the importance of both privileges as “substantive rights that are fundamental to the proper functioning of our legal system”.

 

In the Lizotte case, in the course of an inquiry into a claims adjustor, the assistant syndic of the Chambre de l’assurance de dommages (the "syndic”) asked an insurer to send her a complete copy of its claim file with respect to one of its insured.  The syndic based her request on section 337 of the Act respecting the distribution of financial products and services (“Act”).  In response, the insurer produced some documents but withheld others alleging that they were protected by either solicitor-client privilege or litigation privilege.

 

At a hearing, the syndic conceded that solicitor-client privilege could be asserted against her and therefore the issue before the court was limited to litigation privilege.  The Superior Court of Quebec concluded that litigation privilege cannot be abrogated absent an express provision and that the provision in the Act was not "express" in that sense.

 

The syndic’s appeal was dismissed by the Quebec Court of Appeal and further appeal to the Supreme Court of Canada was dismissed.  In an unanimous decision, the court held that litigation privilege is a common law rule that gives rise to an immunity from disclosure for documents and communications whose dominant purpose is preparation for litigation.  Litigation privilege differs from solicitor-client privilege in that litigation privilege is to ensure the efficacy of the adversarial process .  The purpose of solicitor-client privilege is to protect a relationship.  Solicitor-client privilege is permanent whereas litigation privilege is temporary and lapses when the litigation ends.  In addition, litigation privilege applies to unrepresented parties and to non-confidential documents.  

 

However, the court held that litigation privilege is a class privilege and gives rise to a presumption of inadmissibility for a class of communications – namely those whose dominant purpose is preparation for litigation.  Exceptions to litigation privilege include those relating to public safety, to the innocence of the accused and to criminal communications.  However, because it is a class privilege it has nothing to do with balancing competing interests on a case by case basis.   

 

In this case, none of the exceptions applied.  The court held that there is a robust line of authority according to which a party should not be denied the right to claim litigation privilege without clear and explicit legislative language to that effect.  Litigation privilege therefore cannot be abrogated by inference and the Act did not apply to do so. 

 

In the second case, in the context of a constructive dismissal claim, a delegate of the Information and Privacy Commissioner of Alberta ordered the production of records over which the University of Calgary had claimed solicitor-client privilege.  The delegate was acting in accordance with the Office of the Commissioner’s solicitor-client privilege adjudication protocol and issued a notice to produce the records.  Under section 56(3) of the Freedom of Information and Protection of Privacy Act (“Privacy Act”), a public body was required to produce required records to the Commissioner “despite…any privilege of the law of evidence”.  The University sought judicial review of the decision which upheld the Commissioner’s decision but on appeal to the Alberta Court of Appeal, it was found that “any privilege of the law of evidence” as used in the Privacy Act did not refer to solicitor-client privilege.  

 

The Supreme Court of Canada dismissed the appeal in three separate, partially concurring reasons.  In the first set of reasons written by Justice Côté (Justices Moldaver, Karakatsanis, Wagner and Gascon concurring), the court held that whether the relevant section of the Privacy Act allows a review of documents over which solicitor-client privilege is claimed is a question of central importance to the legal system as a whole and outside the Commissioner’s specialized area of expertise.  Therefore, the applicable standard of review was correctness for both the decision that the Commission had the authority to require production of the records over which solicitor-client privilege was asserted and for the decision to issue the notice to produce the records. 

 

The majority held that the phrase “any privilege of the law of evidence” does not require a public body to produce to the Commissioner documents over which the solicitor-client privilege is claimed.  Solicitor-client privilege is no longer merely a privilege of the law of evidence but a substantive right that is fundamental to the proper functioning of our legal system.

 

In separate concurring reasons Justice Cromwell held that the grammatical and ordinary meaning of the words “any privilege of the law of evidence” includes solicitor-client privilege.  Solicitor-client privilege is both an evidentiary privilege and a substantive principle and it was the evidentiary privilege that was at issue here. 

 

He held that in this case even though the Commissioner had the authority to compel production for review of records over which solicitor-client privilege was asserted and assuming, without deciding, that the correctness standard of review applied, she made a reviewable error to order production in the face of the evidence submitted in relation to the claim of privilege.  The University’s claim of privilege complied with the requirements of Alberta civil litigation practice at the time, and it was a reviewable error for the Commissioner’s delegate to impose a more onerous standard on the University in relation to its assertion of privilege than that applicable in civil litigation before the courts.

 

Justice Abella in further separate but concurring reasons held that that standard of review in this case should be reasonableness in accordance with the Supreme Court’s prior decisions.  However, she held that the Commissioner’s decision to order disclosure was unreasonable.  The Commissioner should have exercised her discretion in a manner that interfered with solicitor-client privilege only to the extent absolutely necessary to achieve the ends sought by her enabling legislation.  In ordering disclosure, she did not sufficiently take into account the fact that the University provided adequate justification for solicitor-client privilege particularly in light of the laws and practices applicable in the civil litigation context in Alberta. 

Regards,

Blair

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. 

Regards,

Blair