November 28, 2016
On November 25, 2016, the Supreme Court of Canada decided privilege wins again – twice. In two separate decisions – Lizotte v. Aviva Insurance Company of Canada and Alberta (Information and Privacy Commissioner) v. University of Calgary – the Court declared first litigation privilege, then solicitor-client privilege, the winner over competing statutory disclosure obligations. While the Court reconfirms solicitor‑client and litigation privilege are distinct and distinguishable from one another (and provides a useful summary of their similarities and differences at paragraph 22 of Lizotte v. Aviva Insurance Company of Canada), it also confirms both privileges are equally fundamental to the proper functioning of the Canadian legal system – and demonstrate the heights to which the Court will go to protect both in the face of statutory disclosure obligations.
The decisions may have the greatest practical impact on regulatory bodies and their ability to access information in the course of their regulatory investigations:
Litigation and regulatory investigations often go hand-in-hand. Regulators (securities regulators, medical and health regulators, legal and accounting profession regulators, and so on) often seek access to all information relevant to their investigation, including records that have been created to assist with ongoing or anticipated litigation. Following the Court’s decision in Lizotte v. Aviva Insurance Company of Canada, it’s clear that litigation privilege will prevail over a statutory disclosure obligation unless the statute empowering the regulator specifically overrides litigation privilege. General statements in statutes entitling regulators to “all documents” will no longer cut it. As a result, regulators may have to make a decision: proceed without those documents, or wait until the litigation is finished. Neither is particularly appealing.
The bar to beat a privilege claim has always been high. In recent years, the Supreme Court has raised that bar. In the case of solicitor-client privilege, it’s now been raised past a “legal privilege” to a “substantive right” (but stopped short of elevating it to quasi-constitutional status). The Court’s decision in Alberta (Information and Privacy Commissioner) v. University of Calgary that the words “privilege of the law of evidence” isn’t enough to clear the bar suggests nothing short of an express statutory requirement to disclose “solicitor-client privileged” records will permit a regulator or investigator to review those records.
Even if the regulator gets it, caution is still required. The Court was also clear that even if a regulator or investigator may review privileged documents, it must exercise this power must sparingly in a manner that infringes the substantive right as little as possible.
LITIGATION PRIVILEGE BEATS STATUTORY DISCLOSURE OBLIGATION
In Lizotte v. Aviva Insurance Company of Canada, Ms. Lizotte is a representative of Quebec’s insurance regulator. In the course of an inquiry, Ms. Lizotte asked Aviva Insurance Company of Canada to produce its complete claim file, stating the investigation could not be completed otherwise. Aviva refused on the basis that some documents were protected by litigation privilege. The regulator filed a motion for full production, arguing the statutory obligation under Quebec’s Act Respecting the Distribution of Financial Products and Services that requires Aviva to produce “any…document” abrogated litigation privilege. The Quebec Superior Court, the Quebec Court of Appeal and ultimately the Supreme Court of Canada dismissed the regulator’s motion:
Class, not case-by-case, privilege. The Court dismissed the regulator’s argument that litigation privilege exists to facilitate the litigation process and is therefore a case-by-case privilege. The Court confirmed litigation privilege does exist to facilitate a process, but it is still a class privilege and like all class privileges (such as settlement privilege and informer privilege), once the conditions for its application are met, there is a presumption of non-disclosure.
Exceptions, not balancing. The Court also dismissed the regulator’s argument that litigation privilege must be subjected to a balancing test, and courts must assess the harm resulting from upholding the privilege against the opposing interests. The Court decided this would be akin to finding litigation privilege is a case-by-case privilege (which it already rejected) and would undermine the confidence of those the privilege protects. Appropriate, specific exceptions to litigation privilege need to be identified. The exceptions to solicitor-client privilege also apply to litigation privilege; abuse of process or similar blameworthy conduct is also an exception. Other exceptions may be identified in the future but will “always be based on narrow classes that apply in specific circumstances” and without creating such an exception, the Court stated one “based on urgency and necessity” is appealing.
Applies to anyone, not just parties. Finally, the Court rejected the argument that Aviva shouldn’t be permitted to assert litigation privilege against a party not involved in the litigation – particularly a regulator with legislative investigative powers, confidentiality obligations and limits to further disclosure. This argument was based on the regulator’s earlier position that litigation privilege exists to facilitate the adversarial process, so only those involved should be affected. The Court found the argument “unconvincing” based on the risk of disclosure by the third parties, unintended waiver and the risks to effective preparation for litigation. It confirmed litigation privilege can be asserted against “anyone, including administrative or criminal investigators”. The Court also confirmed the presumption that a legislature doesn’t intend to change fundamental common law rules, such as those relating to litigation privilege, without clear and explicit provisions (absent in this legislation).
SOLICITOR-CLIENT PRIVILEGE BEATS FREEDOM OF INFORMATION LEGISLATION
In Alberta (Information and Privacy Commissioner) v. University of Calgary, a former employee sued the University of Calgary for constructive dismissal. The University claimed solicitor-client privilege over certain records. The employee made an access to information request for the records. Alberta’s Information and Privacy Commissioner ordered the University to produce them per the Commission’s “Solicitor‑Client Privilege Adjudication Protocol” requiring the provision of a copy of the disputed records or two copies of an affidavit or unsworn evidence verifying privilege over them to substantiate the privilege claim. In keeping with civil litigation law and practice at the time, the University provided a list of documents and a sworn affidavit indicating the claim of solicitor‑client privilege. The Commissioner sought further verification and ultimately issued a Notice to Produce Records under Alberta’s Freedom of Information and Protection of Privacy Act’s (FOIPP) section 56(3) requiring a public body to produce required records to the Commissioner “[d]espite . . . any privilege of the law of evidence”. The University applied to the court for judicial review of the Commissioner’s decision to issue the Notice on the basis section 56(3)’s wording does not include solicitor-client privilege. The lower court agreed with the Commissioner’s Office. However, the Court of Appeal decided “any privilege of the law of evidence” in section 56(3) doesn’t include solicitor‑client privilege and the Supreme Court of Canada agreed:
Words aren’t enough to override privilege here. Solicitor‑client privilege is a substantive right fundamental to the Canadian legal system. Statutory language that purports to overcome or impinge on it must be restrictively interpreted and “demonstrate a clear and unambiguous legislative intent to do so”. The wording “any privilege of the law of evidence” doesn’t meet this test.
Production isn’t appropriate here in any event. Even if the wording did meet the test, this isn’t an appropriate case in which to order production: the Protocol is not law but a guide to assist adjudicators and public bodies. The University also complied with the permitted approach and there was no evidence or argument it made a false claim, and no need for the Commission to review the records to decide.
Please contact your McInnes Cooper lawyer or any member of the Privacy Law Team @ McInnes Cooper to discuss this topic or any other legal issue.
McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.
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