Recent decision departs from Solmax ruling.
In July 2016, we
published an article underscoring the 10th anniversary of the Supreme Court of
Canada’s decision in Blank v. Canada (Minister of Justice), in which we examined how it had been applied
by courts in Quebec in the intervening decade.
Among the judgments referenced in
our article, the decision of the Quebec Court of Appeal in Compagnie d’assurances AIG du Canada v. Solmax
International Inc. was
significant for practitioners of insurance litigation. In it, the court held
that documented exchanges between employees of an insurance company before
litigation arose were not covered by the litigation privilege, as such
documents were prepared in the ordinary course of the insurer’s business, not
primarily in anticipation of litigation.
The recent decision of the Quebec Superior Court in Fiset-Trudeau v. Compagnie mutuelle d’assurances
Wawanesa, 2017 QCCS 5071
departs significantly from the Court of Appeal’s ruling in Solmax.
In this matter, the insured was claiming the insurance indemnity under
its policy following a fire and alleged that the insurer had been negligent in
handling the claim. During the pre-trial examinations, the insurer raised the
litigation privilege in denying the insured’s requests to obtain a copy of 1)
the insurer’s digital file, 2) memos of telephone conversations between the
insured and its representatives and 3) all interim and final investigation
reports in the insurer’s possession.
In her reasons, judge Florence Ducas restated the
principles governing the application of the litigation privilege, particularly
in light of the Supreme Court of Canada’s decision in Lizotte v. Aviva Insurance Company
as well as those identified by the Court of Appeal in Union canadienne (L’), compagnie
d’assurances v. St-Pierre, 2012 QCCA 433, to the effect that the investigation reports of
a claims adjuster are protected by the litigation privilege when they are
instrumental in the conduct of the litigation by the insurer’s counsel. That
decision also held that the confidentiality of documents by virtue of the
litigation privilege did not prevent the insured from obtaining information and
particulars pertaining to the insurer’s defence allegations.
After reviewing these principles, Ducas concluded the interim and final
investigation reports in the insurer’s possession were incontestably protected
by the litigation privilege. As for the insurer’s digital file, the court found
that it contained all the constituent elements of the investigation report,
whose primary purpose was to prepare for eventual litigation.
The court found that the insurer had not waived the privileged nature of
the digital file by electing to have its representative testify as a witness.
The judge emphasized that the insurer never evinced a clear intent to waive the
privilege and that it was rather the questions posed by plaintiff’s counsel
that prompted the witness to mention the digital file’s existence.
Finally, with respect to the memos of telephone conversations between
the insured and the insurer’s representatives, the court applied by analogy the
principle arrived at in the Court of Appeal’s decision in Prévoyance (La) Cie d’assurance v. Construction du
fleuve Ltée to the effect that
a claims adjuster is not obliged to disclose the various stages of the
investigation, documents written when they were not under oath or statements
obtained from potential witnesses. Ducas was of the view that the memos of
conversations with the insured pertained to stages of the investigation and
were thus also protected by the litigation privilege. The judge specified that
this conclusion did not prevent the insured from obtaining particulars of facts
at issue in the litigation through more specific questions during the
examination of witnesses.
It is somewhat astounding that the judge made no reference to the Solmax
decision or the established criterion regarding documents prepared in the
ordinary course of the insurer’s business. Instead, the court adopted the
position of the Court of Appeal in Union
canadienne (L’), compagnie d’assurances v. St-Pierre, in which it held that the memos and comments
of the insurer’s employees were privileged because they were made in connection
with the decision as to whether the claim was covered and, in the event it was
decided that coverage did not apply, in order to support the insurer’s position
should litigation ensue.
Because the period
for appealing the Fiset-Trudeau decision has expired, the Court of Appeal will
not have the opportunity to decide whether its conclusions, made without
reference to the court’s decision in Solmax, are well founded.
is a lawyer and Jean-Francois Gagnon is a partner with Langlois Lawyers in Montreal.