Lexpert Magazine

LEXPERT MAGAZINE | MARCH 2017 31 LIZOTTE V. AVIVA INSURANCE COMPANY OF CANADA DECISION DATE: NOVEMBER 25, 2016 In the course of an inquiry into the conduct of a claims adjuster working for Aviva, the syndic of the Chambre de l'assurance de dom- mages (the "Syndic") asked Aviva to produce the complete copy of the claim file pertaining to a specific claim handled by the adjuster. e Syndic based its request on s. 337 of the Act respecting the distribution of financial products and services, which creates an obliga- tion to produce "[…] at the request of a syndic, […] any required document or information concerning the activities of a representative." e insurer produced a number of docu- ments, but withheld some on the basis that they were covered by litigation privilege. e Syndic responded to this refusal by filing a motion for declaratory judgment, the pur- pose of which was to compel Aviva to pro- duce the documents which were subject to litigation privilege. Both the Superior Court of Québec and the Québec Court of Appeal dismissed the Syndic's motion and held that even though litigation privilege is distin- guishable from solicitor-client privilege, it is, to the same extent, a fundamentally impor- tant principle which could not be overridden, by anyone, absent express statutory language. While the Supreme Court of Canada agreed that litigation privilege and solicitor- client privilege are to be distinguished, it also recognized that both privileges "serve a com- mon cause: the secure and effective adminis- tration of justice according to law." Litigation privilege serves that cause by "ensur[ing] the efficacy of the adversarial process" and main- taining a "protected area to facilitate investi- gation and preparation of a case for trial by the adversarial advocate." Both privileges thus serve an overriding "public interest." LITIGATION PRIVILEGE = CLASS PRIVILEGE e Court put an end to years of conflicting case law and doctrine on this issue. It is now clear that litigation privilege is a class privi- lege and therefore, "Once the conditions for its application are met, that is, once there is a document created for 'the dominant purpose of litigation' and the litigation in question or related litigation is pending 'or may reason- ably be apprehended,' there is a 'prima facie presumption of inadmissibility.'" Any document that meets the conditions for the application of litigation privilege will de facto be protected by an immunity from disclosure "unless the case is one to which one of the exceptions to that privilege applies. As a result, the onus is not on a party assert- ing litigation privilege to prove on a case-by- case basis that the privilege should apply in light of the facts of the case and the 'public interests' that are at issue." NO CASE-BY-CASE BALANCING EXERCISE e Syndic argued that the Court should adopt the balancing test such as the one de- veloped by Justice Doherty J.A. of the On- tario Court of Appeal in General Accident Assurance Co. v. Chrusz (1999), 45 O.R. (3d) 321, namely that litigation privilege should be lied if in given circumstances, the harm flowing from non-disclosure clearly out- weighs the benefit accruing from the recog- nition of the privacy interest flowing from the privilege. e Supreme Court disagreed, citing the uncertainty that would be caused by a case- by-case approach of balancing the advantages and disadvantages of applying the privilege: "What must be done therefore is to identify, where appropriate, specific exceptions to liti- gation privilege rather than conducting a bal- ancing exercise in each case." ASSERTION AGAINST THIRD PARTIES At the hearing, the Syndic submitted that litigation privilege could not be asserted against third parties and that it should apply only vis-à-vis the parties to the litigation in question. In the alternative, the Syndic pro- posed the adoption of an exception to the ef- fect that the privilege could not be asserted against third-party investigators who have a duty of confidentiality. e Supreme Court dismissed these argu- ments and ruled "that litigation privilege can be asserted against anyone, including admin- istrative or criminal investigators, not just against the other party to the litigation." If the arguments of the Syndic were ad- opted there would be nothing to prevent a third party, to whom documents subject to litigation privilege are disclosed, from sub- sequently disclosing them to the public or to the other party, the Court explained. EXPRESS STATUTORY LANGUAGE In the Syndic's view, the words "any docu- ment" in s. 337 ADFPS should be interpret- ed in light of the statute's purpose, namely the protection of the public, and therefore litigation privilege cannot be asserted against the Syndic, because that would interfere with its investigations. e Court disagreed and ruled that "liti- gation privilege, like solicitor-client privilege, cannot be abrogated by inference and that clear, explicit and unequivocal language is required in order to li it." In conclusion, this case has deep ramifica- tions on the investigations carried out by any regulated entity. It is now clear that failing clear and explicit statutory language setting aside litigation privilege, regulators may not compel production of documents or commu- nications subject to litigation privilege. It is therefore important for regulated entities to ensure that the documents and communications subject to solicitor-client and/or litigation privilege are properly iden- tified, segregated and excluded from pro- duction to regulators. Karine Lizotte, in her capacity as assistant syndic of the Chambre de l'assurance de dom- mages, was represented by Claude Leduc and Olivier CharbonneauSaulnier of Mercier Leduc LLP. Aviva Insurance Company of Canada and Traders General Insurance Company were represented by Éric Azran, Patrick Girard, and Patrick Desalliers of Stikeman Elliott LLP. A LOOK AT THE LIMITS TO THE INQUIRY POWERS OF A REGULATORY BODY IN LIGHT OF LIZOTTE V. AVIVA INSURANCE COMPANY OF CANADA, IN WHICH THE SUPREME COURT OF CANADA ELEVATED THE STATUS OF THE LITIGATION PRIVILEGE TO THAT OF A CLASS PRIVILEGE AND CLARIFIED THE VARIOUS PROTECTIONS INHERENT TO SAME, EVEN AGAINST REGULATORS | RECENT LITIGATION OF IMPORTANCE | BIG SUITS

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