Is the information in a statement by an Insured to an Insurer privileged?

Is the information in a statement by an Insured to an Insurer privileged?

Sangaralingam v. Sinnathurai, [2009] O.J. No. 5211 (Master).

During examinations for discovery, information gathered by insurance companies during its process of investigation into a claim, are sometimes the subject of dispute.

For example, counsel for an insurer will usually assert privilege over the document containing a statement made by an insured to the insurer during the course of investigation.

The document itself is privileged. But the question arises whether the "material information" in the statement is also privileged.

Master Short recently dealt with a motion in which the plaintiff sought an Order directing a defendant to disclose information contained in a statement delivered to his insurer following a motor vehicle accident.

Counsel for the plaintiff asserted that even if the statement is privileged, the contents of the statement must be disclosed on discovery.

Master Short quoted Justice Lane in Greco v. Thornhill, [1993] O.J. No. 1347, who wrote that information which is relevant may not be withheld from disclosure merely because it has also been incorporated into a privileged document. For example, with respect to surveillance the questioner is entitled to know what the investigator saw, his knowledge, information and belief, but not to have the document itself. However, the situation is different in the case where the witness has already testified to the facts and what is being requested is not the facts but what the witness said about the facts to her insurer. Justice Lane held that such questioning is clearly devoted solely to the credibility of the witness and the witness is not obliged to respond.

Master Short held that a witness who has been examined for discovery and makes him or herself available to the party opposite to answer any relevant questions is not obliged to then also provide the material information contained in a statement made to its insurer.

Is the information in a statement by an Insured to an Insurer privileged?

Insurance Adjuster's Documents and Litigation Privilege

Insurance Adjuster's Documents and Litigation Privilege

Insurance defence counsel routinely put most, if not all, documents created by an insurer in its investigation of a claim in to schedule B of the insurer’s Affidavit of Documents. Defence counsel take the position often that these documents are subject to litigation privilege. Plaintiff’s counsel do not often object, but increasingly are requesting copies of these documents.

A recent motion heard by Justice Ferguson of the Ontario Superior Court of Justice addressed this issue in Kavanagh v. Peel Mutual Insurance, [2009] O. J. No. 4349. Justice Ferguson helpfully reviewed the applicable law of litigation privilege. The seminal case in this area of the law is the Supreme Court of Canada decision in Blank v. Canada in which the dominant purpose test was adopted. Subsequently, judges of the Ontario Superior Court of Justice have applied a two step approach for the assertion of litigation privilege:

1) Whether litigation was a reasonable prospect at the time the document was produced, and
2) If so, whether the dominant purpose for the creation of the documents in question was to assist in a contemplated litigation.

Further, Justice Ferguson summarized the law from earlier court decisions and indicated that litigation privilege cannot be founded on a suspicion of the possibility of litigation. Justice Ferguson went on to consider whether disclosure of documents may be granted if a plaintiff can show actionable misconduct prima facie and concluded, applying the judgment in Blank v. Canada, that it is possible but that the plaintiff must put evidence before the court of such actionable misconduct.

When investigating claims, insurers need to be aware that whatever they put in to their file may be ordered to be produced to the opposing party in later litigation. Their investigation file is not automatically protected by privilege unless litigation was a reasonable prospect at the time the document was produced and if the dominant purpose for the creation of the document was to assist in the contemplated litigation. Of course once legal counsel is retained on a file, the documents created for communication with legal counsel will be protected by solicitor-client privilege which is arguably a higher or stronger type of privilege.

Insurance Adjuster's Documents and Litigation Privilege

Information contained in written statement insured gave to insurer – is the insured required to provide this information at examination for discovery?

Information contained in written statement insured gave to insurer – is the insured required to provide this information at examination for discovery?

In Sangaralingam v. Sinnathurai, [2011] ONSC 1618, when examining the defendant for discovery, counsel for the plaintiff requested that the defendant provide information contained in the written statement he gave to his insurer following the motor vehicle accident. Defendant’s counsel refused to provide the statement or the contained information on the grounds that it was protected by litigation privilege.

A motion was made to a master who ruled that the defendant was not required to provide the information in the statement on the basis that the defendant had already been examined for discovery at length and the plaintiff also received a copy of the statement the defendant provided to the police following the accident. Therefore, such questioning would be solely with respect to the credibility of the defendant.

The master’s decision was appealed. The motions judge required the defendant to answer the question. The motions judge relied on the principle that questions on discovery seeking the facts of a party’s case do not offend privilege even though the source of the facts is a document over which privilege is being asserted.

There was a further appeal to the Divisional Court. Justice Herman referred to the test for when litigation privilege should be set aside as provided by Justice Ducharme in Kennedy v. McKenzie, [2005] O.J. No. 2060: where “the materials being sought are relevant to the proof of an issue important to the outcome of the case and [that] there is no reasonable alternative form of evidence that can serve the same purpose”.

Upon application of this test to the case at hand, Justice Herman concluded that in the course of the examination for discovery, counsel for the plaintiff had the opportunity to ask questions of the defendant that were relevant to the material issues. The defendant was co-operative and was not withholding information. Therefore, there was an alternative means available to obtain the relevant information and as a result litigation privilege should not be set aside.

Also, with respect to whether the request was directed solely to the credibility of the defendant, Justice Herman stated that it was his opinion that the sole purpose of the question being asked was to find out what the defendant told his insurer and therefore was asked for the sole purpose of credibility.

Information contained in written statement insured gave to insurer – is the insured required to provide this information at examination for discovery?

Disclosure of Surveillance - 2

Disclosure of Surveillance - 2

Aherne v. Chang, 2011 ONSC 3846

This is an appeal from Master Short’s recent decision on the issue of ‘when is privilege waived?’.

The defendants argued that if they provided surveillance material to an IME doctor, the privilege was not waived until the doctor released the report. The plaintiff argued that the privilege was waived as soon as the surveillance was given to the IME doctor. The defendant seems to want to avoid having the plaintiff’s lawyer review the surveillance before the plaintiff goes to the IME to make sure that the plaintiff doesn’t embellish during the IME.

It seems that the defendant in this case could have avoided this entire problem if they simply held onto the surveillance materials and let the IME doctor assess the plaintiff and prepare the report. Then, after the report is released, the defendant can provide the IME doctor with the surveillance, and ask the IME doctor if the surveillance changes his/her opinion.

Thanks to M. Edward Key for bringing this appeal to our attention and for the comments.

Disclosure of Surveillance - 2

The “Curtain” of Asserted Claims of Privilege Lifted to Permit a Full Examination of all Available Evidence

The “Curtain” of Asserted Claims of Privilege Lifted to Permit a Full Examination of all Available Evidence

In Tomasone v. Capo, Sgro LLP, 2014 ONSC 2922 (CanLII) the defendant had provided two legal opinions to the plaintiffs which the plaintiffs claimed failed to meet the requisite standard of care. The plaintiffs sued the defendant in negligence. The defendant brought a motion for summary judgment asserting that the plaintiffs’ claim was statute barred by the Limitations Act, 2002.

In defence to the summary judgment motion, the plaintiffs put forward affidavit evidence suggesting they discovered their claims against the defendant after retaining counsel. Their counsel also swore affidavits but during cross-examinations they refused to answer any questions about when or how they discovered those claims.

In advance of the summary judgment motion, the defendant moved for answers to refusals with respect to discoverability, particularly dealing with information and documentation the plaintiffs claimed privilege over.

Master Short considered whether the plaintiffs could rely on privilege in these circumstances and concluded at paragraph 48 as follows:

The plaintiff ought not to be allowed to rely on discoverability arguments to seek to avoid a limitations defence, without making full disclosure with respect to all relevant facts relating to what knowledge was acquired and when.

Master Short also considered the defendant’s argument that even if privilege applied, the plaintiffs waived privilege. Master Short agreed, taking into account the following factors inter alia:

1) the plaintiffs undertook to prove their action was not statue-barred and they put their state of mind and their lawyer’s mind in issue to argue that the action was not statute-barred;

2) the plaintiffs relied upon the affidavit evidence of their lawyer; and

3) the plaintiffs subpoenaed former counsel to give evidence.

Master Short went on to review the guidance provided by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7 regarding the importance of full disclosure in light of the court’s power on the hearing of summary judgment motions to assess the quality and sufficiency of the evidence and the requirement that the parties "put their best foot forward".

The plaintiffs were ordered to answer the questions they refused related to the timing of receipt and review of relevant documents and the timing of investigations into possible claims against the defendant.

The “Curtain” of Asserted Claims of Privilege Lifted to Permit a Full Examination of all Available Evidence

Litigation Privilege Protects Adjuster's File

Litigation Privilege Protects Adjuster's File

When does litigation privilege arise in tort claims?

Panetta v. Retrocom, 2013 ONSC 2386 (S.C.J.)

In this slip and fall action, there was a question of whether litigation privilege applied to an investigation done by an adjuster prior to defence counsel being appointed.  The plaintiff fell in a Wal-mart parking lot and an incident report was prepared.  A few weeks later, an adjuster retained by Wal-mart's insurers wrote to the landlord of the premises advising it of the incident.  The plaintiff sought production of the adjuster's notes, file and reports, on the basis that litigation privilege had not yet arisen at the time they were created/obtained.

Justice Quinn held that the notes were privileged:

[61]   I think that, in third-party or tort claims (as opposed to claims by an insured against his or her own insurer), there is no preliminary investigative phase where privilege does not attach to notes, reports and files of adjusters. In third-party insurance claims, the sole reason for any investigation by or on behalf of an insurer is because of the prospect of litigation. It is naive to think otherwise; and the fact that the investigation may be used to arrive at a pre-lawsuit settlement does not detract from the point that I make. The prospect of litigation inherently includes the prospect of settlement.

When the adjusters were retained to conduct their investigation on behalf of Wal-mart's insurer, the sole purpose of any documents they created was in anticipation of litigation.  The decision provides a helpful summary of the case law regarding litigation privilege (and as an added bonus, a nice example of Justice Quinn's sense of humour). 

Litigation Privilege Protects Adjuster's File

Litigation Privilege - Production of Lawyer's Notes of Interview

Litigation Privilege - Production of Lawyer's Notes of Interview

A recent case deals with production of statements taken by an opposing party.  It provides a summary of the principles relating to litigation privilege.

In Hart v. Canada (Attorney General), 2012 ONSC 6067 (S.C.J.), the plaintiff brought a motion seeking production of notes that had been made by counsel for the defendant several years earlier when the plaintiff was a potential witness in another lawsuit arising out of the same factual nexus.  The notes appeared to be an almost verbatim translation of the interview.  The defendant argued the notes were protected by litigation privilege.  The Master ordered the notes to be produced and the defendant appealed.

The appeal was dismissed.  Litigation privilege cannot restrict disclosure of an opposing party's statements.  Information or statements that are obtained from an opposing party cannot be confidential from that party.  To the extent a document is a mere recording of information given by the opposing party, it is not subject to litigation privilege, even though it was created with a view to anticipated future actions; however, if the document contains something more that amounts to a solicitor's work product, then it is privileged.  Counsel for the defendant would be permitted to make a proposal to redact certain parts of the document that contained information that was more than simply a record of the plaintiff's interview and statement, such as margin notes, underlining and highlighting.

It appears that the key fact was that the notes contained an almost verbatim recording of the plaintiff's interview.  If the notes contained the solicitor's strategies or theories, the outcome may have been different.

Litigation Privilege - Production of Lawyer's Notes of Interview