Feb 27, 2020

Civil Procedure/Insurance: Litigation Privilege Re a Related Action

Pederson v Allstate Insurance Company of Canada, 2020 ABCA 65 (CanLII)

Keywords: MVA; litigation privilege; related action; Blank v Canada (Minister of Justice), 2006 SCC 39

Synopsis:

The Respondent, Ms. Pedersen, is involved in a MVA. At trial, the Respondent establishes liability for the collision against both the registered owner of the vehicle that hit her and the owner’s son. The Appellant, Allstate Insurance Company of Canada, provides a defence until the end of the liability trial.

After the trial, the Appellant insurer denies coverage and makes itself a third party under s. 579(14) of the Insurance Act, RSA 2000, c I-3. The Respondent seeks to enforce her $1.5M damage award. She brings a separate statutory cause of action as against the Appellant insurer pursuant to s. 579(1) of the Act. In the Court of Queen’s Bench, the Respondent seeks an Order requiring the Appellant insurer to disclose documents identified as “privileged” on the basis they arose in the context of related personal injury litigation – namely the trial.

Applying Blank v Canada (Minister of Justice), 2006 SCC 39, the Court of Queen’s Bench concludes the trial and statutory action are not “closely related” for the purpose of litigation privilege. The Court of Appeal agrees.

Importance:

The decision of the Court of Appeal is significant because it establishes the applicable test for addressing the scope of litigation privilege and whether the litigation privilege in a motor vehicle action can be carried over to a statutory action.

For the Court of Appeal, the test is not whether the two pieces of litigation are “remotely connected”. Indeed, the Court says Alberta (Treasury Branches) v Ghermezian, 1999 ABQB 407 and its progeny are “no longer a correct statement of the law”. (See para. 6).

Alternatively, citing Blank at paras. 34 and 36, the Court of Appeal affirmed that litigation privilege will come to an end “…when the litigation which gave rise to the privilege is over, unless there are closely related proceedings”. (See para. 5). The Court of Appeal sets out the following “minimum factors” to consider when determining whether two matters are “closely related” for the purpose of establishing privilege:

  • whether the parties are the same or related;
  • whether the issues arise from the same or a related cause of action (or juridical source);
  • whether the issues are common in both actions; and
  • whether the proceedings share the same essential purpose. (See para. 5).

Applying Blank, the Court of Appeal ultimately determined that “[o]n this record, and given the unusual facts presented, we cannot accept…the coverage issues that now form part of the s 579 action were notorious in the motor vehicle action.” (See para. 10). As such, the Court of Queen’s Bench made no error in determining litigation privilege did not attach to the Appellant insurer’s documents. (See para. 10).

The Court of Appeal concluded its reasons with a caution that this decision should not be interpreted to “…stand for the proposition that a personal injury accident arising from a motor vehicle and a subsequent statutory action pursuant to s 579(1) of the Insurance Act would never be ‘closely related’ for the purposes of litigation privilege.” For the Court of Appeal, “…each case must be decided based on its own factual context.” (See para. 11).

Counsel for the Appellant: Shawn Stringer (Gilbert Kirby Stringer LLP, Toronto)

Counsel for the Respondent: Terrence Kulasa (James H. Brown & Associates, Edmo