Jun 20, 2014

Regulatory Proceedings and Litigation Privilege: 'Zone of Privacy' Bolstered in Alberta

TransAlta Corporation v Market Surveillance Administrator, 2014 ABCA 196 (CanLII)
Litigation privilege applies to regulatory proceedings where the consequences of the proceedings are significant, and the privilege cannot be excluded by statute without express and clear language, the Alberta Court of Appeal recently held in TransAlta Corporation v Market Surveillance Administrator, 2014 ABCA 196 [TransAlta].

Litigation privilege regularly applies to protect materials created or assembled in the context of litigation. Its purpose is to create a “zone of privacy” in relation to pending or apprehended litigation: Blank v Canada (Minister of Justice), 2006 SCC 39 [Blank] at para. 39. In TransAlta, the respondent Market Surveillance Administrator (MSA), Alberta’s independent electrical watchdog, sought production of certain records from TransAlta in the context of an investigation into whether TransAlta had artificially influenced the price of electricity. TransAlta refused to produce certain of the records on the basis of litigation privilege, relying on section 50 of the Alberta Utilities’ Commission Act, SA 2007, c A-37.2 [AUCA]. This provision contains a process for vetting claims for “solicitor-client privilege”.

In determining whether litigation privilege fell within the purview of “solicitor-client privilege” in section 50, the Court acknowledged that it was abundantly clear since Blank that solicitor-client privilege and litigation privilege “are driven by different legal policy considerations and generate different legal consequences” (para. 28, citing Blank at para. 33). However, such differences did not answer the interpretive question before the Court, as prior to Blank, litigation privilege had been considered a branch of solicitor-client privilege. Section 50 of the AUCA (actually its predecessor provision) pre-dated Blank. The Court held that at the relevant time, the Legislature would have understood solicitor-client privilege to include litigation privilege. Moreover, the terminology “is not precise” even today, such that “a reference to solicitor-client privilege may yet encompass litigation privilege depending upon the context in which the term is employed” (para. 33).

The Court also found that while section 50 embodied a convenient process for determining claims for solicitor-client privilege, it did not expressly exclude claims for litigation privilege, or any other privilege recognized at common law. If the Legislature had intended to remove the right to claim litigation privilege, it would have said so in express and clear language, rather than by simply omitting to refer to it.

Finally, the Court had to consider whether litigation privilege could be claimed in the context of an MSA investigation, raising the more general question of whether litigation privilege can apply in regulatory proceedings. The Court held that litigation privilege can arise in this context, referring to an earlier decision of the Court and stating (at para. 40):

While an investigation undertaken by the MSA will not directly result in criminal convictions or prison, nevertheless the consequences of being found guilty of an “offence” under the Act could result in millions of dollars of fines and other penalties of a very substantial nature. Indeed, the ongoing business of the corporation could be put into jeopardy. Thus, there is an obvious need for legal advice, and the zone of privacy contemplated by litigation privilege, when a party or parties are facing an investigation which could result in the prosecution of offences with such potential consequences.

The Court thus fastened on the consequences of the proceedings (and implicitly, their adversarial nature) as the hallmark for determining applicability of the privilege, in contrast, for example, to previous Alberta Queen’s Bench authorities that considered mandatory disclosure as key (see, for example, Alberta Treasury Branches v Ghermezian, 1999 ABQB 407).

TransAlta thus signals a clear confirmation that litigation privilege can apply in the context of regulatory proceedings, provided that the matter is sufficiently adversarial, or in other words, provided the consequences are sufficiently serious for the party claiming the privilege. As well, TransAlta bolsters the potential scope for applicability of the privilege in the statutory context, requiring express and clear language to exclude the privilege, and increasing the likelihood that a reference to “solicitor-client privilege” will include litigation privilege (perhaps dependent on the date the provision was enacted).