Quebec, Quebec Court of Appeal, Rulings
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Litigation privilege given same protection as solicitor-client privilege

A provincial regulator that sought to force an insurance company to provide documents in the course of an investigation failed after the Quebec Court of Appeal held that the documents were covered by litigation privilege and solicitor‑client privilege.

In a marked departure from past rulings, the Quebec Court of Appeal appears to have granted litigation privilege the same protections afforded to solicitor-client privilege. In a clear blow to Quebec provincial regulators, the appeal court held in the much-anticipated ruling that regulatory bodies cannot gain access to documents covered by litigation privilege unless it is statutorily mandated.

“I was pleasantly surprised by the ruling because the Quebec Court of Appeal had in previous rulings minimized the importance of litigation privilege,” said Montreal lawyer Sylvain Lussier, a partner with Osler, Hoskin & Harcourt LLP whose practice focuses on commercial, administrative and constitutional litigation. “But in this ruling the appeal court does not treat litigation privilege as a sub-privilege.”

The case dates back to January 2011 when the syndic, or investigating officer, of the Chambre de l’assurance de dommages, a provincial regulatory body that oversees the damage insurance and claims adjustment sector, opened an investigation into the conduct of an insurance adjuster working for Aviva and asked the insurer to provide its files on the adjuster. The insurer refused, asserting they were covered by professional secrecy or litigation privilege.

The syndic brought the matter before the courts. The syndic conceded that she could not demand documents covered by professional secrecy but argued that documents covered by litigation privilege should not enjoy the same protection. The syndic argued that the protection afforded professional secrecy is much stronger than that afforded litigation privilege, which serves only to protect purely private interests. The syndic also argued that since litigation privilege protects purely private interests it should give way to public interest since the mandate of the regulatory body is to ensure the protection of the public.

The appeal court was not swayed. Heeding to guidance provided by the Supreme Court in Blank v. Canada (Minister of Justice), [2006] 2 SCR 319, 2006 SCC 39, the appeal court held while that professional secrecy and litigation privilege are driven by different legal considerations and generate different legal consequences, they both serve a common cause: “the secure and effective administration of justice according to law.” It added that “one cannot maintain as the appellant does that litigation privilege serves to protect only private interests.”

The purpose of the litigation privilege is to “create a zone of privacy” in relation to pending or apprehended litigation, noted Supreme Court Justice Morris Fish in Blank. Litigation privilege comes to an end upon the termination of the litigation that gave rise to the privilege. Unlike the solicitor client privilege, it is neither absolute in scope nor permanent in duration.

But Blank did not address the reach of litigation privilege or when it can be revoked. In a unanimous decision in Lizotte v. Aviva 2015 QCCA 152, the Quebec appeal court found that the provincial legislature made no provision under the Quebec Act respecting the distribution of financial products and services allowing for solicitor-client privilege or litigation privilege to be set aside. In other words, Quebec regulatory bodies cannot compel professionals to disclose documents covered by litigation privilege or solicitor-client privilege without clear and explicit language in the legislation, said Francis Gervais, the former batonnier of the Barreau du Québec. At present, there are only three exemptions under Quebec’s Professional Code, the legislation that governs the province’s professional system, that preclude a professional from invoking his obligation to professional secrecy as a reason to refuse to provide documents.

“The ruling has created a very important legal armour for litigation privilege,” said Gervais, an expert in solicitor-client privilege. “It was previously thought that litigation privilege was a lesser privilege that did not have the same protection as solicitor-client privilege. The ruling clearly states that when litigation privilege is applied its protection and application is important as professional secrecy.”

The ruling will most likely make it more challenging for syndics to complete their investigations in a timely manner, said Claude Leduc, a former batonnier of the Barreau who unsuccessfully plead the case. “People will now invoke litigation privilege when syndics want to investigate matters,” said Leduc, an administrative law expert who co-founded the Montreal law firm co-founder of Mercier Leduc LLP. Leduc also wonders what will happen when the Quebec legal society wants to conduct an investigation into one of its members and the lawyer invokes litigation privilege. While Quebec lawyers cannot invoke solicitor-client to allow for the examination of records, Leduc points out that there is no Quebec law governing litigation privilege. It is a privilege stemming from jurisprudence. “What will happen the day when a lawyer says he is relying on this Quebec Court of Appeal ruling to refuse to provide documents to a syndic because it is covered by litigation privilege?” asked rhetorically Leduc.

There is no doubt that the ruling will have a direct impact on regulatory bodies, said Gervais. “In a certain manner, this ruling will act as brake,” said Gervais. “All organizations whose mission is to protect the public and who have someone akin to a syndic, that is to investigate and lodge complaints, is covered by the ruling. It’s unfortunate but syndics can no longer force or undertake other procedures to compel responses if it is covered by litigation privilege.”

Quebec regulators are now widely expected to lobby the provincial government to enact legislative amendments that will allow them to gain access to documents covered by litigation privilege. But even then, Lussier warns the provincial government will have to be prudent as solicitor-client privilege is protected by article 8 of the Canadian Charter of Rights and Freedoms and article 9 of the Quebec Charter of Human Rights and Freedoms.

Leduc said that he is now seriously contemplating filing an application for leave to appeal before the nation’s highest court – a development that would be welcome by many lawyers. “This ruling takes the right approach but there are other decisions by the appeal court that are irreconcilable with this one,” said Lussier. “The Supreme Court will sooner or later have to deal with this issue.”

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