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.”

Damage control: Quebec’s professional corporations

The professional corporations overseeing lawyers and engineers declared recently that they now intend to get even tougher on crooked professionals. Zero tolerance, declared Nicholas Plourde, who stepped down earlier this month as the head of the Quebec bar. The president of the Quebec engineering professional corporation stated that his organization is “determined to get to the heart of the matter and restore public trust.

Following a parade of arrests made by the province’s anti-corruption police unit and troubling revelations disclosed by Quebec’s inquiry into allegations of corruption and construction-industry wrongdoing, the reputation of lawyers has been sullied and the standing of engineers in tatters. The inquiry, ably headed by Justice France Charbonneau, has heard hundreds of hours of testimony over the past year from more than 80 witnesses who shed light into the deeply-rooted system of kickbacks, bribes, and illegal fundraising, linking the province’s construction industry to politicians, civil servants, and engineers and lawyers.

All of which begs the question: how effective is the oversight of Quebec’s professional corporations? In Quebec there is a formal system in place to protect the public from professionals. A law called the Professional Code, introduced nearly forty years ago, lays the foundation of this system. The Code spawned the creation of organizations, or professional orders as they are known in Quebec, to oversee professionals. Each professional order has powers of self-regulation and self-discipline to fulfil their mission of protecting the public.

All told, there are 44 professional orders that govern the practice of 344,000 professionals. All professional orders are overseen by a government agency, l’Office des professions du Québec, whose mandate lies with ensuring that that each order guarantees protection of the public. Each of these orders must name people who investigate transgressions. In Quebec they are called syndics, presumably borrowing from the Greek term for individuals who help in a court of justice.At last count more than sixty people worked for the Quebec law society’s investigative branch. Its annual budget is an impressive $7.4 million, according to the law society’s 2012-13 annual report. Between April 1, 2012 and March 31, 2013, the Barreau du Québec’s investigative branch opened 3,522 dossiers, 2,245 of which are still pending. The syndic believed that it had reasonable grounds that a professional committed an offence on 54 instances last year, and brought the matter to the attention of the law society’s disciplinary committee. In more than 1,000 cases (1,029 to be precise), the syndic felt there was no grounds to bring up the matter before the disciplinary committee.

The Barreau’s disciplinary council heard 93 cases between April 2012 and March 2013, and issued 107 decisions. According to the law society’s annual report the disciplinary council

  • authorized the retraction of the complaint lodged by the syndic in 4 cases,
  • rejected the complaint in 13 cases,
  • acquitted the lawyer in 3 cases,
  • found a lawyer guilty in 17 cases,
  • acquitted and found the lawyer guilty in 3 cases,
  • found the lawyer guilty and imposed a sanction in 20 cases,
  • imposed a sanction in 24 cases,
  • came to another decision in 22 cases,
  • and halted the procedures in a single case.

Again, according to the latest annual report, the law society’s disciplinary council disbarred lawyers:

  • for a period of three months and less in 28 cases,
  • between three months and less than a year in 21 cases,
  • between a year and five years in 154 cases,
  • permanently disbarred lawyers in 23 cases.

But astonishingly the law society’s disciplinary council did not hear a single case between April 2012 and March 2013 that touched on the sordid revelations made during the Charbonneau Commission. A disquieting number of cases dealt with misappropriation of trust funds but the Barreau’s disciplinary council did not hear a single case that involved bribery, corruption or kickbacks.

Last May, just before he completed his year-long mandate, the batonnier of Quebec’s legal society made a rather unusual public disclosure. He confirmed that the syndic is now conducting an investigation on three lawyers who were arrested recently by the province’s anti-corruption police unit. “The Barreau is not in the habit of coming out publicly over investigations the syndic is conducting,” acknowledged Plourde. “But the Barreau is very preoccupied by what is happening. We decided to come out to reassure the public.”

Plourde also called on the provincial government to hand the syndic the power to temporarily suspend lawyers facing criminal charges. In the meantime, the Barreau has added more staff to its investigative branch to deal with an “increase demand for investigations generated” by the Charbonneau Commission, wrote the Barreau’s executive director Claude Provencher in its latest annual report.

The Quebec engineering professional corporation too is playing catch-up. In a commentary published by the Montreal Gazette, the president of the Ordre des ingénieurs du Québec vaunted that it has launched an “unprecedented initiative in Quebec’s professional system.” A voluntary audit program for consulting-engineering firms has been established to allow it to examine their business practices and “encourage their integrity.” A laughable endeavour, if it weren’t so pathetic.

Daniel Lebel, the president of the Quebec professional engineering order, too has admitted that in the wake of revelations made during the Charbonneau Commission that the syndic has “systematically opened inquiries at the centre of the allegations.” According to its 2012-13 annual report, the syndic’s office received 294 requests to investigate its members. The syndic is currently investigating 233 cases involving 211 engineers. Approximately 30 per cent of the cases are linked to revelations made during the Charbonneau Commission. Again, the question lingers: since the principal mandate of the professional corporation is to protect the public, where have they been all these years?

Even then, Lebel warns the public to be patient as the disciplinary process may be lengthy. In an odd turn of phrase Lebel says: “These inquiries (by the syndic) will only lead to complaints, which must be founded on solid evidence, and ultimately to punishments if the Ordre has enough time to do everything it must to complete them.” No explanation was given by what he means if the professional corporation “has enough time.”

Jacques Duchesneau, a former Chief of the Montreal police and former head of a Quebec anti-collusion unit who leaked his own report on the scope of corruption in the awarding of construction contracts, justly condemned the wall of secrecy that has rocked Quebec.

That wall is now crumbling but it remains that questions have to be raised around the efficacy of the professional system in place in Quebec for more than a generation. Where were they when Quebecers needed them most?

Former politician loses right to practice accounting

A former Quebec politician who served a six-month sentence after being found guilty of five counts of fraud and three counts of breach of trust by a public official recently lost a legal battle against the disciplinary committee of the Quebec Order of Chartered Accountants who had revoked his license for life.

In a 17-page ruling, Quebec Superior Court Judge Claude-C. Gagnon dismissed Jean Fillion’s suit to overturn the sentence handed against him by the professional corporation.

“He is seeking conclusions that neither more nor less attempt to rewrite history, rescind the negative effects on his reputation, legitimize actions he was found guilty of by previous rulings by the courts, and ultimately exonerate his name to facilitate his return back into the labour market,” said Judge Gagnon.

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