Date: 19991231
Docket: T-1194-98
ADMIRALTY ACTION IN REM AGAINST
THE SHIP "CSL CABO" AND IN PERSONAM
BETWEEN:
BRITISH COLUMBIA HYDRO &
POWER AUTHORITY
Plaintiff
- and -
THE SHIP "CSL CABO", CABO SHIPPING INC.,
THE OWNERS OF THE "CSL CABO",
CSL INTERNATIONAL INC., and
ALL OTHERS INTERESTED IN
THE SHIP "CSL CABO"
Defendants
REASONS FOR ORDER
MR. JOHN A. HARGRAVE,
PROTHONOTARY
[1]This action involves a power loss on North and South Pender Islands, occuring at 20:45 on 17 June 1996, said to have been caused when the CSL Cabo anchored over and fouled the Plaintiff"s underwater electric transmission line. The Defendant now seeks production of a report styled "Pender-Saturna Cable Fault 1996 (Report prepared for Bull, Housser & Tupper)". The Plaintiff claims litigation privilege for the report.
BACKGROUND
[2]By way of pertinent background to the report, the Affidavit material establishes that Mr. J.D.L. Morrison, of Bull, Housser & Tupper, was retained by the Plaintiff, whom I shall call "B.C. Hydro", on the morning of 18 June 1996, the day after the power failure.
[3]Mr. Morrison entered into discussions with the Vancouver correspondent who acted for the P & I Insurers of the CSL Cabo in order to obtain security. While Mr. Morrison believed, from past experience involving a similar failure, that litigation would be necessary in order to obtain payment, he did not immediately commence litigation because, again from experience on the earlier claim, it would take B.C. Hydro some time to make repairs and to prepare claim documentation. He therefore content himself with correspondence and negotiation with the shipowner"s representative.
[4]At some time between 18 June and 12 July 1996 Mr. McKenzie, of Bull, Housser & Tupper, requested of B.C. Hydro"s Project Engineer, Mr. Blenkiron, "a report for use in the litigation and that he should also confirm that the cable within B.C. Hydro"s right of way.". B.C. Hydro characterized the request by Bull, Housser & Tupper as "will require record of cable location within BCH Corridor and Diary of Events" (minutes, attached to a memo dated 16 July 1996, of a meeting held 12 July 1996).
[5]The Project Engineer, Mr. Spink (since retired), was asked by B.C. Hydro "to prepare report of replacement for file and legal purposes". The resulting report for which privilege is claimed is that titled "Pender-Saturna Cable Fault (1996)".
[6]In order to deal with the claim of privilege I have received and read a copy of the report. Given the memorandum of 16 July 1996, the minutes of the meeting held the previous Friday, the trouble-outage report of 17 June 1996 and the invoices which have also been produced to the Defendants, there is little or no information in the Report which the Defendants could not obtain and piece together on discovery. Now that, in itself, has little or no direct bearing on the issue of privilege, however an examination of the report also makes it clear that the report was not something which B.C. Hydro would necessarily have generated for its own use. Thus, while the report is, in B.C. Hydro"s words, also "for file", I do not take that particular characterization to necessarily exclude the possibility that the dominant purpose of the report was, with litigation in mind, of using it in order to obtain legal advice or to enable counsel to conduct contemplated litigation.
CONSIDERATION
[7]The law as to privilege, both generally and with respect to privilege of a report, is clearly set out in Jordan et al. v. Towns Marine Electronics Ltd. et al. (1996), 110 F.T.R. 22, upheld on appeal by Mr. Justice Noël, as he then was, (1996), 113 F.T.R. 226. As Mr. Justice Noël did, in writing his reasons for the appeal, I will set out several lengthy passages from my reasons:
| [19] In considering whether a document is privileged, this court has adopted the dominant purpose rule described in Waugh v. British Railway Board, [1980] A.C. 521 (H.L.). The House of Lords, in that case, adopted the view of Chief Justice Barwick, who wrote the minority decision for the Australian Court of Appeal in Grant v. Downs (1976), 135 C.L.R. 674 (Aust. C.A.), at p. 677: |
| "... a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection." |
| [20] There must be a balancing of the discovery process, on the one hand, to allow a litigant claims of privilege where it is proper, but on the other hand to recognize that it is in the interests of justice to make the fullest possible disclosure of relevant material capable of throwing light upon the issues in a case. For that reason a party claiming privilege must come clearly within the now well-established dominant purpose rule. |
| [21] The party claiming privilege has the onus of proving both that the report was prepared for the dominant purpose of being provided to counsel and for the purpose of using it in respect of existing litigation or litigation of which there was a reasonable prospect or was reasonably contemplated at the time of production of the document: see for example Marubeni Corporation v. Gearbulk Ltd., supra; The Philippine Victory (1991), 49 F.T.R. 211 (T.D.); British Columbia v. Bagbusters Pest Manage-ment, an unreported decision of Master Chamberlist, March 24, 1995, Prince George Registry No. 27740; and Armeco Construction Ltd. v. Canada (1994), 83 F.T.R. 107 (T.D. Protho.), at 110. |
| [22] The question of privilege, in connection with adjusting reports, was considered at length by the B.C. Court of Appeal in Shaughnessy Golf and Country Club v. Uniguard Services Ltd. (1986), 1 B.C.L.R.(2d) 309 (C.A.). It is clear from that case that it is insufficient to show only that litigation was in reasonable prospect when the document was produced: the claimant for privilege must also establish that the dominant purpose for creating the document was to provide it to counsel either to obtain legal advice or to aid in the conduct of litigation. |
[8]In the present instance, as was the case in Jordan, there is some question as to whether the dominant purpose should be measured by the view of a group of people from B.C. Hydro, who asked the project engineer "to prepare report of replacement for file and legal purposes", or by the caption on the Report "Report prepared for Bull, Housser & Tupper" or by the intention of Plaintiff"s lawyers Bull, Housser & Tupper, for "a report for use in the litigation... should also confirm that the cable within B.C. Hydro"s right of way.". In Jordan I was concerned that the evidence of intention was that of the author of the reports over which privilege was claimed, an investigator, but a person who made no decision as to putting the report to lawyers in order to obtain advice or to assist lawyers with litigation. I therefore, in Jordan at page 30, turned to a passage from the 1991 Supreme Court Practice (the White Book) s. 24/5/9 at page 436:
| "The dominant purpose of a document does not necessarily fall to be ascertained by reference to the intention of its actual composer (Guinness Peat Properties Ltd. v. Fitzroy Robinson Partnership, [1987] 1 W.L.R. 1027 (C.A.); [1987] 2 All E.R. 716, C.A.). The person of authority under whose direction a document is produced or brought into existence is in many cases the employer of the author; in such cases reference must be made to the intentions of the employer rather than to the intention of the author alone (Waugh v. British Railways Board (above); McAvan v. London Transport Executive [1982] C.A., Transcript 498). In other cases a document may be brought into existence at the direction of insurers (either as a condition of the insurance policy of a party to the action or otherwise). In such cases reference must be made to the intention of the insurers." |
| Thus, it is the view of the editions of The White Book that if the report is commissioned by an insurer, it is the insurer's intention that is relevant. |
| [27] Lord Justice Slade wrote the judgment for the Court of Appeal in Guinness Pete Properties Ltd. v. Fitzroy Robinson Partnership, [1987] 1 W.L.R. 1027 (C.A.). At p. 1036 he noted "... that the dominant purpose of a document does not necessarily fall to be ascertained by reference to the intention of its actual composer is borne out by a number of reasoned authorities". He then referred to several authorities including In Highgrade Traders Ltd., Re, [1984] B.C.L.C. 151 (C.A.), in which the court considered the purpose of insurers in instigating reports, not the intention of the writers of the reports themselves. He concluded that the dominant purpose of the document in question "... must be viewed objectively on the evidence, particularly by reference to the intention of the insurers who procured its genesis". (p. 1037). |
From this passage it follows that I should also consider the intention of Bull, Housser & Tupper, who commissioned the Report.
[9]As I said in Jordan, there must be a balancing of the process of full discovery with appropriate recognition of claims of privilege and to this end the Courts have developed and adopted the dominant purpose test. To this I will add the observation that to emasculate privilege to the extent that, as seems to have happened in some jurisdictions, there is no privilege applying to information sent to or collected by litigation lawyers, outside of counsel"s brief, would be a retro-grade step, which would add to the expense of litigation.
[10]Counsel for the Defendants submitted, in written representations, that the report ought to be produced as it is relevant, germane, will shed new light on the incident and will enable the Defendants to assess the merits of the case and to properly defend the action. However, this does not advance the application for production to any degree, for the test for production of a document over which privilege is claimed is not that of usefulness to the opposing party. Moreover, as I have already indicated, there is little or nothing in the report which the Defendants could not, on a through and planned discovery, determine for themselves.
[11]Counsel for the Defendants also referred me to some additional law, to which I will now turn. In The Philippine Victory (1992), 49 F.T.R. 211 Mr. Justice Teitelbaum dealt with survey reports which had been prepared in the ordinary course of dealing with cargo damage claims soon after cargo had been discharged. This is very different from the present situation in which the report was commissioned by counsel.
[12]In The Philippine Victory Mr. Justice Teitelbaum also focuses upon whether litigation was in contemplation at the time the survey reports were prepared and here refers to Canadian National Railway Company v. McPhail"s Equipment Company Ltd. (1977), 16 N.R. 295, a decision of the Federal Court of Appeal in which the Plaintiff, determined to expropriate the Defendant"s land, had an appraisal of the land prepared before consulting its solicitors. The Federal Court of Appeal found that the appraisal was not privileged because when it was prepared there was no reasonable expectation of litigation, particularly given that negotiations for settlement had not even begun. In fact, the appraisal had been prepared for budgetary purposes in connection with the expropriation. The Court noted that there was no suggestion that the appellant"s legal department was involved until the expropriation was well under way. At best there was some evidence that the CNR treated expropriations as potentially litigious and here the Court noted that if the CNR made an offer to the land holder it might well be accepted, or result in negotiations which might reach a settlement, but "only after all attempts at settlement had failed could it be said that there was a "reasonable expectation of litigation"". (page 298).
[13] In my mind an expropriation, such as that in C.N.R. v. McPhail"s Equipment, with the only real issue being the land value, is very different from a marine accident in which many points are at issue, including liability and where the injured party retains counsel to go out and obtain in rem security. There is every reason in this marine context to expect litigation. Indeed, it is likely fair to say that very few incidents involving the fouling of underwater power cables, pipelines and the like, are settled completely voluntarily without assistance from the courts in at least providing or forcing security and providing a forum in which each side may test the other"s case.
[14]As I pointed out in Jordan v. Towns Marine(supra) there must be a balancing of the discovery process to provide for proper claims of litigation yet not hamper full disclosure capable of throwing light upon issues in a case. In the present instance B.C. Hydro, in order to maintain its claim of privilege, must come clearly within the dominant purpose rule.
[15]The dominant purpose rule is set out above in the passage from Jordan v. Towns Marine which contains the test as enunciated by The House of Lords in Waugh v. British Railway Board, [1980] A.C. 521, at pages 532, 543-44 and 545. There various of the law lords adopted the dominant purpose test from the Austrialian Court of Appeal"s decision in Grant v. Downs (1976), 135 C.L.R. 674, at 647, as the touch stone of privilege, it being less stringent than the sole purpose test which, by and large, governed up to that point. I will again set out, for convenience, the dominant purpose test being a grant of privilege to
| "...a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection." (The italics being added by Lord Edmund-Davies of The House of Lords). |
[16]It is clear, from the dominant purpose test, that there are two branches, one involving the purpose of the report and the other requiring a reasonable prospect or reasonable contemplation of litigation at the time of the production of the document.
[17]In the present instance the report was commissioned or brought into existence by the direction of counsel at Bull Housser and Tupper. I am satisfied that, from counsel"s point of view, the dominant purpose was as an aid in the conduct of the litigation and so that counsel might advise B.C. Hydro.
[18]To test this dominant purpose further I will assume, for the moment, that the report was, from the view point of B.C. Hydro"s project engineer, the author of the report, who seems to have received his instructions second or third hand, a dual purpose document "for file and legal purposes": I believe such an assumption is faulty, given both the wording of B.C. Hydro"s lawyers" request and the minutes of the 16 of July 1996 meeting of B.C. Hydro personnel, referring to the report as a requirement of their lawyers. But even accepting the assumption of the project engineer on the basis of instructions from his employer, that does not particularly assist the Defendants for on the basis of the dominate purpose test adopted by The House of Lords in Waugh , the dominate purpose may be set either by an author, or by the person commissioning the report. Certainly the dominant purpose of counsel commissioning the report was as an aid in litigation and as a basis for giving legal advice. However I have also concluded that the dominant purpose of the preparation of the report, not withstanding the ambiguous characterization given to the project engineer employed by B.C. Hydro, was that of instructing its lawyers for the purpose of litigation. Indeed, as pointed out by the editors of the White Book and this is a passage which I have already quoted,
| "In other cases a document may be brought into existence at the direction of insurers ...In such cases reference must be made to the intention of the insurers." |
This is clearly what the English Court of Appeal teaches in Guinness Pete Properties Ltd v. Fitzroy Robinson Partnership and the B.C. Court of Appeal teaches in Re Highgrade Traders Ltd (supra). As pointed out by Lord Justice Slade in Guinness Pete Properties at page 1037, the dominant purpose "...must be viewed objectively on the evidence, particularly by reference to the intention of the insurers who procured its genesis". In the present instance it was counsel for B.C. Hydro that procured the genesis of the report: counsel ought to be accorded at least as much deference as underwriters. Thus, if there is any doubt as to the dominant purpose, from the view point of B.C. Hydro"s instructions to its project engineer, on the one hand, and the dominant purpose from the view point of B.C. Hydro"s counsel, on the other hand there is no doubt that in the present instance, and testing the evidence objectively, the intention of B.C. Hydro"s counsel ought to govern. This, of course, does not decide the entire issue, for one also must look at the stage at which the report was prepared
[19]The second branch of the test is that there be either litigation, or reasonable prospect of litigation, at the time of production of the report. In McPhail"s Equipment (supra) upon which the Defendants rely, there was no litigation current nor, by any reasonable stretch of the imagination, any litigation reasonably to be expected given the context, which would most certainly involve settlement negotiations to start with, with litigation, at best, a potential which might arise out of expropriation, at some future time, if negotiations did not work out. This is an observation which clearly differentiates the Court of Appeal"s decision in McPhail"s Equipment from the present situation. On the facts in McPhail"s Equipment, negotiations were the norm and were to be expected before there might be a prospect of litigation. That finding of negotiations, not litigation, as the norm, distinguishes McPhail"s Equipment from the many cases in which the dominate purpose test has been satisfied, yet without then current litigation.
[20]In the present instance litigation was at least "in reasonable prospect" when the report was commissioned.
[21]Both branches of the dominant purpose test having been met the Pender-Saturna Cable Fault (1996) Report is privileged.
[22]The Plaintiff, as the successful party, will have its costs, at the end of the day.
(Sgd.) "John A. Hargrave"
Prothonotary
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS ON THE RECORD
| COURT FILE NO.: T-1194-98 |
| STYLE OF CAUSE: BRITISH COLUMBIA HYDRO & POWER AUTHORITY |
v.
| THE SHIP "CSL CABO", CABO SHIPPING INC., THE OWNERS OF THE "CSL CABO", CSL INTERNATIONAL INC., and ALL OTHERS INTERESTED IN THE SHIP "CSL CABO" |
PLACE OF HEARING: VANCOUVER, BC
DATE OF HEARING: December 13, 1999
REASONS FOR ORDER OF MR. JOHN A. HARGRAVE, PROTHONOTARY
| DATED: December 31, 1999 |
APPEARANCES:
| Mr. Douglas G. Morrison for the Plaintiff |
| Mr. Thomas S. Hawkins for the Defendants |
SOLICITORS OF RECORD:
Bull, Housser & Tupper
| Vancouver, BC for the Plaintiff |
Campney & Murphy
| Vancouver, BC for the Defendants |