Decision Content
LTS Infrastructure v Rohl et al, 2021 NWTSC 9 S-1-CV-2016-000011
IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES
BETWEEN:
LTS INFRASTRUCTURE SERVICES LIMITED PARTNERSHIP
Plaintiff
- and -
ROHL ENTERPRISES LTD.
Defendant
- and -
TRAVELERS INSURANCE COMPANY OF CANADA
Defendant
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Transcript of the Reasons for Decision by the Honourable Justice S.H. Smallwood, sitting in Yellowknife, in the Northwest Territories, delivered orally on the 24th day of February, 2021.
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APPEARANCES:
K. Loo: Counsel for the Plaintiff,
appearing via videoconference
C. Skipper: Counsel for the Plaintiff,
appearing via videoconference
C. Petrucci: Counsel for Travelers Insurance,
appearing via videoconference
B. Kaneski: Counsel for Rohl Enterprises,
appearing via videoconference
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I N D E X
PAGE
RULINGS, REASONS
Reasons for Decision 1
REASONS
THE COURT: Okay. Dealing first with the application regarding the solicitor/client privilege claim. So this is a decision from a continuation of a hearing regarding the claim of solicitor/client privilege over a number of documents. I do not intend to fully review the history of the previous applications or what has occurred so far with respect to the documents.
In a decision made on December 22nd, 2020, with additional reasons provided on January 6th, 2021, I had required LTS and Travelers to each provide to the other a general description of the documents in question, along with some additional information. Following review of the information provided, a further hearing was to be held on January 26th, 2021, regarding any documents over which the solicitor/client privilege claim remained in dispute.
LTS and Travelers reached an agreement regarding most of the documents. They agreed that where either side has asserted a solicitor/client privilege claim, neither side will challenge the privilege with two exceptions: one, records that were sent by a third party to the party claiming privilege; and two, either side is entitled to claim that the privilege had been waived.
The result is that 29 documents listed by Travelers remain in dispute. The 29 documents are challenged by LTS because of the involvement of Michael Pellegri of Vertex, who was either the recipient, author or copied on the correspondence in question.
Vertex provided investigative services to Travelers during the investigation of LTS's bond claim. Vertex provided Travelers with an investigative report in a letter dated December 1st, 2015, to Louis Carriere at Fasken’s and which has been produced to LTS.
LTS argues that by pleading and producing the December 1st, 2015, letter that Travelers has waived any solicitor/client privilege that might have attached to that document. And therefore, any documents which are associated with Michael Pellegri and Vertex in the course of the investigation are also producible.
Travelers' response is that LTS claimed in its Statement of Claim that Travelers failed to properly investigate the bond claim and in pleading the letter in its Statement of Defence, Travelers was responding to LTS's allegation and was not pleading solicitor/client advice.
Travelers' position is that it has not waived solicitor/client privilege over the documents by pleading the investigative steps that Travelers took.
The first question is whether solicitor/client privilege attaches to these documents, and second, if the documents are subject to solicitor/client privilege, whether Travelers has waived the privilege.
The law with respect to solicitor/client privilege is well-known. Solicitor/client privilege requires that there be: one, a communication between solicitor and client; and two, which involves the seeking or giving of legal advice; and three, which is intended to be confidential. Blank v. Canada (Minister of Justice), 2006 SCC 39.
It is also settled that solicitor/client privilege can extend to communications between a client and a solicitor and a third party. However, not every communication by a third party with a lawyer is protected by solicitor/client privilege.
Where the third party serves as a channel or conduit of communication between the lawyer and client, communications with the third party by the client or solicitor will be protected by the privilege as long as the communications meet the criteria for solicitor/client privilege. General Accident Assurance Company v. Chrusz, [1999] OJ 3291 (CA) at paragraph 106.
The Ontario Court of Appeal in Chrusz took a functional approach in assessing whether solicitor/client privilege applied to communications with a third party. Even if a third party does not act as a channel of communication between the solicitor and client, privilege may still attach. If the third party's function is integral to the existence or operation of the solicitor/client relationship, then the privilege can cover any communications which are in furtherance of that function and which meet the criteria for solicitor/client privilege. Chrusz at paragraph 120.
It was also stated in Chrusz at paragraph 111:
The privilege also extends to communications and circumstances where the third party employs an expertise in assembling information provided by the client and explaining that information to the solicitor. In doing so, the third party makes the information relevant to the legal issues on which the solicitor's advice is sought.
In this case, the 29 documents involve correspondence or attachments which were either sent to Mr. Pellegri (approximately eight documents); copied to Mr. Pellegri (approximately 17 documents); or from Mr. Pellegri (approximately four documents). LTS's position is that privilege attached to the documents sent or copied to Mr. Pellegri, but that it was waived and that documents sent by Mr. Pellegri are not subject to privilege. Travelers' position is that all of the documents are subject to solicitor/client privilege.
There is no dispute that the correspondence that was sent to Mr. Pellegri or copied to Mr. Pellegri was the subject of solicitor/client privilege. With respect to the correspondence and attachments sent by Mr. Pellegri where he is the author of the correspondence, I am satisfied that this communication falls within the continuum of correspondence between solicitor and client and that the communications sent by Mr. Pellegri were integral to the operation of the solicitor/client relationship.
Mr. Pellegri and Vertex were retained by Travelers to perform a preliminary investigation of the alleged default of Rohl. LTS had claimed that Rohl was in default of its obligations under the subcontract. In conducting an investigation, Vertex provided a service that extended beyond gathering information and passing it along to the solicitor for the purposes of providing advice to Travelers.
The content of the December 1st, 2015, letter or report written by Mr. Pellegri substantiates this. Mr. Pellegri's conclusion following the preliminary investigation was:
Based on our review of various project documents, including the subcontract, quality management plan, daily logs and remediation plans prepared by LTS, Rohl conformed to the contract requirements and the remediation required by LTS is due to design issues and goes beyond the scope which Rohl was subcontracted to perform.
Vertex was retained because Travelers and its solicitor required the expertise of Vertex to understand technical information regarding the claim of LTS. Mr. Pellegri and Vertex were retained to perform a function that was integral to the solicitor/client relationship and the ability of the solicitor to provide legal advice to Travelers on the issue.
The bigger question is whether Travelers has waived solicitor/client privilege by pleading the December 1st, 2015, letter in their Statement of Defence or by producing the letter to LTS as part of the discovery process. In the Statement of Defence, Travelers pleaded the investigation, claiming that it took reasonable steps to investigate and consider the bond call in a timely manner.
In support of this claim, Travelers cited the report of December 1st, 2015, and its conclusions regarding whether Rohl was in default of the subcontract. As part of the discovery process, Travelers produced the December 1st, 2015, report.
Solicitor/client privilege can be waived expressly or implicitly. Generally, waiver of solicitor/client privilege can be established where it is shown that the client: one, knows of the privilege; and two, voluntarily shows an intention to waive that privilege.
Implicit waiver was described in The Law of Privilege in Canada at 11.220.10:
Waiver may also occur in the absence of an intention to waive where fairness and consistency so require. Fairness only applies where the information sought to be disclosed is relevant to the issues in the proceeding. Implicit or involuntary waiver can be made by disclosing inadvertently the privileged communication in the delivery of written productions or by testifying about them on discovery or cross-examination.
Implicit waiver can also be made by reliance on privileged communication, in a pleading or otherwise. For example, if a party relies on legal advice sought and received as evidence of good faith or lack of bad faith or acting in the public interest, then privilege over that legal advice will generally be waived.
Implicit or implied waiver of privilege was also addressed in The Law of Evidence in Canada, 5th edition, at page 1027 and 1028.
14.161: For there to be a deemed waiver of solicitor/client privilege, the party who received the legal advice must have made its receipt an issue in the claim or defence. Therefore, where the state of mind in question is whether the party acted in good faith or in reliance upon the other party's representations compelled disclosure of solicitor/client communications requires two elements, namely: (1) that the presence of absence of legal advice is relevant and material to the existence or non-existence of a claim or defence; and (2) that the party who received the legal advice made receipt of it an issue in the case.
Later in the text it was noted (at page 1028) that when the existence or adequacy of legal advice is not a basis for the claim or the defence, privilege is not waived by a simple reference to legal advice in a pleading or disclosed document.
While Travelers did plead the Vertex report in its Statement of Defence, it did so in response to LTS's allegation that it had failed to take reasonable and appropriate steps to investigate the bond claim. In pleading the Vertex report, it was in support of Travelers' claim that it had reasonably investigated the bond claim and Travelers did not specifically plead reliance on legal advice.
Travelers did not plead reliance on legal advice received or put its state of mind with respect to the legal advice it received as a result of the report into issue. Pleading reliance on the report does not necessarily make the content of any legal advice received in conjunction with the preparation of the report relevant or admissible when Travelers has not plead reliance on the legal advice.
In this circumstance, pleading the Vertex report did not implicitly waive the solicitor/client privilege contained in the 29 documents. Similarly, producing the Vertex report as part of the discovery process does not result in a waiver of solicitor/client privilege over communications that were exchanged with Mr. Pellegri.
As I have already concluded earlier that the solicitor/client privilege extended to communications with Mr. Pellegri and that the involvement of Mr. Pellegri was integral to the functioning of the solicitor/client relationship between Travelers and its solicitor, it follows that by sending, receiving or copying Mr. Pellegri on correspondence that was privileged, the privilege was not waived.
This extends to the issue of Mr. Pellegri and the solicitor, Mr. Carriere, attending meetings during the investigation. Their involvement in the investigation and any meetings with the investigative team do not change their role, nor does their attendance at meetings that did not involve solicitor/client communications which might be privileged. Disclosure of these documents which do not contain solicitor/client privileged information does not implicitly waive solicitor/client privilege over documents that do contain privileged information.
I would also note that there are 29 documents in question, which is not a significant number, and Travelers has disclosed other documents regarding the investigation into the bond claim, so this is not a situation where Travelers has plead that the investigation was properly conducted and then refused to produce any documents with respect to the investigation.
Therefore, for these reasons, the 29 documents that are in issue which were sent to, received from, or copied to Mr. Pellegri, I conclude that they are subject to Travelers' solicitor/client privilege claim and that in the circumstances, the privilege has not been waived.
Turning to the other Notices of Motion and argument heard on February 12th, 2021, there were two Notices of Motion. There was a Notice of Motion filed by Travelers and the issues raised by Travelers in its Notice of Motion, I understood from counsel, were to be further discussed by counsel and they may have been capable of resolution, so we will address those issues following this decision.
There was also a Notice of Motion filed by LTS where LTS sought further direction regarding my order of January 6th, 2021, on document production. On January 6th, 2021, I ordered that Travelers produce to LTS a list of documents where attachments have not been produced or where it is not clear that the attachment has been produced by LTS. I also ordered that in response LTS would produce the attachments or provide an explanation for why the attachment could not be produced.
Travelers produced to LTS a list of 1,031 documents. There are three categories of documents: those embedded in an email with an attachment; the Aconex documents; and those with a file with the attachment not attached. I do not think it is necessary for the purposes of this decision to describe further the categories.
With respect to the first category, the emails embedded in an email with an attachment, apparently LTS found 40 of the 49 documents elsewhere in the production and is attempting to find the remaining documents, so the first category is not really in issue.
For the next category, the Aconex documents, these documents appear to be documents which were harvested from the Aconex document management system. In this category, the Aconex system has been archived and data management for LTS has been moved to a newer system. LTS claims that the attachments in the Aconex system cannot be retrieved.
LTS attempted to locate 17 of the emails where the attachment was listed on the bottom of the email or in the subject header of the email. The emails were located, but the attachments were not attached.
It is not clear why this occurred, but Alex Graham, Director, Technology Services, speculated about what might have happened and concluded that there was no way to confirm his theory with respect to what happened to the attachments because the system had been decommissioned for a few years and he was not aware of any way the attachments could be retrieved.
Travelers claims that this is not an explanation, but is a guess and does not explore other options like backup tapes or archives. Mr. Graham's comment that he is not aware of any way the attachments could be retrieved only answers the question of whether there is another way to access the attachments through the Aconex system, and it appears that is not possible, and I accept that explanation. But it does not answer the question about whether the attachments might be accessed through other means available to LTS, such as backup tapes or other archives.
LTS has only reviewed 17 of the Aconex emails. I am not clear exactly how many emails there are, but I am going to order that LTS will review every Aconex email and confirm whether the attachment is available and provide a report to Travelers regarding the results.
I am told that 13 of 13 Aconex documents that were searched by LTS were found elsewhere in the production. If the attachment is available elsewhere, including in archives or other systems available to LTS, LTS will either produce the document or provide the location or locations, to Travelers, in the production for each item.
The third issue is the file name issue. The majority of the documents fall under this category. For these documents, LTS reviewed 53 emails and found 72 percent elsewhere in the production and claims that 28 percent are truly missing. LTS suggests that Travelers can search the file name and find the missing attachments. So I presume that this means that 28 percent of missing attachments will continue to be missing, despite LTS having made no effort to review the list and confirm that percentage or to identify which of the hundreds of documents might continue to be missing.
When I ordered Travelers to go through the production and identify missing attachments in LTS's documents production, which consisted of approximately 130,000 documents, I was aware that this was a significant undertaking that I was placing on Travelers. I did not expect that this would be a one‑sided endeavour. Having received the list prepared by Travelers, I expected LTS to go through the list and report back to Travelers on each item on the list, and not conduct a cursory inspection before claiming that the task was too onerous.
This litigation was initiated by LTS and LTS is the party with the document production of 130,000 documents. Each party has obligations as part of the document production process. As I have previously stated, the document discovery process and litigation on this scale and involving electronic production is not expected to be 100 percent accurate, but that does not absolve a party of the responsibility to address deficiencies when those deficiencies are specifically identified and listed by the other party.
Therefore, LTS, I am going to order, will go through the entire list and for each item will either produce the document or will provide an explanation for why it is not available. Where the document is available elsewhere in the production, LTS will provide the location or locations where that document can be found and will report this to Travelers.
Travelers will have their costs on this application and the application regarding solicitor/client privilege.
CERTIFICATE OF TRANSCRIPT
Neesons, the undersigned, hereby certify that the foregoing pages are a complete and accurate transcript of the proceedings transcribed from the audio recording to the best of our skill and ability. Judicial amendments have been applied to this transcript.
Dated at the City of Toronto, in the Province of Ontario, this 1st day of March, 2021.
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Kim Neeson
Principal