Azuma Foods (Canada) Ltd. v. Versacold Canada Corporation

2008 BCSC 643 Azuma Foods (Canada) Ltd. v. Versacold Canada Corporation

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Azuma Foods (Canada) Ltd. v. Versacold Canada Corporation, 2008 BCSC 643 Date: 20080521 Docket: S062437 Registry: Vancouver Between: Azuma Foods (Canada) Ltd., Bay Hill Partners Inc., Calkins & Burke Limited, Canada Safeway Limited, Double E Foods LLC dba E & E Foods, Fishery Products International Limited, Fjord Pacific Marine Industries Ltd., Frobisher International Enterprise Ltd., New Zealand Lamb Company Ltd./La Compagnie D'Agneau de la Nouvelle Zelande Ltee, Seaborn Enterprises Ltd., Willowfield Enterprises Ltd., Sunshine Seafood Inc., Tyson Foods Inc., Sensient Flavors Canada Inc., Sung Fish Food Company, Sun Sui Wah Seafood Restaurant (Vancouver) Ltd., Tradex Foods Inc., Campbell River Fishing Co. Ltd., Australian Lamb Company Ltd. and Lakeside Feeders Partnership dba Lakeside Packers Plaintiffs And Versacold Canada Corporation, Versacold Group Limited Partnership, John Doe, Jane Doe, Philips Electronics North America Corporation dba Philips Lighting, Philips Electronics Ltd./Philips Electronique Ltee, Genlyte Thomas Group LLC dba Day-Brite Lighting Company, Conco Electrical Services Ltd., General Electric Company and Lexalite International Corporation Defendants And Philips Electronics North America Corporation dba Philips Lighting, Philips Electronics Ltd./Philips Electronique Ltee, Genlyte Thomas Group LLC dba

Day-Brite Lighting Company, Conco Electrical Services Ltd., General Electric Company, Lexalite International Corporation and John Doe Acrylic Lens Corporation Third Parties - and - Docket: S067790 Registry: Vancouver Between: Versacold Canada Corporation and Versacold Group Limited Partnership Plaintiffs And Philips Electronics North America Corporation dba Philips Lighting, Philips Electronics Ltd./Philips Electronique Ltee., Genlyte Thomas Group LLC dba Day-Brite Lighting Company, Conco Electrical Services Ltd., General Electric Company, Jane Doe, John Doe and ABC Company #1 Defendants And Lexalite International Corporation, Philips Electronics North America Corporation dba Philips Lighting, Philips Electronics Ltd./Philips Electronique Ltee., Conco Electrical Services Ltd. and General Electric Company Third Parties - and - Docket: S062479 Registry: Vancouver Between: Angel Seafoods Ltd., Blundell Seafoods Ltd., Bonte Foods Limited, Chiho Meats Ltd., Crippen Holdings Ltd. dba Sandel Foods Inc., Golden Boy Foods Inc., Mixology Canada Inc., Omstead Foods Limited Saputo Foods Limited, Seaworld Fisheries Ltd. and 1708210 Properties Ltd., T&T Supermarket Inc., Tai Foong International Ltd., Triwest Capital Management Corporation, Value Creation Partner Inc. and its subsidiary Gourmet Bakers Inc., and 610881 British Columbia Limited dba Sun Plus Products Plaintiffs And Versacold

Canada Corporation, Versacold Group Limited Partnership, John Doe, Jane Doe, Philips Electronics North America Corporation dba Philips Lighting, Philips Electronics Ltd./Philips Electronique Ltee, Genlyte Thomas Group LLC dba Day-Brite Lighting Company, Conco Electrical Services Ltd. and General Electric Company Defendants And Versacold Canada Corporation, Versacold Group Limited Partnership, Philips Electronics North America Corporation dba Philips Lighting, Philips Electronics Ltd./Philips Electronique Ltee, Genlyte Thomas Group LLC dba Day-Brite Lighting Company, Conco Electrical Services Ltd., General Electric Company, Lexalite International Corporation and John Doe Acrylic Lens Corporation Third Parties - and - Docket: S067097 Registry: Vancouver Between: Princess Cruise Lines, Ltd., Nishimoto Trading Co., Ltd., Bobo Go Enterprises Ltd., Charles Masson Limited, Colorado Boxed Beef Company, Intersea Fisheries West Inc., Westward Seafoods Inc., Fishking Processors, Inc., High Liner Foods Inc., Oak Bay Marina Ltd., Centennial 2000 Inc., Tri-Star Seafood Supply Ltd., Lions Gate Fisheries Ltd., Mrs. William's Baking Limited, Canex Foods Ltd., Good Harvest Seafood Inc., Kenji Seafood (Canada) Inc., Sawayama Canada Inc., Tai Foong USA Inc., Canadian American Boxed Meat Corporation and Hana Fisheries Inc. Plaintiffs And Versacold Canada Corpration, Versacold Group

Limited Partnership, John Doe, Jane Doe, Philips Electronics North America Corporation dba Philips Lighting, Philips Electronics Ltd. Philips Electronique Ltee, Genlyte Thomas Group LLC dba Day-Brite Lighting Company, Conco Electrical Services Ltd. and General Electric Company Defendants And Versacold Canada Corporation, Versacold Group Limited Partnership, Philips Electronics North America Corporation dba Philips Lighting, Philips Electronics Ltd./Philips Electronique Ltee, Genlyte Thomas Group LLC dba Day-Brite Lighting Company, Conco Electrical Services Ltd., General Electric Company, Lexalite International Corporation and John Doe Acrylic Lens Corporation Third Parties Before: The Honourable Madam Justice Wedge Reasons for Judgment Counsel for the Plaintiff Azuma Foods (Canada) Co. Donald P. Montrichard Counsel for the Plaintiff Versacold Canada Corporation David Perry Shelley A. Braun Counsel for the Plaintiff Angel Seafoods Ltd. Donald J. Smith Counsel for the Plaintiff Princess Cruise Lines, Ltd. A. Barry Oland Counsel for the Defendant Conco Electrical Services Ltd. and agent for the Defendant Genlyte Thomas Group LLC Nigel P. Kent Counsel for the Defendant Philips Electronics North America Corporation Gavin C. Crickmore Pauline V. Gardikiotis Counsel for the Defendant General Electric Company Michael D. Parrish Date and Place of Trial/Hearing: March 27, April 2, 3,

2008 Vancouver, B.C. I. Introduction [1] On July 13, 2005, a fire occurred at the Versacold cold storage warehouse known as the Corpak Warehouse (the "Warehouse") located in Richmond, B.C. The fire resulted in the partial destruction of the Warehouse and a large quantity of perishable food stored in it. [2] Several actions were initiated as a result of the damage caused by the fire. Most of the plaintiffs are companies whose food products were stored in the Warehouse and destroyed in the fire. The actions are all subrogated claims brought by the various insurers of the companies who suffered the losses. [3] One of the actions was commenced in the name of a group of plaintiffs now referred to as the Azuma Plaintiffs (Action S062437). Another action was commenced in the name of a group referred to as the Angel Seafoods Plaintiffs (Action S062479). A third action was initiated in the name of a group known as the Princess Cruise Line Plaintiffs (Action S067097). I will refer to these three groups collectively as the "Product Plaintiffs". [4] A further two actions were initiated by the Versacold companies (the "Versacold Plaintiffs"). These actions are also subrogated claims brought by two insurers of the Versacold Plaintiffs. In one action, the Versacold Plaintiffs seek compensation for property damage to the Warehouse. In the other action, they seek recovery of remediation costs

and business interruption losses caused by the fire. These actions have now been consolidated by court order. [5] It is alleged in the various actions that the fire was caused by the lighting system in one of the freezers located in the Warehouse compound. Most of the defendants named in the action are companies who manufactured, installed and/or maintained the lighting system. [6] There are several theories of negligence which, for purposes of this application, I will describe very broadly. The Philips group of companies and General Electric manufactured the lamps installed into some of the lighting fixtures, and it is alleged that the lamps were defective or inherently dangerous. Genlyte and Lexalite manufactured component parts of the fixtures which housed the lamps, and it is alleged that one or more of those components was defective. Conco Electrical installed the lighting system in the Warehouse, and it is alleged that the installation was faulty. It is also alleged that some or all of these defendants (to whom I will refer collectively as the "Lighting Defendants") had a duty to warn of alleged inherent defects or risks associated with the use of the lamps or other components of the lighting system. [7] In the actions brought by the Product Plaintiffs, the Versacold companies have also been named as defendants (the "Versacold Defendants"). It is alleged, among other

things, that the employees of the Versacold Defendants were negligent in the installation and maintenance of the lighting system. In those actions, Versacold has brought third party proceedings against the Lighting Defendants. [8] Soon after being advised of the fire at the Warehouse, the insurers of the Versacold Plaintiffs retained fire investigation experts to determine the cause and origin of the fire, as did various companies within the Product Plaintiffs. Some experts attended at the scene of the fire even before it was extinguished. Others attended within a day or two of the fire. They examined the fire scene, including remnants of the lighting system, and took extensive photographs. They subsequently prepared reports concerning the cause and origin of the fire. [9] The Lighting Defendants, with the exception of Conco Electric, were not notified of the fire until several months later, by which time all of the debris from the fire had been removed from the Warehouse. II. The Applications [10] The defendant Philips brought two applications: a) In the first application, Philips seeks production of the files, including any reports, of the various adjustors, investigators and experts retained by the Versacold Plaintiffs and the Product Plaintiffs; b) In the second application, Philips seeks to examine the experts retained by the various plaintiffs under Rule 28 of the Rules

of Court, B.C. Reg. 221/90. [11] General Electric brought an application for production of the files, including any reports, of the adjusters and experts retained by two companies within the Princess Cruise Line Plaintiffs. [12] General Electric also supported the Rule 28 application of Philips. [13] The defendants Genlyte and Conco supported the applications of Philips and General Electric. [14] Lexalite did not participate in the applications. Positions of the Parties [15] The Versacold and Product Plaintiffs resisted the applications for production of files and reports on the basis that they are protected by litigation privilege and/or solicitor client privilege. They argued, firstly, it was clear from the outset that coverage was not an issue with respect to the losses of most of the claimants. Accordingly, the only purpose of the investigations carried out by the individuals who attended at the scene was to determine the cause and origin of the fire in order to pursue subrogated claims. For that reason, the information gathered is subject to litigation privilege. [16] They argued, secondly, that most of the insurers had retained legal counsel within days or weeks of the fire, and thereafter it was legal counsel who directed the investigation with a view to commencing subrogated actions. Any communications between legal counsel and their clients are protected by

solicitor-client privilege from the time legal counsel was retained. Any reports commissioned by counsel for purposes of conducting the litigation are protected by litigation privilege. [17] The Product and Versacold Plaintiffs resisted the Rule 28 application on the basis that the applicant, Philips, has failed to establish the prerequisites to a Rule 28 examination. [18] The Lighting Defendants argued that the information and documentation they seek is protected by neither litigation nor solicitor-client privilege. The focus of the investigation in its early stages was to determine the cause of the fire. Litigation was not a reasonable prospect and, even if it was, the investigations were not conducted for the predominant purpose of preparing for litigation. [19] In the alternative, the Lighting Defendants argued that the court has the discretion to abrogate privilege where it is necessary to ensure the proper administration of justice. The adjusters and investigators from whom the information and documentation is sought attended at the Warehouse soon after the fire occurred. They had the opportunity to examine the scene, including the location and condition of the lighting fixtures and other components of the lighting system as they existed before being removed from the scene. The fire scene has long since been cleared. The Lighting Defendants said they have no other

practical means of ensuring they obtain all of the facts necessary to defend the claims. [20] With respect to the Rule 28 application, Philips argued that it has requested from the experts the information it requires to properly defend the claims, and they have refused to respond to its requests. Further, argued Philips, there is no property in a witness as to fact, even where that witness is an expert retained by one of the parties. As such, the Product and Versacold Plaintiffs lack standing to respond to the Rule 28 application. III. Issues [21] The issues in these applications are the following: 1. (a) Are the files and reports sought by the Lighting Defendants protected by litigation privilege or solicitor-client privilege? (b) If so, do the interests of justice require that the privilege be abrogated in the circumstances of this case?

2. Are the Lighting Defendants entitled to examine the experts under Rule 28(2) of the Rules of Court, and, if so, what form should that examination take? [22] I will deal with these issues in turn. IV. Applications for Production of Files and Reports A. Background Facts Initial Investigations [23] The Richmond Fire Department ("RFD") was notified of the fire at approximately 1 a.m. on July 13, 2005. The location of the fire within the Warehouse compound was identified as Freezer A. The RFD succeeded in extinguishing the fire on July 14, 2005. As part of the fire suppression efforts, an independent contractor, Impact Demolition, was instructed to use heavy machinery to bobcat the smouldering food product in Freezer A. Thereafter, the investigation by the RFD into the origins and cause of the fire was conducted by Captain Dave Clou of the RFD. [24] An electrical inspector from the B.C. Electrical Safety Branch, Dwayne Askin, attended the fire scene at Clou's request and provided information to the RFD regarding electrical matters. An investigator from the Safety Authority was also present at the fire scene on July 14 and 15, 2005. [25] The following evidence was provided with respect to the investigation efforts of the Versacold and Product Plaintiffs in the first few days and weeks of the fire.

1. The Versacold Plaintiffs [26] On July 13, 2005 Versacold's property insurers retained Wally Matthews, a Senior Loss Adjuster, to investigate the cause of the fire and assess the property damage that resulted. Matthews has been an insurance adjuster for thirty years, and specializes in fire-related property losses. His affidavit evidence disclosed the following: a) When Matthews arrived at the fire scene on July 13, 2005 he concluded from his observations that the damage to the Warehouse, and the product stored in it, would be extensive. b) After reporting his observations to the property insurers, Matthews was instructed by them to retain a fire cause and origin expert. Late in the day on July 13, he retained Terry Zweng of Fire Pro Investigations Inc. to investigate the cause and origin of the fire. c) The Richmond Fire Department was the first responder at the scene of the fire. No one was permitted to enter the Warehouse until after the fire was suppressed, which did not occur until the afternoon of July 14, 2005. d) Zweng and Matthews met outside the Warehouse early on the morning of July 14. They spoke with members of the RFD, who told them the fire was "likely electrical in origin". Zweng then contacted another employee of Fire Pro, Steve Baker, who is an electrical expert. Baker joined the others at the Warehouse. e) After an initial visual inspection on July 14,

Zweng and Baker told Matthews they agreed with the RFD that the likely origin of the fire was below the mezzanine in Freezer A and that the apparent source of the fire was the lighting system. f) As a result of this preliminary advice, Matthews "had no concerns about coverage for the property damage sustained by Versacold and confirmed this with the property insurers". g) Based on his professional experience, it was "apparent to [Matthews] that litigation would result from the fire." He was instructed by the property insurers to retain Fire Pro "to investigate the cause and origin of the fire for possible litigation." He was told that legal counsel would be retained and that he was to report all findings to legal counsel. h) On July 19, 2005 Matthews was told that the insurers had retained the law firm of Lindsay Kenney with respect to any litigation and that he was to report to and take instructions from the law firm concerning the investigation. [27] Terry Zweng's affidavit evidence confirmed that of Matthews. Zweng deposed that after he arrived at the Warehouse on the morning of July 14, 2005 he spoke with Captain Clou of the RFD, who told him the likely origin of the fire was below the mezzanine in Freezer A (as distinct from Freezers B, C or D). Captain Clou also said the RFD suspected the cause of the fire was associated with the lighting but the investigation was not yet

complete. [28] Captain Clou worked with Zweng and Baker over the next few days, examining the fire scene and debris in an effort to pinpoint the precise cause of the fire. Zweng and Baker extensively photographed Freezer A between July 14 and 18, 2005. [29] On July 16, 2005, Zweng and Baker removed the following physical evidence from Freezer A: · 24 light fixtures and associated cable · Wiring · Conduit · Junction boxes · Conductors · 5 breakers [30] No destructive testing was done on any of the lighting components. The wiring was not removed from the metal conduit until many months later, when experts for all of the parties, including the Lighting Defendants, were invited to be present and participate in the process. [31] When removing the components of the lighting system on July 16, 2005, Zweng and Baker spray painted the columns in Freezer A with florescent orange paint to identify the discreet areas within the freezer from which the fixtures and other components were being removed. Captain Clou was present during the process on behalf of the RFD. Extensive photographs were taken during the process. As each fixture was removed, it was labelled with a tag and placed in a box that was also labelled. A diagram was drawn with the box numbers indicated on it. A computer rendition of the diagram was later produced to all parties. [32] Shelley Braun, an associate lawyer with Lindsay Kenney, deposed that the law firm was retained on July 19, 2005 to provide legal advice on the investigation into the cause and origin of the fire, and took over the retainer of Fire Pro.

2. The Azuma and Angel Seafoods Plaintiffs [33] On July 13, 2005 SCM Adjusters Canada ("SCM") was retained by the insurer of Azuma Foods, Lombard Canada Inc., to adjust the claim of the Azuma Plaintiffs. Stuart Macdonald, Major Loss Specialist with SCM, was appointed to handle the claim. [34] Macdonald retained Peter Senez, a cause and origin expert, to investigate the cause of the fire. [35] In his affidavit, Macdonald deposed to the following: a) Macdonald was aware on July 13, 2005 that the frozen product stored in the Warehouse could not have caused the fire. He concluded that the insurers would be pursuing a subrogated action to recover payment of Azuma's claim. b) When he attended at the scene of the fire on July 14, 2005 Macdonald's view as to the size of the fire and magnitude of the loss were confirmed. It appeared to him that the total losses resulting from the fire could be in the range of $20 to $30 million and that there would be a large number of potential claimants. He realized that many may have subrogated claims, and that "it was certainly going to be a complex undertaking and it appeared likely that litigation would ensue." c) Senez performed a visual inspection of the scene on July 14 and discussed with Macdonald the possibility that the fire may have been caused by "electricity and/or an electrical fixture". d) Macdonald was subsequently retained by the

insurers of various other companies who had product stored at the Warehouse and were claiming losses arising from the fire. [36] Senez deposed to the circumstances of his retainer. The steps he took after being retained are contained in his lengthy report dated September 17, 2007, which has been produced to the defendants in the litigation. His evidence can be summarized as follows: a) Senez first had access to the fire scene on July 14, 2005. His initial examination of the fire scene occurred between July 14 and 18, 2005. He communicated with Macdonald from time to time throughout his examination of the scene but otherwise proceeded with the investigation. During his initial examination, Senez took photographs, completed field notes, and spoke to RFD members and others. b) Senez was not on site when the fixtures were removed from Freezer A but was provided with numerous photographs taken during the examination and removal. His focus at the time was not on any particular lamp or fixture. The removal took place in order to preserve the evidence and consider it further under more agreeable working conditions. c) Senez examined the retained lighting components on August 19, 2005 and again in April and September 2006. d) On August 19, 2005 Senez was advised by Macdonald that the law firm of Branch McMaster had been retained by the Azuma Foods Plaintiffs, and that he was to report to the law firm on technical matters. e) On August 24, Senez was advised that he would be reporting jointly to Branch McMaster and another law firm, Guile, Yule, which had been retained by the Angel Seafood Plaintiffs. [37] The law firm of Branch McMaster was retained by the Azuma Plaintiffs on August 19, 2005. Guild, Yule was retained by the Angel Seafood Plaintiffs on August 24, 2005.

3. The Princess Cruise Line Plaintiffs Bobo Go Enterprises Ltd. [38] Leonard Hsu is a claims adjuster employed by Canadian Northern Shield Company ("CNS"), the property insurer of Bobo Go Enterprises Ltd. ("Bobo Go"). Bobo Go is one of the companies within the action of the Princess Cruise Line Plaintiffs. Bobo Go had office and storage premises within the Warehouse compound and stored frozen seafood products there. The premises were located next to Freezer A. While a firewall between the premises and Freezer A prevented any direct fire damage, the resulting smoke and loss of power resulted in both property and product damage. [39] On July 15, 2005, Hsu learned of the fire at the Warehouse. Hsu attended at the Warehouse and observed the damage to the product and office premises of Bobo Go. His affidavit evidence disclosed the following: a) From his inspection of the damage and his experience as an adjuster, Hsu "had strong reason to believe that litigation would be commenced" by those suffering the losses. b) After returning to his office on July 15, 2005, Hsu contacted S.J. Investigations and retained one of its employees, Richard Rawlings, to investigate the cause of the fire. At the time of retaining Rawlings, Hsu was aware there was coverage for the loss under the terms of the CNS policy with Bobo Go. c) As coverage was not an issue, Hsu's only purpose for retaining

Rawlings "was to develop evidence and information to enable counsel to be instructed to commence a subrogated recovery action against Versacold, or other party which might be found responsible for the fire and the loss of Bobo Go". d) On July 21, 2005, Hsu received a verbal report from Rawlings that there was a concern about the functioning of the light fixtures in Freezer A. On the recommendation and request of Rawlings, Hsu retained Richard van Leeuwen, an electrical engineer, to provide advice to Rawlings about the lighting units in the Warehouse and the possible electrical cause of the fire. e) The purpose van Leeuwen's investigation was to assist Rawlings in determining whether there was "information sufficient to enable CNS to instruct counsel to commence a subrogated recovery action against Versacold or other parties based on the failure of the electrical system" in the Warehouse. f) Hsu received the report of van Leeuwen on September 4, 2005 and the report of Rawlings on September 13, 2005. g) The claim of Bobo Go was adjusted and paid in November 2005. Thereafter, CNS retained Oland & Co. to pursue a subrogated action against Versacold and others. Fishking Processors, Inc. [40] Sun Lee is a claims analyst with Sompo Japan Claims Services Inc, the insurer of Fishking Processors, Inc. ("Fishking"), another plaintiff within the action of the Princess Cruise Line

Plaintiffs. Her affidavit disclosed the following: a) Lee was informed on July 14, 2005 that Fishking had suffered the loss of product stored at the Warehouse as a result of a fire. At Lee's request, Sompo retained Roger Robinson, an experienced marine surveyor, to investigate the loss. b) Mr. Robinson then retained Sam Khashan of S.K. Engineering Ltd. to determine the cause and origin of the fire. Khashan attended at the scene of the fire on July 21, 2005 by which time the scene was significantly altered. He provided Robinson with a preliminary report dated July 28, 2005. c) Lee determined "during July and August 2005" that the claim of Fishking was covered by its policy with Sompo. Once she determined that Fishking was entitled to coverage, she "turned [her] mind to the possibility of subrogation". d) On August 26, 2005, Lee retained the law firm of Oland & Co. on behalf of Sompo and Fishking to investigate and undertake a subrogated recovery action. She directed both Robinson and Khashan to report to and receive instructions from the law firm concerning further investigation and development of evidence needed for a subrogated claim. [41] The preliminary report of Khashan dated July 28, 2005 has been produced. The report disclosed that Khashan attended at the fire scene on July 21, 2005. He stated that by the time he attended at the scene, it had been "severely altered by

others". Khashan could say only that the possible area of origin of the fire was Freezer A. He said he could not form any opinion as to the cause of the fire as the lighting fixtures had been removed from Freezer A. He noted that "the records of the Investigators who investigated the fire prior to July 21, 2005 are very necessary to attempt to determine the cause and origin of this fire" (emphasis in original). [42] Robinson swore an affidavit confirming that from August 26, 2005 onward (when coverage had been determined), he and Khashan reported to Oland & Co. on the understanding that the law firm had been retained to investigate the loss with a view to a subrogated recovery action. Five months later, on January 30, 2006, Khashan completed and delivered a report to Oland & Co. concerning the cause and origin of the fire. Ongoing Investigations and Events [43] The Lighting Defendants were advised of the Warehouse fire in or about March, 2006 by counsel for Versacold, who was coordinating an inspection of the physical evidence collected from Freezer A by Captain Clou and Fire Pro (Zweng and Baker). Counsel for Versacold wrote to each of the entities known to have manufactured or installed any of the components of the lighting system thought to have played a role in the ignition of the fire. [44] The inspection of the physical evidence took place over three days - April 10 to

12, 2006. Several experts retained by Philips, General Electric and Genlyte were present. Conco Electric decided not to have an expert present at the inspection. [45] The main purpose of the April, 2006 inspection was to remove the wiring from the conduit, which until then had been retained in its original state, and to allow all interested parties to examine the physical evidence. The removal of the wring from the conduit was performed pursuant to an agreed protocol. [46] At the inspection, electrical drawings were handed out to each of the parties depicting the original fixture and conduit/wiring locations. Copies of all the building plans of the Warehouse were also provided. At the outset of the inspection, all parties participated in discussions about the protocol for the inspection. [47] The parties were told that during the inspection, Zweng and Baker would be available to answer any factual questions. During the discussion, the experts for all parties asked questions of legal counsel for Versacold, Zweng and Baker relating to the fire scene and the physical evidence that had been gathered. Counsel for the Versacold Plaintiffs also advised the experts present that if they had any further questions of Zweng or Baker, they may submit them through counsel. [48] Counsel for the Versacold Plaintiffs did not receive any questions through counsel for any of the Lighting

Defendants arising from the April, 2006 inspection. [49] Counsel for Versacold arranged a second inspection of the physical evidence salvaged from Freezer A, as well as Freezer B and elsewhere in the Warehouse. That inspection took place from July 9 to 13, 2007. The fixtures were dismantled and the parties were able to examine component parts at their leisure. On July 12, 2007 some of the legal counsel and experts for the Lighting Defendants attended the Warehouse for a site inspection. [50] At the end of the July, 2007 inspections it was the understanding of counsel for the Versacold Plaintiffs that all parties had completed their inspections of the physical evidence. [51] With the permission of the Versacold Plaintiffs, counsel for General Electric has interviewed Versacold employees about matters relevant to the litigation, including their observations of Freezer A and the fire scene generally in the days immediately following the fire. [52] All of the photographs taken by Fire Pro between July 14 and 18, 2005 have been produced. The photos were accompanied by a key illustrating the location depicted in each photo. In total, over 500 photos were produced. [53] As noted earlier, Freezer A was spray painted with florescent orange paint to identify the discreet areas in the freezer in which the lighting fixtures were located, and photos were taken of the fixtures before they

were removed. As each fixture was removed, it was labelled to identify its precise location within the freezer. A diagram was produced and a computer rendition of the diagram was produced at the April 2006 inspection. [54] Senez, the expert retained by Angel Seafoods who was also on the scene by July 14, 2005, took photographs and video footage of the fire scene. All of the photos and video footage have been produced to the Lighting Defendants. [55] Senez wrote an 85 page expert report on the cause and origin of the fire. The complete report has been produced to the Lighting Defendants. It includes detailed descriptions of his observations of the Warehouse as well as photographs with illustrative markings, diagrams, and notations. Senez has already responded in writing to written questions submitted to him by the Lighting Defendants, and has indicated his willingness to do so again. [56] Members of the RFD involved in the suppression of the fire and the investigation into its cause have been interviewed by an agent of the defendant Philips and responded to written requests for information. Captain Clou was interviewed on September 12, 2007 concerning his observations of the fire scene in July of 2005 and the investigation by the RFD. The interview was taped and transcribed, and has been provided to all parties in the litigation. Captain Clou has also provided written responses

to questions asked by Philips, as have two other members of the RFD involved in the fire suppression and investigation at the Warehouse. [57] The first of the actions was commenced by the Azuma Plaintiffs in April 2006. The Angel Seafoods Plaintiffs commenced their action a day later. The Princess Cruise Line Plaintiffs commenced their action in November, 2006, and the Versacold Plaintiffs in December, 2006. [58] The Lighting Defendants were added at various times after the actions were commenced. For example, Philips was added to the action of the Azuma Plaintiffs in January, 2007, to the action of the Angel Seafoods Plaintiffs in July, 2007, to the Versacold Plaintiffs' action in May, 2007, and to the action of the Princess Cruise Lines Plaintiffs in August, 2007. General Electrical was added as a defendant to the Princess Cruise Lines action in August, 2007 as well. B. Documents Sought in the Applications [59] The defendant General Electric seeks an order for production of documents from the Princess Cruise Line Plaintiffs only. Those documents are the following: a) With respect to the Bobo Go claims: (i) Copies of the files of Leonard Hsu and Richard Rawlings for the period July 14, 2005 to the date of the retainer of Oland & Co. in November 2005; (ii) A copy of the file of Richard van Leeuwen for the period July 14, 2005 until the retainer of Oland & Co. in November 2005,

including but not limited to the report of van Leeuwen dated September 4, 2005; b) With respect to the Fishking claims: (i) Copies of the files of Sun Lee (and his company Sompo Japan), and Roger Robinson, for the period July 14, 2005 until the retainer of Oland & Co. on August 26, 2005; (ii) Copy of the file of Sam Khashan for the period July 14, 2005 until the retainer of Oland & Co. on August 26, 2005 including but not limited to any reports by Mr. Khashan commissioned before August 26, 2005 but delivered after August 26, 2005 including the report of Khashan dated January 30, 2006. [60] In the event that any of the above documents are held to be protected by privilege, General Electric seeks an order that the documents nonetheless be produced in the interests of justice. [61] Philips seeks an order for the production of the following documents from the Versacold and Product Plaintiffs in the four actions: a) complete and unredacted copies of all independent adjuster reports, files, statement, interview notes, video recordings and photographs gathered or prepared from July 13, 2005 to April 12, 2006. b) Complete and unredacted copies of all factual information in the possession or control of the Plaintiffs, including but not limited to field notes, audio and video recordings, investigation reports, all documents related to testing, testing metrics and all data produced during

any testing, gathered or prepared by the following individuals: i. Peter Senez; ii. Terry Zweng and Steve Baker (Fire Pro); iii. Richard van Leeuwen; iv. Richard Rawlings; and v. Sam Khashan. C. The Claims of Privilege The Princess Cruise Line Plaintiffs [62] I will first address the application of General Electric for production of documents and information from Fishking and Bobo Go, both of whom are plaintiffs in the action of the Princess Cruise Line Plaintiffs. Fishking [63] The Princess Cruise Line Plaintiffs did not object to the production of the files concerning the Fishking claims for the period July 14 to August 26, 2005 (that is, the contents of the files of Lee, Robinson and Khashan created during that period). As noted earlier, Khashan did not attend the scene of the fire until a week after the fire. By that time, the scene had been significantly altered as a result of the fire suppression efforts and the decision of the RFD to remove and preserve the lighting system for further investigation. As at July 28, 2005, when Khashan submitted his preliminary report, he could not form any opinion as to the cause of the fire. [64] Lee spent July and August adjusting Fishking's claim. She completed that process in late August, at which time her company, Sompo Japan, determined that Fishking was covered under the Sompo policy. Lee then turned her mind to the possibility of

subrogation with respect to the Fishking claim, and retained Oland & Co. on August 26, 2005 to pursue a subrogated recovery action. Thereafter, legal counsel communicated with and directed the adjusters and investigators in their work. The Princess Cruise Line Plaintiffs claim litigation privilege over the work product and reports of Sam Khashan prepared after August 26, 2005, including his report dated January 30, 2006. They also claim solicitor-client privilege with respect to all communications between Oland & Co. and agents of the insurer. Bobo Go [65] The Princess Cruise Line Plaintiffs submitted that the work product and reports of Hsu, Rawlings and van Leeuwen, including van Leeuwen's report of September 4, 2005 and Rawling's report of September 13, 2005 are protected by litigation privilege. They say the affidavit of Hsu, their adjuster, establishes that coverage of the Bobo Go claim was never in issue, and that Hsu's sole purpose in retaining Rawlings and van Leeuwen was, from the outset, to develop evidence and collect information to permit the insurer to commence a subrogated action which was reasonably contemplated given the circumstances of the fire. The Versacold Plaintiffs [66] The Versacold Plaintiffs argued the affidavit evidence of the adjuster Matthews establishes that his work product, and that of the Fire Pro investigators (Zweng and Baker) are protected by

litigation privilege. Once Matthews received the preliminary opinion of the RFD and the Fire Pro investigators (Zweng and Baker) on July 14, 2005 that the apparent source of the fire was the lighting system in Freezer A, he concluded that coverage for the property damage sustained by Versacold was not in issue. From that point forward, the investigation by Fire Pro was for the sole purpose of pursuing recovery for the losses through litigation and their work product is protected by litigation privilege. [67] Further, Matthews was told by the insurer that steps were being taken to retain legal counsel and that he and Fire Pro were to report to legal counsel with respect to the cause and origin of the fire. Versacold claims solicitor-client privilege over all communications between Lindsay Kenney and Matthews, agent of the insurer, after the law firm was retained on July 19, 2005. The Azuma and Angel Seafoods Plaintiffs [68] The Azuma and Angel Seafoods Plaintiffs argued the affidavit of their adjuster, Macdonald, established that by July 14, 2005 coverage for their losses was not an issue. The fire originated in Freezer A, and the frozen product could not have caused the fire. The lighting system was the likely cause. For that reason, he concluded that litigation was certain to ensue and retained Senez to identify the cause of the fire in support of a subrogated action by CNS.

Accordingly, the work product of Macdonald and Senez from July 14 onward is protected by litigation privilege. [69] The lengthy report of Senez has already been produced, as have all digital photographs and video footage taken by Senez of the fire scene. D. The Legal Framework: Privilege [70] The privilege asserted by the plaintiffs in these proceedings is primarily litigation privilege, although the Versacold Plaintiffs and Bobo Go also assert solicitor-client privilege. The difference between the two types of privilege was the subject of discussion by the Supreme Court of Canada in Blank v. Canada (Minister of Justice), 2006 SCC 39, [2006] 2 S.C.R. 319 at para. 27 [Blank]. Mr. Justice Fish observed at para. 1 that the two kinds of privilege are "related but conceptually distinct", and while they often co-exist, "they are not coterminous in space, time or meaning." [71] In Blank, the Minister of Justice contended that solicitor-client privilege had two branches, one concerned with communications between lawyer and client (also known as "legal advice privilege"), the other relating to information gathered or created in contemplation of litigation. Fish J. was of the view that the two forms of privilege should not be linked in that manner, stating the following at para. 7: Bearing in mind their different scope, purpose and rationale, it would be preferable, in my view, to

recognize that we are dealing here with distinct conceptual animals and not with two branches of the same tree. [72] Fish J. expanded on the distinction at para. 28 of Blank: R.J. Sharpe (now Sharpe J.A.) has explained particularly well the differences between litigation privilege and solicitor-client privilege: It is crucially important to distinguish litigation privilege from solicitor-client privilege. There are, I suggest, at least three important differences between the two. First, solicitor-client privilege applies only to confidential communications between the client and his solicitor. Litigation privilege, on the other hand, applies to communications of a non-confidential nature between the solicitor and third parties and even includes material of a non-communicative nature. Secondly, solicitor-client privilege exists any time a client seeks legal advice from his solicitor whether or not litigation is involved. Litigation privilege, on the other hand, applies only in the context of litigation itself. Thirdly, and most importantly, the rationale for solicitor-client privilege is very different from that which underlies litigation privilege. This difference merits close attention. The interest which underlies the protection accorded communications between a client and a solicitor from disclosure is the interest of all citizens to have full and ready access to legal

advice. If an individual cannot confide in a solicitor knowing that what is said will not be revealed, it will be difficult, if not impossible, for that individual to obtain proper candid legal advice. Litigation privilege, on the other hand, is geared directly to the process of litigation. . Its purpose is more particularly related to the needs of the adversarial trial process. Litigation privilege is based upon the need for a protected area to facilitate investigation and preparation of a case for trial by the adversarial advocate. In other words, litigation privilege aims to facilitate a process (namely, the adversary process), while solicitor-client privilege aims to protect a relationship (namely, the confidential relationship between a lawyer and a client). ("Claiming Privilege in the Discovery Process", in Special Lectures of the Law Society of Upper Canada (1984), 163, at pp. 164-165) [73] As the above excerpt suggests, solicitor-client privilege applies only to confidential communications between the solicitor and his or her client. The privilege exists any time a client seeks legal advice from his or her solicitor whether or not litigation is contemplated. [74] As noted by Fish J. in Blank at para. 32, litigation privilege, unlike solicitor-client privilege, arises and operates even in the absence of a solicitor-client relationship, and applies to all litigants

whether or not they are represented by counsel. [75] The fact that counsel has (or has not) been retained is not, of itself, determinative of whether a claim of litigation privilege will succeed. [76] Unlike solicitor-client privilege, confidentiality is not an essential aspect of litigation privilege. The privilege attaches where legal counsel, in preparation for litigation, obtains information from third parties who have no expectation of confidentiality (Blank at para. 32). [77] Litigation privilege is properly viewed as a "limited exception to the principle of full disclosure and not as an equal partner of the broadly interpreted solicitor-client privilege." (Blank at para. 60). [78] The party asserting litigation privilege must establish its entitlement to the protection on a balance of probabilities. [79] The two-fold test for litigation privilege was restated recently by Gray J. in Keefer Laundry Ltd. v. Pellerin Milnor Corp., 2006 BCSC 1180, 59 B.C.L.R. (4th) 264 at para 96: [Privilege] must be established document by document. To invoke the privilege, counsel must establish two facts for each document over which privilege is claimed: 1. that litigation was ongoing or was reasonably contemplated at the time the document was created; and 2. that the dominant purpose of creating the document was to prepare for that litigation. [80] Litigation privilege is not directed at

or restricted to communications between solicitor and client. It contemplates, as well, communications between solicitors and third parties and documents created by clients or third parties so long as the dominant purpose is the pursuit of contemplated litigation. The purpose of the litigation privilege is to create a "zone of privacy" with respect to pending or apprehended litigation: Blank. [81] The first leg of the test has been explained in the following way: Litigation is in reasonable prospect at the time the document was produced when a reasonable person, possessed of all relevant information including that peculiar to one party or another, would conclude it was unlikely that the claim for loss would be resolved without it: Hamalainen (Committee of) v. Sippola (1991), 62 B.C.L.R. (2d) 254, [1992] 2 W.W.R. 132 (C.A.) [Hamalainen]. [82] The second leg of the test involves consideration of the "dominant purpose" for the creation of the document. That aspect of the test has been described as follows: 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. (Grant v. Downs (1976), 135 C.L.R. 674, 11 A.L.R. 577 (Aust. H.C.), adopted in Voth Bros. v. North Vancouver (1981), 29 B.C.L.R. 114, [1981] 5 W.W.R. 91 (C.A.)). [83] As is apparent from the above passage, the privilege may be established by affidavit evidence provided by either the author of the documents in question or the person under whose direction the documents were created. [84] Often, investigations following a loss are conducted for two reasons: first, to conduct an investigation into the cause of the loss in order to establish entitlement to coverage, and second, to prepare for possible litigation arising from the loss. Where there is more than one purpose for the creation of an investigation report, the party asserting privilege over the report bears the onus of establishing on a balance of probabilities that its dominant purpose is for use in preparation of litigation: Hetherington v. Loo, 2007 BCSC 129, [2007] B.C.J. No., 154 (QL). [85] As was noted by the Court of Appeal in Hamalainen at para. 24, it is often difficult to determine when in the course of an investigation the focus becomes litigation as distinct from other purposes. At what point that occurs is necessarily a fact-driven inquiry: Even in cases where litigation is in reasonable prospect from the time a claim first arises, there is

bound to be a preliminary period during which the parties are attempting to discover the cause of the accident on which it is based. At some point in the information gathering process the focus of such an inquiry will shift such that its dominant purpose will become that of preparing the party for whom it was conducted for the anticipated litigation. In other words, there is a continuum which begins with the incident giving rise to the claim and during which the focus of the inquiry changes. At what point the dominant purpose becomes that of furthering the course of litigation will necessarily fall to be determined by the facts peculiar to each case. [86] Hamalainen did not involve a fire loss. The context in which the above comments were made is the following. The plaintiff was seriously injured when he fell out of the back door of a camper mounted on a truck as it was travelling on the highway. The accident took place on November 28, 1986. The accident was reported on December 1, 1986 to the Insurance Corporation of British Columbia ("I.C.B.C."). An adjuster with I.C.B.C. immediately retained independent adjustors to investigate the circumstances of the accident and the extent of the plaintiff's injuries. The adjusters prepared a total of 10 reports between December 1, 1986 and February 19, 1987, when I.C.B.C. advised the plaintiff that liability was denied. [87] The

plaintiffs sought production of the ten reports. The I.C.B.C. adjuster deposed that when he retained the independent adjusters to investigate the claim, litigation was a reasonable prospect and that the reports were commissioned for the principal purpose of assisting in the conduct of such litigation. The Master hearing the application for production rejected the evidence of the adjuster and ordered the reports produced. He concluded that the evidence established the reports were commissioned for a dual purpose: first, to determine whether the Corporation ought to admit liability for the plaintiff's injuries, and second, to assist in the preparation of litigation should liability be denied. Accordingly, the Master ordered production of all reports commissioned prior to February 19, 1987, when liability was denied. [88] One of the leading cases concerning claims of privilege in the context of a fire loss is Shaughnessy Golf & Country Club v. Drake International Inc. (1986), 1 B.C.L.R. (2d) 309, 26 D.L.R. (4th) 298 (B.C.C.A.) [Shaughnessy]. In that case, the Court of Appeal observed that the mere fact of suspicious circumstances surrounding a fire will not usually be sufficient to establish that an investigator's report was prepared for the dominant purpose of assisting in litigation which is later commenced. [89] In Shaughnessy, as in other cases concerning fire losses, the

existence of the litigation privilege claim depended entirely on the particular circumstances of the case. The Court emphasized that bare assertions by investigators or adjusters of suspicious circumstances or the likelihood of litigation will not suffice. Rather, all of the surrounding circumstances must establish that the dominant purpose of an investigation into the cause and origin of a fire is the prospect of litigation. [90] The circumstances in Shaughnessy were the following. The clubhouse building at the golf course was destroyed by fire in the early hours of January 1, 1982. The defendant Drake provided security services at the golf course from 10:00 p.m. on December 31, 1981 to 7 a.m. on January 1, 1982. The plaintiff's insurers were notified of the loss within a few hours of the fire. A few days later, an adjuster spoke informally with legal counsel to advise him that the circumstances of the fire were suspicious and that counsel would likely be retained. On January 13, 1982 legal counsel was retained to direct an "in depth investigation" of the matter "with a view to litigation". Ultimately a claim was brought against the defendant company alleging that the security guard on duty at the clubhouse had invited friends to party with him during the evening, and that the guard and his friends started the fire. [91] The insurance adjuster commissioned the first

investigation report on January 14, 1982 after counsel was retained. Several other reports followed. The adjuster deposed that the dominant purpose of all reports was to assist counsel in the preparation of litigation, but that the information in some of the reports was also developed to resolve issues of coverage and quantification of the plaintiff's claim. No distinction was drawn by the adjuster in his affidavit between the many reports and the dominant purpose of each. Cross-examination of the adjuster established a number of reasons for the creation of the reports, including investigation of the cause of the fire, determination of the extent of coverage (if any), assistance to the underwriters in setting their reserves, and assistance to legal counsel should a subrogated claim be commenced. [92] The Court concluded the plaintiff had not established that all of the reports were prepared for the dominant purpose of obtaining legal advice or to aid in the conduct of litigation. The plaintiff had lead evidence only to establish that the reports, taken as a whole, were prepared with the dominant purpose of assisting in the conduct of litigation. It was clear that some of the reports were not created for that purpose, some were created for multiple purposes, and some were created for the dominant purpose of aiding in the conduct of litigation. The Court held that privilege could

not be established globally in the manner proposed by the plaintiff. [93] However, the Court concluded at p. 322 that the evidence, considered in its totality, established that by about January 14, 1982, litigation had become the dominant purpose; as such, documents created subsequent to that time were protected by litigation privilege. That was the case even though the identity of the individuals responsible for the fire had not yet been identified: The evidence as a whole tends to indicate that, by about January 14, all of the matters of concern other than subrogation had become relatively insignificant and that the emphasis thereafter was on pursuing a subrogated claim, although the identity of the defendants may not yet have been determined with certainty. (Emphasis added) [94] Similarly, in Kaiser v. Bufton's Flowers Ltd., [1993] B.C.J. No. 1695 (S.C.) (QL), Melnick J. (citing Shaughnessy), observed at para. 27 that a party asserting litigation privilege over documents is not required to establish that litigation against a particular party was in reasonable contemplation at the time the documents were created: In my view, this takes an unnecessarily restrictive view of the scope of operation of privilege. . Once Kaiser determined that litigation was in reasonable prospect as a result of the fire, any documents he produced thereafter for the dominant purpose of use in that

litigation are privileged, even if he had not specifically identified Lauder as one of the likely defendants. [95] The circumstances in Kaiser were as follows. A fire occurred at Kaiser's newly constructed home on December 25, 1988. An adjuster retained by Kaiser's insurer immediately attended the site and took statements from Kaiser, a house guest and several members of the Vancouver Fire Department. He then retained a fire investigator to determine the cause and origin of the fire. On January 3, 1989, the fire investigator reported that the number of lights on the Christmas tree in the residence was excessive. At that point, litigation was a reasonable prospect. However, the evidence established that the reports of the investigator were required to determine issues relating to coverage. It took approximately nine months to settle the claim, and there was no indication in the affidavits that the reports were not used in settlement of the claim. [96] In contrast, Melnick J. held that reports commissioned by legal counsel after issues of coverage had been determined were protected by litigation privilege as there was no other potential use to which the reports could have been put. In the course of reaching that conclusion, Melnick J. said the following at para 22: The case law also indicates that all other potential uses of a document should be dealt with in the affidavit

material filed in support of a claim of privilege. Such other possible uses should be eliminated or minimized as relevant factors to the point were the court can conclude that the remaining purpose of litigation was dominant: Brayley v. Pappas (1991), 64 B.C.L.R. (2d) 37 (B.C.S.C.). [97] In Hosanna Enterprises Ltd. v. Laser City Audio Video Ltd., [1999] B.C.J. No. 57 (S.C.) (QL), Master Joyce (as he then was) said the following at para. 11: Merely saying the dominant purpose was litigation may not satisfy the test if there are other possible purposes which are equally likely. If those other purposes are not dealt with in one way or another, then it may not be possible to accept the bald statement of the deponent. (see also Trask v. Can. Life Assur. Co., 2002 B.C.S.C. 1741, [2002] B.C.J. No. 2823 (QL) at para.

48) E. Discussion (a) Litigation privilege [98] The adjuster retained by Fishking, Lee, deposed that coverage for the loss of Fishking was resolved by Sompo Japan in late August 2005. Khashan, the investigator retained by Lee, could not immediately determine the cause and origin of the fire because he did not arrive on the scene of the fire until the scene had been significantly altered. However, once coverage was determined, Oland & Co. was retained to pursue a subrogated claim and all investigations were directed by legal counsel for the purpose of pursuing the claim such that Fishking has claimed litigation privilege over the files of investigators after that time. No claim of privilege was advanced with respect to the contents of files created before August 26, 2005 when Oland & Co. was retained. [99] Khashan authored a report dated January 30, 2006, more than five months after Oland & Co. was retained to conduct the investigation for purposes of pursuing a subrogated claim. General Electric argued that the report may have been commissioned before August 26, 2005, when legal counsel was retained, and ought to be produced on that basis. I accept there are circumstances in which a party claiming privilege must establish that reports in a solicitor's file were in fact commissioned by counsel following his or her retainer and not simply delivered to counsel after the retainer.

In the present case, the timing of the report satisfies me that the claim of litigation privilege is valid. Khashan authored a very brief preliminary report on July 28, 2005, in which he made clear that he would require access to information gathered by those individuals who attended the scene of the fire before it was altered. Legal counsel was retained within a month of the preliminary report. The second report was not completed until five months later. Counsel for Fishking submitted that given the timing of the creation of the second report (which was completed on January 30, 2005, not simply provided to counsel on that date), he had not anticipated the argument that Kashan should have provided affidavit evidence verifying the date on which the report was commissioned by counsel. [100] I infer from the totality of the evidence that the second Khashan report was commissioned by legal counsel for Fishking and is therefore protected by litigation privilege. [101] All other Product Plaintiffs, as well as the Versacold Plaintiffs, claimed litigation privilege over reports prepared by adjusters and investigators after July 14, 2005 on the basis that the sole purpose of those reports was to aid in the conduct of litigation. Each of the adjustors deposed that while the investigations were carried out to pinpoint the exact cause and origin of the fire, coverage was not an issue from

the initial stages of the investigation due to the particular circumstances of the case. Each deponent asserted that the only purpose of the investigation into the cause and origin of the fire was to assist in litigation that would likely be commenced by the insurers to recover the losses for which they were required to provide coverage. [102] As suggested by the case authorities discussed earlier, that assertion must be tested against all of the circumstances surrounding the fire and its aftermath. [103] I have concluded that the totality of the evidence supports the assertion of the Product and Versacold Plaintiffs that the dominant purpose of their investigations from July 14, 2005 onward was to aid in the conduct of litigation that was reasonably prospect. [104] It was evident from the outset that the fire in all likelihood originated within Freezer A at the Warehouse, where the product in question was stored. The fire occurred at approximately 1:00 a.m. Employees were not working in the freezer at the time. Given that the product was frozen and contained within the freezer, the only apparent cause of the fire was the lighting system. The first responders to the fire, the RFD, quickly ruled out the possibility of arson because the fire had likely originated within the confines of Freezer A. [105] The preliminary opinion of the RFD, expressed by Captain Clou on July 14, 2005

was that the cause of the fire was the lighting system. While the investigators could not say which part of the lighting system might have caused the fire, they agreed with the RFD that the lighting system was the likely cause. They reached that conclusion within hours of the scene of the fire being released for inspection. It was a reasonable conclusion given the circumstances surrounding the fire. On the basis of that conclusion, litigation was a reasonable prospect. The first branch of the test concerning litigation privilege is thus established. [106] Turning to the issue of the dominant purpose of the investigation, I accept the assertion of the adjusters that a determination was made very quickly that coverage was not an issue with respect to the losses. In light of what was known about the circumstances of the fire, the risk was clearly within the terms of the policies and the losses were covered by the terms of the policies. [107] The losses suffered by Bobo Go, which has office and storage premises adjacent to Freezer A, were obviously caused by the loss of power, smoke and fire suppression efforts. I accept that coverage for those losses, too, was not an issue from the outset. [108] I do not accept the argument of the Lighting Defendants that the investigation was merely a case of "searching for someone to sue". The fire apparently originated from within Freezer A.

The only obvious culprit was the lighting system, although there were numerous entities involved in the manufacture of the various components of the system. As the case authorities indicate, a party claiming litigation privilege is not required to establish that litigation against a particular defendant was prospect, so long as litigation to recover the losses was reasonably contemplated and the dominant purpose of the investigation report was to assist in the conduct of the litigation. [109] The circumstances of this case are significantly different from those present in cases such as Shaughnessy, Kaiser and Hamalainen. In each of those cases, the investigation into the loss had multiple purposes in its initial stages. In all of the case authorities cited by the Lighting Defendants, the early stages of the investigation had as its focus issues such as whether the incident constituted an insurable risk and whether there were any other issues concerning coverage for the loss. By contrast, in the present case the investigation into the cause and origin of the fire in had as its focus, from the outset, determination as to the precise cause of the fire within Freezer A, and, more precisely, within the various components of the lighting system, in order to bring a subrogated claim against the responsible parties for recovery of the insured losses. [110] Accordingly, the assertion by

the Versacold and Product Plaintiffs (including Fishking, once coverage was determined in late August, 2005) that there was no other purpose for the creation of the documents in question than for litigation, is more than a "bare assertion". The risk was clearly an insurable one and entitlement to coverage was apparent. There were no other possible or potential purposes for the creation of the documents other than to assist in pursuing subrogated claims against those responsible for the fire. [111] In the result, I have concluded that the files of the adjusters and experts in question are protected by litigation privilege. (b) Solicitor-Client Privilege [112] The Versacold Plaintiffs asserted solicitor-client privilege only with respect to communications between the adjuster Matthews, who was acting as agent for the property insurers, and the law firm of Lindsay Kenney following its retainer by the property insurers on July 19, 2005. [113] As discussed earlier, solicitor-client privilege applies only to confidential communications between solicitor and client, and exists any time a client seeks legal advice from his or her solicitor whether or not litigation is involved. [114] There can be little doubt, in my view, that all communications between Lindsay Kenney and Matthews after the retainer of July 19, 2005 is also protected by solicitor-client privilege. [115] On the same

basis, all communications between the insurer for Fishking Processors and Oland & Co. after the retainer of August 26, 2005 are protected by solicitor-client privilege. E. Disclosure in the Interests of Justice [116] General Electric argued that where the only practical means by which a party can obtain facts and opinions necessary to prepare its case is to obtain the information in the possession of the experts retained by the adverse party, the court may order disclosure of those facts despite the existence of litigation privilege: Ochoa v. Canadian Mountain Holidays Inc. (1995), 7 B.C.L.R. (3d) 182, 38 C.P.C. (3d) 276 (S.C.) [Ochoa]. [117] In Ochoa, the plaintiff brought an action following the death of her spouse in an avalanche while skiing with the defendant heli-ski operator. Immediately following the fatality, the defendant retained several experts in snow slope stability who attended the site within hours to observe the snow conditions existing at the time. By the time the plaintiff had retained counsel, conditions at the avalanche site had so changed as to render impossible any opportunity to observe the snow slope stability. The plaintiff sought to examine the defendant's experts as her only source of information about the facts relating to the conditions existing at the time of the avalanche. [118] Macdonald J. concluded that although the experts were in the initial

stages of attempting to discover the cause of the accident, the materials and reports they produced were protected by litigation privilege. That conclusion was based on the circumstances of the avalanche and the fact that a number of people died in it. Despite the early stages of the investigation, the court concluded that litigation was a reasonable prospect from the outset and the predominant purpose of the investigation was to assist in defending the actions that were likely to be commenced. [119] However, Macdonald J. went on to hold at para. 12 that there were two grounds which, when taken together, justified the order the plaintiff sought. The first was the principle that privilege may be abrogated "where necessary to ensure the proper administration of justice." The second was Rule 28. The plaintiff was entitled to examine the defendant's experts on matters that would otherwise be privileged, but only with respect to facts observed or disclosed by any tests conducted by the experts from evidence collected at the scene of the avalanche. [120] With respect to the question of disclosure in the interests of the proper administration of justice, the court observed that an order for disclosure of the preliminary observations by the experts of the snow conditions existing at the time was necessary to correct any imbalance between the parties and ensure that the plaintiff was

not taken by surprise late in the day. There was simply no means of reconstructing the snow conditions at the time of the accident to permit the plaintiff's experts to express an opinion on the liability of the defendant for the fatality. [121] The circumstances of the present case differ significantly from those in Ochoa. In Ochoa, no independent witnesses capable of observing the snow conditions were present immediately following the accident. Photographs of the accident scene were taken within a few hours, but none of the physical evidence was capable of being preserved. The critical issue was the condition of the snow at the time of the avalanche. No evidence was capable of being preserved on that issue. The only evidence consisted of the observations of the experts who immediately attended at the scene of the avalanche [122] In the present case, numerous independent witnesses attended at the scene during the fire suppression efforts and immediately following the extinguishing of the fire. Members of the RFD and a representative from the provincial Safety Authority were present at the Warehouse and examined the scene immediately after the fire was extinguished. The defendants have access to all of those witnesses. Captain Clou was interviewed extensively by an agent for Philips and a transcript of the interview provided to all defendants. [123] All 500 photographs taken by

Fire Pro of the scene before the removal of the lighting system, and those taken during the systematic removal of the lighting system, along with keys, have been produced to the defendants. All photographs taken by the manager at Versacold have been produced with a key. Versacold employees with any connection to the fire scene have been made available for interviews. [124] The lighting system was removed from the debris of the fire but preserved in its original state. No destructive testing was conducted. All of the physical evidence taken from the warehouse has been made available to all parties for inspection. The wiring was not removed from the conduits until the April 2006 inspection attended by the defendants' experts. At that inspection, the defendants' experts asked questions of Zweng and Baker relating to the physical evidence. They were invited to submit any further questions through counsel. No further questions were forthcoming. [125] None of the experts retained by the Lighting Defendants has deposed that further information is necessary before reports concerning the cause and origin of the fire can be prepared. [126] Subject to my comments below concerning the examination of experts under Rule 28, I have concluded the interests of justice do not require the abrogation of privilege in this case. F. Conclusion [127] The applications of General Electric and Philips

for production of files and reports are dismissed. V. Application to Examine Experts under Rule 28(2) [128] Philips applies under Rules 28(2) and (3) to conduct oral examinations of Senez, Zweng, Baker, van Leewuwen, Rawlings and Khashan. [129] Rule 28 provides as follows: (1) Where a person, not a party to an action, may have material evidence relating to a matter in question in the action, the court may order that the person be examined on oath on the matters in question in the action and may, either before or after the examination, order that the examining party pay reasonable solicitor's costs of the person relating to the application and the examination. (2) An expert retained or specially employed by another party in anticipation of litigation or preparation for trial may not be examined under this rule unless the party seeking the examination is unable to obtain facts and opinions on the same subject by other means. (3) An application ... shall be supported by affidavit setting out (a) the matter in question in the action to which the applicant believes that the evidence of the proposed witness may be material, (b) where the proposed witness is an expert retained or specially employed by another party in anticipation of litigation or preparation for trial, that the applicant is unable to obtain facts and opinions on the same subject by other means, and (c) that the

proposed witness has refused or neglected upon request by the applicant to give a responsive statement, either orally or in writing, relating to the witness' knowledge of the matters in question, or that the witness has given conflicting statements. [130] Philips argued that the Product and Versacold Plaintiffs lacked standing on the Rule 28 application to make submissions on behalf of the experts sought to be examined. Philips relied on the wording of Rule 28(1), which contemplates that the non-party witness will appear as a party to the application and have representation by independent counsel. Philips also relied on a number of decisions, including Black v. Gust et al, 2000 BCSC 991, [2000] B.C.J. No. 1348 (QL), in which Hunter J. concluded the parties of record had no standing on a Rule 28 application because there is no property in a witness. [131] The cases cited by Philips concern applications under Rule 28(1). I do not accept that these authorities apply to applications under Rule 28(2). Where an expert has been retained by a party to the litigation, and that party asserts privilege over the work product of the expert, the party asserting the privilege has the right to be heard on the application. The party who has retained the expert is in the best position to make submissions as to whether the party seeking the examination is able "to obtain facts and opinions on the

same subject by other means". The expert will seldom be in a position to address that question, or questions of privilege, even with representation by independent counsel. [132] Philips relied on the decision of the English Court of Appeal in Harmony Shipping Co. S.A. v. Davis et al, [1979] 3 All E.R. 177, [1979] 1 W.L.R. 1380 (C.A.) [Harmony Shipping] as a further basis for its argument concerning standing. In Harmony Shipping, the court held there is no property in an expert witness as to the facts the expert has observed and his or her opinions based on those observed facts [133] Counsel for Philips has correctly stated the common law principle described by Lord Denning and applied by him in the circumstances of the Harmony Shipping case. The question, however, is whether that principle has been modified by Rule 28(2), which addresses the compellability of expert witnesses who have been previously retained by one of the parties to the litigation. I have concluded that Rule 28(2) does modify the common law rule. The evidence of an expert who has been retained by a party to the litigation is protected by privilege, and is only to be compelled if the special circumstances of Rule 28(2) are present. [134] Harmony Shipping involved an expert in handwriting who had been consulted inadvertently by each of the opposing parties in an action. The issue was whether he could give

evidence at trial for one party without the consent of the other. Lord Denning concluded there is no property in a witness, including an expert consulted by a party to the litigation, who has relevant evidence to give respecting factual issues in an action. [135] The decision in Harmony Shipping was the subject of comment by our Court of Appeal in Christensen v. Sinclair et al, 2002 BCCA 65, 210 D.L.R. (4th) 170 [Christensen]. In Christensen, the plaintiff brought a medical negligence action against a doctor who had performed surgery on her. A physician who had provided post-operative treatment to the plaintiff but was not a defendant in the action, was interviewed by counsel for the plaintiff. The non-party physician advised plaintiff's counsel that in his view, the surgical treatment provided by the defendant doctor was negligent. Plaintiff's counsel then requested that the physician to provide an expert opinion to that effect. The physician refused to provide such an opinion, but did agree to answer any questions concerning the plaintiff's post-operative condition and the care he had provided the plaintiff. Plaintiff's counsel then applied to examine the physician under Rule 28. The chambers judge granted the application on the basis that the physician had not been retained as an expert by either party and clearly had observed relevant facts and formed relevant medical

opinions concerning the treatment provided by the defendant surgeon. [136] The Court of Appeal upheld the decision of the chambers judge. After citing Harmony Shipping and other decisions dealing with the common law principle concerning compellability of witnesses, the Court noted the following at para. 18: The common law principle that all witnesses, lay or expert, are compellable to testify at trial has largely been overtaken, so far as experts are concerned, by legislative provisions requiring that notice of opinion evidence be given before an expert may be called. The present manifestation of such provision is Rule 40A. [137] The Court went on to say the following at paras. 33-35 concerning the operation of Rule 28 as it applies to the examination of an expert retained by one of the parties to the litigation: An interpretation of the plain language of Rule 28 supports the proposition that an expert may be examined under its provisions. Rule 28(1) refers to the examination of "a person, not a party to the action". The witness may be examined "on the matters in question in the action". Nothing in Rule 28(1) suggests that it would apply only to lay witnesses, or that the opinions of persons qualified to give opinions "on the matters in question" might not be elicited. The intended application of Rule 28(1) to lay and expert witnesses alike is supported by Rule 28(2) which

refers specifically to experts. There are two parts to subrule 28(2): the first part exempts experts retained by another party from the general application of Rule 28(1); the second is an exception to the exemption. If the party applying can show that he is unable to obtain facts and opinions on the same subject "by other means", then even an expert previously retained by another party can be examined under this Rule. Reading those first two subrules together makes it clear that Rule 28(1) is a Rule of general application to all potential witnesses, whether lay or expert, and that Rule 28(2) is a limitation on that general rule in respect only of those experts who may previously have been retained by another party. (Emphasis added) [138] I take from Christensen that Rule 28(1) has largely codified the common law principle for which Harmony Shipping stands, but that Rule 28(2) provides an exemption to experts previously retained by one of the parties to the litigation. The exemption recognizes that evidence of experts retained by parties to the litigation is protected by privilege. There is "an exception to that exemption", in the words of the Court of Appeal, but to fall within the exception, the party seeking to examine the expert must demonstrate that he is unable to obtain facts and opinions on the same subject by other means. [139] While there is no property in a non-party

witness (whether lay or expert) who falls within the scope of Rule 28(1), different considerations apply to an expert who has been retained by one of the parties in anticipation of litigation or preparation for trial. The very purpose of Rule 28(2) is to preclude a party from examining an opposing party's expert, whose evidence is privileged, unless it can be demonstrated that the necessary facts and opinions cannot be obtained by other means. [140] In Ochoa, Macdonald J. noted at para. 18 that discretion under Rule 28(2) is to be "cautiously exercised" and that "cases in which privilege should be set aside will be relatively few." [141] Rule 28 requires that Philips establish not only that it is unable to obtain the facts and opinions by other means, but that the proposed witness has refused or neglected upon request to give a responsive statement either orally or in writing (Rule 28(3)(c)). These are two separate requirements. [142] The various experts were contacted directly by legal counsel for Philips, who wrote to each expert in January, 2008. Philips's counsel requested a meeting with each of the experts for the purpose of obtaining verbal responses concerning a wide range of matters. No specific questions were provided to any of the experts. The letter to each expert identified only the general matters that counsel wished to address in person with the expert, including

the following: o Observations made at the scene; o Conversations with others who were at the scene; o Observations as to the electrical systems and lighting, whether at the scene of the fire or otherwise; o Efforts to preserve the scene and any evidence; o Observations of the actions of others at the scene, including the steps taken to investigate and efforts made to preserve the scene; o Results of any examination or testing of the retained lighting components; o Information provided to the expert by any members of the expert's firm, or others, about their observations or examinations. [143] Following receipt of the letter, each of the experts advised Philips's counsel in writing that he had been retained by legal counsel representing a party to the litigation. Most of the experts invited Philips's counsel to contact legal counsel by whom the expert had been retained. Some of the experts invited Philips's counsel to remit specific questions in writing for their consideration. [144] Counsel for Philips declined the invitation to remit questions in writing and instead brought this application under Rule 28 on the basis that the experts had refused to give a responsive statement. [145] I have concluded that Philips has misconstrued the substantive and procedural requirements of Rule 28. [146] Particularly as Philips's counsel contacted the experts directly instead of taking the

proper course of contacting them through counsel who had retained them, the experts' responses cannot be construed as a "refusal" within the meaning of Rule 28. Counsel for Philips was not entitled to contact the experts directly in light of their retainers. It was predictable, if not inevitable, that the experts would be concerned about their professional obligations concerning confidentiality, if not matters of privilege. [147] Further, Philips took no steps to demonstrate that the broad areas it sought to explore with the experts constituted matters that Philips could not be obtained by other means. [148] Counsel for the Product and Versacold Plaintiffs have advised Philips's counsel that their experts will respond in writing to questions, so long as those questions are provided in written form and are specific in nature. They submit that such a process will enable these individuals to comply with any legal obligations they may have as experts in the case. I accept that submission. [149] I have concluded that the application by Philips is premature. [150] First, Philips has not identified with any precision the nature of the information it seeks from these experts that cannot be obtained (or has not already been obtained) by other means. By way of example, all photographs taken of the lighting system before and during its dismantling and removal from Freezer A have been

provided to the defendants together with keys. Philips's experts have inspected all of the physical evidence removed from Freezer A. They have also been provided the opportunity to ask questions of Fire Pro personnel (Zweng and Baker) who were on the scene and, together with the RFD, responsible for the inspection, photographing and removal of the lighting system. The RFD member responsible for the investigation of the fire has been questioned, as have Versacold employees on site immediately after the fire. Counsel for Philips has not specified any additional evidence he says his client's experts require with respect to the cause and origin of the fire that has not already been provided. [151] Second, none of the experts has refused to respond in writing to properly framed questions. Their request for questions in writing was not unreasonable. There may be cases in which the only practical means of obtaining the information concerning the matters in question is through oral examination. This case is not one of them. In this case, it is only if the Lighting Defendants can establish that a particular fact or opinion cannot be, and has not been, obtained by other means that they will be entitled to ask questions that would otherwise intrude on matters of privilege. There will likely be substantial portions of the experts' knowledge that will remain protected by privilege. That

being the case, the prudent course is to require that the questions be put in writing. Legal counsel for the party retaining the expert may then consider whether the questions are permissible and written responses ought to be provided. [152] I am satisfied that Philips, or any Lighting Defendant seeking to examine the experts, must demonstrate that it has satisfied the prerequisites of Rule 28. Philips must first identify with precision the material information it requires that cannot be obtained, or has not already been obtained, through other sources. Thereafter, Philips must provide its questions in writing to legal counsel for the party who has retained the expert in order to ensure that only permissible areas of evidence are being addressed. [153] Once the prerequisites of Rule 28 have been met, Philips may renew its application if it remains of the view that such application is necessary. [154] The Rule 28 application is dismissed. VI. Summary of Conclusions [155] In summary, I have concluded the following: 1. The applications of General Electric and Philips for disclosure of files and reports of the adjusters and experts retained by the Versacold and Product Plaintiffs is dismissed; and 2. The application of Philips pursuant to Rule 28 to examine the experts retained by the Versacold and Product Plaintiffs is dismissed. The Honourable Madam Justice C. A. Wedge