Commercial Union Assurance Company of Canada v. Baker

Commercial Union Assurance Company of Canada v. Baker Court Court of Appeal Date 1995-02-08 Citation 1995 NSCA 32 Docket CA 109675 Judge/Registrar/Adjudicator Freeman, Gerald B. (Honourable Justice) (CA); Jones, Malachi C. (Honourable Justice) (CA); Pugsley, Ronald N. (Honourable Justice) Document Type Decision Decision Content C.A. No. 109675 NOVA SCOTIA COURT OF APPEAL Cite as: Commercial Union Assurance Co. of Canada v. Baker, 1995 NSCA 32 Freeman, Jones, Roscoe, JJ.A. BETWEEN: COMMERCIAL UNION ASSURANCE ) COMPANY OF CANADA ) Thomas J. Burchell, Q.C. ) Colleen Keyes ) for the Appellant Appellant ) ) ) - and - ) ) ) Cathy Dalziel; ) Philip Gruchy ) for the Respondent ) DEBORAH BAKER ) ) Respondent ) ) Appeal Heard: ) January 17, 1995 ) ) Judgment Delivered: ) February 8, 1995 THE COURT: Appeal dismissed with costs to the respondent in the amount of $700.00 per reasons for judgment of Freeman, J.A.; Jones, J.A. concurring and Roscoe, J.A. dissenting. Freeman, J.A.: The respondent Deborah Baker, then a newly admitted barrister, on January 31, 1992 met with John Merrick, Q.C. in his professional capacity in connection with Ms. Baker's brother Joseph Baker, who was the defendant in a motor vehicle liability action. Mr. Merrick made notes of the interview with Ms. Baker. The issue in this appeal is whether their discussion was subject to solicitor-client privilege. To quote the Chambers judge, Justice Kelly, "Mr. Merrick was acting as Mr. Baker's counsel at that stage, which was after the jury trial but before the court had disposed of all matters in issue." Mr. Baker was represented at trial by the law firm, McInnes Cooper Robertson, which also represented his insurer, Commercial Union. The jury found Mr. Baker liable -- see Armstrong v. Baker and McCrindle (1992) 111 N.S.R. (2d) 239. He subsequently sued McInnes Cooper and Commercial Union. The defendants joined Ms. Baker and Mr. Merrick's firm, Flinn Merrick, as third parties. When Ms. Baker was corresponding with the Nova Scotia Barristers' Society in October and November of 1993 respecting her potential liability Mr. Merrick provided her with a copy of the notes. They were identified on Ms. Baker's list of Documents as "Copy of notes taken by John Merrick during interview with Deborah Baker on January 31, 1993." The date shown was in error. The interview took place January 31, 1992. This appeal is from an interlocutory judgment of Justice Kelly in chambers holding that solicitor client privilege attaches to the notes. Ms. Baker had claimed privilege with respect to twelve documents; Justice Kelly found seven of the twelve, including the notes, were privileged. But only the notes are in issue in this appeal. Ms. Baker's counsel claimed privilege for the other five documents by way of a notice of contention, but acknowledged this was merely to ensure there was no perception that privilege had been waived respecting the notes. This matter was not pursued. Justice Kelly, who as case management judge was thoroughly familiar with the matter, explained what he called "a complex background . . . that must be unique in the local history of litigation": "The defendants joined Flinn Merrick, who, during much of the period in question relating to this application, was solicitor for the plaintiff Baker. The role played by the third party Deborah Baker is yet to be determined; but generally speaking, she acted to guide, to instruct, or to assist her brother Joseph Baker with his dealings with his counsel in the first litigation, the defendant McInnes Cooper Robertson. Mr. Baker makes certain claims in his statement of claim which the defendants allege creates a potential claim against Flinn Merrick at the time Flinn Merrick acted as Mr. Baker's counsel during his negotiations for settlement. The allegation of the defendant is also that there is a potential liability on the part of Deborah Baker, who played her role principally before the jury trial in the first litigation was commenced." The appellant's main argument is that solicitor client privilege does not attach to the notes because they originated long before it was contemplated that Ms. Baker was to be involved in litigation as a party. Solicitor-client privilege is an ancient principle that is still evolving. At its heart is the conflict between two fundamental interests: the need to discover the whole truth through the legal process, and the need to protect the confidentiality essential to the relationship between lawyers and their clients. In the introduction to their text Solicitor-Client Privilege in Canadian Law, Butterworths Canada Ltd. 1993, the authors, Ronald D. Manes and Michael P. Silver, explain the present state of the law at pp. 2-3: "Although many propositions in solicitor-client privilege are based on centuries-old cases, it is a topic which is often litigated throughout all stages of the litigious process. New cases, with new subtleties, are constantly arising. Further, in addition to the well-established precepts of solicitor-client privilege, the Supreme Court of Canada in Slavutych v. Baker (1975), [55 D.L.R. (3d) 224 at p. 228] has expressly adopted Dean Wigmore's four conditions for establishing new forms of professional privileges. Dean Wigmore's four criteria are: 1. The communications must originate in a confidence that they will not be disclosed. 2. This element of confidentiality must be essential to the full and satisfactory maintenance of the relation between the parties. 3. The relation must be one which in the opinion of the community ought to be sedulously fostered. 4. The injury that would inure to the relation by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of the litigation. The fourth criterion is really a public interest balancing test -- weighing the interest at stake in the maintenance of the relationship between the parties, with the interest at stake in the litigation. Therefore, the book is open on new kinds of privileges extended by our courts to relationships of sufficient importance in contemporary society. In so doing, the Supreme Court in Slavutych validated the precept that the common law must be flexible and change with the times, such that it has been referred to as 'organic' or a 'living tree'. In fact, according to the most recent Supreme Court of Canada decision on this issue, the common law privilege coupled with Charter of Rights and Freedoms considerations enables the court to write new chapters on a case-by-case basis. (emphasis in original) [See R. v. Gruenke, [1991] 3 S.C.R. 263.]" There are two main categories of solicitor-client privilege, the legal professional privilege, and communications made in contemplation of litigation. Manes and Silver explain at pp. 7-8: "1.01 Historically, for the communication between solicitor and client to be privileged, it had to be made in contemplation of litigation. That is no longer the case. PRIVILEGE WILL NOW ATTACH TO ALL DIRECT COMMUNICATIONS BETWEEN A SOLICITOR AND CLIENT OR THEIR AGENTS/EMPLOYEES MADE FOR THE PURPOSE OF OBTAINING PROFESSIONAL LEGAL ADVICE. (Upper case in original.) . . . 1.02 The contemplation of litigation as a basis for privilege is required for derivative communications, such as: (i) Communications between the client (or the client's agents) and third parties for the purpose of obtaining information to be given to the client's solicitors to obtain legal advice; or (ii) Communications between the solicitor (or the solicitor's agents) and third parties to assist with the giving of legal advice; or (iii) Communications which are created at their inception by the client including reports, schedules and documentation, etc. " It is clear from his judgment that Justice Kelly was aware of all of these principles and considered them carefully. Justice Kelly stated: "I have had the opportunity of reviewing those notes and I am satisfied that those notes relate to Ms. Baker acting in her capacity as communicator between her brother, Joseph Baker, and Mr. Merrick. Mr. Baker's solicitor today indicates that he, on behalf of his client, also claims a privilege for that information and that his client has not waived it." The difficulties arise from the fact that Ms. Baker's exact role is still to be determined, presumably as an issue in the action between her brother and the appellants, and a paucity of evidence as to the purpose and subject matter of the interview and the nature of the relationship between the participants. What remains unclear is whether Ms. Baker was actually authorized to act as go-between with Mr. Merrick by Mr. Baker, that is, whether she was his agent, or whether she took it upon herself to involve herself in his affairs, perhaps out of a sisterly concern. Facts which may be relevant for the purpose of drawing inferences include the following: * The action against Joseph Baker was tried in October of 1991. * Ms. Baker consulted Mr. Merrick at that time, and was billed by him, with respect to allegations made by the plaintiff's lawyer as to her role in the matter and her presence in the courthouse. * The jury had rendered a verdict adverse to Mr. Baker some time before Ms. Baker saw Mr. Merrick at the time the notes were taken, January 31, 1992, although the matter had not yet been finalized by order. * Mr. Baker sued Commercial Union and McInnes Cooper in March, 1992 and the matter remained dormant for some eighteen months. *. Ms. Baker consulted Mr. Merrick in October or November, 1993, when she first became aware she and Mr. Merrick's firm might be joined as third parties; it was after that meeting that he sent her the notes. It may be inferred that all three of Ms. Baker's visits to Mr. Merrick were in the context of legal actions involving Joseph Baker as a party, and that all three were for the purpose of obtaining professional legal advice. It may be inferred--indeed, it is hardly disputed--that Ms. Baker visited Mr. Merrick to obtain professional legal advice on her own behalf in the fall of 1991 and the fall of 1993. If these facts do not support an inference that her visit to Mr. Merrick on January 31, 1992 was for a similar purpose, neither do they support a contrary inference nor an inference that she visited Mr. Merrick on behalf of her brother rather than herself. The appellant's case is predicated to a large degree upon the supposition that the only privilege which can be claimed with respect to the notes is the contemplated litigation privilege which applies with respect to derivative communications involving third persons. The appellant has contended that Ms. Baker was a third party to the relevant solicitor client relationship, but there is little evidence, other than speculation, to support that view. The distinction between a third party in that sense, and Ms. Baker's role as a third party to the present action, must be kept in mind. For present purposes it may be assumed that Joseph Baker's legal problems were the subject matter as well as the context when Ms. Baker visited Mr. Merrick on January 31, 1992. She went there either on her own behalf or her brother's behalf. Either he sent her or she went of her own volition; it is difficult to conceive of a plausible third possibility in the known circumstances. There is no suggestion she was sent there by McInnes Cooper, the firm with which she had been an articled clerk prior to her admission to the bar. There can be no doubt that she visited Mr. Merrick in his capacity as solicitor capable of giving professional legal advice. He is one of her Majesty's counsel learned in the law and a well known senior practitioner. If Ms. Baker was there on her own account, she was the client. If Joseph Baker sent her, he was the client. In my view "client", for purposes of determining solicitor-client privilege, should not be defined restrictively nor technically, nor should it be a term of art. Seeking and receiving professional legal advice is at the heart of the solicitor-client relationship, and whether or not a charge is made for the advice to the person receiving it, another person, or at all has little to do with it. The first definition in The Dictionary of Canadian Law, 1991, Daphne A. Dukelow, Thompson Professional Publishing Canada, seems appropriate: CLIENT. n. 1. A person who receives services. If Ms. Baker's brother did not send her to Mr. Merrick, she must have been there on her own behalf as a client for the purpose of obtaining professional legal advice. That would be consistent with Justice Kelly's finding that she was helping her brother if she was doing so voluntarily without his specific authorization. In that case the privilege would attach to the direct communications between herself and Mr. Merrick. Whether or not litigation was contemplated would be entirely irrelevant. If she was sent by her brother as his agent or employee the privilege would also attach to the direct communications between Ms. Baker as agent or employee of Joseph Baker, the client, and Mr. Merrick. While the privilege in the latter case would belong to Mr. Baker, it would again be independent of contemplated litigation. In both instances the privilege would be legal professional privilege, not contemplated litigation privilege. Contemplated litigation privilege may be lost when litigation is over, But even if the privilege in question were contemplated litigation privilege, the advice sought by Mr. Baker in January, 1992, could well relate, not to the case which had just been decided against him, although that had not been finally disposed of by order, but to the action he was contemplating against his insurer and trial counsel which began two months later and which is still in progress. Mr. Baker's counsel stated before Justice Kelly that he did not waive his privilege. Therefore he could not lose it simply because his opponents in the litigation joined the agent who obtained the professional legal advice on his behalf as a third party. I have no hesitation in finding that the communication between Ms. Baker and Mr. Merrick was subject to legal professional privilege. For purposes of this appeal, I do not find it necessary to determine whether that privilege belonged to Mr. Baker or Ms. Baker. Neither has waived it. It follows that any record of that communication would be privileged as well. I can see little difference between notes made by Mr. Merrick in the course of the interview, presumably as an aide memoire, and the impression of the conversation left in his memory. The notes are not derivative documents in the ordinary sense. The members of this panel have reviewed the notes in question, as Justice Kelly did. They obviously relate to a matter under discussion between a solicitor and his client, and were intended for no other eyes. I would conclude, as Justice Kelly concluded, that they were made in the expectation of confidentiality. He stated: "I am satisfied that the communication was clearly made in confidence that it would not be disclosed to other parties, principally McInnes Cooper and Robertson and Commercial Union, the parties proposing to join her." The party asserting privilege has the onus of proving it. In my view the burden is discharged when the person asserting it proves beyond a balance of probabilities that the communication in question was part of an exchange between a client and a solicitor in the course of giving and receiving professional legal advice. I am satisfied that burden was met before Justice Kelly. My view that a communication made in circumstances giving rise to professional legal privilege retains the protection of that privilege until it is waived finds support in Canadian Broadcasting Corporation v. Town of Amherst (CA94-101923, unreported, Hallett, J.A.). In that case, decided by this court June 8, 1994, Justice Hallett had occasion to consider a privileged communication which had fallen into the hands of a third person. He stated: "Although older authority indicates that the solicitor/client privilege is only a rule of evidence and that a third party who comes into possession of confidential solicitor/client communications can make whatever use of them that the party chooses, I am satisfied those authorities are no longer persuasive since the Supreme Court of Canada decision in Descôteaux v. Mierzwinski, [1982] 1 S.C.R. 860 where Lamer J., after reviewing the law as to confidentiality of communications between solicitor and client and, after reviewing the decision of the Supreme Court of Canada in Solosky v. The Queen, [1980] 1 S.C.R. 821 stated at p. 875: 'It is quite apparent that the Court in that case applied a standard that has nothing to do with the rule of evidence, the privilege, since there was never any question of testimony before a tribunal or court. The Court in fact, in my view, applied a substantive rule, without actually formulating it, and, consequently, recognized implicitly that the right to confidentiality, which had long ago given rise to a rule of evidence, had also since given rise to a substantive rule. It would, I think, be useful for us to formulate this substantive rule, as the judges formerly did with the rule of evidence; it could, in my view, be stated as follows: 1. The confidentiality of communications between solicitor and client may be raised in any circumstances where such communications are likely to be disclosed without the client's consent. 2. Unless the law provides otherwise, when and to the extent that the legitimate exercise of a right would interfere with another person's right to have his communications with his lawyer kept confidential, the resulting conflict should be resolved in favour of protecting the confidentiality. 3. When the law gives someone the authority to do something which, in the circumstances of the case, might interfere with that confidentiality, the decision to do so and the choice of means of exercising that authority should be determined with a view to not interfering with it except to the extent absolutely necessary in order to achieve the ends sought by the enabling legislation. 4. Acts providing otherwise in situations under paragraph 2 and enabling legislation referred to in paragraph 3 must be interpreted restrictively.' Therefore, the law has evolved to the point that the Town's right to confidentiality respecting its communication with its solicitor is a substantive right which may be enforced against third parties who have come into possession of documents protected by this right. " There is no conflict between Rule 20 of the Rules of Civil Procedure, under which discovery of the notes is claimed, and the substantive rules enumerated above by Chief Justice Lamer. Rule 20.01 specifically exempts from disclosure documents with respect to which privilege is claimed. In the present case the privileged document has not yet fallen into the hands of strangers to the solicitor-client relationship in question. I agree with justice Kelly that it should be protected from this, although I would see this as a matter of substantive law, following Amherst. If it were discretionary, Justice Kelly exercised his discretion judicially. He found that the notes conformed with all four elements in the Wigmore test, and concluded: "I conclude by saying that this is a most unusual situation and I have attempted to exercise my discretion, and apply the philosophy of privilege in a way that would advance the efficiency, justness and cost reduction in the matters in issue in this action." I have not been persuaded he committed reversible error of law. Nor can I find that he committed error in exercising his discretion as he did with respect to the costs he awarded to Ms. Baker. The position of this court in discretionary matters was stated in Exco Corporation Limited v. Nova Scotia Savings and Loan et al. (1983), 59 N.S,R,. (2d) 331 at p. 333 as follows: "This court is an appeal court which will not interfere with a discretionary order, especially an interlocutory one such as this that is now before us, unless wrong principles of law have been applied or patent injustice would result." I would dismiss the appeal and fix the respondent's costs at $700. Freeman, J.A. Concurred in: Jones, J.A. ROSCOE, J.A.: (Dissenting) I have had the opportunity of reading the reasons of Justice Freeman and respectfully disagree. In my opinion, if the notes are subject to solicitor-client privilege, the privilege belongs to the client, who, at the relevant time, was Joseph Baker. The relevant time in my view was when the notes were made in January, 1992, not when they were sent to Ms. Baker in November, 1993. The question of whether Mr. Baker has privilege in the notes, or whether it may have been waived has not yet been determined by Justice Kelly. In the present action, the plaintiff, Mr. Baker, claims damages for breach of contract and negligence from Commercial Union and McInnes Cooper & Robertson in respect to his liability arising out of an automobile accident and a previous action against him by Mr. Armstrong. Commercial Union was Mr. Baker's insurer and McInnes Cooper acted as his lawyers during the litigation. The defendants have joined Flinn Merrick and Ms. Baker as third parties. The point at which Flinn Merrick commenced acting on behalf of Mr. Baker is not entirely clear from the record before this court. The background to the action is described by the Chambers judge as: "There is a complex background behind the relationship between these parties that must be unique in the local history of litigation. Part of the complexity is that the third party, Deborah Baker, is the sister of the plaintiff. At the time in issue she was a recently graduated lawyer who was admitted to the Bar about the time that the initial litigation took place. By "initial litigation", I mean the litigation between Armstrong and the present plaintiff Baker that gave rise to a liability on the part of Mr. Baker and caused him to bring action against his counsel and his insurer, the two defendants in this matter. The defendants joined Flinn Merrick, who, during much of the period in question relating to this application, was solicitor for the plaintiff Baker. The role played by the third party Deborah Baker is yet to be determined; but generally speaking, she acted to guide, to instruct, or to assist her brother Joseph Baker with his dealings with his counsel in the first litigation, the defendant McInnes Cooper and Robertson. Mr. Baker makes certain claims in his statement of claim which the defendants allege creates a potential claim against Flinn Merrick at the time Flinn Merrick acted as Mr. Baker's counsel during his negotiations for settlement. The allegation of the defendant is also that there is a potential liability on the part of Deborah Baker, who played her role principally before the jury trial in the first litigation was commenced." In her List of Documents, Ms. Baker objected to the production of the notes on the ground of privilege and listed the notes under the heading: "Correspondence passing between the Defendant and her solicitor with a view to these proceedings; documents written, obtained or sent by, upon the advice of, or at the instigation of the Defendant's solicitor with a view to these proceedings...." [emphasis added] In her affidavit filed on the application before Justice Kelly, Ms. Baker says: "With respect to the document listed at 3(iv) of my List of Documents this is a typewritten transcript of notes which was supplied to me as a matter of courtesy by John P. Merrick, Q.C. and which notes were taken by him during the time that he represented my brother, Joseph Baker. These notes resulted from a confidential interview between myself and Mr. Merrick while Mr. Merrick was investigating my brother's case." [emphasis added] The burden is on Ms. Baker to prove that the notes are privileged and she must do so by either claiming a legal professional privilege or a contemplated litigation privilege. Whatever privilege is claimed must be on her own behalf. It appears from her List of Documents that she claims privilege on the basis of contemplated litigation, but in her affidavit she says her brother was the client and she received the notes as a matter of courtesy. She does not claim that Mr. Merrick was her solicitor in January, 1992, but that she retained him in November, 1993. In Descoteaux et al. v. Mierzwinski, [1982] 1 S.C.R. 860, Lamer, J. as he then was, when discussing the right of privilege from disclosure of communications with legal counsel, said: (at p.873) "There are exceptions. It is not sufficient to speak to a lawyer or one of his associates for everything to become confidential from that point on. The communication must be made to the lawyer or his assistants in their professional capacity; the relationship must be a professional one at the exact moment of the communication. " [emphasis added] The communication that is in issue is that that took place at the January 1992 meeting, not the letter sending a copy of the notes to Ms. Baker after the present action commenced. If the transmittal of the notes is the relevant communication, then privilege in any document could be created merely by sending it to one's legal counsel. A review of the notes confirms that the discussion concerned Mr. Baker's litigation with Mr. Armstrong. It is clear that at the time of the meeting, Mr. Merrick was acting for Mr. Baker and not Ms. Baker. The meeting took place one week after the parties to the Armstrong v. Baker matter had appeared before Justice Saunders to argue numerous matters arising from the jury award such as pre-judgment interest, discounts and loss of future income. (See 111 N.S.R.(2d) 239.) If Ms. Baker was there as the agent of Mr. Baker, then he must claim the privilege, not her. The exact role of Ms. Baker in that litigation is one of the issues in the present litigation. In Liszkay v. Brouwer & Co., [1979] 1 W.W.R. 253 Craig, J.A. for the British Columbia Court of Appeal said at page 256: ". . . the authorities do not support the proposition that once a document is privileged it is "always privileged". The privilege is that of the litigant for whom the document has been prepared. Another litigant in another action should not be able to assert a claim of privilege with respect to the document merely because the litigant for whom it was prepared was able to assert the claim of privilege." I would allow the appeal with costs to Commercial Union and McInnes Cooper & Robertson in the amount of $500.00 each plus disbursements. I would further order that the notes not be disclosed until Mr. Baker has had the opportunity to file his List of Documents and make his claim for privilege if he wishes. If no claim is made by him, then the notes ought to be produced to the other parties. I would remit the matter to the case management judge to make any other rulings necessitated by this order. Roscoe, J.A.