McCarthy v. City of North Vancouver

2021 BCSC 2517 McCarthy v. City of North Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: McCarthy v. City of North Vancouver, 2021 BCSC 2517 Date: 20211229 Docket: S204470 Registry: Vancouver Between: Sarah Megahn McCarthy Plaintiff And The City of North Vancouver, Quay Property Management Corp., 0698283 B.C. Ltd., 366466 B.C. Ltd., Travis Grubb, Alison McCann, Sarah Howard, John Doe, Jane Doe, Truffles Fine Foods Ltd., John Doe Employee, Smitten Events LLP, and Jane Doe Employee Defendants And Truffles Fine Foods Ltd., Smitten Events LLP, The City of North Vancouver, Quay Property Management Corp., The Pipe Shop, Travis Grubb, Alison McCann, John Doe, Jane Doe, John Doe Company, John Doe Employee, Jane Doe Company, and Jane Doe Employee Third Parties Before: Master Elwood Reasons for Judgment Counsel for the Plaintiff: B. McFadden Counsel for the Defendant Sarah Howard: T. Pettit G. Hall Place and Date of Hearing: Vancouver, B.C. November 22, 2021 Place and Date of Judgment: Vancouver, B.C. December 29, 2021 Table of Contents I. INTRODUCTION.. 3 II. BACKGROUND.. 3 III. THE DOCUMENTS AT ISSUE.. 6 IV. ANALYSIS.. 7 A. Litigation Privilege. 7 i. When was litigation in reasonable prospect?. 8 ii. Were the documents created for the dominant purpose of litigation?. 9 B. Waiver of Litigation Privilege. 11 i. Are the emails by Ms. Dickout protected by settlement privilege?. 11 ii. Did Ms. Dickout waive litigation

privilege?. 12 V. CONCLUSION.. 15 I. INTRODUCTION [1] The plaintiff Sarah McCarthy applies for production of a number of documents by Sarah Priebe, a defendant and third party in the action.[1] The documents in issue include video footage and photographs of the events giving rise to the litigation. [2] The application raises issues relating to litigation privilege, settlement privilege and waiver of privilege. II. BACKGROUND [3] Ms. McCarthy was injured on April 21, 2018, when she fell on the dance floor at the wedding of Travis Grubb and Alison McCann. Ms. McCarthy alleges that she was knocked to the ground by Ms. Priebe, who had slipped on water on the dance floor. [4] Ms. McCarthy brings this action against the bride and groom, the owner of the venue, the City of North Vancouver, Ms. Priebe and others. Ms. McCarthy alleges a number of injuries as a result of the incident, including knee damage and an overall decline in her mobility and well-being. [5] One of the issues on this application is when litigation was in reasonable prospect for the purposes of litigation privilege. [6] Ms. Priebe learned a week or so after the wedding from a mutual acquittance that Ms. McCarthy had ended up in the hospital. On May 7, 2018, Ms. Priebe received a voicemail from Ms. McCarthy about her injuries. That same day, Ms. Priebe sent an email to Ms. McCarthy, apologizing for the "collision" on

the dance floor and expressing her sympathy for how badly Ms. McCarthy had been injured. [7] On May 12, 2018, Ms. Priebe met with Ms. McCarthy's son-in-law, James MacDonald. She made notes of the meeting. [8] Almost two years later, on March 27, 2020, Ms. Priebe learned from the groom, Mr. Grubb, that Mr. Grubb had received a telephone call from Ms. McCarthy informing him that court documents were going to be filed. [9] On April 21, 2020, Ms. Priebe was interviewed by Megan Bradley, an adjuster working with the liability insurer for Mr. Grubb and Ms. McCann. [10] On June 26, 2020, Ms. Priebe was informed by Mr. MacDonald and Sarah Unwin, Ms. McCarthy's daughter, that she was going to be served with a notice of civil claim. Ms. Priebe made notes of this conversation as well. [11] On July 14, 2020, Ms. Priebe learned from her husband that Mr. Grubb's liability insurer had completed their investigation and they were going to issue a subrogated claim against her. [12] On July 16, 2020, Ms. Priebe obtained a copy of the notice of civil claim and third party notice from Court Services Online. Ms. Priebe provided the pleadings to AIG, with whom she had a policy of home insurance that provided her with third party liability insurance. [13] On July 17, 2020, AIG retained Maria Dickout, an insurance adjuster, to manage the preliminary defence and investigation of the claim against Ms.

Priebe. [14] Ms. Dickout contacted Ms. Bradley and asked that Ms. Bradley provide her with any statements taken from Ms. Priebe. Ms. Bradley provided Ms. Dickout with a copy of Ms. Priebe's statement in the body of an email. Ms. Dickout forwarded the email to Ms. Priebe for her comments. [15] On September 7, 2020, Ms. Priebe was served with the notice of civil claim. [16] On September 8, 2020, Ms. Priebe provided Ms. Dickout with a marked-up copy of the email from Ms. Bradley. [17] On September 16, 2020, Ms. Priebe met with Ms. Dickout to discuss the litigation. [18] On September 18, 2020, Ms. Priebe obtained photographs and/or videos of the wedding from Rohan Karnick. On September 21, she obtained additional photographs and/or videos from Chris Rae. [19] Meanwhile, Ms. McCarthy's legal counsel, Bradley McFadden, reached out to Ms. Dickout to determine whether defence counsel had been assigned to act on behalf of Ms. Priebe. Ms. McCarthy relies on two emails in response from Ms. Dickout for a waiver of litigation privilege. In the first email, on September 18, 2020, Ms. Dickout wrote: I met with our insured yesterday so her statement is being transcribed. Sorry for the delay she just got served as she was away. After meeting with her though and getting her statement, I'm surprised she didn't initiate a claim against the bride/groom, the vendor etc. She slipped on the wet floor.

She could have really gotten injured but thankfully didn't. We'll be looking to place everyone on Notice now that we have her statement. We see no liability here. Your allegation suggest she was wearing inappropriate shoes, which isn't true and wedding photos will confirm that. You say she wasn't dancing correctly or watching for unsafe conditions on the floor? After speaking with her, we strongly believe that she was not negligent. In fact we question why your clients dancing partner wasn't named. He fell onto your client not our insured. Since you emailed, we are respectfully requesting that Ms. Priebe/Howard be removed from this claim. This had nothing to do with her and if anything she should be a plaintiff. [20] Mr. McFadden asked Ms. Dickout to produce a copy of the statement she obtained from Ms. Priebe and any corroborating information, including any photographs or videos of what Ms. Priebe said occurred. Without responding directly to Mr. McFadden's document requests, Ms. Dickout wrote on September 22, 2020: We have witnesses and video and are interviewing more witnesses this week. All so far say the same thing. Not one says that Ms. Howard was reckless or that she fell onto your client. Our insured fell, that's not in dispute. However, it doesn't look like she fell onto your client. In any event, if you can't remove her or won't, we can retain counsel for the

discovery process. Let me know. [21] Defence counsel was appointed for Ms. Priebe on September 22, 2020. III. THE DOCUMENTS AT ISSUE [22] The documents at issue on this application are listed in Part 4 of Ms. Priebe's list of documents as follows: No. Date of Document Description of Document Grounds on which privilege is claimed 1 September 21, 2020 Investigations C, D[2] 3 April 21, 2018 Investigations C 4 May 12, 2018, and June 26, 2020 Investigations D 6 Undated Investigations C 7 Undated Investigations D [23] Document No. 1 is a report by Ms. Dickout dated September 21, 2020, setting out her assessment of the plaintiff's claims. The report attached a copy of Ms. Priebe's comments on her statement to Ms. Bradley in April 2020, and a transcript by Ms. Dickout of her interview with Ms. Priebe in September 2020 (the transcript is separately listed as Document No. 7). [24] Document No. 3 is the copies of pictures and photographs from the wedding that Mr. Priebe obtained in September 2020. [25] Document No. 4 is the notes that Ms. Priebe made of the two conversations with Ms. McCarthy's son-in-law, in May 2018 and June 2020. [26] Document No. 6 is a diagram that Ms. Priebe made during the meeting with Ms. Dickout on September 16, 2020. [27] Document No. 7 is a further report by Ms. Dickout and the transcript that Ms. Dickout prepared of her interview with Ms. Priebe. IV.

ANALYSIS [28] Ms. McCarthy argues Ms. Priebe has failed to demonstrate that any of the documents meet the test for litigation privilege. In particular, she argues, the photographs and videos of the wedding were created before litigation was in contemplation. [29] Further, Ms. McCarthy argues, Ms. Priebe waived litigation privilege when Ms. Dickout, as her agent, relied on witness statements, photographs and videos in support of an argument that Ms. McCarthy ought to drop the claim against Mr. Priebe. This waiver, Ms. McCarthy submits, requires complete production of Ms. Dickout's investigation file up to September 22, 2020. [30] In response, Ms. Priebe asserts settlement privilege over the emails between Ms. Dickout and Mr. McFadden. A. Litigation Privilege [31] The purpose of litigation privilege is to create a "zone of privacy" within which those engaged in pending or anticipated litigation can prepare their cases without intrusion into their thoughts or work product: Blank v. Canada (Minister of Justice), [2006] 2 S.C.R. 319, at paras. 32-34. [Blank] [32] Litigation privilege is available to all litigants, whether or not they are represented by counsel or acting on instructions of their counsel. Also, unlike solicitor-client privilege, confidentiality is not an essential component of litigation privilege: Blank, at para. 32. [33] In Raj v. Khosravi, 2015 BCCA 49 [Raj], at

para. 8, the Court of Appeal affirmed a two-part test for litigation privilege originally set out in Hamalainen (Committee of) v. Sippola, (1991), 62 B.C.L.R. (2d) 254 (C.A.) [Hamalainen]: a) Was litigation in reasonable prospect at the time the document was produced, b) If so, what was the dominant purpose for its production? [34] The onus is on the party claiming litigation privilege to establish that both parts of the test are met with respect to each document over which it is claimed: Raj, at para. 9. i. When was litigation in reasonable prospect? [35] Litigation can properly be said to be "in reasonable prospect" when a reasonable person, being aware of all of the circumstances, would conclude it is unlikely the claim will be resolved without litigation: Hamalainen, at 262. Litigation need not be a certainty, but the claimant must establish something more than mere speculation: Raj, at paras. 10-11. [36] Ms. Priebe argues that litigation was in reasonable prospect from the moment she learned Ms. McCarty was seriously injured on the dance floor. [37] This seems objectively unlikely. Ms. Priebe's email to Ms. McCarthy on May 7, 2018, was apologetic and unguarded. She offered to speak with Ms. McCarthy directly about the incident. She did not seem to anticipate any litigation. [38] Ms. Priebe made notes of her conversation with Ms. McCarthy's son-in-law on May 12, 2018, in

her words, "to record all information I learnt during the conversation as I thought the information might be of assistance in defending a lawsuit if one was commenced." However, she does not say in her evidence whether or why at this time, in 2018, she thought there might be a lawsuit. [39] There is no evidence that anything further of note happened in relation to potential litigation involving Ms. Priebe until March 27, 2020, when Mr. Grubb told her that Ms. McCarthy was going to file court documents. [40] Ms. Priebe deposes that she "gathered" from the conversation with Mr. Grubb that she would be one of the defendants. Ms. Priebe further deposes that she became concerned by the tone and tenure of the interview by Ms. Bradley on April 21, 2020, that she might need to retain her own counsel and that she was going to be named as a defendant. [41] Ms. McCarthy filed the notice of civil claim on April 21, 2020. [42] Ms. Priebe did not confirm she was a defendant in the action until some time later, when she obtained the pleadings on July 16, 2020. However, in my view, litigation involving Ms. Priebe was in reasonable prospect by April 21, 2020. [43] This date excludes the notes Ms. Priebe made on May 12, 2018, but not the photographs and videos of the wedding. The original photographs and videos were, of course, created on the night of the wedding on April 21, 2018, before

litigation was in contemplation. However, what is at issue on this application is not the originals, but rather the copies of the photographs and videos that Ms. Priebe sought out from other wedding guests in September 2020. [44] The copies of the photographs and videos in Ms. Priebe's possession came into existence after litigation was in reasonable contemplation. ii. Were the documents created for the dominant purpose of litigation? [45] Ms. Priebe must demonstrate that the dominant purpose of the documents over which she claims privilege was to obtain legal advice or to conduct or aid in the conduct of the potential litigation: Raj, at paras. 12-15. [46] There is no absolute test for determining whether litigation was the dominant purpose of a document's production. As the Court of Appeal explained in Raj, at para. 17: A finding of dominant purpose involves an individualized inquiry as to whether, and if so when, the focus of the investigation/inquiry shifted to litigation. This is a factual determination to be made based on all of the circumstances and the context in which the document was produced. [47] A number of the documents at issue in this case were created by or for the insurance adjuster, Ms. Dickout, after she was retained by AIG. [48] Ms. Priebe turned to AIG, her home owner insurance provider, for the purpose of defending the litigation. AIG retained Ms. Dickout

for the purpose of defending the litigation. Unlike, for example, an adjuster working for a common automobile insurer, Ms. Dickout had no role to perform except to prepare a defence. Ms. Dickout was not asked to investigate Ms. Priebe's coverage. Nor was she asked to adjust any claim of loss by Ms. Priebe as an injured party. [49] The only purpose of Ms. Dickout's investigations was to assist with the defence, which attracts litigation privilege to her work product: see, for example, Drewniak v. Law, 2017 BCSC 1565, at para. 5. [50] Ms. Priebe deposes that she sought out photographs and videos of the wedding for the purpose of defending the action. There was no other purpose for her to obtain the photographs or videos two years after the wedding. [51] Litigation privilege may be claimed over copies of documents, the originals of which may not be privileged, that are included in a collection of documents that was assembled for the dominant purpose of litigation: Huang v. Silvercorp Metals Inc., 2017 BCSC 795, at para. 210. [52] Likewise, Ms. Priebe deposes that she made notes of the conversation with Ms. McCarthy's son-in-law in June 2020, to assist in defending against the lawsuit. There was no other purpose for those notes in June 2020. [53] Accordingly, unless it was waived, litigation privilege protects all of the documents at issue from disclosure, except for the notes that

Ms. Priebe created on May 12, 2018, which was before litigation was in reasonable prospect. B. Waiver of Litigation Privilege [54] Before I can consider Ms. McCarthy's argument that Ms. Priebe waived litigation privilege, I must determine whether the emails by Ms. Dickout on which Ms. McCarthy relies for the waiver are protected by settlement privilege. i. Are the emails by Ms. Dickout protected by settlement privilege? [55] Settlement privilege protects communications exchanged by parties as they try to settle a dispute. It enables litigants to participate in settlement negotiations without fear that information they disclose will be used against them in litigation. This promotes honest and frank discussions between the parties, which can make it easier to reach a settlement: Union Carbide Canada Inc. v. Bombardier Inc., [2014] 1 S.C.R. 800, at para. 31. [56] Settlement privilege extends beyond documents and communications that are expressly designated as being "without prejudice". The words "without prejudice" are not required to invoke the privilege. What matters instead is the intent of the parties to settle the litigation. Any communications undertaken for this purpose are protected: Sable Offshore Energy Inc. v. Ameron International Corp., [2013] 2 S.C.R. 623, at para. 14. [57] The purpose of Ms. Dickout's emails was to convince Mr. McFadden as plaintiff's counsel to

remove Ms. Priebe from the litigation. The emails do not contain any offer of consideration from Ms. Priebe in exchange for being removed (for example, an offer of minor compensation or a waiver of costs). [58] As to whether a communication must contain an actual offer of settlement to attract the privilege, the learned authors of Sopinka, Lederman & Bryant: the Law of Evidence in Canada, 5th ed (Toronto: LexisNexis Canada, 2018), wrote at para. 14.358: [T]he communication must be a part of a correspondence which the parties intend will reasonably lead to a compromise or settlement of a dispute. Hence, letters designed to open such negotiations, or letters or discussions which attempt to convince the opponent of the strengths of the other's position, but which also recognize weaknesses, in the hope that some settlement can be effected once each other's positions are on the table, should be subject to the privilege, whether or not they contain an actual offer of settlement. [59] Here, the communication was a very one-sided argument - indeed, in oral submissions, Ms. Priebe's counsel described it as "puffery" - by Ms. Dickout on behalf of Ms. Priebe. There was no effort by Ms. Dickout to engage Mr. McFadden in negotiations; no acknowledgment by Ms. Dickout of any possible exposure on the part of Ms. Priebe. In my view, the emails cannot be described as an opening of

communications which the parties reasonably intended to lead to a compromise or settlement. [60] In short, I would describe the emails as advocacy by Ms. Dickout, and not settlement communications that attract a privilege against use in the litigation. ii. Did Ms. Dickout waive litigation privilege? [61] Waiver of privilege is ordinarily established when it is shown that the holder of the privilege: (a) knows of the existence of the privilege, and (b) voluntarily evinces an intention to waive the privilege. Waiver may be implied by the conduct of a party in certain circumstances. For example, if a party advances a state of mind defence and relies on legal advice to justify their conduct, waiver may be inferred: S. & K. Processors Ltd. v. Campbell Avenue Herring Producers Ltd. (1983), 45 B.C.L.R. 218 (S.C.), at para. 6. [62] Waiver may also be found in limited circumstances where fairness and consistency require that the privilege be waived. The Court of Appeal addressed these circumstances recently in Graham v. Canada (Minister of Justice), 2021 BCCA 118, at paras. 48-49 [Graham]: [48] Generally speaking, in cases where fairness has been invoked in support of a finding of waiver, there has been some manifestation by the privilege holder of a voluntary intention to waive the privilege, at least to some extent. In these circumstances, achievement of the principles of fairness and

consistency may lead to a finding that the privilege has been waived in its entirety. The issue was helpfully canvassed by Holmes A.C.J. in United States v. Meng, 2020 BCSC 1461: [37] Implicit waiver may take place where a party does not expressly waive privilege, but takes a position in relation to privileged materials that is inconsistent with maintaining the privilege. This may be by, for example, selectively disclosing part of a privileged document or a category of privileged documents on a particular subject, but withholding the remainder of the document or other documents on that same subject. In these circumstances, to uphold the privilege over the remaining communications would be unfair, because the opposing party and the court would be deprived of access to the full narrative. In Huang v. Silvercorp Metals Inc., 2017 BCSC 795 at para. 143, Madam Justice Warren explained: The common thread in the cases where implied waiver is found is that the privilege holder has attempted to use and, at the same time, to shelter behind privileged documents. In such cases, fairness and consistency require production because the privilege holder uses the privilege as a sword to justify or explain a position or action while also using the privilege as a shield to prevent the other party from testing the justification or explanation. [38] In a case of the selective disclosure of

privileged documents, fairness and consistency require the disclosure of all documents on the same subject so to ensure that the partial disclosure does not give an unfair advantage or create a misleading picture: McDermott v. McDermott, 2013 BCSC 534 at paras. 113‑117; Huang at para. 149. [Emphasis added by the Court of Appeal] [63] In Graham, the Court of Appeal held that partial disclosure of a privileged document will not invariably result in a deemed waiver of privilege over the entire document. Rather, the principle of deemed waiver holds that litigants cannot rely on privilege as both a sword and a shield, by strategically disclosing only that which serves their interests, while at the same time seeking to withhold information of the same ilk (para. 50). [64] The common thread of the selective disclosure cases is that a litigant has disclosed or sought to rely on an otherwise privileged document or part of an otherwise privileged document in the litigation process. [65] In McDermott, for example, one of the parties used a partial email from a chain of emails over which privilege had been claimed to cross-examine the opposite party at trial. Justice Walker held that privilege was waived over the entire email chain and the subjects discussed in the emails (paras. 122-126). The same litigant, in that case, swore an affidavit attaching selected emails with her lawyer. Walker

J. found that she had waived privilege over the balance of the communications on the subjects discussed in the exhibited emails, as well as the legal advice on which she deposed that she had relied (paras. 128-133). Further, her counsel disclosed in several submissions to the court and in an affidavit the substance of privileged communications. Walker J. found that the client had waived privilege over related advice (paras. 148-164). [66] In this case, Ms. Priebe has not disclosed any of the statements, photographs or videos referred to in Ms. Dickout's emails. Nor has she sought to rely on any of those documents in these proceedings. [67] While Ms. Dickout referred to photographs, videos and witnesses in support of her effort to convince Mr. McFadden to remove Ms. Priebe, I see nothing in her conduct warranting a conclusion that Ms. Priebe has inappropriately used litigation privilege as both a sword and a shield. [68] Ms. Dickout's advocacy was just that. Mr. McFadden was free to ignore her entreaty to remove Ms. Priebe, which he did. I do not consider that the interests of fairness and consistency now require production of the documents referred to by Ms. Dickout, let alone her entire file to the date of her emails. [69] Ms. McCarthy has not cited any authority for the proposition that mere reference in correspondence between the parties to a document that was created for

the dominant purpose of litigation constitutes a waiver of litigation privilege. A legal proposition that broad would, in my respectful view, encroach unjustifiably on an important privilege that serves the litigation process well. V. CONCLUSION [70] The application by Ms. McCarthy is dismissed, with the exception of the notes that Ms. Priebe created on May 12, 2018, which must be produced. [71] As Ms. Priebe was substantially successful on this application, she is entitled to costs in the cause. "Master Elwood" [1] Ms. Priebe is named in this action by her maiden name, Howard. I will refer to her by her chosen legal name, Priebe. [2] Ground "C" is described in the list of documents as "Dominant Purpose of Litigation". Ground "D" is described as "Solicitor's Brief". Both were argued on this application as litigation privilege.