IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:	Accredit Mortgage Ltd. v. Cook Roberts,
	2017 BCSC 1078

Date: 20170627

Docket: S137260

Registry: Vancouver

Between:

Accredit Mortgage Ltd. and Great Pacific Mortgage & Investments Ltd.

Plaintiffs

And

Cook Roberts (A Firm), Cook Roberts LLP, Patterson Adams (A Firm) and Jack A. Angus

Defendants

And

District of Ucluelet, Raymond Goldsworthy Architect Ltd. and Raymond Goldsworthy

Third Parties

- and -

Docket: S137922

Registry: Vancouver

Between:

Whiskey Dock Developments Ltd., 694023 Bc Ltd., Tzartus Holdings Ltd. and Wayne Bary Wenstob

Plaintiffs

And

Patterson Adams (A Firm) and Jack A. Angus

Defendants

And

District of Ucluelet, Raymond Goldsworthy Architect Ltd., and Raymond Goldsworthy

Third Parties

Before: Master Taylor

Reasons for Judgment

Counsel for the Plaintiffs in Both Actions:	J. Mendes N. Rozenberg
Counsel for the Defendants Cook Roberts (A Firm) and Cook Roberts LLP:	J. Dives, Q.C.
Counsel for the Defendants Patterson Adams (A Firm) and Jack A. Angus	P. Arvisais
Counsel for the Third Parties in Both Actions:	J. Mendes N. Rozenberg
Place and Date of Trial/Hearing:	Vancouver, B.C. May 29, 2017
Place and Date of Judgment:	Vancouver, B.C. June 27, 2017

[1] The two applications before the Court deal with settlement privilege and litigation privilege.

[2] The first notice of application was brought by the Cook Roberts Defendants made up of Cook Roberts (A firm), Cook Roberts LLP, and Jack A. Angus, the defendants in the action commenced by the Accredit Mortgage Ltd. and Great Pacific Mortgage & Investments Ltd. The Patterson Adams Defendants made up of Patterson Adams (A Firm), and Jack A. Angus are the defendants in registry number S137922, hereinafter referred to as the Patterson Adams Defendants or Patterson Adams.

[3] In the notice of application brought by Cook Roberts, the order sought is that Accredit, Ucluelet, and Goldsworthy produce within 14 days of the pronouncement of this order the un-redacted settlement agreement between themselves and Whiskey Dock Developments Ltd., dated November 25, 2013 (the “Agreement”). As well, Cook Roberts seeks an order that Accredit, Ucluelet, and Goldsworthy amend their respective lists of documents to include the un-redacted Agreement under Part 1 thereof.

[4] In the notice of application brought by the Patterson Adams Defendants, both defendants seek an order that the plaintiffs and third parties, and each of them, within 14 days, file and deliver a further supplemental list of documents listing, and produce copies of, any and all documents not already listed that were exchanged between them in the underlying proceedings, namely B.C. Supreme Court action number 10-4734 (Victoria registry) and action number 085211(Victoria registry) (the “Victoria Actions”), including without restricting the generality of the foregoing, all expert reports or summaries of expert opinion, minutes of evidence, particulars of loss and damage alleged, and trail briefs exchanged between the parties in those actions.

[5] Both applicants seek costs.

[6] In relation to the application by Cook Roberts, the issue is whether the disclosure of the monetary amount of the settlement Agreement entered into in the earlier proceeding is both relevant and necessary in the circumstances. The Agreement has been produced by the plaintiffs with the settlement amounts in dollar value redacted from the Agreement.

[7] The plaintiffs have offered the dollar figures on the following terms:

(a) the amount would be provided on a confidential, without prejudice basis, for the purpose of settlement discussions and mediation only;

(b) the defendants would keep the settlement confidential and would not refer to it in any pleadings or other filed materials. Patterson Adams would amend its response to civil claim to delete the reference to an estimated settlement amount; and

(c) the settlement amount would be disclosed to the trial judge at the conclusion of the trial to avoid any possibility of over compensation.

[8] The motion brought by Patterson Adams seeks disclosure of expert reports exchanged in the earlier actions. Those reports were delivered pursuant to R. 11-6 of the Supreme Court Civil Rules.

[9] The plaintiffs submit that the expert reports that were exchanged in the earlier litigation are subject to litigation privilege. It is to be noted that that matter settled before trial.

[10] Accordingly, the issue is whether the privilege over the expert reports of the earlier proceedings was lost or waived when they were served in the course of litigation.

Background Facts and Earlier Proceedings

[11] The background facts to these applications involve a claim of solicitor’s negligence, breach of duty or breach of retainer contract against two firms of solicitors, Cook Roberts and Patterson Adams, in relation to the financing by Accredit of a commercial strata development which was to be developed and constructed by Whiskey Dock Developments Ltd. (Whiskey Dock”) in Ucluelet, B.C.

[12] Cook Roberts represented the plaintiffs, Accredit and Great Pacific. Patterson Adams represented Whiskey Dock.

[13] In 2008 and 2009 respectively, Whiskey Dock and Accredit commenced lawsuits against Ucluelet, alleging negligence and misrepresentation in respect of the building permit issued for the project.

[14] In 2012, Raymond Goldsworthy Architect Ltd. and Raymond Goldsworthy (the “Architects”) were added as defendants.

[15] On July 19, 2012, Mr. Justice Macaulay ordered that Patterson Adams produce its files relating to the Whiskey Landing project.

[16] Between July and August 2013, the parties in the earlier proceedings exchanged expert reports pursuant to R. 11-6 and a case plan order.

[17] These earlier proceedings were settled before the trial began.

[18] On November 25, 2013, Accredit, Whiskey Dock, Ucluelet, and the Architects entered into a confidential settlement agreement in relation to the earlier proceedings (the “BC Ferry Agreement”).Some of the terms of this agreement included:

a. an acknowledgement that Whiskey Dock and Accredit might commence "Further Proceedings” against Patterson Adams and Cook Roberts;

b. a waiver by Whiskey Dock and Accredit of their right to recover from Patterson Adams and Cook Roberts any portion of the damages attributable to the fault of Ucluelet and the Architects [;]

c. an agreement by Ucluelet and the Architects to make documents and witnesses reasonably available in the Further Proceedings;

d. the following confidentiality clause:

27. This Settlement Agreement, its terms and the payments made hereunder will remain confidential and may be disclosed only:

a To a Settling Party’s insurers, solicitors, accountants, auditors and other professional advisors;

b In a Settling Party’s financial statements, if such disclosure is required by generally accepted accounting principles;

c To the Receiver General of Canada or other taxation authority, if such disclosure is required by legislation.

No Settling Party will otherwise disclose, publish, or in any way reveal the Settlement Agreement, its terms and the payments made hereunder without the written consent of all Settling Parties or unless ordered by the Court.

[19] Accredit, Great Pacific, Whiskey Dock, and certain parties related to Whiskey Dock also entered into a settlement agreement dated November 25, 2013, to address the fact that Accredit had not recovered the full amount owing under its loan through foreclosure and the earlier proceedings. Pursuant to that agreement, Whiskey Dock and its related parties assigned all of their causes of action against Patterson Adams to Accredit, and appointed Accredit as their agent to proceed with a claim against Patterson Adams.

The Project

[20] The action relates to the construction of a strata-title hotel located in Ucluelet known as Whiskey Landing.

[21] Whiskey Dock was the builder/developer of the project.

[22] Patterson Adams provided legal services to Whiskey Dock and its principals and related companies in relation to the project.

[23] Accredit was Whiskey Dock’s lender. Great Pacific administered the loan as a broker.

[24] Cook Roberts provided legal services to Accredit in relation to the loan.

[25] The third parties Raymond Goldsworthy and Raymond Goldsworthy Architect Ltd. provided architectural services to Whiskey Dock in relation to Whiskey Landing.

[26] Whiskey Dock was not enrolled as a “licensed residential builder”, and the project was constructed without mandatory “2-5-10" home warranty insurance, contrary to the Homeowner Protection Act, S.B.C. 1998, c. 31 [HPA].

[27] As a result, the Homeowner Protection Office (“HPO”) issued a compliance order on June 25, 2008, requiring, among other things, that:

(a) Whiskey Dock cease carrying on business as a "residential builder” as defined by the HPA until it was in compliance with the HPA; and

(b) Whiskey Dock cease selling the project’s residential units until they were covered by home warranty insurance.

[28] Whiskey Dock was unable to obtain home warranty insurance. Sales of the residential units did not complete, and the loan went into default.

Current Proceedings

[29] Accredit and Great Pacific commenced the within action against Patterson Adams and Cook Roberts on September 30, 2013.

[30] Whiskey Dock commenced action no. S-137922 against Patterson Adams and Jack Angus (the “Whiskey Dock Action”) on October 25, 2013.

[31] Whiskey Dock alleges that Patterson Adams failed to properly advise it about the requirements of the HPA and the risks of continuing construction of the project without warranty insurance.

[32] On January 26, 2015, Accredit and Whiskey Dock disclosed the BC Ferry Agreement to Patterson Adams and Cook Roberts, with settlement amounts redacted. The plaintiffs maintain this was in accordance with the Supreme Court of Canada decision in Sable Offshore Energy v. Ameron Int’l Corp., 2013 SCC 37.

[33] In 2015, the plaintiffs, including Great Pacific, filed amended notices of civil claim to reflect the terms of the BC Ferry Agreement. The amended pleadings state that the plaintiffs waive all right to recover from the solicitor defendants any portion of their damages which is attributable to the fault of the District or the Architects in these words:

Pursuant to the BC Ferry Agreement, the Plaintiffs waive all right to recover from the Defendants any portion of their damages which is attributable to any fault of the District or the Architects or their respective agents, successors, administrators, heirs, employees, assigns or insurers or any of them, and for which the Defendants can claim from either the District or the Architects or their respective agents, successors, administrators, heirs, employees, servants, assigns or insurers or any of them for contribution or indemnity pursuant to the Negligence Act, R.S.B.C. 1996, c. 333, or any successor legislation.

[34] Patterson Adams has pled the dollar amount it believes Accredit recovered through settling the earlier proceedings. The plaintiffs have requested that Patterson Adams amend its pleadings to remove the reference to this amount, but they have refused to do so.

[35] Pursuant to a case plan order made in June 2015, this action and the Whiskey Dock Action will be tried together.

[36] In September 2015, Patterson Adams issued a third party notice to the District and Architects. In February 2017, Cook Roberts issued a similar third party notice.

[37] The third party proceedings seek a declaration as to the attribution and causation of losses proven by the plaintiffs, and an apportionment of losses.

[38] The documents produced in the earlier proceedings pursuant to R. 7-1 by Accredit, Whiskey Dock, the District, the Architects, National Home Warranty, and the HPO have been produced. Examinations for discovery have been conducted in these proceedings, and transcripts from the examinations for discovery held in the earlier proceedings have been produced.

[39] Given the trial is set for 45 days commencing on October 16, 2017, all parties’ initiating expert reports were due on June 9, 2017.

[40] In the earlier action, the key underlying issue was that Mr. Wenstob and Whiskey Dock did not obtain home warranty insurance for the strata titles that were to go into a hotel, but were to be sold as individual units. There is evidence that the building inspector of Ucluelet told Mr. Wenstob that he didn't need home warranty insurance.

[41] There is also evidence about communications between Mr. Wenstob and his lawyers on the topic of home warranty insurance, and there was a disclosure statement, which was amended from time to time and mentioned home warranty insurance, but didn't actually say that it was in place. Thus, when it came time to sell the properties, the HPO would not allow the units to be sold without home warranty insurance.

[42] Although there are means by which home warranty insurance can be put in place after the fact, if appeared that some considerable period of time elapsed before either Mr. Wenstob, Whiskey Dock, or Accredit took any steps to actually obtain and put in place home warranty insurance.

[43] In any event, Accredit took foreclosure proceedings against the property and obtained title and entered into an agreement with Mr. Wenstob under which Mr. Wenstob assigned Whiskey Dock's rights to Accredit, including not only the right to sue his lawyers Patterson Adams but also his rights as against Ucluelet and the architect, Mr. Goldsworthy.

[44] The claim against Ucluelet was based on the HPA which essentially says a municipality shall not issue a building permit unless home warranty coverage is in place. In addition to potentially having told Mr. Wenstob that he didn't need home warranty insurance, the building inspector also issued building permits that allowed the project to be built without home warranty insurance. And for that, Ucluelet was sued.

[45] Counsel for Cook Roberts says the claim against his clients seems identical to what was asserted against Ucluelet by Accredit, which is that Accredit relied upon Cook Roberts and his counsel and would not have advanced the funds had the solicitors insisted on home warranty insurance or taken other steps that would have demonstrated that the home warranty insurance was not in place, so essentially claiming the same losses and the same reliance, but in two separate actions.

[46] As a result of the earlier agreement and an amendment to the plaintiffs' claim to limit their relief such that the two solicitor firms cannot be held responsible for whatever portion or segment of negligence would be attributable to Ucluelet and Goldsworthy, the third party proceedings in the instant cases are limited to declaratory relief only, such that the defendants are not seeking a money judgment against Ucluelet and Goldsworthy, but are claiming a declaration as to their fault.

[47] Counsel for the defendant Cook Roberts makes the point that without knowing how much Accredit received from Ucluelet, the defendants simply don’t know whether they’ve even suffered a loss on advancing the funds, and if so, how much their loss is. Thus, say the defendants, knowing how much was advanced under the settlement Agreement is the essential element of the claim.

[48] As well, without knowing the amount that Accredit settled for, the defendants say they are in a difficult position to determine whether the settlement actions by Accredit were reasonable. The defendants submit the actions of Accredit in settling the action are subject to analysis for reasonableness. To put it another way, did Accredit act reasonably in the way in which it sought to recover its losses?

[49] Again, submits the defendant, without knowing what the loss is, it is impossible for them to litigate the question of whether or not they owe anything, or if so, how much? And whether the plaintiffs have been reasonable in whatever steps they have taken including: was it reasonable for them not to put home warranty insurance on the project until three or four years down the road when they were dealing with that issue? Ultimately, says the defendant Cook Roberts, the focus was simply whether the settlement with Ucluelet was a reasonable settlement.

[50] The plaintiffs take the position that they are not required to disclose the financial terms in the BC Ferry Agreement, having disclosed everything else but the settlement figures.

[51] The plaintiffs say it is not necessary or relevant to the current proceedings for the earlier settlement figures to be disclosed. They rely on settlement privilege as the rationale for not disclosing the settlement figures.

[52] The defendants submit that the litigation privilege relied upon by the plaintiffs is not the same in the case at bar where the plaintiffs have chosen to “litigate in slices”, where privilege has been maintained for multiple defendants in the same action. Therefore, the defendants say that the issue is not identical and is distinguishable.

[53] Our Court of Appeal in Middelkamp v. Fraser Valley Real Estate Board (1992), 71 B.C.L.R. (2d) 276 (C.A.) talked about the public interest behind this privilege in settlement communications:

[19] ... the public interest in the settlement of disputes generally requires “without prejudice” documents or communications created for, or communicated in the course of, settlement negotiations to be privileged. I would classify this as a “blanket”, prima facie, common law, or “class” privilege because it arises from settlement negotiations and protects the class of communications exchanged in the course of that worthwhile endeavour.

[Per McEachern, C.J.B.C.]

[54] The B.C. Court of Appeal also dealt with the exceptions to settlement privilege which are “narrowly defined” and “seldom applied” in Heritage Duty Free Shop Inc. v. Attorney General for Canada, 2005 BCCA 188 at para. 25. Generally, the exceptions include circumstances where:

(a) the agreement's existence could cast light on the quality of the evidence or motivation of a witness, or could affect the weight a court might give to the evidence;

(b) the agreement’s existence could be relevant to decisions regarding the conduct of trial;

(d) the settling parties agree that evidence will be furnished in connection with the litigation in which the application is made. In that case, the public interest in the proper disposition of litigation assumes paramountcy, and opposite parties are entitled to know about any arrangements which are made about evidence;

(e) the matter involves fraud; and

(f) production may be required to meet a defence of laches, want of notice, passage of a limitation period, or other similar matters.

[55] Both plaintiffs and defendants reply upon Sable Offshore Energy v. Ameron International Corp., 2013 SCC 37 [Sable]. The defendants take the position that Sable is the high-water mark in protecting the details of a concluded settlement agreement.

[56] As the Court said in Sable, commencing para. 19:

[19] There are, inevitably, exceptions to the privilege. To come within those exceptions, a defendant must show that, on balance, "a competing public interest outweighs the public interest in encouraging settlement" (Dos Santos Estate v. Sun Life Assurance Co. of Canada, 2005 BCCA 4, 207 B.C.A.C. 54, at para. 20). These countervailing interests have been found to include allegations of misrepresentation, fraud or undue influence ..., and preventing a plaintiff from being overcompensated (Dos Santos).

[20] The non-settling defendants argue that there should be an exception to the privilege for the amounts of the settlements because they say they need this information to conduct their litigation. I see no tangible prejudice created by withholding the amounts of the settlements which can be said to outweigh the public interest in promoting settlements.

[57] And further, commencing at para. 27:

[27] It is therefore not clear to me how knowledge of the settlement amounts materially affects the ability of the non-settling defendants to know and present their case. The defendants remain fully aware of the claims they must defend themselves against and of the overall amount that Sable is seeking. It is true that knowing the settlement amounts might allow the defendants to revise their estimate of how much they want to invest in the case, but this, it seems to me, does not rise to a sufficient level of importance to displace the public interest in promoting settlements.

[28] The non-settling defendants also argued that refusing disclosure impedes their own possible settlement initiatives since they are more likely to settle if they know the settlement amounts already negotiated. Perhaps. But they may also, depending on the amounts, arguably come to see them as a disincentive. In any event, theirs is essentially a circular argument that the interest in subsequent settlement outweighs the public interest in encouraging the initial settlement. But the likelihood of an initial settlement decreases if the amount is disclosable.

…

[30] A proper analysis of a claim for an exception to settlement privilege does not simply ask whether the non-settling defendants derive some tactical advantage from disclosure, but whether the reason for disclosure outweighs the policy in favour of promoting settlement. While protecting disclosure of settlement negotiations and their fruits has the demonstrable benefit of promoting settlement, there is little corresponding harm in denying disclosure of the settlement amounts in this case.

[Emphasis in original.]

[58] The plaintiffs submit that the Supreme Court of Canada in Sable concluded that the monetary terms of a settlement agreement did not need to be produced prior to trial. In deciding whether settlement privilege must give way to disclosure, the Court in Sable held that there must be a competing public interest which outweighs the public interest in encouraging settlement. As set out at para. 27, infra, the Court rejected the argument that the non-settling defendants needed to know that information to conduct their litigation.

[59] A similar conclusion was reached in BC Children’s Hospital v. Air Products Canada Lts., [2003] B.C.J. No. 591, 2003 BCCA 177. In that case, the hospitals purchased products from a number of defendants. The suppliers pled guilty to charges of conspiracy pursuant to the Competition Act, R.S.C. 1985, c. 34. The plaintiffs commenced actions for damages based upon conspiracy, then settled with some defendants.

[60] In BC Children’s Hospital, it was agreed by the parties to the settlement agreement that the terms of the agreement would remain confidential. The remaining defendants applied for production of the settlement agreement. The B.C. Court of Appeal agreed with the trial judge that the amount of the settlement was not relevant and not subject to disclosure.

[61] The plaintiffs maintain that in order to establish an exception to settlement privilege, Cook Roberts must show a competing or overriding public interest that outweighs the “compelling public interest” in encouraging settlement. . It must demonstrate that disclosure of the settlement amount is both relevant and necessary in the circumstances, such that it is in the interests of justice that it be disclosed, and not just in the interest of the defendants.

[62] The plaintiffs have also expressed concern that disclosing the settlement amount before trial would prejudice the plaintiffs and third parties by influencing the proceedings and affecting how liability is allocated amongst the parties.

[63] On the other hand, the defendants submit that the redacted information from the settlement agreement is relevant and necessary evidence, especially, because of the nature of the claim against Cook Roberts. The defendants say that they are precluded from making a proper argument without all the facts, one of which is what position the plaintiffs would be in now if they had been advised differently. Counsel for the defendants suggests that “having to argue in a vacuum” will be incredibly difficult, yet the defendants know everything about the prior case but for the settlement amounts, which the plaintiffs say will be disclosed to the Court at the end of the trial.

[64] While the defendants’ point is that this is litigation in slices and possibly an abuse of the court’s process, for now, I am satisfied that the defendants have not shown me that the reasons for disclosure outweigh the policy in favour of promoting settlement other than for personal benefit of the defendants. Accordingly, the application of the Cook Roberts Defendants is dismissed.

Settlement Privilege

[65] The Patterson Adams Defendants seek to compel disclosure by the plaintiffs and third parties of any and all documents that were exchanged between them in the earlier proceedings, the Victoria Actions, including all expert reports or summaries of expert opinion, minutes of evidence, particulars of loss and damage alleged.

[66] The claims by the plaintiffs in these two actions are against two firms of solicitors for breach of duty and solicitor’s negligence. Accredit and Great Pacific claim to have sustained multi-million dollar losses arising from the foreclosure of the subject property. The claims are pleaded as follows:

62. By reason of the defendants' negligence and breach of contract, the plaintiffs have suffered loss and damage, particulars of which include:

a. losses resulting from the Borrowers' default under the Loan and modification agreements;

b. financing and carrying costs, interest charges, and loss of investment capital caused by the Borrowers' default under the Loan and modification agreements;

c. maintenance costs, insurance premiums and taxes paid in relation to the Project and other security for the Loan and modification agreements;

d. consulting fees, disbursements and taxes incurred to investigate the condition of the Project;

e. legal fees, disbursements and taxes incurred in the foreclosure proceedings;

f. legal fees, disbursements and taxes incurred in action no. S-085211 and action no. S-104734;

g. such further and other particulars as the plaintiffs may advise or prove at trial.

…

65. The plaintiffs have suffered loss and damage by reason of the defendants' breach of contract and negligence, particulars of which include:

a. the plaintiffs' liability to Accredit under the order nisi in the foreclosure proceedings;

b. the loss of the plaintiffs' interest in the security for the Loan;

c. economic loss resulting from Whiskey Dock's inability to sell the Project's strata lots at all or as originally contemplated;

d. economic loss resulting from the reduced market value of the Project;

e. increased costs associated with the maintenance and management of the Project;

f. financing and carrying costs, interest charges, and loss of investment capital associated with the Loan;

g. such further and other particulars as the plaintiffs may advise or prove at trial.

[67] The defendants say that not only do the pleadings as set out above make certain claims against the defendants, but also in addition to the amounts claimable under the foreclosure, they appear to claim all profits they hoped to realize from the development, and all expenses incurred in recovering what they have in fact recovered. The claim asserted by Accredit in its capacity as assignee of Whiskey Dock against Patterson Adams is said to exceed $10 million, although it is not known how that quantum is calculated.

[68] The defendants go on to say that Accredit and Whiskey Dock had also previously sued the District of Ucluelet, and the Architect, Raymond Goldsworthy. In those Victoria Actions, they sought substantially the same losses as are now being claimed against Patterson Adams and Cook Roberts.

[69] In the Victoria Actions, they claimed that the District and the Architects were solely responsible for the losses sustained by Accredit on the financing and by Whiskey Dock by reason of the financial failure of the project.

[70] The two Victoria Actions claimed inter alia:

(a) against the Architect for breach of duty in relation to the failure of the building envelope, which permitted water penetration and substantial damage to the development requiring remediation costing in excess of $2.5M;

(b) against the District for breach of the Homeowner Protection Act, S.B.C. 1998, ch. 31, s. 30 in issuing a building permit to Whiskey Dock without proof of existing New Home Warranty insurance on the residential, strata title component of the development; and,

[71] Since the plaintiffs settled the two Victoria Actions against the District and the Architects just prior to trial, after all of them had served all of their expert reports and received expert reports from each other, the defendants say there can obviously be no privilege remaining to be asserted over those expert reports since they were disclosed and served on parties then opposite in interest to one another.

[72] According to Affidavit #1 of Mariana Sichova filed by the plaintiffs, their Lists of Documents attached as Schedule C and D the exact copies of the Lists of Documents of the District and the Architects produced in the Victoria Actions. There are thousands of documents produced, but they do not include expert reports or other items exchanged between the parties in the course of those actions and preparation for trial.

[73] On February 29, 2016, counsel for Patterson Adams sought further disclosure of documents from the Victoria Actions, including all discovery transcripts, non-privileged correspondence, and non-privileged documents relevant to these cases and otherwise.

[74] On May 16, 2016, counsel for the plaintiffs produced amended Lists of Documents which included the examination for discovery transcripts from the Victoria Actions and certain summaries of evidence ordered to be produced by Ucluelet.

[75] On May 18, 2016, the plaintiffs produced further amended Lists of Documents which attached redacted correspondence in the Victoria Actions responding to requests from discovery in those actions (Webster at 96).

[76] At the examination for discovery of Mr. Wenstob conducted by counsel for Patterson Adams on March 2, 2017, in response to a question as to where the expert reports in the underlying cases in Victoria were in his clients’ disclosure, counsel for the plaintiffs indicated that even though expert reports and other documents had been exchanged between the plaintiffs and the third parties in the underlying Victoria Actions which were settled on the eve of trial, his view was that they need not be and would not be disclosed.

[77] Thereafter, also on March 2, 2017, counsel for Patterson Adams made formal demand and request for production of those and other documents exchanged.

[78] The plaintiffs take a contrary view. Starting with the proposition that litigation privilege is intended to facilitate the adversarial process, the plaintiffs maintain that litigation privilege retains its purpose and effect where the litigation that gave rise to the privilege has ended, but related litigation remains pending or may reasonably be apprehended.

[79] The plaintiffs submit that they obtained the expert opinions in the earlier proceedings to prosecute the claims against the District and the Architects. They maintain they posed strategic questions to the consultants, and prepared lists of assumed facts and documents to be reviewed, and now say the defendants are seeking those materials and work product to save time and expense in prosecuting their third party claims.

[80] The Supreme Court of Canada in Blank v. Canada (Minister of Justice), 2006 SCC 39, [2006] 2 S.C.R. 319 provides the framework for the plaintiffs’ submissions and reticence to produce the expert reports in the following paragraphs:

34 The purpose of the litigation privilege, I repeat, is to create a "zone of privacy" in relation to pending or apprehended litigation. Once the litigation has ended, the privilege to which it gave rise has lost its specific and concrete purpose -- and therefore its justification. But to borrow a phrase, the litigation is not over until it is over: It cannot be said to have "terminated", in any meaningful sense of that term, where litigants or related parties remain locked in what is essentially the same legal combat.

35 Except where such related litigation persists, there is no need and no reason to protect from discovery anything that would have been subject to compellable disclosure but for the pending or apprehended proceedings which provided its shield. Where the litigation has indeed ended, there is little room for concern lest opposing counsel or their clients argue their case "on wits borrowed from the adversary", to use the language of the U.S. Supreme Court in Hickman, at p. 516.

36 I therefore agree with the majority in the Federal Court of Appeal and others who share their view that the common law litigation privilege comes to an end, absent closely related proceedings, upon the termination of the litigation that gave rise to the [page334] privilege: Lifford; Chrusz; Big Canoe; Boulianne v. Flynn, [1970] 3 O.R. 84 (H.C.J.); Wujda v. Smith (1974), 49 D.L.R. (3d) 476 (Man. Q.B.); Meaney v. Busby (1977), 15 O.R. (2d) 71 (H.C.J.); Canada Southern Petroleum Ltd. v. Amoco Canada Petroleum Co. (1995), 176 A.R. 134 (Q.B.). See also Sopinka, Lederman and Bryant; Paciocco and Stuesser.

37 Thus, the principle "once privileged, always privileged", so vital to the solicitor-client privilege, is foreign to the litigation privilege. The litigation privilege, unlike the solicitor-client privilege, is neither absolute in scope nor permanent in duration.

38 As mentioned earlier, however, the privilege may retain its purpose -- and, therefore, its effect -- where the litigation that gave rise to the privilege has ended, but related litigation remains pending or may reasonably be apprehended. In this regard, I agree with Pelletier J.A. regarding "the possibility of defining ... litigation more broadly than the particular proceeding which gave rise to the claim" (para. 89); see Ed Miller Sales & Rentals Ltd. v. Caterpillar Tractor Co. (1988), 90 A.R. 323 (C.A.).

39 At a minimum, it seems to me, this enlarged definition of "litigation" includes separate proceedings that involve the same or related parties and arise from the same or a related cause of action (or "juridical source"). Proceedings that raise issues common to the initial action and share its essential purpose would in my view qualify as well.

40 As a matter of principle, the boundaries of this extended meaning of "litigation" are limited by the purpose for which litigation privilege is granted, namely, as mentioned, "the need for a protected area to facilitate investigation and preparation of a case for trial by the adversarial advocate" (Sharpe, at p. 165). This purpose, in the context of s. 23 of the Access Act must take into account the nature of much government litigation. In the 1980s, for example, the federal government [page335] confronted litigation across Canada arising out of its urea formaldehyde insulation program. The parties were different and the specifics of each claim were different but the underlying liability issues were common across the country.

41 In such a situation, the advocate's "protected area" would extend to work related to those underlying liability issues even after some but not all of the individual claims had been disposed of. There were common issues and the causes of action, in terms of the advocate's work product, were closely related. When the claims belonging to that particular group of causes of action had all been dealt with, however, litigation privilege would have been exhausted, even if subsequent disclosure of the files would reveal aspects of government operations or general litigation strategies that the government would prefer to keep from its former adversaries or other requesters under the Access Act. Similar issues may arise in the private sector, for example in the case of a manufacturer dealing with related product liability claims. In each case, the duration and extent of the litigation privilege are circumscribed by its underlying purpose, namely the protection essential to the proper operation of the adversarial process.

[81] Madam Justice McLachlin (as she then was), in S. & K. Processors Ltd. v. Campbell Ave. Herring Producers Ltd., [1983] B.C.J. No. 1499 (S.C.), spoke of waiver in the face of being compelled to produce expert documents due to legislation, which in that case was the Evidence Act, R.S.B.C. 1979, c. 116, but more recently has been caused by the rules of Court by way of the Supreme Court Civil Rules. At para. 9 she said:

9 It is settled that legislation is to be taken as abrogating privilege only if it does so in clear and unambiguous terms: Re Dir. of Investigation & Research and Can. Safeway Ltd., [1972] 3 W.W.R. 547. It is also apparent that had the Legislature wished to abrogate privilege, not only with respect to an expert's opinion and the facts upon which it is based, but as to the communications between the expert, the instructing solicitor and the client in the course of preparation of the report, it could have drafted s. 11 to so provide. These considerations weigh against requiring production of the documents here in issue.

[82] The learned jurist went on to elaborate on the compulsion aspect of the legislation as follows:

11 In the case of production of an expert's report under the Evidence Act, s. 11, it can be contended that the pre-trial production of the report and the attendant loss of privilege at that stage is involuntary, being compelled by statute. Being involuntary, it cannot constitute waiver, although it is clear that under s. 11 privilege will be lost as to the opinion and the facts upon which it is based. Moreover, even if production of the report pursuant to the Act could be said to constitute waiver, in these circumstances it cannot be said to be unfair or inconsistent that the party producing it retain such privilege as is left to him by the Act.

12 In the result, I conclude that the privilege attaching to these documents has not been waived. The plaintiffs are not entitled to production. They are, however, entitled to disclosure of all the facts upon which the inferences and conclusions contained in the Laventhol & Horwath report are based, to be furnished by way of particulars as well as by supplementation of the report in so far as it fails to precisely set forth those facts.

[83] Mr. Justice Johnston said much the same thing in West Moberly First Nations v. British Columbia, 2014 BCSC 410, commencing at para. 24:

[24] That a party may disclose otherwise privileged documents to one party without necessarily waiving or losing its claim of privilege with respect to other parties was established, at least in Alberta, in Western Canadian Place Ltd. v. Con‑Force Products Ltd. (1997), 50 Alta. L.R. (3d) 131 (Alta. Q.B.), where the court said at para. 27:

Waiver, however, depends upon intention. The giving of a privileged document to one party in litigation does not necessarily show an intention to waive the privilege in respect of all other parties or in respect of other litigation.

[25] Rule 11-6 governs disclosure of expert reports that are to be tendered in evidence at a trial and requires delivery to other parties at least 84 days before trial. In this case, given the complexity of the issues and the length of trial, that delivery date has been advanced substantially for all of the parties.

[26] I am persuaded that litigation privilege continues to protect expert reports from forced disclosure, and that voluntary disclosure to parties, as a result of a Case Plan Order, has not amounted to a waiver of the privilege generally.

[84] After a review of the law as set out above, I am satisfied that at the very least the expert opinions provided by the plaintiffs in the earlier actions were compelled by the operation of R. 11-6 of the Supreme Court Civil Rules, and that the current actions are pending related litigation such that the litigation privilege remains intact regarding the documents sought by the Patterson Adams defendants. Accordingly, the application for production of various documents sought by the defendants is dismissed.

[85] Unless the parties otherwise agree, I am of the view that the plaintiffs are entitled to their costs of defending these applications.

“Master Taylor”