Law Times

Law Times • JuLy 21, 2014 Page 11 www.lawtimesnews.com Lawyers reminded about dominant purpose test for litigation privilege By arshy mann Law Times hen undertaking an investigation in preparation for litigation, there's always a danger it could fall into the other party's hands through discovery. Litigation privilege doesn't automatically apply to all investigative reports commis- sioned by a party. Instead, in order to benefit from litiga- tion privilege, a party must undertake an investigation with the dominant purpose of preparing for litigation. Waugh v. British Railways Board, a Brit- ish case from 1979, first outlined the "domi- nant purpose" test. It has since become a standard test in Canada to deter- mine whether litigation privilege applies. According to Malcolm Aboud, a litigation associate with Osler Hoskin & Harcourt LLP, privilege claims for investigative reports often fail because the courts will find there was an al- ternative purpose to the probe. In Société Air France v. Greater Toronto Airports Authority, the Ontario Superior Court found a report wasn't privileged because it had other purposes. "In that case, they had put together a number of reports after the crash and their privilege claim failed on the basis that they circulated their reports to Air France employees to im- prove f light safety," says Aboud. "So on that basis, the court found that it wasn't undertaken for the dominant purpose of preparing for litigation." Aboud says there are several ways lawyers can ensure inves- tigations remain privileged. The first is to keep a paper trail. "The main theme you find as you look through the case law is the impor- tance of keeping an evidentiary record of the investigation and the basis of the privilege claim." "You're going to want legal counsel to be the ones request- ing this investigation, stating the s pecific purpose for it, saying we need to undertake an investiga- tion for this purpose to make sure that it's clear that the pur- pose for the investigation relates to upcoming litigation," he says. Another way to protect privi- lege is to hire external counsel. "In certain cases, it may be ad- visable to go with external coun- sel rather than internal because you're going to have a better basis for claiming that this was not simply a busi- ness decision, that you were seeking legal advice," says Aboud. "If you're going to your external counsel, then I would think it would provide some sort of basis for argu- ing that you were ac- tually worried about litigation." Another theme that comes up in the case law, according to Aboud, is any in- vestigations undertaken on a regular basis or that are routine are unlikely to pass the domi- nant purpose test. If a company is hiring a third- party investigator, the issue can become more complex. "One of the other interesting ones people run into is the deci- sion whether to go internal or with a third party and whether to have the investigation under- taken by a lawyer or a non-law- yer employee," says Aboud. To qualify for litigation privi- lege, there's no formal require- ment that a lawyer undertake the investigation. "As long as it was prepared for the dominant pur- pose of preparing for litigation, then it should be subject to litiga- tion privilege," says Aboud. "But obviously, it's going to be a lot easier to establish that something was prepared for the dominant purpose of litigation if it was prepared by a lawyer." And if a lawyer didn't prepare it, communications should f low through counsel. Aboud notes the more non-lawyers involved in commissioning a report, the less likely it is to qualify for privilege. If an audit committee or se- nior management commissions a report, it's more likely the courts will reject a litigation privilege claim, says Aboud. In some cases, the courts will uphold a claim for litigation privilege simply because the party marked the documents them- selves as privileged. In Saturley v. CIBC World Markets Inc., a 2010 case argued in front of the Supreme Court of Nova Scotia, Justice Gerald Moir considered whether a report labelled "In An- ticipation of Litigation — Privi- leged and Confidential" was actu- ally subject to litigation privilege. Moir found he was "unable to readily see" why it should be sub- ject to privilege since it dealt with a compliance issue. Despite that, he accepted the privilege claim. "Although it is unclear to me precisely why this report was prepared for counsel, the fact that it was, and its ex- tensiveness, lead me to conclude that it was either to be consid- ered by counsel for advising on a specific issue or to inform coun- sel generally so counsel would be in a position to give advice from time to time," he wrote. Aboud says that when in doubt, a good option is to use a red stamp. "If you're planning on claiming privilege, stamp it." LT FOCUS REACH ONE OF THE LARGEST LEGAL AND BUSINESS MARKETS IN CANADA! AVAILABLE ONLINE AND IN PRINT With more than 300,000 page views and 76,000 unique visitors monthly canadianlawlist.com captures your market. 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Price(s) subject to change without notice and subject to applicable taxes. 00222HA-A45318 Includes print, CD-ROM and mobile version 'If you're planning on claiming privilege, stamp it,' says Malcolm Aboud. W

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