Litigation privilege protects communications made and documents created for the dominant purpose of preparing for litigation, whether existing or anticipated. Common interest privilege applies when parties have a mutual interest in present or anticipated litigation, and litigation privilege is not waived when parties share particular information in relation to their shared interest. But how do courts determine how far common interest privilege should extend? When interviewing witnesses to evaluate coverage, how should adjustors determine who to include?

Background

The insurer, Lloyd’s Underwriters (“Lloyd”) sought an order for production of a witness transcript from an adjusting firm (“CTA”) pursuant Rule 5.13.

The transcript in question arose out of an interview that a CTA adjuster conducted of a roofing contractor’s employee. This employee had performed torching work on a building that caught fire (the “Building”) shortly afterward. Parties with adverse interests were also invited to attend the interview, and some attended There was no evidence that participants at the interview discussed the confidentiality of the information being provided.  

CTA argued that the transcript was protected by litigation and common interest privilege, whereas Lloyd argued that common interest privilege did not apply because adverse parties were invited to attend the interview and some parties had attended to assess coverage rather than to prepare for litigation.

What the Court Said

The fundamental question posed by the Court was whether the interview invitees shared a common interest in potential litigation such that their interests were aligned. In short, they did not.

The Court determined that the invitees attended for the following reasons: a lawyer for the roofing subcontractor’s CGL insurer was evaluating coverage; the director and general manager of the roofing contractor and his lawyer attended in anticipation of litigation; and CTA’s adjustor attended in anticipation of litigation and to evaluate coverage, but primarily for coverage purposes.  

The Court ordered production of the transcript because neither common interest privilege nor litigation privilege applied, due to the mixed nature of the purpose of the interview, which was not solely for the purpose of litigation   Further, the interests of the invitees were in conflict Further still, CTA was not fully aware of which parties were represented in the interview room, so it would be difficult for common interest privilege to apply.

The Court emphasized that parties seeking to share information under common interest privilege need not be co-parties with identical positions. There just needs to be sufficient common interest among. The sufficient common interest has been described as “they anticipate litigation against a common adversary on the same issue or issues”.  Here, it was difficult to identify a strong common interest between the parties at the interview, given the potential for cross-claims between them as to negligence allegations and vicarious liability.  

Takeaways

The greater the number of people who attend an interview for the purpose of ongoing or anticipated litigation, the more likely that litigation privilege protecting associated transcripts will be preserved. It is somewhat a “numbers game”, as the Court emphasized that the majority of the invitees attended for a non-litigation purpose.

Interviewers should also be wary of who they invite to if invitees have conflicting interests. Creating an open invitation may increase the probability that litigation privilege over interview transcripts will be waived because it becomes increasingly likely that parties will hold opposing positions. Common interest privilege will not apply where parties have strongly adverse interests. An interviewer may consider including only parties with sufficiently similar interests against a common party. It is also recommended that invitations to observe an interview indicate that the interview and invitation are on a common-interest basis and require an acknowledgment from attendees that their attendance is for the purpose of [pending, anticipated or ongoing] litigation.

Insurance disputes can become complex very quickly, so it is advisable to consult a lawyer without delay. Contact Jill Bishop or Grant Szelewicki in Field Law’s Calgary office, Christine Pratt in the Edmonton office, or any member of Field Law’s Insurance Group for advice.

Link to Decision: Center Street v Lloyd's Underwriters, 2023 ABKB 709