Court of Queen ’ s Bench of Alberta Citation: Halliburton Group Canada Inc. v. Borth, 2012 ABQB 23 Date: 20120110 Docket: 0901 13711 Registry: Calgary Between: Halliburton Group Canada Inc Plaintiff - and - Donald Borth Defendant _______________________________________________________ Reasons for Judgment of the J.B. Hanebury, Master in Chambers _______________________________________________________ [ 1 ] At issue in this case is whether a report prepared to analysis the economic loss claim of the plaintiff is subject to litigation privilege.

The defendant’s adjuster had originally misread the claim and when it was found to be in excess of $800,000.00, the adjuster requested an expert’s report on the claim. [ 2 ] The plaintiff is seeking the release of this report, arguing that liability had been acknowledged and therefore litigation was not contemplated and litigation privilege cannot apply. The defendant replies that litigation was within the contemplation of the insurer and the privilege should be respected.

[3] Two cases were referred to by the parties. The plaintiff relied on Moseley v. Spray Lakes Sawmills

(1980) Ltd., 1996 ABCA141, to argue that the report should be provided. [4] The Court in that case, after reviewing the conflicting lines of authority found in British Columbia and Saskatchewan, said atpara. 26: These two lines of authorities indicate different approaches to the investigation of accidents... The Saskatchewan cases seem to suggestthat there is no distinction between assessing liability and preparation for litigation. In my view there can be one without the other. Eachcase will turn on its own facts. I do accept that an investigation can occur for reasons other than preparation for litigation.

It can be doneto avoid litigation, or determine whether litigation will be a likelihood, or it can be done simply because there is an obligation under acontract of insurance that requires it. It depends on the facts. The litigation privilege has been carefully confined to narrow limits in orderto preserve the public interest in full disclosure.

The onus of proving that the privilege applies should rest squarely on the personclaiming the privilege. [5] In that case the court found at para. 27 that: While some “contemplation of litigation” may have been present in the sense that litigation may always be a reasonable possibilitywhere there is a serious accident, the facts of this case do not support the respondent’s assertion that the actions taken by the adjusterwere done to prepare for litigation proceedings.

They were intended to provide the insurer with information which could assess “whetherthere was any potential liability exposure” arising out of the accident. There had been no claim made. There was no solicitor involved orevidence that one was contemplated. The file was subsequently closed and the adjuster’s report was not forwarded to a lawyer. [6] Ultimately the court found that, if litigation was a purpose, it was only one purpose and not the dominant purpose. It heldthat the facts did not satisfy the test set out in Nova, an Alberta Corp. v.

Guelph Engineering Company Ltd., (1984) 1984 ABCA 38, 30 A.L.R. (2d) 183 (C.A.), that “the only case for exclusion which can be made is for documents which were brought intoexistence by reason of an intention to provide information to solicitors.” [7] The defendant relied on Specialty Steels v. Suncor Inc., [1997] A.J. No. 1025 (ABCA), to argue that the report is notproducible. [8] In that case a written internal report was prepared by Suncor after a fire. It was prepared pursuant to a written policy andprocedure for investigating and analysing accidents and incidents.

Its stated purposes did not include aiding in the prosecution or defenceof litigation arising out of the accident or incident.

However, before the report was completed, proceedings had been commenced againstSuncor and shortly after the report was completed Suncor filed its defence and counterclaim. [9] At issue in the case was the point in time at which the dominant purpose should be ascertained when privilege is claimed.The Court found that the appropriate time was when the report was created or delivered, and said at paragraph 10: The concept of dominant purpose assumes that creation of a document may be motivated by more than one intention.

There is no reasonin principle why a servient purpose of use in litigation cannot mature into the dominant purpose as the underlying investigationprogresses and external events change.

Likewise, the predominant intention for requesting a report may, over time, become of lessersignificance. [10] The Court reiterated, at paragraph 15, that the burden of proving the dominant purpose on a balance of probabilities is on theparty alleging privilege. [11] From this case law it is clear that litigation privilege is narrowly applied and the burden is on the party asserting the privilege.Furthermore, a document can have more than one purpose, but the purpose relevant to the assertion of privilege must be the dominantpurpose.

That purpose may develop over time, and the purpose at the time of the completion of a report can be considered.

[ 12 ] An adjuster acting for the defendant swore an affidavit. He was not the adjuster involved personally for most of the time in issue. He states that from a review of the file he believes that in mid-2006 the plaintiff’s insurer had contacted the defendant’s insurer advising that they would be advancing a “claim” arising out of the accident. No telephone notes or anything from the file to support this statement are attached to his affidavit.

He does not indicate that the word “claim” was in any way further described or qualified. [ 13 ] He states that because of the “excessive loss of use claim” the defendant’s insurer retained an economic expert. He then concludes that “[t]he Expert Report was requested in contemplation of litigation regarding the Accident [and] [t]he dominant purpose of the Expert Report at the time it was both requested and delivered to Intact was for use in litigation.” [ 14 ] These are not facts, but rather legal conclusions.

The sole fact the defendant’s adjuster relies upon is the allegation that in mid-2006 the plaintiff’s broker said she would be “advancing a claim”arising out of the accident. The broker for the plaintiff did put forward a “claim”, but to the defendant’s insurer. As is seen from her evidence, described below, litigation does not appear to have been the path contemplated by either party. [ 15 ] A similar dearth of evidence is not found in the two affidavits of the claims broker acting on behalf of the plaintiff.

She was involved during the course of the matter and states that the adjuster acting for the defendant admitted liability and paid the plaintiff’s claim for direct property damage to the plaintiff’s vehicle. An e-mail dated August 22, 2006, from the adjuster for the defendant to the claims broker for the plaintiff stated that the “submissions looked to be in order when I reviewed them” and she confirmed that she did not anticipate any issues. Included in those submissions were the amounts for both the property loss and the downtime claim.

Both were paid, apparently by way of account transfers. [ 16 ] However, in September, 2006, it was discovered that the downtime claim paid to the plaintiff’s insurer was $13,000 and the amount requested was $883,418.00. It appeared there had been a misunderstanding by the defendant’s adjuster when reading the claim and she had picked up the wrong number as the amount of the downtime claim. [ 17 ] When that error was realized, the adjuster for the defendant stated that the documentation would likely have to be forwarded on for review as the amount was over the monetary amount that she was authorized to handle.

At that point an investigative accountant, Kevin Copeland, was retained. It is his report that is in issue. He had a number of questions for the plaintiff as to how it had quantified its claim. [ 18 ] The claims broker for the plaintiff states that they continued to negotiate the plaintiff’s “downtime” claim for lost revenue in the interim but the defendant’s adjusters were waiting for the report of Mr. Copeland. She states that she was told repeatedly for many months that the downtime claim would be quantified, resolved and paid once Mr. Copeland’s report was finalized and reviewed.

As a result, she says, she continued to wait. [ 19 ] A number of emails were attached to her affidavits including a handwritten note of a telephone conversation with the defendant’s adjuster where the adjuster allegedly said that they had accepted the claim and would deal with it until finalized. That handwritten note is found on the claims broker’s copy of an email of November 3, 2006.

The email is from the defendant’s adjuster and says that “due to the dollar amount involved in this claim we do require the accountant’s report....It normally only takes a couple of weeks to get the report.” [ 20 ] In August, 2008, the plaintiff’s broker was advised that the report had been received and was being reviewed and the defendant’s adjuster “hope[d] to have some information for you by next week”. [ 21 ] No offer came and in 2009 the defendant’s new adjuster advised the plaintiff’s claims broker that a court house search had been undertaken and as no statement of claim had been filed, the claim was barred.

Conclusion

[ 22 ] The onus is on the defendant to satisfy the Court that the dominant purpose for the preparation of the report was the contemplation of litigation. As noted in Mosely the avoidance of litigation or the assessment of the likelihood of litigation is insufficient. [ 23 ] On the evidence before the Court the defendant has not met the test. [ 24 ] The evidence provided and the emails provided in support indicate that at the time the report was commissioned litigation was not contemplated. Nor is there evidence that it was contemplated at the time the report was received, some two years later.

While litigation is always a possibility if negotiations between insurers fail, the evidence does not indicate that it was the dominant purpose behind the report in issue at either its creation or receipt. [ 25 ] The report is to be released and is to be included as a producible document in the Affidavit of Records. [ 26 ] The applicant is entitled to its costs of this application. Heard on the 14 th day of December, 2011. Dated at the City of Calgary, Alberta this 10 th day of January, 2012. J.B. Hanebury M.C.C.Q.B.A. Appearances: Michael J. Bailey Maurice Law for the Plaintiff Jeffrey S.

Brunner for the Defendant