CNOOC Petroleum North America ULC v 801 Seventh Inc, 2021 ABQB 861

Court of Queen’s Bench of Alberta Citation: CNOOC Petroleum North America ULC v 801 Seventh Inc, 2021 ABQB 861 Date: 20211029 Docket: 1901 06261 Registry: Calgary Between: CNOOC Petroleum North America ULC Plaintiff/Defendant by Counterclaim - and - 801 Seventh Inc., OPTrust Office Inc., Centurion Holdings Ltd., Quantico Capital Corp., Westhills Development Corporation, Canadian Income Fund Group Inc., and TOKAY Capital Corp. Defendants/Plaintiffs by Counterclaim - and - CNOOC Limited Defendant by Counterclaim _______________________________________________________ Decision of the Honourable Madam Justice N.

Dilts _______________________________________________________ Introduction [ 1 ] CNOOC Limited applies to compel the production of a significant number of records over which the Defendants/Plaintiffs

by Counterclaim (the “Landlord Parties”) claim privilege. I am told that the Landlord Parties claim privilege over 2,673 records. CNOOC Limited on its behalf and on behalf of CNOOC Petroleum North America ULC (“CNOOC NA” and together “CNOOC”) challenges the claim of privilege over hundreds of those records. [ 2 ] CNOOC questions the validity of the Landlord Parties’ claims of privilege over 3 categories of records:

i) records over which solicitor-client privilege is claimed but that were not sent by or to a lawyer; ii) communications involving the Landlord Parties and their consultants relating to the testing of and investigation into the asbestos in the Building; and iii) communications between all or some of the members of a working group established by the Landlord Parties after being notified of the discovery of asbestos in the Building. [ 3 ] CNOOC expresses concern regarding the scope of the Landlord Parties’ claim of privilege given the evidence.

As well, it identifies anomalies in the Landlord Parties’ Affidavit of Records that it says betray a difference in legal opinion as to the scope of a party’s disclosure obligation. CNOOC seeks the court’s assistance to define the proper scope of the Landlord Parties’ claims of privilege and, if needed, to determine a path forward for resolving persistent disputes.

Anchoring its concerns regarding the Landlord Parties’ production is CNOOC’s allegation that the Landlord Parties prioritized their financial interests over the health and safety of the Building occupants by not undertaking the necessary abatement or removal of the asbestos.

It argues that the Landlord Parties are hiding discussions of this nature under claims of privilege. [ 4 ] In response, counsel for the Landlord Parties say they have repeatedly and diligently reviewed each document over which they claim privilege, have consulted with their clients to ensure accurate responses have been provided, and have explained the Landlord Parties’ claim of privilege with respect to every disputed document.

They maintain their claim of privilege over all of the disputed records and say it would be an inappropriate use of resources to require what would amount to a third review of their production. [ 5 ] The Landlord Parties have filed a number of affidavits in response to CNOOC’s application. In addition, there has been cross-examination on those Affidavits and questioning on the Landlord Parties’ Affidavit of Records.

Given the number of documents that remain in dispute, the evidence filed by the Landlord Parties largely responds to the broad categories of concern expressed by CNOOC, although it also addresses individual documents identified by CNOOC as illustrative of its concerns. Background [ 6 ] This action is under case management. Additional background on this litigation can be found at reported decisions: 2020 ABQB 198 , 2020 ABQB 224 and 2021 ABQB 81 . [ 7 ] For decades, CNOOC NA (or its predecessor companies) was the principal tenant in an office building located in downtown Calgary (the “Building”).

The Building is owned by 801 Seventh Inc. (“801” or “Landlord”) as bare trustee for six Beneficial Owners all of whom are named as Defendants/Plaintiffs by Counterclaim. CNOOC NA and 801 entered into a Lease dated December 30, 2013 under which CNOOC NA agreed to lease the majority of the Building. CNOOC Limited is the parent company of CNOOC NA. [ 8 ] In mid-November 2017, CNOOC NA discovered asbestos in the Building and retained a consultant to conduct environmental testing. CNOOC NA notified the Landlord of its findings at that time but did not share those findings.

According to the Landlord Parties, CNOOC NA told the Landlord that the matter was with legal. The Landlord asked to be kept informed of CNOOC NA’s assessment of the problem. According to Mr. Sardachuk, the corporate representative for Centurion Holdings Ltd, historically the parties had worked cooperatively to deal with issues in the Building. Mr. Sardachuk expected that they would do so with respect to these new concerns. At least in November and December 2017, the parties maintained contact and were congenial and cooperative.

According to the Landlord Parties, in this timeframe CNOOC NA advised them that there were no air quality issues in the Building and that the insulation could be removed using low-risk procedures. [ 9 ] The Landlord requested a meeting to discuss CNOOC NA’s findings; however, the parties did not meet until March 14, 2018. The Landlord Parties say that by March 14, 2018, they anticipated that there could be litigation. As a result, by the March 14, 2018 meeting, Mr. Shoraka, an officer of 801 and of OPTrust Office Inc., had involved Mr.

Watson, an in-house lawyer with OPTrust, to provide legal advice with respect to potential litigation. Mr. Watson had in turn retained external litigation counsel to provide legal advice to the Landlord Parties. Mr. Shoraka and Mr. Watson travelled to Calgary to meet with external litigation counsel. [ 10 ] At CNOOC NA’s request, the March 14, 2018 meeting between the Parties proceeded on a without prejudice basis. CNOOC NA informed the Landlord Parties that test results indicated the presence of asbestos.

According to the Landlord Parties, CNOOC NA also informed the Landlord Parties that it believed it could terminate the Lease. Shortly following the meeting, CNOOC NA provided the Landlord with the test results on a without prejudice basis. [ 11 ] Around this same time, the Landlord Parties formed what they describe as a working group that included Messrs. Shoraka, Watson, Sardachuk and Mr. Killi, the corporate representative of the Beneficial Owner Westhills Development Corp. The evidence is uncontroverted that this group communicated frequently on the asbestos issues.

Some of those communications have been produced. Others are subject to claims of privilege. At times Mr. Watson was included on the communications and at times he was not. The evidence is that Mr. Watson acted solely in a legal capacity with OPTrust. Messrs. Shoraka, Sardachuk and Killi acted in their capacity as directors and officers of 801. The purpose of the working group, according to its members, was to address the potential litigation. [ 12 ] On March 26, 2018, the Landlord Parties (through counsel) engaged a consultant, WSP, to review the findings of CNOOC NA’s consultant.

WSP conducted a pilot scale abatement and testing program in the Building on August 2-6, 2018. The results of that pilot were shared with CNOOC NA. The Landlord Parties also provided the pilot results to Occupational Health and Safety on August

17, 2018. In addition, WSP prepared a draft Assessment and Risk Evaluation Report dated August 24, 2018 which was provided CNOOC NA on August 24, 2018 and to Occupational Health and Safety on August 27, 2018. WSP’s mandate was ongoing and was to conduct a comprehensive assessment and risk evaluation for the abatement of spray insulation in the Building.

As part of that mandate, WSP prepared a report entitled Spray Insulation – Assessment and Risk Evaluation Program dated September 13, 2018, which has been produced. [ 13 ] In September 2018, CNOOC NA informed the Landlord Parties that its consultant Eco Abate had conducted testing which showed evidence of asbestos fibers. Until then, the Landlord Parties understood that neither they nor CNOOC NA believed that the asbestos presented any health or safety risk to the Building occupants.

By September 5, 2018, the Landlord Parties were aware that CNOOC NA claimed that its workforce was at risk of exposure in the Building. On September 28, 2018, CNOOC NA notified the Landlord Parties that it had entered into a lease for premises at another downtown building and that it planned to relocate its workforce in the last quarter of 2018. In May 2019, CNOOC NA terminated the Lease.

Issues [ 14 ] This application raises the following issues: 1. what is the boundary around the “continuum” of solicitor-client communications; 2. does the evidence support the claim that certain records relating to the Landlord’s testing and investigation of asbestos in the Building are privileged; 3. does common interest privilege extend to communications between all or some of the working group participants, paying particular note of whether Mr.

Watson was included on the communications; and 4. should there be further review of the disputed records and, if so, what is the appropriate process by which to do so. [ 15 ] In addition, I will address what I see as a preliminary issue regarding discharging the onus on this application. Preliminary Issue [ 16 ] The parties agree that the onus is on a party asserting privilege to establish privilege. The Landlord Parties say, however, that a sworn Affidavit of Records gives rise to a presumption in favour of privilege and satisfies their burden of establishing their claims of privilege.

They rely on the case of Raywalt Construction Co. Ltd. v JRB , 2005 ABQB 688 . [ 17 ] In Raywalt , Justice Veit addressed the process by which a party adverse in interest should test a counterparty’s claims of privilege. Her conclusion was that the party should cross-examine the counterparty on its affidavit of records before asking the court to undertake a review of privileged records. In reaching her conclusion, Justice Veit referenced the following excerpt from William A. Stevenson & Jean A.

Côté, Civil Procedure Encyclopedia vol 2 (Edmonton, Alberta: Juriliber, 2003) at 27-66: If the affidavit swears to facts which (if true) create privilege, and it is not contradicted, not cross-examined on, and not dubious on its face (such as blanket claims in preprinted forms), the court should give effect to the affidavit. [ 18 ] The Landlord Parties rely on that statement as authority for the position that a sworn Affidavit of Records gives rise to a presumption in favour of privilege and satisfies the burden of establishing privilege. [ 19 ] Each of Stevenson & Côté and the cases referenced therein, Opron Construction Co. v Alberta , 1989 ABCA 279 and Pocklington Foods Inc. v Alberta (Provincial Treasurer) , 1993 ABCA 69 , discuss the process for the court’s inspection of privileged records.

None of those authorities suggest, as the Landlord Parties say, that a sworn Affidavit of Records creates a presumption in favour of privilege. [ 20 ] An Affidavit of Records is prima facie evidence of a claim of privilege. It contains the basis on which a claim of privilege is founded. Where an Affidavit of Records is unchallenged, meaning the affiant has not been cross-examined, or there is no other evidence or error on its face that confronts a claim of privilege, the Affidavit of Records should be sufficient evidence to support a claim of privilege.

However, when a claim of privilege is challenged on its face, by cross-examination, or by conflicting evidence, the onus remains on the party asserting privilege to substantiate it. There is no presumption that displaces that onus on the party asserting privilege. As such, on an application such as this one where claims of privilege are challenged on their face, by conflicting evidence and by cross-examination, the party asserting privilege bears the onus of establishing privilege.

What is the boundary around the “continuum” of solicitor-client communications [ 21 ] The Landlord Parties claim solicitor-client privilege over certain communications between members of the Landlord Parties who are involved in the litigation but who are not lawyers. CNOOC says these communications between corporate representatives (non- lawyers) that do not copy counsel are, on their face, not privileged and only fall on the continuum of solicitor-client communications if they disclose legal advice. It says that the concept of a continuum of communications that fall within solicitor-client privilege must be

limited and should not extend to discussions amongst representatives of corporate parties where they discuss commercial objectives,risks, costs or strategy unless disclosure of the communication would disclose legal advice.

CNOOC asks me to set a boundary on thecontinuum of communications that fall within solicitor-client privilege by excluding records that are not copied to counsel and that donot disclose legal advice. [22] The Landlord Parties say that communications between non-lawyers that are essential to or further the existence of thesolicitor-client relationship are part of the continuum of communications that fall within solicitor-client privilege and are protected fromdisclosure.

They say that an assessment of whether a communication falls on the continuum of communications that fall within solicitor-client privilege requires the court to take a broad and contextual view of solicitor-client privilege. They say this must be so as corporateparties who act through their employees or representatives must be at liberty to discuss legal advice sought or received, and must be ableto gather the information needed to obtain or process that legal advice without risk that those communications will be produced,regardless of whether counsel is copied.

The Landlord Parties say those discussion may include discussions regarding strategy, risk,obligations and liabilities. [23] Unlike many of the cases cited that discuss the continuum of communications that fall within solicitor-client privilege, I havenot viewed the disputed documents. Instead, I have received high-level evidence intended to address the disagreement over these records.For example, in his April 27, 2021 Affidavit, Mr.

Shoraka says that “in an organization (such as OPTrust) individuals often need tospeak to each other to gather information to give to a lawyer (so we can get legal advice or give instruction) or to discuss what advice weshould seek, the results of any advice given or what instructions we should provide.

Those conversations often take place without alawyer…” and “when there is a group of parties who have common counsel (as the Landlord Parties do here), we often have discussionsamong ourselves to gather information to give to a lawyer (so we can get legal advice or give instruction) or to discuss what advice weshould seek, the results of any advice given or what instructions we should provide.

Those conversations often take place without alawyer…” He also deposes that the Landlord Parties discussed with their experts the legal advice they should seek, legal advicereceived, or the instructions to provide to counsel. Although cross-examined on his April 27, 2021 Affidavit, nothing in that cross-examination contradicts Mr. Shoraka’s evidence regarding these communications. [24] As with so many matters that the court is asked to rule on, it is imprudent, if not impossible, to articulate a bright line of wherea continuum of communications that fall within solicitor-client privilege ends.

Absent reviewing the documents, a judge can onlyarticulate the principles that should apply to a consideration of the issues. It is otherwise impossible to pronounce with certainty whereany given document should fall on the continuum.

Having articulated the applicable principles, all that can be done is to discuss howthose principles apply to the general categories of documents described in the evidence. [25] Any discussion regarding the boundary around the continuum of communications that fall within solicitor-client privilegemust be set by reference to the fundamental purpose of solicitor-client privilege: to allow for and to protect full free and frankcommunication between client and lawyer. The rationale underlying solicitor-client privilege has been extensively discussed and is not indispute.

Solicitor-client privilege is fundamental and foundational to the integrity of the justice system and contributes to the public’sconfidence in the administration of justice. Described as close to absolute, it protects from disclosure communications between client andlawyer where legal advice is sought or given. [26] In General Accident Assurance Co. v Chrusz, (ON CA), 1999 CarswellOnt 2898 (ONCA), Doherty, JAspoke for the majority on the issue of solicitor-client privilege and said at para 94: In

summary, I see the privilege as serving the following purposes: promoting frank communications between client and solicitor wherelegal advice is being sought or given, facilitating access to justice, recognizing the inherent value of personal autonomy and affirming theefficacy of the adversarial process. Each of these purposes should guide the application of the established criteria when determining theexistence of client-solicitor privilege in specific fact situations. [27] The criteria needed to establish solicitor-client privilege was set by the Supreme Court in Solosky v The Queen, (SCC), [1980] 1 SCR 821.

Solicitor-client privilege extends to a communication between solicitor and client which entails the seekingor giving of legal advice and which is intended by the parties to be confidential. Generally, solicitor-client privilege applies as long as thecommunication falls within the usual and ordinary scope of the professional relationship. The privilege, once established, is broad andall-encompassing: Pritchard v Ontario (Human Rights Commission), 2004 SCC 31 at para 16.

We know that solicitor-client privilegeapplies to confidential communications between a solicitor and client when legal advice is sought, whether or not in relation to litigation:Alberta (Municipal Affairs) v Alberta (Information and Privacy Commissioner), 2019 ABQB 274 at para 8. [28] Solicitor-client privilege also encompasses a continuum of solicitor-client communications. This idea of a continuum ofcommunication arose first in the context of communications between lawyer and client.

Case law resolved that solicitor-client privilegeencompasses not only the actual giving or receiving of legal advice, but also the surrounding communications relating to that advice.

Anearly comment on this continuum of communications appears in Samson Indian Nation and Band v Canada, (FCA): The legal advice privilege protects all communications, written or oral, between a solicitor and a client that are directly related to theseeking, formulating or giving of legal advice; it is not necessary that the communication specifically request or offer advice, as long as itcan be placed within the continuum of communication in which the solicitor tenders advice; it is not confined to telling the client the lawand it includes advice as to what should be done in the relevant legal context. [29] Privilege extends to the continuum of communications between lawyer and client so as to allow the lawyer to understand theclient’s circumstances and advise accordingly, and for the client to receive, understand and process that advice.

Communications areprotected if they fall within that continuum, even if the communication does not itself specifically include advice or a request for advice:Blood Tribe v Canada (Attorney General), 2010 ABCA 112 at para 26 citing Balabel v. Air India, [1988] Ch 317, [1988] 2 All ER 246at 254 (CA): Privilege obviously attaches to a document conveying legal advice from solicitor to client and to a specific request from the client forsuch advice. But it does not follow that all other communications between them lack privilege. In most solicitor and client relationships,

especially where a transaction involves protracted dealings, advice may be required or appropriate on matters great or small at variousstages. There will be a continuum of communication and meetings between the solicitor and client. The negotiations for a lease such asoccurred in the present case are only one example. Where information is passed by the solicitor or client to the other as part of thecontinuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach.

A letter from theclient containing information may end with such words as "please advise me what I should do." But, even if it does not, there willusually be implied in the relationship an overall expectation that the solicitor will at each stage, whether asked specifically or not, tenderappropriate advice.

Moreover, legal advice is not confined to telling the client the law; it must include advice as to what should prudentlyand sensibly be done in the relevant legal context. [30] In Blood Tribe, the Court of Appeal extended the continuum of solicitor-client privilege to include documents that did notcontain legal advice but that were made in confidence “as part of the necessary exchange of information between the solicitor and clientfor the ultimate objective of the provision of legal advice.” [31] Also referring to Balabel, the meaning of “continuum” was the subject of comment in Canada (Information Commissioner)v Canada (Minister of Public Safety and Emergency Preparedness), 2013 FCA 104 at paras 27-29: Part of the continuum protected by privilege includes “matters great and small at various stages...includ[ing] advice as to what shouldprudently and sensibly be done in the relevant legal context” and other matters “directly related to the performance by the solicitor of hisprofessional duty as legal advisor to the client.” See Balabel v.

Air India, [1988] 2 W.L.R. 1036 at page 1046 per Taylor L.J.; ThreeRivers District Council v. Governor and Company of the Bank of England, [2004] UKHL 48 at paragraph 111. In determining where the protected continuum ends, one good question is whether a communication forms “part of that necessaryexchange of information of which the object is the giving of legal advice”: Balabel, supra at page 1048. If so, it is within the protectedcontinuum.

Put another way, does the disclosure of the communication have the potential to undercut the purpose behind the privilege –namely, the need for solicitors and their clients to freely and candidly exchange information and advice so that clients can know theirtrue rights and obligations and act upon them?

For example, where a Director of a government department receives legal advice on how certain proceedings should be conducted andthe director so instructs those conducting proceedings, the instructions, essentially cribbed from the legal advice, form part of thecontinuum and are protected: Minister of Community and Social Services v. Cropley (2004), (ON SCDC), 70 O.R.(3d) 680 (Div. Ct.).

Disclosing such a communication would undercut the ability of the director to freely and candidly seek legal advice. [32] However, where parties have moved into operationalizing legal advice for the purpose of conducting their regular business,those communications do not form part of the protected continuum of communication, even where shaped by legal advice: Canada(Information Commissioner) v Canada at para 33. [33] This continuum of solicitor-client communication has been expanded to include communications on which a lawyer is notcopied or included.

In Bank of Montreal v Tortora, 2010 BCSC 1430 at para 12, the court found that: [solicitor-client] privilege will extend to documents between employees which transmit or comment on privileged communications withlawyers. The privilege will also extend to include communications between employees advising of communications from lawyer toclient (Mutual Life Assurance Co. of Canada v. Canada (Deputy Attorney General), [1988] O.J. No. 1090 (Ont.

S.C.J.). [34] In Alberta (Municipal Affairs), the continuum of solicitor-client communication was expanded to include email chains withina client group that requested and gave information, made inquiries, answered questions and otherwise related topically tocommunications, matters and issues in which legal counsel were directly involved: at para 17. [35] In Reid v British Columbia (Egg Marketing Board), 2006 BCSC 346, the court upheld the defendant’s claim of solicitor-client privilege over a memorandum sent by the general manager of the Egg Marketing Board to the Board’s directors in which thegeneral manager reported on discussions with legal counsel about specialty egg pricing.

The plaintiffs argued that the memorandumrelated to non-legal business advice to the directors. In upholding the claim of privilege, the court said at para 13: There are no doubt considerations of pure policy in relation to egg pricing. However, nothing in the brief text of the memorandumindicates that counsel’s advice was confined to those considerations. The memorandum refers to discussions with counsel about one ofthe matters in issue between the parties in these proceedings, and refers specifically to the plaintiff Mr. Reid.

Its brief content isconsistent with a report on advice as to the legal ramifications of a certain course of action.

As such, it would constitute legal adviceprotected by solicitor-client privilege. [36] From this, I offer the following general observations regarding the continuum of communications that fall within solicitor-client privilege. [37] First, based on my view of the evolution of the law regarding privileged communications and having regard to thefundamental purpose underlying the recognition and preservation of solicitor-client privilege, a client’s internal communications aboutits alternatives within a legal framework provided by a lawyer can be privileged.

Specifically, if a lawyer advises its client on its rightsand obligations (including what should be done or not done, for example), the client’s internal communications relating to that advicecan be privileged. For the privilege to extend, the legal advice that creates the legal framework within which the communications occurmust be discernible in the document, even if not explicitly referenced. If the legal advice cannot be discerned within the communications,then privilege will not attach.

In my view, the recognition of privilege over internal communications that discuss alternative courses ofaction within the framework of legal advice protects from disclosure internal communications that are necessary to flesh out, assess,discuss and formulate actions or strategy that are based on legal advice. [38] Second, where parties have gone beyond gathering, assessing or discussing legal advice and have moved into the realm ofoperationalizing legal advice, privilege will not attach.

Solicitor-client privilege is intended to protect from disclosure thosecommunications which, if disclosed, have the potential to undercut the purpose behind the privilege – namely, the need for solicitors and

their clients to freely and candidly exchange information and advice so that clients can know their true rights and obligations and act upon them. Once the client crosses into the operationalization of advice, privilege ceases. On this analysis, the implementation of a decision, policy or strategy that is based on legal advice would not be privileged. [ 39 ] Given that framework and considering the evidence of Mr.

Shoraka, to the extent that counsel’s legal advice addressed what could be done, internal records regarding that advice, including the development of strategy, the assessment of risk, or the consideration of obligations in respect of that advice, could be protected by solicitor-client privilege if they fall within the guidelines described above. [ 40 ] Having offered these observations, the effort of distinguishing records on these lines will take careful review, particularly over records created after legal advice is received.

One important consideration will be whether, at the point the record was created, the client had determined its course of action and moved into implementation.

Does the evidence support the claim that certain communications involving the Landlord Parties and their consultants relating to the testing of and investigation of asbestos in the Building are privileged records? [ 41 ] CNOOC expresses concern regarding the Landlord’s claim of privilege over certain records relating to the testing undertaken by the Landlord’s consultants, WSP and Renegade. [ 42 ] CNOOC says that at least until WSP issued its September 13, 2018 report, the work undertaken by the consultants was not for the dominant purpose of litigation, but to discharge the Landlord’s obligations under the Lease.

It then argues that because the consultants’ mandate was fact gathering in the discharge of the Landlord’s obligations under the Lease, any discussions regarding the consultants’ work cannot be subject to a claim of privilege. CNOOC speculates that the Landlord Parties must have had non-privileged discussions amongst them and with their consultants about the testing and abatement work, and that they have improperly claimed privilege over those records.

It seeks production of those non-privileged communications about, for example, the cost of abatement, and decisions made or considered regarding the abatement. [ 43 ] The Landlord Parties assert both solicitor-client privilege and litigation privilege over these disputed records. The Landlord Parties say that simply because their consultants were retained to investigate CNOOC NA’s claim of asbestos does not mean that all communications regarding the consultant’s work or findings cannot be subject to a claim of privilege.

They say the Landlord Parties sought legal advice regarding their duties and obligations under the Lease. Moreover, they say the Landlord Parties anticipated litigation no later than March 2018 and that some discussions with their consultants and amongst the Landlord Parties regarding the testing and abatement work were undertaken for the dominant purpose of litigation. It says any non-privileged communications involving or respecting the Landlord Parties and their consultants have been produced in the litigation; the Landlord Parties claim privilege over others. [ 44 ] The Affidavit of Mr.

Shoraka sworn April 27, 2021 responds to CNOOC Limited’s claim. That evidence, summarized, is that: 1. the Landlord Parties undertook testing and abatement work in a good faith effort to satisfy their obligations as landlords; 2.

WSP’s work product has been produced as have non-privileged communications relating to that work product; 3. the Landlord Parties sought and obtained legal advice regarding its duties and obligations as landlord; and 4. the Landlord Parties reviewed and discussed the test results and abatement issues for the dominant purpose of litigation at least by March 2018. [ 45 ] The evidence is clear and uncontroverted that when CNOOC NA disclosed to the Landlord Parties the presence of asbestos at the March 14, 2018 meeting, the Landlord Parties recognized that they had a role and responsibility as landlord to address their tenant’s concerns, and to protect the health and safety of occupants of the Building.

The Landlord Parties acknowledged in questioning that their obligation was to investigate the presence of asbestos and to conduct testing. Part of the purpose of retaining their consultants, including WSP, was to understand the extent of asbestos in the Building.

The Landlord Parties say that records relating to this obligation have been produced, including WSP’s pilot scale abatement and testing program, WSP’s draft Assessment and Risk Evaluation Report, and WSP’s Spray Insulation – Assessment and Risk Evaluation Program, as well as “hundreds” of non-privileged records relating to testing or abatement issues. [ 46 ] An assessment of a party’s claim of privilege must be contextual, meaning that the Landlord Parties’ claim of litigation privilege must be considered in the context of the landlord and tenant relationship that existed between the parties.

There is no dispute that much of the early work undertaken by the Landlord to investigate and understand the asbestos issue arose out of its obligation as landlord under the Lease and in light of its obligation as Building owner to ensure the safety and health of the Building occupants. However, the question of privilege over any testing-related records is not resolved simply by looking at why the Landlord Parties’ consultants were directed to investigate the asbestos.

The question is whether the Landlord Parties’ discussions about that non-privileged work are also not privileged. [ 47 ] An assessment of a claim of privilege requires an examination of t he circumstances surrounding the creation of a particular record: Pinder v Sproule , 2003 ABQB 33 at para 43 . There may be privileged discussions with counsel about the testing data in seeking

or obtaining legal advice; there may be discussions regarding the data, including with the consultant, that were for the dominant purpose of litigation. The question of whether a document attracts a claim of privilege requires an examination of the record itself and the circumstances of its creation; it is not answered simply by considering whether the underlying subject matter is privileged.

I agree with the Landlord Parties that simply because their consultants were retained to investigate CNOOC NA’s claim of asbestos does not mean that all communications regarding the consultants’ work or findings are not privileged. The evidence of the Landlord Parties is that they sought legal advice as to the Landlord’s obligations under the Lease and with respect to the Building generally, including advice as to the nature and scope of any investigation to be undertaken and obligations arising as a result of the test results.

Records of that nature can properly be subject to a claim of privilege. [ 48 ] As a result, while the results of the investigation conducted to discharge the Landlord’s duties under the Lease are not subject to a claim of solicitor-client privilege, communications with counsel regarding the investigation could be, as could be communications that fall along the continuum of solicitor-client communications already discussed. [ 49 ] In addition, I am satisfied on the evidence that by March 14, 2018, the Landlord Parties’ communications, including communications with their consultants, could have been for the dominant purpose of litigation.

That position is both plausible and supported by the evidence. [ 50 ] The evidence amply demonstrates that by March 14, 2018, the Landlord Parties were concerned about the risk of litigation and in particular that CNOOC NA would attempt to exit the Lease. The threat of litigation need not have arisen out of the non-privileged testing conducted by its own consultants.

In fact, none of the witnesses suggest that it did; instead they say the threat of litigation arose because of how CNOOC NA’s allegations unfolded and how they were presented: CNOOC NA’s November 2017 advice that the issue of asbestos in the Building was with legal; CNOOC NA’s refusal to meet to discuss testing results until March 2018; CNOOC NA’s insistence that the March 14, 2018 meeting be without prejudice; and CNOOC NA’s delivery of the testing results on a without prejudice basis.

In response to their rising concerns, by March 2018, OPTrust involved internal counsel whose mandate was to assist and advise with respect to litigation, and the Landlord Parties retained external litigation counsel. Those steps satisfy me that by March 14, 2018, the Landlord Parties could have had conversations relating to the testing and abatement work for the dominant purpose of litigation. [ 51 ] CNOOC argues that the Landlord Parties could not reasonably have anticipated litigation until the presence of asbestos had been fully investigated and they received WSP’s September 2018 report. I disagree.

That position fails to consider the Landlord Parties’ view of the information it received from CNOOC NA and the manner that information was received. I am also not satisfied that Mr. Sardachuk’s evidence supports the conclusion CNOOC NA invites me to reach. Mr. Sardachuk’s evidence was that he anticipated litigation by the March 2018 meeting and that after that, his suspicions as to CNOOC NA’s motivations evolved. Rising suspicions as to a party’s motivations do not answer the question as to when records may have been created for the dominant purpose of litigation.

I am satisfied that the evidence supports the conclusion that by March 14, 2018, records may have been created for the dominant purpose of litigation. [ 52 ] Having said that, I am not satisfied that records that predate when counsel was retained could have been prepared for the dominant purpose of litigation. I say that for the following reasons. First, excerpts of the Questioning of Mr. Sardachuk December 8, 2020 make clear that in December 2017, Mr. Sardachuk had no reason to be concerned about CNOOC NA leaving the Building or suing 801; and that he was not concerned about the reported contamination.

He communicated that to at least Mr. Killi. [ 53 ] Second, although Mr. Shoraka’s evidence in his April 27, 2021 Affidavit is that he and OPTrust were concerned about the prospect of litigation with CNOOC from the moment CNOOC told the Landlord Parties about the discovery of asbestos and that the matter was with legal in November 2017, I am not satisfied that this concern supports a claim that records prior to March 14, 2018 were prepared for the dominant purpose of litigation. Mr.

Shoraka provided no better evidence than what I have referenced and took no other action that would indicate that he anticipated litigation. I am satisfied that the evidence supports the conclusion that from and after Mr. Watson’s engagement and the involvement of external litigation counsel shortly before the March 14, 2018 meeting, the Landlord Parties could reasonably have engaged in discussions, including discussions about testing and abatement, for the dominant purpose of anticipated litigation.

Does common interest privilege extend to communications between all or some of the members of a working group established by the Landlord Parties after being notified of the discovery of asbestos in the Building. [ 54 ] CNOOC does not dispute that the Landlord Parties have a common interest in this litigation. It says, however, that communications between and among Mr. Watson on one hand and Messrs. Killi and Sardachuk on the other, or records that convey Mr. Watson’s legal advice to someone other than OPTrust, cannot be the subject of a claim of solicitor-client privilege. CNOOC argues that Mr.

Watson had no solicitor-client relationship with either Mr. Killi or Mr. Sardachuk and therefore that the sharing of his privileged solicitor-client advice resulted in a waiver of that privilege. [ 55 ] The evidence I have is that the Landlord Parties’ working group was made up of Messrs. Killi, Shoraka, Sardachuk and Watson. The evidence of Mr. Sardachuk was that Mr. Watson was not always included in the working group communications, but that even if Mr. Watson was not included, the remaining members talked about the litigation. Mr.

Sardachuk was questioned at some length about how communications between working group members unfolded and why it was that Mr. Watson was not copied. None of his answers suggest that the working group only discussed litigation if Mr. Watson was included. In fact, his evidence is the opposite.

The evidence is that the litigation was a “significant aspect” of what the group discussed and that they often had exchanges of communication to evaluate the legal advice they received or to discuss legal strategy as co-owners. [ 56 ] Common interest privilege may preserve a party’s claim to either solicitor-client privilege or litigation privilege where a party knowingly shares privileged communications with a third party: see the lengthy discussion in Pinder at paras 42-71 .

In the context of solicitor-client privilege, the question is whether, in the circumstances, the privilege holder and the recipient have sufficient common

interest not only in the subject matter of the privileged communication, but in its confidential nature, such that its disclosure does not amount to a waiver of the solicitor-client privilege. Most commonly, disclosure of solicitor-client communications to a third party is a waiver of solicitor-client privilege because of a loss of the confidentiality that underlies the privilege: Pinder at para 49 .

As a consequence, in considering common interest privilege, it is necessary and relevant to consider the context of the disclosure, including the relationship between the privilege holder and the recipient, and whether the recipient received the information in confidence. [ 57 ] In the context of litigation privilege, the common interest inquiry is whether the parties share a common interest in current or anticipated litigation such that the sharing of information does not amount to a waiver of the privilege that protects their investigation and preparation of the case for trial : Pinder at para 61 .

The general principle of common interest privilege in the context of litigation privilege was first articulated in Buttes Gas and Oil v. Hammer (No. 3) [1980] 3 All E.R. 475 (C.A.) where Denning, L.J., referenced at length in Chrusz , discussed the “self-same interest” that people or organizations may have in litigation that entitles them to jointly develop the litigation brief.

The language of Denning, LJ in Buttes is instructive: In all such cases I think the courts should, for the purposes of discovery, treat all the persons interested as if they were partners in a single firm or departments in a single company. Each can avail himself of the privilege in aid of litigation. Each can collect information for the use of his or the other's legal adviser. Each can hold originals and each make copies. And so forth.

All are the subject of the privilege in aid of anticipated litigation, even though it should transpire that, when the litigation is afterwards commenced, only one of them is made a party to it. No matter that one has the originals and the other has the copies.

All are privileged. [ 58 ] This perspective on common interest privilege is similarly reflected in the following excerpts from Justice Callum MacLeod, An Update on Privilege, 2018 28 th Annual Civil Litigation Conference 3, 2018 CanLIIDocs 10764 , cited by CNOOC in its brief: [Common interest privilege] can also arise when clients with separate lawyers share privileged information for the purpose of coordinating legal activities. … Co-defendants in litigation may share litigation strategy, expert opinions or legal advice with the clear understanding that they are for the purpose of making common cause against the plaintiff. [ 59 ] The case law recognizes that parties allied against a common adversary may share privileged documents without waiving privilege: YBM Magnex International Inc. (Re) , (2000), 2000 ABCA 284 at para 18 . [ 60 ] In the present case, I have no doubt that the Landlord Parties share a common interest in this litigation and did so as early as March 14, 2018 when litigation was reasonably contemplated.

The Landlord as legal owner of the Building and the Beneficial Owners as beneficial owners of the Building have the same interest in the litigation and should be treated as such. [ 61 ] I am equally satisfied that the sharing of information amongst the working group members, including the sharing of legal advice provided by Mr. Watson to OPTrust, falls within the protection of common interest privilege. Although Mr. Watson’s solicitor- client relationship existed solely with OPTrust, OPTrust’s sharing of Mr. Watson’s advice with Mr. Killi and Mr.

Sardachuk falls within the common interest exception to waiver either as common interest solicitor-client privilege or common interest litigation privilege. Harkening back to the language in Buttes , parties who share a common interest in litigation are entitled to safely share with the others information received from their legal advisors. I am satisfied that the working group communications may properly be entitled to a claim of privilege either as solicitor-client privilege or as litigation privilege.

Conclusion [ 62 ] As already expressed, I was asked to provide general guidance on a collection of privilege issues. These reasons are my attempt to do so in an effort to establish consistency when viewing records for production. [ 63 ] The Landlord Parties are directed to consider their production and claims of privilege in light of these reasons and to identify to CNOOC whether any documents are no longer subject to a claim of privilege. That work should be completed within 30 days.

A copy of that letter should be provided to me. [ 64 ] After receiving the Landlord Parties’ letter disclosing any changes to its claims of privilege, CNOOC is to provide a specific list of the documents that remain in dispute, if any.

If there remains a dispute about what is producible given my directions, the parties may appear before me to make submissions on the appointment of a referee to act as facilitator, pursuant to the procedure provided for by Rules 6.44 – 6.46 of the Rules of Court and in light of the procedure set out in Alberta v Suncor Energy Inc ., 2016 ABQB 26 4 paras 95-97 ; varied, in part on appeal, 2017 ABCA 221 para 52 , leave to appeal to SCC refused (2018 CarswellAlta 882 , May 03, 2018). Heard on the 27 th day of August, 2021. Dated at the City of Calgary, Alberta this 29 th day of October, 2021.

N. Dilts J.C.Q.B.A. Appearances: Jerry Patterson, Q.C. Daniel Dickey Dentons for CNOOC Limited Michael D. Mysak David R. McKinnon Bennett Jones LLP for 801 Seventh Inc., OPTrust Office Inc., Centurion Holdings Ltd., Quantico Capital Corp., Westhills Development Corporation, Canadian Income Fund Group Inc., and TOKAY Capital Corp. Julia A. Lisztwan Burnet, Duckworth & Palmer LLP for CNOOC Petroleum North America ULC