IN THE SUPREME COURT OF NOVA SCOTIA
Citation: Nova Scotia (Attorney General) v. Royal & Sun Alliance Insurance Company of Canada, 2003 NSSC 226
Date: 20031104
Docket: S.H. 149142
Registry: Halifax
Between:
The Attorney General of Nova Scotia, Representing
Her Majesty The Queen in Right of the Province of Nova Scotia
Plaintiff
v.
Royal & Sun Alliance Insurance Company of Canada, Guardian Insurance Company
of Canada, The Halifax Insurance Company, Wellington Insurance Company,
General Accident Assurance Company of Canada and Quebec Assurance Company
Defendants
DECISION ON PRODUCTION OF DOCUMENTS
FROM THE KAUFMAN INVESTIGATION
Revised Decision: The text of the decision has been corrected according to the erratum released December 5, 2003.
Judge: The Honourable Justice Gerald R. P. Moir
Heard: October 27, 2003
Decision: November 4, 2003 (Orally)
Written Release: November 20, 2003
Counsel: Duncan Beveridge Q.C. for the Honourable Fred Kaufman
Robert M. Purdy Q.C., Peter M. Rogers and Dale Darling for the Plaintiff, The Attorney General of Nova Scotia
George MacDonald Q.C. and Jane O’Neill for the Defendants The Halifax Insurance Company and Wellington Insurance Company
Daniel Ingersoll for the Defendant General Accident Assurance Company of Canada
Robert Bell and William Augustus Richardson for the Defendants Royal & Sun Alliance Insurance Company of Canada and Quebec Assurance Company
Moir, J.: (Orally)
[1] The Province of Nova Scotia alleges that the defendant insurers failed to defend the Province and to provide indemnification against claims of those who say they were abused when they were children and were in the custody of provincial institutions.
[2] As a result of police investigations criminal charges and criminal proceedings in the early 1990's, the public became aware that some children had been sexually abused at the Nova Scotia School for Boys in Shelburne and the Nova Scotia School for Girls in Truro during the 1960's and 1970's. In 1994 the Honourable Stuart G. Stratton, Q.C., former Chief Justice of New Brunswick, was asked by the Minister of Justice to investigate this subject. Mr. Stratton reported upon numerous claims of abuse at Shelburne, at the Truro School for Girls, at the residential treatment centre in Bible Hill, a facility for mentally challenged children, and at other locations. The Province set up an alternate dispute resolution program. Those who had sued and those who otherwise had made claims as well as those contemplating claims were invited into this process. Some of the defences mounted by the insurers focussed upon that process. It is alleged that the Province made unauthorized admissions, that the Province unilaterally contracted settlements and that the Province operated the ADR program negligently, such that invalid claims were paid and valid claims were over compensated. The government and the public also had concerns about the ADR process. The Minister asked the Honourable Fred Kaufman, C.M., Q.C., for many years a Member of the Quebec Court of Appeal, to investigate this subject. He reported in January 2002. His criticisms of the ADR process were scathing. The insurers would like to see his work notes and other materials. The Province agrees. Mr. Kaufman resists. I have decided to order Mr. Kaufman to turn his work product over to the Province, who will make disclosure after ascertaining relevancy and absence of privilege. My reasons are as follows.
[3] The application is for an order to compel the Province, as a party, to produce the documents generated by Mr. Kaufman or his staff or to compel Mr. Kaufman, as a third party, to produce them himself. The application to compel the Province is brought under rule 20.06(1), which reads:
The court may order the production, for inspection by any party or the court, of any document relating to any mater in question in a proceeding at such time, place and manner as it thinks just.
[4] Rule 20.06 has not been changed since the present rules were first established in 1972 by the Supreme Court Judges pursuant to their subordinate legislative powers under the Judicature Act. The judges of 1972 cross-referenced rule 20.06(1) to English order 24, rules 11 and 12. However, the English rules only provided for production by parties. As I read it rule 20.06(1), which differs from the English rule of the time, covers both production by a party and production by a stranger. In any case, the judges provided specifically for documentary production by third parties in rule 20.06(2), a provision not cross-referenced to the English rules and not to be found in the English rules of the time. The rule provides:
Where a document is in the possession, custody or control of a person who is not a party, and the production of the document might be compelled at a trial or hearing, the court may, on notice to the person and any opposing party, order the production and inspection thereof or the preparation of a certified copy that may be used in lieu of the original.
The possibility of obtaining production from strangers is consistent with the wide provisions for discovery of witnesses also adopted by the Court in 1972. However, the final provision in rule 20.06 imposes restrictions upon documentary production that do not extend to discovery of witnesses or, for that matter, the disclosure of party documents under rules 20.01 and 20.02. Rule 20.06(3) provides:
An order for the production of any document for inspection by a party or the court shall not be made unless the court is of the opinion that the order is necessary for disposing fairly of the proceeding or for saving costs and is not injurious to the public interest.
Confining oneself to the literal meaning of the immediate words, compulsory production by a party or a stranger is subject to these restrictions:
1) The document must relate to “any matter in question” in the proceeding. 20.06(1).
2) The court must be satisfied that production is “necessary for disposing fairly of the proceeding or for saving costs”. 20.06(3)
3) The court must be satisfied that production “is not injurious to the public interest”. 20.06(3)
In the case of compulsory production by a stranger, the text offers a fourth restriction:
4) It must be shown that “the production of the document might be compelled at a trial or hearing”. 20.06(2)
“Hearing” refers to the disposition of originating applications and interlocutory motions: rule 1.05(i).
[5] Thus, it may be that the standard applicable where production is sought from a stranger is somewhat more stringent than where production is sought from a party. Based solely on the text, production may be compelled from a party if the document relates to any matter in question in the proceeding, which would include documents having investigative value (reasonably contemplated to lead to admissible evidence). On the other hand, there may be a need to show tentatively the admissibility of a document sought from a third party. I say tentatively because of “might” in 20.06(2). So, I begin with the question whether documents in the possession of Mr. Kaufman, a stranger to the action, are thereby in the possession of the Province, a party.
[6] The plaintiff and the defendants maintain that Mr. Kaufman holds the documents as an agent of the Province and, consequently, the Province should be obligated to exercise its right of access to the documents and should produce for inspection those of the documents as are relevant and are not privileged. Mr. Kaufman’s position is that there is no need to determine the status of his relationship with the Province. He has the documents. He has refused to give them to the Province. (In part, this appears to be because Mr. Kaufman promised confidentiality to some whose information may be recorded in the documents.) Consequently, the documents are not in the control of the Province.
[7] On behalf of Mr. Kaufman, Mr. Beveridge referred to Canada v. Spencer, [2000] S.J. 514 (S.C.A.). That case involved a number of actions concerning allegations of abuse at native residential centres. Concerning documents such as income tax returns, medical records and employment records pertaining to the plaintiffs, a Queen’s Bench judge gave directions that disclosure and production was necessary where records were in a plaintiff’s “possession or power” and that a document would not be in the plaintiff’s possession or power “if the holder requires a fee for production of the document or if the holder can refuse to produce the document” (see para. 9). The Court of Appeal overturned the Queen’s Bench decision in part. The duty to disclose documents was broader than the Queen’s Bench order recognized and the Court of Appeal cast the obligation to produce this way:
Paragraph 1(d) of the chambers judge’s order should read: A document is in a party’s power or control if that party has knowledge of the document and has sufficient ability to enable him to reasonably be capable of retrieving the document from the holder. The document is still in the person’s power notwithstanding that the holder of the document demands a fee to produce the document. If the holder of the document refuses to produce the document, it can no longer be considered to be within the control of the litigant and the parties will have to resort to Rule 236(1) to force production. [para.31]
Rule 236(1) in Saskatchewan deals with production of documents by third parties. Mr. Beveridge emphasizes these passages from the Court of Appeal decision at para. 21:
Here the documents sought by the appellant, the medical, educational and employment records, are within the power of the respondent plaintiff. It may well be that in some circumstances health or taxation officials may refuse the plaintiff access to those records and in those circumstances it is reasonable to conclude that the plaintiff can not retrieve the documents. If the officials refuse access, the documents can no longer be considered to be within the plaintiff’s “power” and the appellant’s recourse is to resort to Rule 236(1). I repeat, that is however a separate issue and the respondent plaintiff has an obligation to use reasonable efforts to discover and disclose the existence of documents.
and at para. 23:
The statements of the chamber judge in his fiat are inconsistent with the form of the order in para. 1(d). A document is still in the power or control of the litigant even if the third party requires a fee for producing it. It only ceases to be within the control of the litigant if the holder of the document refuses to produce the document. In those circumstances, the party adverse will have to resort to Rule 236(1) in order to force production.
With respect, I do not agree that the decision in Canada v. Spencer assists Mr. Kaufman’s position. It did not deal with the situation where the unwilling holder is an agent of the party. When the Court said “If the holder of the document refuses to produce the document...[etc.]” the Court had in mind Revenue Canada, the holder of tax records; Saskatchewan Health or hospitals or doctors, the holders of medical records; Employment Insurance or former employers, the holders of employment records; schools or the Education Department, the holders of education records, and; the police or the Department of Justice or the courts, holders of criminal records. None of these were in an agency relationship with the former school residents. The present question concerns possession where the holder is identified with the plaintiff as agent. Further, interpretation of our rules on discovery, disclosure and production has followed a path which emphasises the exceptional breadth of our provisions.
[8] As a first, nearly preliminary, point, our rules differ from Saskatchewan’s and most others in failing to have maintained clear distinctions between discovery of documents, disclosure of documents and production of documents. I believe that Nova Scotia was second in Canada only to Alberta in effecting a modern, radical overhaul of Court rules. Mindful of the Alberta Rules and the American Federal Court Rules, Nova Scotia superimposed some fundamental reforms over a text which had been touchstone in our procedures for over a century, the English rules as amended from time to time. That fact is not merely of historical interest. It is of assistance in interpreting the rules when they appear to overlap or even to contradict.
[9] Under our rules, there are numerous ways one can get at documents in the hands of a party or a stranger to the litigation. Rule 18 provides for the broadest discovery. Our provisions are far more broad than Saskatchewan’s. Rule 18.11 provides for production of documents referred to in discovery and the form of notice of examination prescribed by the rules is, in effect, a subpoena duces tecum. This opens a way to finding any probatively or investigatively relevant document that is not privileged. Rule 20.01 follows the English rules that were current in 1972 in providing for disclosure of documents by way of a list, but it departs from the English rule in providing, in rule 20.01(4), for the simultaneous production of the disclosed documents excepting those for which privilege has been claimed. In this way 20.01 and 20.06 overlap. Also, rule 20.02(b) allows for discovery of documents in addition to discovery under examination. Finally, rule 20.06 adopted the English rule for production and expanded it to include strangers. These provisions cannot be interpreted in isolation. Our courts have developed a unifying approach which emphasises the benefits of disclosure and discovery.
[10] Almost since the present rules were first made, the courts recognized the breadth of intended disclosure. King v. King (1975), 20 N.S.R. (2d) 260 (Cowan, C.J.T.D.) concerned discovery of witnesses under rule 18. McCarthy v. Board of Governors of Acadia University (1976), 22 N.S.R. (2d) 381 (C.A.) concerned documentary disclosure under rule 20.01. Such provisions are to be interpreted so as “to provide a full disclosure to the parties on matters in issue and thus assist in the disposition of issues before or at trial”: McCrea v. Historic Properties Ltd., [1988] N.S.J. 449 (C.A.) at para 9. Recently, the Court of Appeal recognized that that same approach applies when rule 20.06 is engaged: Dowling v. Securicor Canada Ltd., [2003] N.S.J. 237 (C.A.).
[11] So, the restrictions provided in the text of 20.06 have to be construed in light of the scheme of discovery and disclosure and of the purpose of these provisions. It appears that they are construed in a manner akin to the limits on discovery: irrelevancy and privilege. See Brown v. MacKeen, [1999] N.S.J. 498 (Wright, J.) to which Mr. MacDonald referred. Similarly, “possession, custody, or control” was interpreted generously in the context of 20.01 to include an injured plaintiff’s hospital or doctors’ records: Traverse v. Turnbull, [1996] N.S.J. 212 (C.A.) to which both sides referred. A similar approach is indicated for 20.06(2) and the question whether documents in the hands of an unwilling agent are still within the party’s control. In my opinion, rule 20.06(1) obliges a party to produce a document in the hands of that party’s agent if it is within the party’s ability to control the agent. Control of the document is not determined by the agent’s willingness. It is determined by the principal’s right to the document and the ability to enforce that right.
[12] I do not accept the submission, ably made, that Mr. Kaufman’s legal status vis a vis the Province does not matter. In my opinion, it is crucial. If Mr. Kaufman was an agent of the Province and if he holds the documents within the ambit of his agency, then he holds them for the Province, who must produce any that are relevant and not privileged.
[13] Mr. Beveridge referred me to a number of interesting scholarly works by lawyers and political scientists on Royal Commissions, Public Inquiries and Ministerial Investigations. The points emphasized by Mr. Beveridge are: 1) These are unique instruments of government that are not easily categorized according to the branches of government recognized by some. 2) They perform one or both of two functions, advising or investigating and 3) They distinguish themselves from those who appointed them, the independence of public inquiries distinguished from the regiment of the public service. Though the functions may be similar, the status of a Royal Commission, a Public Inquiry and a Ministerial Investigation may vary. The Commission is a royal prerogative and the question of agency with the government may entail difficult questions in Crown Law. Public inquiries are appointed by governor-in-council under legislation and the question of agency would turn on the statute and, perhaps, the order-in-council. Ministerial Investigations (I have chosen one of many names for departmentally appointed persons of independence who are assigned tasks of advising or investigating, tasks which terminate in a report) take their authority from the appointment and from the authority of the person making the appointment. The question of Mr. Kaufman’s agency turns on that.
[14] Mr. Kaufman’s terms of reference begin with recitals. Reference is made to a “three-pronged strategy” formulated by the government in 1994 to respond to the reports of abuse by provincial employees at provincially operated institutions for children. It refers to the Stratton report and a recommendation for a compensation program, the institution of the ADR program in 1996, adjustments made to it, the establishment of the Internal Investigation Unit for disciplinary purposes and, the establishment of an RCMP operation for criminal investigation of employees. The recitals continue:
The Program has been criticized by current and former employees who feel that their reputations have been tarnished; by claimants who believe changes made to the Program are too restrictive; and by citizens concerned about the cost and other aspects of the Program.
The substantive terms were:
The independent review will determine if the Government response to institutional abuse has been appropriate, fair and reasonable. The review will document and describe the Government response to the allegations of institutional abuse, assess the appropriateness of Government response in light of contemporary context in the public interest, the interests of claimants, staff, and former staff of the institutions, other available response options and assess the implementation of each element of the Government response. A report of the review findings will be made to the Minister of Justice and subsequently released to the public. Activities untaken during the review must not compromise any police investigation being conducted in relation to the alleged institutional abuse.
At a point in his report, Mr. Kaufman discusses solicitor/client privilege owned by the Crown in documents shown to himself in the course of his investigation. Towards the point that there had been no waiver of privilege, Mr. Kaufman wrote:
Since I was conducting a review on behalf of the Minister of Justice, I stood in the shoes of the Minster and accordingly was given full access to documents, whether or not these documents could be obtained by members of the public.
The Deputy Minister was of a like mind on this point when the Minister of Justice approached Mr. Kaufman. The Deputy Minister wrote to some senior staff:
The sole direction to Mr. Kaufman from government is the terms of reference given him by the Minister. Mr. Kaufman is otherwise free of government direction or influence as to how he fulfills his mandate and the conclusions and opinions he expresses in his report to the Minister of Justice. He has, in short, been retained to make independent findings and has full intellectual and operational independence.
However, Mr. Kaufman’s review is a ministerial undertaking and as such, has no separate legal status. Mr. Kaufman is doing work that the Minister could do himself or have others do for him under his authority as Minister. Therefore, providing information to Mr. Kaufman does not constitute a waiver of lawyer/client privilege or Crown privilege any more than providing information to the Minister or a private law firm retained to advise or represent government on a particular file. Similarly, providing information to the review is not disclosure of information pursuant to the Freedom of Information and Protection of Privacy Act.
This writing of the Deputy Minister well articulates what needs to be seen for this question. Agency does not necessarily exclude independence. Many would say that independence from ones client is a valuable attribute for the client in his or her lawyer, but the lawyer is agent and the client remains principal.
[15] As I said, the Honourable Stuart Stratton, Q.C. was retained in 1994 to conduct an “independent investigation into the events that took place at the Shelburne School for Boys”. He reported to the Minister of Justice after conducting his investigation, which included interviews under promises of confidentially to the extent permitted by law. Mr. Stratton turned his documents over to a lawyer at the Department of Justice as “custodian” and he sought to impose limits on the access that could be had to the documents. The present plaintiffs applied for production of the Stratton documents and the Province resisted. My colleague, Justice Wright, ordered production subject to a further order designed to reinforce the collateral uses rule so as to diminish the adverse effects upon expectation of confidentiality. His decision is reported as Nova Scotia v. Royal and Sun Alliance Insurance Co. of Canada, [2000] N.S.J. 402 (Wright J.). At para.13 Justice Wright concluded that Mr. Stratton had been an agent of the Province.
It is also argued by the plaintiff that although these documents are in its possession, they are not under its control within the meaning of CPR 20, given Mr. Stratton’s letter to the Minister of Justice dated June 29, 1995 and the independent nature of his appointment. I do not accept that argument. Although appointed as an independent investigator, Mr. Stratton was nonetheless an agent of the Province. Indeed, he acknowledged that fact in his letter to the Department of Justice dated January 29, 1999. His mandate was completed on June 30, 1995 and in my view, the files and records of his investigation are within the control of the Province within the meaning of CPR 20.
I see no factual basis upon which to distinguish the status of Mr. Kaufman from the status of Mr. Stratton. Consequently, I follow Justice Wright.
[16] At this stage, Mr. Kaufman does not assert that assurances of confidentiality gave rise to privilege. If there are privileged documents, the owners of the privilege have not been notified of this application. The Province has asserted and the Court has accepted that the documents are in the possession, custody and control of the Province. The Province has asserted and the Court has accepted that Mr. Kaufman acted as agent for the Province when he carried out the investigation, including any confidential interviews. So the responsibility falls to the Province. If it appears that a third party may have a reasonable claim to privilege, the Province may notify them in advance of the next hearing in December.
[17] Mr. Kaufman does assert that documents in his possession are irrelevant to any issue in this proceeding. With the greatest of respect, the first call on that question does not belong to Mr. Kaufman or the Court. Having determined that the documents belong to the Province, it, as owner of the documents and as plaintiff, makes the first determination. Truly, it is not rule 20.06(1) or 20.06(2) by which the Court will order Mr. Kaufman to turn over the documents. Rather, the Court will order that the documents be given to the owner so the owner can comply with 20.06(1). If necessary, I would make reference to the inherent jurisdiction to support such an order.
[18] Be that as it may, I would not grant an order if the effort were a waste. No doubt there will be some documents that are irrelevant. For example, one of the three prongs in the Province’s strategy, which Mr. Kaufman investigated, was “an assessment of the safety of youth currently in custody”. That assessment, termed an audit, was carried out in 1994 and 1995. The person primarily responsible for the audit was interviewed by Mr. Kaufman or his staff. Although some of the insurance coverage is alleged to extend into 1996, it is difficult for me to see how the audit and any information relayed in the interview could be relevant to the issues in this case. Certainly no one has attempted to establish a semblance of relevancy, the standard now followed by Nova Scotia judges before trial for issues of discovery, disclosure or production: Eastern Canadian Coal Gas Venture Ltd. v. Cape Breton Development Corp., [1995] N.S.J. 177 (C.A.) at para. 12 and Eastern Canadian Coal Gas Venture Ltd. v. Cape Breton Development Corp., (1994), 137 N.S.R. (2d) 116 (Davison, J.) at para. 17 and 20.
[19] Mr. Beveridge takes this a step further. Page one of Mr. Kaufman’s report includes “This report cannot begin to separate out the true and false claims of abuse”. Mr. Beveridge says that the Stratton investigation obtained information about the claims and that is where the semblance of relevancy is to be found, not in the subjects that arose much later and were investigated by Mr. Kaufman. In my assessment, this takes too narrow a view of the pleadings. Mr. Kaufman investigated three subjects: the Stratton investigation itself, the audit of current (1995) safety measures, and the ADR Program. Under the heading “Damages” the statement of claim pleads that in excess of $26,000,000 has been paid in compensation including the ADR awards. Under “Relief Sought” the Province claims a declaration that the insurers are obliged to indemnify the Province for “ADR awards”. Further, the ADR program is a focus of some of the defences. Breach of condition through unilateral settlements would be an example. Mr.
Kaufman’s primary criticism of the process adopted by the Province is that it lacked any meaningful validation of claims. This criticism extends through both the review of the Stratton investigation with the limits it operated under and the review of the ADR program with its severe limits for fact finding. Mr. Kaufman’s finding that “The Program was seriously flawed” (p. l) is a finding the insurers will argue for on trial. To attempt to establish such a finding they need access to the evidence Mr. Kaufman had as lead him to the finding. For example, notes of interviews with two senior people responsible for the program (see p. 172 of the Kaufman report) and with several assessors (see p. 172 and p. 223) and with Compensation Program staff (see p. 178). These are clearly relevant to the claim for damages and to some defences.
[20] I will order Mr. Kaufman to deliver to the Province the documents arising from his investigation. The order may include explicit restrictions to protect privacy of any informant along the lines of the collateral uses rule.
J.
Halifax, Nova Scotia
20 November 2003