IN THE SUPREME COURT OF NOVA SCOTIA
Citation: Gay v. UNUM Life Insurance Company of America- 2003 NSSC228
Date: 20031203 Docket: S.H. No. 137242
Registry: Halifax
Between:
Julie Frances Gay, by her guardian ad litem Patrick Gay,
Patrick Gay, Patrick William Elliott Gay
Plaintiffs
-and-
UNUM Life Insurance Company of America
Defendant
Decision
Judge: The Honourable Justice Robert W. Wright
Heard: October 2, 2003 in Chambers at Halifax, Nova Scotia
Written Decision: December 3, 2003
Counsel: Counsel for the plaintiffs - Peter Darling
Counsel for the defendant - Michelle Awad
Counsel for the defendant physicians in S.H. No. 109384 - Loretta Taylor
Counsel for the defendant hospital in S.H. No. 109384 - Donald Peverill
[1] This Rule 20.02 application raises the interesting question of whether expert reports on professional liability commissioned by the defendants in the course of a malpractice lawsuit, and voluntarily disclosed to the plaintiff shortly before a private mediation which led to settlement, can be compelled for production by another defendant in a second lawsuit brought by the same plaintiff and arising out of the same injury.
[2] The essential facts giving rise to this application are not in dispute. In September, 1992 the plaintiff experienced serious complications in a pregnancy for which she was treated in hospital. Unfortunately, things went catastrophically wrong and after the delivery of twins, she was left in a seriously disabled condition which has been characterized in the pleadings as paraplegia.
[3] Two lawsuits resulted. The first (S.H. No. 109384) was commenced in 1994 against the hospital and four attending physicians for the recovery of various heads of damages (the “malpractice suit”). The second was the present proceeding brought in 1997 against UNUM Life Insurance Company of America (the “insurance suit”) in which the plaintiff has sued for benefits under a group accident insurance policy under which she was an insured through her employer at the time. In this action, the plaintiff seeks recovery of an accident benefit of $46,400 under an insuring agreement that provides for payment of two times the insured’s annual salary where it is established that the insured was rendered a paraplegic.
[4] The plaintiff contends in this the insurance suit that her condition was caused by the negligence of the defendants in the malpractice suit and that negligence constitutes an “accident” within the meaning of the UNUM policy. UNUM has denied the claim by taking the position that the plaintiff’s condition was the progression of an illness rather than an accident within the meaning of the policy. It also questions whether the plaintiff’s physical condition falls within one of the categories for indemnity under the policy.
[5] A Notice of Trial was filed by the plaintiffs in the malpractice suit on November 21, 2000, attached to which were copies of their expert reports as required under C.P.R. 31.08. That, of course, triggered the obligation of the defendants to file and serve any expert reports on which they intended to rely within a 30 day period, a timeline commonly extended by agreement of counsel.
[6] There were several expert reports prepared in the course of the malpractice suit on behalf of the defendants collectively. Among them were two expert reports commissioned by counsel for the defendant physicians containing expert opinion evidence relating to liability. These reports were prepared by Dr. Armson, an obstetrician, under date of December 21, 2001 and by Dr. Norris, a neurologist, under date of May 8, 2002. It became clear during the course of the hearing of this matter that these are the only two expert reports remaining in issue on this application.
[7] In or about early May of 2002, and with the trial dates looming, the parties to the malpractice suit agreed to participate in a private mediation in an attempt to reach a settlement. The mediation was scheduled to take place on June 20, 2002.
[8] About three weeks prior to that, counsel for the defendant physicians sent to the plaintiff’s counsel copies of the expert reports of Drs. Armson and Norris (along with a further expert report on cost of future care with which we are not here concerned). These reports were sent under cover of a perfunctory letter dated May 31st simply noting that the subject reports were enclosed. The reports were then included with the settlement briefs and materials provided to the mediator.
[9] When the parties convened for the mediation session on June 20, 2002, they signed a mediation contract provided by the mediator which contained the following provision:
All communications between the Parties and with the Mediator are privileged and made without prejudice in the pursuit of a settlement. The contents of mediation are confidential, except any settlement agreement reached unless it also provides for confidentiality.
[10] The efforts of the parties at mediation proved to be successful. A full and final settlement of the malpractice suit was reached, the terms of which were explicitly set out in a consent order for judgment taken out on July 30, 2002.
[11] Once that lawsuit was resolved, Ms. Awad on behalf of UNUM began pressing Mr. Darling, the plaintiff’s counsel in both lawsuits, for production of the defendants’ medical expert reports which he had in his possession from the malpractice suit. Mr. Darling replied that he was not at liberty to produce copies of those reports because of what he felt to be an implied duty of confidentiality from the earlier proceeding. He further advised UNUM’s counsel that he had no difficulty whatsoever in her obtaining copies directly from defence counsel in the malpractice suit.
[12] Accordingly, Ms. Awad directed the same request to defence counsel in the earlier proceeding. The response made by counsel for the defendant physicians, Mr. Dan Campbell, was that the subject expert reports would not be released, on the instructions of his client, having been disclosed to the plaintiff’s counsel in confidence and without having been filed with the court. Not satisfied with that response, counsel for UNUM has brought the present application.
[13] In her brief, Ms. Awad notes that both actions arise out of the same fact situation and that while the liability issues in the malpractice suit were negligence based, and in this litigation are contract based, both proceedings necessitate answering the same question, namely, what caused the plaintiff’s injuries? Obviously, the evidence needed to address this question could be obtained by undertaking new discovery examinations of the four physicians who were earlier sued and perhaps other witnesses as necessary. However, the costs of doing so would be very substantial and somewhat disproportionate to the amount at stake in this lawsuit. UNUM’s counsel has instead elected to bring this application as a more cost effective way to try and determine the cause of the plaintiff’s disabled condition and to have the benefit of the existing expert opinions as to what happened and why it happened.
[14] Counsel for the defendant physicians, having been granted standing to be heard on this application, oppose it on the basis that the subject expert reports are not relevant in this proceeding and in any event remain privileged from production. The plaintiff’s counsel continues not to take any position one way or the other, having no objection to UNUM’s counsel receiving the reports but feeling unable to release them in the face of the privilege claim being asserted.
[15] The first issue then to be addressed is the dispute over the relevance of the subject expert reports in this proceeding. Counsel for the defendant physicians argues that they have no relevance because they are merely opinions on professional liability based on an assumption of facts gathered from a file review of the medical records. It was emphasized that neither Dr. Armson nor Dr. Norris has any first hand knowledge of the facts, not having had any involvement in the plaintiff’s treatment and care, and that documents which merely contain expressions of opinion on liability are generally irrelevant.
[16] In determining whether the plaintiff’s disabled condition should be characterized as an illness or an accident, the defendant UNUM is concerned with the cause of the condition she is left in. That is to say, UNUM seeks to ascertain, in a detailed step by step fashion, what happened to the plaintiff while being treated in hospital and why it happened as it did. It is true that UNUM could retain its own medical expert to conduct a file review of the medical records to form an opinion on the cause of the plaintiff’s disability. It is also true that the expert opinions expressed on the potential professional liability of any of the attending physicians are not of themselves relevant in this action. However, the production of these expert reports, which undoubtedly contain a review and analysis of the steps taken in the plaintiff’s medical treatment, would likely assist UNUM in a line of inquiry on the causation of the plaintiff’s condition useful to its defence and/or settlement. It is to be remembered that we are speaking here of the opinions of experts and not those of lay persons and the focus in any event is more with ascertaining the causal factors underlying the plaintiff’s condition than the liability opinions themselves.
[17] Although this is a rather unusual fact situation, I am satisfied that these expert reports fall within the “semblance of relevancy” test applicable at the pre-trial discovery stage as articulated by the Nova Scotia Court of Appeal in Eastern Canadian Coal Gas Venture Limited v. Cape Breton Development Corp. (1995) 141 N.S.R. (2d) 180. That is not to say, of course, that these reports might be admissible or compellable at trial (which is not a requirement under this a Civil Procedure Rule 20.02 application). Indeed, counsel for UNUM is the first one to say that her client is not trying to adopt these expert reports as its own in any fashion. Rather, their production is being sought as an expeditious and cost effective means of ascertaining the cause of the plaintiff’s disabled condition.
[18] Accordingly, I find that the defendant UNUM has met the onus of establishing the relevance of the subject expert reports for purposes of pre-trial discovery of documents in this proceeding. This finding also accords with the wide and liberal interpretation which our courts have frequently given to the Civil Procedure Rules when it comes to disclosure of documents (see, for example, McCrea et al. v. Historic Properties Ltd. et al. (1989) 89 N.S.R. (2d) 201).
[19] I now turn to what is regarded as the main issue in this application and that is whether the subject expert reports remain privileged from production.
[20] The submission made on behalf of the defendant physicians, who continue to assert a claim of privilege, is that their expert reports were disclosed to the plaintiff only after the parties had agreed to participate in a mediation and that there was no intention that these expert reports would necessarily be used beyond mediation purposes. As such, it is argued that the disclosure of these reports is and remains subject to settlement privilege by virtue of the confidentiality agreement contained in the mediation contract aforesaid, and otherwise implied to have been in effect at the time the reports were earlier disclosed in contemplation of mediation. Counsel for the defendant physicians relies on the principle affirmed by the British Columbia Court of Appeal in Middlekamp v. Fraser Valley Real Estate Board (1992) 96 D.L.R. (4th) 227 that the public interest in the settlement of disputes generally requires “without prejudice” documents or communications created for, or communicated in the course of, settlement negotiations to be privileged. The court in Middlekamp classified this as a blanket or class privilege because it arises from settlement negotiations and operates to protect documents and communications created for such purposes both from production to other parties to the negotiations and to strangers. It further observed that without such protection, the public interest in encouraging settlements would not be served.
[21] The court in Middlekamp was dealing with the issue of a litigant’s obligation to produce documents for inspection prior to a civil trial that were earlier generated in negotiating the resolution of potential criminal charges against the party under the Competition Act. It upheld the privilege asserted over the documents, having been created for the purpose of negotiations towards settlement. That decision was recently revisited and applied by the same court in British Columbia Children’s Hospital v. Air Products Canada Limited [2003] B.C.J. No. 591 where it was ruled that the settlement agreement itself was privileged and not subject to disclosure, having been reached on a without prejudice basis.
[22] Counsel for the defendant physicians also relies on the decision of the Ontario Court of Appeal in I. Waxman & Sons Ltd. v. Texaco Canada Ltd. et al. [1968] 2 O.R. 452 where it was ruled that letters written “without prejudice” with a view to settlement of issues between A and C are privileged from production at the instance of B in subsequent litigation between A and B on the same subject matter or subject matter closely related to that with which the correspondence in question was concerned.
[23] The doctrine of settlement privilege has long been entrenched in the common law as a form of class privilege for the reasons so well articulated by the British Columbia Court of Appeal in Middlekamp. That being so, it is unnecessary in my opinion to resort to the venerable four part Wigmore test (as cited in The Law of Evidence in Canada by the authors Sopinka , Lederman and Bryant (2d ed.) 1999 at page 719) to determine whether privilege should attach to a confidential relationship emanating from a mediation agreement. As noted in that text (at page 724), the Wigmore criteria are to be utilized both to identify relationships which should attract a new class privilege and to determine whether privilege should apply in particular circumstances, on a case by case basis. As an established type of evidentiary privilege, settlement privilege does not fall under either category. Moreover, settlement privilege aims to facilitate a process (namely, negotiations for settlement) rather than to protect a particular relationship between adversaries. For those reasons, I disagree with the submissions of counsel that the Wigmore test ought to form part of the analysis in the present case.
[24] That said, the question to be decided is whether the subject expert reports fall within the ambit of settlement privilege. As set out in The Law of Evidence in Canada, supra, at page 810, there are a number of conditions that must be present for this form of privilege to be recognized:
(a) a litigious dispute must be in existence or within contemplation;
(b) the communication must be made with the express or implied intention that it would not be disclosed to the court in the event negotiations failed; and,
(c) the purpose of the communication must be to attempt to effect a settlement.
[25] This commentary was recently cited with approval by the Alberta Court of Appeal in Costello v. Calgary (City) (1998) 152 D.L.R. (4th) 453.
[26] While the first of these conditions is obviously met, the other two require a more rigorous examination. What is vital to the analysis here is a close scrutiny of the nature of the documents over which settlement privilege is claimed. We are not dealing with admissions or concessions made for the purpose of trying to reach a negotiated settlement; nor are we dealing with offers of settlement or compromise written in the course of negotiations for settlement; nor are we dealing with disclosure of the settlement agreement itself. It cannot be said that these expert reports owe their existence to anticipated settlement negotiations, through a mediation or otherwise. Rather, in the absence of any evidence to the contrary, I conclude that they were commissioned by counsel for the defendant physicians for litigation purposes generally. When the parties eventually agreed to participate in a private mediation, the decision was taken to disclose the expert medical reports to the plaintiff without any mention of purporting to maintain a reservation of confidentiality, in an apparent attempt to bargain from strength. I infer that counsel for the defendant physicians would not have disclosed these expert reports to the plaintiff at all unless they were favourable to the defendants’ position in the malpractice suit.
[27] It is argued nonetheless by counsel for the defendant physicians that even though there was no mention of any intention of maintaining a reservation of confidentiality over these expert reports when they were delivered to plaintiff’s counsel, there was an implied agreement that any discussions and documents exchanged in connection with the mediation would remain confidential, a stipulation that was later embodied in the written mediation contract. Counsel further argues that had the mediation not been successful, the subject expert reports would not necessarily have become part of the court file, or used at trial, in which case they would have remained privileged.
[28] There is no doubt but that a document may be sent to another party implicitly on a without prejudice basis, depending on its contents and the surrounding circumstances, even though there is no express mention of that intention. However, the documents in issue here are expert reports. They are of a different ilk from the class of documents normally falling within the ambit of settlement privilege.
[29] Expert reports are, of course, subject to litigation privilege unless there is a waiver of that privilege by disclosure. Once disclosure of an expert report is made to an opposing party, it cannot later be retracted even if the disclosure was said at the time to have been on a without prejudice basis. Here, litigation privilege was waived when the expert reports were disclosed to the plaintiff. Had the mediation proved to be unsuccessful, the defendant physicians would have been in no position to insist on the privacy of those expert reports in the name of confidentiality under the mediation agreement. Once disclosed, they became available for use in the malpractice suit as either party saw fit.
[30] Litigation privilege is not to be confused, of course, with settlement privilege. Although the focus of this case is primarily on the latter, I have of necessity dealt with litigation privilege as a related issue, in light of submissions by counsel, to clarify that confidentiality in expert reports is lost once they are disclosed to opposing counsel and that any attempt to earmark their disclosure as being without prejudice will generally be in vain, whether in contemplation of a mediation or otherwise. This does not offend the doctrine of settlement privilege which serves to protect documents created and communicated for the dedicated purpose of negotiations towards settlement. These most often take the form of admissions or concessions, or offers of settlement or compromise, in trying to reach a resolution. It is primarily that class of documents that fall under the ambit of settlement privilege which prevents their later use or disclosure to the court or others if the attempts to reach a settlement are unsuccessful.
[31] In summary, I am not satisfied that the defendant physicians have discharged the onus upon them of establishing a continuing claim of privilege over their expert reports, having regard to the requisite conditions set out in the text aforesaid. Where litigation privilege was waived and the subject expert reports are to be distinguished from the class of documents protected by settlement privilege, I find that the plaintiff’s counsel is not under a duty of confidentiality to the defendants in the malpractice suit and is therefore able, and indeed now required, to provide copies of the expert reports to UNUM.
[32] I would add parenthetically that such an order does not offend the implied undertaking rule. This was not even raised in argument by counsel for the defendant physicians and aptly so where the expert reports were disclosed voluntarily and not by compulsion. Moreover, it is not the plaintiff who now seeks to utilize these expert reports, but UNUM in seeking to ascertain the cause of the plaintiff’s injury. That cannot be categorized as the sort of collateral or ulterior purpose which the rule was designed to prevent.
[33] On a final note, it was argued by counsel for the defendant physicians that the granting of this application would run counter to the public interest in encouraging settlements and that litigants in the future would be discouraged from making disclosure and communications with the candour needed to settle their disputes if there were a fear that any document so produced could later be useable in collateral proceedings. I do not anticipate or intend that this decision should be viewed as having any such chilling effect. It is confined in its scope to the disclosure of expert reports by one litigant to another, whether in the context of a mediation or otherwise, and the consequences thereof. As such, it is not injurious to the public interest in encouraging settlements and in the result may well save substantial costs in this proceeding.
[34] No costs were sought on the hearing of this application and in the circumstances, none are awarded.
J.