Joint litigation privilege dissolves when one party takes action against the other

Litigation privilege does not automatically attach on the basis that litigation counsel has been retained in relation to an incident. Litigation privilege that arises between parties will dissolve if one party takes action against the other.

Jetport Inc. v. Global Aerospace Underwriting Managers (Canada) Ltd., [2013] O.J. No. 156, January 10, 2013, Ontario Superior Court of Justice, R.F. Goldstein J.

This was an appeal from the decision of a master ordering a representative of the respondent, Jones Brown Inc. (“Jones”), to answer questions about a meeting and to produce documents in relation to the meeting. The documents were in the possession of Jones and another party, Jetport Inc. (“Jetport”). The order at issue was made pursuant to an application by Global Aerospace Underwriting Managers (Canada) Limited (“Global”).

Jetport operated an aircraft charter company. Jones was an insurance broker that placed an insurance policy on Jetport’s aircraft with Global, an insurance underwriter. An accident occurred and Jetport submitted a claim which was denied by Global. Jetport claimed against Global for denying its insurance claim. Global claimed against Jones seeking contribution and indemnity. Jetport also claimed against Jones for negligence and breach of contract. The three related actions were consolidated.

The meeting in question was conducted after Jetport retained litigation counsel in relation to the accident. At the meeting, the position of Global was discussed. Jones was present at the meeting. The three actions commenced after this meeting.

Jetport argued the dominant purpose of the meeting and the creation of documents, which were the subject of the master’s order, was anticipated litigation and litigation privilege attached. Jones and Global submitted that Jetport failed to lay a proper evidentiary foundation for the privilege claim and, regardless of whether privilege did arise, it dissolved when Jetport decided to bring an action against Jones. The master agreed with Jones and Global.

The judge applied the standard of correctness as he found this was a decision involving a finding of fact and law. The judge upheld the master’s order and stated that, even if litigation privilege had existed, it was dissolved by reason of Jetport’s action against Jones.

This case was originally summarized by Djuna M. Field and originally edited by David W. Pilley of Harper Grey LLP.

To stay current with the new case law and emerging legal issues in this area, subscribe here.