T-2891-75
The Queen in right of Canada (Plaintiff)
v.
Hawker Siddeley Canada Ltd. and Chemi-Solv
Limited (Defendants)
Trial Division, Walsh J.—Toronto, June 14;
Ottawa, June 28, 1976.
Practice—Privilege—Defendant seeking production of
report of Board of Inquiry investigating damage allegedly due
to defendants' cleaning of plaintiffs ship—Whether privi-
leged—National Defence Act, R.S.C. 1970, c. N-4, s. 42(1).
Defendant H Ltd. contracted with plaintiff to clean the
boilers on the HMCS Restigouche, and subcontracted the
chemical cleaning to defendant C Limited. Plaintiff claimed
that the massive corrosion discovered after delivery of the ship
resulted from defendants allowing corrosive chemicals to
remain. A confidential Board of Inquiry was established to
investigate, and though it was stated that the division of H Ltd.
which did the work should attend the proceedings, it was not
invited, and did not attend. H Ltd. now seeks production of the
Board's report so as to avoid being taken by surprise at the trial
of the action which was ultimately brought against it and C
Limited for the cost of investigation and repair and loss of use
of the ship.
Held, granting the motion, the report is not privileged. While
undoubtedly litigation was in contemplation, it would be hard
to say that the inquiry was made at the request of a solicitor or
for submission to him or to counsel. Thus, one of the criteria for
privilege is unsatisfied. Litigation was definitely a strong possi
bility at the time the report was made, and no doubt its
contents would be useful in connection therewith, but there was
not the slightest indication of any intervention by any attorney
or representative of the Department of Justice asking that the
investigation be made in order to obtain information to assist in
the preparation of his brief in connection with proposed litiga
tion. On the contrary, the report was commissioned and pre
pared on behalf of Naval authorities for the Department of
National Defence; while the contents would be useful to plain
tiff's counsel in connection with contemplated proceedings, to
allow him sole access thereto, and to the statements of the
many witnesses allegedly contained therein, would be prejudi
cial to defendants, who have the right of access to this informa
tion in preparing their defence, which information was not
obtained at plaintiff's counsel's request for his use in preparing
the case.
Susan Hosiery Limited v. M.N.R. [1969] 2 Ex.C.R. 27;
Birmingham and Midland Motor Omnibus Company,
Limited v. London & North Western Railway Company
[1913] 3 K.B. 850 (C.A.); Longthorn v. British Transport
Commission [1959] 2 All E.R. 32; Woolley v. North
London Railway Company (1869) 38 L.J.C.P. 317 and
Cook v. North Metropolitan Tramway Co. (1889) 6
T.L.R. 22 (Q.B. Div.), applied. Mitchell v. Canadian
National Railways (1973) 38 D.L.R. (3d) 581; Alfred
Crompton Amusement Machines Ltd. v. Customs and
Excise Commissioners (No. 2) [1974] A.C. 405; Seabrook
v. British Transport Commission [1959] 2 All E.R.
(Q.B.D.) 15; Blackstone v. The Mutual Life Insurance
Company of New York [1944] O.R. 328 and Cook v.
Cook [1947] O.R. 287, discussed.
MOTION.
COUNSEL:
D. Aylen, Q.C., for plaintiff.
J. D. Holding, Q.C., for defendants.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Borden & Elliot, Toronto, for defendants.
The following are the reasons for judgment
rendered in English by
WALSH J.: This is an application on behalf of
defendant Hawker Siddeley Canada Ltd. for an
order pursuant to Rule 455(1)(b) (and Rule 459 if
applicable) requiring the plaintiff to produce for
inspection the Board of Inquiry proceedings and
report referred to as Item 402 in Part 2 of the
plaintiff's list of documents dated May 7th, 1976.
This document for which plaintiff claims privilege
is described as "Board of Inquiry Held re HMCS
`RESTIGOUCHE' Machinery Corrosion by
Department of National Defence". The issues
being litigated between the parties can be briefly
summarized by stating that defendant Hawker
Siddeley was engaged by contract to do certain
work in connection with HMCS Restigou-
che, the contract involving over $5,000,000. Part
of the work consisted of the mechanical cleaning of
the main boilers. Subsequently chemical cleaning
of the boilers became necessary and defendant
Hawker Siddeley entered into a subcontract with
defendant Chemi-Solv to do this. After the deliv
ery of the vessel it was found that the main
engines, main boiler superheater tubes, forced
lubrication pumps and other auxiliary machinery
and equipment contained corrosive substances
resulting in massive corrosion which plaintiff
claims resulted from defendants allowing corrosive
chemical substances to remain in them. In due
course proceedings were instituted on August 20th,
1975 for $721,468.26 for the cost of investigation
and repair of the corrosion damage and loss of use
of the vessel. Defendant Chemi-Solv Limited
pleads that it carried out the cleaning in accord
ance with the Royal Canadian Navy's specifica
tions and that in any event the work was inspected
and accepted by both plaintiff's inspector and
co-defendant's representative. Defendant Hawker
Siddeley pleads that the acid cleaning of the boil
ers was done by the co-defendant accepted and
designated by plaintiff's representatives as having
experience and expertise in this type of work and
in any event denies that the work was not properly
done. It further pleads that if any corrosion took
place this was the fault of plaintiff's representa
tives and servants for allowing the vessel to remain
idle for too long following the completion of sea
trials, failing to properly maintain and preserve the
machinery, and failing to take proper steps so as to
diminish the damage after the corrosion was first
discovered.
The ship was delivered to plaintiff on May 12th,
1972, and the damage was first discovered on June
23rd, 1972. On July 4th, 1972, a letter was sent by
the Navy Shipbuilding Branch to defendant
Hawker Siddeley Canada Ltd. advising them of
the corrosion allegedly caused by the chemical
cleaning and that it was considered that this fell
under the warranty clause of the contract and that
they were therefore being held responsible for all
costs, and that said defendant's representatives
were invited to attend the opening up of the equip
ment to inspect the damage. On July 11, 1972,
defendant Hawker Siddeley replied denying any
responsibility for the alleged damage saying that
the acid cleaning had been ordered by Department
of National Defence officers who obtained prices
from the co-defendant telling defendant Hawker
Siddeley to employ them, and that furthermore all
the procedures used were approved and inspected
by Department of National Defence officials.
In due course a Board of Inquiry was set up on
the orders of Vice Admiral D. A. Collins, Chief of
Technical Services, on August 4th, 1972. The
terms of reference called upon it "to investigate
the extent of and cause of the corrosion damage
reported in the main and auxiliary machinery as
well as associated systems of the HMCS RESTI-
GOUCHE'." It was further stated that the Board
should investigate the administrative and technical
actions that caused the corrosion damage and the
extent of the damage and that representatives of
the Department of Supply and Services Shipbuild
ing Branch, Ottawa, and of Halifax Shipyards
(which is the division of Hawker Siddeley which
did the work) should be invited to attend the
proceedings of the Board. The Board was to hear
statements from all available witnesses and record
any evidence as to any possible alternative techni
cal causes of the damage, the actions both techni
cal and administrative which may have contribut
ed to the most probable cause of them, what
persons were associated with these actions and the
full extent and cost of repair of them. Findings
were to have been made as to the most probable
technical cause of the damage, administrative
procedures which may have contributed to this and
the repairs which are required or may be required.
Recommendations were to be made as to technical
procedures to avoid a recurrence of the damage on
all ships and administrative procedures to prevent
a repetition of the incident. It was stated that the
investigation was classified "confidential". The
proceedings were to be delivered in triplicate to
Vice Admiral Collins.
It is the report of this Commission of Inquiry
which defendant now seeks to have produced. It is
common ground between counsel for the parties
that representatives of Halifax Shipyards did not
attend the inquiry proceedings despite the directive
and the terms of reference that they should be
invited to do so. Whether by oversight they were
not invited is not clear, but it appears most un
likely that they would not have attended had the
invitation been given, as the representatives would
then have been able to hear all the evidence before
the Inquiry, which is now contained in the report,
said to be over 400 pages in length, and which they
now seek to have produced so as to avoid being
taken by surprise by this at the trial.
In the affidavit of Colonel Roland F. Barnes,
Deputy Judge Advocate General, it is stated that
at no stage subsequent to the exchange of letters of
July 4th, 1972 and July 11th, 1972, referred to
(supra) did defendant Hawker Siddeley give any
indication that it would pay the cost of repairing
the damage and that it was therefore apparent
before the Board of Inquiry was convened and
while it was being conducted that a dispute had
already arisen between plaintiff and defendant
Hawker Siddeley and that it would be necessary to
take legal proceedings to recover the cost of repair
ing the ship. He also states that the report consists
of signed statements obtained from people many of
whom will likely be called as witnesses as well as
incorporating the conclusions of the members of
the Board and that this document was delivered to
the Department of Justice when that Department
was instructed to take whatever steps were neces
sary to recover the substantial cost of repairing the
damaged ship.
Another affidavit of J. L. Scott Henderson
states that he was legal adviser to the Board of
Inquiry which convened in August 1972 to investi
gate the damage and in this capacity he sat with
the Board during its proceedings and that the
Board was aware when it convened of the letter
dated July 4th, 1972, that a notice of claim had
been made by the Crown against Hawker Siddeley
and that accordingly during the Board's proceed
ings it obtained statements from witnesses and
evidence which could be used in support of a
Crown claim against the parties legally responsible
for the damage, and that it was expected by the
Board that the evidence received by it would be
referred to the law officers of the Crown for use in
connection with legal proceedings arising out of
the damages.
Defendant for its part in an affidavit submitted
by Edward Allan Ayers, its solicitor, states that a
press release by the Department of National
Defence dated September 29th, 1972, describing
certain findings of the Board of Inquiry allegedly
refers to the said report. The third paragraph of
this press release states "The inquiry report, which
runs to close to 400 pages, is being studied inten
sively at National Defence Headquarters to deter
mine what further action may be necessary,
including the possibility of recovery action for the
costs of repair".
The inquiry was convened by virtue of the provi
sions of section 42(1) of the National Defence
Act', which reads as follows:
42. (1) The Minister, and such other authorities as he may
prescribe or appoint for that purpose, may, where it is expedi
ent that he or any such other authority should be informed on
any matter connected with the government, discipline, adminis
tration or functions of the Canadian Forces or affecting any
officer or man, convene a board of inquiry for the purpose of
investigating and reporting on that matter.
It would appear from the wording of this section
that the primary purpose of such an inquiry must
have been to determine whether any member of
the Armed Forces was to blame for any of the
work orders given or inspections and approval of
the work done, and to prevent the recurrence of
any similar directives or actions, if in fact the
damage did result from this. Although the en
abling section of the Act therefore has little to do
with the establishment of a claim against defend
ant, the terms of reference certainly directed an
inquiry into the extent of the damage, the most
probable technical or administrative cause of
same, possible alternative technical or administra
tive causes and the repairs to be required and the
probable cost of same all of which are directly
pertinent to the litigation.
The mere fact that the investigation was classi
fied as confidential does not by itself make the
report of it privileged, especially when the very
terms of reference require that an invitation be
extended to representatives of Halifax Shipyards,
the division of defendant Hawker Siddeley Canada
Ltd. which did the repairs, to attend the hearings.
R.S.C. 1970, c. N-4.
Counsel for both parties referred to extensive
jurisprudence on the question of privilege. Actual
ly both sides found some support from what is one
of the most recent Canadian judgments, namely
that of Mitchell v. Canadian National Railways 2 .
In this decision Chief Justice Cowan of the Nova
Scotia Supreme Court analyzed the British and
Canadian jurisprudence at some length. The issue
concerned the production of an accident report
furnished by the Railway to the Board of Trans
port Commissioners whose order provided that
such report should be privileged. The learned
Chief Justice found that this order is intended to
insure that such documents are not made public
except by order of the Commission but is not
intended to protect them from production for
inspection in an action arising out of an accident.
While a letter written by the claims agent of the
railway to the railway's solicitor summarizing the
results of the investigation of the accident to that
date, and incorporating written reports and notifi
cations made by various employees of the railway,
is privileged as a solicitor-client document under
the ordinary rules of civil procedure the Court
found that the reports and notifications themselves
are not communications of the solicitor-client var
iety and, not having been prepared for the purpose
of litigation pending or anticipated, are not privi
leged. At page 586 of the judgment he refers to
Williston and Rolls 3 , wherein it is stated at page
827:
Communications between a party and non-professional agent
are only privileged if they are made both ... (1) for the purpose
of being laid before a solicitor or counsel for the purpose of
obtaining his advice or of enabling him to prosecute or defend
an action or prepare a brief; and (2) for the purpose of
litigation existing or in contemplation at the time. Both these
conditions must be fulfilled in order that the privilege may
exist.
On the same page he quotes further from Williston
and Rolls at pages 916 and 917:
All documents and copies thereof prepared for the purpose;
but not necessarily the sole or primary purpose, of assisting a
party or his legal advisers in any actual or anticipated litigation
are privileged from production.
2 (1973) 38 D.L.R. (3d) 581.
3 Law of Civil Procedure (1970), vol. 2, pp. 821-9.
Documents existing before litigation was conceived and not
brought into existence for the purpose of obtaining legal advice
are not free from the duty to produce ... merely because they
are in the possession of a solicitor for the purposes of an action.
There must be a real expectation of litigation before there is a
privilege from production.
Counsel for defendant contends that while admit
tedly litigation was in contemplation before the
inquiry was made it was not made for the sole or
primary purpose of assisting plaintiff and its legal
advisers in the anticipated litigation but for the
purpose of establishing if any member of the
Armed Services was at fault in order to prevent a
recurrence of similar problems in connection with
future contracts. Counsel for plaintiff on the other
hand contends that it was only after the claim had
been rejected by Hawker Siddeley that the Board
of Inquiry was ordered and that the terms of
reference indicated clearly that the information
obtained in the course of the inquiry was of a
nature which would be pertinent in the litigation
which was bound to result and that the documents
are therefore privileged and that the quotation
from Williston and Rolls supports this.
The learned Chief Justice refers to the judgment
of Hamilton L.J. in Birmingham and Midland
Motor Omnibus Company Limited v. London &
North Western Railway Company 4 in which at
page 859 he discusses the question of records and
reports made in the normal course of the operation
of a business and states:
To hold such documents privileged merely because it can be
shewn of them, not untruthfully, that the principal, who made
them part of the regular course of business and of the duties of
his subordinates, foresaw and had in mind their utility in case
of litigation, feared, threatened, or commenced, would in my
opinion be unsound in principle and disastrous in practice.
This differed from the view of Buckley J. in the
same case which I will discuss later. The Mitchell
case also refers to the case of Longthorn v. British
Transport Commissions, in which Diplock J. was
dealing with the claim to privilege from production
of a report of a private inquiry into the cause of an
accident in which the plaintiff, an employee of the
British Transport Commission took part. At the
time of the inquiry the Commission did not know
^ [1913] 3 K.B. 850 (C.A.).
5 [1959] 2 All E.R. 32.
that the plaintiff intended to bring the action. The
affidavit claiming privilege said that the docu
ments came into existence "inter alia" for the
purpose of obtaining and furnishing to the solicitor
evidence and information for his use. Diplock J.
found that the claim of privilege was not estab
lished by the ground put forward in the affidavit,
that is, that the documents, including the report,
were made for the purposes, "inter alia" of fur
nishing evidence or information to the solicitor,
without stating that that was the main purpose. He
also found that the report showed that the inquiry
was not convened for the purpose of furnishing
evidence or information to the Commission's solici
tor and that the report was, therefore, not
privileged.
Reference was also made by the learned Chief
Justice to the case of Woolley v. North London
Railway Company 6 in which an accident had
occurred to the train of the defendant, in which
the plaintiff was a traveller and it was suggested
that this was from a defect in the construction of
the engine. The plaintiff asked to inspect certain
documents but Brett J. stated at page 324:
I think the rule may be thus stated, viz: any report made by a
servant to his principal for the purpose of instructing the latter
as to his claim or defence in any legal proceeding anticipated or
existing ought not to be produced, but that any such report
made in the ordinary course, and which would have been so
made whether there was litigation, either anticipated or exist
ing, should be produced. It follows, therefore, that if that be the
rule it is immaterial whether the report be made before or after
litigation has commenced, or whether it be confidential or not,
or whether it be of matters of opinion or of matters of fact. The
material point is whether it is made or not in the ordinary
course of things, or whether only for the purpose of instructing
the principal to resist or make a claim.
In Cook v. North Metropolitan Tramway Co.'
Field J. said at page 23 dealing with the daily
report of a conductor:
The power to call for production of such documents was very
important, and it was for the benefit of both parties that they
should come into Court knowing all the facts, rather than that
one side should be informed and the other in the dark. This was
a report—a daily report—made by a conductor in the course of
his duty. It was not made for the purpose of the defence to this
action, nor with reference to any particular action.
6 (1869) 38 L.J.C.P. 317.
7 (1889) 6 T.L.R. 22 (Q.B. Div.).
The British cases referred to in the Mitchell
judgment and others were reviewed at considerable
length in the case of Alfred Crompton Amusement
Machines Ltd. v. Customs and Excise Commis
sioners (No. 2) 8 . While the principal judgment in
that case was rendered by Lord Cross it is perhaps
the decision of Lord Kilbrandon reported at page
435, which agrees with the finding of Lord Cross,
which is most pertinent to the present case. He
states:
I would like, however, to add a word or two about the
somewhat diverging trends of authority, on the question of
discovery of documents said to have been prepared for the
purposes of litigation, which may be typified by the judgments
of Buckley L.J. in Birmingham and Midland Motor Omnibus
Co. Ltd. v. London and North Western Railway Co. [19131 3
K.B. 850 and of Havers J. in Seabrook v. British Transport
Commission [19591 1 W.L.R. 509, on the one hand, and those
of Hamilton L.J. in the Birmingham case and of Diplock J. in
Longthorn v. British Transport Commission [19591 1 W.L.R.
530 on the other. Like my noble and learned friend, I prefer the
approach of the latter to that of the former. In my opinion, any
practice of "blanket" classifying of documents especially when
they concern, as they normally do, claims arising out of acci
dents, is to be discouraged.
On the other hand there was a dissenting judgment
in the Crompton case by Viscount Dilhorne which
states at page 421:
The finding that from July 31, 1967, onwards the commis
sioners reasonably anticipated that there would be an arbitra
tion is, in my opinion, crucial in relation to their claim for legal
professional privilege.
The documents which the commissioners claim are covered
by legal professional privilege, came into existence in the course
of the investigation. They had a dual purpose, to enable the
commissioners to form their opinion and for the use of their
solicitors whose task it was to secure the material necessary for
the arbitration, to advise thereon and to prepare the commis
sioners' case.
Where an event occurs which is likely to lead to litigation,
e.g., an accident on a railway, it has long been established that
reports made in anticipation of litigation and for the use of the
defendant's solicitors are protected, and that the reports need
not be made solely or primarily for the use of the solicitors:
Ogden v. London Electric Railway Co. (1933) 49 T.L.R. 542
and Birmingham and Midland Motor Omnibus Co. Ltd. v.
London and North Western Railway Co. [19131 3 K.B. 850. So
the fact that the documents come into existence for a dual
purpose does not deprive them of protection if one purpose is
their use by solicitors when litigation is reasonably anticipated.
8 [1974] A.C. 405.
In the Seabrook v. British Transport Commis
sion case 9 dealing with railway reports arising out
of an accident it was held that the reports were
privileged because they had been bona fide
obtained for the purpose of taking professional
advice from the Commission's solicitor in view of
anticipated proceedings, and the fact that these
documents also served other purposes did not place
them outside the scope of the privilege. While this
followed the Buckley judgment in the Birmingham
and Midland Motor Omnibus Company Limited
case it was entirely contrary to the finding of
Diplock J. in the Longthorn v. British Transport
Commission case as Lord Kilbrandon pointed out
in the Crompton case. In the Birmingham and
Midland Motor Omnibus Company Limited v.
London & North Western Railway Company
(supra) Buckley L.J. had said at page 856:
It is not I think necessary that the affidavit should state that
the information was obtained solely or merely or primarily for
the solicitor, if it was obtained for the solicitor, in the sense of
being procured as materials upon which professional advice
should be taken in proceedings pending, or threatened, or
anticipated. If it was obtained for the solicitor, as above stated,
it is none the less protected because the party who has obtained
it intended if he could to settle the matter without resort to a
solicitor at all.
Reference was also made by the plaintiff's counsel
to the case of Blackstone v. The Mutual Life
Insurance Company of New York 10 in which Rob-
ertson C.J.O. stated at page 333:
I agree with the proposition of the defendant's counsel that it
is not essential to the validity of the claim of privilege that the
document for which privilege is claimed should have been
written, prepared or obtained solely for the purpose of, or in
connection with, litigation then pending or anticipated. It is
sufficient if that was the substantial, or one of the substantial,
purposes then in view.
Reference was also made to the statement of Gale
J. as he then was in the case of Cook v. Cook" at
page 289 where he said:
If a person employs a detective to investigate the conduct of
another person for a purpose quite unconnected with any
pending or contemplated litigation, and proceedings are subse
quently taken, the contents of the report of that detective would
have to be made available, if relevant to the proceedings.
9 [1959] 2 All E.R. (Q.B.D.) 15.
1° [1944] O.R. 328.
11 [1947] O.R. 287.
Earlier on the same page however he states:
... communications between a person and an agent who is not
a legal adviser are privileged only in certain circumstances. To
be protected, the latter must not only be made at the request or
suggestion of a solicitor, or for submission to a solicitor or to
counsel, but must also be made or procured for the purpose of
litigation existing or in contemplation at the time.
In the present case there is no doubt that the
litigation was in contemplation but it would be
difficult to say that the inquiry was made at the
request or suggestion of a solicitor or for submis
sion to him or to counsel. It thus does not satisfy
one of the criteria set out by Chief Justice Gale, or
by Williston and Rolls (supra).
In this Court Jackett P. as he then was in the
case of Susan Hosiery Limited v. M.N.R. 12 stated
at page 34:
What is important to note about both of these rules is that
they do not afford a privilege against the discovery of facts that
are or may be relevant to the determination of the facts in
issue. What is privileged is the communications or working
papers that came into existence by reason of the desire to
obtain a legal opinion or legal assistance in the one case and the
materials created for the lawyer's brief in the other case. The
facts or documents that happen to be reflected in such com
munications or materials are not privileged from discovery if,
otherwise, the party would be bound to give discovery of them.
While it is evident that the jurisprudence is quite
evenly balanced and each case must be decided on
its own facts I cannot find that in the present case
the report of the Commission of Inquiry although
confidential is a privileged document. Litigation
was undoubtedly a strong possibility at the time it
was prepared and no doubt the contents of it
would be useful in connection with such litigation,
but there does not appear to be the slightest indi
cation that there was any intervention of any
attorney or representative of the Department of
Justice asking that this investigation be made in
order to obtain information to assist in the prepa
ration of his brief in connection with litigation
which it was proposed to bring and which was in
fact brought although some three years later. On
the contrary the report was commissioned and
prepared on behalf of the Naval authorities for the
Department of National Defence and while the
12 [1 9 69] 2 Ex.C.R. 27.
contents were no doubt useful to plaintiff's counsel
in connection with the contemplated proceedings,
to allow plaintiff's counsel to have sole access to it
and to the statements of a great many witnesses
allegedly contained therein would be prejudicial to
defendants who have the right of access to this
information in the preparation of their defence,
which information was not obtained at the request
of plaintiff's counsel, for his use in connection with
his preparation of the case.
I therefore find that the report in question is not
privileged and should be produced and accordingly
grant defendant's motion with costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.