In this case, the successful Defendant of a personal injury action sought an unredacted copy of the adverse costs insurance policy belonging to the Plaintiff's counsel after having not received their costs. The decision grapples with balancing issues of privilege, confidentiality, and principles of contractual interpretation.

1. Background

  1. This case originated from an action where the Plaintiff, John Belton, brought a claim for damages after being injured while walking the horse owned by the Defendant, Katie Spencer. The Plaintiff was represented by personal injury law firm, Martin & Hillyer. Following an eight-week trial, the Plaintiff's action was dismissed, and she was ordered to pay over $450,000 in disbursements and legal fees.
  2. Martin & Hillyer held an adverse costs insurance policy with Omega General Insurance Company (“Omega”). The purpose of this policy was to cover Martin & Hillyer's disbursements and/or the Defendant's trial costs owed by the Plaintiff in the event they were unsuccessful at trial. The policy had limits of $100,000.
  3. The Application in question was brought by Spencer and her insurer, Elite Insurance Company, because the Plaintiff had yet to fulfill their payment obligations to the Defendant as a result of the Belton v Spencer

2. The Application at Bar

  1. A discrete Application was also brought because there was dispute between Belton and his lawyers, Martin & Hillyer, over the allocation of the $100,000 in adverse costs insurance under the policy with Omega. There was disagreement over whether the policy should be divided on a pro rata  basis between the disbursements incurred by Martin & Hillyer which were valued at just over $65,000, and the trial costs incurred by Belton and owed to the moving parties valued at over $450,000.
  2. In disputing this issue, Martin & Hillyer only provided a redacted copy of their policy with Omega and claimed that the redacted portions were confidential or privileged. As it was unclear within the redacted version of the policy whether Belton was a beneficiary under the Policy, the moving parties sought an order requiring Martin & Hillyer to produce the entire policy without redactions, or in the alternative, with redactions limited to references to any insurance premiums or Martin & Hillyer's other clients.

2.1. Are the redacted portions of the policy privileged?

  1. The first issue at bar was whether the redacted portions of the policy were privileged. Honourable Justice A.J. Goodman determined that they were not privileged because the moving parties identified and presented into evidence another publicly filed adverse costs policy between Omega and Pace Law Firm which was filed at the Brantford Court a year ago. This policy appeared to be identical to the one in question. There was no mention of clients or file names in this policy.
  2. Further, the Policy in question included a clause which stated, “no clause within this policy shall interfere with lawyer-client privilege…”. Therefore, after reviewing the publicly filed policy in its entirety, Justice Goodman concluded that there was no actual legal advice or information in furtherance of litigation, nor any privileged communications within the policy and therefore Martin & Hillyer failed to meet their onus of proving that there was any privileged information within the Policy.

2.2. Are the redacted portions of the policy confidential?

  1. The second issue was whether the redacted portions of the policy were confidential. As the portions of the policy that Martin & Hillyer were arguing were “confidential” already existed in the public domain via the policy between Omega and Pace Law Firm, there could be no breach of confidence in revealing to others something which was already common knowledge.

2.3. Is the entirety of the Policy relevant to the Application?

  1. Lastly, Justice Goodman addressed whether the entirety of the policy was relevant to the Application. He reasoned that because the Applications judge will be required to engage in contractual interpretation to adjudicate the larger matter at hand – who will benefit from the policy and to what extent – the principles of contractual interpretation require contracts to be read in their entirety and thus the entire policy is relevant.

The Supreme Court of Canada has been extremely clear that the desired approach with respect to contractual interpretation and insurance policy interpretation is to focus on interpretation of the words of the policy, read as a whole. Further, without a fulsome review of the policy, the Applications judge may be constrained from making an informed decision regarding the contractual interpretation of the M&H Policy. [at para 38]

3. Conclusion

  1. Based on these reasons, Justice Goodman held that Martin & Hillyer failed to meet their onus of proving that there were any privileged communications, legal advice, or legal information within the policy, nor was the information confidential. There was no indication that future clients of Martin & Hillyer would be prejudiced by the production of the unredacted policy. Rather, the entirety of the policy is relevant to the fair adjudication of the Application.
  2. The Spencer v. Martin & Hillyer Associates decision underscores the commitment of the Court to finding a balance between the principles of contractual interpretation and concerns of privilege and confidentiality. Going forward, counsel should be mindful that internal insurance policies, such as those providing adverse costs insurance, may not always be covered by privilege or confidentiality.