On April 26th, the Court of Appeal of Alberta affirmed a lower court decision that privilege in two post-incident investigation reports had been waived, also opining on the law governing whether the reports were subject to litigation privilege.
The case arises out of 2015 pipeline failure. The operator initiated an investigation for multiple purposes, ultimately leading to the creation of several reports, including the two expert reports at issue. The operator relied on an affidavit sworn by its assistant general counsel in which she stated that she contemplated litigation soon after the incident and directed all investigations to be conducted on a privileged and confidential basis under the supervision of legal counsel.
The two reports were later produced by experts. The lower court judge did not review the reports, but held they were used to decide whether to repair or replace the pipeline and encompassed “too many other concerns” to have been prepared for the dominant purpose of litigation. The lower court judge also held the operator waived privilege in the reports by sharing them with the Alberta Energy Regulator and the Association of Professional Engineers and Geoscientists of Alberta and by mentioning the conclusion of the reports at a press conference.
The press conference statement is worth quoting:
Nexen has conducted comprehensive investigations into the pipeline failure in July 2015 and the January 2016 explosion at its Long Lake Oil Sands facility to determine the root cause for each incident. . . .
• Following the Long Lake pipeline rupture discovered on July 15, 2015, Nexen conducted a comprehensive, independent investigation using Nexen’s Event Recording and Analysis (ERA) Procedure to determine the root cause.
• Based on our investigation, the root cause of the rupture was a thermally-driven upheaval buckling of the pipeline and the subsequent cooldown during the turnaround. This was the result of using an incompatible pipeline design for the muskeg ground conditions. Steps that could have been taken to mitigate the potential for upheaval buckling were not addressed.
The Court of Appeal held that this revelation did not waive privilege as found by the lower court judge. The core of its reasoning is that the statement did not clearly reveal the content of the privileged reports: “It is difficult to see how privilege could be lost over a document that is no even mentioned.”
Privilege was nonetheless waived, the Court said, by the voluntary disclosure of the reports to the Regulator and the APEGA. Although the operator disclosed the reports to the Regulator with various stipulations, none precluded the Regulator from using the reports in a prosecution or from disclosing the reports to others as required by law. Likewise, disclosure to the APEGA for its use was incompatible with maintaining a privilege claim.
On the privilege claim itself, the Court applied its decision in Suncorp, which dictates that litigation privilege must be assessed on a document-by-document basis. It then stressed that the dominant purpose test applies to the creation of a document, not the investigation that preceeded the document’s creation or the use of the document after it was created. It questioned the lower court judge’s finding because the judge made it without reviewing the reports and because the judge placed too much emphasis on the reports’ use use rather than the purpose for their creation.
The creation and maintenance of a litigation privilege claim is very technical, and this decision is illustrative in many ways. The finding that the above-quoted press conference statement did not waive privilege is most notable. The statement does have a degree of vagueness about it, but also hints at the content of privileged documents in a way that begs a question about what they say. Ultimately, the Court’s finding suggests that drafters of such statements have some latitude to garner trust from expert investigations so long as they don’t refer to the content of privilege reports. This is helpful, though to be relied upon with caution.
CNOOC Petroleum North America ULC v ITP SA, 2024 ABCA 139 (CanLII).
