Adjuster’s investigative materials are privileged when litigation threatened
A recent decision of the BC Supreme Court has reaffirmed a line of case law which states that materials produced in the course of an investigation by an adjuster on behalf of a liability insurer in response to a threat of litigation against an insured is protected by privilege even if an action had not been commenced.
In Drewniak v. Law 2017 BCSC 1565 Master Bouck dismissed the Plaintiff’s application for production of adjuster reports and witness statements. The Plaintiff argued that these were prepared for the dominant purpose of investigating the incident at issue and not litigation. The defendants submitted a claim to their home insurer after Plaintiff’s counsel had sent the defendants a letter in which he outlined the Plaintiff’s version of events, invited them to put their liability insurer on notice of the incident, and stated that an action was in contemplation. The materials at issue were produced after the date of the letter, but before the notice of civil claim was filed. In dismissing the Plaintiff’s application, Master Bouck adopted the line of authority which states that the only purpose for an adjuster’s investigation on behalf of a liability insurer is in anticipation of litigation.
This decision should give liability insurers the confidence to assert privilege over all their investigative efforts following receipt of a claim. While in this case there was a letter from Plaintiff’s counsel which started the investigation, that is not the end of the assessment; it only made it easier. If there is a loss reported to a liability insurer where it can be demonstrated to the court that litigation was the dominant purpose for the initiation of the investigation, and the creation of the documents therein, privilege ought to attach to those documents: see also Plenert v. Melnik Estate 2016 BCSC 403 which was cited in the above decision. The court has recognized that the only reason for a liability insurer to investigate a claim is to assist in anticipated litigation.
Case summary by Tim Wedge