Facts: The defendant applied for an order that the plaintiff produce the redacted portion of a marine survey report commissioned by the plaintiff’s insurer after a catastrophic engine failure on the plaintiff’s vessel. The section of the report which was redacted related to the surveyor’s engine failure analysis and litigation privilege over that section was claimed. The engine was rebuilt by the defendant and failed at sea trial. The plaintiff notified its insurer of the failure who appointed a surveyor and retained counsel, and the defendant did the same. The plaintiff’s surveyor provided his first written report to counsel on 27 February indicating that the only purpose of his further investigation of the engine failure was to advance a liability claim against the defendant, and on 02 March plaintiff’s counsel wrote to the defendant’s insurer indicating the failure was caused by the rebuild of the defendant. Between March and June 2018 the parties’ respective surveyors attended the vessel and inspected the engine. On 24 April a metallurgy inspection of failed parts from the engine indicated the parts failed as they were tightened incorrectly. On 11 July the plaintiff’s surveyor provided his report to plaintiff’s counsel which was the subject of this application.
Decision: Application dismissed; litigation was in reasonable prospect when the survey was written and litigation was the dominant purpose of the redacted engine failure analysis section.
Held: The test for litigation privilege is two part. The party claiming privilege must show litigation was in reasonable prospect at the time the document was produced, and if so, what was the dominant purpose for its production. On the first part of the test, the Court held that litigation was in reasonable prospect by the time the 11 July report was produced as the metallurgy inspection suggested fault on the defendant and counsel for the parties began discussing liability issues. On the second part, the Court noted that when a document is produced for multiple purposes, one of which being litigation but not dominant, then the document should be produced. However, where the document can be segregated into sections created for the dominant purpose of litigation from those that were not, litigation privilege may be maintained. The Court, having viewed an unredacted copy, held the section of the report entitled engine failure analysis confirms its dominant purpose was for the potential subrogated claim against the defendant.