The Policy Manual

Policy manuals setting out the process of investigation are mandatory in most jurisdictions requiring that the employer take steps to investigate health and safety issues in the workplace, including allegations of harassment and abuse, as reviewed here.

Human rights law does not mandate a policy manual but all jurisdictions require an investigation of human rights violations, as discussed here. Many employers use such a document to set out the procedure for reporting and investigating such complaints.

The policy manual often also details the investigative process for many other forms of workplace controversies, beyond the above issues.

The argument will then arise that the investigation of such a workplace dispute is not one which has the dominant purpose of preparation for an actual or threatened claim but rather is one mandated by law and as part of corporate governance.

An interesting example of the application of this test for litigation privilege in a human rights context is the decision of the Alberta Officer of the Information and Privacy Commissioner. ¹ The applicant had made a human rights complaint against the University of Calgary, this being the public body by which she was able to seek access to the employer’s investigative report. In the determination of the employer’s refusal based on litigation privilege, regard was had to the following factors:

1. The investigator orally disclosed much of the report to the applicant;
2. The investigator also reported that “no important or relevant information was withheld from the applicant”;
3. The letter by which the applicant was advised that her complaint was dismissed did not provide reasons, apart from referring to the report; ²
4. The motive for the investigation was not the threat of legal proceedings. On this issue the decision appears to distinguish between the threat of legal proceedings distinguished from the sexual harassment complaint; ³
5. The apparent emphasis on the investigator’s neutrality suggested that his report was not intended for litigation as for that purpose he need not be neutral. ⁴
6. More significantly, the decision concluded that the implementation of the Sexual Harassment Policy was contradictory to the report being subject to litigation privilege. The purpose of the investigation was to examine the merits of the complaint, not prepare for litigation.

For these reasons the claim for litigation privilege failed.

It is this latter finding that is the most critical aspect of this decision. The theory that the very existence of an employer document setting out the commitment to investigate a workplace complaint must thus lead to the denial of litigation privilege is a critical observation. This certainly was not the only logic to propel this conclusion but it was definitely influential.

Where the employer maintains a workplace policy dealing with the manner of investigation, the fact of this process will likely show a non-privileged purpose. There will then arise an issue as to which, if any, was the dominant purpose. It cannot be inferred. This must be proven. ⁵

The Alberta decision, referenced above, looked to the terms of the workplace manual to conclude that its expectation would be that the investigation would not be privileged:

The Policy contemplates an investigation may be conducted by the company representatives or by an “independent third party”. It contemplates that an outcome, report and operational recommendations are to be forthcoming from the company representatives appointed to act under the Policy. It does not mention privilege over the investigation. It contemplates the investigation may be disclosable where required by law. If the outcome of investigation, as referenced in the required report to the parties, were termination, discipline or sanction, the accused party would reasonably expect to have access to the case against them in the event they wished to challenge the decision. That expectation further suggests the Policy investigation would not be privileged.

This theory will have a very significant consequence to any form of investigation which has been commenced based on a pre-existing workplace policy. The ramifications of this cannot be understated.

Changing the Context of the Investigation

Case law has paid attention to the issue of the evolving stages of the investigative process. There may well be an investigative stage which is then followed by the need to take action which may give rise to the reasonable prospect of litigation. In the course of a workplace investigation, there could be a decision to take disciplinary action, as an example, which then leads to the argument of litigation privilege.

The Supreme Court of British Columbia considered this issue in the 2009 decision of Butler J. ⁶

The Bank sued Tortora, a mortgage specialist and Poonja, both of whom were Bank employees terminated due to being suspected of splitting commissions earned by Tortora. It was also alleged that the two women negligently accepted fraudulently prepared appraisals used to underwrite mortgage loans.

The controversy arose over the notes and reports of an external Certified Fraud Examiner initially retained by the Bank’s external legal counsel in Toronto with respect to certain events in Ontario, who then was assigned to investigate the conduct of the defendants in British Columbia.

The court examined the adjuster line of cases and similarly concluded that the question to be asked is whether (1) litigation was in reasonable prospect at the time the material was created and (2) was the litigation the dominant purpose of the making of the report.

The factual context was then analyzed after which the court determined that in his initial investigation in this instance his mission was to determine if there was any basis to take action against the two employees. Accordingly at that time, litigation was not in reasonable prospect.

The court noted that often the pendulum will swing as time progresses, and hence the prospect of litigation will not be stagnant. That precise moment in time was not to be defined in this case in view of the findings of the second test of dominant purpose.

In the process of the determination of the dominant purpose, the court noted that in the course of an investigation, “where the party is a large corporation,” there may be other reasons for the investigation, “particularly in the early phase of the inquiry”. It continued to observe that there may be systemic issues to examine: ⁷

Additionally, where the party is a large corporation, there may be other reasons for the investigation, particularly in the early phase of the inquiry. In insurance cases, the insurer may be considering whether the claim falls within coverage. In such a context, and the case raises questions about its policies and procedures, it may ask that the circumstances be investigated to determine if their procedures need to be revised or revamped.

On the facts of the case at bar, the facts showed other objectives of the mission and hence it could not be said, the court determined, that the dominant purpose was the contemplated litigation.

That being said, the court applied the changing context of the circumstance when the Bank decided to terminate the two defendants, at which time the dominant purpose test was met. Documents prior to that date were hence ordered to be produced and those at or beyond were spared.

Much to the same end is the arbitral decision of Arbitrator Slotnick. ⁸ The Board accepted that there was an intent to investigate and commence litigation preparation as of the date of termination but refused to conclude that every document thereafter must be subject to litigation privilege. The dominant purpose test must be applied to each document:

 It is not uncommon for an employer to relieve an employee of duty with or without pay, while it initiates or completes an investigation of an allegation of misconduct.  At the point that the employee is relieved of duty, as here, it might be said that litigation is anticipated.   However, placing a blanket protection over interview notes and statements made during the ensuing investigation would insulate from production documents that are normally disclosed in termination cases where the employer has conducted its investigation before the employee is sent home.   Furthermore, it would undermine the firmly established trend toward greater pre-hearing production in labour arbitration, the reasons for which are well stated in the Toronto District School Board case, and include the narrowing of issues, facilitation of settlement and the avoidance of delays when documents are requested and produced for the first time during the hearing. In addition, as both arbitrators and the courts have stated, liberal disclosure enhances the fairness of the process.

In applying this test, the dominant purpose was not litigation, but rather investigation.

The present climate of mandating an investigation and indeed requiring that the employer set out in a policy manual the process to be followed, in the case of occupational health and safety issues, will put the likelihood of a successful litigation privilege argument into the category of unlikely to succeed.