Workplace Investigations: When Is Litigation Privilege Waived?

An employer retains an independent investigator after an employee threatens to sue. The investigator prepares a report for the employer and/or its counsel, and the employer claims litigation privilege over the report and the investigation file.

The employee then commences a wrongful dismissal or human rights proceeding. In its defence, the employer says that it acted on the findings of a fair and thorough independent investigation.

Can the employer rely on the investigation to justify its conduct while withholding the report and underlying evidence?

The answer depends on what the employer discloses, how it uses the investigation and what fairness requires. In some circumstances, the employer’s conduct may amount to a waiver of privilege—even if the employer did not intend that result.

Litigation Privilege and the Investigation Report

Litigation privilege may protect a document created for the dominant purpose of existing or reasonably anticipated litigation. The privilege is intended to protect the preparation of a party’s case in the adversarial process.

An investigator’s report may qualify where it is prepared for that purpose. But the existence of a threatened claim, a lawyer’s involvement, or a heading describing the report as privileged does not, by itself, establish the claim. The actual purpose for which the material was created must be examined.

In Alberta v. Suncor Energy Inc., 2017 ABCA 221, the Alberta Court of Appeal rejected a blanket approach to privilege over documents created or collected during an internal investigation. The privilege claim required consideration of the particular documents, or appropriate groups of documents, and the purpose for which they were created.

That is the first question: Did privilege attach to the report or other material?

The second is different: If privilege attached, was it subsequently waived?

For a discussion of the first question, see Litigation Privilege and Workplace Investigations.

Express and Implied Waiver

A client may expressly waive privilege by voluntarily producing a privileged report or choosing to put it into evidence.

Waiver may also be implied from conduct. A party does not necessarily have to say, “I waive privilege.” A court may find that the party’s conduct is inconsistent with maintaining the privilege, particularly where fairness requires the opposing party to have access to material needed to test a claim or defence.

This problem can arise when an employer relies on selected aspects of an investigation while asserting privilege over the material needed to examine those assertions.

For example, an employer may say that an independent investigator found a complaint unsubstantiated and that it acted reasonably by relying on the investigation. If the complainant challenges the fairness of the investigation or the basis for its findings, the employer’s reliance may give rise to an argument that the relevant material must be disclosed.

The question is not simply whether the employer mentioned an investigation. It is how the employer has used the investigation and what information the other party needs to answer the position taken.

The Alberta Decision in Prosser

The issue was considered by the Alberta Court of King’s Bench in Prosser v. Industrial Alliance Insurance, 2024 ABKB 87.

The employer retained an external investigator after receiving harassment complaints. Following the investigation, it dismissed the employee for cause. The employee brought a wrongful dismissal action and sought disclosure of investigation materials, including information about the complaints and witness interviews.

The employer claimed litigation privilege and solicitor-client privilege over the materials.

Justice Eamon concluded that the employer had not established privilege over the investigation and underlying records on the evidence presented. That conclusion resolved the privilege claim.

The court also considered what would have happened if the records had been privileged.

In its statement of defence, the employer did more than deny the employee’s allegations. It asserted that:

• The investigation was fair, thorough and impartial;
• The employee had been given a full opportunity to respond;
• The investigation substantiated the harassment complaints; and
• The findings provided grounds for dismissal for cause.

The court found that the employer had placed the investigation’s process, evidence and findings in issue. In those circumstances, the employee could not fairly challenge the employer’s position without access to the relevant underlying material.

Justice Eamon concluded that, had privilege applied, it would have been waived over the relevant aspects of the investigation, including the information received by the investigator and the underlying evidence.

A Mere Denial Is Not Necessarily a Waiver

The distinction drawn in Prosser is important.

An employer does not automatically waive privilege simply by denying an employee’s claim. The court contrasted a mere denial with the employer’s affirmative reliance on the investigation’s fairness, process and findings.

Consider the difference between these two positions:

“The employer denies that it acted improperly.”

and:

“The employer acted properly because an independent investigator conducted a fair and thorough investigation, found the allegations substantiated, and provided the basis for the decision.”

The second position places considerably more weight on the investigation. If the opposing party challenges those assertions, the employer may face an argument that it cannot rely on the investigation while withholding the material required to test it.

The wording of a pleading is not the only consideration. The court may also examine evidence given by the employer, documents it produces and the way it presents its case.

What If the Employer Simply Says It Investigated?

The distinction becomes particularly important in a wrongful dismissal action in which the employer alleges serious misconduct.

An employee dismissed for cause may assert that the employer acted in bad faith by making serious allegations without first making reasonable inquiries. The employer may wish to answer that allegation by stating that an investigation was conducted before the dismissal.

Suppose the defence says:

“Before terminating the plaintiff’s employment, the defendant conducted an investigation into the allegations. The defendant denies that it acted in bad faith in the manner of dismissal.”

The employer does not expressly refer to the investigator’s findings, assert that the investigation was fair or thorough, or say that the report justified the dismissal. Instead, it seeks to establish cause through admissible evidence of the underlying misconduct.

That position presents a stronger argument for preserving privilege than the defence advanced in Prosser. An acknowledgment that an investigation occurred does not necessarily place the contents of the report in issue.

There is nevertheless a question about the purpose for which the employer relies on that acknowledgment.

If the employee alleges that the employer made no inquiry whatsoever, the employer may answer that narrow allegation by saying that an investigation occurred. The existence of the investigation may be capable of proof without disclosure of a privileged report.

The position becomes more difficult if the employer asks the court to infer that it acted in good faith because an investigation was conducted. The employee may then argue that the court cannot properly draw that inference without knowing what the investigation revealed, whether it considered the employee’s response, and how the employer used the information.

Whether the employer has put the privileged material in issue will depend on the substance of its position, including the inferences it asks the court to draw. Merely avoiding the word “findings” in the pleading will not necessarily resolve the question.

The Supreme Court’s Decision in Campbell

The distinction between acknowledging the existence of privileged material and relying on it was considered by the Supreme Court of Canada in R. v. Campbell, [1999] 1 S.C.R. 565.

An RCMP officer acknowledged in response to questioning that he had sought a legal opinion concerning a police operation. The Supreme Court held that this acknowledgment alone did not waive solicitor-client privilege.

The Crown later relied on the fact that the police had consulted government lawyers to support an argument that the police had acted in good faith. The Court found that privilege had been waived. Although the content of the advice had not been disclosed, the argument conveyed the implication that the advice supported the legality of the operation.

The Court’s reasoning illustrates that an express disclosure of privileged material is not always necessary for a waiver. A party may put the material in issue by asking the court to draw a favourable inference that depends on its contents.

Campbell concerned solicitor-client privilege and a criminal proceeding. Its application to a claim of litigation privilege over a workplace investigation report is an analogy, rather than a direct ruling on the proposed employment pleading. It nevertheless identifies the difficulty an employer may encounter if it relies on the existence of an investigation to establish good faith.

An Investigation Followed by Dismissal

In Gower v. Tolko Manitoba Inc., 2001 MBCA 11, an employer retained a lawyer to investigate a sexual harassment complaint, prepare findings and provide legal advice.

After receiving the report, the employer dismissed the employee. In the resulting wrongful dismissal action, the employee sought production of the report. The Manitoba Court of Appeal upheld the employer’s claim of solicitor-client privilege.

Gower illustrates that conducting an investigation, receiving a privileged report and subsequently dismissing an employee do not, by themselves, require production of the report.

The decision does not, however, directly resolve whether an employer may plead the existence of an investigation to answer a bad-faith claim while maintaining litigation privilege over the report.

Does Disclosure of the Report Waive Privilege over the Entire File?

Not necessarily.

In Prosser, the employee did not seek the investigator’s report itself. The court therefore did not decide whether privilege over that report had been waived.

Justice Eamon expressly recognized that waiver over an investigation report does not necessarily result in waiver over all underlying investigation materials. That question depends on the circumstances.

The same distinction applies in the other direction. A court may order disclosure of particular underlying records without deciding that every draft, communication or document associated with the investigation must be produced.

The scope of any waiver should be considered in relation to the material disclosed or relied on and the issue the opposing party must be able to test.

What About a Summary of the Results?

Employers may be required to inform the parties of the results of a workplace investigation and any corrective action. A notification of the outcome is not necessarily the same thing as providing the investigator’s complete report.

A brief statement that an allegation was substantiated or not substantiated does not automatically waive litigation privilege over the entire investigation file. But the content and use of the communication matter.

A detailed summary that selectively describes the investigator’s reasoning or evidence may create a different issue, particularly if the employer later relies on that summary to defend its decision.

The question should be considered before the results are communicated: what must be disclosed, what will be disclosed voluntarily, and how might that disclosure affect an existing privilege claim?

Legal Advice Is a Separate Question

An investigation may also involve confidential legal advice. That advice should not be treated as automatically disclosed merely because the investigation report is produced.

In Masse v. TerraFarma Inc., 2024 ONSC 789, an investigation report contained a brief reference to advice received by the employer from counsel. The report was produced in the wrongful dismissal litigation, and the employee argued that privilege over the underlying legal advice had been waived.

The court rejected the waiver argument on the facts. Among other things, the employer was not relying on the legal advice to justify the dismissal; it was relying on the investigator’s findings.

Masse concerned solicitor-client privilege over legal advice, rather than litigation privilege over the investigator’s report. It illustrates the need to identify precisely which material and which privilege are said to have been waived.

The Practical Consequence

An employer may commission an investigation for the dominant purpose of anticipated litigation and have a valid privilege claim. That does not end the analysis.

An employer that acknowledges an investigation occurred, while avoiding reliance on its fairness, findings or contents, has a stronger argument for maintaining privilege than one that affirmatively relies on those matters to justify its conduct.

Even so, the court may consider the purpose for which the employer refers to the investigation and the inference it asks the court to draw. If the employer relies on the investigation to establish that it acted reasonably or in good faith, the opposing party may seek the material needed to test that position. In an appropriate case, fairness may support a finding of implied waiver.

The issue is therefore not confined to the retainer or the wording on the report. It continues through the notification of results, the employer’s decisions, disclosure, pleadings and the presentation of evidence.

Before relying on an investigation in a proceeding, the employer should consider the consequences for privilege—not only over the final report, but also over the underlying evidence and related materials.

Workplace Investigations: When Is Litigation Privilege Waived?

An employer retains an independent investigator after an employee threatens to sue. The investigator prepares a report for the employer and/or its counsel, and the employer claims litigation privilege over the report and the investigation file.

The employee then commences a wrongful dismissal or human rights proceeding. In its defence, the employer says that it acted on the findings of a fair and thorough independent investigation.

Can the employer rely on the investigation to justify its conduct while withholding the report and underlying evidence?

The answer depends on what the employer discloses, how it uses the investigation and what fairness requires. In some circumstances, the employer’s conduct may amount to a waiver of privilege—even if the employer did not intend that result.

Litigation Privilege and the Investigation Report

Litigation privilege may protect a document created for the dominant purpose of existing or reasonably anticipated litigation. The privilege is intended to protect the preparation of a party’s case in the adversarial process.

An investigator’s report may qualify where it is prepared for that purpose. But the existence of a threatened claim, a lawyer’s involvement, or a heading describing the report as privileged does not, by itself, establish the claim. The actual purpose for which the material was created must be examined.

In Alberta v. Suncor Energy Inc., 2017 ABCA 221, the Alberta Court of Appeal rejected a blanket approach to privilege over documents created or collected during an internal investigation. The privilege claim required consideration of the particular documents, or appropriate groups of documents, and the purpose for which they were created.

That is the first question: Did privilege attach to the report or other material?

The second is different: If privilege attached, was it subsequently waived?

For a discussion of the first question, see Litigation Privilege and Workplace Investigations.

Express and Implied Waiver

A client may expressly waive privilege by voluntarily producing a privileged report or choosing to put it into evidence.

Waiver may also be implied from conduct. A party does not necessarily have to say, “I waive privilege.” A court may find that the party’s conduct is inconsistent with maintaining the privilege, particularly where fairness requires the opposing party to have access to material needed to test a claim or defence.

This problem can arise when an employer relies on selected aspects of an investigation while asserting privilege over the material needed to examine those assertions.

For example, an employer may say that an independent investigator found a complaint unsubstantiated and that it acted reasonably by relying on the investigation. If the complainant challenges the fairness of the investigation or the basis for its findings, the employer’s reliance may give rise to an argument that the relevant material must be disclosed.

The question is not simply whether the employer mentioned an investigation. It is how the employer has used the investigation and what information the other party needs to answer the position taken.

The Alberta Decision in Prosser

The issue was considered by the Alberta Court of King’s Bench in Prosser v. Industrial Alliance Insurance, 2024 ABKB 87.

The employer retained an external investigator after receiving harassment complaints. Following the investigation, it dismissed the employee for cause. The employee brought a wrongful dismissal action and sought disclosure of investigation materials, including information about the complaints and witness interviews.

The employer claimed litigation privilege and solicitor-client privilege over the materials.

Justice Eamon concluded that the employer had not established privilege over the investigation and underlying records on the evidence presented. That conclusion resolved the privilege claim.

The court also considered what would have happened if the records had been privileged.

In its statement of defence, the employer did more than deny the employee’s allegations. It asserted that:

• The investigation was fair, thorough and impartial;
• The employee had been given a full opportunity to respond;
• The investigation substantiated the harassment complaints; and
• The findings provided grounds for dismissal for cause.

The court found that the employer had placed the investigation’s process, evidence and findings in issue. In those circumstances, the employee could not fairly challenge the employer’s position without access to the relevant underlying material.

Justice Eamon concluded that, had privilege applied, it would have been waived over the relevant aspects of the investigation, including the information received by the investigator and the underlying evidence.

A Mere Denial Is Not Necessarily a Waiver

The distinction drawn in Prosser is important.

An employer does not automatically waive privilege simply by denying an employee’s claim. The court contrasted a mere denial with the employer’s affirmative reliance on the investigation’s fairness, process and findings.

Consider the difference between these two positions:

“The employer denies that it acted improperly.”

and:

“The employer acted properly because an independent investigator conducted a fair and thorough investigation, found the allegations substantiated, and provided the basis for the decision.”

The second position places considerably more weight on the investigation. If the opposing party challenges those assertions, the employer may face an argument that it cannot rely on the investigation while withholding the material required to test it.

The wording of a pleading is not the only consideration. The court may also examine evidence given by the employer, documents it produces and the way it presents its case.

What If the Employer Simply Says It Investigated?

The distinction becomes particularly important in a wrongful dismissal action in which the employer alleges serious misconduct.

An employee dismissed for cause may assert that the employer acted in bad faith by making serious allegations without first making reasonable inquiries. The employer may wish to answer that allegation by stating that an investigation was conducted before the dismissal.

Suppose the defence says:

“Before terminating the plaintiff’s employment, the defendant conducted an investigation into the allegations. The defendant denies that it acted in bad faith in the manner of dismissal.”

The employer does not expressly refer to the investigator’s findings, assert that the investigation was fair or thorough, or say that the report justified the dismissal. Instead, it seeks to establish cause through admissible evidence of the underlying misconduct.

That position presents a stronger argument for preserving privilege than the defence advanced in Prosser. An acknowledgment that an investigation occurred does not necessarily place the contents of the report in issue.

There is nevertheless a question about the purpose for which the employer relies on that acknowledgment.

If the employee alleges that the employer made no inquiry whatsoever, the employer may answer that narrow allegation by saying that an investigation occurred. The existence of the investigation may be capable of proof without disclosure of a privileged report.

The position becomes more difficult if the employer asks the court to infer that it acted in good faith because an investigation was conducted. The employee may then argue that the court cannot properly draw that inference without knowing what the investigation revealed, whether it considered the employee’s response, and how the employer used the information.

Whether the employer has put the privileged material in issue will depend on the substance of its position, including the inferences it asks the court to draw. Merely avoiding the word “findings” in the pleading will not necessarily resolve the question.

The Supreme Court’s Decision in Campbell

The distinction between acknowledging the existence of privileged material and relying on it was considered by the Supreme Court of Canada in R. v. Campbell, [1999] 1 S.C.R. 565.

An RCMP officer acknowledged in response to questioning that he had sought a legal opinion concerning a police operation. The Supreme Court held that this acknowledgment alone did not waive solicitor-client privilege.

The Crown later relied on the fact that the police had consulted government lawyers to support an argument that the police had acted in good faith. The Court found that privilege had been waived. Although the content of the advice had not been disclosed, the argument conveyed the implication that the advice supported the legality of the operation.

The Court’s reasoning illustrates that an express disclosure of privileged material is not always necessary for a waiver. A party may put the material in issue by asking the court to draw a favourable inference that depends on its contents.

Campbell concerned solicitor-client privilege and a criminal proceeding. Its application to a claim of litigation privilege over a workplace investigation report is an analogy, rather than a direct ruling on the proposed employment pleading. It nevertheless identifies the difficulty an employer may encounter if it relies on the existence of an investigation to establish good faith.

An Investigation Followed by Dismissal

In Gower v. Tolko Manitoba Inc., 2001 MBCA 11, an employer retained a lawyer to investigate a sexual harassment complaint, prepare findings and provide legal advice.

After receiving the report, the employer dismissed the employee. In the resulting wrongful dismissal action, the employee sought production of the report. The Manitoba Court of Appeal upheld the employer’s claim of solicitor-client privilege.

Gower illustrates that conducting an investigation, receiving a privileged report and subsequently dismissing an employee do not, by themselves, require production of the report.

The decision does not, however, directly resolve whether an employer may plead the existence of an investigation to answer a bad-faith claim while maintaining litigation privilege over the report.

Does Disclosure of the Report Waive Privilege over the Entire File?

Not necessarily.

In Prosser, the employee did not seek the investigator’s report itself. The court therefore did not decide whether privilege over that report had been waived.

Justice Eamon expressly recognized that waiver over an investigation report does not necessarily result in waiver over all underlying investigation materials. That question depends on the circumstances.

The same distinction applies in the other direction. A court may order disclosure of particular underlying records without deciding that every draft, communication or document associated with the investigation must be produced.

The scope of any waiver should be considered in relation to the material disclosed or relied on and the issue the opposing party must be able to test.

What About a Summary of the Results?

Employers may be required to inform the parties of the results of a workplace investigation and any corrective action. A notification of the outcome is not necessarily the same thing as providing the investigator’s complete report.

A brief statement that an allegation was substantiated or not substantiated does not automatically waive litigation privilege over the entire investigation file. But the content and use of the communication matter.

A detailed summary that selectively describes the investigator’s reasoning or evidence may create a different issue, particularly if the employer later relies on that summary to defend its decision.

The question should be considered before the results are communicated: what must be disclosed, what will be disclosed voluntarily, and how might that disclosure affect an existing privilege claim?

Legal Advice Is a Separate Question

An investigation may also involve confidential legal advice. That advice should not be treated as automatically disclosed merely because the investigation report is produced.

In Masse v. TerraFarma Inc., 2024 ONSC 789, an investigation report contained a brief reference to advice received by the employer from counsel. The report was produced in the wrongful dismissal litigation, and the employee argued that privilege over the underlying legal advice had been waived.

The court rejected the waiver argument on the facts. Among other things, the employer was not relying on the legal advice to justify the dismissal; it was relying on the investigator’s findings.

Masse concerned solicitor-client privilege over legal advice, rather than litigation privilege over the investigator’s report. It illustrates the need to identify precisely which material and which privilege are said to have been waived.

The Practical Consequence

An employer may commission an investigation for the dominant purpose of anticipated litigation and have a valid privilege claim. That does not end the analysis.

An employer that acknowledges an investigation occurred, while avoiding reliance on its fairness, findings or contents, has a stronger argument for maintaining privilege than one that affirmatively relies on those matters to justify its conduct.

Even so, the court may consider the purpose for which the employer refers to the investigation and the inference it asks the court to draw. If the employer relies on the investigation to establish that it acted reasonably or in good faith, the opposing party may seek the material needed to test that position. In an appropriate case, fairness may support a finding of implied waiver.

The issue is therefore not confined to the retainer or the wording on the report. It continues through the notification of results, the employer’s decisions, disclosure, pleadings and the presentation of evidence.

Before relying on an investigation in a proceeding, the employer should consider the consequences for privilege—not only over the final report, but also over the underlying evidence and related materials.