Tuesday, 1 May 2012

Documents in Possession of Advisors May Not Be Producible

Often, documents are sought from a party that may be in possession of that party's professional advisors, e.g., lawyers, accountants, etc.  The basis for this request is R. 7-1(11) and (14), which provide for production of documents "that are or have been in the party's possession, power or control".  The application of these provisions was recently considered in The Owners, Strata Plan No. VIS3578 v. Canan Investment Group Ltd., 2012 BCSC 607, with what may be somewhat surprising results.

Because the defendant advised that documents sought by the plaintiff were no longer in its possession, the plaintiff sought an order to require the defendant "to make inquiries of various unspecified professionals such as accountants, solicitors and tax advisors who provided services to [defendant] at the relevant time concerning the enumerated documents, and to attempt to obtain the documents from these professionals."

Considering this request, the court accepted that "power or control" includes "all documents which, though not in the party's possession, he has a right to obtain from the person who has them": Lacker v. Lacker (1982), 42 B.C.L.R. 188 (S.C.).  Moreover, the court also accepted that it this principle has been applied to documents in possession of a lawyer because the agency relationship with the client: Jones, Gable & Company Limited v. Price (1977), 5 B.C.L.R. 103.  Nevertheless, the court dismissed the application on the basis that the plaintiff did not present any evidence regarding the nature of the retainers with these professionals; holding that "Depending on the nature of the retainer, there may or may not have been an agency relationship."

Although likely appropriate in the unique circumstances of this case, the overall correctness of the decision seems less clear.

First, it arguably presents an association fallacy, as it seems to hold that because documents in possession of a lawyer are documents in a party's power or control because of an agency relationship between the party and the lawyer, an agency relationship is therefore a requirement of power or control.   

Second, one wonders about the practicality of placing the onus to identify the other party's advisors and the nature of the retainers on the demanding party.  Where the other party refuses to provide this information, the demanding party will have little choice but to seek this information at an oral discovery, bring an application for documents on the basis of this information, and then seek to continue oral discovery with the newly produced documents.  Arguably, the principle of proportionality inherent in the new Rules suggests that a simpler procedure be adopted, such as the order sought by the plaintiff in this case.  After all, given that the defendant was uniquely aware of the identity of its advisors and the nature of the retainers, it is difficult to see what prejudice would come to it if the order was granted and the defendant was required to comply with its document production obligations by doing the necessary investigations.