Privilege over whistleblower investigation files

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Publication October 2015

The recent Alberta Court of Queen’s Bench decision in Talisman Energy Inc v Flo-Dynamics Systems Inc. confirms that privilege is not absolute in whistleblower investigations.


Background

The background to the decision involved a common scenario: an employee and a consultant to Talisman allegedly directed significant business to a company they owned, the defendant Flo-Dynamics Systems.

The issue came to Talisman’s attention through an anonymous whistleblower. Talisman immediately commenced an investigation, led by one of its in-house lawyers. Talisman’s internal whistleblower investigation generated 550 documents, prior to the retainer of external legal counsel. The defendants sought production of this whistleblower file, while Talisman asserted it was privileged.

Grounds of privilege

The court considered three grounds of privilege: litigation privilege, case-by-case privilege, and legal advice privilege. The court found that only legal advice privilege applied in the circumstances and accordingly, the whistleblower file was protected by privilege.

Respecting litigation privilege, the court could not conclude, on the evidence, that the “dominant purpose” for creating the whistleblower file was litigation. The court noted that a whistleblower investigation could have numerous other purposes, including assessing termination of employment or business relationship or compliance with whistleblower policies and procedures. Because Talisman objected to its witness answering questions about the whistleblower program, the court could not determine whether the “dominant purpose” was some purpose other than litigation (namely, compliance with the whistleblower program).

Similarly, with respect to case-by-case privilege, the court found it could not fully ascertain the circumstances surrounding Talisman’s whistleblower program in order to assess whether this category of privilege applied.

The court found that only legal advice privilege applied to protect the whistleblower file from disclosure. In making this determination, the court concluded that, “One of the purposes of the investigation… was to ascertain the facts in order to get legal advice from their in-house legal counsel” and accordingly, the whistleblower file was privileged. Legal advice privilege only required the provision of legal advice to be “one of the purposes” and not the “dominant purpose,” as is the case for litigation privilege.

What does this decision mean to internal investigations, particularly whistleblower investigations?

  • The corporate investigation policy should require the immediate involvement of internal or external legal counsel. The policy should specify that legal counsel leads and manages the internal investigation, for the express purpose of ascertaining the facts to provide legal advice to the company.
  • All members of the investigation team should understand legal advice privilege and ensure it is maintained. Key items should include marking all communications “Solicitor-Client Privileged” and limiting disclosure to legal counsel and the central investigation team only.
  • Whistleblower policies should be drafted to better rely upon all categories of privilege. In particular, the whistleblower policies should note the litigation purpose of an investigation and the importance of confidentiality of the whistleblower complaint and investigation.

Maintaining confidentiality and privilege is critical to an effective whistleblower investigation. This recent decision confirms that privilege is not absolute respecting whistleblower investigations and companies need to ensure privilege is maintained.


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