Executive Summary: Key Legal and Evidentiary Issues

• Appellants sought leave to appeal an order compelling production of documents connected to a settlement agreement between them.
   
• Justice MacNaughton, sitting in chambers, granted leave to appeal and stayed the production order pending the appeal.
   
• Underlying litigation stems from the 2020 collapse of an agriproducts silo at a North Vancouver marine terminal.
   
• Case management judge found a prima facie case of abuse of process based on delayed disclosure of a settlement agreement and a related cooperation agreement.
   
• Questions remain about whether the case management judge properly applied precedent on implied waiver of privilege, including reliance on an Ontario Court of Appeal decision later overturned.
   
• No monetary award arose from this chambers ruling, which addressed only document production and a stay pending appeal.
   

Facts of the case

The applications arose from litigation following the September 11, 2020 collapse of a newly-constructed agriproducts silo at Fibreco Export Inc.'s marine terminal facility in North Vancouver. AGT Food and Ingredients Inc. and related companies had entered into a long-term agreement with Fibreco to use the silos, enabling Fibreco to proceed with construction. Fibreco worked with AG Growth International Inc. and related companies (collectively "AGI") to engineer, manufacture, and construct the silos, while Marsh Canada Limited and Thomas Liu acted as insurance broker and had sourced coverage for the project. After the collapse, Fibreco sought insurance coverage, which was largely denied on the basis that Marsh had terminated construction coverage before the collapse. The collapse resulted in a series of actions, counterclaims, and third-party claims among the parties.

Mediation in May 2023 was largely unsuccessful. Fibreco and AGI subsequently negotiated a settlement, entering into a common interest privilege agreement backdated to June 14, 2023, and reaching a settlement by June 22, 2023, which was later finalized as a settlement agreement dated effective June 22, 2023. AGT and Marsh were not given settlement specifics at the time and were notified of the settlement agreement in August 2023, with the cooperation agreement disclosed only in late August 2023. AGT filed an application in November 2023, and Marsh followed in June 2024, alleging that the delayed disclosure amounted to an abuse of process and seeking to strike Fibreco and AGI's pleadings, or alternatively, production of documents. Fibreco and AGI adduced evidence responding to these allegations through affidavits from counsel, corporate representatives, and a senior vice president, relying on the settlement privilege exception discussed in Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37.

Policy and legislative provisions at issue

The production order under review was made pursuant to Rule 22-1(4)(c) of the Supreme Court Civil Rules, B.C. Reg. 168/2009, which permits a court to give directions requiring discovery, inspection, or production of documents relevant to an application. Because the order was made under this rule, it constituted a limited appeal order under Rule 11 of the Court of Appeal Rules, B.C. Reg. 120/2022, requiring leave to appeal under section 31 of the Court of Appeal Act, S.B.C. 2021, c. 6. The cooperation agreement between Fibreco and AGI stated that the parties agreed to "cooperate" in the ongoing litigation, a term that became central to the case management judge's finding that the litigation landscape had been altered. In seeking a stay of the production order, the appellants relied on sections 30(c) and 33 of the Court of Appeal Act, which allow a chambers justice to make interim orders preventing prejudice, including staying proceedings that form the basis of an appeal.

Reasoning and analysis

Justice MacNaughton applied the four factors for leave to appeal set out in Goldman, Sachs & Co. v. Sessions, 2000 BCCA 326: significance to the practice, significance to the action, prima facie merit, and undue hindrance to the progress of the action, all considered under the interests of justice as described in B.C. Teachers' Fed. v. B.C. (A.G.) and Vancouver (City) v. Zhang, 2007 BCCA 280. On significance to the practice, the judgment noted the Supreme Court of Canada's consistent emphasis on the breadth of solicitor-client privilege in Blank v. Canada (Minister of Justice), 2006 SCC 39, and found the circumstances giving rise to implied waiver in this case raised issues of broader importance, including the potential chilling effect of disclosure orders on settlement of complex litigation.

On prima facie merits, the court observed that the case management judge had not cited Soprema Inc. v. Wolrige Mahon LLP, 2016 BCCA 471, described as a leading authority on implied waiver, and had relied in part on Handley Estate v. DTE Industries Limited, 2018 ONCA 324, which was subsequently overturned by a five-justice division of the Ontario Court of Appeal in 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City), 2026 ONCA 352. Although that reversal postdated the case management judge's decision, the court found merit in considering its impact on the reasoning below. The court also identified an unresolved question as to whether the judge adequately explained how the evidence adduced by Fibreco and AGI justified the scope of the waiver and the resulting disclosure order. On undue hindrance, the court noted the trial was over ten months away [as stated in the source, though this appears inconsistent with the source's separate reference to a 100-day trial scheduled for April 2027, roughly eight months from this August 2026 judgment] and unlikely to proceed as scheduled given anticipated pleadings amendments; an expedited appeal date had already been secured for October.

Ruling and overall outcome

Justice MacNaughton concluded that the interests of justice favoured granting leave to appeal, finding the appellants had established sufficient merit and that the appeal would not create undue prejudice or delay given the litigation's likely trajectory. Leave to appeal was granted to the appellants, AG Growth International Inc. and Fibreco Export Inc. Because the order under appeal involved disclosure of documents protected by solicitor-client privilege, the court also granted a stay of the production order pending the outcome of the appeal, reflecting the importance of preserving that privilege until the scope of disclosure is resolved. The decision did not address costs or damages, and no monetary amount was granted or ordered.