Executive Summary: Key Legal and Evidentiary Issues

• Plaintiffs claimed CN’s negligence in culvert maintenance caused flooding on their rural property.

• Central legal issues included trespass, nuisance, negligence, and gross negligence.

• CN asserted litigation and solicitor-client privilege over key investigative and internal documents.

• Plaintiffs challenged the privilege claims, arguing these were routine operational documents.

• The court found CN had properly established privilege on a document-by-document basis.

• Disclosure was denied; the injunction request remains pending as parties pursue resolution.

Facts and outcome of the case

The plaintiffs, Sheldon Reed, Susan Tew, and Christopher Reed, owned an 84.6-acre off-grid property near Smithers, British Columbia, purchased in 2021. They alleged that on May 8, 2023, their property was flooded due to Canadian National Railway Company’s failure to inspect and maintain a culvert beneath its railway line. The blocked culvert allegedly caused water to build up and then release suddenly, flooding the plaintiffs’ land and altering the Beament Stream’s course. A second obstruction was later reported in 2024 at the same culvert location.

They brought a civil claim against CN, Skeena Rail Services Ltd., and White Spruce Enterprises (1981) Ltd., advancing causes of action in trespass, nuisance, negligence, and gross negligence. In addition to damages estimated at $255,150, they sought an interlocutory injunction requiring CN to maintain the culvert to prevent future flooding. The plaintiffs also applied for disclosure of numerous documents withheld by CN on grounds of litigation privilege, solicitor-client privilege, and settlement privilege.

The court’s decision, authored by Madam Justice Sukstorf, focused exclusively on the plaintiffs’ disclosure application. It did not address the injunction, which remains unresolved pending settlement discussions.

CN argued that litigation was reasonably anticipated as early as May 9, 2023, when Mr. Reed directly accused CN of liability. Acting on instructions from its legal department, CN initiated an investigation and retained a third-party firm. All relevant documents—investigation reports, internal memos, legal strategy emails, and communications with counsel—were claimed to have been created for the dominant purpose of litigation or legal advice.

The plaintiffs countered that these documents involved routine maintenance and operational activities and were not litigation-driven. They insisted that broad privilege claims over entire categories of documents lacked justification and undermined their ability to assess CN’s liability.

Justice Sukstorf conducted a detailed privilege analysis. Relying on principles from Hamalainen, Raj, and Panetta, the court affirmed that when litigation is reasonably anticipated, even investigative documents may attract privilege. The court found that CN’s affidavit evidence—particularly from its senior claims agent—met the evidentiary standard required to uphold privilege claims for each contested document.

The application to compel disclosure was dismissed. The court held that CN properly asserted privilege and that no in-camera review was required. The matter of costs was deferred, and the injunction application will be decided later if settlement talks do not succeed. CN therefore prevailed in this phase of the proceedings, with its document confidentiality fully upheld.