The Report Everyone Knew Existed, and No One Could See

The situation

The number Reza kept coming back to was one point one million dollars, the combined figure for rebuilding the section of the house that burned, replacing custom fixtures already installed and destroyed, and covering roughly eight months of delay while the site sat under a fire investigation before rebuilding could even begin. Insurance would cover a meaningful share of that figure, but the policy's builder's risk coverage had limits set well before construction ever started, and a significant gap remained between what the insurer would ultimately pay out and what it would actually cost to finish the home the way Reza and Azadeh had originally planned and paid for it to be built.

The house, a custom waterfront build near Gananoque, was roughly eighty percent complete when an electrical fault in an unfinished section of wiring started a fire that spread quickly through the framing before the site's fire suppression measures, minimal at that stage of construction, could do much to contain it. Reza, a partner at an engineering firm, and Azadeh, a surgeon, had been planning the home for over two years, working through custom finishes, mechanical systems, and a long list of small decisions with a small local builder they had chosen specifically because of a strong reputation for high-end waterfront work in the area.

The builder, run by Carmela, had been responsive throughout the project up to that point, answering emails within a day and walking the couple through the site personally most weekends, and the relationship had been a genuinely good one until the fire changed everything. Afterward, communication slowed considerably, replaced by shorter, more careful messages. The builder's insurer sent an adjuster within days of the fire, and the builder's own team conducted what they described only as an internal review of the electrical work performed before the fire occurred. Reza and Azadeh assumed, not unreasonably, that whatever that review found would eventually come out once a lawsuit was underway and both sides were required to disclose their relevant documents to each other under the ordinary rules of the process.

That assumption turned out to be only partly right, and the case ultimately turned less on any single dramatic fact than on two separate, quieter gaps in the paper trail, one created deliberately by the builder's lawyers well within the rules, and one created unintentionally by Reza and Azadeh's own record-keeping during a stressful and fairly disorganized period of the project.

What was actually at stake

At the centre of the dispute was a single document: an internal incident report Carmela's company had prepared in the days after the fire, reviewing what the electrical crew had actually done on site and whether the work matched the approved plans and inspection sign-offs. Reza and Azadeh's side wanted that report badly, believing it would show exactly what had gone wrong and whether the builder's own team already knew, well before the lawsuit even began, that the wiring in that section of the house was deficient in some identifiable way.

In Ontario litigation, each side is generally required to prepare an affidavit of documents, a sworn list disclosing every relevant document in their possession or control, including documents that are being withheld from the other side and the specific reason why. Carmela's company listed the incident report on its affidavit but claimed litigation privilege over it, arguing the report had been prepared at the direction of legal counsel, in anticipation of exactly this kind of lawsuit, and was therefore protected from disclosure even though everyone agreed it existed and was directly relevant to what had happened.

That privilege claim was tested rather than simply accepted, and it was ultimately upheld. The evidence produced showed the report had genuinely been commissioned through the builder's lawyer within days of the fire, with the dominant purpose of preparing for anticipated litigation rather than simply documenting the incident for ordinary business or insurance purposes, which is the line the law actually draws. Litigation privilege, when it genuinely applies on those facts, protects that kind of document even from a party who badly wants to see it, and even when the document plainly bears on exactly what happened and who was responsible for it.

The second gap sat on Reza and Azadeh's own side of the file. Roughly a third of the project's change orders, the emailed approvals for design changes and cost adjustments made throughout more than two years of construction, had been stored on a work laptop of Reza's that failed and had never been backed up before the fire occurred, a problem unrelated to the fire itself but discovered only once the litigation document review began in earnest. Without those records, establishing the full scope and cost of the custom work destroyed in the fire meant reconstructing the project from whatever secondary sources still existed, rather than being able to point directly to a single, clean, uninterrupted paper trail.

What we did

1. Challenged the privilege claim over the incident report before simply accepting it, formally requesting the underlying details of when the report was commissioned, by whom, and for what stated purpose, since a privilege claim asserted too broadly or arranged too late in the process can sometimes be defeated on a motion, and it needed to be tested rather than taken at face value from the outset.
2. Reviewed the evidence supporting the privilege claim once it was produced, concluding honestly, after seeing the timeline and the instructions to counsel, that the report had in fact been commissioned through the builder's lawyer within days of the fire for the dominant purpose of anticipated litigation, meaning the claim was genuinely likely to be upheld and continuing to fight it further would spend money without realistically changing the outcome.
3. Reconstructed the missing change orders from every available secondary source, working systematically through Reza and Azadeh's bank and credit card statements, the builder's own issued invoices, email correspondence retained by the design consultants, and Azadeh's separate cloud backup of shared project files, to rebuild as complete and defensible a record as possible of what had actually been approved and installed on the project.
4. Commissioned an independent electrical and fire origin assessment, since the builder's own incident report was unavailable to Reza and Azadeh's side, to establish a separate, independent evidentiary basis for what had actually caused the fire that did not depend in any way on the document the builder was entitled to withhold, and that Reza and Azadeh controlled directly rather than waiting on disclosure from the other side.
5. Obtained sworn evidence from the electrical subcontractor directly through an examination, questioning them under oath about the work they personally performed, since a witness's own factual account of what they did is not protected by the builder's privilege claim, even where a report summarizing similar findings would be, giving Reza and Azadeh a direct line to facts the report itself kept out of reach.
6. Assessed the combined effect of both gaps honestly and directly with Reza and Azadeh, explaining plainly that the reconstructed records, while credible and reasonably thorough, were less airtight than original documentation would have been, and that the missing report meant the strongest direct evidence of what the builder's team knew immediately after the fire would likely never surface at all.
7. Pursued a negotiated settlement rather than pushing the case to a full trial, given that a trial would put the reconstructed evidence, without the incident report available to corroborate it, in front of a decision-maker with no guarantee the gaps would be read favourably, and a negotiated settlement offered meaningfully more certainty within a much shorter timeframe, without staking the whole recovery on how a single decision-maker read two evidentiary gaps.
8. Advised Reza on data backup practices going forward, both for this litigation and for his own engineering practice, recommending redundant, automatic backups for any project-critical correspondence and financial records, stored on at least two separate systems, so a single device failure could never again threaten a claim of this size or leave a client rebuilding a file from bank statements years later.

The outcome

The case settled for roughly sixty percent of the original claim, covering most of the rebuilding cost and a portion of the delay damages, but falling well short of full recovery for the custom finishes and mechanical systems whose original cost could only be estimated once the change order records had to be reconstructed from secondary sources rather than produced directly from a complete file. The privilege ruling never changed over the course of the case, and the incident report was never seen by Reza and Azadeh's side, then or at any point afterward, even once the settlement was finalized.

The gap between the claim as originally framed and the amount ultimately recovered came down almost entirely to those two evidentiary weaknesses working together: a document the law properly allowed the builder to withhold, and a set of records Reza and Azadeh had never expected to need reconstructed from bank statements and invoices years after the fact. Neither weakness reflected any fault in the underlying claim itself, and the fire and its cause were never seriously disputed, but both weaknesses reduced what could be proven to a court with real confidence, and a settlement negotiated against genuinely uncertain proof tends to reflect that uncertainty directly in the final number both sides land on.

Reza now keeps project-related email and financial records backed up across two separate systems rather than a single laptop, a habit he has since carried directly into his own engineering practice as well, requiring the same of project files his firm manages for clients. The lesson he took from the case was less about the fire itself, which had been an accident neither he nor the builder could have easily foreseen, than about how much a claim's ultimate value depends on what can actually be proven months or years later in front of a court, not simply on what everyone involved already privately knows to be true.

What you can learn from this