All About Information

On March 7th the Federal Court denied a motion for relief from the implied undertaking rule to allow documents produced in one action to be used in another related action.

The Court held that the defendant (and plaintiff by counterclaim) did not meet the strict standard of “necessity” established by the Supreme Court of Canada and Lac d’Amiante du Québec Ltée and recently endorsed in Juman v. Doucette (see summary here). The Court was particularly concerned about prejudice to the opposing parties in the other action, where the trial was set to commence just over a week after the motion was heard. It said:

The impact on Servier, even though it is not a party to the Ramipril Action, must also be considered. As the Plaintiff and Defendant by Counterclaim to the Perindopril Action, it is self-evident that Servier is one of the “parties involved” (Lac d’Amiante, above at para. 77). For this motion, Apotex has selected groups of documents from the discovery process in the Ramipril Action. As a third party, Servier is unable to review the entire discovery record to determine whether there are other documents or transcript references that might assist it in responding to Ramipril Documents that would now become available in the Perindopril Action. In this, I see the potential for serious prejudice to Servier. In response, Apotex asserts that it has only “selected” entire groups of documents (for example, all of the semi-annual reports and all of the pre-Troy lab notebooks). Even accepting that this is true, I do not find this explanation to be sufficient to dissipate the potential prejudice. There may be other documents outside these defined “groups” that could assist Servier. While Servier may have tools at its disposal to overcome the potential prejudice (although none have been described), the late hour of this motion closes that possibility. Apotex has not persuaded me that Servier would not suffer any prejudice; indeed, I believe that it is more likely than not that Servier would, at best, be at a disadvantage and, at worst, be seriously prejudiced.

Further, the importance of this potential prejudice or disadvantage to Servier is heightened, in my view, by the fact that other means could have been pursued by Apotex to obtain the Ramipril Documents. Sanofi and Schering have highlighted at least five different ways — including methods explicitly spelled out in the Federal Courts Rules, S.O.R./98-106 — in which Apotex could have obtained the Ramipril Documents while still preserving the implied undertaking of confidentiality.

The Court did allow the applicant to use one set of documents that had been broadly disseminated.

Sanofi-Aventis Canada Inc. v. Apotex Inc., 2880 FC 320.

The Supreme Court of Canada unanimously allowed an appeal in Juman v. Doucette today (indexed at the BCCA as Doucette v. Wee Watch). It held that the implied undertaking rule prohibits a party from making a bona fide report of criminal conduct to law enforcement without seeking court approval.

The underlying action was a negligence claim against a day care and day care worker which was filed after a child suffered a seizure while under care. The police investigation was ongoing, but the police had not yet laid charges by the time the day care worker’s examination for discovery was scheduled. The day care worker filed a motion to request an express restriction on disclosure of her transcript and the Attorney-General brought a competing motion seeking to vary the implied undertaking to allow disclosure of the discovery transcript to the police.

The chambers judge held that both motions were premature but declared that the A-G and the police were under an obligation not to cause the parties to violate their undertakings without the day care worker’s consent or leave of the court.

The Court of Appeal allowed an appeal of this order. It acknowledged an exception to the undertaking when disclosure is necessary to prevent serious and imminent harm and then went further to permit the disclosure of suspected crimes to law enforcement without court approval in non-exigent circumstances.

Binnie J. writing for the majority of the Supreme Court of Canada, favored the chambers judge’s approach. He held that giving litigants a discretion to make bona fide reports to law enforcement was a recipe for conflict:

This difficulty is compounded by the fact that parties to civil litigation are often quick to see the supposed criminality in what their opponents are up to, or at least to appreciate the tactical advantage that threats to go to the police might achieve, and to pose questions to the examinee to lay the basis for such an approach: see 755568 Ontario Ltd., at p. 656. The rules of discovery were not intended to constitute litigants as private attorneys general.

More generally, Binnie J. made a number of statements that favour a high standard for relief from the implied undertaking rule, a stance he said is justified because examinees are subject to compelled testimony. His award also includes a nice general discussion of the rule, its basis and its exceptions.

In Ontario a litigant’s privacy interest in discovery transcripts and other un-filed pre-trial productions is protected by Rule 30.1.01, but the analysis is the same. In fact, the Court considered the limited Ontario jurisprudence in endorsing a rigorous undertaking over the protection of the public interest in the detection and prosecution of crimes. See in particular: 755568 Ontario Ltd. v. Linchris Homes Ltd. (1990), 1 O.R. (3d) (G.D.) and Perrin v. Beninger, 2004 CanLII 18347 (Ont. S.C.J.).

Juman v. Doucette, 2008 SCC 8.

On January 31, the Alberta Court of Appeal quashed a procedural appeal brought by a non-party to a longstanding commercial litigation dispute and, in doing so, made some comments on the use of information gathered in the discovery process.

The non-party appealed from an order which granted the plaintiffs partial relief from the implied undertaking and a confidentiality order. The non-party claimed the order caused it prejudice in a second related action, presumably in which it was a defendant. The Court rejected the prejudice argument (emphasis in original):

Since counsel for the appellant argued that he would be prejudiced if his client could not appeal, we went beyond mere status and inquired into the nature of the prejudice or injustice suggested. He seemed to think that the order under appeal put into evidence in the second suit against him, information gathered largely without his participation, even his knowledge, in the first suit.

That suggestion of ex parte injustice is not correct. Both the implied undertaking restricting the use of information got through discovery, and confidentiality orders, merely add an extra impediment to attempts to use evidence for purposes outside the original lawsuit. If those impediments are removed, then the information in question simply has the same status as all other information lying about in the great wide world.

The first rule of the law of evidence is that courts will not receive all information as evidence. Much of it is inadmissible: most hearsay, for example, and all irrelevant information. Therefore, waiving the implied undertaking rule, or lifting a confidentiality order, has no effect on such inadmissibility. What is inadmissible as evidence for other reasons other than confidentiality or implied undertakings remains inadmissible. To lift a confidentiality order or the implied undertaking merely allows the parties to another action to tender the information as evidence. It has no influence whatever on the judge or master’s decision about whether to accept it as evidence. The usual common-law rules of evidence (as modified by statute or Rules of Court) still apply.

The Court also noted that the order appealed from gave the non-party an express right to raise the matter of fairness in the second action.

Dreco Energy Services v. Wenzel Downhole Tools, 2008 ABCA 36 (CanLII).

On September 10th, a panel of the Divisional Court held that a motions judge erred in ordering a plaintiff in a disability insurance action to disclose a defence medical report and surveillance video that were prepared for and disclosed to the plaintiff in a prior tort action. The motions judge had ordered disclosure subject to the deemed undertaking’s constraint on use. The Divisional Court held that the disclosure order, absent an exercise of discretion under sub-rule 30.1.01(8), offended the rule. It also held that the reference to “use of evidence obtained in one proceeding” in sub-rule 30.1.01(6) does not support disclosure subject to a constraint on use:

The motion judge was concerned that under sub-rule 30.1.01(6) one could not use evidence from another proceeding to impeach the testimony of a witness, unless such evidence had been disclosed and therefore, impliedly, the Rule cannot be read to prohibit disclosure, but merely to restrict the use of such evidence once disclosed. We are of the view that sub-rule (6) allowing evidence from another proceeding to be used for impeachment refers to evidence which is lawfully in the hands of the examining party. Sub-rule (6) refers to “evidence obtained in one proceeding …”. We agree with the appellant’s submission that sub-rule (6) does not provide for or require the disclosure of protected evidence for use in impeaching testimony. It merely provides for the limited use of such evidence, when it is lawfully available.

Kitchenham v. AXA Insurance Canada, 2007 CanLII 37892 (ON S.C.D.C.).

On August 31, the Alberta Court of Queen’s Bench declared that the plaintiff in a departing employee case was entitled to enforce a default order that allowed it direct access to a number of hard drives it had seized earlier in executing an Anton Piller order.

The plaintiff was granted an Anton Piller order at the outset of litigation. It seized hard drives but did not inspect them.

As the litigation proceeded, a case management judge ordered the defendants to serve and file an affidavit of records by a certain date, failing which the plaintiffs would have direct access to the hard drives (subject to confidentiality terms to be agreed upon or ordered). The parties subsequently consented to a joint confidentiality order.

The Court held that the defendants did not provide an adequate affidavit of records because they did not disclose a number of records related to their involvement in a consortium that had bid successfully for a contract formerly held by the plaintiff and did not disclose all relevant e-mails and deleted files. It also held that the defendants should have produced the passwords, systems files and software necessary to access files in their native format and should have processed the electronic records for export into a litigation support software program.

The Court also rejected the defendants’ justifications. It held that the records pertaining to the consortium would be adequately protected by the implied undertaking rule and the joint confidentiality order. It also held that the defendants had not shown that electronic production (as ordered) would be unduly burdensome. On this point, the Court said:

The unusually high level of disclosure imposed in this case is justified by: the underlying fact that the defendants were employees of the plaintiff when they began working in competition with the plaintiff, the judicial determination that this was an appropriate case in which to issue an Anton Piller order, the size of the claim, which exceeds $50 million, and the great IT expertise of the parties which presupposes that at least some of the work required to provide the required level of disclosure can be done in-house.

Spar Aerospace Limited v. Aerowerks Engineering Inc., 2007 ABQB 543 (CanLII).

On September 10th, the British Columbia Court of Appeal dismissed an application for leave to appeal in a novel application for contempt based on an alleged breach of the implied undertaking rule.

The plaintiffs alleged that the Insurance Corporation of British Columbia unnecessarily disclosed obtained information in materials served on third parties in support of a production order. They relied on an ICBC internal policy that recommended (in part) that such information only be disclosed in third-party production motion materials as “absolutely necessary.” The application was dismissed and the Court of Appeal dismissed the application for leave to appeal, holding that the appeal was not prima facie meritorious.

The Court of Appeal quoted the following passage from the application judge’s decision:

It is a matter of judgment to be exercised by counsel what information obtained by parties through the litigation discovery process needs to be disclosed to non parties in furtherance of the litigation in which that information has been obtained.

Any court-imposed constraint on that judgment is antithetical to the underlying rationale of court compelled disclosure, with its necessary intrusion on a litigant’s general right to privacy. That rationale is the need to do justice between the parties.

Implicit in the law and Rules governing disclosure is the proposition that justice between the parties is best assured when disclosure of all relevant evidence from whatever source may be compelled by the court, subject to claims of privilege.

Imposition of constraints on the parties’ use of information obtained through the discovery process in the litigation in which it is obtained, by expanding the scope of the implied undertaking, could inhibit counsel in their investigation of the case and undermine the rationale for court compelled disclosure.

***

The law delineating the scope of the implied undertaking of confidentiality respecting use of information obtained through the litigation discovery process draws a bright line. Use of that information within the litigation is permitted use. Use outside the litigation for an “alien” or “collateral” purpose is not permitted without the consent of the affected party or an order of the court.

That bright line tends to expedite litigation, which is the goal of all recent reforms of civil litigation procedure in various jurisdictions. An obscure line would tend to promote procedural controversy, which is antithetical to that goal. The current bright line sacrifices litigants’ privacy for more procedural certainty. Its ultimate goal is to achieve a just result in the litigation.

The plaintiffs’ applications seek to have the court impose the policy reflected in s. 8.3.2 of the Manual as a constraint on the use of information obtained through the litigation discovery process within the litigation. If the court were to impose that policy by expanding the scope of the implied undertaking of confidentiality to limit use of information obtained through the litigation discovery process within the litigation in which it was obtained, the bright line would become an obscure line. There is no precedent for imposing such a policy. For the reasons stated, I decline to do so.

Jampolsky v. Shattler, 2007 BCCA 439.

A significant case on the implied undertaking rule (or deemed undertaking rule, as it may be) is being heard at the Supreme Court of Canada on November 16th.

In Doucette v. Wee Watch Day Care Systems Inc., 2006 BCCA 2662 the British Columbia Court of Appeal held that a party obtaining information in the discovery process can make a bona fide report of criminal conduct to the police without seeking court approval.

The underlying action was a negligence claim against a day care and day care worker which was filed after a child suffered a seizure while under care. The police investigation was ongoing, but the police had not yet laid charges by the time the day care worker’s examination for discovery was scheduled. The day care worker filed a motion to request an express restriction on disclosure of her transcript and the Attorney-General brought a competing motion seeking to vary the implied undertaking to allow disclosure of the discovery transcript to the police. The trial judge held that both motions were premature but declared that the A-G and the police were under an obligation not to cause the parties to violate their undertakings without the day care worker’s consent or leave of the court.

The Court of Appeal acknowledged an exception to the undertaking when disclosure is necessary to prevent serious and imminent harm and then went further to permit disclosure without court approval in non-exigent circumstances:

The conclusion reached by the chambers judge is thoughtful and practical. It does not, however, contemplate the circumstance in which neither party has an interest in or is willing to seek court ordered relief from the disclosure of information under the undertaking or otherwise. Nor does it contemplate non-exigent circumstances of disclosed criminal conduct. It is easy to imagine a situation in which criminal conduct is disclosed in the discovery process, but no one apprehends that immediate harm is likely to result. Nevertheless, if an application to court is required before a party may disclose the alleged conduct, the perpetrator of the crime may be notified of the disclosure and afforded the opportunity to destroy or hide evidence or otherwise conceal his or her involvement in the alleged crime.

In my opinion, the scope of the undertaking must be fashioned in a manner that accommodates these and other eventualities. I conclude that the implied undertaking of confidentiality rule is as stated in Hunt: a party obtaining production of documents or transcriptions of oral examination of discovery is under a general obligation, in most cases, to keep such document confidential. A party seeking to use the discovery evidence other than in the proceedings in which it is produced must obtain the permission of the disclosing party or leave of the court. However, the obligation of confidentiality does not extend to bona fide disclosure of criminal conduct. On the other hand, non-bona fide disclosure of alleged criminal conduct would attract serious civil sanctions for contempt.

The focus of the inquiry is on the use to which the evidence is to be made. A party is limited in the manner in which it can use the discovery evidence as I have indicated above. A non-party, such as the police, who obtains the discovery evidence by lawful means (such as by search warrant) is not prevented from using the evidence to further an investigation. Whether the evidence can be used in a subsequent criminal proceeding is a matter to be considered by the criminal court.

In Ontario the issue is governed by Rule 30.1.01( but the analysis is the same. In fact, the Court considered the limited Ontario jurisprudence on the issue and held, to the extent the Ontario jurisprudence favoured a rigorous deemed undertaking rule over the protection of the public interest in the detection and prosecution of crimes, the Ontario jurisprudence should not be followed. See in particular: Linchris Homes Ltd. (1990), 1 O.R. (3d) (G.D.), Perrin v. Beninger, 2004 CanLII 18347 (Ont. S.C.J.) and Klassen v. College of Physicians and Surgeons of Ontario, [2002] O.J. No. 4055 (S.C.J.).

This is truly one to watch.

Alex Cameron of the On the Identity Trail project recently wrote a good article on the related issue of privacy and litigation at blog-on-nymity. It’s available here.