Introduction

This paper will provide an overview of the Supreme Court Decision of Juman v. Doucette, 2008 SCC 8 and assist the reader in consideration of the effect of Juman and subsequent case law on the multi-claim litigant.

This paper will look to facilitate discussion on the following topics:

• What to do when you discover that a plaintiff has prior claims and prior files;
• Steps to take where prior discovery on similar claims has been conducted; and
• What to do if an insurance client provides you with medical documents obtained through discovery measures in a separate action with similar issues and similar parties.

The Implied Undertaking Rule

In Hunt v. T&N plc (1995), 4 B.C.L.R. (3d) 110 (C.A.), the court confirmed that the law implies an undertaking on all parties in a civil litigation to use material obtained within the process of discovery strictly for the purposes of the court case in hand and for no other purposes. The undertaking is intended to preserve confidentiality with regard to evidence produced during the pre-trial process. The implied undertaking applies to examinations for discovery, as well as to document discovery: Towriss v. Westminster Savings and Credit Union, 2005 BCSC 695.

The root of the implied undertaking rule is embedded in the statutory compulsion on a party to participate fully in the discovery by answering any and all questions posed, within his or her knowledge or means of knowledge regarding any matter, not privileged, and relating to a matter in question in the action. See Rules of Court 7-2(1), (4) and (18).

The Case: Juman v. Doucette

The Background

In Juman the Supreme Court of Canada re-affirmed the existence, justification and scope of the “implied undertaking rule” within civil proceedings. The principle issue before the Court was the scope of the “implied undertaking rule” and the limitations on the use of evidence compelled during pre-trial discovery from a party. The issue arose in the context of alleged child abuse where a 16 month old child acquired a brain injury while in the care of a child care worker. A civil action for personal injury was commenced against the child care worker and a number of other parties on behalf of the child. A criminal investigation was commenced and was ongoing at the time of the appeal.

The care worker brought an application to prohibit the parties to the civil proceedings from providing the transcripts of discovery, which had yet to be conducted, to the police. She also sought to prevent the police or the Attorney General of British Columbia from obtaining copies of the transcripts without further court order. In her application the care worker relied upon the parties’ “implied undertaking” to the court not to use documents or responses obtained through the discovery procedure for any purpose other than securing justice in the civil proceedings in which responses are compelled, whether or not such answers were confidential or incriminatory in nature. The Attorney General of British Columbia rejected the existence of an “implied undertaking rule” within the jurisdiction of British Columbia. Alternatively, they argued that if such a rule exists, it did not extend to admissions of criminal activity. In the further alternative, they submitted that an “implied undertaking” does not prohibit authorities, who are not party to it, from obtaining discovery of documents by way of a search order.

The Ruling

The Supreme Court re-affirmed the existence and scope of the rule, stating at para.4:

[B]oth documentary and oral information obtained on discovery, including information thought by one or more parties to disclose criminal activity, is subject to the implied undertaking. It is not to be used by the other parties except for purposes within that litigation, unless and until the scope of the undertaking is varied by court order or a situation of immediate and serious danger emerges.

Justice Binnie, writing for the Court, remarked that unless a statutory exemption overrides the implied undertaking, the onus is on the person applying for the exemption to demonstrate on a balance of probabilities the existence of a public interest of greater weight than the values the implied undertaking is designed to protect, namely privacy, protection against self-incrimination, and the efficient conduct of civil litigation. The factors that may be taken into account include public safety concerns or contradictory testimony by the examinee about the same matters in different proceedings: See Fraser City Motors Ltd. v. Moore, 2010 BCSC 146 at para. 85.

Justice Binnie found that the values the implied undertaking is designed to protect were not outweighed by a greater public interest. Justice Binnie stated at para. 6: “[d]iscoveries (both oral and documentary) are likely to run more smoothly if none of the disputants are in a position to go without a court order to the police, or regulators or other authorities with their suspicions of wrongdoing, or to use the material obtained for any other purpose collateral or ulterior to the action in which the discovery is obtained.”

In the decision Justice Binnie remarked at paragraph 3:

[T]he rationale of the implied undertaking rule rests on the statutory compulsion that requires a party to make documentary and oral discovery regardless of privacy concerns and whether or not it tends to self-incriminate. The more serious the criminality, the greater would be the reluctance of a party to make disclosure fully and candidly, and the greater is the need for broad protection to facilitate his or her cooperation in civil litigation.

Since Juman a number of litigants have argued that the Supreme Court’s decision changed the law with regard to disclosure. The arguments advanced are that the ruling changes the requirements of disclosure provided in the Rules of Court (former Rule 26 & 27; current Rule 7-1 & 7-2), namely that not all relevant documents that are or have been in the party’s possession or control that may be used to prove or disprove a material fact need to be produced. It has been argued that discovery material provided in one action is insulated against production in another. Subsequent decisions within British Columbia recognize the rationale applied in Juman is warranted in situations where it is prudent to give effect to the public policy concern that a party who has been compelled to testify for the purpose of a civil action should be afforded a measure of protection for that testimony: See Joubarne v. Sandes, 2009 BCSC 1413. However, the rule is not absolute and courts have recognized exceptions, specifically in cases involving multi-claim litigants.

The Fallout: How The Courts Have Interpreted Juman

Prior to the release of Juman, case law provided some guidance as to when the court may exercise its discretion to grant leave for disclosure of evidence obtained through the discovery process obtained at an earlier point in time. For example, where discovery material in one action is sought to be used in another with the same or similar issues and the same or similar parties, leave would generally be granted as the prejudice to the examinee is deemed miniscule (See Lac Minerals Ltd. v. New Cinch Uranium Ltd. (1985), 50 O.R. (2d) 260 (H.C.J.), at pp. 265-266; Abernathy v. Ross (1985), 65 B.C.L.R. 142 (C.A.); and Scuzzy Creek Hydro & Power Inc. v. Tercon Contractors Ltd. (1998), 27 C.P.C. (4th) 252 (B.C.S.C.).

However, the courts have generally denied applications brought in circumstances where the applicant pursues discovery evidence obtained in one action for the purposes of using it in another wholly unrelated action, absent a compelling public interest. See Lubrizol Corp. v. Imperial Oil Ltd. (1990), 33 C.P.R. (3d) 49 (F.C.T.D.), at p. 51.

Following Juman, an Alberta court was faced with a multi-claim litigant who had commenced two separate actions arising from two motor vehicle accidents, the first occurring in 1999 and the second in 2004: Jomha v. McAllister et al 2008 ABQB 597. Defence counsel asked the court to relieve them of the implied undertaking attached to the plaintiff’s discovery evidence provided in the second action and order that a schedule of all records be produced by the parties in that action. The plaintiff objected on the basis that the defendant failed to provide evidence of inconsistent testimony in the two separate actions, which he stated was a necessary pre-condition of production of the transcript and records from the 2004 action.

The plaintiff claimed injury to the head, jaw, neck, shoulder and entire spine along with a loss of income and earning capacity as a result of the 1999 accident. In the statement of defence it was alleged that the plaintiff’s injuries were not caused by the accident and, among other allegations, were caused by the subsequent 2004 motor vehicle accident. In relation to the second accident the plaintiff plead “injury, re-injury, exacerbations or aggravations of prior injury, to the back” and “injury to spine”.

Relevancy of the transcripts was not disputed by the plaintiff, their submissions to deny the production of discovery material was based on remarks made by Justice Binnie in Juman at para. 41:

Another situation where the deponent’s privacy interest will yield to a higher public interest is where the deponent has given contradictory testimony about the same matters in successive or different proceedings. If the contradiction is discovered, the implied undertaking rule would afford no shield to its use for purposes of impeachment.

Counsel for the defendant distinguished Juman on its facts, arguing that the objective of the non-party Attorney General was to obtain evidence that may have been self-incriminating to assist their criminal investigation. As noted by Justice Binnie at para. 58, that objective was to “sidestep the appellant’s silence in the face of police investigation of her conduct. The authorities should not be able to obtain indirectly a transcript which they are unable to obtain directly through a search warrant in the ordinary way…”

Counsel for the defendant denied any ulterior motive and submitted that their position was supported by circumstance contemplated by Justice Binnie in para. 35 of Juman:

The case law provides some guidance to the exercise of the court’s discretion. For example, where discovery material in one action is sought to be used in another action with the same or similar parties and the same or similar issues, the prejudice to the examinee is virtually non-existent and leave will generally be granted.

The court in Jomha ruled that in situations where the parties in two proceedings are the same or similar and the issues are the same or similar, the applicant requesting relief from the implied undertaking does not need to show inconsistent testimony occurred in another proceeding in order to be successful. The interests of justice outweighed any privacy interest held by the plaintiff to the discovery material sought to be protected and the material was ordered to be produced.

In the British Columbia Supreme Court decision of Beazley v. Suzuki Motor Corporation, 2008 BCSC 850 Justice Goepel addressed the issue of disclosure in subsequent proceedings involving similar parties with similar issues. The plaintiffs in the action sought transcripts from depositions of other litigants who had similar claims against a manufacturer for the defective design of a motor vehicle.

In ordering disclosure of the transcripts, Justice Goepel held:

[27] The recent Supreme Court of Canada decision in Juman does not assist the GM Defendants. In Juman, a stranger to the action sought production of discovery transcripts. That is not the case here. The Court noted at para. 35 that when discovery material in one action is sought to be used in another action with the same or similar parties and the same or similar issues, leave will generally be granted. In support of that proposition, it cited both Miller (Ed) Sales & Rentals Ltd. and Scuzzy Creek.

[28] The plaintiffs acknowledge that Mr. King has certain transcripts. Mr. King is however bound by confidentiality orders and cannot release the transcripts to the plaintiffs absent the consent of the GM Defendants. The GM Defendants have refused to consent.

[29] This application does not turn on undertakings or confidentiality orders. Rule 26(1) requires the GM Defendants to produce all relevant documents in their possession or control. The transcripts are in their possession or control. There is no onus on the plaintiffs to prove that the transcripts are relevant to the present proceedings. It is sufficient that the depositions were taken in actions closely resembling the present case and there exists a possibility of relevance with respect to the depositions. Transcripts of what representatives of the GM Defendants said on prior occasions may lead to a train of enquiry which could advance the plaintiffs’ case or damage that of the GM Defendants. The transcripts are relevant documents and, subject to the submissions concerning Rule 26(1.2), must be produced.

More recently, in Joubarne v. Sandes 2009 BCSC 1413, the court held that a psychiatric report prepared in a prior wrongful dismissal action against her employer was produceable in a subsequent motor vehicle accident, with a temporal proximity. A transcript of the examination for discovery of the plaintiff in the prior action was also ordered to be produced. The relevancy was apparent as both actions encompassed issues with regard to the plaintiff’s physiological and psychological well being.

Juman was not a bar to disclosure. In ordering disclosure Justice Williams held:

[20] The facts in Juman, which led the court to prohibit production of the examination for discovery transcript, were materially and significantly different than those at bar. There, a stranger to the litigation, a police investigator, sought disclosure of the evidence. That evidence had never been aired in court.

[22] The decision of the court in significant measure gives effect to the public policy concern that a party who has been compelled to testify for the purpose of a civil action should be afforded a measure of protection for that testimony.

[23] However, the rule is not absolute and without exception. In para. 35, Binnie J. said this concerning the court’s discretion to relieve against the rule:

The case law provides some guidance to the exercise of the court’s discretion. For example, where discovery material in one action is sought to be used in another action with the same or similar parties and the same or similar issues, the prejudice to the examinee is virtually non-existent and leave will generally be granted.

[24] To my mind, it is clear that disclosure will not be categorically barred or precluded in such situations. I find the present case to fall into that category.

A Multi-Litigant Claimant is Uncovered: Now What?

In General

The first question to ask is: are the issues in the action to which discovery from an examination is sought similar to the action in which that discovery evidence is intended to be used? Second: are the parties involved in the two actions the same or similar? If the answers to these questions are “yes”, one may assume that discovery material provided by an examinee in a separate action may be used to prove or disprove a material fact in the instant case and therefore is required to be listed pursuant to Rule 7-1 and produced before trial. On at least two occasions costs have been levied against parties who have refused to consent to the use of relevant discovery material obtained in a separate action where both the issues and parties involved were similar (See Beazley; Joubarne).

The meaning and scope of the “implied undertaking rule” shall be determined on precedent, policy, and the facts specific to each case. The overriding concern of the courts shall be fairness and balancing the interests between the examinee and the public. However, in circumstances involving multi-claim litigants the civil law accepts the rationale that where discovery material in one action is sought to be used in another with the same or similar issues and the same or similar parties, the public interest in getting at the truth in a civil action strongly outweighs the examinee’s privacy interest.

When a party bound by the undertaking to the proceeding wishes to disclose discovery evidence, but the examinee does not consent, the party wishing to disclose may apply to the court for leave to use the information or documents otherwise than in the action, as described in Lac d’Amiante du Québec Ltée v. 2858-0702 Québec Inc., 2001 SCC 51 at para 77:

Before using information, however, the party in question will have to apply for leave, specifying the purposes of using the information and the reasons why it is justified, and both sides will have to be heard on application.

In such an application the court would have access to the documents or transcripts at issue and assess the severity of the harm to the parties involved if the rule of confidentiality were to be suspended, as well as the benefits of doing so. In cases where the harm suffered by the party who disclosed the information seems insignificant, and the benefit to the opposing party seems considerable, the court is justified in granting leave to use the information.

In Practice

In Balderston v. Aspin, 2011 BCSC 730, the plaintiff claimed to have suffered injuries as a result of a motor vehicle accident that occurred in 2008. The defence alleged that this accident was of low velocity and that the plaintiff was suffering from a number of health related issues including symptoms suffered as a result of a 2001 motor vehicle accident. Counsel for the defendant applied to the court seeking, among others, the following relief:

1. The plaintiff produce and deliver to the defendant, a list of documents listing all records that are or have been in her power or control relating to her 2001 motor vehicle accident; and
2. An authorization permitting the Insurance Corporation of British Columbia to search their files, then list and produce those records relating to the plaintiff’s 2001 motor vehicle accident in accordance with Rule 7-1(1)

Prior to the application the solicitor for the defendant failed to provide a written request for a list of documents relating to the 2001 accident and in addition, failed to issue a demand for additional documents pursuant to Rule 7-1(11). With regard to the latter, the court remarked that such an oversight was particularly discouraged and warned that parties who ignore the processes under the Rules risk the application being adjourned or even dismissed: Sutherland v. Banman, 2008 BCSC 1194.

Nonetheless, finding that the issues and parties were similar between the two actions, the court ordered the transcripts and pleadings from the earlier accident produced. Plaintiff counsel acknowledged that she was in possession of such records and had expressed her willingness to produce such records, however, she resisted the production of all information relating to a mediation session. The court found the resistance to be justified as such information was not binding and therefore irrelevant.

With regard to the defendant’s application for authorizations, the court re-affirmed that records and/or documents that are related to the 2001 action in the possession of ICBC are subject to an implied undertaking and are not to be used in a separate action unless all parties consent to the use or the court permits the disclosure: Juman.

Ultimately, the court found that the defendant was requesting authorization from the plaintiff to search the ICBC files with the purpose of seeking what may be there to discover. Characterized as a classic example of the “prohibited fishing expedition” the court dismissed the defendant’s application.

Providing further direction on the subject the court described the predicament of the defence by reproducing the remarks of Justice Voith in Chonn v. DCFS Canada Corp. 2009 BCSC 1474 at paras. 25 and 26:

A party who has documents from earlier litigation that are impressed with the implied undertaking simply cannot make use of those documents without the concurrence of the party from whom they were obtained or leave of the court. The implied undertaking protects documents or oral discovery obtained in earlier litigation from being used for any purpose “collateral” to the litigation. Thus, the documents cannot be used for internal strategic review in subsequent litigation. They cannot be used for the purposes of drafting pleadings. They cannot be sent to counsel for the purposes of obtaining an opinion in new litigation…

In most cases where ICBC or its counsel is aware, through the pleadings or their direct involvement in earlier litigation, of relevant documents or other pretrial discovery from that litigation, they need only contact plaintiff’s counsel to obtain his or her concurrence to the use of the materials in question.

On a similar vein, there is orbiter from the Supreme Court of British Columbia that counsel for the defence does not require his or her obligations under an implied undertaking to be relieved when he is and was counsel of record on subsequent actions commenced by the same plaintiff. Pointedly, the court states in Cochrance v. Heir, 2011 BCSC 477, that in this scenario the plaintiff has an independent obligation to list and produce the records, including transcripts of the examinations for discovery conducted in previous actions, further to obligations under Rule 7-1(1)(a)(i).

Nonetheless, the court, on the authority of Juman, did relieve the solicitor for the defendant of the implied undertaking but stated the following at para. 5:

The plaintiff cannot shield herself from her obligation to list and produce relevant documents by invoking the implied undertaking against opposing counsel who came into possession of those documents in [a] previous litigation.

Within the realm of personal injury law, the implied undertaking rule, with regard to confidentiality for documents originating in a previous action involving the same plaintiff, appears clear. When it becomes apparent that the litigant has been previously discovered in a separate action involving similar issues counsel for the defence will likely become inclined to request a transcript of the discovery and any corresponding relevant document production resulting therefrom. Counsel is probably also interested in production of the medical reports and records. However, at times, there are scenarios within the personal injury practice where aspects of the rule are not as clear as one may wish. We have provided a few scenarios below to facilitate a discussion on the process that should be followed to obtain discovery, the benefits of doing so and the possible pitfalls in bringing on the application.

Scenario 1:

Upon being retained by an insurance corporation to defend a personal injury claim you are provided with file materials. Within are numerous documents pertaining to issues of liability, medical treatment, and wage loss. In addition are numerous medical records and expert opinion reports that relate to a separate action commenced as a result of a personal injury claim that alleges similar damages. What is your obligation in respect of the documents that were obtained in the separate actions?

Scenario 2:

Opposing counsel on a prior file, now settled, filed a Trial Brief in a Rule 15-1 case asking for $200,000 in damages and listing two experts she proposed to rely on at trial. The Plaintiff’s injuries were soft-tissue in nature. When you asked the court at the trial conference for a continued examination for discovery, the plaintiff’s counsel opposed it.

Rule 15-1 has a nominal jurisdiction of $100,000, which, while not binding on the Court, should apply in some fashion to counsel who file within the ambit of that rule.
You now have another file with the same claimant and counsel in which the plaintiff is alleging a head injury. You have written to counsel, twice, asking that she confirm in writing that the plaintiff will not be seeking in excess of $100,000 at the trial of this matter. No response.

You wish to file an affidavit exhibiting the filed trial brief from the earlier action in support of an application to have the matter removed from Rule 15-1. You wish to use it to show the Court that, in your view, plaintiff counsel is inappropriately using Rule 15-1 on cases that do not meet its criteria in order to limit your discovery procedures.

Scenario 3:

To what extent does the duty of implied confidentiality (litigation privilege) extend to other documents produced, and can they be distributed to experts?

Scenario 4:

In an application for production of further clinical records and work records, do you separate the applications and affidavits to nominally protect the Plaintiff’s right to confidentiality? What if you need to show the clinical and medical complaints to justify the request for the employment file. What if the employer has concerns about the employment of the Plaintiff, in light of the stated complaints/medical issues?

Note: This article was originally prepared for the CLEBC course, Defending Personal Injury 2012, to be held in Vancouver, BC, on February 24, 2012.

Matthew Howard
Associate Lawyer in Insurance Law and Litigation
LK Law – Vancouver Office

In a recent decision by Master Keighley (Tong v. Lanser et al., BCSC Action No. M95149, New Westminster, January 4, 2012) the defendant, represented by the writer, successfully applied to remove a matter from Rule 15-1, the “Fast Track” Rule, even though the claim of the plaintiff was for $100,000.00.

The Fast Track Rule

Rule 15-1 “applies to an action if

• (a) the only claims in the action are for one or more of money, real property, a builder’s lien and personal property and the total of the following amounts is $100,000 or less, exclusive of interest and costs:
  • (i) the amount of any money claimed in the action by the plaintiff for pecuniary loss;
  • (ii) the amount of any money to be claimed in the action by the plaintiff for non-pecuniary loss;
  • (iii) the fair market value, as at the date the action is commenced, of
    • (A) all real property and all interests in real property, and
    • (B) all personal property and all interests in personal property claimed in the action by the plaintiff,
• (b) the trial of the action can be completed within 3 days,
• (c) the parties to the action consent, or
• (d) the court, on its own motion or on the application of any party, so orders.”

The rule is not permissive. That is, if any of the foregoing elements applies, then the matter ought to be “Fast Tracked” unless “the court, on its own motion or on the application of any party, so orders”.

The Fast Track Rule is designed to impose on litigants some economies with respect to litigation where the matters at issue do not justify the relatively large expenditure that goes on in more complex cases. For example, the trial of a Fast Track matter cannot be heard by a jury. Subject to court order or consent, Examinations for Discovery are more limited and applications cannot be brought without a Case Planning Conference first being conducted, presumably so as to impose some case management on the matter.

Further, there are significant limits to the costs that a successful litigant can expect to receive at the end of the day (see Rule 15-1(15)).

All of this is consistent with the object of the Supreme Court Civil Rules which is “to secure the just, speedy and inexpensive determination of every proceeding on its merits.” “Proportionality” is the order of the day.

The Case at Bar

In Tong v. Lanser, the matter arose from a motor vehicle accident on November 3, 2003. The action was commenced almost two years later, and between then and November 22, 2011, when the plaintiff filed a Notice of Fast Track Action, triggering the application of the Fast Track Rule, there had been:

…seven pre-trial conferences, three applications to court, and the trial has been rescheduled twice at the request of the plaintiff.

Shortly after the Notice of Trial had been delivered in September 2007, the defendant filed and served a Jury Notice, requiring the trial of the matter to be by jury.

Importantly, the plaintiff filed the Notice of Fast Track only two months prior to a 10-day jury trial scheduled for January, 2012. By that time, almost all pre-trial steps had been taken in the proceeding with costs awarded to the defendant on two occasions.

The practical effect of the Notice of Fast Track was not to “streamline” the proceeding, as most of the proceeding was over, but to deny the defendant a jury and dramatically limit the defendant’s costs should she have been successful. As such, the defendant applied to remove the matter from Fast Track.

The plaintiff submitted that he had instructed his counsel to limit the claim to $100,000. That would bring the matter within the ambit of the Rule, but a court is still at liberty to award damages in excess of the $100,000 limit. In a sense, a plaintiff’s self-imposed limitation of a claim to $100,000 is of little practical moment in a matter involving a “non-liquidated” claim for personal injury.

Master Keighley, though, after considering the purpose of the Fast Track Rule and its aim at the “early resolution of simpler claims” held that “Considerations of proportionality have less application to the facts upon which this application is based than otherwise might be the case…The opportunity for cost savings with respect to pre-trial procedures has been lost.” Master Keighley was particularly concerned that the defendant would be denied costs under the Rule despite having been awarded costs in any event of the cause on two previous occasions.

In light of that, Master Keighley granted the application, with costs to the defendant, and removed the matter from Fast Track.

The Fast Track Rule is still relatively new. This decision is significant in that it provides further guidance as to the application of Rule 15-1 and when litigants might expect the Court to remove matters from that Rule.

Scott Urquhart
Associate Lawyer in Insurance Law and Litigation
LK Law – Vancouver Office

Lindsay Kenney Partner lawyer, Brad Martyniuk, presented a training session at the recent Certified Fraud Examiners Association in Vancouver, BC on Nov. 23, 2011.

This session provided an overview of recent caselaw in the regulatory law and criminal law fields regarding the commission of securities fraud and the penalties imposed in those cases.

View presentation.

Brad Martyniuk
Partner Lawyer in Fraud Law and Litigation
Lindsay Kenney – Vancouver Office

In B.C., individuals who have been injured in hit-and-run accidents can make a claim to ICBC for compensation if they comply with the statutory requirements under section 24 of the Insurance (Vehicle) Act.

S.24 requires a claimant to make “all reasonable efforts” to ascertain the identity of the motorist who caused the accident and the decisions are determined based on the facts of the case. ICBC is named as the nominal Defendant in actions commenced under this section of the Act. The following are two recent cases where the court has come to different conclusion when applying the “all reasonable efforts” test.

In Morris v. Doe, 2011 BCSC 253, the Plaintiff was a passenger in a vehicle driven by her husband. The accident occurred at a busy intersection. They were stopped at a red light when they were rear-ended. The Plaintiff felt she was injured immediately. Her husband exited the vehicle and motioned to the motorist behind to pull over at a nearby parking lot. The motorist nodded but left the scene without following the Plaintiff’s vehicle. The Plaintiff reported to the police and ICBC but did nothing further to ascertain the identity of the unknown driver.

At trial, Madam Justice Ker found that the Plaintiff had failed to take all reasonable steps in the days and weeks after the accident to attempt to ascertain the identity of the unknown driver, such as canvassing the businesses near the accident scene, posting signs, or advertising in the local newspaper for witnesses. The Court rejected the argument that such effort would have been futile. The Plaintiff’s claim was dismissed and costs were awarded to ICBC.

In Nicholls v. ICBC, 2011 BCSC 422, the Plaintiff lost control of his motorcycle when he came upon a diesel spill on the highway and crashed his motorcycle. The accident occurred in an isolated area in B.C. ICBC’s summary trial application was dismissed by the trial judge. The Court of Appeal upheld the trial judge’s decision. The Court of Appeal confirmed that the test remains that of “reasonableness in the circumstances”. Given the lack of temporal link between the time of the spill and the accident, the rural location, and the Plaintiff’s serious injuries, the trial judge did not err in finding in favour of the Plaintiff, although, as in the Morris case, Mr. Nicholls only reported the accident to the police and ICBC. Morris v. ICBC was distinguished by by the Court of Appeal in Nicholls.

The above cases illustrate that the Court will decide if the Plaintiff has met the “reasonable efforts” test by considering the factual background on which the accident occurred. Those who are unfortunately involved in hit-and-run accidents in well populated areas of B.C. should take as many steps as reasonable to locate the indentified motorist.

Tiffany Tsang
Associate Lawyer in Insurance Law and Litigation
LK Law – Vancouver Office

When a shareholder or “an appropriate person” feels that the affairs of a company are being conducted in a manner that is oppressive, or that an act of the company done or threatened is unfairly prejudicial, that person may make an application for a remedy pursuant to section 227 of British Columbia’s Business Corporations Act. This is known as the oppression remedy. If successful, the court makes any order it considers appropriate, which may include an order appointing or removing a director, an order directing a shareholder to purchase the shares of another shareholder, or an order directing that the company be liquidated and dissolved. The flexibility of the oppression remedy makes it a powerful tool for protecting a person’s interests.

Shareholder disputes are varied but in closely held companies they often result from a breakdown in the personal relationship between the shareholders. The parties are required to seek the court’s assistance because there is no mechanism either in the company’s articles of incorporation or by way of a shareholders’ agreement to remedy the situation. The types of disputes that are commonly before the courts, include:

1. Shareholders who are family members, with historical grievances, allow personal matters to effect the operation of the company;
2. A shareholder is precluded from participating in the management of the company when he or she expected to do so;
3. A shareholder takes action or causes the company to take action that is not in its best interest;
4. Shareholders fundamentally disagree on the vision and direction of the company and cannot find common ground; and

 

A shareholder wants to realize on his or her investment in the company while others want to maintain the status quo.

Oppression claims are assessed in a two-step inquiry. The first step is to determine the parties’ reasonable expectations in a contextual and objective analysis. In determining the reasonable expectations, consideration is given to the general commercial practice, the nature of the corporation, the relationship between the parties, and past practice. The second step is to determine whether those reasonable expectations were violated to such a degree that the conduct amounts to oppression or unfair prejudice.

Not every unmet expectation gives rise to an oppression claim. In Alleluia v. Wilson, 2011 BCSC 666, Justice Armstrong held that the failure of the company to follow basic corporate governance requirements did not amount to oppression. In Boffo Family Holdings Ltd. v. Garden Construction Ltd., 2011 BCSC 1246, Justice Goepel held that the removal of a minority shareholder as a director did not amount to oppression because there was evidence that the minority shareholder was moving towards full retirement and was no longer going to be actively involved in the company’s activities.

But even in cases where the conduct complained of falls short of being oppressive or unfairly prejudicial, a court may still fashion a remedy pursuant to section 324 of the Business Corporations Act if it is “just and equitable” to do so.

There are four separate ways of triggering a “just and equitable” remedy pursuant to section 324:

1. loss of substratum;
2. justifiable lack of confidence;
3. deadlock; and
4. the partnership analogy.

There is a “loss of substratum” when the purpose for which the company was formed has been exhausted. For example, in Alldrew Holdings Ltd. v. Nibro Holdings Ltd., 1993 CanLII 5509 (ON SC), it was held that there was a loss of substratum when a company incorporated to manufacture, purchase, and sell starch and starch by-products ceased its manufacturing activities.

For there to be a “justifiable lack of confidence”, the lack of confidence must be grounded on conduct in regard to company’s business. Merely being dissatisfied at being outvoted on the business affairs of the company does not constitute a justifiable lack of confidence.

A “deadlock” is when the normal operations of a corporation are being paralyzed or seriously interfered with. The classic situation is demonstrated in Boffo Family Holdings. In that case, one of the corporations had only two shareholders, each of whom owned 50% of the shares. The shareholders could not agree with respect to the management of the company and there was no meaningful way to break the deadlock. Justice Goepel ordered a shotgun arrangement so that one shareholder could buy out the other shareholder, and thereby break the deadlock.

The “partnership analogy” triggers when there exists something more than a purely commercial relationship between the parties; the relationship must be formed or continued on the basis of a personal relationship involving mutual confidences. If the aggrieved shareholder can demonstrate a basic underlying obligation that if broken, the association must be dissolved, then the courts will find it just and equitable to do so. The leading case on the partnership analogy is Ebrahimi v. Westbourne Galleries Ltd., [1972] 2 All E.R. 492 (H.L.). In that case, two individuals created a partnership to sell carpets. They had an equal share in the management and profits of the partnership. The partnership was later incorporated, and an extra partner, the son of one of the original two individuals, was added. When the business relationship between the individuals deteriorated, father and son voted the other partner out of his office as director. The courts stepped in and held that it would be “just and equitable” for the courts to fashion a remedy for the excluded shareholder.

These cases demonstrate the court’s ability to fashion remedies for non-controlling shareholders who are being oppressed or unfairly prejudiced, or who are in situations where just and equitable considerations arise. The cases also highlight the importance of planning ahead and preparing documents, such as shareholders agreements, to deal with problems before they arise.

The above is a brief summary of the law. As you will appreciate each circumstance can differ on the facts involved in each particular case. We encourage you to consult with a lawyer should you have any questions or concerns regarding shareholder disputes.

Christopher Martin
Associate Lawyer in Corporate/Business Law
Lindsay Kenney – Vancouver Office

I. Introduction

It is an important task of every litigator to consider the balance between the competing interests of the protection of personal privacy and a party’s disclosure obligations. With the expansion of international commerce, balancing these interests has become more complex. In recent years, the inter-jurisdictional transfer of documents has received increased attention from lawmakers concerned with protecting privacy rights. This paper considers the interactions between the disclosure obligations in Canada and the United States, and the privacy laws of the European Union.

With the exception of the province of Quebec, all jurisdictions in Canada have broad disclosure obligations whereby parties involved in litigation are required to disclose to adverse parties all documents related to the matter at issue. The transfer of documents across provinces or territories within Canada pursuant to these disclosure rules is considered obligatory as a matter of order, fairness, and comity.

In 1995, the European Union adopted Council Directive 95/46/EC to respect and protect natural persons’ rights to privacy. In furtherance of this objective, transfers of personal data by Member States to countries without adequate privacy legislations were prohibited. This included prohibiting transfers made pursuant to a foreign jurisdiction’s rules of procedure regarding document discovery. Although Canada has been recognized as providing adequate measures for the protection of personal data, many countries, most notably the United States, do not meet European Union standards.

An examination of this dichotomy, as well as other examples where inter-jurisdictional document disclosure obligations arise, can assist in planning for and shaping future international agreements, such as the Comprehensive Economic and Trade Agreement between Canada and the European Union.

II. Canada’s Legal System

Canada is governed as a parliamentary democracy and is established under the Constitution Act, 1867. Constitution Act, 1867, 30 & 31 Vict. Ch. 3. (U.K.), as reprinted in R.S.C., No. 5 (Appendix 1985). The Constitution Act, 1867 gives the federal government exclusive right to legislate over matters such as trade and commerce, banking, and criminal law, while the ten provinces have jurisdiction over matters such as health care, property and civil rights. Id. at sections 91 and 92. Canada also has 3 territories that have no inherent jurisdiction, but are delegated powers by the federal government.

The provinces and territories each have their own courts of first instance. Appeals from these courts are heard at the appellate court of that province or territory. Appeals from a provincial or territorial appellate court are heard at the Supreme Court of Canada, which is Canada’s highest court.

There is also a Federal Court which exists primarily to hear lawsuits that fall under the federal government’s jurisdiction. Appeals from this court can be made to the Federal Court of Appeal, and then appealed again to the Supreme Court of Canada.

With the exception of courts in the province of Quebec, Canada’s courts use the common law, or judge-made law, which is based on the principle of stare decisis. Courts in Quebec, on the other hand, use a hybrid legal system; on matters of private law, the courts follow a civil tradition, and on matters of public law, the courts follow the common law.

III. Document Disclosure Obligations in Canada

Matters relating to document disclosure obligations in connection with civil suits are governed by a court’s rules of procedure. Although disclosure obligations across the courts are similar and generally very broad, there are slight differences.

A. Provinces and Territories with the Exception of Quebec

Parties involved in civil actions must disclose every document “relating to” (or, for the provinces of Nova Scotia, Manitoba, and Alberta, “relevant to”) the matter in issue that is in their possession, control, or power (or, depending on the province, some subset of possession, control, and power), as well as documents the party intends to refer to at trial. See Rules of Civil Procedure, R.R.O., Reg. 194 (1990) at Rule 30.02; see Civil Procedure Rules, R.S.N.S., ch. 240 (1989) at Rule 15.02; see Rules of the Supreme Court, S.N.L., ch. 42, Schedule D (1986) at Rule 32.01; see Court of Queen’s Bench Rules, Man. Reg. 553/88 at Rule 30.02; see Supreme Court Civil Rules, B.C. Reg. 168/2009 at Rule 7-1; see Rules of Civil Procedure, R.S.P.E.I., ch. 240 (1989) at Rule 30.02; see Queen’s Bench Rules, R.S.S., ch. Q-1 (1978) at Rule 212; see Alberta Rules of Court, Alta. Reg. 390/1968 at Rule 5.14; see Rules of the Supreme Court, S.N.L., ch. 42, Schedule D (1986) at Rule 32.01; see Rules of Court, Y.O.I.C., 2009/65 at Rule 25(4); see Rules of the Supreme Court of the Northwest Territories, N.W.T., Reg. 034-92 at Rule 219; see also Nunavut Judicial System Implementation Act, S.N.W.T., ch. 34, Schedule A (1998) at s. 59(2); see Federal Court Rules, SOR/2004-283, s. 2, Rule 223.

A failure to disclose empowers a court to “make such order as is just”, which in many cases could lead to the party’s action being dismissed or defence being struck out. See, e.g., Rules of Civil Procedure, R.R.O., Reg. 194 (1990) at Rule 30.08; see, e.g., S.N.L., ch. 42, Schedule D (1986) at Rule 32.10.

Despite these broad disclosure obligations, parties may claim privilege over certain documents. See, e.g., Supreme Court Civil Rules, B.C. Reg. 168/2009 at Rule 7-1.

B. Quebec

In Quebec, there is no general duty to produce potentially relevant documents. A party only has to disclose documents it intends to refer to as exhibits at the trial or hearing. Code of Civil Procedure, R.S.Q. ch. C-25 at Article 331.1. However, on application, the court may order a party “having in his possession any real evidence relating to the issues between the parties to exhibit it, preserve it or submit it”. Id. at Article 402.

IV. Privacy Legislation

The European Union, the United States, and Canada have all taken different approaches to the protection of individuals’ privacy rights.

A. The European Union

i) The Privacy Directive

In 1995, the European Union adopted the Privacy Directive to harmonize the data protection laws of its Member States. Carla L. Reyes, The U.S. Discovery-EU Privacy Directive Conflict: Constructing a Three-Tiered Compliance Strategy, 19 DUKE J. COMP. & INT’L L. 357 [hereinafter Reyes] at 358. One of the reasons behind the adoption of the Privacy Directive was the need for data-processing systems to respect natural persons’ fundamental right to privacy. Council Directive 95/46/EC, on the Protection of Individuals with Regard to the Processing of Personal Data and the Free Movement of Such Data, 1995 O.J. (L 281) 31 [hereinafter Privacy Directive].

As part of its data protection mechanism, the Privacy Directive mandates that Member States shall not transfer personal data which are undergoing processing, or are intended for processing after the transfer, to a country unless the Commission determines that the country ensures an “adequate level of protection”. Id. at Article 25. The Commission also has the responsibility of entering into negotiations with countries to encourage them to adopt adequate levels of data protection. Id.

If a country does not ensure an adequate level of protection for personal data, the Privacy Directive puts the burden on the individual Member States to each adopt measures necessary to prevent the transfer of personal data to that country. Id. A party or organization in a Member State that violates the Privacy Directive may be subject to Member State-administered penalties, such as a fine and/or imprisonment. See, e.g., Ashley Winton, Data Protection and Privacy Update, July 2007 (reporting that France’s data protection authority, La Commission Nationale de L’informatique et des Libertés, fined Tyco Healthcare 30,000 Euros for transferring employee personal data from France to Tyco Healthcare’s headquarters in the United States).

This mechanism ensures that personal data gathered in Member States is guaranteed a minimum amount of protection because Member States must not only adopt protective standards, but also only allow the transfer of personal data which are undergoing processing, or are intended for processing after the transfer, to countries that are deemed to provide adequate data protection.

But what does it mean to transfer personal data which are undergoing processing, or are intended for processing after the transfer?

The Privacy Directive defines “processing” to mean any operation “performed upon personal data, whether or not by automatic means, such as collection, recording, organization, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction”. Id. at Article 2. This definition is very broad and it effectively prevents the transfer of personal data to any country that has not been deemed “adequate”, since such a transfer would almost certainly involve some form of “processing”, as it is defined.

B. The United States

The United States has taken a very different approach to privacy rights. In 1974, Congress introduced the Privacy Act to regulate federal agencies in their use and disclosure of personal information. Privacy Act, 5 U.S.C. § 552a (1974). However, the Privacy Act’s enforcement mechanisms are considered ineffective. See Jennifer McClennan & Vadim Schick, “O Privacy” Canada’s Importance in the Development of the International Data Privacy Regime, 38 Geo. J. Int’l L. 669 [hereinafter McClennan & Schick] at 675.

Instead of enacting comprehensive legislation protecting all of an individual’s right to privacy, Congress has adopted a sectoral approach to protecting private information. For example, the Health Insurance Portability and Accountability Act provides protection for health data, while the Gramm-Leach-Bliley Act governs the collection, disclosure, and protection of consumers’ personal information in the possession of financial institutions. See Health Insurance Portability and Accountability Act, 42 U.S.C. § 201 (2007); see Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 (2007). There are many other examples of sectoral privacy legislation at the federal level.

Sectoral privacy legislation can also be passed by state legislatures. For example, California’s Insurance Information and Privacy Protection Act provides protection for personally identifiable information provided to an agent, broker, or insurance company in order to apply for insurance or submit a claim. Insurance Information and Privacy Protection Act, CAL. INS. CODE §§ 791-791.27 (2010).

C. Canada

Canada has what some refer to as a middle-of-the-road approach to the enactment of privacy laws. See McClennan & Schick at 669. While Canada’s privacy laws are comprised primarily of comprehensive legislation that protects all of an individual’s right to privacy, the province of Ontario has also enacted sectoral privacy law legislation.

i) Public Sector

The federal Privacy Act imposes obligations on federal government institutions to respect privacy rights by limiting how they collect, use, and disclose personal information. Privacy Act, R.S.C., ch. P-21 (1985). The Privacy Act empowers the Privacy Commissioner of Canada to investigate any complaints received under the Privacy Act. Id. For provincial government institutions, every province has privacy legislation governing the collection, use, and disclosure of personal information and each is supervised by an independent commissioner or ombudsman.

ii) Private Sector

The Personal Information Protection and Electronic Documents Act controls how private sector organizations collect, use, and disclose personal information in the course of commercial activities. Personal Information Protection and Electronic Documents Act, S.C., ch. 5 (2000) [hereinafter PIPEDA]. PIPEDA is overseen by the Privacy Commissioner of Canada. PIPEDA applies to all organizations engaged in commercial activities, whether they be federal or provincial, unless the Governor in Council exempts the organization or activity. Id. The power to exempt arises if the organization or activity is covered by provincial legislation that is substantial similar to PIPEDA. Id. The Quebec, Alberta, and British Columbia laws have each been recognized as substantially similar to PIPEDA. Organizations in the Province of Quebec Exemption Order, SOR/2003-374; Organizations in the Province of Alberta Exemption Order, SOR/2004-219; Organizations in the Province of British Columbia Exemption Order, SOR/2004-220 [collectively, hereinafter Exemption Orders].

iii) Ontario’s Sectoral Legislation

Ontario’s Personal Health Information Protection Act establishes rules for collection, use, and disclosure of personal health information by health information custodians. Personal Health Information Protection Act, S.O., ch. 3, Schedule A (2004). The Personal Health Information Protection Act has be recognized as substantially similar to PIPEDA. Health Information Custodians in the Province of Ontario Exemption Order, SOR/2005-399.

V. The EU Privacy Directive and Canada’s Disclosure Rules

A. The Issue

Although the Privacy Directive mandates that personal data cannot be transferred outside of the Member States, a party that is involved in litigation in Canada may be ordered to disclose personal data for the purposes of document discovery. See, e.g., British Columbia’s Supreme Court Civil Rules (stating that parties must disclose documents that “relate to any or all matters in question in the action”, unless the documents are privileged). A party may find themselves in the position of having to decide between disclosure, in which case the party would be in violation of the Privacy Directive, and non-disclosure, in which case the party would be in violation of document disclosure obligations. In either case, there is a penalty for the violation.

B. Origins of the Issue: Common Law and Civil Law Approaches to Evidence Gathering

It has been suggested that this issue really stems from a difference between common law and civil law approaches to evidence gathering. Reyes at 361.

In common law jurisdictions, such as in most provinces in Canada, the parties themselves are responsible for gathering evidence. There is a pre-trial discovery period which takes place after the filing of a lawsuit but prior to trial. During this period, evidence can be gathered by the parties involved in the litigation. The scope of this evidence gathering is extremely broad and parties are expected to disclose all potentially relevant documents, whether or not the documents are detrimental to their case. If there is a dispute about whether a document should be disclosed, the courts have the power to resolve the issue. See, e.g., British Columbia’s Supreme Court Civil Rules at Rule 7-1.

Conversely, most civil law countries do not have a system for pre-trial discovery. See also Craig P. Wagnild, Civil Law Discovery in Japan: A Comparison of Japanese and U.S. Methods of Evidence Collection in Civil Litigation, 3 ASIAN-PAC. L. & POL’Y J., Winter 2002 [Hereinafter Wagnild], at 1, 2. Most evidence production takes place at trial, and the judge assumes primary responsibility for gathering the evidence. See also id. at 4; see also Reyes at 362 (commenting that judges actively question witnesses then decide what documents are discoverable). The parties themselves may only gather evidence through voluntary cooperation or by court intervention. See also id.

Given the evolution of these two different legal approaches, it is perhaps not surprising that transnational discovery issues have arisen. Civil law countries have a different concept of the role of a judge, so extensive pre-trial document disclosure is often considered unnecessary. Wagnild at 16. Even worse, it can be seen as a method of fostering fishing expeditions. Reyes at 362.

We suggest that the solution to transnational discovery should not be to force litigants to conjure up creative ways to navigate so as to avoid penalties under common law or civil law rules, but rather, the solution should be to find a way to reconcile the differences between the laws.

C. Reconciling the Privacy Directive and the Disclosure Rules

The Privacy Directive permits the transfer personal information from Member States to a third country which ensures an adequate level of data protection.

In an opinion dated January 26, 2001, the Privacy Directive’s Article 29 Data Protection Working Party reported on the adequacy of Canada’s PIPEDA. Working Party, Opinion 2/2001 on the Adequacy of the Canadian Personal Information and Electronic Documents Act, 5109/00/EN, WP 39 (Jan. 26, 2001) [Hereinafter WP 39]. The Working Party recommended that any adequacy findings made by the Commission be limited to reflect the scope of PIPEDA. Id. at 7; see also PIPEDA (stating that PIPEDA only applies to organizations that collect, use, and disclose personal information in the course of commercial activities).

In a Commission Decision dated December 20, 2001, the Commission decided that for the purposes of the Privacy Directive, Canada be considered a country that ensures an adequate level of protection for personal data. European Commission, Commission Decision on the Adequate Protection of Personal Data Provided by the Canadian Personal Information Protection and Electronic Document Act, 2002/2/EC (Dec. 20, 2001), at Article 1 [hereinafter Commission Decision]. Therefore, transfers of personal data from Member States to recipients in Canada, whether or not the transfers are made pursuant to Canadian discovery obligations, are not a violation of the Privacy Directive.

However, the Commission Decision only applied to transfers to Canadian recipients subject to PIPEDA. Id. The problem is that under PIPEDA, the Governor in Council could exempt an organization, a class of organizations, an activity, or a class of activities, from the application of PIPEDA with respect to the collection, use, or disclosure of personal information in a province if the province has legislation deemed to be substantially similar to PIPEDA. PIPEDA at s. 26.

The Working Party invited the Commission “to look into the process leading to the definition of “substantially similar” and to ascertain whether it is appropriate to individually recognise provincial laws as providing an adequate level of protection or if the same objective can be attained at the Federal level through an Order in Council.” WP 39 at 7. Recognizing that amendments could be made to PIPEDA and that provincial legislation may be declared by the Governor in Council to be substantially similar to PIPEDA, the Commission declared that the functioning of their adequacy decision would be evaluated in three years. Commission Decision at Article 4. Until that evaluation, the Commission Decision would cover only the organizations subject to Canada’s PIPEDA, and not to those organizations subject to substantially similar provincial legislation.

On August 3, 2002, Industry Canada established a process for the determination of “substantially similar” provincial legislation (Office of the Privacy Commission of Canada, Substantially Similar Provincial Legislation).  The process involves a consideration of the provincial legislation, and whether the provincial legislation follows the ten principles outlined in Schedule 1 of PIPEDA, provides for an independent and effective oversight and redress mechanism with powers to investigate, and restricts collection, use, and disclosure of personal information to purposes that are appropriate or legitimate. Id. Subsequently, provincial laws in Quebec, Alberta, and British Columbia, as well as Ontario’s sectoral legislation, were determined to be substantial similar to PIPEDA, and therefore organizations or activities subject to them would be exempt from PIPEDA. See Exemption Orders. The question was whether transfers of personal data to these exempt groups satisfied the adequacy requirement under the Privacy Directive.

On November 20, 2006 the Commission released a Commission Staff Working Document to re-examine the functioning of the Commission Decision given that some provincial legislation had been deemed by the Governor in Council to be substantially similar to PIPEDA. Commission of the European Communities, Commission Staff Working Document, SEC(2006) 1520 (Nov. 20, 2006). The Working Document concluded that PIPEDA continues to provide an adequate level of protection of personal data within the meaning of the Privacy Directive. Id. at 6. So a determination by Canada’s Governor in Council that provincial legislation is substantially similar to the federal PIPEDA is sufficient for meeting the adequate level of protection standard required under the Privacy Directive. The European Union Privacy Directive and the Canadian disclosure rules were reconciled.

VI. Interjurisdictional Discovery Examples

A. The Privacy Directive and Disclosure Rules in the United States

Unlike the privacy legislation in Canada, the privacy laws in the United States have not been recognized as providing an adequate level of protection. Working Party, Opinion 10/2006 on the Processing of Personal Data by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), 01935/06/EN, WP 128 (Nov. 22, 2006). As a result, a party with personal data located in a Member State that discloses the documents by transferring them to the United States pursuant to the discovery rules of the United States is in violation of the Privacy Directive.

Parties are forced to carefully navigate through both the Privacy Directive and the discovery rules in order to avoid penalties. Methods for doing so include: using the safe harbour mechanism, agreeing to abide by mandatory data protection provisions, developing a set of binding corporate rules, entering into model contracts, seeking a protective order releasing the party from its obligation to produce documents, or using a letter of request pursuant to the Hague Evidence Convention. See also Reyes (providing a detailed discussion of these methods).

B. Quebec

i) Quebec’s Internal Discovery Procedure

Quebec has been influenced by common law conceptions of discovery. See JOHN E.C. BRIERLY & RODERICK A. MACDONALD, QUEBEC CIVIL LAW 52 (Emond Montgomery Publications Limited 1993). Although a party is only required to disclose documents that it intends to rely on at trial, certain persons may be required to allow copies to be made of any documents relating to the issues. Code of Civil Procedure at Articles 331.1, 397, 398. Also, a Quebec court may hear an application for the production of documents. Id.

ii) Interprovincial Document Discovery with Quebec

Despite this, the province of Quebec was reluctant to allow documents within the province to be transferred outside the province. Quebec enacted the Business Concerns Records Act to prohibit the removal from the province of documents relating to any business concern in Quebec pursuant to any order or requirement of a juridical authority outside the province. Business Concerns Records Act, R.S.Q., ch. D-12.

Quebec’s prohibiting act came into conflict with British Columbia’s disclosure rules in Hunt. Hunt v. T&N plc, [1993] 4 S.C.R. 289 (Can.). In that case, the appellant requested documents relating to the action, but the Quebec Provincial Court granted orders preventing the transfer of documents out of the province. The case went up to the Supreme Court of Canada, which held that Quebec’s Business Concerns Records Act was constitutionally inapplicable to other provinces because it did not respect the minimum standards of order and fairness, namely the right to use discovery as a tool in civil litigation. Id.

In the aftermath of the Hunt decision, it became clear that a province would not be able to block a transfer of documents that is pursuant to another province’s disclosure rules. Moreover, Hunt has international implications as well. The Supreme Court of Canada reaffirmed that there is a need for greater comity in our modern era of international transactions. Id.

C. The North American Free Trade Agreement

i) Organization of NAFTA

The North American Free Trade Agreement, or NAFTA, is a trilateral agreement between Canada, the United States, and Mexico. The purpose of NAFTA is to reduce the barriers to trade and investment. North American Free Trade Agreement, U.S.-Can.-Mex., Dec. 17, 32 I.L.M. 289 (1993) [hereinafter NAFTA] at Article 102.

The dispute resolution mechanism under NAFTA is driven by the classification of the subject matter of the dispute. NAFTA’s Chapter 11 deals with investment protection and expropriation of assets, Chapter 19 deals with anti-dumping and countervailing duties, and Chapter 20 deals with the general interpretation of the agreement. Id.

Chapter 11 disputes can only arise in the context of a NAFTA investor alleging that a government has breached its obligations. The government party, by virtue of being a signatory of NAFTA, pre-consents to arbitration under the International Centre for the Settlement of Investment Disputes, its Additional Facility Rules, and the United Nations Commission for International Trade Law. See id. at Article 1122. Each of these arbitral mechanisms has rules of procedure for dealing with document disclosure, and each ultimately gives the tribunal the power to order disclosure. See International Centre for the Settlement of Investment Disputes, ICSID Convention, Regulations and Rules, ICSID/15 (April 2006) at Rule 34; see International Centre for the Settlement of Investment Disputes, Additional Facility Rules, ICSID/11 (April 2006) at Article 27; see United Nations Commission on International Trade Law, Arbitration Rules, G.A. Res. 65/22, U.N. Doc. A/65/465 (as revised in 2010) at Article 27.

Under the Chapter 19 dispute resolution process, parties must file all documentary information with a bi-national panel. NAFTA at Article 1904. Documents which are proprietary or privileged can be sealed and marked. Rules of Procedure for Article 1904 Bi-national Panel Reviews at Rule 41. A party seeking disclosure of these sealed documents needs to submit an application to the panel, and the panel ultimately decides whether or not an order for disclosure should be made. Id. at Rules 46, 50, 52.

Chapter 20 disputes involve the general interpretation of NAFTA. The Chapter 20 dispute resolution process involves the appointment of a panel, and the panel has the power to determine the applicable rules of procedure, including those related to document disclosure. See Model Rules of Procedure for Chapter 20 at Rule 17.

VII. Implications for the Comprehensive Economic and Trade Agreement

A. The Comprehensive Economic and Trade Agreement

On October 16, 2008, a study was released showing that a closer economic partnership between Canada and the European Union could be of significant benefit to both sides. What followed was an agreement to start negotiations for a Comprehensive Economic and Trade Agreement (“CETA”) to address tariff issues, investment, and non-tariff barriers. On March 5, 2009, a joint report was released outlining the negotiating agenda. Negotiations for CETA are currently still ongoing.

B. Dispute Resolution under the Comprehensive Economic and Trade Agreement

CETA will also require a dispute resolution mechanism since laws of different jurisdictions are rarely in uniformity. Without a uniform process, the potential for tension exists between the laws of different jurisdictions. One way to avoid this tension is to make pre-arrangements for a dispute resolution process, similar to what was done under NAFTA.

In terms of document discovery, it does not matter whether the process involves broad disclosure, like in most common law jurisdictions, or judge-administered disclosure, like in many civil law jurisdictions. As long as there are mutually agreed upon rules of procedure in place, the uncertainty related to disclosure can be minimized.

VIII. Conclusion

Although laws may differ from jurisdiction to jurisdiction, there are ways to reconcile them. The Canada/EU disclosure-privacy example, the Supreme Court of Canada judgment regarding Quebec’s blocking statute, and NAFTA, are all examples of this. In each example, reconciliation came about through different means. The Canada/EU tension was resolved through a Commission decision on the adequacy of Canada’s privacy laws. Quebec’s blocking statute was reconciled through a court ruling on the need for greater comity. And disclosure issues in NAFTA disputes were dealt with pre-emptively through dispute resolution processes being written into the treaty.

With negotiations for CETA currently ongoing, it is imperative that consideration be given to a dispute resolution process under CETA. Similar to what was done with NAFTA, Canada and the European Union can agree to either a comprehensive set of rules of procedure or an alternate dispute resolution mechanism to be written into the treaty itself. This would facilitate greater certainty and resolve the issue of which country’s laws should apply in the event of a dispute.

Patricia Armstrong
Associate Lawyer in Insurance Law and Litigation
Lindsay Kenney – Vancouver Office

LK staffers had been fundraising since November raising over $2,500. Proceeds from the fundraising initiatives which included a staff cookbook, a wine draw and the ever popular Jean’s Day went into buying toys and food for the Christmas Hampers.  

We hope to make this a very special Christmas for five Vancouver families.

• to the legal profession in general; or
• to jurisprudence in Canada; or
• to Canadian Defence Lawyers and its membership; or
• for service to the community at large.

Any CDL member in good standing who is a Young Lawyer (ten years of call or less) is eligible for the award (except a member of the current Executive). The award will be presented annually at the Annual General Meeting.

• 2010 Exceptional Young Lawyer Award Winner: Kadey B.J. Schultz

Nominations

Nominations must be filed with the Executive Director.

Richard B. Lindsay, QC
Partner Lawyer in Insurance Law and Litigation
Lindsay Kenney - Vancouver Office

Congratulations to senior partners, Richard B. Lindsay, QC and Gregory S. Miller, P. Eng. Mr. Lindsay and Mr. Miller have once again been selected as top practitioners in their area of law by their esteemed peers and knowledgeable users of legal services. Lexpert is Canada’s most comprehensive guide to legal talent in Canada, identifying leading lawyers across Canada in over 60 practice areas.

Richard B. Lindsay, QC
Partner Lawyer in Insurance Law and Litigation
Lindsay Kenney – Vancouver Office

Gregory S. Miller, P.Eng
Partner Lawyer in Insurance Law and Litigation
Lindsay Kenney – Vancouver Office