Date: 20070807
Docket: T-970-04
Citation: 2007 FC 824
Ottawa, Ontario, August 7,
2007
PRESENT: The Honourable Mr. Justice Phelan
BETWEEN:
PEAK
ENERGY SERVICES LTD.
Plaintiff
and
DOUGLAS J. PIZYCKI HOLDINGS
LTD.,
carrying on business as Predator Oilfield
Rentals
and DOUGLAS
J. PIZYCKI
Defendants
AND BETWEEN:
DOUGLAS J. PIZYCKI HOLDINGS LTD.,
carrying on business as Predator Oilfield
Rentals
and DOUGLAS
J. PIZYCKI
Plaintiffs by Counterclaim
and
PEAK ENERGY
SERVICES LTD.
Defendant by Counterclaim
REASONS FOR ORDER AND ORDER
I. INTRODUCTION
[1]
This
is an appeal of a Prothonotary’s decision where the learned Prothonotary
determined that transcripts of the discovery of representatives of the
Plaintiff in other actions, and which had not been filed in those courts, were
not producable in this litigation. In refusing a motion to compel production of
those transcripts (and related information), the learned Prothonotary held that
(a) the relevance of those transcripts had not been established; and (b) the
transcripts were covered by the implied undertaking of confidentiality and no
reason had been established to grant relief from the undertaking.
II. FACTUAL
BACKGROUND
[2]
The
current action is for patent infringement concerning Patent ‘053 – a patent
which relates to apparatus and methods for separating solids from drilling
fluids. Messrs. Rowney and King were the inventors of the ‘053 patent.
[3]
The
original plaintiffs who commenced this action was Grand Tank (International)
Inc. and Davlin Holdings Ltd. The current Plaintiff Peak Energy Services Ltd.
(Peak) was substituted for those plaintiffs.
[4]
The
documents in question include transcripts from pre-trial examinations of the
inventors (Rowney and King) who were produced as witnesses in three other
Federal Court actions brought by the Plaintiff (or its predecessor plaintiffs)
against other defendants alleging infringement of its patent.
[5]
Of
the three other actions, one was settled, one was discontinued and the third,
the “Harding action”, continues case managed by the learned
Prothonotary.
[6]
The
Defendants contend that there are a number of issues which are common to all
four actions ranging from the development of the invention, through to prior
disclosure, obviousness and ambiguity.
[7]
The
Plaintiff has produced transcripts of the examinations and related documents in
the other three actions if such transcripts were filed in Court and therefore became
public. The documents related to those transcripts were also produced on the
basis, as the learned Prothonotary held, that such documents were relevant to
the publicly available evidence.
[8]
It
is the Defendants’ position that since the Plaintiff has copies of the
undisclosed transcripts and that the transcripts are a document or record in
the Plaintiff’s hands which may be relevant, the transcripts are producable.
[9]
The
learned Prothonotary dismissed the Defendants’ motion for production firstly
and principally on the issue of relevance. As to relevance, she held:
There is no reason to assume the
relevance of answers given on discovery in a separate, if similar action. Nor
is it evident that the transcript of such depositions necessarily comes within
the meaning of relevant documents as defined at Rule 222(2) of the Federal
Courts Rules. To the contrary, the relevance of the depositions is for the
defendants to demonstrate and is not achieved through mere speculation.
The defendants, in this instance, will
have an opportunity to examine for discovery the very people whose testimony in
other proceedings is being sought in the context of this motion.
[10]
The
learned Prothonotary further dealt with the implied undertaking of
confidentiality in the following terms:
The only use for the transcript of the
discovery of those individuals in the other actions, might be to impeach their
credibility in this proceeding. Here, I agree with the Master Funduk, in Elder
v. Kadis [2002] A.J. No. 924 (“Elder”), that questions and documents aimed
solely at credibility, without more, are not relevant. Without providing a
basis to impugn the credibility of the plaintiff’s representatives, the
defendants, in my view, are on a fishing expedition.
While I reject the defendants’ request on
the basis of relevance, I would add that I agree with Master Funduk’s view of
the reach of the rule of confidentiality as set out in Elder supra, at
paras. 7 to 10. I concur with his conclusion that grounds such as credibility
or, as proposed by the defendants in this case, the utility of the prior
depositions in helping counsel for the defendants to prepare for the examination
on discovery, without more, are not sufficient to be an exception to the rule
of confidentiality.
III. ANALYSIS
A. Standard
of Review
[11]
As
with all such appeals, the Court must consider the standard of review
applicable to the decision under appeal. The test is set forth by the Federal
Court of Appeal in Canada v. Aqua-Gem Investments
Ltd. (C.A.), [1993] 2 F.C. 425, modified slightly in Merck & Co.
v. Apotex Inc., 2003 FCA 488; discretionary orders of prothonotaries should
not be disturbed unless
(a) the
issue raised is vital to the final issues in the case; and
(b) the
orders were clearly wrong in the sense of making a decision based upon a wrong
principle or upon a misunderstanding or misapprehension as to the facts.
B. Relevance
[12]
In
my view, on the issue of relevance, there is no issue as to the legal
principles concerning relevance, such as to make this something other than an
exercise of discretion. The learned Prothonotary simply held that relevance
cannot be assumed and that the Defendants had failed to establish that such
transcripts and related documents are relevant to this action.
[13]
In
that regard, the learned Prothonotary was exercising her discretion. The
determination is not vital to the case as that same information can be obtained
by putting the same questions to the witnesses or obtained in some other manner
if, in fact, it is important.
[14]
Further,
the learned Prothonotary did not proceed on some wrong principle or
misapprehension of facts. The learned Prothonotary has been case managing this
action for some period of time and is fully familiar with the issues to date.
Moreover, the learned Prothonotary is case managing the allegedly related Harding
action. The learned Prothonotary is in the best position to understand
relevancy, potential relevancy and the interrelation between these legal
actions.
[15]
The
usual deference owed to the discretionary decisions of a prothonotary is
reinforced by the fact that the learned Prothonotary is the Case Management
Prothonotary in this case and in the Harding action. In Sawridge Band
v. Canada (C.A.), [2002] 2 F.C. 346, the Federal Court of Appeal held that
case management judges must be given latitude to manage cases and that the
appellate courts should only interfere in the clearest case of a misuse of
judicial discretion.
[16]
That
principle was extended to apply to case management prothonotaries’ decisions
appealed to this Court. Federal Court judges should be extremely reluctant to
interfere with case management discretionary decisions.
[17]
Justice
Gibson in Microfibres Inc. v. Annabel Canada Inc., 2001 FCT 1336,
summarized the situation accurately:
Case management prothonotaries, like case
management judges, are familiar with the proceedings that they are managing to
a degree that a trial judge, sitting on appeal from a prothonotary’s
discretionary decision in such a context, usually cannot be.
[18]
In
this situation, the role of the Court is not to assess the relevance of the
documents requested but to determine whether the Prothonotary made a
fundamental error of principle or misapprehended the facts. The learned
Prothonotary was clearly aware of all of the circumstances and simply held that
the Defendants had not shown the relevance of the undisclosed transcripts.
There is no fundamental error of principle or misapprehension of facts which in
any way would justify this Court’s intervention. For this reason alone, the
appeal should be dismissed.
C. Implied
Undertaking of Confidentiality
[19]
The
learned Prothonotary made an alternative finding concerning the applicability
of the implied undertaking of confidentiality which the Defendants argue
influenced, if not controlled, the learned Prothonotary’s finding on relevance.
Firstly, in my view, the learned Prothonotary’s finding on relevance stands
alone and is not influenced by the issues raised in respect of the implied
undertaking. Secondly, the learned Prothonotary’s finding on the implied
undertaking based on a correct legal principle is a further exercise of
discretion subject to the same deference as earlier discussed.
[20]
The
Defendants have taken the position that the implied undertaking does not
operate or should not operate because the principle is meant to prevent the
receiving party (the “questioner”) from using the transcripts outside the
litigation. The Defendants say that the implied undertaking is not designed to
protect the answering party and in that regard relies on the decision of the
Ontario Court of Appeal in Tanner v. Clark, 63 O.R. (3d) 508 (CA).
[21]
Whatever
may be said about the Tanner decision – and I do not accept that it
undermines the breadth of the implied undertaking- the guidance for this Court
is the Supreme Court of Canada’s decision in Lac d’Amiante du Québec Ltée v.
2858-0702 Québec Inc., [2001] 2 S.C.R. 743.
[22]
In
Lac d’Amiante, the Supreme Court dealt with an appeal where the issue
was whether information and documents received at the discovery stage could be
used for purposes other than the specific action. The Supreme Court upheld the
implied undertaking on grounds of judicial policy including the need for a
far-reaching and liberal exploration of facts to allow for obtaining a complete
picture of the case. In return for this freedom to investigate, there is an
implied obligation of confidentiality.
[23]
The
Court recognized that the trade-off for an invasion of confidentiality is a
measure of protection by virtue of the implied undertaking:
65. Adopting this rule
means that although confidentiality is compromised to some extent at the stage
of examination on discovery, there is still a degree of protection of privacy.
If the trial never takes place, the information remains confidential. Moreover,
when the party who has conducted an examination decides not to use the evidence
or information obtained for the purposes of the trial, a right to complete confidentiality
remains, except for what may be the practical consequences of communicating the
information. Because Quebec civil procedure provides for this phase to take
place outside the public sphere, the principle of limited confidentiality is
consistent with the nature and the purpose of the transmission of information
that takes place at the examination.
[24]
The
Court further acknowledged that it was legitimate to protect information in one
case which might never be used in the specific case. In the current situation
the Defendants are seeking transcripts not otherwise disclosed in those
specific cases but which it wants to use in this action. The Supreme Court of
Canada outlined the legitimacy of this confidentiality as follows:
74. There are other judicial
policy reasons why it is legitimate to recognize the confidentiality rule. As
we have seen, examination on discovery is an exploratory proceeding. As Fish
J.A. pointed out in his reasons, the purpose of the examination is to encourage
the most complete disclosure of the information available, despite the privacy
imperative. On the other hand, if a party is afraid that information will be
made public as a result of an examination, that may be a disincentive to
disclose documents or answer certain questions candidly, which would be
contrary to the proper administration of justice and the objective of full
disclosure of the evidence. Recognizing the implied obligation of
confidentiality will reduce that risk, by protecting the party concerned
against disclosure of information that would otherwise not have been used in
the case in which the examination was held and the information was disclosed.
75. In addition, it is
sometimes difficult for a party, at the examination on discover stage, to
assess whether information is useful or relevant to the outcome of the case.
This creates a problem for the people who are compelled to disclose personal
information that is potentially damaging to their interests. It
would therefore be surprising if damaging personal information that was
communicated at an examination could be used for purposes unrelated to the
case, without being used in that case. This is of even greater
concern with respect to third parties who are compelled to reveal information
at examinations held under art. 398, para. 3 C.C.P. when they are not
even directly involved in the trial. The rule of confidentiality minimizes
those risks and problems.
[25]
This
Court has long recognized that any document or information produced or given
under compulsion as a result of the civil process of this Court by any person,
if it is not given in open Court, is confidential to that person unless and
until the contrary is shown. (See N.M. Paterson & Sons Ltd. v. St. Lawrence
Seaway Management Corp., 2002 FCT 1247)
[26]
Contrary
to the Defendants’ position, the privacy interest being protected by the
Supreme Court is that of the person compelled to answer – in this instance the
Plaintiff’s representatives questioned in those other actions. The Defendants’
position also ignores the fact that discoveries in other actions may also
disclose, either in question or answer, information about other persons who may
or may not be involved in the litigation. While this is not the same third
party information referred to in paragraph 75 of the Lac D’Amiante
decision quoted above, the same principle of protection is equally applicable.
[27]
In
the case of Tanner relied on by the Defendants, the medical reports at
issue had been disclosed in an arbitration which was public. The document had
lost its quality of confidentiality by that reason alone. Furthermore, it was a
document which would have had to be produced under the “continuing obligation
to disclose” rule which governs all such litigation.
[28]
In
my view, the Ontario Court of Appeal did not undercut the implied undertaking
rule in any sense. Even if it did, this Court, given the guidance of the
Supreme Court, ought not do so.
[29]
The
learned Prothonotary, having recognized the existence of the implied
undertaking, then considered whether there was any basis for relieving from
that undertaking. In that regard, she was exercising her discretion since the
undertaking may be relieved in limited circumstances. It is recognized that the
undertaking is a limitation on use of information but is not itself a privilege.
[30]
This
issue of release from the undertaking was also addressed in Lac d’Amiante
with a clear indication that the power to relieve the obligation of
confidentiality should be based on necessity and the interests of justice:
76. Before concluding, it
would seem to be in order to comment on the scope of the rule of
confidentiality. The rule applies during the case to both a party and the
party's representatives, and it remains applicable after the trial ends.
However, there must be some limits on the rule. For instance, the court will
retain the power to relieve the persons concerned of the obligation of
confidentiality in cases where it is necessary to do so, in the interests of
justice. However, the courts will avoid exercising that power too routinely, as
to do so would compromise the usefulness of the rule, if not its very
existence. For example, the exceptions to the rule of confidentiality must not
be used, where a party has obtained information at an examination to enable the
party to use that information virtually automatically in other court
proceedings. That practice would be contrary to the public interest and would
amount to an abuse of process.
[31]
The
Supreme Court confirmed that it was the task of a court to weigh a
non-exhaustive list of factors in determining whether the interests of justice
in disclosure outweigh the right of confidentiality. That is an exercise of
discretion by the court or court officer.
[32]
At
paragraph 77, the Supreme Court discussed that weighing exercise:
77. The courts must
therefore 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 will be justified in granting leave to use the information. 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 the application. The court
will determine whether the interests of justice in the information being used
in the relations between the parties and, where applicable, in respect of other
persons, outweigh the right to keep the information confidential. A number of
factors, which cannot be listed exhaustively, will be taken into consideration.
Disclosure of all or part of an examination, or of exhibits produced during an examination,
may then be approved, in cases where there is an interest at stake that is
important to the justice system or the parties. This might be the case, for
example, where a party wishes to establish in another trial that a witness has
given inconsistent versions of the same fact. (For comparison, see Wirth
Ltd. v. Acadia Pipe & Supply Corp. (1991), 79 Alta. L.R. (2d) 345
(Q.B.).)
[33]
The
learned Prothonotary did precisely what the Supreme Court mandated. She weighed
the competing interests and found no compelling reason for relief from the
confidentiality obligation.
[34]
In
that regard, the learned Prothonotary exercised her discretion on a matter
which has not been established to be vital to the final issues in the case.
There are no grounds for the Court to intervene, even if it was inclined to do
so – which it is not.
IV. CONCLUSION
[35]
For
these reasons, this appeal is dismissed with costs.
ORDER
THIS COURT
ORDERS that this appeal is dismissed
with costs.
“Michael
L. Phelan”
Email this Content