Docket: 2011-5(IT)G
BETWEEN:
andré drouin,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
____________________________________________________________________
Application
heard on September 6, 2011, at Montreal, Quebec.
Before: The Honourable Justice Lucie
Lamarre
Appearances:
|
Counsel for the Appellant:
|
Guy
Du Pont
Michael H. Lubetsky
Jack J. Fattal
|
|
Counsel for the Respondent:
|
Michel Lamarre
Alain Gareau
Sara Jahanbakhsh
|
____________________________________________________________________
ORDER
Upon motion by the appellant under section
16.1 of the Tax Court of Canada Rules (General Procedure) (the Rules)
for a confidentiality order in respect of the documents identified in Schedule
A of the motion (the Confidential Documents);
Upon reading the affidavit of Marc Bernier
filed in support of the motion;
And upon hearing each party's allegations;
The motion is granted and a confidentiality
order is issued, whose terms are as follows:
(a) the Confidential Documents
shall be kept sealed in the Court record and shall be accompanied by a copy of
this order and shall not be made accessible to anyone other than the Court and
its staff;
(b) the Confidential
Documents shall be shared with counsel for the respondent, who are not to share
them or to use them outside of the scope of this appeal.
(c) if counsel for the
respondent refer to the Confidential Documents or present an excerpt from them
to the Court or to a witness during the hearing of this appeal, any information
that relates to rates for the services in question and/or is likely to identify
third parties other than Prospector International Networks Inc., its
affiliates, partners and subcontractors will be censored, viz.:
(i) Prospector
International Networks Inc., PNMI Group Ltd., PIN Franchise Ltd., Réseau
Prospector inc./Prospector Network Inc. (Quebec), Prospector Network Inc. (Wyoming),
MIS International Inc. (collectively, the Prospector Group); and
(ii) Cash-On-Time Inc.,
Mail-It-Safe Inc. and Espeo Inc. (collectively, the Prospector Partners);
(d) counsel for the
respondent shall destroy all copies of or excerpts from the Confidential
Documents as soon as the appeal is disposed of.
Signed at Montreal, Quebec, this 14th day
of September 2011.
"Lucie
Lamarre"
Translation certified true
on this 22nd day of March 2013.
Erich Klein, Revisor
Citation: 2011 TCC 425
Date: 20110914
Docket: 2011-5(IT)G
BETWEEN:
andré drouin,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR ORDER
Lamarre J.
[1]
The grounds for the
motion are as follows:
[Translation]
1. The
Confidential Documents include (i) market studies and consultants' reports on
the marketing strategy for the products and services of the Prospector Group
and Prospector Partners (Economic Studies) [found at tabs 1 to 7 of the Book
of Confidential Exhibits] and (ii) recent contracts with various clients (Client
Contracts) [found at tabs 8 to 17 of the Book of Confidential Exhibits].
2. A
confidentiality order is necessary to prevent a serious risk of prejudice to
important interests, because
(a) the
Confidential Documents are from Prospector International Inc., which has always
considered and treated them as confidential and is not prepared to allow their
use in this appeal without appropriate confidentiality measures;
(b) there
are confidentiality obligations that have been agreed upon by the Prospector
Group and some of its clients, and the fulfilment of those obligations would be
irremediably compromised if the Client Contracts were made public in their
entirety;
(c) the
disclosure of information related to the identity of new clients and the rates
for the services offered to them would seriously prejudice the Prospector Group's
and Prospector Partners' commercial interests;
(d) there
is a confidentiality obligation imposed by the authors of the Economic Studies the
fulfilment of which would be irremediably compromised if the Economic Studies
were made public and their authors publically identified; and
(e)
the Economic Studies contain marketing strategies, market studies and
profitability analyses for various products of the Prospector Group and
Prospector Partners, which, if they were made public, could enable their
competitors to gain a considerable, undue commercial advantage, which would undermine
the competitive position of the Prospector Group and the Prospector Partners.
3. The
salutary effects of a confidentiality order outweigh its deleterious effects in
that
(a) the
filing in evidence of the Confidential Documents is necessary to support the
appellant's position;
(b)
If the Court does not make the order sought, the appellant may have to withhold
the Confidential Documents, thus compromising his right to a fair trial; and
(c)
The prejudice to the public interest in open and accessible court proceedings
is minimal since the Confidential Documents make up only a small portion of all
the documents that will be filed in evidence, while the identity of new clients
of the Prospector Group and Prospector Partners as well as information as to the
exact rates for services offered to them are not per se directly relevant to
the issues raised in this appeal.
4. There
is no reasonable alternative to the confidentiality order sought that would make
it possible to prevent the serious risk of prejudice to the interests involved.
5. The
salutary effects of the order sought outweigh its deleterious effects.
[2]
An affidavit of Marc
Bernier, chairman of the board and chief executive officer of Prospector
International Networks Inc. (Prospector), a corporation which he
acquired in March 2009, was filed in support of the motion. The respondent
accepted the filing of the affidavit without asking to cross-examine the deponent.
M. Bernier stated in the affidavit that the Confidential Documents have
always been treated by Prospector as highly confidential and that he authorized
the appellant to use the documents on condition that they be protected by a
confidentiality order (paragraphs 11 and 12 of the affidavit). With regard to
the Economic Studies, Mr. Bernier stated that he had mandated … in 2009 to conduct marketing studies, and
added at paragraphs 15, 16, 17 and 18:
[Translation]
15. The
Mandate … contained the following
provisions, among others:
The deliverables (market study, business plan and forecast) are for
internal and management purposes only. All external uses or presentation of the
deliverables must be preapproved in writing by an authorized delegate of ….
16. During
our discussions, … clearly indicated that
the asking price for preparing the Economic Studies would increase
significantly if they were to be published.
17. Therefore,
I undertook to keep the Economic Studies strictly confidential in order to
avoid breaching my obligations toward ….
18 The
Economic Studies were never prepared for the purpose of being disseminated to
the public; they contain highly confidential information and business plans,
including
(a)
detailed technical comparisons between the Prospector software and that of its
competitors, listing their compared advantages and disadvantages;
(b) the
geographical regions and market segments targeted for priority marketing
efforts; and
(c) potential
partners of high-priority value-added resellers.
[3]
With respect to Client
Contracts, he stated, inter alia, the following at paragraph 23 of the
affidavit:
[Translation]
23. Prospector
and Canadian Partners verbally made a commitment to the New Clients not to identify
them publicly as being clients of Cash-On-Time and Mail‑It‑Safe
until further notice.
[4]
The appellant relied on
the Supreme Court of Canada decision in Sierra Club v. Canada, [2002] 2
S.C.R. 522, in support of his motion. In that case, a confidentiality order was
sought with regard to documents belonging to the Chinese authorities, who had
authorized the disclosure of the documents on the condition that they be
protected by such an order. In essence, what was being sought was the prevention
of the dissemination of confidential documents without, however, the imposition
of any restriction on public access to the proceedings. The immediate purpose of
the request for a confidentiality order was related to the applicant's
commercial interests. If the documents in question were disclosed, the
applicant would have been in breach of its contractual obligations and would
have suffered a risk of harm to its competitive position. If the
confidentiality order were denied, then, in order to protect its commercial
interests, the applicant would have had to withhold the documents, which would have
impeded its ability to make full answer defence and violated its right to a
fair trial.
[5]
These are appreciably
the same arguments as those put forward by the appellant before me. Section
16.1 of the Rules provides as follows with regard to confidentiality orders in
this Court:
Confidentiality Order
16.1 (1) On
motion, the Court may order that a document or part of a document shall be
treated as confidential at the time of filing of the document or part of the
document and determines the conditions in relation to its reproduction,
destruction and non-disclosure.
(2)
Where the Court makes an order pursuant to subsection (1), a party or solicitor
of record may have access to the confidential document or part of the
confidential document only on conditions determined by the Court in relation to
its reproduction, destruction and non-disclosure.
(3)
The order remains in effect until the Court orders otherwise.
[6]
Moreover, the Supreme
Court of Canada, in Sierra Club, sets out a test for whether a confidentiality
order ought to be granted in a case such as this one. Justice Iacobucci wrote
as follows at paragraphs 54 and 55:
54 As in Mentuck, I would add
that three important elements are subsumed under the first branch of this
test. First, the risk in question must be real and substantial, in that the
risk is well grounded in the evidence, and poses a serious threat to the
commercial interest in question.
55 In addition, the phrase "important
commercial interest" is in need of some clarification. In order to
qualify as an "important commercial interest", the interest in
question cannot merely be specific to the party requesting the order; the
interest must be one which can be expressed in terms of a public interest in
confidentiality. For example, a private company could not argue simply that
the existence of a particular contract should not be made public because to do
so would cause the company to lose business, thus harming its commercial
interests. However, if, as in this case, exposure of information would cause a
breach of a confidentiality agreement, then the commercial interest affected
can be characterized more broadly as the general commercial interest of
preserving confidential information. Simply put, if there is no general principle
at stake, there can be no "important commercial interest" for the
purposes of this test. Or, in the words of Binnie J. in F.N. (Re),
[2000] 1 S.C.R. 880, 2000 SCC 35, at para. 10, the open court rule only yields "where
the public interest in confidentiality outweighs the public interest in
openness" (emphasis added).
[7]
The first step,
therefore, consists in determining whether disclosing the Confidential
Documents would impose a serious risk on an important commercial interest of
the appellant and whether there are reasonable alternatives to the order itself
(see Sierra Club, paragraph 58).
[8]
As in Sierra Club,
the commercial interest at stake in this case relates to the objective of
preserving contractual obligations of confidentiality. The appellant must demonstrate
that the information in question has always been treated as confidential and
that, on a balance of probabilities, its proprietary, commercial and scientific
interests could reasonably be harmed by the disclosure of the information. It must have been accumulated with a
reasonable expectation of it being kept confidential (see Sierra Club,
paragraphs 59 and 60).
[9]
In the instant case,
according to his affidavit, Mr. Bernier authorizes the use of the Confidential
Documents by the appellant only if they are the subject of a confidentiality
order. Mr. Bernier himself is bound to not disclose the Economic Studies in
question without prior consent from … (see letter from …
to Marc Bernier, page 19 of
the motion record). In addition, Mr. Bernier has given a contractual
undertaking to [ … not to disclose the studies' content.
[10]
The respondent argued
that the correspondence filed in the motion record was not countersigned by Mr.
Bernier and that the agreement in question provided in the confidentiality
clause that the documents could be disclosed in legal proceedings.
[11]
As pointed out by
counsel for the appellant, Mr. Bernier's affidavit was filed with the
respondent's consent without any cross-examination being conducted by the
respondent. From this I infer that the content of Mr. Bernier's affidavit was
not disputed. He states specifically that he is bound by contract with …
as well as with the clients at
issue not to disclose the information. With regard to the Economic Studies, Mr.
Bernier has given a contractual undertaking not to disclose their content in
negotiating the rate required by …. It is in
this context that he agrees to voluntarily provide this documentation to the
appellant as long as the appellant obtains a confidentiality order. It is
therefore important to note here that, as regards Mr. Bernier and the
appellant, the documents were collected by the latter with a reasonable
expectation of them being kept confidential. Clearly, if the appellant does not
obtain a confidentiality order, Mr. Bernier will not allow him to use the Confidential
Documents to defend his case. The respondent does not seem to accept that the Prospector
Group intended to operate a business (see paragraphs 26(l) and (q) of the
Reply to the Notice of Appeal, and excerpts from the out-of-court examination
of Normand Desjardins, pages 160, 173, 174 and 180). In this regard, although I
make no ruling on the matter, this evidence may be relevant for the appellant.
[12]
It seems, therefore,
that the appellant has shown, as a first step, the necessity of seeking a
confidentiality order and the absence of reasonable alternatives to the order
itself.
[13]
In the second step of the
analysis, the salutary effects of the confidentiality order, including the
effects on the appellant's right to a fair trial, must be weighed against the
deleterious effects of the confidentiality order, including the effects on the
right to free expression, which in turn is connected to the principle of open
and accessible court proceedings. This balancing will ultimately determine
whether a confidentiality order ought to be granted (see
Sierra Club, paragraph 69).
[14]
In this case, Mr.
Bernier's affidavit indicates that the appellant will not be authorized to use
the Confidential Documents without a confidentiality order. In this context,
there is a very real a risk that, without such an order, the appellant's
ability to prove part of his case would be limited, and that the Court would
have to draw conclusions based on an incomplete evidentiary record. This could thus
impede the search for truth in this case (see Sierra Club, paragraph
77).
[15]
In addition, the fact
that the appellant is not seeking to impede public access to the proceedings
means that the confidentiality order represents a fairly minimal intrusion into
the open court rule and thus would not have significant deleterious effects on
this principle (see Sierra Club, paragraph 79).
[16]
It is also important to
bear in mind the nature and scope of the information for which the order is
sought in assigning weight to the public interest. In this case, the substance
of the proceedings was not public in nature but, rather, private since it is a
matter of demonstrating the real operation of a business; the public interest
is less engaged in this context (see Sierra Club, paragraphs 84 and 86).
[17]
Finally, the appellant may
not have to file the Confidential Documents (if the respondent were to concede
certain points, for example), in which case those documents would be irrelevant
to the proceedings, with the result that freedom of expression, which is
inextricably tied to the principle of open courts, would be unaffected by the
confidentiality order (see Sierra Club, paragraphs 74, 88 and 89).
[18]
In conclusion, in
weighing the various rights and interests involved in the very specific case
before me, I am of the view that the salutary effects of the confidentiality
order outweigh its deleterious effects and that the order should therefore be
granted.
Signed at Montreal, Quebec, this 14th day of September 2011.
"Lucie Lamarre"
Translation certified true
on this 22nd day of March 2013.
Erich Klein, Revisor
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