[1] The individual Plaintiff, Mr Letourneau, contends that he invented a simple and ingenious type of guard rail for use in preventing workers from falling overboard during construction of multi-storey concrete buildings. The guard rail apparently immediately became popular and spawned imitations. Thus the Plaintiff commenced this action and, at the same time, a companion action, which is similar, except for the choice of defendants.

[2] The companion action to this present action proceeded more quickly and was settled by common counsel. Counsel for the present Defendant now wishes to use documentary materials produced by the Plaintiffs in that companion action. Thus the implied undertaking rule comes into play.

CONSIDERATION

[3] The implied undertaking rule is a rule of judge-made procedural law (see National Gypsum Co. v. Dorrell (1989), 34 C.P.C. (2d) 1 (Ont. H.C.) at 9 -10) which is designed to protect the privacy interest of a litigant and counter-balance it with the intrusiveness of the discovery process: see also Schreiber v. Canada (Attorney General), [2001] 1 W.W.R. 739 (Alta. Q.B.) at 742 - 743. The implied undertaking rule is to the effect that when documents are produced on discovery they are produced on an implied undertaking, to the Court, that these to whom the documents are produced will not use them for a collateral purpose: to so use such documents would be a contempt of Court.

[4] In Merck and Co. v. Apotex Inc. (1997), 161 F.T.R. 161 (F.C.T.D.) Mr Justice Joyal began a consideration of circumstance which might avoid the rule by considering the reasons for the existence of the rule in the first place:

18 In Goodman v. Rossi (1995), 24 O.R. (3d) 359, the Ontario Court of Appeal explains that there are two rationales for the implied undertaking rule. Firstly, the discovery process represents an intrusion into the right of privacy which a person has with respect to his or her documents and a necessary corollary to this intrusion is that it should not be permitted to extend beyond that which is necessary for securing justice in the proceeding in which the discovery takes place. Secondly, the rule is said to promote full discovery by avoiding the disincentive to production which the risk of collateral use might cause.

The result is that there should be a balance of the injustice as between the two sides, but the rule ought not to be relaxed to the extent that it will mitigate against full discovery.

[5] A litigant may apply to be released from the implied undertaking, for example where a party's interest in using information outweighs the interest protected, or where a document is also available outside of the litigation in which it was produced. Much of this is set out by Madam Justice McGillis in Mark Anthony Properties Ltd. v. Victor International Inc. (2000), 183 F.T.R. 40 (F.C.T.D.) at pages 43 and 44. In her reasons Madam Justice McGillis refers to a passage from Eli Lily and Co. v. Interpharm Inc. (1993) 50 C.P.R. (3d) 208 (F.C.A.) at 213 in which Mr Justice Appeal McDonald adopted a passage from the decision of Madam Justice Reed in Canada v. Ichi Canada Ltd. (1991), 40 C.P.R. (3d) 119 (F.C.T.D.):

I adopt the reasons of Reed J. in Canada v. Ichi, supra, where at the conclusion of her judgment [at p. 126] she says:

The defendant will know from the text of these reasons that an implied undertaking automatically arises so that information obtained on discovery is to be used only for the purposes of the litigation for which it is obtained. This does not, of course, restrict the use of any information which subsequently is made part of the public record. Nor does it affect the use of information which while obtained on discovery may also have been obtained from some other source. An implied undertaking cannot operate to pull under its umbrella documents and information obtained from sources outside the discovery process merely because they were also obtained on discovery. In addition, the implied undertaking does not prevent a party from applying, in the context of collateral litigation, for release from the implied undertaking, so that information obtained on discovery might be used in that litigation.

Aside from this reference, counsel did not refer us to any authorities where an undertaking had been enforced involving information obtained other than by way of discovery.

I am of the view that no implied undertaking should attach to materials filed with the court voluntarily by way of affidavits or in statements of fact and law.

In the present instance the documents produced in each action overlapped to a degree, however, as I understand it, there may have been documents produced in the companion action which bear on changes in the Plaintiffs' pricing brought about by reason of competition. There is also a supplemental affidavit of documents, prepared by Court Order, indicating the searches made by the Plaintiffs for documents. Indeed, I believe this affidavit may be central to the present application. The material at issue did not become part of the public record. Thus I must decide whether the interest of the Defendant, in using the information, outweighs the privacy and confidentiality interests of the Plaintiffs. While I will refer to Federal Court authority, I will begin with a lucid and informative passage from Schreiber (loc. cit.):

12 The requirement that a litigant submit to discovery is an intrusion on the litigant's interest in privacy and the confidentiality of private information. That intrusion is permitted in order to ensure that there is full disclosure, and therefore a better chance of a just result, in the action in which the discovery occurs. The implied undertaking exists to limit the effect of the intrusion by ensuring that the information is used only for the purpose for which the litigant is obliged to provide it

13 Relieving the litigant who has received the discovery information from the undertaking upsets the balance the undertaking is intended to create. It should only be done where the interest sought to be advanced through the use of the otherwise confidential discovery information outweighs the litigant's privacy and confidentiality interests. The same interests which are brought into balance by the undertaking must be reassessed to determine which has greater significance. If disclosing a litigant's privacy interest outweighs the interest sought to be served by disclosure, the undertaking should be kept in place. If the interest to be served by disclosure is more significant, relief from the undertaking should be granted.

14 In the context of assessing the Defendants' interest in maintaining the undertaking, I emphasize that the interest being protected by the undertaking has been described as a privacy interest. In Harman v. Secretary of State [1983] 1 A.C. 280, Lord Scarman observed at p. 312:

But there is also the general right of the citizen to privacy, which includes a right to keep his own documents to himself.

and Lord Keith of Kinkel said, at p. 540:

Discovery constitutes a very serious invasion of the privacy and confidentiality of a litigant's affairs.

[6] Counsel for the Defendant submits that there should be relief from the rule where it is fair and equitable and that it should be allowed where special circumstances exist and the weighing of the injustice between the parties favour the partying seeking relief. Here counsel refers to Kastner v. Painblanc (1994), 57 C.P.R. (3d) 321 (F.C.T.D.), affirmed by the Federal Court of Appeal (1994), 59 C.P.R. (3d) 293 for the proposition that a party may be relieved from the duty of confidentiality, based on the implied undertaking, if that party establishes that it would be fair and equitable to do so (page 323).

[7] In Visx Inc. v. Nidek Co. (1998), 80 C.P.R. (3d) 437 (F.C.T.D.) Mr Justice Rothstein, as he then was, is more explicit. At page 438 he summarized the factors bearing upon relief from the implied undertaking rule as:

1. the existence of special circumstances; and

2. the weighing of the injustice between the parties between granting or denying the application for relief from the rule.

[8] Counsel for the Defendant submits that the relief from the implied undertaking rule ought to be granted where discovery information is to be used in a related action raising similar issues. I do not see this, without more, to be a special circumstance. The submission continues to the effect that in any event it would be fair and equitable to grant that relief, for the Defendant would still be bound by the implied undertaking rule not to use the discovery information for any purposes outside of the litigation. Carried to general application this approach could result in a stage by stage dismantling of the rule without any real regard for injustices between parties.

[9] In Lac Minerals Ltd. v. New Cinch Uranium Ltd. (1985), 17 D.L.R. (4^th) 745 (Ont. H.C.) relief was granted from the implied undertaking rule in the case of companion actions, one in British Columbia and one in Ontario, when the need for two actions arose by reason of the jurisdictional requirements of the Canadian federal system. In the Ontario portion of Lac Minerals the court, on a motion bearing on the Rule, considered a number of factors including the close relationship between the Ontario and British Columbia actions and that the parties in both actions could have been the same but for the inability of a court in one province to compel a submission of non-residents to its jurisdiction and that some documents, produced in both jurisdictions during the discovery procedure, were a matter of public interest. In a companion motion, in the British Columbia proceeding, Lac Minerals v. Vancouver Stock Exchange (1985) 17 D.L.R. (4^th) 687 (B.C.S.C.), Mr Justice Taylor canvass various English and British Columbia decisions for granting special relief against the rule before deciding that the nature of the federal system and the purpose of the two actions warranted the granting of discretionary relief, subject to appropriate assurances, in the Ontario jurisdiction, that the rule would be observed there. The Lac Minerals cases demonstrate not only the special circumstances branch of the test, but also the balancing of injustice, including privacy on the one hand and public interest on the other hand. In the present instance there is not the same commonality of parties. There is no public interest and obviously no split in jurisdiction by which to justify relief from the Rule as in the two Lac Minerals cases.

[10] Counsel for the Defendant also refers to Edgeworth Construction Ltd. v. Thurber Consultants Ltd. (2000) 190 D.L.R. (4^th) 89 (B.C.C.A.). In Edgeworth an application for documents caught by the implied undertaking rule was returned to the Trial Division so that procedural fairness in the interest of justice might be considered. In Edgeworth the documents, said to contravene the rule, were obtained by the Defendant, Thurber Consultants, who had counsel in common with another litigant who was also opposing the plaintiff, Edgeworth Construction Ltd., in another proceeding. However I do not see that the general principle in Edgeworth, that of procedural fairness, adds anything to test set out by Mr Justice Rothstein in Visx (supra), that the existence of both special circumstances and the weighing of injustice between the parties that might be brought about granting or denying relief from the implied undertaking rule.

[11] There is some weight in the Defendant's argument that the material sought by the Defendant should be made available easily, by means of this motion, for the Defendant submits that it could be obtained on discovery. However, the documents are part of the private business of the Plaintiffs and it may be that the Plaintiffs could be able to maintain that state of affair, to one degree or another, on the basis of relevance, for the actions while parallel, are not completely similar. On this basis the balance falls in favour of maintaining the rule, for to ignore it would let some weight of injustice fall upon the Plaintiffs.

[12] There is to a degree the circumstance, with common counsel, that neither side will be able to put out of their minds what produced during and learned from the now resolved parallel action, when formulating questions and giving answers in the present action and that this will be difficult to detect and to guard against. However that is neither unique situation nor an aspect that should be of great concern. I would not elevate it to the status of a special circumstance.

[13] Finally there is the issue whether Rule 3, placing a premium on achieving a just, most expeditious and least expensive determination of the proceeding, should have some application. While the Rule is a commendable one which ought to be kept in mind at all times, Madam Justice Snider recently pointed out in Pfizer Canada Inc. v. Apotex Inc., 2003 FCT 40, an unreported 17 January 2003 action in file T-2282-01, that the Rule has limitations. At paragraph 18 she characterizes the Rule as one of interpretation, rather than a general procedural catch-all. This may, in the context of present-day litigation, be an unfortunate shortcoming of the Rule. However, as Rule 3 now stands, and in the absence of a Federal Court Rule to interpret and apply "so as to secure the just, most expeditious and least expensive determination of every proceeding on its merits", Rule 3 does not assist in this instance. I reach this conclusion because the implied undertaking rule, as I pointed out earlier, is judge-made law, not a Federal Court Rule.

[14] The application for relief from the implied undertaking rule, with some reluctance on my part, must be dismissed. Costs will be in the cause.

(Sgd.) "John A. Hargrave"

Prothonotary

Vancouver, British Columbia

1 August 2003

FEDERAL COURT

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET: T-1864-00

STYLE OF CAUSE: John Letourneau et al. v. Clearbrook Iron Works Ltd.

PLACE OF HEARING: Vancouver, British Columbia

DATE OF HEARING: 29 July 2003

REASONS FOR ORDER: Hargrave P.

DATED: 1 August 2003

APPEARANCES:

Paul Smith

J Kevin Wright

FOR PLAINTIFFS (Defendants by Counterclaim)

FOR DEFENDANT (Plaintiff by Counterclaim)

SOLICITORS OF RECORD:

Paul Smith Intellectual Property Law

Vancouver, British Columbia

Davis & Company

Barristers & Solicitors

Vancouver, British Columbia

FOR PLAINTIFFS (Defendants by Counterclaim)

FOR DEFENDANT (Plaintiff by Counterclaim)

You are here

Letourneau v. Clearbrook iron works Ltd., 2003 FC 949

Citations2003 FC 949

Case tabs

Citations
2003 FC 949