State Farm Mutual Automobile Insurance Company v. Privacy Commissioner of Canada, 2010 FC 736

Federal Court

Cour fédérale

 

Date: 20100709

Docket: T-604-09

Citation: 2010 FC 736

Montréal, Quebec, July 9, 2010

PRESENT:     The Honourable Mr. Justice Mainville

 

 

BETWEEN:

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Applicant

 

and

PRIVACY COMMISSIONER OF CANADA

and

ATTORNEY GENERAL OF CANADA

Respondents

 

 

 

REASONS FOR JUDGMENT AND JUDGMENT

 

[1]               This judgment concerns an application for judicial review challenging the jurisdiction of the Privacy Commissioner of Canada (“Privacy Commissioner”) to carry out an investigation under the Personal Information Protection and Electronic Documents Act, S.C. 2000, c.5 (“PIPEDA”) and to compel access to information which is covered by solicitor-client privilege or litigation privilege in the New Brunswick courts.

 

[2]               The main issue in these proceedings is whether the provisions of PIPEDA apply to evidence collected by an insurer on behalf of an insured in order to defend that insured in a third party tort action. For the reasons which follow, I conclude that they do not.

 

Background

 

[3]               The Applicant, State Farm Mutual Automobile Insurance Company (“State Farm”) is licensed to carry on business as a motor vehicle insurer in New Brunswick.

 

[4]               In March of 2005, Jennifer Vetter and Gerald Gaudet were involved in a motor vehicle accident which occurred in New Brunswick. Ms. Vetter was then insured with State Farm under a standard automobile policy prescribed by New Brunswick insurance legislation and which provided that her insurer had a duty to defend her. State Farm thus retained legal counsel for Ms. Vetter in contemplation of litigation to be initiated by Mr. Gaudet against her.

 

[5]               On advice of counsel, State Farm hired private investigators to inquire about the activities of Mr. Gaudet. These private investigators used video surveillance on several occasions both before and after the commencement of a personal injury tort action by Mr. Gaudet against Ms. Vetter initiated in the New Brunswick Court of Queen’s Bench in December of 2005.

 

[6]               Shortly before initiating his tort action, in November of 2005, Mr. Gaudet, through his legal counsel, requested from State Farm, pursuant to PIPEDA, any and all of the information it had collected on him, and in particular copies of any surveillance reports or tapes. State Farm denied this request on the ground that PIPEDA did not apply. That request under PIPEDA was renewed by Mr. Gaudet on January 21, 2006 and again denied by State Farm on the same ground.

 

[7]               In the course of the personal injury tort proceeding against her in the New Brunswick Court of Queen’s Bench, Ms. Vetter’s legal counsel, who had been retained by State Farm to defend her, submitted to Mr. Gaudet’s legal counsel in February 2006 a draft affidavit of documents, as is the usual practice in such matters. In this draft affidavit, litigation privilege was claimed by Ms.Vetter over the narrative surveillance reports and related video tapes concerning Mr. Gaudet. The final affidavit of documents was provided in April of 2006.

 

[8]               On February 22, 2006, Mr. Gaudet complained to the Privacy Commissioner under PIPEDA, alleging that, in violation of the provisions of PIPEDA, State Farm had denied access to his personal information, disclosed his personal information to a third party without his consent and had not provided adequate safeguards to protect his personal information. The Privacy Commissioner informed State Farm of this complaint, but kept that matter in abeyance pending receipt of representations from State Farm and the appointment of an investigator. State Farm conveyed its position that the Privacy Commissioner had no jurisdiction to proceed under PIPEDA.

 

[9]               On May 17, 2007, Privacy Investigator Arn Snyder wrote the following letter to State Farm concerning the complaint by Mr. Gaudet:

I am writing to notify you that I have been assigned the responsibility of investigating the complaint under the Personal Information Protection and Electronic Documents Act (PIPEDA) received from the above-named individual.

 

I have reviewed the correspondence received from David T.S. Fraser from the law firm McInnes Cooper, dated August 28, 2006. Mr. Fraser indicates that he is counsel to State Farm Mutual Automobile Insurance Company (State Farm) on this matter. I will now address the issues raised by Mr. Fraser and will then outline what information I will require from State Farm.

 

1) Jurisdiction: The Office of the Privacy Commissioner (OPC) is of the opinion that it has jurisdiction. The comments of the court in Ferenczy concerning [sic] application of PIPEDA were strictly obiter and are not viewed as precedent by the OPC.

 

2) Other Grievance Procedure: The complainant sent State Farm correspondence dated January 31, 2006 and received a reply from State Farm dated February 14. 2006. The OPC correspondence to State Farm is dated July 24, 2007.

 

3) Further Particulars: The complainant’s allegations are outlined in the initial notification letter dated July 24, 2006 sent to you by OPC.

 

To conduct my investigation I will require the following information:

 

1) A list of all the documents (or other format such as videotape) containing Gerald Gaudet’s personal Information held by State Farm at the time of his request.

 

2) A list of the documents (or other format such as videotape) which have been released to Gerald Gaudet by State Farm.

 

3) A list of all the documents (or other format such as videotape) which have been denied access and a notation as to under what authority was the access denied.

 

4) In the event that State Farm is denying access under solicitor client privilege on any documents (or other format such as videotape) I will require this information in the following format: the date of the document, the document type, the author, the recipient, and the grounds for privilege. In order to increase the value of the evidence of the list will require that:

 

a) the list be in the format of a sworn affidavit (similar to a Schedule B format) and,

b) the affidavit contains a statement from the organization’s counsel that they explained the concept of solicitor-client privilege to the affiant prior to the affiant taking the oath. Also, please remember that while your organization is not compelled to disclose these documents to us for our review, it is possible for you to do so and we would keep the documents confidential. Moreover, if it turns out that you cannot adequately prove to our satisfaction that these remaining documents are privileged, we will have no choice, as the Federal Court of Appeal has suggested in the Blood Tribe decision, but to make an application to the Federal Court for a determination on the validity of your claim.

 

5) In the event that State Farm is denying access for any other reason I will require access to those documents (or other format such as videotape).

 

6) A copy of State Farm’s Privacy Policy.

 

7) A description of the circumstances where State Farm disclosed Gerald Gaudet’s personal information including the type of information disclosed, the date and recipient.

 

8) A confirmation that State Farm hired a third party to conduct surveillance on Gerald Gaudet, a copy of the Agreement between State Farm and the third party and/or any directions provided to the third party by State Farm.

 

9) A confirmation as to whether State Farm retains the personal information of Gerald Gaudet solely in Canada.

 

I appreciate receiving this information by June 22, 2007 […]

 

[10]           Following receipt of this letter, State Farm initiated proceedings before the New Brunswick Court of Queen’s Bench seeking a declaration that the Privacy Commissioner did not have statutory or constitutional authority to investigate, make recommendations, or otherwise act upon the complaint of Mr. Gaudet. The Court of Queen’s Bench, however, decided that the Federal Court was the appropriate forum to determine these issues: State Farm v. Privacy Commissioner and A.G. of Canada, 2008 NBQB 33, 329 N.B.R. (2d) 151.

 

[11]           State Farm appealed this ruling to the Court of Appeal of New Brunswick, which ruled that since the Federal Court had exclusive jurisdiction over the statutory vires question regarding the Privacy’s Commissioner’s authority to act under PIPEDA, and concurrent jurisdiction to hear the constitutional validity issue, it was the proper forum for the resolution of the dispute raised by State Farm: State Farm Mutual Automobile Insurance Company v. Canada (Privacy Commissioner), 2009 NBCA 5, 307 D.L.R. (4^th) 495, 341 N.B.R. (2d) 1, [2009] N.B.J. No. 10 (QL).

 

[12]           Consequently, this judicial review proceeding was initiated by State Farm before the Federal Court on April 17, 2009, and a notice of constitutional question was submitted shortly thereafter.

 

The position of State Farm

 

[13]           State Farm first submits that this case can be decided without reference to constitutional considerations and on the simple basis of the interpretation of the language of PIPEDA.

 

[14]           Part 1 of PIPEDA applies to every organization in respect of personal information that the organization collects, uses or discloses in the course of “commercial activities”. The expression “commercial activity” is defined in subsection 2(1) of PIPEDA as an act or transaction or course of action that is of a “commercial character.” State Farm submits that a defendant in a civil action, and a defendant’s agents, are not engaged in “commercial activity” vis à vis the plaintiff in that action in view of the ordinary meaning of those words. Here, Mr. Gaudet is attempting to use PIPEDA in order to obtain information beyond what he is entitled to under the rules of tort litigation in New Brunswick and without having any commercial relationship with Ms. Vetter or State Farm.

 

[15]           State Farm thus submits that the analysis carried out in Ferenczy v. MCI Clinics (2004),70 O.R. (3d) 277, [2004] O.J. No 1775 (QL) (“Ferenczy”) is correct. That case involved an insurer defending an insured and using video surveillance to do so. The issue was whether the video surveillance and the disclosure thereof to counsel were in violation of PIPEDA. Ferenczy held that the principle of agency applied in such circumstances; consequently it was the defendant in the civil case who was the person collecting the information, albeit through his insurer, and the information was thus not covered by PIPEDA in view of paragraph 4(2)(b) thereof which excludes information that an individual collects, uses or discloses for personal or domestic purposes.

 

[16]           State Farm submits that Ferenczy is good law, particularly on the ground that when a federal statute can be properly interpreted so as to not interfere with a provincial statute, such an interpretation is to be applied in preference to another construction that would bring about a conflict between the statutes.

 

[17]           In the event this interpretation of PIPEDA should not be accepted by this Court, State Farm submits, in the alternative, that those provisions of PIPEDA making that legislation applicable to organizations engaged in provincially regulated commercial activity are unconstitutional.

 

[18]           State Farm argues that the provisions of PIPEDA covering provincially regulated commercial activities conflict with the provincial powers over Property and Civil Rights and over the Administration of Justice contemplated in section 92 of the Constitution Act, 1867, and also conflict with section 96 of the Constitution Act, 1867.

 

[19]           Property and Civil Rights cover the vast bulk of commercial activities in a province. This includes jurisdiction and regulatory authority over insurers in the provinces and enables the provinces to legislate with respect to motor vehicle accidents and the law of torts in general. Property and Civil Rights also allow a province to regulate privacy rights.

 

[20]           Section 92(14) of the Constitution Act, 1867 specifically confers on the provincial legislatures the exclusive power to make laws in relation to the administration of justice, which includes procedure in civil matters before the provincial superior courts. The rules applicable in New Brunswick recognize litigation privileges and the right not to disclose the existence of surveillance evidence intended to be used solely on cross-examination. The application of PIPEDA proposed by the Privacy Commissioner would seriously encroach on these rules and hence on the provincial power over the administration of justice. The present case is an apt illustration of the mischief at hand: a federal agency is seeking to intervene, directly or through the Federal Court’s supervisory authority, in a tort litigation evidentiary matter falling squarely within the provincial sphere of competence and that of section 96 courts.

 

[21]           All steps taken in the course of civil litigation, including the collection, disclosure or non-disclosure of evidence, have been within the jurisdiction of section 96 superior courts since before Confederation, as have the rules of solicitor-client privilege. State Farm contends that PIPEDA deprives section 96 courts of the right to control their own processes, and consequently infringes upon the core jurisdiction of section 96 courts.

 

[22]           State Farm adds that the provisions of PIPEDA covering provincially regulated commercial activity are not a valid exercise of the general branch of the federal Trade and Commerce power since they do not meet the indicia or factors for the valid exercise of that power as enumerated in General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641, 58 D.L.R. (4^th) 255.

 

[23]            In particular, to be valid under the federal Trade and Commerce power, the legislation must be concerned with trade as a whole rather than a particular industry; in this case, PIPEDA addresses a specific commodity, namely “information”. Moreover, the legislation must be of such a nature that the provinces, together or independently, would be constitutionally incapable of enacting it; yet privacy and personal information have been regulated by the provinces under various provincial legislative frameworks. Finally, it must be shown that the failure to include one or more provinces in the legislative scheme would jeopardize the successful operation of the scheme in other parts of the country; however, the simple fact that national rules on a particular subject may seem convenient does not, by itself, make the subject one of national concern.

 

[24]           If the federal government is to use the Trade and Commerce power to displace provincial authority over commerce within the provinces, it should be required to show that there is a pressing and substantial concern calling for a federal regulatory scheme, that the scheme is rationally connected to that objective, that it impairs the provincial legislative authority no more than necessary, and that the impairment of provincial authority is not excessive or disproportionate having regard to the importance of the federal objective. PIPEDA’s regulatory scheme addresses information beyond the electronic commerce setting in which its purposes are to be found. It is accordingly excessively broad and encroaches on the exclusive provincial domain of Property and Civil Rights.

 

[25]           Consequently, State Farm submits that PIPEDA is to be read down so that its ambit is restricted to intra vires contexts, or alternatively, that paragraph 4(1)(a) of PIPEDA be struck down and declared of no force or effect so that PIPEDA will have no operational effect beyond the federal undertakings sector.

 

The position of the Privacy Commissioner

[26]           The Privacy Commissioner submits that the application brought by State Farm before this Court is premature. Under subsection 12(1) of PIPEDA, the Privacy Commissioner must conduct an investigation in respect of a complaint. Under subsection 13(1) of PIPEDA, the Privacy Commissioner must prepare a report of findings and recommendations with respect to a complaint. However, these recommendations are not binding. It is through an application to the Federal Court that recommendations may eventually become binding by way of a court order.

 

[27]           In this case, the Privacy Commissioner argues that the May 17, 2007 letter which gave rise to this judicial review application is interlocutory in nature. In view of the case law of this Court, the Privacy Commissioner argues that interlocutory decisions are subject to judicial review only where exceptional circumstances exist. There are no such exceptional circumstances in this case.

 

[28]           To date, the Privacy Commissioner has made no rulings, recommendations or decisions regarding the complaint of Mr. Gaudet against State Farm and regarding the issue whether State Farm is in compliance with PIPEDA, or not. The Privacy Commissioner submits that if she is given an opportunity to complete her investigation and issue a report, the questions raised in State Farm’s judicial review application may very well become entirely moot.

 

[29]           Moreover, the Privacy Commissioner also submits that, in view of State Farm’s pre-emptive refusal to provide any information to her and its decision to bring the matter first before the New Brunswick Courts and then the Federal Court, the present application is hypothetical in nature and there is no live controversy that allows this Court to adequately examine the constitutional argument.

 

[30]           In response to State Farm’s substantive arguments, the Privacy Commissioner argues that the only questions at issue are whether she has jurisdiction to commence an investigation into the complaint of Mr. Gaudet against State Farm and to require the documents in question.

 

[31]           The questions of law to be determined in this judicial review proceeding are therefore whether the Privacy Commissioner correctly interpreted sections 4 and 12 of PIPEDA in commencing an investigation and in requesting lists of documents and certain information from State Farm. In making these determinations, the Privacy Commissioner was interpreting her home statute. In view of Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 (“Dunsmuir”) and Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339, recent decisions of the Supreme Court of Canada, the standard of review applicable to decisions of administrative tribunals interpreting their home statute is that of reasonableness.

 

[32]           Section 12 of PIPEDA is clear and unambiguous: the Privacy Commissioner is required to conduct an investigation whenever she is in receipt of a complaint. It is also clear that, pursuant to paragraph 12(1)(c) of PIPEDA, the Privacy Commissioner may seek evidence in order to carry out such an investigation. The Privacy Commissioner, through the letter of May 17, 2007, took jurisdiction to conduct an investigation as she was required to under section 12 of PIPEDA, but this did not constitute a decision as to whether the conduct complained of occurred in the course of “commercial activity.” A decision on this issue would follow the investigation. It is submitted by the Privacy Commissioner that her interpretation and application of these provisions of PIPEDA were reasonable and should not be interfered with.

 

[33]           In any event, in the alternative, the Privacy Commissioner submits that the collection of the surveillance information in question in the complaint from Mr. Gaudet constituted “commercial activity”. State Farm collected the information because of its insurance contract concluded with Ms. Vetter as part of its insurance business. The relationship between State Farm and Ms. Vetter is entirely commercial in nature and the surveillance of Mr. Gaudet pertained to this relationship: State Farm had an obvious interest in minimizing what amounts it must pay out under that insurance contract.

 

[34]           Finally, the Privacy Commissioner submits that this Court should not consider the constitutional issues raised by State Farm since there is no proper factual foundation on which the constitutional questions raised in this application can be determined.

 

[35]           The Privacy Commissioner also raises an objection as to certain portions of the affidavits submitted by State Farm in support of its application before this Court. This will be discussed further below.

 

 

The position of the Attorney General of Canada

[36]           For similar reasons to those of the Privacy Commissioner, the Attorney General of Canada submits that at the investigation stage of the process conducted by the Privacy Commissioner, judicial review is premature. Judicial review may indeed become unnecessary, depending on the Privacy Commissioner’s ultimate recommendation. If State Farm is unsatisfied with the eventual recommendations of the Privacy Commissioner, it will then have the right to have those recommendations reviewed before this Court.

 

[37]           On the substantive issues, should this Court conclude that the investigation conducted by the Privacy Commissioner is reviewable, the Attorney General of Canada agrees with State Farm that the appropriate standard of review is that of correctness.

 

[38]           The Attorney General of Canada submits that the Privacy Commissioner correctly requested the information in conducting her investigation pursuant to PIPEDA.

 

[39]           The Attorney General of Canada further submits, as to the constitutional validity of PIPEDA, that it has been duly enacted under the general branch of the Trade and Commerce power. PIPEDA is a regulatory scheme designed to protect personal information in the Canadian marketplace. PIPEDA protects the privacy of individuals by imposing restrictions on the flow of personal information in the Canadian economy, regardless of whether that information is itself collected, used or disclosed as a commodity or whether it is being collected, used or disclosed in some other commercial context.

 

[40]           Under PIPEDA, personal information is regulated only insofar as it relates to how the Canadian economy functions and operates. The legislation promotes consumer confidence by protecting personal information when it is collected, used or disclosed in the course of commercial activity in the Canadian market. The significant relationship between personal information use and economic activity has developed with advances in information and communication technologies and the extensive adoption of such technologies by businesses.

 

[41]           The protection of personal information is important to the well-being of all participants in the entire Canadian marketplace. Information has become the fundamental raw material of the modern economy. The private sector has become a significant collector and user of personal information in the marketplace, and information flows are an increasingly integral part of operations in all sectors in the economy. As a result, the use of personal information in commerce contributes to a nation’s gross domestic product, national competitiveness and overall economic growth. Thus, ensuring the protection of personal information in the course of commercial activity is a matter that concerns the entire Canadian economy.

 

[42]           National regulation is necessary because the effectiveness of any provincial law protecting an individual’s information is completely undermined once personal information flows out of the province. Given the great national and international mobility of personal information in today’s economy, universal rules are not merely convenient, they are necessary. A national scheme is consequently necessary to ensure the integrity and effectiveness of the protection of personal information.

 

[43]           As for the arguments raised by State Farm concerning section 96 of the Constitution Act, 1867, the Attorney General of Canada submits that this section does not prevent Parliament from conferring on a federal tribunal or some other federal body certain functions normally exercised by a superior court.

 

[44]           Moreover, the Attorney General of Canada also submits that the authority of the Privacy Commissioner to investigate allegations of breaches of the Act did not exist at the time of Confederation and therefore it does not relate to a power exercised by a superior court at the time of Confederation. Further, the Office of the Privacy Commissioner under PIPEDA is not judicial in nature; hence, no violation of section 96 has occurred. The Privacy Commissioner’s power to compel the production of documents in the course of an investigation does not affect the jurisdiction of superior courts in any way.

 

[45]           The Attorney General of Canada has also offered abundant affidavit evidence concerning the context in which PIPEDA was adopted, and did not raise any argument based on an insufficiency of the evidentiary record in his written submissions. However, at the hearing of this Application, counsel for the Attorney General informed this Court that, a few days prior to the hearing, a new position was being put forward. Indeed, the Attorney General of Canada now also supports the Privacy Commissioner’s argument that the evidentiary record is insufficient to allow this Court to properly adjudicate the constitutional questions raised by State Farm.

 

The issues

[46]           The issues in this case may be briefly stated as follows:

a.       Is some of the evidence submitted inadmissible?

b.      Is the application premature?

c.       If the application is not premature, what is the applicable standard of review?

d.      Is the collection of evidence by an insurer acting for one of its insured in the defence of a third party tort action “commercial activity” within the meaning of PIPEDA?

e.       In the affirmative, is the application of PIPEDA to organizations that are not federal works, undertakings or businesses beyond the constitutional authority of Parliament?

 

Is some of the evidence submitted inadmissible?

[47]           In February of 2006, Anthony Fudge, a plaintiff in a personal action before the New Brunswick courts against another insured of State Farm, filed a complaint with the Privacy Commissioner alleging that State Farm had refused to give him access to personal information. State Farm also challenged in that case the jurisdiction of the Privacy Commissioner under PIPEDA. Nevertheless, the Privacy Commissioner completed an investigation into the complaint of Mr. Fudge, prepared a detailed and lengthy written report of findings, and concluded that the complaint was well-founded.

 

[48]           Similar complaints under PIPEDA were made against State Farm in May of 2006 in the case of Allan Mason and, in July of 2006, in the case of Douglas Nash; both also plaintiffs in personal injury actions in New Brunswick involving parties insured by State Farm. The Privacy Commissioner also completed investigations into these complaints, prepared detailed and lengthy written reports of findings, and concluded that both complaints were well-founded.

 

[49]           In July of 2009, with the consent of Fudge, Mason and Nash respectively, the Privacy Commissioner then initiated applications under paragraph 15(a) of PIPEDA before the Federal Court under file numbers T-1187-09 (the “Fudge proceeding”), T-1188-09 (the “Mason proceeding”) and T-1189-09 (the “Nash proceeding”).

 

[50]           The Fudge, Mason and Nash proceedings were stayed pursuant to Rule 105(b) of the Federal Courts Rules, SOR/98-106 with the consent of the parties, pending the outcome of this proceeding concerning the complaint of Mr. Gaudet.

 

[51]           The Privacy Commissioner is seeking the exclusion of some of the affidavit evidence offered by State Farm. In the main, this challenge is directed at information and documents relating to the Nash, Fudge and Mason proceedings referred to above and which were offered by State Farm. The objection also concerns communications exchanged between State Farm and the lawyer representing Mr. Gaudet and a publicly available document published on the internet by the Privacy Commissioner and concerning covert video surveillance.

 

[52]           The specific affidavit evidence objected to are subparagraph 7(k) and paragraphs 8 through 14 and related exhibits of the affidavit of Rick Cicin sworn May 15, 2009 and paragraphs 10 through 22 and related exhibits of the affidavit of Rick Cicin sworn on October 21, 2009.

 

[53]           The main ground for the objection of the Privacy Commissioner is that this evidence, for the most part, post-dated the May 17, 2007 letter from the Office of the Privacy Commissioner and therefore should not be considered in this judicial review proceeding since it was not before her when the May 17, 2007 letter was drafted. As a corollary argument, the Privacy Commissioner adds that the information is irrelevant to the present proceeding.

 

[54]           It is trite law that a judicial review proceeding is conducted on the basis of the record which was before the decision maker whose decision is being reviewed. However, there are exceptions to this well-known principle, most notably when the affidavit and exhibits are produced as background information concerning the issues to be addressed in judicial review: Chopra v. Canada (Treasury Board) (1999), 168 F.T.R. 273, [1999] F.C.J. No. 835, Sha v. Canada (Minister of Citizenship and Immigration), 2010 FC 434 at paras. 15 to 19, where the evidence concerns the jurisdiction of the decision maker or of the Federal Court itself to hear and determine the matter: In Re McEwen, [1941] S.C.R. 542 at 561-62; Kenbrent Holdings Ltd. v. Atkey (1995), 94 F.T.R. 103 at para. 7, or were the evidence pertains to violations of natural justice or procedural fairness by the decision maker: Abbot Laboratories Ltd. v. Canada (Attorney General), 2008 FCA 354, [2009] 3 F.C.R. 547, [2008] F.C.J. No. 1580 at para. 38; Liidlii Kue First Nation v. Canada (Attorney General), (2000) 187 F.T.R. 161, [2000] F.C.J. No. 1176 at paras. 31-32, or again were the evidence relates to a constitutional issue raised within the framework of the proceedings.

 

[55]           In this case, I conclude that the evidence offered by State Farm and which is challenged by the Privacy Commissioner is admissible, since this evidence concerns background information on the issues to be addressed in this judicial review proceeding and also concerns the jurisdiction of the Privacy Commissioner and of the Federal Court to hear and determine the matter.

 

[56]           I add that this evidence is relevant to the issues that are to be decided in this case. I note in particular that the information and documentation concerning the Fudge, Mason and Nash proceedings are highly relevant for the purposes of deciding in its proper context the issue of prematurity raised by the Respondents.

 

[57]           Consequently, I reject the objection of the Privacy Commissioner. The entire record, as constituted by the parties, is thus both admissible and relevant for the purposes of this proceeding.

 

 

 

Is the application premature?

[58]           The Privacy Commissioner, with the support of the Attorney General, submits that the application filed by State Farm is premature. The Privacy Commissioner argues that the letter of May 17, 2007, which gave rise to this application, is interlocutory in nature and that the case law provides that interlocutory decisions are not reviewable, save exceptional circumstances, and there are none in this case. She relies on Canada (Attorney General) v. Brar, 2007 FC 1268, 78 Admin. L.R. (4^th) 163, [2007] F.C.J. No. 1629 (QL); Fairmount Hotels Inc. v. Director Corporations Canada, 2007 FC 95, 308 F.T.R. 163, [2007] F.C.J. No. 133; and Greater Moncton International Airport Authority v. Public Service Alliance of Canada, 2008 FCA 68, [2008] F.C.J. No. 312 (“Greater Moncton Airport”), to support the proposition that “judicial review of interlocutory decisions should only be undertaken in the most exceptional circumstances” (Greater Moncton Airport at para. 1).

 

[59]           In my view, the objection based on prematurity is unfounded in the particular circumstances of this case. The full context in which this application was initiated sheds much light on this issue.

 

[60]           First, the complaint of Mr. Gaudet was submitted to the Privacy Commissioner on February 22, 2006. Though the Privacy Commissioner is correct in asserting that she had a legal duty to investigate this complaint pursuant to subsection 12(1) of PIPEDA, she fails to mention that, pursuant to subsections 13(1) and (3) of PIPEDA, she also had a legal duty to prepare a report “within one year after the day on which the complaint is filed” and send this report to both Mr. Gaudet and State Farm. This report triggers a right for the complainant, Mr. Gaudet, to apply to the Federal Court for a hearing pursuant to section 14 of PIPEDA.

 

[61]           The targeted organization (in this case State Farm) has no right to apply to the Federal Court for a hearing pursuant to section 14 of PIPEDA. Both subsection 14(1) and paragraph 15(a) of PIPEDA provide that such an application solely avails to the complainant. Thus, should a complainant decline to apply to the Federal Court for a hearing pursuant to section 14 or refuse to consent that the Privacy Commissioner apply for such a hearing, no hearing can be held before the Federal Court pursuant to these provisions. Consequently, State Farm can only be heard by the Federal Court pursuant to sections 14 or 15 of PIPEDA if the Privacy Commissioner’s report is issued and if the complainant himself initiates, or consents to, such proceedings.

 

[62]           The statutory period in which the Commissioner was to prepare a report and send it to the parties expired one year after the filing of the complaint from Mr. Gaudet. However, in this case, the Privacy Commissioner did not prepare a report within that period and has yet to do so. The net result of this situation is that Mr. Gaudet has not submitted, or consented to the submission of an application pursuant to sections 14 or 15 of PIPEDA.

 

[63]           Consequently, what is significant is that State Farm is unable to address the issues it raises here through sections 14 and 15 of PIPEDA without Mr. Gaudet initiating or authorizing an application under these provisions. If one were to follow the argument of the Respondents to its logical conclusion, the right of State Farm to have its issues addressed by this Court would be entirely contingent on Mr. Gaudet’s decision to pursue the matter further. This cannot be.

 

[64]           Rather than issuing a report within one year as required by PIPEDA, the Privacy Commissioner, through her delegate, decided in the May 17, 2007 letter to assume jurisdiction over the complaint notwithstanding the strong objections of State Farm. The Privacy Commissioner made that decision after the one year period provided for by PIPEDA. Had the Privacy Commissioner issued a timely report as required by the Act based on the information then available to it, Mr. Gaudet might have filed an application before this Court under PIPEDA and the issues raised here may have possibly then been addressed through that judicial process. However this is speculation. The fact of the matter is that the Privacy Commissioner did not comply with her statutory duty to issue her report within one year, and instead of issuing a report, she decided on May 17, 2007 to assume jurisdiction over the matter.

 

[65]           The decisions in the May 17, 2007 letter were initially challenged by State Farm before the New Brunswick courts on jurisdictional and constitutional grounds similar to those raised in this application. Both the Privacy Commissioner and the Attorney General of Canada contested these New Brunswick proceedings on the ground that the issues raised should be addressed before the Federal Court pursuant to sections 18 and 18.1 of the Federal Courts Act, R.S.C. 1985, c. F-7. The Privacy Commissioner or the Attorney General of Canada did not argue before the New Brunswick courts that the issues should be decided first by the Privacy Commissioner and then submitted to the Federal Court though an application pursuant to sections 14 or 15 of PIPEDA. Indeed, they could not make such an argument since the only person who could actually initiate such an application, Mr. Gaudet, was not a party to the proceedings, and there was no way of knowing what Mr. Gaudet would decide if a report were issued.

[66]           The position of the Privacy Commissioner was clearly explained by her counsel during oral argument before Justice Clendening of the Court of Queen’s Bench of New Brunswick (Exhibit 5 to the affidavit of Rick Cicin sworn October 21, 2009 at pages 32 -33 of the Supplementary Record of State Farm):

For, on the record, I’m instructed to advise the court that the Privacy Commissioner will not oppose a request for an extension of time by, by State Farm if the court’s decision is that portion of the application means that the, the application must be pursued in Federal Court. And the court, the Federal Court Judge does have jurisdiction to extend the time. So the Privacy Commissioner will not be opposing any such application.

 

So, My Lady, 18(1) [of the Federal Courts Act] commits the Federal Court with exclusive original jurisdiction for declaratory relief, which my friend is seeking, for a matter on the, that regards the actions and conduct of a federal agency. And 18.1 [of the Federal Courts Act] then gives the procedure, which includes the grounds. And, again, going back to the Record, the grounds are clearly grounds raised by State Farm that fall within what the Federal Court is allowed to consider in making an order.

 

So to, to summarize, I think I’ve, I’ve gone into both of my first two points, My Lady, actually rather than keeping them separate. But to summarize with respect to those two points, the submission of the Privacy Commissioner is that the Record is clear, the very Record that has been put before the court by State Farm that they object to actions taken by a federal tribunal. They object to the federal tribunal or agency making a decision to investigate. They object to that federal agency asking them, or attempting to compel them, to produce information. And they do all of that otherwise the Privacy Commissioner would not be part of this, this application. And that being so then the cases are clear that the matter falls within the jurisdiction of the Federal Court.

 

What does that mean? What does that mean? What it means is that the Federal Court is the only one that can deal with those particular aspects of this application. And it also has jurisdiction to deal with constitutional issues, just as this court has jurisdiction to deal with constitutional issues. So it’s not a case of the Privacy Commissioner putting State Farm out of court, it’s simply saying in order to deal with this matter completely, in order to deal with those aspects that involve the conduct, declaratory relief, and, and orders against a federal agency, those matters must go before the Federal Court because otherwise we’ll end up with two proceedings.

 

[67]           The Court of Queen’s Bench of New Brunswick agreed with those arguments and referred the matter to the Federal Court in order to deal with the issues raised pursuant to its authority under section 18 of the Federal Courts Act. This decision was upheld by the New Brunswick Court of Appeal. Paragraphs 6 to 9 of Justice Clendening’s decision read as follows (State Farm v. Privacy Commissioner and A.G. of Canada, 2008 NBQB 33, 329 N.B.R. (2d) 151):

6   The Applicant seeks a declaratory order that the Privacy Commissioner has no authority to investigate a complaint of an individual against State Farm. This individual, Gerald Gaudet, commenced an action against Jennifer Vetter, who is insured by State Farm. The insurer has been investigating this claim, and it appears that Gerald Gaudet is not happy about surveillance of his activities by State Farm. The Privacy Commissioner has decided to investigate and demands that State Farm send to them the material they have collected on surveillance for a review by the Privacy Commissioner. I will not comment on this aspect of the motion. State Farm has refused to comply, and it filed this Application with the Court of Queen's Bench of New Brunswick.

 

7     All parties agree that the Court of Queen's Bench of New Brunswick and the Federal Court have concurrent jurisdiction to rule on the applicability and constitutional validity of federal legislation. However, the Federal Court has exclusive jurisdiction to hear applications for judicial review of a Federal Board, Commission or other Tribunal. The jurisdiction is derived from the various subsections of section 18 of the Federal Courts Act, R.S.C. 1985, c. F-7.

 

8     It is my view that the Application before me involves both questions of constitutional validity of legislation and a judicial review of the authority of the Privacy Commissioner. It is that simple. Consequently, both the constitutional validity of the Personal Information Protection and Electronic Documents Act, R.S.C. 2000 c. 5 (PIPEDA) and the judicial review should be heard by the Federal Court. Otherwise the bifurcation of proceedings would not be in the best interests of the parties.

 

9     The Application before this Court shall be stayed because the Federal Court is the appropriate forum to determine whether the Applicant is entitled to the declarations requested.

 

[68]           Moreover, while these judicial proceedings in New Brunswick were taking place, the Privacy Commissioner and State Farm continued to be embroiled in disputes raising issues similar to those raised in the proceedings initiated following Mr. Gaudet’s complaint. Indeed, the Fudge, Mason and Nash proceedings referred to above raise issues almost identical to those raised in this judicial review application.

 

[69]           In the Fudge, Mason and Nash proceedings, the Privacy Commissioner did prepare and send reports pursuant to section 12 of PIPEDA, even though such reports were issued well beyond the one year statutory period provided for under section 13 of PIPEDA. In each of these reports, the Privacy Commissioner clearly took the position that she had jurisdiction over the complaints and that the expression “commercial activity” in PIPEDA was broad enough to encompass the investigation and defence by State Farm of claims made against those it insured, positions which are identical to those the Privacy Commissioner takes in the present case.

 

[70]           The Fudge, Mason and Nash proceedings did lead to applications before the Federal Court pursuant to sections 14 and 15 of PIPEDA. However these proceedings were stayed pending the final determination of this application for judicial review. The exchange of correspondence is illuminating as to the reason for such stays.

 

[71]           The correspondence dated August 18, 2009 from State Farm’s attorney to the Office of the Privacy Commissioner sets out this proceeding concerning the complaint of Mr. Gaudet as a test case which will serve to also resolve the Fudge, Mason and Nash proceedings (Exhibit 17 of the affidavit of Rick Cicin sworn October 21, 2009, at page 137 of the Supplementary Record of State Farm):

Upon reviewing the four Notices of Application, it is evident the three Applications filed on July 22, 2009 [the Fudge, Mason and Nash proceedings] raise substantially the same issues as those in the Application for Judicial Review filed by State Farm in T-604-09. In particular, the “commercial activity” issue is central to each of the cases. A determination of the issues in T-604-09, including the constitutional issues, will, in all likelihood, resolve the other three matters.

 

We propose that the parties, on consent, bring a motion to the Court pursuant to Rule 105(b) of the Federal Court (sic) Rules 1998 to stay files T-1187-09, T-1188-09 and T-1189-09 until there is a final determination of State Farm’s Application for Judicial Review in

T-604-09. Proceeding in this manner will avoid a multiplicity of proceedings and promote an expeditious and inexpensive determination of the issues in all four matters. It will also avoid the necessity of State Farm having to raise the constitutional issues already raised in T-604-09 [and] will avoid having to involve the Attorney General in the three matters.

 

[72]           The answer from the Privacy Commissioner was provided in an email dated August 24, 2009 whereby she not only consented to the stays, but also instituted a procedure so that all other similar complaints concerning State Farm would be left in abeyance pending the outcome of this judicial review application involving the complaint of Mr. Gaudet. The pertinent paragraph of this email concerning the Fudge, Mason and Nash proceedings reads as follows (Exhibit 18 of the affidavit of Rick Cicin sworn October 21, 2009, at page 139 of the Supplementary Record of State Farm):

The parties will consent to a Court Order staying the three judicial review applications recently commenced in Ottawa against State Farm (Nash (T-1189-09), Mason (T-1188-09), Fudge (T-1187-09)). The stay of proceedings will expire 30 days following the final resolution of Court file No. T-604-09 between the parties, at which time State Farm will then have a further 30 days to file its supporting affidavit(s), if any. […]

 

[73]           In light of the context set out above, and for the reasons below, I do not accept the prematurity arguments raised by the Respondents.

 

[74]           First, the argument that the Privacy Commissioner should be given an opportunity to prepare and develop a position on the scope of the expression “commercial activity” found in PIPEDA is without merit. The Privacy Commissioner has clearly expressed her position on this matter in this judicial proceeding, and that position is identical in every respect with the one she put forward in the reports issued in the Fudge, Mason and Nash proceedings. There is no expectation whatsoever that the Privacy Commissioner would issue a report in the Gaudet complaint which would offer an interpretation of “commercial activity” other than the one already extensively and thoroughly articulated in these proceedings. To dismiss this application on this ground would result in a complete waste of time, energy and money for all parties.

 

[75]           Second, within the context of the litigation in the New Brunswick courts, the Respondents clearly confirmed that the issues raised by State Farm were to be resolved before this Court by way of a judicial review proceeding initiated pursuant to sections 18 and 18.1 of the Federal Courts Act rather than pursuant to an application initiated under sections 14 or 15 of PIPEDA.

 

[76]           Third, even if this judicial review were dismissed on the ground of prematurity in order to allow the Privacy Commissioner to issue a report on the complaint of Mr. Gaudet, there is no guarantee that Mr. Gaudet would himself initiate or consent to the filing of an application before this Court pursuant to sections 14 or 15 of PIPEDA; that would potentially leave State Farm without an effective judicial forum in which to adjudicate its claims.

 

[77]           Fourth, the Privacy Commissioner has had many years to issue a report concerning the Gaudet complaint and chose not to do so. She cannot now use her inaction in order to hinder State Farm’s right of access to the courts. The Privacy Commissioner’s assertion that no report has been issued because State Farm has not collaborated in the investigation is simply not credible in light of the reports issued in the Fudge, Mason and Nash proceedings based on a similar record as that available to her in the Gaudet complaint.

 

[78]           Fifth, it appears clearly from the record that the Privacy Commissioner and State Farm have used this judicial review proceeding as a test case to resolve a series of outstanding litigations and complaints, and it would consequently not be in the interest of justice nor a proper use of limited judicial resources for this Court to decline to decide the merits of this application.

 

[79]           Finally, the principle of judicial non-interference with ongoing administrative processes has simply no application in this case since State Farm has no right to access this Court through an application pursuant to sections 14 and 15 of PIPEDA. Only complainants may initiate applications under these provisions. State Farm’s access to this Court in order to have its jurisdictional and constitutional submissions adjudicated cannot be contingent on the consent of the complainant Mr. Gaudet. Consequently, State Farm can access this Court through a judicial review application under sections 18 and 18.1 of the Federal Courts Act in order to challenge the May 17, 2007 decisions of the Privacy Commissioner to assume jurisdiction under PIPEDA and to carry out an investigation pursuant to section 12 thereof.

 

[80]           In this context, the principle set out in Canada (Attorney General) v. Brar, supra, Fairmont Hotels Inc. v. Director Corporations Canada, supra and Greater Moncton Airport does not apply. I add that the principle of judicial non-interference with ongoing administrative processes has been recently reiterated by the Federal Court of Appeal in C.B. Powell Ltd. v. Canada (Border Services Agency), 2010 FCA 61, 400 N.R. 367, [2010] F.C.J. No. 274. This principle is sound. However it is simply not at issue in this case.

 

The standard of review

[81]           Dunsmuir at para. 62 sets out a two-step process for determining the standard of review: “[f]irst, courts ascertain whether the jurisprudence has already determined in a satisfactory manner the degree of deference to be accorded with regard to a particular category of question. Second, where the first inquiry proves unfruitful, courts must proceed to an analysis of the factors making it possible to identify the proper standard of review”.

 

[82]           The main issues in this case are the interpretation of the expression “commercial activity” found in PIPEDA and the constitutional authority of Parliament to make the provisions of PIPEDA applicable beyond the operations of federal works, undertakings or businesses.

 

[83]           As noted by the Supreme Court of Canada in Dunsmuir at paragraph 58, the correctness standard of review will apply to constitutional questions regarding the division of powers between Parliament and the provinces in the Constitution Act, 1867 as well as regarding other constitutional questions. Moreover administrative bodies must also be correct in their determinations of true questions of jurisdiction or vires. True jurisdiction questions arise where the tribunal must explicitly determine whether its statutory grant of power gives it the authority to decide a particular matter (Dunsmuir, at paragraph 59).

 

[84]           In addition, the Federal Court of Appeal and the Federal Court have consistently held that the standard of review of correctness applies in proceedings initiated pursuant to sections 14 and 15 of PIPEDA, including over matters concerning the interpretation of that legislation: Englander v. Telus Communications Inc., 2004 FCA 387, [2005] 2 F.C.R. 572, 247 D.L.R. (4^th) 275; [2004] F.C.J. No. 1935 (QL) at para. 48 (Englander); Rousseau v. Canada (Privacy Commissioner), 2008 FCA 39, 373 N.R. 301, [2008] F.C.J. No. 151 (QL) at para. 25 (Rousseau); Blood Tribe Department of Health v. Canada (Privacy Commissioner, 2006 FCA 334, [2007] 2 F.C.R. 561, 274 D.L.R. (4^th) 665, [2006] F.C.J. No. 1544 at para. 11; Johnson v. Bell Canada, 2008 FC 1086, [2009] 3 F.C.R. 67, 299 D.L.R. (4^th) 296, 334 F.T.R. 44, [2008] F.C.J. No. 1368 (QL)at para. 20; Lawson v. Accusearch Inc., 2007 FC 125, [2007] 4 F.C.R. 314, 280 D.L.R. (4^th) 358, 308 F.T.R. 186, [2007] F.C.J. No. 164 (QL) at para 21; Morgan v. Alta Flights (Charter) Inc., 2005 FC 421, 271 F.T.R. 298, [2005] F.C.J. No. 523 (QL) at paras. 16-17. There is no cogent reason why this should not also be the appropriate standard with respect to proceedings commenced pursuant to sections 18 and 18.1 of the Federal Courts Act raising questions related to the interpretation and application of PIPEDA.

 

[85]           Taking into account this jurisprudence, State Farm and the Attorney General of Canada both agree that the standard of correctness is appropriate in this case.

 

[86]           However, the Privacy Commissioner disagrees in respect to the interpretation of PIPEDA, arguing that her interpretation of that statute, and particularly of the expression “commercial activity” found therein, should be given deference and should consequently only be reviewed by this Court according to a standard of reasonableness, in view of Dunsmuir, at para. 54, which held that deference will usually be called for where a tribunal is interpreting its own statute or statutes closely connected to its function. The question raised by the Privacy Commissioner is therefore whether Dunsmuir has modified the standard for reviewing decisions of the Privacy Commissioner involving the interpretation of PIPEDA from that of correctness to that of reasonableness.

 

[87]           For the reasons which follow, I conclude that the applicable standard of review is that of correctness.

 

[88]           First, PIPEDA contains no privative clause concerning the Privacy Commissioner.

 

[89]           Second, the role of the Privacy Commissioner under PIPEDA is incompatible with a standard of deference. Indeed, in the exercise of her mandate under PIPEDA, the Privacy Commissioner may become adverse in interest to the party whose documents she wants to have access to: Canada (Privacy Commissioner) v. Blood Tribe Department of Health, 2008 SCC 44, [2008] 2 S.C.R. 574 at para. 23 (Blood Tribe). The Privacy Commissioner is clearly not acting in an adjudicative capacity under PIPEDA, and may appear as a party to a hearing before the Federal Court under that statute; this has important consequences on the standard of review. As noted by Justice Décary in Englander at para. 48, “[t]o show deference to the Commissioner’s report would give a head start to the Commissioner when acting as a party and thus could compromise the fairness of the hearing.” 

 

[90]           Third, the nature of the question at issue, though involving the interpretation of certain provisions of PIPEDA, is fundamentally jurisdictional. In this case, a true question of jurisdiction has been raised by State Farm. Indeed, in the May 17, 2007 letter itself, the decisions made by the Privacy Commissioner are set out in jurisdictional terms.

 

[91]           Finally, the Privacy Commissioner has no special expertise in the interpretation of the provisions of PIPEDA since that statute itself entrusts the Federal Court with the authority and mandate to do so, notably through its sections 14 and 15.

 

[92]           Consequently, the issues raised by these proceedings will be reviewed under a standard of correctness.

 

The relevant legislation

[93]           The pertinent provisions of PIPEDA are included in its Part I entitled “Protection of personal information in the private sector” and in its Schedule 1. The relevant provisions are reproduced in a schedule to this judgment. For ease of reference, the provisions of this legislation which are of particular interest are also reproduced below:

 

[94]           The New Brunswick Insurance Act, R.S.N.B., c. I-12, at paragraphs 237(b) and 244(1)(c) and at subsection 244(2), provides that insurers must defend their insured against third party claims:

 

[95]           Moreover, section 43.1 of the New Brunswick Evidence Act, R.S.N.B., c. E-11 sets out the following litigation privilege, which has been held by the New Brunswick Court of Appeal to extend to surveillance videotapes in Main v. Goodine, (1997) 192 N.B.R. (2d) 230, 1997 N.B.J. No 370 (QL):

 

[96]           Finally, Rule 31.09 of the New Brunswick Rules of Court, N.B. Reg. 82-73 exceptionally allows the use of a document for which privilege has been claimed in order to contradict a witness:

 

Is the collection of evidence by an insurer acting for one of its insured in the defence of a third party tort action “commercial activity” within the meaning of PIPEDA?

[97]           This Court must decide whether the collection of evidence by an insurer acting for one of its insured in the defence of a third party tort action is “commercial activity” within the meaning of PIPEDA.

 

[98]           The collection of evidence on a plaintiff by an individual who is a defendant in a tort action brought by that plaintiff would clearly not constitute a “particular transaction, act or conduct that is of a commercial character” as set out in the definition of “commercial activity” found in subsection 2(1) of PIPEDA. Indeed, the fact that an individual defendant collects evidence himself or herself for the purpose of a defence to a civil tort action is clearly not a commercial activity on the part of that defendant since there is no “commercial character” associated to that activity.

 

[99]           The Privacy Commissioner, however, submits that since Ms. Vetter has paid an insurer to defend her against such a claim, such collection of evidence has now assumed a “commercial character” and is thus now prohibited under subsection 7(1) of PIPEDA unless the plaintiff, here Mr. Gaudet, consents thereto. The Privacy Commissioner’s logic would also extend to the law firm retained to defend Ms. Vetter in this action since that law firm would also be involved in a “particular transaction, act or conduct that is of a commercial character” by being paid to assist Ms. Vetter in gathering evidence about the plaintiff on her behalf. This logic would also extend to a private investigator whom Ms. Vetter could possibly hire to assist her in collecting evidence in the defence of the claim made against her by Mr. Gaudet.

 

[100]       In short, the logic of the Privacy Commissioner is such that all collection of evidence about a plaintiff by third parties retained by a defendant in response to a tort action would now be prohibited by PIPEDA unless the plaintiff were to consent to such collection of evidence. Presumably this would also extend to all collection of evidence about a defendant by third parties retained by a plaintiff to assist in prosecuting a tort action. I cannot accept that such was the intention of Parliament in adopting PIPEDA.

 

[101]       The history and purpose of PIPEDA have been extensively canvassed in Englander and need not be repeated here. Suffice it to note that PIPEDA is a compromise between competing interests, and its provisions must be interpreted and applied with flexibility, common sense and pragmatism. As noted by Justice Décary in Englander at paragraph 46:

All of this to say that, even though Part 1 and Schedule 1 of the Act purport to protect the right of privacy, they also purport to facilitate the collection, use and disclosure of personal information by the private sector. In interpreting this legislation, the Court must strike a balance between two competing interests. Furthermore, because of its non-legal drafting, Schedule 1 does not lend itself to typical rigorous construction. In these circumstances, flexibility,

common sense and pragmatism will best guide the Court.

 

[102]       Reasonableness is moreover the overriding standard set out in PIPEDA itself in its section 3 which reads as follows [emphasis added]:

 

[103]       The Attorney General of Canada, in paragraph 32 his Memorandum of Fact and Law in these proceedings, submits that the purposes of PIPEDA are related to electronic commerce:

In the PIPEDA, personal information is regulated only insofar as it relates to how the Canadian economy functions and operates. The scheme promotes consumer confidence by protecting personal information when it is collected, used or disclosed in the course of commercial activity in the Canadian market. The significant relationship between personal information use and economic activity has developed with advances in information and communication technologies and the extensive adoption of such technologies by businesses. In the Preamble to the APEC Privacy Framework (16^th APEC Ministerial Meeting, Santiago, Chile, November 17-18, 2004 it is pointed out that:

 

“Information and communications technologies, including mobile technologies, that link to the internet and other information networks have made it possible to collect, store and access information from anywhere in the world. These technologies offer great potential for social and economic benefits for business, individuals and governments, including increased consumer choice, market expansion, productivity, education and product innovation. However, while these technologies make it easier and cheaper to collect, link and use large quantities of information, they also often make these activities undetectable to individuals. Consequently, it can be more difficult for individuals to retain a measure of control over their personal information. As a result, individuals have become concerned about the harmful consequences that may arise from the misuse of their information. Therefore, there is a need to promote and enforce ethical and trustworthy information practices in on- and off-line contexts to bolster the confidence of individuals and businesses.”

 

[104]       These purposes are reflected in the long title of PIPEDA [emphasis added]:

An Act to support and promote electronic commerce by protecting personal information that is collected, used or disclosed in certain circumstances, by providing for the use of electronic means to communicate or record information or transactions and by amending the Canada Evidence Act, the Statutory Instruments Act and the Statute Revision Act.

 

[105]       The collection of information in order to properly defend a civil tort action has little or nothing to do with these purposes.

 

[106]       I conclude that, on a proper construction of PIPEDA, if the primary activity or conduct at hand, in this case the collection of evidence on a plaintiff by an individual defendant in order to mount a defence to a civil tort action, is not a commercial activity contemplated by PIPEDA, then that activity or conduct remains exempt from PIPEDA even if third parties are retained by an individual to carry out that activity or conduct on his or her behalf. The primary characterization of the activity or conduct in issue is thus the dominant factor in assessing the commercial character of that activity or conduct under PIPEDA, not the incidental relationship between the one who seeks to carry out the activity or conduct and third parties. In this case, the insurer-insured and attorney-client relationships are simply incidental to the primary non-commercial activity or conduct at issue, namely the collection of evidence by the defendant Ms. Vetter in order to defend herself in the civil tort action brought against her by Mr. Gaudet.

 

[107]       I therefore rule that the investigation reports and related documents and videos concerning Mr. Gaudet and prepared by or for State Farm or its lawyers to defend Ms. Vetter in the civil tort action taken against her by Mr. Gaudet are not subject to PIPEDA.

 

[108]       I am comforted in this interpretation of PIPEDA by paragraph 26(2)(b) of that statute which allows the Governor in Council to exempt an organization, activity or a class thereof from the application of Part 1 of PIPEDA “if satisfied that legislation of a province that is substantially similar to this Part applies” to that organization or activity. Pursuant to this provision, the Governor in Council has exempted from the application of PIPEDA almost all organizations in British Columbia, Alberta and Quebec which are not a federal work, undertaking or business: Organizations in the Province of Alberta Exemption Order, SOR/2004-219, Organizations in the Province of British Columbia Exemption Order, SOR/2004-220 and Organizations in the Province of Quebec Exemption Order, SOR/2003-374.

 

[109]       Paragraphs 14(d), 17(d) and 20(m) of the Alberta Personal Information Protection Act, S. A. 2003 c. P-6.5 specifically provide that an organization may collect, use and disclose personal information about an individual without that individual’s consent if the collection, use or disclosure of the information is reasonable for the purposes of an investigation or legal proceeding.

 

[110]       Paragraphs 12(1(k) and (l), 15(1)(h.1) and 18(4)(a) of the British Columbia Personal Information Protection Act, S.B.C. 2003, c. 63 contain similar provisions.

 

[111]       Moreover, although the Quebec Act respecting the protection of personal information in the private sector, R.S.Q., chapter P-39.1 does not contain similar specific provisions, it has been interpreted in such a manner as to have the same effect: Duchesne c. Great-West compagnie d’assurance-vie, J.E. 95-263, AZ-95021090 (Que. S.C.). The provisions of that legislation must also be read in conjunction with the provisions of articles 35 to 41 of the Civil Code of Quebec, S.Q., 1991, c. 64, and of the Quebec Charter of Human Rights and Freedoms, R.S.Q., c. C-12 concerning privacy and which have been interpreted by the courts in Quebec as allowing evidence gathering through videotapes, or otherwise, for the purposes of a defense to a civil action, insofar as the evidence gathering is rationally connected to the claim and is reasonable: Syndicat des travailleuses et travailleurs de Bridgestone/Firestone de Joliette (CSN) c. Trudeau, [1999] R.J.Q. 2229 (C.A.) at paras. 74 to 79; Servant c. Excellence (L’), compagnie d’assurance-vie, 2008 QCCA 2180 at para. 1; Lefort c. Desjardins Sécurité financière, 2007 QCCQ 10192, [2007] R.R.A. 1213, at paras. 171 to 206; Bolduc c. S.S.Q Société d’assurance-vie inc., J.E. 2000-337, [2000] R.R.A. 207, at paras. 408 to 422.

 

[112]       I find it significant that the Governor in Council has found these statutes to be “substantially similar” to PIPEDA. Since the collection, use or disclosure of personal information for the purposes of a legal proceeding can be carried out under these acts without the consent of the concerned individuals, and since these statutes have been found by the Governor in Council to be substantially similar to PIPEDA, it is not an unreasonable inference to conclude that the Governor in Council does not deem these activities to be prohibited under PIPEDA. Though Parliament’s intentions under PIPEDA are not necessarily to be surmised from the Governor in Council’s interpretation of this act, the fact remains that Parliament entrusted the Governor in Council with the authority to exempt the application of PIPEDA on finding provincial legislation to be “substantially similar” to its provisions. These findings of the Governor in Council are therefore entitled to some weight in the context of PIPEDA.

 

[113]       This is not, however, the end of the matter. Although I have ruled that the investigation reports and related documents and videos concerning Mr. Gaudet are not subject to PIPEDA, this does not necessarily mean that the Privacy Commissioner is without authority to investigate under PIPEDA following the complaint of Mr. Gaudet. Indeed, though the reports and related documents and videos are not subject to PIPEDA, there must nevertheless still be mechanisms in place to test the bona fides of the exemption or non-application claim.

 

[114]       Indeed, under subsection 12(1) of PIPEDA, the Privacy Commissioner must conduct an investigation in respect of a complaint made under that act. However, where such as here, the organization being investigated raises solicitor-client privilege or litigation privilege, the Privacy Commissioner’s investigative authority is limited.

 

[115]       In Blood Tribe at paragraph 2, the Supreme Court of Canada held that the Privacy Commissioner had no right under PIPEDA to access solicitor-client documents, even for the limited purpose of determining whether privilege is properly claimed. In Privacy Commissioner of Canada v. Air Canada, 2010 FC 429, [2010] F.C.J. No. 504, the Federal Court further held that the Privacy Commissioner had no authority under PIPEDA to require an organisation to justify its assertion of privilege. I note that the principles applicable to the solicitor-client privilege raised pursuant to a complaint under PIPEDA also extend to a litigation privilege which is raised within the context of such a complaint: Rousseau v. Wyndowe, 2006 FC 1312, 302 F.T.R. 134, [2006] F.C.J. No. 1631 at para. 34; Privacy Commissioner of Canada v. Air Canada, supra at paras. 32-35.

 

[116]        If the Privacy Commissioner has serious doubts concerning a claim of litigation privilege or solicitor-client privilege, she has two options under Blood Tribe (at paragraphs 32 to 34): she can either refer the question to the Federal Court under subsection 18.3(1) of the Federal Courts Act or issue a report under section 13 of PIPEDA and, with the agreement of the complainant, bring an application to the Federal Court for relief under section 15 of that statute.

 

[117]        Where litigation privilege or solicitor-client privilege is being raised in relation to pending litigation before a provincial superior court, the role of the Federal Court in such circumstances is not to substitute itself for the provincial superior court in determining the admissibility of evidence in the pending litigation, but rather to ascertain the bona fides of the privilege claim for the purposes of PIPEDA and, where appropriate, to stay the proceedings before it pursuant to section 50 of the Federal Courts Act. This ensures that judicial comity is maintained between federal and provincial superior courts while also ensuring that proper judicial mechanisms are available at the Federal Court in order to avoid that the provisions of PIPEDA be circumvented through spurious privilege claims.

 

[118]       Applying these principles to this case, in light of the privilege claimed by State Farm, I conclude that the Privacy Commissioner had no authority to issue the May 17, 2007 letter under which she purported to assume jurisdiction over the matter, nor did she have the authority to request justifications from State Farm in regard to its privilege claims.

 

[119]       In light of my conclusions above, it will not be necessary to address the constitutional questions raised by State Farm. It is indeed a well-established principle that a court is not bound to answer a constitutional question when it may dispose of the case before it without doing so: Skoke-Graham v. The Queen, [1985] 1 S.C.R. 106 at pages 121-22; R. v. Nystrom, 2005 CMAC 7 at para. 7.

 

Costs

[120]       Costs shall be awarded to State Farm against both the Privacy Commissioner and the Attorney General of Canada for two counsels, at the high end of column IV of Tariff B.

JUDGMENT

 

THIS COURT DECIDES AS FOLLOWS:

 

1.         The application for judicial review is granted.

 

2.         The May 17, 2007 decision made by Privacy Investigator Arn Snyder is declared invalid, quashed and set aside.

 

3.         The following declaration is issued: the Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5 does not apply to document disclosure or privilege within the framework of the defence by State Farm Mutual Automobile Insurance Company for Jennifer Vetter of the personal injury tort action claim instituted against her before the New Brunswick Court of Queen’s Bench.

 

4.         Costs are awarded to State Farm Mutual Automobile Insurance Company against both the Privacy Commissioner of Canada and the Attorney General of Canada for two counsels at the high end of column IV of Tariff B.

 

 

“Robert M. Mainville”

SCHEDULE

 

PERTINENT PROVISIONS OF PIPEDA

 

 

 

FEDERAL COURT

 

SOLICITORS OF RECORD

 

 

DOCKET:                                                      T-604-09

 

 

STYLE OF CAUSE:                                      STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. PRIVACY COMMISSIONER OF CANADA and ATTORNEY GENERAL OF CANADA

 

PLACE OF HEARING:                                Halifax, Nova Scotia

 

DATE OF HEARING:                                  April 13, 2010

 

REASONS FOR JUDGEMENT

AND JUDGEMENT BY:                              MAINVILLE J.

 

DATED:                                                         July 9, 2010

 

 

APPEARANCES:

 

Peter M. Rogers, Q.C. Jane O’Neill David T.S. Fraser	FOR THE APPLICANT
Frederick C McElman, Q.C. Nicholas Russon	FOR THE RESPONDENTS

 

SOLICITORS OF RECORD:

 

McINNES COOPER Saint John, NB	FOR THE APPLICANT
STEWART McKELVEY Fredericton, NB	FOR THE RESPONDENTS