Judgments

[2001] 2 F.C. 324

T-1096-95

Andersen Consulting (Plaintiff)

v.

Her Majesty the Queen (Defendant)

Indexed as: Andersen Consulting v. Canada (T.D.)

Trial Division, Hugessen J.—Ottawa, January 12 and 19, 2001.

Practice — Discovery — Production of documents — Implied undertaking — Obligation on receiving party to return or destroy documents which have not become part of public record at conclusion of litigation — Crown arguing cannot do so as obligation superseded by National Archives of Canada Act obligations concerning documents under control of government institutions — Documents not under control of Department of Justice and continue to be subject to undertaking — Access to Information Act case law not governing herein.

Practice — Costs — Solicitor and client — Counsel for Crown taking position prevented by National Archives of Canada Act from returning or destroying documents obtained at discovery, newer becoming part of public record as case settled out of court — Implied undertaking to Court breach of which punishable as contempt of court — Crown lawyers should not have waited till had advantage of document discovery before making argument based on Archives Act — Conduct of Crown lawyers unconscionable, incompatible with duty to Court, plaintiff — Forced plaintiff to fight costly, unnecessary battle — Costs against Crown on solicitor and client basis.

After the action was settled before trial, the plaintiff sought an order for the return or destruction of a very large number of documents copied by the plaintiff and turned over to the defendant as part of the discovery process. The documents were not produced in evidence and never became part of the public record. Crown lawyers informed plaintiff that the documents could neither be returned nor destroyed in view of the legal obligation to retain them and, in due course, turn them over to the archives under the terms of the National Archives of Canada Act.

The documents had been given to the lawyers for the Crown under the terms of the “implied undertaking” under which all information obtained in the process of discovery in a Federal Court of Canada civil action is only to be used by the party to whom it is given for the purposes of the action and is not to be disclosed or otherwise made use of unless it is produced in evidence and becomes part of the public record.

The undertaking is not a mere matter of contract but is imposed by the Court itself on a litigant who takes advantage of the discovery process. Since the undertaking is given to the Court, it may be enforced by the Court through use of the contempt power. In practice, it usually includes an obligation on the part of the receiving party to return or destroy the documents (those which have not become part of the public record) at the conclusion of the litigation.

Held, the motion should be allowed.

This issue has never before arisen. The National Archives of Canada Act, enacted in 1987, has never before been put forward as a barrier to the usual Court practice in this matter. It was disturbing that the Department of Justice had waited so long to raise this argument. Crown lawyers should have made this argument at the outset of the process rather than waiting until they had had the advantage of the intrusive elements of document discovery before maintaining that they could not deliver on the quid pro quo.

Access to Information Act case law did not govern the case at bar. The two statutes were not in pari materia, having different objectives. Cases under the Access Act do not deal with a situation where the law itself imposes a condition upon the government institution receiving a document. Crown lawyers have no option to decline giving the implied undertaking: by accepting the documents they are bound towards the Court to deal with them only in the way permitted by the undertaking. Furthermore, the undertaking extends not just to the actual documents, but to all information obtained through the discovery process — oral discovery as well as production of documents. Such information cannot be said to be in the government’s control, its possession being constrained and restricted by law.

The 1988 English Chancery Division case of Brue Ltd. v. Solly was distinguished and disapproved. To rely upon ownership of a chattel — a piece of paper — as defeating the more fundamental right to privacy placed an inordinate value on the right of property in an object with virtually no inherent value.

In the event that the documents were turned over to the archives, the Access to Information Act would apply; anybody could request to have access to them; although the plaintiff might then be able successfully to oppose that request, it would have to do so indefinitely, and at its own expense.

Therefore, the documents in question were not and are not under the control of the Department of Justice and continue to be subject to the terms of the undertaking. They must be returned.

The Crown lawyers’ approach in this matter has been wholly unconscionable. There was no excusing their taking a position which was entirely incompatible with their obligations to both the Court and the plaintiff. The Crown was accordingly ordered to pay costs on a solicitor and client basis.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Access to Information Act, R.S.C., 1985, c. A-1, ss. 2(1), 3 “record”, 4(1).

Federal Court Rules, 1998, SOR/98-106, rr. 151, 152.

National Archives of Canada Act, R.S.C., 1985 (3rd Supp.), c. 1, ss. 2 “record”, 4(1), 5.

Public Archives Act (The), S.C. 1912, c. 4.

CASES JUDICIALLY CONSIDERED

APPLIED:

Goodman v. Rossi (1995), 24 O.R. (3d) 359; 125 D.L.R. (4th) 613; 12 C.C.E.L. (2d) 105; 37 C.P.C. (3d) 181; 83 O.A.C. 38 (C.A.).

DISAPPROVED:

Brue Ltd. v. Solly (1988) The Times, February 9, 1988 (Ch. D.).

DISTINGUISHED:

Baldasaro, Blacklock and Tucker v. Canada (1986), 4 F.T.R. 120 (F.C.T.D.); Canada (Information Commissioner) v. Canada (Immigration & Refugee Board) (1997), 4 Admin. L.R. (3d) 96; 82 C.P.R. (3d) 290; 140 F.T.R. 140 (F.C.T.D.); Canada Post Corp. v. Canada (Minister of Public Works), [1995] 2 F.C. 110 (1995), 30 Admin. L.R. (2d) 242; 60 C.P.R. (3d) 441 (C.A.).

REFERRED TO:

R. v. Stewart, [1988] 1 S.C.R. 963; (1988), 50 D.L.R. (4th) 1; 39 B.L.R. 198; 41 C.C.C. (3d) 481; 19 C.I.P.R. 161; 21 C.P.R. (3d) 289; 63 C.R. (3d) 305; 85 N.R. 171; 28 O.A.C. 219.

MOTION, pursuant to an “implied undertaking”, for the return or destruction of documents copied by the plaintiff and turned over to the Crown in the discovery process in a civil action. Motion granted.

APPEARANCES:

Barbara A. McIsaac, Q.C. for plaintiff.

Geoffrey S. Lester for defendant.

SOLICITORS OF RECORD:

McCarthy Tétrault, Ottawa, for plaintiff.

Deputy Attorney General of Canada, for defendant.

The following are the reasons for order and order rendered in English by

[1]        Hugessen J.: This motion brought by the plaintiff seeks an order for the return or destruction of a very large number of documents which were copied by the plaintiff and turned over to the defendant as part of the discovery process in an action between the parties in this Court. The action was settled before trial on the payment of an undisclosed sum of money, which included a sum for costs, by the defendant. The documents in question were never produced in evidence and never became part of the public record.

[2]        Following settlement of the action, the solicitors for the two parties entered into correspondence regarding the documents. Lawyers for the Department of Justice asked for the return of the documents which they had produced to the plaintiff and sought the latter’s instructions regarding the plaintiff’s documents. Shortly thereafter, however, Justice apparently had a change of heart and informed plaintiff’s solicitors that it could neither destroy nor return the documents, as plaintiff had requested, but were obliged by law to retain them and in due course turn them over to the archives under the terms of the National Archives of Canada Act, R.S.C., 1985 (3rd Supp.), c. 1.

[3]        Following a number of efforts to resolve the matter amicably and in a manner consistent with plaintiff’s view that the documents contained a great deal of sensitive commercial information which should not be made available to its competitors, (or even to the Crown itself, with whom the plaintiff is engaged in other litigation) this Court made an interim conservatory order placing the documents under the Court’s protection pending the bringing and disposition of this motion.

[4]        It is common ground that the documents in question were given to the lawyers for the Crown under the terms of the so-called “implied undertaking” under which all information obtained in the process of discovery in a civil action in this Court is only to be used by the party to whom it is given for the purposes of the action and is not to be disclosed or otherwise made use of unless and until it is produced in evidence and becomes part of the public record. A much-quoted statement, approved by the Ontario Court of Appeal in Goodman v. Rossi (1995), 24 O.R. (3d) 359 (C.A.), at pages 363-364, is as follows:

Where a party has obtained information by means of a court compelled production of documents or discovery, which information could not otherwise have been obtained by legitimate means independent of the litigation process, the receiving party impliedly undertakes to the court that the private information so obtained will not be used, vis-à-vis the producing party, for a purpose outside the scope of the litigation for which disclosure was made, absent consent of the producing party or with leave of the court; any failure to comply with the undertaking shall be a contempt of court.

This rule shall remain in effect unless and until the private information is revealed in open court.

[5]        The Court also briefly addressed the rationale of the principle in the following words (at page 367):

… the principle is based on recognition of the general right of privacy which a person has with respect to his or her documents. The discovery process represents an intrusion on this right under the compulsory processes of the court. The necessary corollary is that this intrusion should not be allowed for any purposes other than that of securing justice in the proceeding in which the discovery takes place.

[6]        The undertaking is not a mere matter of contract but is imposed by the Court itself on a litigant who takes advantage of the discovery process. Since the undertaking is given to the Court, it may be enforced by the Court through the use of the contempt power. As a matter of practice, at least in my experience in this Court, it usually includes an obligation on the part of the receiving party to return or destroy the documents (those which have not become part of the public record) at the conclusion of the litigation.

[7]        Clearly, other things being equal, the Crown would be obliged to return or destroy the copies of which it has obtained possession in this matter.

[8]        But, says Mr. Lester for the Crown, other things are not equal. The Crown’s solicitors, as members of the Department of Justice, a “government institution”, are subject to an overriding statutory obligation imposed by the terms of the National Archives of Canada Act and particularly sections 2 and 5 thereof as follows:

2. In this Act,

…

“record” includes any correspondence, memorandum, book, plan, map, drawing, diagram, pictorial or graphic work, photograph, film, microform, sound recording, videotape, machine readable record, and any other documentary material, regardless of physical form or characteristics, and any copy thereof.

…

5. (1) No record under the control of a government institution and no ministerial record, whether or not it is surplus property of a government institution, shall be destroyed or disposed of without the consent of the Archivist.

[9]        Since, in the event the documents were turned over to the archives they would be in the control of the latter and arguably no longer subject to the constraints accepted by the Crown’s lawyers, the provisions of the Access to Information Act, R.S.C., 1985, c. A-1, are also relevant. The most pertinent sections read:

3. …

“record” includes any correspondence, memorandum, book, plan, map, drawing, diagram, pictorial or graphic work, photograph, film, microfilm, sound recording, videotape, machine readable record, and any other documentary material, regardless of physical form or characteristics, and any copy thereof

…

4. (1) Subject to this Act, but notwithstanding any other Act of Parliament, every person who is

(a) a Canadian citizen, or,

(b) a permanent resident within the meaning of the Immigration Act,

has a right to and shall, on request, be given access to any record under the control of a government institution.

[10]      This appears to be the first time that a question of this sort has arisen. In the past, when litigation has been settled or otherwise concluded, parties have routinely returned or destroyed all documents obtained on discovery which have not been used in evidence. This has been the case as much for the Crown as for private litigants and the initial position taken by the Department of Justice in this case appears in conformity with past practice. The emergence of the National Archives of Canada Act as a barrier to conforming to such practice is new, although the legislation itself has been on the books for many years.[1]

[11]      It is also disturbing that the Department of Justice has apparently chosen to wait until this time to raise its alleged obligations under the National Archives of Canada Act. If, as Mr. Lester contends, those obligations operate to prevent Justice lawyers from returning or destroying documents obtained in the discovery process, it seems to me that they had a clear obligation to make that fact known at the beginning of the process and not to wait until they had had the advantage of the intrusive elements of document discovery before maintaining that they could not deliver on the quid pro quo. I shall return to this matter later.

[12]      I also note that the obligations imposed by the implied undertaking are in many respects very similar to those contained in the express undertaking required in the analagous situation where solicitors are allowed to inspect material produced in confidence in accordance with the provisions of rules 151 and 152 [of the Federal Court Rules, 1998, SOR/98-106]. If materials so obtained by Justice lawyers are subject to the constraints of the National Archives of Canada Act, then those lawyers would equally not be able to respect their undertakings in regard to them either, with consequences which might prove very unpleasant indeed for them.

[13]      The defendant argues, however, that the statutory obligation is clear: the applicable section of the National Archives of Canada Act uses the same word “control” and is cast in similar terms to the equivalent section in the Access to Information Act.

[14]      While there appears to be virtually no jurisprudence under the National Archives of Canada Act, the cases under the Access to Information Act have taken a generous view of the sense to be given to the concept of control. In particular, it has been held that an obligation of confidentiality imposed by the originator of the document (Baldasaro, Blacklock and Tucker v. Canada (1986), 4 F.T.R. 120 (F.C.T.D.)), by the governmental recipient (Canada (Information Commissioner) v. Canada (Immigration & Refugee Board) (1997), 4 Admin. L.R. (3d) 96 (F.C.T.D.)), or by a party entering into contractual relations with the government (Canada Post Corp. v. Canada (Minister of Public Works), [1995] 2 F.C. 110 (C.A.)), do not operate to remove such documents from being in the “control” of a government department within the meaning of that statute.

[15]      In my view, and despite the similarity of the statutory language, the cases under the Access to Information Act are not governing. The two statutes are not in pari materia. Their objectives are different, the one being to provide for access by the public to the workings of an open and accountable government and the other being to ensure that a historical record of government operations is preserved.

Access to Information Act

2. (1) The purpose of this Act is to extend the present laws of Canada to provide a right of access to information in records under the control of a government institution in accordance with the principles that government information should be available to the public, that necessary exceptions to the right of access should be limited and specific and that decisions on the disclosure of government information should be reviewed independently of government.

National Archives of Canada Act

4. (1) The objects and functions of the National Archives of Canada are to conserve private and public records of national significance and facilitate access thereto, to be the permanent repository of records of government institutions and of ministerial records, to facilitate the management of records of government institutions and of ministerial records, and to encourage archival activities and the archival community.

[16]      It is a fair inference that Parliament’s interest in creating the public archive was primarily in ensuring that the archives should contain those documents relating to the actual operations of government as such rather than to government in its incidental role as plaintiff or defendant in civil litigation.

[17]      More important, the cases under the Access to Information Act do not deal with a situation where the law itself imposes a condition upon the government institution which receives a document. This is critical. Documents received by Justice in the discovery process are not subject to a merely voluntary condition. Lawyers for the Crown do not have the option of refusing to give the implied undertaking: by accepting the documents they are bound towards the Court to deal with them only in the way permitted by the undertaking. That condition is imposed upon the solicitors and upon the department and the government they serve prior to the documents ever coming into their possession. Furthermore, the undertaking extends not only to the documents themselves but, much more significantly, to all information obtained as a result of the discovery process, e.g. through answers to oral questions. The Court in extracting the undertaking is concerned not so much with the documents as pieces of paper but rather, and significantly, with the information they may contain. That information is to remain private unless and until it comes out in open Court. While the point does not arise for decision herein, I seriously doubt that it could be called “government information”. It is not in the government’s control because the latter’s possession of it is constrained and restricted by law.

[18]      But Mr. Lester has another string to his bow: in a little noted case, which as far as counsel have been able to discover, has been neither noted nor followed, Harman J. held, in Brue Ltd. v. Solly (1988) The Times, February 9, 1988 (Ch. D.), that a third party whose private diary was in the hands of the defendant who had produced a copy of it on discovery, was not entitled to have that copy either destroyed or returned to him after the case was over. Harman J. placed his decision upon two grounds: first, that the ownership in the chattel, or piece of paper upon which the copy was reproduced, was in the defendant who had made the copy, and second, that the defendant was a “gentleman” who was not likely to breach the undertaking of which he was well aware.

[19]      The second point makes the case of Brue readily distinguishable from the situation here since the whole burden of the argument put forward by Mr. Lester is that the Department of Justice, notwithstanding its awareness of the implied undertaking, proposes to breach it and to turn the documents in question over to the archives. There is thus a real threat that the confidentiality of the information obtained on discovery will be lost. It is also by no means clear that the defendant here has any property rights in the documents: the copies were made by the plaintiff and certainly belonged at one time to it. Mr. Lester argues that I should infer from the fact that the settlement payment included a sum for costs that property in the documents thereupon passed to the Crown. I can draw no such inference; on the contrary, it seems to me to be far more likely that it was an implied term of the settlement agreement that the documents would be destroyed or returned in accordance with the wishes of the party who had produced them in the first place, a course which was originally proposed by the Crown’s lawyers themselves.

[20]      But, with respect, it is my view that the authority of Brue is very dubious on other grounds. To rely on the ownership of the chattel, the piece of paper, as defeating the far more fundamental right to the privacy of the information contained therein, seems to me to place an inordinate value on the right of property in an object with virtually no inherent value and to wholly overlook the modern concept of privacy as a right which the law should both foster and protect. Balancing those two rights, property and privacy, against one another in the context of the present case, I have no difficulty in concluding that the latter must prevail and that the plaintiff is entitled to the order which it seeks for the return or destruction of the documents.[2]

[21]      I would add that I have not overlooked the fact that in the event that the documents were turned over to the archives and a subsequent request for access under the Access to Information Act were made, the plaintiff might be able successfully to oppose the application under the terms of that statute. That does not seem to me to be an answer; the present litigation is over and the plaintiff should not have to anticipate that for years to come it may have to continue to defend its privacy rights at its own expense simply because it was unwise enough to sue the government and to achieve a successful settlement. The case would be even more striking for a defendant who had successfully resisted an action brought by the Crown if the documents which he had disclosed on discovery were viewed as having fallen under the “control” of the Department of Justice and being subject in consequence to demands under the Access to Information Act.

[22]      I conclude accordingly that the documents here in question were not and are not under the control of the Department of Justice and continue to be subject to the terms of the undertaking. They must be returned.

[23]      On the question of costs, I have previously adverted to the conduct of the Crown’s lawyers. I consider it to be wholly unconscionable that they should have acted as they did. Even if, as I suspect to be the case, the idea of the National Archives of Canada Act as trumping their obligations under the implied undertaking only came to them after the case was settled, that cannot excuse their taking a position which is wholly incompatible with their obligations previously undertaken to the Court and the plaintiff. They have forced the plaintiff to fight a long and unnecessary battle, and one which is no doubt costly. Even if they had been right in their view of the law, I would have ordered that the plaintiff should recover the costs of this motion. In my opinion, the plaintiff should be compensated for their legal costs associated with this matter in their entirety. Thus, costs to the plaintiff are to be assessed on a solicitor and client basis.

ORDER

All documents obtained by the defendant on discovery and not forming part of the public record are to be returned to the plaintiff within ten (10) days of this order. The plaintiff shall have its costs of this motion to be assessed on a solicitor and client basis.

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