Tanner et al. v. Clark et al Reimer et al. v. Christmas [Indexed as: Tanner v. Clark]
60 O.R. (3d) 304
[2002] O.J. No. 2558
Divisional Court File Nos. 56/02 and 55/02
Ontario Superior Court of Justice
Divisional Court
Blair R.S.J., Lane and Epstein JJ.
June 27, 2002
Civil procedure -- Discovery -- Production of documents -- Deemed undertaking -- Deemed undertaking rule set out in rule 30.1.01(3) of Rules of Civil Procedure not applying to information or evidence obtained in arbitration proceedings before Financial Services Commission of Ontario -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 30.1.01(3).
Civil procedure -- Discovery -- Production of documents -- Implied undertaking rule -- Plaintiffs injured in motor vehicle accidents -- Plaintiffs commencing arbitration proceedings with respect to accident benefits and bringing tort action for damages -- Common law implied undertaking rule not operating to protect medical reports obtained in arbitration proceeding from disclosure in tort action.
Insurance -- Arbitration -- Plaintiffs injured in motor vehicle accidents -- Plaintiffs commencing arbitration proceedings before Financial Services Commission of Ontario with respect to accident benefits and bringing tort action for damages -- Common law implied undertaking rule not operating to protect medical reports obtained in arbitration proceeding from disclosure in tort action -- Deemed undertaking rule set out in rule 30.1.01(3) of Rules of Civil Procedure not applying to information or evidence obtained in arbitration proceeding -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 30.1.01(3).
The plaintiffs were injured in motor vehicle accidents. They each commenced two legal proceedings: an arbitration proceeding before the Ontario Insurance [page305] Commission (now the Financial Services Commission) with respect to accident benefits (the "AB proceeding") and a tort action for general and pecuniary damages. The plaintiffs were compelled to submit to medical examinations at the behest of their accident benefit insurers. The defendants in the tort actions requested production of the medical reports prepared as a consequence of those examinations. The request was denied. The defendants brought a motion for production of the medical reports. In each case, the motions judge relied on the application of the implied undertaking rule (the common law rule that imposes an implied undertaking upon a party receiving disclosure not to use the disclosure for a purpose collateral or ulterior to the resolution of the issues in the action) to dismiss the motion. The defendants appealed.
Held, the appeals should be allowed.
There was no question that the reports sought by the defendants were relevant to the tort actions and were not protected by any privilege. The plaintiffs had put their medical condition directly in issue in the tort actions, and the medical reports spoke to those medical conditions and related to a time that might be of particular interest to the trier of fact. Further, there was a strong additional nexus between the two proceedings created by the right of the defendants in the tort actions to deduct the AB benefits from the tort damages.
The deemed undertaking rule, set out in rule 30.1.01(3) of the Rules of Civil Procedure, had no application in these circumstances. Rule 30.1.01(3) restricts the application of the rule to evidence or information obtained within the discovery processes referred to in rule 30.1.01(1). The rule does not apply to evidence or information otherwise obtained. It does not provide for a deemed undertaking with respect to evidence or information obtained in any process other than a proceeding governed by the rules. A "proceeding" is defined in rule 1.03 as an action or application commenced under the Rules of Civil Procedure. As a result, the rule does not include an arbitration proceeding commenced before the Financial Services Commission of Ontario.
The motions judges erred in holding that the implied undertaking rule applied in the circumstances of these cases. The purpose of the implied undertaking rule is to ensure that compulsory disclosure is not pressed further than the course of justice requires. In this respect, the disclosure requirement is an intrusion on a person's right to privacy. Ultimately, the rule limits the scope of a recipient's use of information obtained from another party in a proceeding. The effect of the decisions under appeal was to turn a rule designed to protect privacy into a privilege that attaches to the document or information in question. Further, to apply the rule in these circumstances would be to allow the plaintiff to pick and choose which AB reports to produce by selectively asserting such a privilege. Such an approach constitutes an error in law and is clearly wrong. In this case, the AB insurers in each of the AB proceedings had copies of the medical reports. They might be bound by an undertaking not to use the information contained in the reports for ulterior purposes, but there was no concern about such an occurrence. The only other individuals who were in possession of the medical reports were the plaintiffs. However, these parties had no intention of using the reports for an ulterior or collateral purpose. While the rule might be invoked to prevent either party to the AB proceeding from using the reports for an ulterior purpose, that was not what was happening here. The defendants were seeking production of documents, relevant to the issues in the tort actions, that were in the plaintiffs' possession and that were not protected by any privilege. They were seeking them for legitimate intent, namely, appropriate disclosure in an action closely related to the AB proceeding. The medical reports should be produced. Once they were produced, the [page306] implied undertaking rule would limit the use that the defendants could make of the documents to securing the ends of justice in the tort actions. That was the only application of the implied undertaking rule to the circumstances in these appeals.
APPEALS from orders dismissing motions for production of medical reports.
Goodman v. Rossi (1995), 1995 1888 (ON CA), 24 O.R. (3d) 359, 125 D.L.R. (4th) 613, 12 C.C.E.L. (2d) 105, 37 C.P.C. (3d) 181 (C.A.) [Leave to appeal granted (1995), 1994 10551 (ON CA), 120 D.L.R. (4th) 557n (Ont. C.A.)], revg (1994), 21 O.R. (3d) 112, 120 D.L.R. (4th) 557, 7 C.C.E.L. (2d) 188, 34 C.P.C. (3d) 18 (Div. Ct.); London Life Insurance Co. v. Konney (1998), 1998 18849 (ON SC), 41 O.R. (3d) 706, 114 O.A.C. 376, 7 C.C.L.I. (3d) 69 (Div. Ct.), consd Other cases referred to 2858-0702 Québec Inc. v. Lac d'Amiante du Québec Ltée, 2001 SCC 51, [2001] 2 S.C.R. 743, 204 D.L.R. (4th) 331, 274 N.R. 201, [2001] S.C.J. No. 49, 14 C.P.C. (5th) 189; Binns v. Skinner Estate (2000), 2000 26982 (ON SC), 50 O.R. (3d) 275 (S.C.J.); Browne v. MacKeen, [1999] N.S.J. No. 498 (Sup. Ct.); Cook v. Ip (1985), 1985 163 (ON CA), 52 O.R. (2d) 289, 22 D.L.R. (4th) 1, 5 C.P.C. (2d) 81 (C.A.); Cosyns v. Canada (Attorney General) (1992), 1992 8529 (ON SCDC), 7 O.R. (3d) 641, 88 D.L.R. (4th) 507 (Div. Ct.); Klingbeil (Litigation Guardian of) v. Worthington Trucking Inc. (1999), 1999 19927 (ON SC), 43 O.R. (3d) 697, 172 D.L.R. (4th) 761, 41 M.V.R. (3d) 257, 33 C.P.C. (4th) 106 (Div. Ct.), revg (1997), 1997 12191 (ON SC), 36 O.R. (3d) 656, 155 D.L.R. (4th) 469, 34 M.V.R. (3d) 222, 18 C.P.C. (4th) 255 (Gen. Div.); Lamb v. Hyde, [1994] O.J. No. 2535; Stein v. "Kathy K" (The) ("Storm Point" (The)), 1975 146 (SCC), [1976] 2 S.C.R. 802, 62 D.L.R. (3d) 1, 6 N.R. 359 Statutes referred to Insurance Act, R.S.O. 1990, c. I-8, s. 266 Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 1.03, 26, 30.07, 30.10, 30.1, 30.1.01, 31.11(8), 33, 33.04 Statutory Accident Benefits Schedule -- Accidents Before January 1, 1994, R.R.O. 1990, Reg. 672 ("Insurance Act"), s. 23 Authorities referred to Matthews and Malek, Discovery (1992)
Karl Arvai, for plaintiffs (respondents). Mark Edwards, for defendants (appellants). Peter W. Kryworuk, for defendant (appellant).
The judgment of the court was delivered by
[1] EPSTEIN J.: --Two appeals were heard together. They raise the common issue of the application, if any, of the implied undertaking rule to production obligations in the context of the interrelationship between arbitration proceedings before the Financial Services Commission of Ontario concerning accident benefits and actions for general and pecuniary damages. More specifically, the common issue is whether or not the implied undertaking rule [page307] operates to protect medical reports obtained in the arbitration proceeding from disclosure in the tort action.
[2] In each of the two actions involved in this combined appeal, the plaintiffs were injured in a car accident. As a result, the injured parties in each action commenced two legal proceedings. The first was an arbitration proceeding before the Ontario Insurance Commission (now the Financial Services Commission of Ontario) with respect to accident benefits (the "AB proceeding"). The second was their action in this court for general and pecuniary damages (the "tort action").
[3] In each case, the party who sustained the injuries was compelled to submit to medical examinations at the behest of his or her accident benefits insurer. The defendants in the tort actions requested production of the medical reports prepared as a consequence of these examinations. This request was denied. As a result of the denial, the defendants brought a production motion. In each case, the motions judge relied on the application of the implied undertaking rule to dismiss the motion. In a combined hearing for leave to appeal to this court, Justice Hockin granted leave to appeal in both matters.
Background of the Two Actions
(i) The Reimer proceedings
[4] Mr. and Mrs. Reimer commenced an action in 1996 (the "Reimer action") for damages as a result of injuries suffered in a car accident in November of 1993. Mrs. Reimer pleads that she fractured her jaw and sustained soft tissue damage to her shoulder, head, arm, neck, back, leg and chest. Mrs. Reimer alleges she is no longer able to work for prolonged periods in the position she held at the time of the accident. She advances a significant wage loss claim. To succeed in the lawsuit, she must establish liability and demonstrate that she sustained a "permanent, serious impairment of an important bodily function caused by continuing injury which is physical in nature", in accordance with s. 266 of the Insurance Act, R.S.O. 1990, c. I.8.
[5] In the course of discoveries held in November 1997, Mrs. Reimer's counsel undertook to provide a copy of the entire no- fault file to be obtained from the accident benefit insurer. Counsel also undertook to provide a copy of any mediation and arbitration materials not included in the file. However, Mrs. Reimer's counsel was unable to obtain the no-fault file. Accordingly, the defence brought a motion for production pursuant to rule 30.10 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194]. The file was ultimately produced without the necessity of a court order. [page308]
[6] At the continuation of the discovery in August 2000, the defence learned that Ms. Reimer's accident benefit insurer had arranged for her to be assessed by Dr. Clifford on October 14, 1998. This assessment was pursuant to s. 23 of the Statutory Accident Benefits Schedule -- Accidents Before January 1, 1994, R.R.O. 1990, Reg. 672.
[7] The assessment was for the purposes of an arbitration scheduled for October 27, 1998 in the AB proceeding. The issues in the arbitration included Mrs. Reimer's entitlement to weekly income benefits. The claim for no-fault benefits was settled shortly before the arbitration.
[8] The defence had an opportunity to obtain two defence medicals in the Reimer action. The defendant moved for an additional defence medical. The motion was dismissed.
[9] The plaintiffs' refusal to produce Dr. Clifford's report resulted in the production motion heard by Justice Leitch. As previously mentioned, Justice Leitch dismissed the motion based on her interpretation of the implied undertaking rule and its application to these circumstances.
(ii) The Tanner proceedings
[10] Mr. and Mrs. Tanner started their action in 1993 (the "Tanner action"). In it, they claim damages as a result of injuries Mr. Tanner sustained in a car accident that took place in June of 1991. Mr. Tanner complains of low back pain and a head injury. He acknowledges a significant pre-accident health history as well as a prior history of psychiatric problems and chronic low back pain. Like Mrs. Reimer, for Mr. Tanner to be successful in the tort action he must prove liability and meet the so-called threshold provided in the Insurance Act, s. 266.
[11] Mr. Tanner attended three independent medical examinations ("IMEs") at the request of Allstate, Mr. Tanner's accident benefit carrier. He was examined by a neuropsychologist in 1992, a physical medicine specialist in 1994 and a neurologist in 1995. Allstate relied on the results of these IMEs in its decision to terminate Mr. Tanner's weekly benefits.
[12] At the time of discoveries in the Tanner action, Allstate had, in fact, terminated his benefits and Mr. Tanner had commenced the AB proceeding. An arbitration hearing was set for March 15, 1999 but did not proceed as the AB proceeding was settled at a private mediation.
[13] The tort action continued and, at the defendants' request, Mr. Tanner participated in three defence medical examinations pursuant to Rule 33 of the Rules of Civil Procedure. In 1996, [page309] Mr. Tanner was examined by a neuro-psychologist, an orthopaedic surgeon and a neurologist.
[14] Since Mr. Tanner claims loss of income, a key issue in the tort action is his ability to return to work. The IMEs are germane to this issue. They are assessments that cover a period from December 1992 to September 1995, much closer to the date of the accident than the period covered by the defence medicals. There is no issue as to the relevance of the IMEs in the Tanner action.
[15] In addition, in the course of the tort action, Mr. Tanner has produced medical reports that comment on the conclusions reached in the IMEs.
[16] At discovery, the defence requested production of copies of the IMEs. Mr. Tanner refused this request. Justice Browne heard the defence motion to compel production and, relying on the decision of Justice Leitch in the Reimer action, held that the implied undertaking rule protected the IMEs from production. On May 8, 2001, he dismissed the motion.
The Implied Undertaking Rule -- Review of the Decisions of the Motions Judges and the Leave Application
[17] The implied undertaking rule is a common law rule. The rule provides for an undertaking to be imposed upon a party receiving disclosure. The party in receipt must not use the disclosure for a purpose collateral or ulterior to the resolution of the issues in the action in which the disclosure is made.
[18] Justice Leitch, in denying production of Dr. Clifford's report, relied upon the Court of Appeal decision in Goodman v. Rossi (1995), 1995 1888 (ON CA), 24 O.R. (3d) 359, 125 D.L.R. (4th) 613. In particular she relied on a passage quoted by Justice Morden from Matthews and Malek's Discovery (1992) at p. 253 [at p. 369 O.R.]:
It is a general wrong that one who is compelled by law to produce documents for the purpose of particular proceedings should be in peril of having those documents used by the other party for some other purpose other than the purpose of the particular legal proceedings and, in particular, that they should be made available to third parties who might use them to the detriment of the party who has produced them on discovery.
Justice Leitch went on to observe, in para. 19 of her reasons, that the defendant in the Reimer tort action was not a party to the AB proceeding. Therefore, Justice Leitch found the defendant to be a "third party upon which the rule applies therefore barring her from obtaining the report".
[19] In addition to holding that the implied undertaking rule applied to protect the IMEs from disclosure in the relevant tort actions, both motions judges refused to exercise their discretion [page310] and grant relief from the application of the rule. Justice Leitch specifically held that Dr. Clifford's report was relevant to the Reimer action and that "more than likely there is evidence in Dr. Clifford's report that the defendant would find useful in advancing her position in [the tort] action . . .". However, Justice Leitch also found that the policy principles that are the foundation of the undertaking rules applied to protect Ms. Reimer's privacy and that the defendants would not be prejudiced by not receiving the report.
[20] Similarly, Justice Browne concluded that the IMEs were relevant to the Tanner action and that they were unfavourable to Mr. Tanner. Furthermore, he found no prejudice by way of any inability on the part of the defendant to obtain additional evidence about Mr. Tanner's medical condition. In fact, Justice Browne found prejudice to the plaintiffs based on the possibility of disclosure being made just prior to trial.
[21] Justice Hockin granted leave to appeal from the decisions of Leitch J. and Browne J. because of the importance of the issues raised and because he felt there was a conflict in the jurisprudence given the inconsistency between their decisions and that of McDermid J. in Lamb v. Hyde, [1994] O.J. No. 2535.
The Standard of Review
[22] The parties agree that the application of the implied undertaking rule to the circumstances is a matter of law. It follows that, in respect of that issue, the standard of review is whether or not the application of the implied undertaking rule, in the circumstances, was "clearly wrong". See: Stein v. "Kathy K." (The) ("Storm Point" (The)), 1975 146 (SCC), [1976] 2 S.C.R. 802, 62 D.L.R. (3d) 1. However, the motions judges also refused to exercise their discretion and relieve against the application of the rule. In this respect, the test is whether the motions judges applied erroneous principles that rendered the result "clearly wrong". See: Cosyns v. Canada (Attorney General) (1992), 1992 8529 (ON SCDC), 7 O.R. (3d) 641, 88 D.L.R. (4th) 507 (Div. Ct.).
The Issues
Does the deemed undertaking rule apply to these circumstances?
Does the implied undertaking rule apply to these circumstances?
If the implied undertaking rule applies, are the defendants still entitled to production of the documents in question? [page311]
The Analysis
[23] Before examining these issues, there are three points to be made. First, the plaintiffs have possession of the reports being sought by the defendants in the tort actions. Second, the documents in question are clearly relevant to the tort actions and, third, they are not protected by any privilege.
[24] I will comment briefly about the issues of relevance and privilege even though they are not necessarily in dispute. These comments not only demonstrate the difficulties in applying the rule in these circumstances, but also are relevant to the issue of the court's discretion to relieve against the application of the rule.
[25] Given the issues raised in the tort actions, the nature of the evidence in question and the interrelationship between the AB proceedings and the tort actions, the relevance of the IMEs to the issues raised in the tort actions is beyond doubt. The injured plaintiffs have put their medical condition directly in issue. The IMEs speak to these medical conditions. Moreover, they relate to a time that may be of particular interest to the trier of fact.
[26] Further, there is a strong additional nexus between the two actions. The right of the defendants in the tort actions to deduct the AB benefits from the tort damages creates this nexus. It is identified and described in Binns v. Skinner Estate (2000), 2000 26982 (ON SC), 50 O.R. (3d) 275 (S.C.J.), where, at p. 279 O.R., Justice John Macdonald made the following observation: "While different claims are made, accident benefits entitlements relate to damages entitlements because of the deductibility of accident benefits entitlements from tort damages." In fact, the defendant in the Reimer case advises that she intends to challenge the providence of the plaintiffs' settlement in the AB proceeding in response to the damage claim advanced in the tort action.
[27] Accordingly, the documents in question have considerable relevance with respect to a number of important aspects of the two tort actions.
[28] It was not argued that the documents the defendants seek are protected by any privilege. It is inconceivable that they are. The authorities support the proposition that no privilege of any kind attaches to the documents. In Klingbeil (Litigation Guardian of) v. Worthington Trucking Inc. (1999), 1999 19927 (ON SC), 43 O.R. (3d) 697, 172 D.L.R. (4th) 761 (Div. Ct.), Justice Sedgewick, speaking for this court said at p. 701 O.R. that "[i]f relevant to the issues in this tort action, medical reports, records and information relating to the plaintiff are not confidential and are not protected from disclosure, whether or not obtained as the result of a statutory no-fault claim." See also Browne v. MacKeen, [1999] N.S.J. No. 498 (Sup. Ct.). [page312]
- The deemed undertaking rule
[29] The defendants contend that the deemed undertaking rule, set out in rule 30.1.01(3), has no application in these circumstances. The plaintiffs argue that rule 30.1.01(3) merely codifies the common law in Ontario with respect to the implied undertaking rule. Accordingly, the plaintiffs focus their argument on the implied undertaking rule.
[30] Justice Leitch held that the deemed undertaking rule had no application and, in my view, she was correct in this regard. In para. 16 of her reasons, the motions judge stated that the deemed undertaking rule provides that the "result of discovery in one action cannot be used by any party to that action in a subsequent action". In the very next sentence, she observed that "this is not a subsequent action as defined under r. 31.11.8." While the reference to rule 31.11(8) in this context is puzzling, it is clear that the motions judge was aware of the procedural impediment to the application of rule 30.1.01(3).
[31] In his decision, Justice Browne was clear in his finding that the deemed undertaking rule was not relevant to these circumstances. He identified what he described as a "technical point" that the AB proceeding is not an action or proceeding within the rules. Therefore, the IMEs were not the result of discovery in a proceeding.
Analysis
[32] In 1996, the Rules of Civil Procedure were amended to provide for a deemed undertaking rule. Pursuant to rule 30.1, all parties and their counsel are deemed to undertake not to use evidence or information obtained through the discovery process for any purposes other than those of the proceeding in which the evidence was obtained.
[33] In the matter before us, as well as in authorities considering the rule since its promulgation, the suggestion has been made that Rule 30.1 is a simple codification of the implied undertaking rule recognized by the Court of Appeal in Goodman v. Rossi as part of the common law of this province. In fact, often the descriptors "implied" and "deemed" are used interchangeably. The problem with this approach is that the deemed undertaking rule is not a mere codification of the common law rule. In formulating rule 30.1, the Civil Rules Committee did not limit itself to merely codifying what had been decided in the case law. Instead the Committee took the opportunity to refine the implied undertaking principle.
[34] The rule is quite specifically worded. Rule 30.1.01(3) provides that "[a]ll parties and their counsel are deemed to undertake not to use evidence or information to which this Rule applies for any purposes other than those of the proceeding in which the [page313] evidence was obtained." The rule provides for its application to limited circumstances. In this respect, rule 30.1.01(2) restricts the application of the rule to evidence or information obtained within the discovery processes referred to in rule 30.1.01(1). The rule does not apply to evidence or information otherwise obtained. The wording in subparagraph 3 makes it clear that the rule does not provide for a deemed undertaking with respect to evidence or information obtained in any process other than a proceeding governed by the rules.
[35] Technical though it may be, the AB proceeding is not a "proceeding". A "proceeding" is defined in rule 1.03 as an action or application commenced under the Rules of Civil Procedure. As a result, the rule does not include an arbitration proceeding commenced before the Financial Services Commission of Ontario.
[36] On this basis, the motions judges were correct in deciding that the deemed undertaking rule has no application in these circumstances.
- The implied undertaking rule
[37] The defendants submit that the implied undertaking rule also has no application. The crux of their argument is that the rule only applies to the recipients of documents produced as part of the disclosure process in litigation. Neither the Reimers nor the Tanners received the documents in this manner and therefore cannot be subjected to the rule. In both actions, the plaintiffs are in possession of reports about their own medical condition and are simply being asked to respond to the defendants' legitimate production demands. Thus, the rule cannot affect the moving parties, the defendants in the two tort actions, unless and until they are recipients of the documents in question. The rule acts to control their use of the documents after receipt, not to prevent them from receiving the documents at all.
[38] On the other hand, the plaintiffs argue that the documents themselves are protected by the implied undertaking rule. The case of Goodman v. Rossi provides that someone "compelled by law to produce documents" should not be in peril of having such documents used for some ulterior purpose. Since the injured plaintiffs in each action had to subject themselves to AB medicals pursuant to the terms of their insurance contracts, they say that the evidence was obtained under compulsion. Accordingly, the plaintiffs submit they should be protected from having the IMEs used in the tort actions. Ultimately, it is the fact that the reports were prepared as a result of the plaintiffs' being compelled to submit to the medicals that brings these reports within the reach of the implied undertaking rule. [page314]
Analysis
[39] As previously stated, the implied undertaking rule is a common law rule that imposes an implied undertaking upon a party receiving disclosure not to use the disclosure for a purpose collateral or ulterior to the resolution of the issues in the action. The words"collateral" or "ulterior" are not used in a pejorative sense. These words are used merely to indicate some purpose different from that designed by the procedure to achieve justice.
[40] In Goodman v. Rossi, the Ontario Court of Appeal extensively analyzed the rule for the first time. In that case, the plaintiff brought a wrongful dismissal action in which the defendant produced a document that disparaged the plaintiff. The defendant had apparently sent the document to the Ministry of Consumer and Commercial Relations. Based on this document, the plaintiff started an action against the defendant for defamation. The Court of Appeal held that the plaintiff would not have had the document or have known of its existence except for its production in the wrongful dismissal action. Accordingly, the plaintiff was prevented, by the application of the implied undertaking rule, from using it for purposes other than in the wrongful dismissal litigation. In the end, the court stayed the defamation action.
[41] In Goodman, Morden J.A. spent considerable time [at p. 362 O.R.] reviewing the history of the rule and the principle behind it. He started with the basic question of,
[w]hether a party who obtains a document from the other party under the discovery process in the Rules of Civil Procedure is subject to an implied undertaking not to use the document for a purpose other than that of the proceeding in which the document was obtained, except with the consent of the other party or with the leave of the court.
At p. 367 O.R., Justice Morden went on to explain that,
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 purpose other than that of securing justice in the proceeding in which the discovery takes place.
[42] Morden J.A. concluded that on the basis of precedent and policy, a particular version of the implied undertaking rule should be recognized in Ontario.
[43] In the Reimer proceedings, Justice Leitch came to the conclusion that the implied undertaking rule applied in the circumstances. In this respect, Justice Leitch relied upon Goodman v. Rossi and then followed the court's analysis in London Life Insurance Co. v. Konney (1998), 1998 18849 (ON SC), 41 O.R. (3d) 706, 7 C.C.L.I. (3d) 69 (Div. Ct.). In [page315] Konney, an insurance company was paying disability benefits to an insured who also had a tort claim which he settled for a sum insufficient to cover his entire future lost income claim. London Life was therefore left exposed to continue its payments. London Life sued the insured alleging bad faith in this settlement. London Life sought to obtain the medical reports from the tort actions. The company wanted to use these reports in a separate action to terminate disability benefits. The insured refused to produce them.
[44] In order to obtain the medical reports produced in the tort actions, the insurance company moved to amend its pleadings in the bad faith action. The company wanted to include a claim that the insured's refusal to produce the medical reports accumulated in the tort actions constituted a breach of the insured's duty under the policy.
[45] The defendants submitted that they were prejudiced by the amendments because they would lose the protection of the deemed undertaking rule. They argued that if the documents were produced in the bad faith action alone, they could not be used for any purposes other than those of the bad faith proceeding. However, if the action were reconstituted by these amendments into a combined bad faith and insurance claim, the documents could then be used for all purposes in the combined proceeding. This was prejudice that could not be rectified by costs and so offended Rule 26.
[46] The court found that the point of most, if not all, of the proposed amendments was to enable the insurer to obtain the medical reports accumulated in the tort actions and use them to deny further payments to the insured. As such, the court would not allow the amendments since their effect would be to circumvent the privacy interests of litigants afforded by rule 30.1(3) which amounted to prejudice under Rule 26. The reports were ordered to be produced in the bad faith action, subject to the undertaking, but the amendments were refused.
[47] It is of note that the court in Konney did not protect the reports from being produced in another action, being the bad faith action. In fact, the court in Konney observed at p. 709 O.R., p. 71 C.C.L.I., that the compulsory production of the reports in the bad faith action was a "legitimate and principled extension of the invasion of the privacy interests of Mr. Konney in the tort actions".
[48] When the implied undertaking rule is engaged for the purpose for which it was intended, it is easily understood and applied. The purpose of the rule is to ensure that compulsory disclosure is not pressed further than the course of justice requires. In this respect, this disclosure requirement is an intrusion on a person's right to privacy. Ultimately, the rule limits the scope of a recipient's use of information obtained from another party in a proceeding. [page316]
[49] Complications arise when the rule is invoked in circumstances for which it was not intended. Such are the circumstances here. With respect, the motions judges, in the decisions under appeal, relied on certain concepts from cases such as Goodman v. Rossi. In their application of the implied undertaking rule, they attempted to fit the circumstances before them into these concepts. Unfortunately, the liquid simply does not fit the vessel.
[50] The effect of the decisions under appeal is to turn a rule designed to protect privacy into a privilege that attaches to the document or information in question. Further, to apply the rule in these circumstances would be to allow the plaintiff to pick and choose which AB reports to produce by selectively asserting such a privilege. Such an approach constitutes an error in law and is clearly wrong.
[51] In oral argument, counsel for the plaintiffs in both actions, submitted that it is the fact that the IMEs were obtained under compulsion that engages the operation of the rule. The motions judge in the Reimer proceeding appears to have accepted this argument. In this respect, Justice Leitch made specific reference in her reasons to the passage from Malek and Matthews that focuses on the fact that a party's privacy must be protected when he or she is compelled, in the course of a proceeding, to produce otherwise confidential information or documentation.
[52] It is true that the plaintiffs in the AB proceedings had to present themselves for a defence medical and the information obtained as a result of that examination came into the hands of their AB insurers. Ultimately, the information came into the possession of the plaintiffs themselves as part of this process. However, simply springing from the contractually prescribed process by which the evidence was obtained to the application of the rule overlooks certain fundamental aspects of the implied undertaking rule, namely, to whom it is intended to apply, in what circumstances and, of course, the principle behind the rule itself.
[53] The basis of the operation of the rule is not how the documents or information came into existence, but how they came into the hands of the party whose use is being challenged. In Goodman v. Rossi, Morden J.A. says, at p. 370 O.R., that the implied undertaking rule is a "legal obligation that arises by operation of law by virtue of the circumstances under which the relevant person obtained the documents or information".
[54] In this case, the AB insurers in each of the AB proceedings have copies of the reports. They may be bound by an undertaking not to use the information contained in the reports for ulterior purposes, that is to start another proceeding, but there is no concern about such an occurrence. The only other individuals, relevant to the matters at hand who are in possession of the IMEs [page317] are the plaintiffs in each of the tort actions. However, these parties have no intention of using the reports for an ulterior or collateral purpose. While the rule might be invoked to prevent either party to the AB proceeding from using the reports for an ulterior purpose, that is not what is happening here.
[55] What is happening is that the plaintiffs have commenced their respective tort actions in which they have put their medical conditions squarely in issue. The defendants in those actions have asked for production of documents, relevant to the issues in those actions, that are in the plaintiffs' possession and that are not protected by any privilege. They are seeking them for legitimate intent, namely, appropriate disclosure in an action closely related to the AB proceeding. They should be produced. Once they are, the implied undertaking rule will limit the use that the defendants can make of the documents to securing the ends of justice in the tort actions. That is the application and the only application of the implied undertaking rule to the circumstances before us in these appeals.
[56] This conclusion arguably eliminates the need to comment on the decision of the motions judges not to relieve against the operation of the rule. However, since considerable argument was advanced concerning the exercise of the judges' discretion in this regard, and in the event I am in error with respect to the application of the rule, I propose to deal briefly with the third issue.
Relief from the Implied Undertaking Rule
[57] In Goodman v. Rossi, Justice Morden held that it is a necessary part of the implied undertaking rule that the court have power to grant relief from its application. There would be cases where the interests of the discovered party sought to be protected by the rule will not be seriously affected, or affected at all, by a collateral use of discovered documents or information. However, the interests of the discovering party would be seriously affected if use could not be made of the documents. In other words, the court should be prepared to "tolerate some injustice to the discovered party if it is outweighed by a greater injustice to the discovering party if he or she could not make use of the discovered documents" (p. 378 O.R.).
[58] In the two cases under appeal, the motions judges, after concluding that the implied undertaking rule obtained, refused to grant relief from its application.
[59] In Reimer, the motions judge determined that Mrs. Reimer's privacy interests had to be protected and that the defendant was not prejudiced by not receiving Dr. Clifford's report since the defendant had taken advantage of its opportunity to obtain defence medicals in the tort action. For these reasons, Justice Leitch refused to exercise her discretion to relieve against the application of the rule. [page318]
[60] The defendant, in addressing the exercise of the motion judge's discretion in Reimer, submits that the interests of justice mandate the production of the report. In the circumstances of this case, Mrs. Reimer's privacy interests have been waived by her putting her medical condition in issue in the tort action. Mrs. Reimer's privacy interests, if any, are therefore not sufficient to overcome the prejudice to the defendant if the report is not available to address a number of issues raised in the tort action including the defendant's challenge to the providence of the settlement of the AB proceeding.
[61] The plaintiff argues that the rule should apply and relief from it should not be granted even if to do so would amount to the suppression of relevant evidence. Authorities support the importance of protecting a party's privacy interests. Furthermore, plaintiffs' counsel challenges the fairness of allowing the defendant effectively to "double up" on the defence medicals by having access to Dr. Clifford's report.
Analysis
[62] The major argument in favour of denying relief against the application of the rule involves the protection of Mrs. Reimer's privacy interests. Such interests are important. In fact, as previously discussed, these interests provide the foundation of the implied undertaking rule. However, the fact that there is provision for relief at all implies that such interests do not always trump everything else.
[63] In both of the proceedings involved in this combined appeal, the plaintiffs' privacy interests have been waived. In Cook v. Ip (1985), 1985 163 (ON CA), 52 O.R. (2d) 289, 22 D.L.R. (4th) 1 (C.A.), the Court of Appeal, at p. 293 O.R., examined the policy considerations relevant to production issues arising in personal injury actions. The court recognized that medical records are private and confidential in nature but when damages are sought for personal injuries, the medical condition of the plaintiff is relevant and often the very issue in question. The plaintiff himself places the issue before the court and in such circumstances "there can no longer be any privacy or confidentiality attaching to the plaintiff's medical records."
[64] In exercising the discretion to relieve against the application of the rule, the competing interests recognized by Morden J.A. in Goodman v. Rossi, were the need for all relevant evidence to be available to the court and the protection of the privacy interests of the parties.
[65] Respectfully, Leitch J. erred in proceeding with the balancing required in determining whether to exercise her discretion to relieve against the operation of the rule on the basis that the [page319] plaintiff had a privacy interest in her medical records. In failing to recognize that Mrs. Reimer had waived her privacy interests in her medical records by commencing the tort action, the motions judge fell into reversible error.
[66] Had this part of the analysis been necessary, I would have exercised my discretion and ordered production of Dr. Clifford's report on the basis that Mrs. Reimer's interests, given the waiver, would not be affected by the use of the report. In contrast, the interests of the defendant would be seriously affected if use could not be made of the report.
[67] In addition to the submission that the plaintiffs have waived any privacy interest in Dr. Clifford's report, counsel for the defendant in the Reimer action argues that there are other reasons why the court should exercise its jurisdiction and relieve against the application of the implied undertaking rule.
[68] First, the defendant submits that the plaintiffs have consented to the release of the report due to the undertaking they gave in 1997 to produce the entire AB file and a copy of all the mediation and arbitration materials.
[69] Further, pursuant to both the common law and rule 30.07, the plaintiffs in the Reimer tort action have an ongoing obligation to produce relevant documentation to the defendant. The defendant also relies upon the production and disclosure obligations contemplated by rule 33.04.
[70] An issue has also been raised about the effect of the order of Granger J. dated May 2, 2000 that required the plaintiffs to provide to the defendant "all updated medical records, reports and/or clinical notes and records from physicians or treating institutions that have assessed or treated Mrs. Reimer since the accident . . .". The defendant contends that the plaintiffs are bound by the terms of this order to produce the document.
[71] The crux of the plaintiffs' arguments with respect to all of these matters is that there was never any undertaking, agreement or court order that applied to Dr. Clifford's report. Further, any orders, rules or undertakings were intended to and can only apply to documents otherwise producible. In this respect, they submit that Dr. Clifford's report does not fall into that category by reason of the operation of the implied undertaking rule.
[72] There is insufficient evidence in the record to support a finding with respect to the reach of any undertakings given by counsel for the plaintiffs or the interpretation of Granger J.'s order. The circumstances surrounding the giving of the undertakings and the granting of the order are not clear. The arguments concerning the impact of the rules pertaining to ongoing disclosure do depend on whether the document is otherwise producible. [page320]
[73] In regards to the Tanner motion, there is an additional observation to be made with respect to Mr. Tanner's privacy interests in the IMEs. That is that the plaintiffs' medical experts involved in the tort action have reviewed and commented on at least some of the IMEs. Once Mr. Tanner decided to use the IMEs in his own case then the right to any confidentiality of the reports comes to an end. See: 2858-0702 Québec Inc. v. Lac d'Amiante du Québec Ltée, 2001 SCC 51, [2001] 2 S.C.R. 743, [2001] S.C.J. No. 49.
[74] This observation is made in addition to the fact that, based on the same analysis as set out when dealing with the court's exercise of discretion in the Reimer matter, Mr. Tanner's privacy interests in the IMEs were waived when he started his tort action.
[75] However, in Tanner, Justice Browne's decision not to relieve against the operation of the implied undertaking rule was influenced not as much by Mr. Tanner's privacy interests as by the affect of a disclosure order on the number of defence medicals that would be available to the defendants at trial.
[76] With respect, this is not a proper factor to take into consideration. First, notwithstanding the decision to order production of the medical reports in question in this combined appeal, the trial judge still maintains complete discretion with respect to the use, if any of these reports at trial. There are, as well, other ways to address any such concern, including, as was observed by J. Macdonald J. in Binns, supra, the plaintiffs' opportunity to raise the existence of IMEs in the course of responding to a motion for additional defence medicals. The point is that the implied undertaking rule was not designed for and should not be used to balance the number of medical reports available.
[77] The combination of the failure of the motions judge in Tanner to recognize and take into account the waiver of Mr. Tanner's privacy interests in the IMEs and his improperly concerning himself with the number of medical reports that would be available to the defence, resulted in an error in the exercise of his discretion. Justice Browne applied erroneous principles and the result of failing to relieve against the operation of the implied undertaking rule, with respect, fell into reversible error.
Conclusion
[78] For these reasons, both appeals are allowed. The plaintiffs in each action are to produce the reports in issue within ten days of today's date. The parties may make written submissions as to costs within 15 days.
Appeals allowed.