Kitchenham v. AXA Insurance Canada

94 O.R. (3d) 276

Court of Appeal for Ontario,

Doherty, Cronk and Juriansz JJ.A.

December 24, 2008

Civil procedure -- Discovery -- Deemed undertaking -- Plaintiff in tort action arising out of motor vehicle accident receiving copy of surveillance video and independent medical examination report from tort defendant during discovery -- Plaintiff also suing her insurer for disability benefits as result of same accident -- Copy of surveillance video and IME report subject to deemed undertaking under rule 30.1 -- Deemed undertaking placing restriction on documents obtained in discovery only on recipient of those documents -- Interests of party who was compelled to disclose information being only interests that can justify maintaining undertaking under rule 30.1.01(8) -- Plaintiff's alleged privacy rights in material irrelevant to exercise of discretion under subrule (8) -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 30.01.

In a tort action arising out of a motor vehicle injury, the tort defendant obtained an order requiring the plaintiff to submit to an independent medical examination, and a copy of the doctor's report (the "IME") was provided to the plaintiff by the tort defendant as required under rule 33.06 of the Rules of Civil Procedure. The tort defendant conducted surveillance of the plaintiff, and during the discovery process provided a copy of the surveillance videotape to the plaintiff pursuant to Rule 30. The tort action was settled. The plaintiff also sued her own insurer, claiming that she was disabled and unable to work and that the insurer had improperly withheld certain benefits and expenses. During discoveries in that action, the plaintiff refused to produce a copy of the surveillance videotape and the IME on the basis that she was bound by the deemed undertaking in rule 30.1. On a motion by the defendant, the motion judge held that the deemed undertaking rule applied but that the rule precluded use and not disclosure. He ordered production of the videotape and the IME, limiting their use to potential impeachment purposes. The Divisional Court agreed that the IME and the videotape were caught by the deemed undertaking in rule 30.1, but held that they could only be produced by the plaintiff in the discovery process in the benefits action pursuant to a judge's order under rule 30.1.01(8). The defendant appealed.

Held, the appeal should be dismissed. [page277]

The deemed undertaking rule places a restriction on the use of documents obtained in discovery only on the recipient of those documents. The plaintiff obtained a copy of the videotape and the IME through the discovery process. She was bound by the deemed undertaking not to use the IME or the videotape in another proceeding, and the tort defendant was the beneficiary of that undertaking. No distinction should be drawn between using a document and producing that document. Where the undertaking applies, it reaches production of evidence (and derivative information) captured by rule 30.1. None of the exceptions enumerated in subrules (4) to (7) applied. Rule 30.1 applied to both the videotape and the IME, and they could not be disclosed by the plaintiff in the benefits action without a judge's order under rule 30.1.01(8). Under subrule (8), the interests of the party who was compelled to disclose the information are the only interests that can justify maintaining the undertaking. The interests advanced by the plaintiff to justify her refusal to produce the copy of the videotape and the IME had no place in the exercise of the discretion contemplated in subrule (8). Claims based on the privacy interests in the material of the recipient of the information (in this case, the plaintiff) have nothing to do with whether a judge should permit use of evidence otherwise subject to the deemed undertaking.

APPEAL from the order of the Divisional Court, 2007 37892 (ON SCDC), [2007] O.J. No. 3477, 284 D.L.R. (4th) 722 on the applicability of deemed undertaking.

Cases referred to Goodman v. Rossi (1995), 1995 1888 (ON CA), 24 O.R. (3d) 359, [1995] O.J. No. 1906, 125 D.L.R. (4th) 613, 83 O.A.C. 38, 12 C.C.E.L. (2d) 105, 37 C.P.C. (3d) 181, 56 A.C.W.S. (3d) 267 (C.A.); London Life Insurance Co. v. Konney (1998), 1998 18849 (ON SC), 41 O.R. (3d) 706, [1998] O.J. No. 3747, 114 O.A.C. 376, 7 C.C.L.I. (3d) 69, 82 A.C.W.S. (3d) 658 (Div. Ct.), consd Other cases referred to B.E. Chandler Co. v. Mor-Flo Industries Inc. (1996), 1996 8030 (ON SC), 30 O.R. (3d) 139, [1996] O.J. No. 2093, 7 O.T.C. 60, 50 C.P.C. (3d) 122, 63 A.C.W.S. (3d) 1036 (Gen. Div.); Home Office v. Harman, [1983] 1 A.C. 280 (H.L.); Juman v. Doucette, [2008] 1 S.C.R. 157, [2008] S.C.J. No. 8, 2008 SCC 8, 75 B.C.L.R. (4th) 1, [2008] 4 W.W.R. 1, 50 C.P.C. (6th) 207, EYB 2008-130634, J.E. 2008-501, 290 D.L.R. (4th) 193, 164 A.C.W.S. (3d) 765; Kay v. Posluns (1989), 1989 4297 (ON SC), 71 O.R. (2d) 238, [1989] O.J. No. 1914, 18 A.C.W.S. (3d) 24 (H.C.J.); Kitchenham v. AXA Insurance, 2007 37892 (ON SCDC), [2007] O.J. No. 3477, 284 D.L.R. (4th) 722, 229 O.A.C. 249, 52 C.C.L.I. (4th) 201, 45 C.P.C. (6th) 29, 160 A.C.W.S. (3d) 431 (Div. Ct.), varg 2005 16620 (ON SC), [2005] O.J. No. 1973, [2005] O.T.C. 417, 23 C.C.L.I. (4th) 76, 17 C.P.C. (6th) 375, 139 A.C.W.S. (3d) 443 (S.C.J.); Rogacki v. Belz (2003), 2003 12584 (ON CA), 67 O.R. (3d) 330, [2003] O.J. No. 3809, 232 D.L.R. (4th) 523, 41 C.P.C. (5th) 78, 125 A.C.W.S. (3d) 806 (C.A.); Snook v. ING Insurance Co. of Canada (September 15, 2003), FSCO A02-000728 (Arbitrator J. Sandomirsky); Tanner v. Clark (2003), 2003 41640 (ON CA), 63 O.R. (3d) 508, [2003] O.J. No. 677, 224 D.L.R. (4th) 635, 169 O.A.C. 152, 30 C.P.C. (5th) 103, 34 M.V.R. (4th) 23, 120 A.C.W.S. (3d) 952 (C.A.), affg (2002), 2002 62434 (ON SCDC), 60 O.R. (3d) 304, [2002] O.J. No. 2558, 161 O.A.C. 285, 27 C.P.C. (5th) 52, 31 M.V.R. (4th) 91, 114 A.C.W.S. (3d) 821 (Div. Ct.) [Leave to appeal to S.C.C. refused [2003] 3 S.C.R. viii, [2003] S.C.C.A. No. 192] Statutes referred to Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 6(2) [as am.], 105 [as am.] Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 30, 30.1, 30.1.01(1) [as am.], (a) [as am.], (b) [as am.], (2) [as am.], (3) [as am.], (4) [as am.], (5) [as am.], (6) [as am.], (7) [as am.], (8) [as am.], 33, 33.04, 33.06 O. Reg. 61/96, s. 2 [page278] Authorities referred to Laskin, John B., "The Imiplied Undertaking". A paper presented to the Canadian Bar Association -- Ontario, CLE Conference on Privilege and Confidential Information in Litigation -- Current Developments and Future Trends, October 9, 1991 Papile, Critiano, "The Implied Undertaking Revisited" (2006), 32 Adv. Q. 190 Swan, Richard B., "The Deemed Undertaking: A Fixture of Civil Litigation in Ontario" (Winter 2008) 27 Advocates' Soc. J., No. 3 Watson, Garry D., Holmested and Watson: Ontario Civil Procedure, looseleaf, vol. 3 (Scarborough, Ont.: Carswell, 1984)

Geoffrey D.E. Adair, Q.C., and Robert M. Ben, for appellant. Karl Arvai, for respondent.

The judgment of the court was delivered by

DOHERTY J.A.: --

I. Factual Background

[1] Civil litigants are compelled in the discovery process to disclose information to their opponents. Forced disclosure can compromise a litigant's legitimate interest in maintaining the confidentiality of documents and information. However, interference with that privacy interest is justified as essential to a fair and accurate resolution of the litigation. Various judicial and legislative means have been developed to limit the interference with privacy interests to the confines of the litigation in which the disclosure is compelled. In Ontario, the deemed undertaking, created by rule 30.1 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, protects privacy interests by controlling the use of information outside of the litigation in which it was obtained by way of compelled disclosure. This appeal examines the application of the deemed undertaking rule where a plaintiff, who obtained information from a defendant in one action, seeks to withhold that information from another defendant in the discovery process in a second action also commenced by the plaintiff.

[2] Janet Kitchenham, the respondent ("plaintiff"), was in a car accident in January 1993. She sued the other driver in January 1995 (the "tort action"). The tort defendant obtained an order under s. 105 of the Courts of Justice Act, R.S.O. 1990, c. C.43, requiring the plaintiff to submit to an independent medical examination. That medical examination was performed by Dr. Clifford, a [page279] psychiatrist. A copy of his report (the "IME"), dated January 1999, was provided to the plaintiff by the tort defendant as required under rule 33.06.

[3] The tort defendant conducted surveillance of the plaintiff. During the discovery process, the tort defendant provided a copy of the surveillance videotape to the plaintiff, pursuant to Rule 30. [See Note 1 below]

[4] The tort action settled some time in the year 2000. About four years earlier, the plaintiff had commenced a second action (the "benefits action"). In the benefits action, the plaintiff sued her own insurer, AXA Insurance Canada ("AXA"), claiming that she was disabled and unable to work, and that AXA had improperly withheld weekly income replacement benefits and payments for certain rehabilitation-related expenses. AXA filed a statement of defence in 1997.

[5] Discoveries in the benefits action were completed in 2003. During those discoveries, the plaintiff refused to produce the following: -- a copy of the surveillance videotape provided to the plaintiff by the tort defendant; -- a copy of the IME provided to the plaintiff by the tort defendant; and -- copies of documents relating to the settlement of the tort action.

[6] The plaintiff refused to produce the videotape and the IME, claiming that she was bound by the deemed undertaking in rule 30.1. She refused to produce the documents relating to the settlement, claiming that they were irrelevant to any issue in the benefits action. AXA brought a motion challenging the refusals.

[7] The motion judge held that the video surveillance and the IME engaged the deemed undertaking rule, whether or not the plaintiff was the recipient of the discovery documents. However, he concluded that the Rule precluded use and not disclosure. He ordered production of the videotape and the IME, limiting their use to potential impeachment purposes. He agreed with the plaintiff's contention that the settlement documents were [page280] irrelevant: see Kitchenham v. Axa Insurance, 2005 16620 (ON SC), [2005] O.J. No. 1973, 17 C.P.C. (6th) 375 (S.C.J.).

[8] Both parties obtained leave to appeal the order of the motion judge to the Divisional Court. That court agreed with the motion judge that the videotape and the IME were caught by the deemed undertaking in rule 30.1, but disagreed with the production order. The Divisional Court held that the videotape and the IME could not be produced by the plaintiff in the discovery process in the benefits action, subject to a judge's order under rule 30.1.01(8). The Divisional Court agreed with the motion judge that the settlement documents were irrelevant and need not be produced to AXA: see Kitchenham v. AXA Insurance, 2007 37892 (ON SCDC), [2007] O.J. No. 3477, 284 D.L.R. (4th) 722 (Div. Ct.).

[9] AXA obtained leave to appeal to this court. [See Note 2 below] Although I have a different interpretation of rule 30.1 than both the Divisional Court and the motion judge, I arrive at the same result as the Divisional Court.

[10] In my view, the rule exists to protect the privacy interest of the party compelled by the rules of disclosure to provide that information to another party to the litigation. The rule provides that protection by prohibiting the party who obtained the information through compelled disclosure from using that information outside of the litigation, except where certain exceptions apply or the court makes an order permitting its use.

[11] The plaintiff obtained copies of the videotape and the IME from the tort defendant in the course of the discovery process in the tort action. Consequently, that material falls within the scope of the deemed undertaking found in rule 30.1. AXA can obtain a copy of the videotape and the IME by obtaining either the consent of the tort defendant or an order of the court pursuant to rule 30.1.01(8).

[12] I agree with the Divisional Court and the motion judge that AXA has not demonstrated that the settlement documents have any relevance to the benefits action brought by the plaintiff against AXA. I would not order those documents produced and will briefly address that issue before turning to an analysis of the deemed undertaking rule. [page281]

II. The Settlement Documents

[13] AXA argues that it is entitled to production of the settlement documents in the tort action because the amount and terms of the settlement could provide a disincentive to the plaintiff to work, thereby colouring her claim in the benefits action that she is actually disabled and unable to work. No other relevance is suggested. The amount of the settlement in the tort action can have no impact on what AXA must pay under its policy if the plaintiff's claim succeeds.

[14] I agree with the motion judge (paras. 51-53) and the Divisional Court (para. 22) that this ground of appeal cannot succeed. The issue in the benefits action is whether the plaintiff is disabled and unable to work. The impact, if any, of the settlement in the tort action on the plaintiff's motivation to work and, more particularly, the connection between that motivation and the extent to which the plaintiff is actually disabled are both so speculative as to be beyond even the generous notion of relevance applied at this stage of a proceeding: Kay v. Posluns (1989), 1989 4297 (ON SC), 71 O.R. (2d) 238, [1989] O.J. No. 1914 (H.C.J.), at p. 246 O.R.

III. The Deemed Undertaking Rule

[15] The copy of the videotape and the IME are relevant in the benefits action. Both potentially speak to the level of the plaintiff's disability. They are in the possession of the plaintiff. Apart from rule 30.1, no basis has been advanced by the plaintiff for withholding this material from AXA during the discovery process. The plaintiff did not advance a privilege claim, although some of the plaintiff's submissions suggested that the personal nature of the information conveyed to Dr. Clifford, which he referenced in the IME, was relevant to whether the IME should be produced. For the purpose of this appeal, AXA's entitlement to a copy of the videotape and the IME turns exclusively on the operation of rule 30.1.

[16] The terms of the deemed undertaking are found in subrule (3) of the rule. It must, however, be read as a whole to understand its meaning and scope:

30.1 DEEMED UNDERTAKING

Application

30.1.01(1) This Rule applies to, (a) evidence obtained under, (i) Rule 30 (documentary discovery), (ii) Rule 31 (examination for discovery), [page282] (iii) Rule 32 (inspection of property), (iv) Rule 33 (medical examination), (v) Rule 35 (examination for discovery by written questions); and (b) information obtained from evidence referred to in clause (a).

(2) This Rule does not apply to evidence or information obtained otherwise than under the rules referred to in subrule (1).

Deemed Undertaking

(3) All 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 evidence was obtained.

Exceptions

(4) Subrule (3) does not prohibit a use to which the person who disclosed the evidence consents.

(5) Subrule (3) does not prohibit the use, for any purpose, of, (a) evidence that is filed with the court; (b) evidence that is given or referred to during a hearing; (c) information obtained from evidence referred to in clause (a) or (b).

(6) Subrule (3) does not prohibit the use of evidence obtained in one proceeding, or information obtained from such evidence, to impeach the testimony of a witness in another proceeding.

(7) Subrule (3) does not prohibit the use of evidence or information in accordance with subrule 31.11(8) (subsequent action).

Order that undertaking does not apply

(8) If satisfied that the interest of justice outweighs any prejudice that would result to a party who disclosed evidence, the court may order that subrule (3) does not apply to the evidence or to information obtained from it, and may impose such terms and give such directions as are just.

(1) Reasons of the motion judge and the Divisional Court

[17] The motion judge acknowledged that rule 30.1 had its origin in the implied undertaking rule developed in the common law and recognized by this court in Goodman v. Rossi (1995), 1995 1888 (ON CA), 24 O.R. (3d) 359, [1995] O.J. No. 1906 (C.A.). However, he went on to identify two differences between the implied undertaking at common law and the deemed undertaking found in rule 30.1.

[18] First, he noted that, as interpreted in Tanner v. Clark (2003), 2003 41640 (ON CA), 63 O.R. (3d) 508, [2003] O.J. No. 677 (C.A.), leave to appeal to S.C.C. refused [2003] 3 S.C.R. viii, [2003] S.C.C.A. No. 192, the common law implied undertaking constrained only the [page283] conduct of the recipient of the information and not the party who had disclosed the information in the discovery process. The motion judge read rule 30.1 as applying to all parties. At paras. 25 and 27, he stated:

[S]ubrule 30.1.01(3) imposes the undertaking on "[a]ll parties and their counsel". This includes both the party disclosing the evidence and the party receiving it, as well as their respective counsel. By contrast, the focus in Tanner v. Clark was on the recipient of the information only. As Carthy J.A. noted, the accident benefits insurer was bound by the undertaking, but the plaintiff (referred to as the "source" of the information) was not. . . . . .

Rather than focussing on the recipient of information, and imposing an implied obligation on that recipient, the rule focuses on the nature of the evidence in question. If the evidence was obtained under one of the five enumerated procedures in sub-rule 1(a), then the use of that evidence is constrained by the rule. These constraints are imposed on all parties and their counsel. Clearly, the drafters of the rule intended that it should apply not only to the parties and counsel in the original proceeding, but also to the parties and counsel where the specified evidence is sought to be introduced. (Italics in original; underlining added)

[19] The second difference identified by the motion judge concerns the scope of the undertaking. In his view (at para. 29), the common-law rule constrained only uses that were detrimental to the party that produced the information. In contrast, the deemed undertaking set out in the rule foreclosed use "for any purpose other than those of the proceeding in which the evidence was obtained" (emphasis in original). On the motion judge's reading of the rule, it was irrelevant whether the subsequent use was to the detriment of the party who produced the information.

[20] The motion judge ultimately decided the motion on a point not raised or argued by counsel. He drew the following distinction, at para. 32: "The point that was entirely missed in argument is that this rule constrains the use of evidence, it does not constrain the disclosure of evidence" (emphasis in original).

[21] The motion judge concluded that although the rule foreclosed use of the material, the plaintiff was compelled to produce a copy of the IME and the videotape to AXA. AXA, however, could only use the material for impeachment purposes. This limited use was found in the exception to the deemed undertaking created by rule 30.1.01(6). If AXA wished to make broader use of the material, it would have to bring a motion under subrule (8).

[22] The Divisional Court agreed with the motion judge that the deemed undertaking rule, unlike the common law implied [page284] undertaking, applied not just to the recipient of the documents, but also to the discovered party, stating, at para. 14:

Because of the clear wording of Rule 30.1.01(3) and in particular to the phrase "(3) All parties and their counsel are deemed to undertake . . .", we are unable to accept the submission of the respondent that it is only the recipient of discovery documents or evidence that is constrained from disclosing or using them outside the proceeding and that the discovered party is not constrained by the deemed undertaking rule in any way. In addition to what we regard as the clear wording of the rule, it is obvious that in many instances the discovered party may have a privacy interest worthy of protection under the rule.

[23] The Divisional Court, however, disagreed with the motion judge's distinction between disclosing information otherwise captured by the deemed undertaking and using that information. The Divisional Court concluded that disclosure was a form of use and was captured by the deemed undertaking in subrule (3), indicating, at para. 16:

We would begin by recognizing that the routine disclosure of discovery evidence from a prior proceeding in a subsequent action would totally fail to give effect to the important privacy interests which form the basis of Rule 30.1.01, the deemed undertaking rule, and indeed its common law counterpart. There does not appear to be any authority for the distinction between disclosure and use which the motion judge suggests. The prohibited "use" in the Rule is a term sufficiently broad to include disclosure. Indeed the case law, both at common law and under the deemed undertaking rule seems to protect the privacy of litigants by protecting the confidentiality of documents and information produced on discovery against any further disclosure without leave of the Court.

[24] The Divisional Court concluded that the videotape and the IME were protected from disclosure by the deemed undertaking rule, irrespective of which party was the discloser or recipient of the information, and directed that an application for relief from that rule should be made by way of motion to a judge of the Superior Court under subrule (8).

(2) Analysis

(i) Who is subject to the deemed undertaking?

[25] Rule 30.1 is referred to as the deemed undertaking rule. With respect to the contrary view, an interpretation of that rule that extends the deemed undertaking to the party who provided the information and to strangers to the litigation in which the information was provided is inconsistent with the meaning of an undertaking in the litigation context. "Undertaking" is defined in Black's Law Dictionary, 4th ed., revised, in part as:

[A] promise given in the course of legal proceedings by a party or his counsel, generally as a condition to obtaining some concession from the court or the opposite party. [page285]

[26] An undertaking is a promise given by one party to another party to the lawsuit in exchange for obtaining something from that party. Thus, in the discovery process, one party receives information from another party, and in exchange promises the other party that the information will not be used for any purpose other than the litigation at hand. The disclosed information flows in one direction, from the discovered party to the discovering party. The undertaking flows in the opposite direction, from the party obtaining the disclosure to the party giving the disclosure. That undertaking does not limit what the discovered party can do in the future with its own information. There is no reason for imposing an undertaking limiting future use of the information on the party who has suffered the burden of producing the information through compelled disclosure. It is equally at odds with the accepted meaning of an undertaking to hold that parties who had no connection with the process in which the undertaking arose should, at some later time in some other litigation, find themselves bound by that promise or undertaking.

[27] I appreciate that it is ultimately the meaning of rule 30.1 and not the customary meaning of an undertaking that controls the outcome of this appeal. However, the rationale underlying the rule, the language used in the rule and the jurisprudence of this court interpreting the rule all support an interpretation that is consistent with the way in which undertakings customarily work.

(a) Rationale underlying the rule

[28] Rule 30.1 came into force on April 1, 1996: O. Reg. 61/ 96, s. 2. It is a direct descendant of the common law implied undertaking doctrine recognized by this court in Goodman v. Rossi. The implied undertaking was recently described in these terms:

One such safeguard is the implied undertaking of confidentiality, which circumscribes the use that a party receiving discovery may make of the information it obtains. Where the implied undertaking exists, the party in receipt of information is deemed to give an undertaking to the court that it will not use that information for any collateral or ulterior purpose unrelated to the litigation at hand. (Emphasis added) Cristiano Papile, "The Implied Undertaking Revisited" (2006), 32 Advocates' Q. 190, at p. 190.

[29] The common law implied undertaking, as developed in Canada and England, limits the use that the recipient of the compelled disclosure could make of information obtained by that disclosure. The implied undertaking did not bind either the party [page286] who provided the disclosure or strangers to the litigation in which the disclosure was made: see Juman v. Doucette, 2008 SCC 8, [2008] 1 S.C.R. 157, [2008] S.C.J. No. 8, at paras. 4 and 55; Tanner v. Clark, at paras. 5-7, affg (2002), 2002 62434 (ON SCDC), 60 O.R. (3d) 304, [2002] O.J. No. 2558 (Div. Ct.), at paras. 39 and 48-55; Home Office v. Harman, [1983] 1 A.C. 280 (H.L.), per Lord Keith, at p. 308 A.C.; John B. Laskin, "The Implied Undertaking" (a paper presented to the CBA-Ontario, CLE Conference on Privilege and Confidential Information in Litigation -- Current Developments and Future Trends, October 19, 1991), at p. 2.

[30] The implied undertaking promotes the due administration of justice in the conduct of civil litigation in two ways. First, it encourages full and frank disclosure on discovery by the parties. It does so by interdicting, except with the court's permission, the subsequent use of the disclosed material by the party obtaining that disclosure for any purpose outside of the litigation in which the disclosure was made. Second, the implied undertaking accepts that the privacy interests of litigants must, subject to legitimate privilege claims, yield to the disclosure obligation within the litigation, but that those interests should be protected in respect of matters other than the litigation: Juman v. Doucette, at paras. 23-27; Richard B. Swan, "The Deemed Undertaking: A Fixture of Civil Litigation in Ontario" (Winter 2008) 27 Advocates' Soc. J., No. 3, at p. 16.

[31] In Goodman v. Rossi, at p. 369 O.R., Morden J.A. quotes from Matthews and Malek's Discovery (1992), at p. 253, where the rationale for the rule is described as follows:

The primary rationale for the imposition of the implied undertaking is the protection of privacy. Discovery is an invasion of the right of the individual to keep his own documents to himself. It is a matter of public interest to safeguard that right. The purpose of the undertaking is to protect, so far as is consistent with the proper conduct of the action, the confidentiality of the party's documents. It is in 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 purpose other than the purpose of the particular legal proceedings . . .

[32] The promotion of full and frank disclosure, and the protection of the privacy interests of those who are compelled to make disclosure during discovery are both served by restricting the use that the party obtaining the information can make of that information. Neither rationale for the implied undertaking justifies any restriction on the subsequent use of the information by the party who produced that information. To the contrary, wrapping all information produced in the discovery process in one action [page287] in a cloak of non- disclosure for any subsequent purpose and requiring a court order to remove that cloak of secrecy would inevitably interfere with the effective operation of the discovery process.

(b) The language of the rule

[33] The language of rule 30.1 confirms that it, like the common law implied undertaking, targets subsequent use by the recipient of information disclosed through the discovery process. Subrule (1) identifies the material captured by the deemed undertaking. Subrule (1)(a) refers to "evidence obtained under" the various discovery mechanisms described in subrule (1)(a). Subrule (1)(b) extends the rule to cover information obtained from evidence described in clause (a).

[34] The verb "obtained" signals that the rule applies to evidence (and derivative information) received through the discovery process and not to information provided in that process. A party who receives evidence through compelled disclosure obtains that evidence. The party who provides evidence through compelled disclosure does not obtain that evidence under any accepted meaning of the word. Subrule (2) expressly excludes from the operation of the rule any evidence (or derivative information) other than evidence obtained through the discovery process. Consequently, if a party called upon to disclose evidence (or derivative information) in a subsequent proceeding did not obtain that evidence through the discovery process, the rule has no application. [See Note 3 below]

[35] The actual deemed undertaking is set out in subrule (3):

Deemed undertaking

(3) All 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 evidence was obtained. (Emphasis added)

[36] The undertaking applies to "evidence or information to which this Rule applies". That phraseology drives the reader back to subrules (1) and (2). As indicated above, the rule only applies to evidence (and derivative information) obtained through the discovery procedures identified in subrule (1)(a). [page288] Consequently, "[a]ll parties and their counsel" who obtained evidence through those procedures are deemed to undertake not to use that evidence for any purpose other than purposes arising in the proceedings in which they obtained that evidence. If the party called upon to disclose the evidence in a subsequent proceeding did not obtain that evidence (or derivative information) through discovery in the prior proceeding, the rule does not apply and there is no deemed undertaking. A party who provides evidence on discovery does not obtain that evidence through discovery. That party's subsequent use of that evidence is unaffected by the deemed undertaking rule.

[37] Two other features of the rule demonstrate that it applies exclusively to the party or parties who obtain the evidence on discovery. Subrule (4) excludes from the deemed undertaking provision in subrule (3) a use "to which the person who disclosed the evidence consents". An outright exclusion from the deemed undertaking rule based on the unilateral consent of the disclosing party makes sense only if the rule exists exclusively to protect the residual privacy interest of that party in the information it revealed on discovery. An exclusion from the deemed undertaking based on the disclosing party's consent is inconsistent with an interpretation of the rule that makes the disclosing party subject to the undertaking. On that reading, one subrule would make the disclosing party subject to the deemed undertaking, while another subrule would allow the disclosing party to escape the deemed undertaking, simply by consenting to the subsequent use. One can hardly be said to be bound by an undertaking if one's own consent can negate that undertaking.

[38] Subrule (8) also assists in identifying the nature of the deemed undertaking rule. It provides that the court may order that the deemed undertaking in subrule (3) does not apply to evidence, or information obtained from it, "if satisfied that the interest of justice outweighs any prejudice that would result to a party who disclosed evidence". Subrule (8) makes it clear that the party who disclosed the evidence through the compelled discovery process is the exclusive beneficiary of the protection afforded by the deemed undertaking. It is that party's privacy interests that can justify restriction on the use of information obtained through discovery outside of the litigation in which that information was obtained: see B.E. Chandler Co. v. Mor-Flo Industries Inc. (1996), 1996 8030 (ON SC), 30 O.R. (3d) 139, [1996] O.J. No. 2093 (Gen. Div.), at p. 142 O.R.

[39] In arriving at the conclusion that the deemed undertaking rule foreclosed use by both the recipient of the disclosure [page289] and the party giving disclosure, the Divisional Court referred to the opening language of subrule (3) and added, at para. 14, that "it is obvious that in many instances the discovered party may have a privacy interest worthy of protection under the rule".

[40] I agree with this observation. Indeed, I think that the discovered party has the only privacy interest protected under the rule. However, the protection of the privacy of the discovered party is neither served, nor justified, by an extension to the discovered party of the obligation not to use the information in a subsequent proceeding. The protection of the discovered party's privacy interest flows from the imposition of the undertaking limiting subsequent use on the discovering party.

(c) The case law

[41] The case law from this court supports a reading of the rule that imposes the undertaking on the recipient of the compelled disclosure for the benefit of the party who was compelled to make the disclosure. In Tanner v. Clark, this court, after concluding that in the circumstances, the common law implied undertaking and not the deemed undertaking rule applied, held that the implied undertaking constrained only subsequent use outside of the litigation by the recipient of the disclosed documents. The motion judge and the Divisional Court distinguished Tanner v. Clark on the ground that it spoke to the common law implied undertaking and not the terms of the deemed undertaking found in rule 30.1.

[42] Carthy J.A. addressed both the common law implied undertaking and the deemed undertaking in Tanner v. Clark. After agreeing with the observation of Epstein J. in the Divisional Court that the implied undertaking protected against use by the recipient of the information rather than against all uses of the information, Carthy J.A. went on to draw the parallel between the common law and rule 30.1, at para. 6:

It is "used by the other party" and "use them to the detriment of the party who has produced them" that are the keynote phrases. Rule 30.1.01(1) speaks in the same voice -- it is "evidence obtained" on discovery that shall not be "used". These verbs describe the acts of receiving and disseminating information; they do not label the evidence as sealed or privileged. The applicants in the AB proceedings submitted to medical examinations knowing that the information they impart will not be used by the two insurance companies except in those proceedings, and will not be communicated to others for their use in other proceedings. That has not happened here. The insurers in the tort proceedings are different companies and the information is sought, not from the insurers in the AB proceedings, but from the source of that information, the respective plaintiffs in the tort actions. Those plaintiffs are not constrained in any way from the use of their medical information for any purpose. What they argue for is not [page290] enforcement of an undertaking, but a protective shield against production of very relevant evidence. (Emphasis added)

[43] The analysis of Carthy J.A. applies with full force to the deemed undertaking as described in rule 30.1. This is demonstrated by the reasons in Rogacki v. Belz (2003), 2003 12584 (ON CA), 67 O.R. (3d) 330, [2003] O.J. No. 3809 (C.A.), at para. 28. Borins J.A., relying on Tanner v. Clark, described the rule in these terms:

The documents and testimony obtained from the discovered party are protected by the deemed undertaking from improper use by the discovering party. Under Rule 30.1 the discovered party is not constrained from any use of his testimony or the documents elicited by the discovering party. It is the discovering party's use of information obtained from the discovered party for a purpose other than that of the litigation in which it was obtained that is precluded by Rule 30.1. (Emphasis added)

[44] London Life Insurance Co. v. Konney (1998), 1998 18849 (ON SC), 41 O.R. (3d) 706, [1998] O.J. No. 3747 (Div. Ct.) does offer some support for the position taken by the plaintiff. It would appear that in Konney the insured, relying on rule 30.1.01(3), claimed that medical reports he had prepared for use in a tort action could not be produced by him in a subsequent action brought by his insurer against him. The court accepted this contention, stating, at p. 709 O.R., that "[t]hese documents originated in the tort actions and their use by any party is prima facie confined to those actions".

[45] In holding that the deemed undertaking bound all parties to the earlier proceeding, the court purported to rely on Goodman v. Rossi. For reasons set out above, I read that authority and the many it referred to as placing a restriction on the use of documents obtained in discovery only on the recipient of those documents. In Konney, the insured was the source of the medical reports and not the recipient of those reports from the opposing party. The deemed undertaking rule protected the insured against the use of those reports outside of the tort action by the defendant to whom those reports were produced. The rule did not permit the insured to withhold its own relevant information from a different insurer in a second action. Not only does Konney misread Goodman v. Rossi, but it has been overtaken by the decisions of this court in Tanner v. Clark and Rogacki v. Belz.

[46] In summary, the rationale for the rule, the language of the rule and this court's jurisprudence all support the following observation in Garry D. Watson, ed., Holmested and Watson: Ontario Civil Procedure, looseleaf, vol. 3 (Scarborough, Ont.: Carswell, 1984), at p. 30.1-5: [page291]

The undertaking prevents the recipient of the information from revealing it to third parties (perhaps most particularly, but not limited to, the media) or making use of the information in a proceeding other than the one in which it was obtained. (Emphasis added)

(ii) Did the plaintiff obtain a copy of the videotape and the IME through the discovery process?

[47] The tort defendant conducted surveillance of the plaintiff and recorded that surveillance by way of videotape. A copy of that videotape was produced to the plaintiff on discovery. The plaintiff clearly obtained a copy of the videotape during discovery. The fact that she is the subject of that videotape is irrelevant. The plaintiff is bound by the deemed undertaking not to use the videotape except as permitted by the rule. The tort defendant, and not the plaintiff, is the beneficiary of that deemed undertaking. The deemed undertaking protects any privacy interest the tort defendant may have in the use of a copy of the videotape outside of the tort action.

[48] Similarly, the plaintiff obtained the IME during discovery in that it was produced to her by the tort defendant pursuant to Rule 33. As with the copy of the videotape, the plaintiff is bound by the deemed undertaking not to use the IME in another proceeding and the tort defendant is the beneficiary of that undertaking.

[49] During oral argument, counsel for the plaintiff referred to the IME, medical records provided by the plaintiff to Dr. Clifford for use in the preparation of the IME as required by rule 33.04, and medical information given to Dr. Clifford by the plaintiff in the course of the doctor's examination of the plaintiff as if all were subject to the deemed undertaking in rule 30.1. If I understood counsel's submission correctly, he asserts that all this material is protected from disclosure in the benefits action by the deemed undertaking rule.

[50] Only the IME was obtained by the plaintiff in the course of discovery in the tort action and, therefore, only the IME is subject to the deemed undertaking rule. The other medical information given to Dr. Clifford by the plaintiff as required by the rules flowed from the plaintiff to Dr. Clifford and was not "obtained" by the plaintiff in the course of the discovery. The same observation applies to any information conveyed by the plaintiff to Dr. Clifford during his examination. The plaintiff's obligation to produce her own medical information in the benefits action is unaffected by the fact that she had already produced that information in the tort action for the purpose of the preparation of the IME. If [page292] the information is relevant and not protected by privilege, it must be produced.

[51] Counsel's attempt to bring all the plaintiff's medical information provided to the tort defendant within the deemed undertaking rule suggests a misconception of the scope and purpose of the rule. The rule has nothing to do with the nature of the information in issue, but turns exclusively on how the party called upon to disclose the information came into possession of that information: Juman v. Doucette, at para. 25. If the party obtained the information in the course of the discovery process, it is subject to the deemed undertaking rule regardless of whether the information is confidential. If, however, the information was not obtained in the discovery process, the deemed undertaking rule has no application no matter how confidential the information might be. A litigant who wishes to resist production on the basis of the nature of the information sought must find shelter in some privilege or challenge the relevancy of the information.

(iii) Does the deemed undertaking prohibit production of evidence on discovery in a subsequent proceeding?

[52] Subrule (3) proscribes use of evidence or information covered by the rule "for any purposes other than those of the proceeding in which the evidence was obtained". The prohibition is drawn in very wide terms. Those terms are consistent with the scope of the common law implied undertaking that prohibited use for any purpose other than the conduct of the litigation in which the compelled disclosure occurred: Goodman v. Rossi, at pp. 374-75 O.R. The privacy rationale underlying the rule also warrants extending the protection of the rule to requests for disclosure of the information covered by the rule in the course of discoveries in subsequent proceedings. Disclosure on discovery compromises the residual privacy interest of the party from whom the material was obtained by compelled disclosure in the earlier proceeding.

[53] The motion judge was moved to exclude the disclosure of material in the course of discoveries from the scope of subrule (3) because subrule (6) accepted use for impeachment purposes of information otherwise caught by the deemed undertaking in subrule (3). The motion judge reasoned, at para. 35:

As already noted, sub-rule 30.1.01(6) permits the use of such evidence to impeach the testimony of a witness in the present proceeding. Obviously, it would be impossible to make use of the evidence in that manner without having it disclosed in the first place. [page293]

[54] I do not agree that rule 30.1.01(6) requires the disclosure of protected evidence for impeachment purposes. Litigants will sometimes, quite properly, be in possession of material that is subject to the deemed undertaking rule. They will not be permitted to use that material. If, however, the occasion arises, they can use that material for impeachment purposes. For example, if party "A" sues party "B" and obtains certain documents on discovery, the deemed undertaking rule will prohibit "A" from using those documents for any purpose outside of that litigation. However, should party "A" become involved in a second lawsuit, subrule (6) would permit party "A" to utilize the evidence lawfully obtained in the prior action to impeach the testimony of a witness in the second proceeding. There is no need to exempt production on discovery from scope of the deemed undertaking to give meaning to the impeachment exception to the rule.

[55] Neither party on this appeal supported the distinction drawn by the motion judge between using a document and producing that document. Like the Divisional Court, I do not think that distinction is warranted either on the language of the rule or having regard to its rationale. Where the undertaking applies, it reaches production of evidence (and derivative information) captured by the rule.

(iv) The operation of subrule (8).

[56] Having concluded that the copy of the videotape and the IME were obtained by the plaintiff in the course of discovery in the tort action, and that their disclosure on discovery by the plaintiff in the subsequent benefits action would constitute a use of that evidence, it follows that the material is subject to the deemed undertaking created by the rule. None of the exceptions enumerated in subrules (4) to (7) apply. AXA can obtain the material either by getting the consent of the tort defendant to the plaintiff giving the material to AXA or by obtaining an order under subrule (8) lifting the deemed undertaking as it applies to the copy of the videotape and the IME.

[57] Subrule (8) identifies the two competing interests which must be considered on a motion under that subrule. On the one side stands the "interest of justice". On the other side stands "prejudice" to the "party who disclosed evidence". The former interest must "outweigh" the latter before the deemed undertaking will be held not to apply to the information in issue. In the context of subrule (8), the "interest of justice" refers to factors that favour permitting the subsequent use of the information. Where the motion arises in the context of a party who seeks to [page294] use the information in subsequent litigation, the more valuable the information to the just and accurate resolution of the subsequent litigation, the more the interest of justice will be served by permitting the use of that information.

[58] The interests of the party who was compelled to disclose the information are the only interests that can justify maintaining the undertaking. My reading of subrule (8) is consistent with an interpretation of the rule that recognizes the party who gave up the information as the sole beneficiary of the protection afforded by the rule. It is also consistent with subrule (4), which provides that the deemed undertaking has no application if the party who disclosed the evidence consents to its use.

[59] On the view I take of subrule (8), the interests advanced by the plaintiff to justify her refusal to produce the copy of the videotape and the IME have no place in the exercise of the discretion contemplated in subrule (8). The plaintiff contends that she has a privacy interest in the material. She also argues that AXA could obtain the same kind of medical information through other means. Unlike the motion judge (paras. 38 and 43-45) and the Divisional Court (para. 20), I do not think these interests carry any weight on a motion under subrule (8). The motion judge, at para. 38, mistakenly refers to the subrule as contemplating the balancing of the interest of justice against "any prejudice that would result to a party". As set out above, subrule (8) looks only at prejudice to the party who disclosed the evidence, in this case, the tort defendant. Claims based on the recipient of the information's privacy interests in the material (in this case, the plaintiff) have nothing to do with whether a judge should permit use of evidence otherwise subject to the deemed undertaking. [See Note 4 below]

[60] The discretion in subrule (8) must be exercised on a case-by-case basis. However, where the beneficiary of the undertaking resists relief from that undertaking, the undertaking should only be set aside in "exceptional circumstances". Those circumstances must be particularly compelling if a stranger to the undertaking seeks to use material protected by the undertaking: see Juman v. Doucette, [at] paras. 38 and 53.

[61] Juman v. Doucette is a recent case in which a stranger to the undertaking rule sought judicial permission to use evidence given on discovery by a party who strongly opposed that use. The [page295] Vancouver police were conducting a criminal investigation targeting the appellant. The British Columbia prosecutorial authorities sought access to evidence given by the appellant in an earlier discovery in a civil proceeding from the discovering parties. The appellant moved to prohibit the discovering parties from providing the discovery transcripts to the police.

[62] Although Juman v. Doucette involved the application of the common law implied undertaking rule, Binnie J. did refer to subrule (8) of the Ontario rule. At para. 32, he stated:

An application to modify or relieve against an implied undertaking requires an applicant to demonstrate to the court on a balance of probabilities the existence of a public interest of greater weight than the values the implied undertaking is designed to protect, namely privacy and the efficient conduct of civil litigation. In a case like the present, of course, there weighs heavily in the balance the right of a suspect to remain silent in the face of a police investigation, and the right not to be compelled to incriminate herself. The chambers judge took the view (I think correctly) that in this case that factor was decisive. In other cases the mix of competing values may be different. What is important in each case is to recognize that unless an examinee is satisfied that the undertaking will only be modified or varied by the court in exceptional circumstances, the undertaking will not achieve its intended purpose. (Emphasis added)

[63] The "examinee" referred to by Binnie J. is the party who was compelled to submit to the examination for discovery and to disclose information in that testimony. On the facts of this case, it is the tort defendant, and not the plaintiff, who stands in the same shoes as the "examinee" in Juman v. Doucette.

[64] The result of the balancing process required by subrule (8), and described by Binnie J. above, must be very different where the beneficiary of the protection afforded by the deemed undertaking has no interest in availing itself of that protection. In this case, the tort defendant has not expressed any concern about the production of the videotape or the IME in the benefits action. Indeed, it is unclear whether the tort defendant is aware of the dispute over the production of this material. The plaintiff resists disclosure, not for any reasons connected to the privacy interest of the tort defendant, the beneficiary of the undertaking, but for reasons of her own which, whatever merit they may have, have nothing to do with the rationale for the deemed undertaking. On the present record, this case would appear to fit within that category of cases described in Goodman v. Rossi, at p. 378 O.R.:

Of course, there will 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 . . . [page296]

[65] Where the interests of the party protected by the deemed undertaking would not be adversely affected by the use of the material, and assuming the material has relevance in the subsequent proceeding, the interest of justice would inevitably outweigh any resulting prejudice to the party who had disclosed the evidence.

IV. The Appropriate Order

[66] In the normal course, I would simply dismiss the appeal and uphold the order of the Divisional Court that rule 30.1 applies to both the videotape and the IME, and that subject to a judge's order under rule 30.1.01(8), they cannot be disclosed by the plaintiff in the benefits action. However, while this appeal was pending, the parties proceeded with their motion under subrule (8). The motion judge ordered the plaintiff to produce the videotape, but refused to order production of the IME. Both sides have obtained leave to appeal from that order to the Divisional Court. The parties included a copy of the motion judge's endorsement in the appeal book. Those reasons must now be assessed in the light of these reasons.

[67] If both parties are content, the appeals from the motion judge's order under subrule (8) should proceed in the Divisional Court in the normal course. One or both parties may, however, wish to make a motion under s. 6(2) of the Courts of Justice Act. That section would allow this court to hear the appeal from the motion judge as long as this appeal was still outstanding in this court. There was some discussion at the time of oral argument concerning the possible application of s. 6(2). I think the parties should have an opportunity to revisit their positions with respect to that section after reviewing these reasons.

[68] Rather than dismissing the appeal immediately, I would release these reasons and allow the parties an opportunity to decide whether either or both wish to bring a motion under s. 6(2) of the Courts of Justice Act. The parties should inform this court within seven days of the release of these reasons whether any such motion will be brought. If the motion is to be brought, counsel may arrange a conference call with me to work out the details. If neither party decides to bring a motion under s. 6(2), an order can issue dismissing the appeal.

V. Costs

[69] The parties agreed that the successful party on the appeal was entitled to costs in the amount of $14,000, inclusive of disbursements and GST, payable upon the completion of the action. [page297] If no motion is brought under s. 6(2) and the appeal is dismissed, the plaintiff is entitled to costs in that amount. If a motion is to be brought under s. 6(2), I would not make any order as to costs until the matter is fully dealt with in this court.

Appeal dismissed.

Notes

Note 1: In its factum, the appellant suggests that the record does not indicate how the plaintiff came into possession of the videotape. Both the motion judge (para. 49) and the Divisional Court (para. 6) proceeded on the basis that the copy of the videotape of the surveillance was given to the plaintiff pursuant to the tort defendant's obligations under Rule 30. I propose to do the same.

Note 2: At the same time that AXA pursued its leave to appeal application in this court, it brought a motion for production of the material pursuant to rule 30.1.01(8) in the Superior Court. On February 11, 2008, Kennedy J. ordered production of the videotape but not the IME. This court was told that both parties have now appealed that decision to the Divisional Court. I will have more to say about this development when addressing the appropriate order in Part IV of these reasons.

Note 3: There may be cases where an entity in possession of evidence (or derivative information) was not a party to the litigation in which the deemed undertaking arose but has sufficient connection to the recipient of the information that the deemed undertaking will extend to that entity. That issue does not arise in this case.

Note 4: The arbitration cases relied on by the plaintiff have no application. Those cases accept that the arbitrator has a discretion that goes far beyond the balancing of competing interests contemplated by subrule (8): see e.g., Snook v. ING Insurance Co. of Canada (September 15, 2003), FSCO A02-000728 (Arbitrator J. Sandomirsky).