GasTOPS Ltd. v. Forsyth, 2011 ONCA 186

CITATION: GasTOPS Ltd. v. Forsyth, 2011 ONCA 186

DATE: 20110308

DOCKET: M39614 (C51170)

COURT OF APPEAL FOR ONTARIO

Juriansz J.A. (In Chambers)

BETWEEN

GasTOPS Ltd.

Plaintiff (Respondent)

and

Bradley Forsyth, Douglas Brouse Jeffrey Cass, Robert Vandenberg and MXI Technologies Ltd. a.k.a. 1197543 Ontario Ltd.

Defendants (Appellants)

David Elliot, for the appellants

James Shields, for the respondent

Heard: January 27, 2011

ENDORSEMENT

[1] This motion relates to the confidentiality of part of the court record in this appeal. After the hearing of the motion on January 27, 2011, I ordered that Trial Exhibits 17C, 33C, 42C and 764C are to be kept confidential and that the court registry is not to make them available to the public. I indicated that I would provide written reasons later.

[2] I am case managing this appeal. In the action the respondent, a software company, claimed the individual defendants, who are former employees of the respondent, used its proprietary trade secrets and confidential business information to misappropriate corporate opportunities. The respondent was successful at trial. The trial judge awarded it damages in the amount of $11,401,571. At the trial, which lasted 290 days, 2893 exhibits totalling some 70,000 pages were filed. Some 150 exhibits were designated confidential pursuant to a broad sweeping Confidentiality and Nondisclosure Order made by the trial judge. I highlight a few of the features of that order.

[3] The order provides that Designated Information may be revealed only to Designated Persons. Designated Persons are listed in the order. They include the trial judge, counsel for the parties, court staff and the parties themselves. Other Designated Persons, such as expert witnesses, have to execute Confidentiality Undertakings in a prescribed form before being granted access to the Designated Information. The Confidentiality Undertakings, themselves, are ordered to be kept confidential. The order provides that the court may name other Designated Persons “from time to time on motion by either party”.

[4] The question of whether, and to what extent, the order applied to the Court of Appeal proceeding arose early in the case management process. The order that Designated Information be kept confidential is not time-limited. The order contains several references to the appeal process. For example, para. 6 of the order provides “that upon final disposition of all court proceedings, including appeals, all Designated Information will be destroyed.” On the other hand, the order can be read as reserving to the trial judge a continuing role to supervise access to the information during and after the appeal proceedings. If taken literally, the order would require that the Court of Appeal registry and even the Court of Appeal judges be named as Designated Persons by the trial judge so that the Designated Information may be revealed to them. The first notice of motion filed by the respondent regarding the confidentiality issue sought an order of this court supplementing the confidentiality orders to include judges of the Court of Appeal and appeal court staff as Designated Persons. As well, if the appeal is considered a “related hearing”, para. 5 of the order would control who may be present in the courtroom at the hearing of the appeal when Designated Information is discussed.

[5] A final concern was that there is no indication that the requirements of the Supreme Court’s decision in Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, [2002] 2 S.C.R. 522, were satisfied prior to the making of the order. In fact, the order seems on its face to delegate to the parties the responsibility for determining what material would be kept confidential. Paragraph 1 of the order provides:

THIS COURT ORDERS that at any time during the within trial, or any related hearing, either party may designate any particular exhibit (hereinafter “Designated Information”) as being subject to the confidentiality provisions of this order.

[6] In light of all of these concerns, I instructed counsel that a motion be scheduled in open court on notice to the media to address whether the trial judge’s Confidentiality and Nondisclosure Order applied to the appeal proceeding and to deal with any requests that the record on appeal, or parts of it, be kept confidential.

[7] Ultimately, the respondent sought to have only four exhibits kept confidential. The appellants made no request that any material be kept confidential. The motion proceeded on January 27, 2011, after notice was given to the media through the court’s website. No representative of the media attended.

Discussion

[8] In my view, the trial judge’s Confidentiality and Nondisclosure Order was not intended to interfere with this court’s authority to deal with its own process. A careful reading of the order leads me to conclude that the trial judge did not intend that the parties should seek a variation of his order to identify Court of Appeal judges as Designated Persons or to permit the filing of the appeal record. As I read it, the order applies only to the trial record and the proceedings at trial. The order’s isolated references to “appeals” simply indicate when certain steps may be taken in regard to the trial record. For example, para. 2(e)(v) provides that copies of the Confidentiality Undertakings filed with the trial court may be obtained on application to the trial court upon the completion of “the trial, and any appeals”. Paragraph 6 provides that the Designated Information will be destroyed “upon the final disposition of all court proceedings, including appeals”. I understand para. 6 to refer to destruction of the Designated Information in the registry of the trial court, and not in the registry of this court.

[9] I conclude that the order does not apply to this court or the record filed with this court. No variation of the trial judge’s order is necessary to have any portion of the appeal record available to the public. Rather, the starting point in this court is that all material filed with this court’s registry is available to the public, and any party seeking to have material kept confidential must obtain an order to that effect.

[10] The Supreme Court in Sierra Club at para. 53 stated the test that must be met. A confidentiality order should only be granted when:

(a) such an order is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonably alternative measures will not prevent the risk; and

(b) the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible court proceedings.

[11] Under the first branch of this test:

• the risk in question must be real and substantial, in that the risk is well grounded in the evidence, and poses a serious threat to the commercial interest in question;

• the important commercial interest must be one which can be expressed in terms of a public interest in confidentiality, and the public interest in confidentiality must outweigh the public interest in openness of the courts; and

• consideration of reasonably alternative measures does not require the adoption of the absolutely least restrictive option, but does require the courts to restrict an order as much as is reasonably possible while preserving the commercial interest in question.

[12] In the second branch of the test, the salutary effects of the confidentiality order, including the effects on the appellant’s right to a fair trial, must be weighed against the deleterious effects of the confidentiality order, including the effects on the right to free expression, which in turn is connected to the principle of open and accessible court proceedings. The balancing of these considerations will determine whether the confidentiality order ought to be granted.

[13] I now turn to consideration of the four exhibits the respondent seeks to keep confidential in the appeal.

Exhibits 17C, 33C, and 42C

[14] These three exhibits relate to the relationship of GasTOPS with the government of Canada. Exhibit 17C is a Proposal to Develop ECMS Intellectual Property Rights. Each page of the proposal is marked “GasTOPS Ltd. Proprietary Information”. Exhibit 33C is a Department of National Defence (DND) grant of license to GasTOPS. It contains a confidentiality clause prohibiting GasTOPS from disclosing the licensed intellectual property, except as authorized by the agreement or with the prior consent of the licensor. Exhibit 42C is a contract between GasTOPS and the government of Canada. Large and bold type on its face indicates that it contains a security requirement. The contract specifies that GasTOPS “hold a valid Facility Security Clearance with approved document safeguarding at the level of SECRET, issued by the Industrial Security Division (ISD) of the Department of Supply and Services (DSS).”

Exhibit 764C

[15] Exhibit 764C is GasTOPS’ Business Plan for Fiscal Year 1997-1998. It contains marketing strategies, revenue information and the cost structure of GasTOPS. The age of the document raises the question whether disclosure of the information that it contains, which was clearly commercially sensitive at the time it was written, would continue to constitute a serious risk to GasTOPS’ commercial interest.

[16] Counsel for GasTOPS stresses that this particular business plan was prepared after GasTOPS had lost the defendants as employees as well as a large part of its business. This business plan, he said, was prepared for the Board of Directors to decide how to recover, or even whether an attempt to recover was feasible. The document was introduced at trial to show the effect of the defendants’ actions on GasTOPS as an operating company. The document contains a lot of material not relevant to this action, relating to other products and other contracts that are still ongoing. That is because the projects in this particular industry, by their nature and complexity, are long-lived. The time from conception of a project and the making of a proposal to the formation of a contract and its execution can easily span more than a decade. The document describes projects both with DND, the U.S. Navy and other military and commercial interests that are still ongoing. It also describes the processes and methodology of GasTOPS in carrying out its projects.

Conclusion

[17] I am satisfied that disclosure of these documents would pose a serious risk to GasTOPS’ commercial interests, and that the risk is real and substantial. I am also satisfied that there is a public interest in not disclosing these documents. These documents contain intellectual property, information connected to national defence, and subject matter over which third parties have required secrecy in their commercial dealings with GasTOPS. These public interests in this case outweigh the public interest in openness of the courts. Also, these documents would scarcely be of any interest to anyone other than potential competitors in the same business.

[18] With respect to all four documents, I am satisfied that redaction is not a reasonable alternative. Redaction is possible with Exhibit 764C, but would result in a document that conveyed little meaning. I see no other reasonable alternative to protect the interests involved than by keeping these documents confidential.

[19] I was advised that argument at trial related to these documents took place in open court, and that it was anticipated that keeping them confidential would not require that any portion of the appeal hearing be conducted in camera.

[20] I have also considered that GasTOPS introduced these exhibits at trial with the security provided by the trial judge’s order that they would be kept confidential.

[21] Having weighed the salutary effects of the confidentiality order requested in this motion against the deleterious effects of the confidentiality order, including the effects on the right to free expression, which includes the public interest in open and accessible court proceedings, I am satisfied that the interests in keeping these four exhibits confidential outweighs the public interest in their disclosure.

[22] I order that trial exhibits 17C, 33C, 42C and 764C shall remain confidential. As the record in this case is electronic, electronic versions of these exhibits are to be filed on a separate disk that will not be available to the public. The copies of the exhibits filed in support of this motion will also not be available to the public. There will be no restriction on the remainder of the appeal file, subject to any further order.

“R.G. Juriansz J.A.”