Ontario Superior Court of Justice, Divisional Court

Court File: 95-CU-88970CM

Date: 1999-06-25

Southey J.

Counsel:

John P. Koch, for appellants, Canadian Broadcasting Corp., Peter Van Dusen, Trish Dyer, Wendy Mesley, Phil Jenkins, and Robert Culbert.

Bryan Finlay, Q.C., and Michael Statham, for respondent, Victor Allen.

E.A. Cronk and Howard Winkler, for respondents, Care Canada and John Watson.

[1] SOUTHEY J.:—This appeal from a decision of Master Albert, dated March 15, last, raises difficult questions regarding the production of documents from persons not a party to an action and the examination for discovery of such persons. The relevant rules are rule 30.10(1) and rule 31.10(1) and (2).

[2] The action is one for libel brought by Care Canada ("Care") and its executive director, John Watson, in respect of statements made in television broadcasts on May 30 and May 31, 1995. The substance of the more significant statements may be summarized as follows:

(i) that Care had raised more than $400,000 from the Canadian public for the relief of conditions in Somalia, but had not used the money for that purpose.

(ii) that Care had been profligate in its expenditures on transportation, hotel accommodation and entertainment.

(iii) that Care had employed in its finance department a person with links to organized crime.

[3] The defendants have pleaded justification and fair comment.

[4] The statements complained of were part of broadcasts questioning the findings contained in a report obtained by Care from an independent business consultant, Victor B. Allen. Allen is a respondent in the appeal, but is not a party to the action. Allen had been hired by Care to investigate the allegations respecting Somalia relief that were contained in a report from current and former employees of Care entitled "In the Matter of Management". Care had agreed with Allen that anything said to him by staff members would be kept in strictest confidence. This assurance of confidentiality was given by Care to its staff, and was repeated by Allen to the employees of Care.

[5] The defendants are the Canadian Broadcasting Corporation (the "CBC"), whose stations carried the broadcasts, and 5 employees of the CBC who participated in the broadcasts. The plaintiffs and Allen have refused to produce the notes made by Allen of his interviews with some 25 to 30 Care employees. The order under appeal is the dismissal by the Master of the motion by the defendants to compel production of unexpurgated copies of the notes of Allen's interviews and for an order permitting the defendants to examine Allen for discovery.

[6] The following are the relevant portions of the applicable rules:

30.10(1) The court may, on motion by a party, order production for inspection of a document that is in the possession, control or power of a person not a party and is not privileged where the court is satisfied that,

(a) the document is relevant of a material issue in the action; and

(b) it would be unfair to require the moving party to proceed to trial without having discovery of the document.

31.10(1) The court may grant leave, on such terms respecting costs and other matters as are just, to examine for discovery any person who there is reason to believe has information relevant to a material issue in the action, other than an expert engaged by or on behalf of a party in preparation for contemplated or pending litigation.

Test for Granting Leave

31.10(2) An order under subrule (1) shall not be made unless the court is satisfied that,

(a) the moving party has been unable to obtain the information from other persons whom the moving party is entitled to examine for discovery, or from the person he or she seeks to examine;

(b) it would be unfair to require the moving party to proceed to trial without having the opportunity of examining the person; and

(c) the examination will not,

(i) unduly delay the commencement of the trial of the action,

(ii) entail unreasonable expense for other parties, or

(iii) result in unfairness to the person the moving party seeks to examine.

[7] The Master dismissed the defendants' motion on the ground that the interviews conducted by Allen and the documents created by Allen in conducting the interviews were protected by privilege. She also found that the documents and discovery were not relevant to matters in issue in the action.

[8] The Master's reasons for judgment are clear and carefully written, but I regret that I am unable to agree with her on either the question of privilege or the question of relevance.

RELEVANCE

[9] I shall deal first with the issue of relevance.

[10] The defence of justification requires the defendants to prove the truth of the statements alleged to have been libelous. I have summarized above the substance of the more significant of those statements. Evidence to prove justification, if the statements are true, may be obtained from the records of Care and the oral evidence of Care employees without any reference to the Allen Report. The correctness of the Allen Report is not directly in issue in the action.

[11] In these circumstances, the plaintiffs submit, the statements made to Allen during the course of interviewing Care employees are not relevant.

[12] I cannot accept that submission. The purpose of Allen's interviews was to determine the validity of the allegations respecting Somalia relief that were contained in the report entitled "In the Matter of Management". The subject matter of the interviews was the same as the alleged libel.

[13] I can see no merit in the argument that the communications between Allen and the employees whom he interviewed were not relevant to the plea of justification. I would expect them to be directly relevant.

PRIVILEGE

[14] The Master relied on the following statement of McLachlin J. in M.(A.) v. Ryan, [1997] 1 S.C.R. 157 at 170, 143 D.L.R. (4th) 1:

General Principles

The common law principles underlying the recognition of privilege from disclosure are simply stated. They proceed from the fundamental proposition that everyone owes a general duty to give evidence relevant to the matter before the court, so that the truth may be ascertained. To this fundamental duty, the law permits certain exceptions, known as privileges, where it can be shown that they are required by a "public good transcending the normally predominant principle of utilizing all rational means for ascertaining truth": Trammel v. United States, 445 U.S. 40 (1980), at p. 50.

While the circumstances giving rise to a privilege were once thought to be fixed by categories defined in previous centuries — categories that do not include communications between a psychiatrist and her patient — it is now accepted that the common law permits privilege in new situations where reason, experience and application of the principles that underlie the traditional privileges so dictate: Slavutych v. Baker, [1976] 1 S.C.R. 254; R. v. Gruenke, [1991] 3 S.C.R. 263, at p. 286. The applicable principles are derived from those set forth in Wigrnore on Evidence, vol. 8 (McNaughton rev. 1961), § 2285. First, the communication must originate in a confidence. Second, the confidence must be essential to the relationship in which the communication arises. Third, the relationship must be one which should be "sedulously fostered" in the public good. Finally, if all these requirements are met, the court must consider whether the interests served by protecting the communications from disclosure outweigh the interest in getting at the truth and disposing correctly of the litigation.

[15] There is no question that the first requirement of privilege exists in the case at bar. The communications between Allen and the employees whom he interviewed originated in confidence. I am unable, however, to agree with the conclusion of the Master that the second and third requirements stated by Wigrnore have been met.

[16] Allen had been hired by Care to interview the employees of Care. Care then chose to commence an action in which Care alleges that statements made by the defendants on the same subject as the interviews are libellous. Those statements are relevant to the plea of justification for the reasons given above. I cannot accept that the confidence in which the communications arose was essential to the relationship of employer and employee between Care and the employees making the statements to Allen. Nor was the confidence essential to the relationship between Allen and the employees of Care. Unlike the relationship between a priest and a penitent, or a psychiatrist and a patient, Allen could not confer any blessing, advice or other benefit upon the interviewees which was dependent upon them making full and truthful disclosure to him. There was, of course, no continuing relationship between Allen and the persons interviewed by him.

[17] Allen was not a solicitor. Care does not claim any litigation or solicitor-and-client privilege for the communications between him and the interviewees. The purpose of the interviews was supposed to be the determination of the truth. It should have been known by Care, Allen and the interviewees that any assurances of confidentiality could not displace the legal duty to give evidence if that truth became an issue in legal proceedings. That is especially so, in my judgment, when the legal proceedings are an action commenced by the employer at whose behest the inquiries were made.

[18] As to the authorities cited by the Master, the existence of a corporate ombudsman privilege accepted in Kientzy v. McDonnell Douglas Corp., 133 F.R.D. 570 (1991), by David D. Noce, United States Magistrate Judge in the United States District Court for the Eastern District of Missouri, Eastern Division, was not recognized in Carman v. McDonnell Douglas Corp., 114 F.3d 790 (1997), a decision of the United States Court of Appeals for the Eighth Circuit. The Court said:

McDonnell Douglas relies on the analysis of the court in Kientzy, supra, apparently one of only two federal courts to have recognized a corporate-ombudsman privilege. [* * 12] n3 We do not find the reasoning of that opinion convincing. For example, the Kientzy opinion argues that confidentiality is essential to ombudsman-employee relationships because the function of that relationship is to "receive communications and to remedy workplace problems, in a strictly confidential atmosphere. Without this confidentiality, the office would just be one more non-confidential opportunity for employees to air disputes. The ombudsman's office provides an opportunity for complete disclosure, without the specter of retaliation, that does not exist in the other available, non-confidential grievance and complaint procedures." 133 F.R.D. at 572. As we have said, the corporate ombudsman will still be able to promise confidentiality in most circumstances even with no privilege. To justify the creation of a privilege, McDonnell Douglas must first establish that society benefits in some significant way from the particular brand of confidentiality that the privilege affords. Only then can a court decide whether the advantages of the proposed privilege overcome the strong presumption in favor of disclosure of all relevant information. The creation of a wholly new evidentiary [**13] privilege is a big step. This record does not convince us that we should take it.

[19] Although the decision of Master Donkin in Tubbessing v. Bell Canada (1995), 22 O.R. (3d) 714, may be distinguished on the grounds mentioned by Master Albert, Master Donkin expressed the same doubt as to an ombudsman's privilege, as was later stated by the United States Court of Appeals in Carman v. McDonnell Douglas. After referring to the Kientzy decision, Master Donkin said at p.717:

So far as counsel are aware, this case has not been followed in any case in which the balance to be drawn was between a private investigation and an action in the courts.

In my view, the defendant has not presented evidence which would persuade me that the social value of the defendant being able to assure its employees that their remarks will be kept confidential outweighs the social value of the information being made available in order to allow the courts to do justice as between the plaintiff and defendant.

[20] In my opinion, the communications between Allen and the employees whom he interviewed do not satisfy the second and third principles enunciated by Wigmore, and are not protected by privilege.

[21] It is unnecessary to consider Wigmore's fourth requirement, because it is dependent on the fulfillment of all of the first three requirements.

FAIRNESS

[22] An order for production under rule 30.10(1) and an order for discovery under rule 31.10(1) can only be made where it would be unfair to require the moving party to proceed to trial without having discovery of the document or the opportunity of examining the person.

[23] It follows from the general duty of everyone to give evidence that the defendants will be entitled to call Allen as a witness at trial and to require him to produce the notes of his interviews. In Ontario (Attorney General) v. Ballard Estate (1995), 44 C.P.C. (3d) 91, 129 D.L.R. (4th) 52, the Ontario Court of Appeal allowed an appeal from an order of a motions judge who had refused to order the production of documents from non-parties. The Court held that the motions judge had erred in holding that the documents in question must he "vital" or "crucial" before it could be said that it would be unfair to refuse their production. The Court said, with respect to rule 30.10(1)(a) [p. 94]:

The Rule envisions cases where it will be unfair to require a party to proceed to trial without the production of relevant documents even though those documents are not crucial or vital to that party's preparation for trial. By limiting the production of documents to those found to be vital or crucial, the trial judge elevated the materiality standard in Rule 30.10(1)(a) and effectively neutered the fairness assessment demanded by Rule 30.10(1)(b).

[24] Later in its reasons, the Court listed a number of factors which should have been considered by the judge in deciding whether to order production in the circumstances of that case. I shall examine each of those factors in relation to the case at bar [pp. 95-96].

• the importance of the documents in the litigation: In my judgment, the documents related to the interview conducted by Allen are important to the determination of the issue of justification.

• whether production at the discovery stage of the process as opposed to production at trial is necessary to avoid unfairness to the appellant: The notes relate to interviews with employees of Care. It seems likely that evidence from those employees relevant to the issue of the truth of the statements complained of would be readily available to Care, but not to the defendants. The resulting imbalance would be somewhat eliminated by providing the defendants with notes of the statements made by the employees to Allen. The result would be to reduce the unfairness to the defendants resulting from such imbalance.

• whether discovery of the defendants with respect to the issues to which the documents are relevant is adequate and if not, whether responsibility for that inadequacy rests with the defendants: In the case at bar, the question is whether the discovery of the plaintiffs with respect to the issues to which the documents are relevant is adequate. The discovery of the plaintiffs is not adequate in the case at bar, because the plaintiffs do not have possession of the documents in question. The responsibility for the inadequacy in this respect lies with Allen, not with the plaintiffs, but the plaintiffs are supporting Allen in his refusal to produce the documents.

• the position of the non-parties with respect to production: In the case at bar Allen, the non-party, refuses to produce the documents because of the assurance of confidentiality. He and the plaintiffs claim a privilege, which I have found does not exist in law.

• the availability of the documents or their informational equivalent from some other source which is accessible to the moving parties: The documents or their informational equivalent are not accessible to the moving parties from some other source. It is unlikely that the employees interviewed by Allen will cooperate with the defendants whom the employer has sued.

• the relationship of the non-parties from whom production is sought, to the litigation and the parties to the litigation. Nonparties who have an interest in the subject matter of the litigation and whose interests are allied with the party opposing production should be more susceptible to a production order than a true "stranger" to the litigation: Allen is not an independent third party who would be inconvenienced by an order requiring production of the documents in question. Allen has an interest in the litigation, in that he was retained to investigate the subject matter of the statements complained of. It was his business to determine the truth of the statements in respect of which the plea of justification is made.

[25] In the circumstances of this case, and having regard to the factors mentioned by the Court of Appeal in the Ballard case, it would be unfair to the defendants, in my opinion, to require them to proceed to trial without having discovery of the documents. There would be no unfairness to Allen if an order is made for him to be examined for discovery because, as pointed out above, he should have realized that any assurances of confidentiality could not displace the duty to give evidence, if the subject of the interviews became relevant to an issue properly raised in litigation.

DELAY

[26] The date for commencement of the trial of the action has been fixed for October 25, next. There is ample time to conduct an examination of Allen.

DISPOSITION

[27] An order will go setting aside the Order of Master Albert. In its place will be an order directing that Allen produce for inspection the notes of his interviews, and granting leave to the defendants to examine Allen for discovery. Costs of the examination are reserved to the trial judge. If the parties and Allen are unable to agree on any other terms of the examination, a motion may be brought before the Master to settle those terms.

[28] Costs here and below reserved to the trial judge.

[29] Appeal allowed.