ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 03-003/03

DATE: March 6, 2013

BETWEEN:

KAREN FOSS

Applicant

– and –

ROY FOSS, ANDREW FOSS, ANDREA FOSS, ERIC FOSS, ROY FOSS MOTORS LTD., HOGAN CHEVROLET BUICK GMC LIMITED, FOSS NATIONAL LEASING LTD., NEWMARKET SATURN SAAB LTD., ROY FOSS MOTORCAR LIMITED, RF LIMITED PARTNERSHIP, 720168 ONTARIO INC. , 2152832 ONTARIO LTD., RF INVESTMENT HOLDINGS LTD., ROY FOSS CHEVROLET LTD., 1737481 ONTARIO LIMITED, 1475398 ONTARIO INC., 1788289 ONTARIO INC., 2117197 ONTARIO INC., 2122192 ONTARIO INC., 2102230 ONTARIO LIMITED, TOWN & COUNTRY MOTORS (1989) LIMITED, NORTH OCEAN ESTATES INC., MILLER THOMSON LLP, O’SULLIVAN ESTATE LAWYERS, BMO TRUST COMPANY and THE PUBLIC GUARDIAN AND TRUSTEE

Respondents

Caroline E. Abela for the Applicant

Isabella Massimi for the Respondents Roy Foss Motors Ltd., Foss National Leasing Ltd., Newmarket Saturn Saab Ltd., Roy Foss Motorcar Limited, RF Limited Partnership, 720168 Ontario Inc., 2152832 Ontario Ltd., 2102230 Ontario Limited, RF Investment Holdings Ltd., and Roy Foss Chevrolet Ltd.

Paul Monahan and Kimberley Potter for the Respondents Andrew Foss, Hogan Chevrolet Buick GMC Limited and 1737481 Ontario Ltd.

John D. Campbell for the Respondents 1475398 Ontario Inc., 1788289 Ontario Inc., 2117107 Ontario Inc., 2122192 Ontario Inc. and Town & Country Motors (1989) Limited.

Jan Goddard for Roy Foss.

HEARD: February 28, 2013

PERELL, J.

REASONS FOR DECISION

I. INTRODUCTION

[1] There are two motions before the court.

[2] The first motion, the “sealing motion,” is brought by the Applicant, Karen Foss, to have the court file sealed to the public but not to the parties to this Application. The Application is a guardianship application under the Substitute Decisions Act, 1992, S.O. 1992, S.O. 1992, c. c. 30 with respect to the person and property of Roy Foss, who is Ms. Foss’s father.

[3] The second motion, the so-called “confidentiality motion,” is brought by the Respondents Roy Foss Motors Ltd., Foss National Leasing Ltd., Newmarket Saturn Saab Ltd., Roy Foss Motorcar Limited, RF Limited Partnership, 720168 Ontario Inc., 2152832 Ontario Ltd., 2102230 Ontario Limited, RF Investment Holdings Ltd., and Roy Foss Chevrolet Ltd. (“the Foss Motors Respondents”). The Foss Motors Respondents are businesses in the automotive industry in which Mr. Foss has an ownership interest.

[4] In the second motion, the Foss Motors Respondents seek an order that would authorize certain documents and information being disclosed to the court but not to certain parties. For example, the order being sought would prevent Hogan Chevrolet Buick GMC Limited and 1737481 Ontario Ltd., “the Hogan Respondents,” which are also businesses in the automotive industry, from having access to any information that the Foss Motors Respondents designate as confidential. As an alternative to this order, the Foss Motors Respondents seek an “eyes-only” order; that is, an order that the parties’ lawyer but not the party see the documents.

[5] At the conclusion of the hearing of the two motions, I made the following endorsements:

This is a motion for an order sealing the court record in these proceedings. The parties agree or do not oppose an order that third parties and the public not have access to the material filed with the court with the exception for access to LawPro, the insurer of the respondent Miller Thomson LLP. For written reasons to follow and having read the motion records and from counsel for Mr. Foss, the Foss [Motors] respondents, the Hogan respondents, and the Town & Country respondents, I am satisfied that the court file should be sealed to the public save for LawPro. The sealing of the court file is without prejudice to the rights and obligations of the parties to the material filed in the proceeding. Order accordingly. There should be no order as to costs with respect to the motion for a sealing order.

This is a motion for a so-called confidentiality order. The moving parties, the Foss [Motors] respondents, seek a confidentiality order that their co-respondents be required to treat the documents in this proceeding that may be filed, most particularly the documents associated with a material arrangement, as confidential. The moving parties further seek an order that the confidential documents not be disclosed to the persons bound by the confidentiality order. The moving party thus seeks an order that the co-respondents treat as confidential documents that they have not seen. In the alternative, the moving party seeks an “eyes-only” order. Mr. Foss, the Hogan respondents, and the Town & Country respondents do not oppose an order that extends the deemed undertaking rule to documents disclosed in the proceeding at a hearing, subject to an opportunity to persuade the court that the documents are not confidential or the deemed undertaking be discharged. But they oppose the non-disclosure of documents. I agree that there should be no order relieving the parties from making disclosure in accordance with the rules of civil procedure. For written reasons to follow, I conclude that there should only be an order as follows:

(1) Any party may assert that a document or information filed for a hearing in this matter is confidential, in which case the deemed undertaking rule will continue to apply to that document;

(2) Any party may apply in this proceeding or in other proceedings for an order discharging the extension of the deemed undertaking on any grounds including that the document or information is not or is no longer confidential or that it is in the interests of justice to discharge the deemed undertaking.

As for costs, in my opinion the respondents Hogan and Town & Country were the successful parties to this motion, and the normal rules with respect to costs should apply awarding them costs on a partial indemnity basis. I award the Hogan respondents $17,558.51, all inclusive and the Town & Country respondents $11,525.34, all inclusive.

[6] As noted in the endorsements, my Reasons for Decision were to follow. These are my reasons.

II. FACTUAL AND PROCEDURAL BACKGROUND

[7] The Respondent Roy Foss (“Mr. Foss”) is now 82 years old. He is the brother to John David Foss, and he is married to the co-Respondent Renata Ingeborg Hough Foss. Mr. Foss is the father of the Applicant Karen Foss (“Ms. Foss”) and of her siblings, who are the co-Respondents Andrew Foss, Andrea Foss, Eric Foss, and Roy Foss Jr.

[8] In 1962, Mr. Foss founded what had become a conglomerate of businesses in the automotive industry.

[9] Mr. Foss is a director of the various businesses comprising the Foss Motors Respondents, which are privately held businesses in the automotive industry.

[10] Mr. Foss, along with his son Andrew, are directors of the Hogan Respondents. Mr. Foss has a 15% interest in the Hogan Respondents.

[11] Mr. Foss is also a director of 1475398 Ontario Inc., 1788289 Ontario Inc., 2117107 Ontario Inc., 2122192 Ontario Inc., and he is a former director of Town & Country Motors (1989) Limited (the “Town & Country Respondents”). These businesses are also businesses in the automotive industry.

[12] The Foss Motors Respondents have a 50% ownership interest in the Town & Country Respondents.

[13] Between 2006 and April 2011, Mr. Foss signed a variety of powers of attorney appointing Ms. Foss as his attorney for various purposes.

[14] Beginning in 2006, Foss National Leasing, a member of the Foss Motors Respondents began discussions and negotiations with respect to a Material Business Arrangement.

[15] In May 2012, Mr. Foss revoked his previous powers of attorney and granted powers of attorney to his son Andrew Foss. Recently, in January 2013, Mr. Foss signed another power of attorney for personal care in favour of his wife and his son Andrew. All these powers of attorney were witnessed by Mr. Foss’s lawyer, Rosanne Rocchi, an estates lawyer at Miller Thompson LLP.

[16] On December 5, 2012, the negotiations for a Material Business Arrangement progressed to the point of an Interim Agreement for a Material Business Arrangement. The Interim Agreement is apparently subject to confidentiality provisions.

[17] On January 11, 2013, Ms. Foss brought this Application under the Substitute Decisions Act, which seeks, among other things: (a) a capacity assessment and interim guardianship for the property of Mr. Foss; and (b) a declaration that he is incapable of managing his property and personal care.

[18] Ms. Foss alleges that her brother Andrew`s powers of attorney were procured by undue influence and that Mr. Foss was incapable of giving the power of attorney. She seeks a declaration that one or more of the prior powers of attorney are valid.

[19] In her Application, Ms. Foss sues her father, her step-mother, her siblings, the Foss Motors Respondents, the Hogan Respondents, the Town & Country respondents, Miller Thomson LLP, O’Sullivan Estate Lawyers, and the Public Guardian and Trustee.

[20] In this last regard, it may be noted that Ms. Foss is suing, amongst others: (a) a group of companies, of which she is the directing mind, namely, the Foss Motors Respondents; (b) a group of companies in which the Foss Motors Respondents have a 50% interest; namely the Town & Country Respondents; and (c) a group of companies, in which Mr. Foss has a 15% interest; namely, the Hogan Respondents.

[21] The guardianship application puts into issue Mr. Foss’s general medical history and his mental capacity to grant a power of attorney or to execute a testamentary instrument. It also puts into issue his personal financial circumstances, which, in turn, are tied to the commercial and financial circumstances of the various businesses with which he is connected.

[22] The challenge to Mr. Foss’s capacity also puts into doubt whether the Foss Motors Respondents will be able to have him authorize the corporate acts necessary to complete the Material Business Arrangement. Thus, on February 21, 2013, the Foss Motors Respondents on behalf of Foss National Leasing Ltd. brought a motion for an order replacing Mr. Foss as a director of one or more corporations so that a replacement director could sign the resolutions with respect to the completion of the Material Business Arrangement that was scheduled to close on March 19, 2013.

[23] Around this time, Ms. Foss brought a motion for a sealing order and the Foss Motors Respondents brought a motion for a confidentiality order, which would secret, which is to say privilege from disclosure to some of the parties, but not the court, confidential documents including the Material Business Arrangement.

[24] The Foss Motors Respondents also brought a motion scheduled to be heard on March 7, 2013 for an interim order to have the court approve the Material Business Arrangement. The March 7 motion is for an interim order about the Material Business Arrangement and that motion necessitates disclosing the particulars of the Arrangement, including the parties and terms, and disclosing the potential impact of the Arrangement on the Foss Motors Respondents.

[25] The Foss Motors Respondents do not wish to show these documents to the co-Respondents.

[26] Thus, the delivery of documents for the March 7, 2013 motion and for the Application has been held up because of the two motions now before the court. Thus, Ms. Foss had not yet delivered her material in support of her application under the Substitute Decisions Act. Those materials are scheduled to be delivered on March 14, 2013.

III. DISCUSSION

[27] There is no serious dispute about the first motion, the request for a sealing order. The controversies arise with respect to the second motion and the request for the so-called confidentiality order.

[28] The adjudication of the guardianship application will require disclosure of documents and personal and private information about Mr. Foss’s health and financial situation, and it will require disclosure of commercially sensitive business records of the various business with which Mr. Foss has interests.

[29] Pursuant to s. 137 (2) of the Courts of Justice Act, R.S.O. 1990, c. C.43, the court has the jurisdiction to make a sealing order. Section 137 (2) states:

A court may order that any document filed in a civil proceeding before it be treated as confidential, sealed and not form part of the public record.

[30] In Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, [2002] 2 S.C.R. 522, which concerned a request for a sealing order in proceedings before the Federal Court, the Supreme Court of Canada formulated a test for when a sealing order should be granted. At paragraphs 53‑57, Justice Iacobucci stated that a sealing order should only be granted when: (1) the 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 (2) 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 includes the public interest in open and accessible court proceedings.

[31] Although courts are generally reluctant to grant a sealing order, they have been granted in a variety of circumstances including; (1) protecting the privacy of infants and parties under a disability, particularly a mental disability; Kaybar Fluid Power Ltd. v. Danfloss A/S, [2000] O.J. No. 1692 (S.C.J.); DB Trust (Trustees of) v. J.B. (Litigation guardian of), 2009 33033 (ON SC), [2009] O.J. No. 2693 (S.C.J.); (2) protecting a genuine trade secret or confidential property; Towers, Perrin, Foster & Crosby Inc. v. Cantin (2000), 2000 22695 (ON SC), 50 O.R. (3d) 476 (S.C.J.); CPC International Inc. v. Seaforth Creamery Inc., 1996 8195 (ON SC), [1996] O.J. No. 2059 (Gen. Div.); Dupont Canada Inc. v. Russel Metals Inc., [2000] O.J. No. 2043 (S.C.J.); and (3) preventing the disclosure of a non-parties’ confidential information, especially where disclosure by a party would contravene a confidentiality agreement: Andersen v. St. Jude Medical Inc., 2010 ONSC 5191 (S.C.J.).

[32] As noted in the introduction, above, there was no dispute that the immediate case is an appropriate one for a sealing order with an exception for LawPro. Out of an abundance of caution, I added the term that the sealing of the court file is without prejudice to the rights and obligations of the parties to the material filed in the proceeding.

[33] Turning to the request for a confidentiality order. Normally, in civil proceedings, the confidentiality and privacy of documents and information is protected by the common law’s implied undertaking or by Rule 30.1 of the Rules of Civil Procedure, the deemed undertaking rule. Rule 30.1.01 states:

RULE 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),
(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 lawyers 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.

[34] The deemed undertaking or the common law`s implied undertaking protects the confidentiality and privacy of documents and information disclosed during the course a proceeding by precluding the use of the documents or information for any purposes other than those of the proceeding in which the evidence was obtained.

[35] In the case at bar, none of the parties opposed the application of the implied undertaking or the deemed undertaking rule to what is a proceeding by application and none of the parties opposed closing the loophole found in subrule (3) of rule 30.1.01 (3), which provides that the deemed undertaking 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; or (c) information obtained from evidence referred to in clause (a) or (b).

[36] However, Mr. Foss, the Hogan Respondents, and the Town & Country Respondents all vigorously oppose the extraordinary and unprecedented request that non-privileged documents and information that a party intends to rely on and use at a hearing not be disclosed to the opposing parties in the litigation because the party believes that the disclosure of the allegedly confidential information or information covered by a confidentiality agreement will cause it economic losses and irreparable harm.

[37] The respondents also argue that the Foss Motors Respondents did not establish any evidentiary foundation to substantiate their concerns that there would be economic losses and irreparable harm if they complied with the Rules of Civil Procedure.

[38] In this regard, the Respondents argue that Mr. Jeff Hartley, a senior Foss National Leasing Ltd. employee, who gave evidence for the Foss Motors Respondents and who was cross-examined, was unable to identify any economic loss or irreparable harm that would befall the Foss Motors Respondents by the disclosure of the documents claimed to be confidential.

[39] I agree with the Respondents` opposition to the so-called confidentiality order. It is one thing to seal documents from the public; it is another thing altogether to seal documents from the parties to the litigation at the unilateral discretion of one party who fears commercial harm if he, she, or it complies with the Rules of Civil Procedure with respect to the disclosure and production of documents.

[40] Unless we are to return to the days of the Starr Chamber, where proceedings were conducted in secret, it is a fundamental aspect of civil procedure that the parties to the proceedings disclose the documents and information they rely on and that the parties, subject to the rules of documentary and oral discovery, disclose and produce the documents and information that are relevant to the matters in issue.

[41] There is nothing in Sierra Club, supra that suggests that a sealing order should apply to the parties to litigation and prevent them from seeing their opponent’s documents. In any event, in my opinion, the so-called confidentiality order moves well beyond the concerns of the open court principle, to the fundamental principles of a fair adversarial process in accordance with the fundamental principles of natural justice.

[42] The Foss Motors Respondents seek not only an order sealing the court file to the public but also barring their co-respondents from seeing and using the documents declared to be confidential by the Foss Motors Respondents. I agree with the opposing parties that no principle of law authorizes such a procedure for civil proceedings.

[43] I also agree with the responding parties` arguments that the case at bar is inappropriate for the extraordinary and rare “eye’s only” disclosure order.

[44] An order permitting disclosure to a party’s lawyer but not to the party interferes with the lawyer and client relationship and with the adversary system of adjudication, and such an order should only be granted in very rare circumstances where there is a demonstrated risk of serious injury. Those circumstances do not exist in the case at bar. See Boehringer Ingleheim (Canada) Ltd. v. Bristol-Myers Squibb Canada Inc., [1998] O.J. No. 667 (Gen. Div.); Novopharm Ltd. v. Nycomed Canada Inc., 2011 FC 109; Novopharm Ltd. v. Glaxo Group Ltd., [1998] F.C.J. No. 534 (C.A.).

[45] I conclude that the order requested by the Foss Motors Respondents should be refused. However, given the concessions of the Mr. Foss, the Hogan Respondents, and the Town & Country Respondents, I shall make an order extending the deemed undertaking. This order provides protection for the confidentiality of the Material Business Arrangement.

IV. CONCLUSION

[46] This completes the Reasons for Decision for the endorsements that I made on February 28, 2013. Order accordingly.

Perell, J.

Released: March 6, 2013

COURT FILE NO.: 03-003/03

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

KAREN FOSS

Applicant

‑ and ‑

ROY FOSS, ANDREW FOSS, ANDREA FOSS, ERIC FOSS, ROY FOSS MOTORS LTD., HOGAN CHEVROLET BUICK GMC LIMITED, FOSS NATIONAL LEASING LTD., NEWMARKET SATURN SAAB LTD., ROY FOSS MOTORCAR LIMITED, RF LIMITED PARTNERSHIP, 720168 ONTARIO INC. , 2152832 ONTARIO LTD., RF INVESTMENT HOLDINGS LTD., ROY FOSS CHEVROLET LTD., 1737481 ONTARIO LIMITED, 1475398 ONTARIO INC., 1788289 ONTARIO INC., 2117197 ONTARIO INC., 2122192 ONTARIO INC., 2102230 ONTARIO LIMITED, TOWN & COUNTRY MOTORS (1989) LIMITED, NORTH OCEAN ESTATES INC., MILLER THOMSON LLP, O’SULLIVAN ESTATE LAWYERS, BMO TRUST COMPANY and THE PUBLIC GUARDIAN AND TRUSTEE

Respondents

REASONS FOR DECISION

Perell, J.

Released: March 6, 2013.