SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 08-CV-337570

MOTION HEARD: January 3, 2013

Re: Sweda Farms Ltd., Best Choice Eggs Ltd. and Tilia Transport Inc.

Plaintiffs

v.

Egg Farmers of Ontario, Harry Pelissero, Burnbrae Farms Limited, Burnbrae Holdings Inc. Maple Lynn Foods Limited, L.H. Gray & Son Limited, William Harding Gray, John Klei and The Estate of Johannes Klei

Defendants

BEFORE: Master Thomas Hawkins

COUNSEL:
Allison M. Webster for moving defendants L.H. Gray & Son Limited and William Harding Gray

F (519) 667-3362

Donald R. Good for responding plaintiffs

F (613) 228-7404

Norman Bourdeau, responding non-party in person

F (519) 601-1325

No one for the other defendants

REASONS FOR DECISION

[1] This is a motion by the defendants L.H. Gray & Son Limited (“L.H. Gray”) and William Harding Gray ( the “Gray defendants”) for an order under subsection 137(2) of the Courts of Justice Act, R.S.O. 1990 c.C. 43 sealing certain documents filed with this court in this civil action.

[2] Subsection 137(2) of the Courts of Justice Act provides as follows.

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.

[3] This subsection must be read together with subsection 137(1) of the Courts of Justice Act. Subsection 137(1) provides as follows.

On payment of the prescribed fee, a person is entitled to see any document filed in a civil proceeding in a court, unless an Act or an order of the court provides otherwise.

[4] The combined effect of these two subsections is that court records are open to the public unless an Act or a court order provides otherwise.

[5] This motion is not opposed by any of the defendants. Indeed the defendants consent to the relief sought. This motion is opposed by the plaintiffs and by Norman Bourdeau, who is not a party to this action.

[6] Mr. Bourdeau has not sought leave to intervene in this action. There is no dispute that Mr. Bourdeau is a defendant in an action with similarities to this one, pending in the London registry of this court. If Mr. Bourdeau feels that he needs access to any sealed documents in order to defend himself, he may move in the London action for an order granting him access to such sealed documents. I understand that he has done so, but I do not know the outcome of that motion.

[7] Certain background facts are relevant to this motion. This action is a consolidation of two actions, one which Sweda Farms Ltd. commenced in Whitby on May 4, 2005, and the other which Sweda Farms Ltd. and others commenced in Toronto on July 23, 2008. L.H. Gray was a defendant in the Toronto action but not the Whitby action.

[8] Although L.H. Gray was not a party to the Whitby action, it successfully moved before Lauwers J. and obtained a sealing order on August 26, 2011 in the Whitby action. The format of that order is similar to the format of the order which the Gray defendants now seek. Sweda Farms Ltd. was the plaintiff in the Whitby action and consented to the order of August 26, 2011. Sweda Farms Ltd. and the two other plaintiffs in this action do not consent to this motion. They oppose it.

[9] Counsel for L.H. Gray appears to be of the opinion that because the sealing order which L.H. Gray obtained from Lauwers J. in the Whitby action was not made in the present consolidated action, that order is no longer of any force or effect. I disagree. The order which Lauwers J. made in the Whitby action on August 26, 2011 directed that certain specific and listed documents filed in the court registry be sealed. I assume that the court registry staff have complied with that order and sealed the listed documents. That order stands. It has not been varied or set aside. I have not been asked to vary or set aside that order. If I were so asked, I would not have jurisdiction to do so by virtue of subrule 37.02(2)(b).

[10] In Sierra Club of Canada v. Canada (Minister of Finance), [2002] S.C.R. No. 42, Iacobucci J. (speaking for the court) considered the test for granting a confidentiality or sealing order under Rule 151 of the Federal Court Rules.

[11] Federal Court Rule 151 provides as follows.

151. (1) On motion, the Court may order that material to be filed shall be treated as confidential.

(2) Before making an order under subsection (1), the Court must be satisfied that the material should be treated as confidential, notwithstanding the public interest in open and accessible court proceedings.

[12] At paragraphs 53 to 57 of his judgment, Iacobucci J. laid down the following test for obtaining a confidentiality or sealing order.

53 Applying the rights and interests engaged in this case to the analytical framework of Dagenais and subsequent cases discussed above, the test for whether a confidentiality order ought to be granted in a case such as this one should be framed as follows:

A confidentiality order under Rule 151 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.

54 As in Mentuck, I would add that three important elements are subsumed under the first branch of this test. First, 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.

55 In addition, the phrase “important commercial interest” is in need of some clarification. In order to qualify as an “important commercial interest”, the interest in question cannot merely be specific to the party requesting the order; the interest must be one which can be expressed in term of a public interest in confidentiality. For example, a private company could not argue simply that existence of a particular contract should not be made public because to do so would cause the company to lose business, thus harming its commercial interests. However, if, as in this case, exposure of information would cause a breach of a confidentiality agreement, then the commercial interest affected can be characterized more broadly as the general commercial interest of preserving confidential information. Simply put, if there is no general principle at stake, there can be no “important commercial interest” for the purposes of this test. Or, in the words of Binnie J. in F.N. (Re), [2000] 1 S.C.R. 880, 2000 SCC 35, at para. 10, the open court rule only yields “where the public interest in confidentiality outweighs the public interest in openness” (emphasis added).

56 In addition to the above requirement, courts must be cautious in determining what constitutes an “important commercial interest”. It must be remembered that a confidentiality order involves an infringement on freedom of expression. Although the balancing of the commercial interest with freedom of expression takes place under the second branch of the test, courts must be alive to the fundamental importance of the open court rule. See generally Muldoon J. in Eli Lilly and Co. v. Novopharm Ltd. (1994), 1994 19670 (FC), 56 C.P.R. (3d) 437 (F.C.T.D.), at p. 439.

57 Finally, the phrase “reasonably alternative measures” requires the judge to consider not only whether reasonable alternatives to a confidentiality order are available, but also to restrict the order as much as is reasonably possible while preserving the commercial interest in question.

[13] Although the wording of subsections 137(1) and 137(2) of the Courts of Justice Act is different from the wording of Federal Court Rule 151, the cases interpreting both the subsections and the Rule make it clear that before granting a confidentiality or sealing order the court must balance the public interest in an open court system against the interests, including commercial interests, of those seeking a confidentiality order.

[14] In my view the test which Iacobucci J. laid down in Sierra Club applies to the motion before me. The Sierra Club test is a difficult one to meet.

[15] The specific order which the Gray defendants seek provides as follows.

1. THIS COURT ORDERS that the following materials filed in the within action with the Court shall be sealed, including:

a) Moving Party’s Motion Record (for Production of Documentation) for Motion Returnable October 25, 2012;

b) Responding Party’s Motion Record (for Production of Documentation) for Motion Returnable October 25, 2012;

c) Cross-examination transcripts, exhibits, facta as filed with regards to the Motion for Production of Documentation Returnable October 25, 2012;

d) All Motion Materials, facta, transcripts of cross-examinations and exhibits filed with regards to any further motions before this Court, including, but not limited to, the motion seeking summary judgment currently pending before this Court by L.H. Gray & Son Limited and returnable May 27, 2013; and

e) Pre-trial Memoranda filed by the parties.

2. THIS COURT ORDERS that any non-party seeking access to the documents listed under paragraph (1) above shall not be granted access unless Application is made to the Court and that any non-party requesting such access must:

a) Demonstrate that access should be granted; and

b) Outline the reasons why access is being requested.

[16] If I were to grant the Gray defendants the sealing order which they seek, that order would apply to certain specific documents already filed in this action and to certain categories of documents not yet filed in this action.

[17] I fail to see how the Gray defendants can prove that if a document which is not yet drafted is not sealed before it is filed, an important commercial interest of theirs will be exposed to a serious risk. The contents of such an undrafted document are currently unknown.

[18] The only affidavit filed in support of this motion is that of Steven J. Atkinson. Mr. Atkinson is one of the lawyers representing the Gray defendants in this action.

[19] Mr. Atkinson’s affidavit deals in part with the history and background of this litigation. It is quite proper that this subject be dealt with in an affidavit sworn by a lawyer who, like Mr. Atkinson, is personally familiar with that history and background.

[20] However Mr. Atkinson’s affidavit also deals with other subjects, such as the L.H. Gray documents which Mr. Atkinson “believes” were filed with the court in the Whitby action and which Mr. Atkinson says are “highly sensitive to L.H. Gray’s commercial interests”. Mr. Atkinson makes this statement in paragraph 21 of his affidavit. He does not claim to have direct personal knowledge of the facts set forth in this paragraph. He does not disclose the source of the information set forth in paragraph 21 of his affidavit. Paragraph 21 of his affidavit does not comply with subrule 39.01(4).

[21] Subrule 39.01(4) provides as follows.

An affidavit for use on a motion may contain statements of the deponent’s information and belief with respect to facts that are not contentious, if the source of the information and the fact of the belief are specified in the affidavit.

[22] The statement that documentation which Mr. Atkinson believes has been filed in the Whitby action “is highly sensitive to L.H. Gray’s commercial interests” is contentious. That statement should have been included in an affidavit from someone at L.H. Gray with personal knowledge of L.H. Gray’s commercial interests. It was not so included.

[23] On this motion there is no affidavit from anyone at L.H. Gray and no explanation as to why there is no such affidavit. Paragraph 21 of Mr. Atkinson’s affidavit thus offends the best evidence rule.

[24] There is an issue on this motion as to whether the materials filed in the Whitby action are indeed confidential. Those materials were in the court file open to the public for almost a year before L.H. Gray obtained a sealing order from Lauwers J. Given that L.H. Gray waited so long before obtaining that sealing order, one wonders just how sensitive to L.H. Gray the information in those materials was.

[25] Paragraph 23 of Mr. Atkinson’s affidavit describes the materials which L.H. Gray intends to file in response to a motion by the plaintiffs for production of L. H. Gray documents for discovery purposes in this action. In this paragraph Mr. Atkinson makes reference to “L.H. Gray’s proprietary grading processes” and its egg grading machine. There is an issue as to whether those processes are indeed confidential and proprietary.

[26] I have been given no information on this motion about the egg grading machine which L.H. Gray uses. I do not know if any features of that machine have been protected by patents. I do not know if that machine was secretly designed and built by L.H. Gray itself or if it was designed and built by a commercial supplier of equipment used by egg graders. If the latter was the case, information about how to use the egg grading machine would be available to anyone who bought the same model of machine from a dealer. If so, a sealing order respecting such information would be inappropriate unless the information was confidential in fact and the supplier demanded and obtained a confidentiality agreement from every buyer.

[27] In paragraph 25 of his affidavit Mr. Atkinson makes reference to a pending summary judgment motion by L.H. Gray. He states in part “The summary judgment motion materials will also contain highly sensitive and proprietary information regarding L.H. Gray’s grading process”.

[28] In paragraph 26 of his affidavit Mr. Atkinson refers to “the serious risk to L H Gray’s commercial interests if its proprietary information is disclosed to the public”.

[29] The passages in paragraphs 23, 25 and 26 of Mr. Atkinson’s affidavit which I have quoted suffer from the same flaws as paragraph 21. They are not by their nature statements about Mr. Atkinson’s direct personal knowledge. They do not comply with subrule 39.01(4). They are contentious. They offend the best evidence rule.

[30] That being so, I cannot give those statements any weight.

[31] I have therefore come to the conclusion that the Gray defendants have not met the test for obtaining a confidentiality or sealing order laid down in Sierra Club, supra.

[32] For all these reasons, this motion is dismissed.

[33] Within 10 days the plaintiffs and the Gray defendants are to exchange and file with me their costs outlines (Form 57B) . Within a further 10 days they are to exchange and file with me their responding costs submissions. There will be no costs order in favour of or against Mr. Bourdeau.

_(original signed) ___

Master Thomas Hawkins

DATE: May 8, 2013