SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 144/14

DATE: 20140707

RE: Sweda Farms Ltd., Best Choice Eggs Ltd. and Tilia Transport Inc., Plaintiffs/Responding Parties

AND:

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: Kiteley J.

COUNSEL:
Donald R. Good, for the Plaintiffs/Responding Parties

Allison Webster, for the Defendants/Moving Parties L.H. Gray & Son Limited and William Harding Gray (the L.H. Gray defendants)

HEARD: May 26, 2014

ENDORSEMENT ON APPEAL FROM THE ORDER OF the master

[1] This is an appeal by the L.H. Gray defendants from the order of Master Hawkins[^1] dated May 8, 2013 in which he dismissed the motion for a sealing order pursuant to s. 137(2) of the Courts of Justice Act. For the reasons that follow, the appeal is dismissed.

Background

[2] This action is a consolidation of two actions: one commenced in Whitby on May 4, 2005 and the other commenced in Toronto on July 23, 2008. The L.H. Gray defendants were named in the Toronto action but not in the Whitby action.

[3] In the Whitby action, Sweda Farms claimed that the defendants Ontario Egg Producers, Beaven and Pelissero acted tortiously in various ways to damage its business interests. In the Toronto action, Sweda Farms claimed that the defendants Burnbrae, the L.H. Gray defendants and others conspired to defame the plaintiffs, to interfere in their contractual relations with suppliers and customers, and to damage the plaintiffs’ interests by abusing confidential information that the plaintiffs had provided during negotiations toward the acquisition of Sweda Farms by Burnbrae and L.H. Gray.

[4] From July 2006 to June 2009, Norman Bourdeau had been employed as the Manager of Information Technology by L.H. Gray & Son Limited (whose principal is William Harding Gray). Thereafter he worked as a consultant to L.H. Gray & Son Limited. He was not named as a defendant in either action.

[5] In the Whitby action, Corkery J. heard a motion in which Bourdeau was a respondent and in which it was alleged that William Harding Gray had ordered him to destroy all electronic data related to the Gray-Burnbrae litigation. Bourdeau said that he followed that instruction, but he kept the data storage medium which had contained the deleted data. According to the plaintiffs, Bourdeau was a whistleblower who provided incriminating information. According to the L.H. Gray defendants, Bourdeau was a thief. At the request of the plaintiffs, Corkery J. made an ex parte order dated February 12, 2010 by which Bourdeau was ordered to produce the data storage device to the supervising solicitor along with other orders including an order that L.H. Gray & Son Limited and associated defendants not destroy or delete any documents or electronic documents from its business records. This was referred to as an “Anton Piller lite” order because, instead of the normal execution of such an order, the information was already in Boudreau’s possession. He asked for the protection of an order directing him to release the data storage device.

[6] Although not a party to the Whitby action, L.H. Gray & Son Limited brought a motion before Lauwers J. (as he then was) in which it sought to set aside the order of Corkery J. It also sought an order to find Bourdeau in contempt of the order of Corkery J. In addition, the plaintiffs brought a motion to consolidate the two actions under the rubric of conspiracy and have the consolidated action sited in Oshawa for trial purposes.

[7] In reasons for decision dated March 16, 2011, Lauwers J. set aside parts of the order of Corkery J. because it had been obtained on the basis of inadequate disclosure. Lauwers J. retained paragraphs 3 and 4 of the order of Corkery J. which required the supervising solicitor to store the data storage device and make an inventory of the contents. He also continued the direction that L.H. Gray & Son Limited and associated defendants not destroy or delete business records.

[8] At paragraph 23 of the reasons, Lauwers J. observed that between June 2009 and January 2010, Bourdeau had “systematically accessed L.H. Gray’s entire electronic system and downloaded everything from the date of the inception of the electronic system forward” and that over 1 million documents in electronic and hard copy form were in the hands of the supervising solicitor. He also noted that it was clear that those “documents contain confidential, commercially sensitive and privileged information including, for example, payroll records, invoices and privileged communications from lawyers”. At paragraph 30, Lauwers J. referred to Bourdeau’s evidence about the L.H. Gray defendants egg grading data which he described as “commercially sensitive data”.

[9] At paragraph 39, Lauwers J. accepted the submission of counsel for the L.H. Gray defendants that the material held by the supervising solicitor contains confidential, commercially sensitive, proprietary and privileged information pertaining to L.H. Gray’s business, the release of which could harm its business interests and that it was on that basis that counsel asked for a sealing order under section 137 of the Courts of Justice Act “in respect of the motion records of the motion before Corkery J. and these motions”. After considering authorities[^2], he held as follows at paragraph 42:

These principles suggest that a blanket sealing order is not appropriate. In my view, balancing the right of public access with a party’s right to protection of confidential and sensitive information requires a process, since not all of the motion material has a confidential character. I therefore order that the parties undertake the process set out below, which I have adapted from the process ordered by Master Beaudoin in BASF Canada Inc . . .

[10] He directed the parties to identify information that was allegedly confidential on the basis that it is “commercially sensitive, proprietary or privileged and is not to be publicly disclosed” and that if counsel were unable to agree as to the assessment of such information, they could schedule a motion before him with respect to specific documents.

[11] At paragraph 43, Lauwers J. referred to the submission on behalf of counsel for the L.H. Gray defendants who opposed the plaintiffs getting access to the material held by the supervising solicitor and he directed counsel to make submissions as to the process by which the plaintiffs would get access to allow it to meaningfully participate in the argument of a motion for production.

[12] Lauwers J. signed an order dated August 26, 2011 which was described as being on consent of counsel to the parties, although I understand that counsel for L.H. Gray defendants (who were not parties to that action) also signed the consent. In that order, Lauwers J. directed that 15 listed items were subject to the sealing order including motion records, compendium of exhibits/answers to undertakings, and transcript briefs. That order further directed that non-parties seeking access to the documents were required to apply to the court and demonstrate why access should be granted.

[13] I have outlined the context and the outcome of the motion before Lauwers J. because counsel for the appellants in the motion before me relies on that order in support of the appeal before me.

[14] The plaintiffs consolidated the two actions. The title of proceedings above reflects the consolidated proceeding. The L.H. Gray defendants brought the motion before the Master in which they sought an order sealing documents described as follows: motion record (for production of documentation) for motion returnable October 25, 2012; responding motion record; cross-examination transcripts, exhibits, facta as filed; 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 the court (and then returnable May 27, 2013), and pre-trial memoranda.

Decision under appeal

[15] The Master heard submissions on January 3, 2013. At the conclusion, he had directed counsel to make further written submissions as to which specific paragraphs and exhibits in the motion records should be kept confidential and sealed and why. In a letter dated January 21, 2013, counsel for the L.H. Gray defendants provided a 13 page table which referred to the affidavits at issue, namely the affidavits of Scott Brookshaw sworn October 5, 2012 and October 22, 2012, and the affidavits of Stuart Jackson sworn July 9, 2012 and November 21, 2012. In written submissions dated January 30, 2013 counsel for the plaintiffs provided a 12 page table referring to the same affidavits challenging the position taken by counsel for the L.H. Gray defendants. In addition it provided 4 pages of a letter from the Chair of the Ontario Farm Products Marketing Commission.

[16] In an endorsement dated March 28, 2013, Master Hawkins noted that his decision was under reserve but there was a pending motion for summary judgment where the confidentiality of the documentation was at issue. He noted that the plaintiffs feared that the summary judgment motion brought by the L.H. Gray defendants would be delayed and consequently they had consented to the Master making an interim order sealing all materials which the L.H. Gray defendants filed in support of that motion on condition that the L.H. Gray defendants had the option of removing from the court file within 20 days of the release of his reasons for decision any materials which the Master did not order be sealed and that that order expired on the filing of his reasons for decision on the motion for a sealing order. In his endorsement, the Master ordered that the L.H. Gray defendants were at liberty to redact from the transcripts of any cross-examinations conducted for use on the summary judgment motion any references to documents which the L.H. Gray defendants removed from the court file pursuant to that order.

[17] In the reasons dated May 8, 2013, the Master referred to the Whitby action and the order made by Lauwers J. dated August 26, 2011. He instructed himself with respect to the reasons for decision in Sierra Club of Canada v. Canada (Minister of Finance)[^3] and specifically with respect to the test of “important interest, including a commercial interest”. At paragraph 10, he observed that the order made by Lauwers J. still applied vis-à-vis the pre-consolidation Whitby action. The Master acknowledged that the motion was opposed by the plaintiffs (who had consented to the order made by Lauwers J. dated August 26, 2011) and by Bourdeau. He dismissed the motion for a sealing order for a number of reasons including the following:

(a) the L.H. Gray defendants sought an order sealing documents that had not yet been created and observed that one could not know if it disclosed an important commercial interest before it was created;

(b) the deponent of the affidavit in support of the motion was one of the lawyers (Atkinson) representing the L.H. Gray defendants in the action. It reflected the deponent’s belief as to which documents were filed with the court in the Whitby action that contained information that was “highly sensitive to L.H. Gray’s commercial interests” yet he had no direct personal knowledge of the facts to which he deposed and did not disclose the source of the information. He referred to rule 39.01(4) and concluded that since the affidavit contained reference to facts that were contentious, it offended the best evidence rule;

(c) there was an issue as to whether the materials filed in the Whitby action were confidential and he noted that the materials had been in the court file open to the public for almost a year before the order was obtained from Lauwers J. which caused him to wonder how sensitive the information was;

(d) although the egg grading data was said to be particularly commercially sensitive, he had been given no information about the machine used by the L.H. Gray defendants and therefore whether information about it was in the public domain, in which case a sealing order would be inappropriate.

[18] In an endorsement dated May 13, 2013, he scheduled the steps leading up to the plaintiffs’ motion for production of documents on December 11, 2013 and, apparently on consent, he ordered that his interim sealing order dated March 28, 2013 would apply to materials which the L.H. Gray defendants and the plaintiffs filed on the L.H. Gray defendants’ summary judgment motion and the materials filed or to be filed by the plaintiffs and the L.H. Gray defendants on the production of documents motion and that that interim order continued in effect until the final disposition of any appeals from his order dated May 8, 2013.

Position of the parties

[19] Counsel for the L.H. Gray defendants takes the position that, in his decision dated May 8, 2013, the Master erred in law in his application of the jurisprudence, most notably the application of the principles set out in Sierra Club of Canada; erred in the application of his discretion with respect to s. 137(2) of the Courts of Justice Act; erred in law in his application of rule 39.01(4) of the Rules of Civil Procedure and the principles applicable to the best evidence rule; erred in failing to apply or consider the findings of Lauwers J.; and erred in failing to consider the parties’ written submissions. As a result of those errors, counsel asked that the order be set aside and in its place a sealing order should be granted.

[20] Counsel for the plaintiffs opposes all of the grounds of appeal.

Standard of Review

[21] Pursuant to s. 17(a) of the Courts of Justice Act, an appeal from an interlocutory order of a Master lies to a Judge of the Superior Court of Justice. Because of the appeals brought by the L.H. Gray defendants from the order of C. Brown J.[^4], counsel arranged for both matters to be heard together in the Divisional Court. Counsel agree that the decision of the Master, whether final or interlocutory, will only be interfered with if the court is persuaded that the Master made an error of law or exercised his discretion on the wrong principles or misapprehended the evidence such that there is a palpable and overriding error. Where the Master has made an error in law, the standard of review is correctness[^5].

Analysis

[22] Counsel for the appellant concedes that the Master correctly instructed himself on the law with respect to sealing orders; she argues that he wrongly applied the law. I am satisfied that, with respect to the decision to dismiss the motion for a sealing order and with respect to the decision that the affidavit of Atkinson offended the best evidence rule and rule 39.01(4), the Master made decisions of mixed fact and law. The standard of review with respect to this appeal is palpable and overriding error.

[23] I am not persuaded that the Master made a palpable and overriding error in any part of the decision for these reasons. First, the position taken on behalf of the L.H. Gray defendants is not consistent with the law. Documents filed in court are presumed to be open to the public in keeping with the “open courts” principle. It is rare that a sealing order is made. One such circumstance is where documents or information are confidential. The Master did not make a palpable and overriding error in finding that the appellant had failed to establish that the documents and information were confidential.

[24] Second, the request to seal was overreaching. As the table submitted by counsel for the appellants in the letter dated January 21, 2013 illustrates, it included such documents as reasons for decision of Lauwers J. which clearly were in the public domain. Although counsel conceded that point in the written submissions, the fact that it had been initially included is but one indication that the request to seal was far too broad. The request also included portions of affidavits that provided background information that obviously did not fall within the category of documents that should be protected. The appellant unquestionably confuses embarrassing with confidential. A sealing order is not intended to protect from public view documents and information that are embarrassing.

[25] Third, the Master did consider the order made by Lauwers J. and noted that it survived the consolidation of the actions vis-à-vis the Whitby action.

[26] Fourth, the Master did not make a palpable and overriding error in his application of the definition of “important interest, including a commercial interest”. On the record before him, none of the documents or information fell into that category.

[27] Fifth, the Master did not make a palpable and overriding error in his application of rule 39.01(4). Atkinson had direct information about the legal proceedings. He did not depose to having direct information about the key and controversial facts as they related to the “proprietary egg grading process” nor did he have direct information about the extent to which the documents for which the sealing order was sought reflected an “important interest, including a commercial interest”.

[28] It is the case that the Master did not refer to the written submissions that followed the attendance of counsel on January 3, 2013. Masters (and Judges) are not required to refer to every piece of evidence or every submission that is made. Having reviewed those tables, they demonstrate how overreaching the claim for a sealing order was, given that, for example as indicated above, counsel conceded that reasons for decision that were already in the public domain ought not to be subject to a sealing order.

[29] In his reasons for decision released March 16, 2011 Lauwers J. made it clear that a blanket sealing order was not appropriate. He gave directions as to how counsel were to follow a procedure designed to identify those that should be categorized as “confidential and sensitive information”. For whatever reason, counsel for the plaintiffs agreed that a broad order would be made that included affidavits in the Whitby action. The fact that counsel made that concession and the fact that Lauwers J. then accepted the consent and signed the order does not mean that documents and information filed in the Toronto consolidated action should be protected by a similarly broad order.

[30] It is possible that some of the million documents contained on the data storage device are within the Sierra Club framework. Indeed, counsel for the plaintiffs conceded that that might be the case. That issue was not before the Master although it may be in the motion for production of those documents which I understand is scheduled for July 16, 2014. To attempt to protect those documents and information to the extent permitted by law, counsel for the L.H. Gray defendants must isolate specific documents and provide evidence as to which deserve the extraordinary protection of being sealed from public view. Counsel for the L.H. Gray defendants must not seek global sealing orders but must limit the claims to individual documents or information for which it provides direct evidence why an extraordinary sealing order should be granted.

[31] L.H. Gray’s chief competitor is co-defendant Burnbrae which may impact the issue as to whether the L.H. Gray defendants have an important competitive interest to protect.

[32] As indicated above, the Master’s temporary sealing orders provided, in effect, that the L.H. Gray defendants have 20 days from release of these reasons for decision to remove from the court file any materials which the Master did not order sealed. There is no time limit specified for the redaction, but the L.H. Gray defendants may also redact from the transcripts of the cross-examination conducted for use on the L.H. Gray summary judgment motion any references to documents which they remove from the court file pursuant to the agreement reflected in the preceding sentence.

[33] When the file came to me for the appeal from the order dismissing the summary judgment motion and for this appeal, it came from two sources: new documents created for the Divisional Court proceedings and other documents that had been generated in the motion for summary judgment and in the motion before the Master. Some documents were contained in sealed envelopes and some were not. All have been removed from envelopes and it is not possible to determine what documents were sealed pursuant to the temporary order. It will be a challenge to implement the consent order.

[34] In order to ensure that the motion before the Master proceeds, I will direct staff to send to Master Hawkins all of the materials that were generated before the proceedings began in the Divisional Court. With the assistance of the Master, arrangements can be made to implement the consent orders.

[35] As for the materials generated in the Divisional Court proceedings, Ms. Webster will be in contact with the Registrar or her likely designate Donna Greson, to remove such documents as are permitted by the consent orders.

ORDER TO GO AS FOLLOWS:

[36] The appeal is dismissed.

[37] The amount of costs having been agreed subject to success, the L.H. Gray defendants shall pay to the plaintiffs costs of the appeal in the amount of $6621.79.

[38] The Registrar of the Divisional Court shall return the materials received from the Civil Motions office directly to Master Hawkins, along with a copy of this endorsement.

[39] The Registrar of the Divisional Court shall release to Ms. Webster or her designate such parts of the files in the Divisional Court office (416/13 and 144/14) as Ms. Webster in writing directs.

[40] Allison Webster shall retain in a secure place all of the documents removed pursuant to the consent orders of Master Hawkins dated March 28, 2103 and May 13, 2013.

Kiteley J.

Date: July 2014

[^1]: Sweda Farms v Egg Farmers of Ontario, 2013 ONSC 2566

[^2]: BASF Canada Inc. v. Max Auto Supply (1986) Inc. (1999) 30 C.P.C. (4th) 23; Towers, Perrin, Forster & Crosby Inc. v. Cantin (2000) 2000 22695 (ON SC)

[^3]: [2002] S.C.R. No. 42

[^4]: 2014 ONSC 3016

[^5]: Zeitoun v. Economical Insurance Group, 2008 20996 (ON SCDC), 2008 CarswellOnt 2576 (Ont. Div. Ct.); affirmed 2009 CarswellOnt 2665 (Ont. C.A.) at paragraph 40 and 41