SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-08-7670-00CL
COURT FILE NO.: CV-13-10158-00CL

DATE: 20140124

RE: Canadian National Railway Company

and

Scott Paul Holmes, Jennifer Parisien, also known as Jennifer Lynn Flynn in her personal capacity and as the sole proprietor and operating as Efficient Construction, Janice Shirley Maureen Holmes, Murray Fussie, Scott Albert Pole, Rick Sousa, also known as Ricky Sousa, in his personal capacity and operating as Trax Unlimited, Michael Sousa, also known as Mike Sousa, in his personal capacity and operating as Trax Unlimited, Julie Sousa, 2035113 Ontario Ltd., Complete Excavating Ltd., Monterey Consulting & Construction Ltd., 2071438 Ontario Ltd., operating as Complete Trax, 2071442 Ontario Ltd., The Scott Holmes Living Trust, The Jennifer Lynn Flynn Living Trust, Greyslone Ltd., and Belview Management Ltd.

AND RE: Scott Paul Holmes. Jennifer Lynn Parisien also known as Jennifer Lynn Flynn, Complete Excavating Ltd., Monterey Consulting & Construction Ltd., 2035113 Ontario Ltd., 2071442 Ontario Ltd., The Scott Holmes Living Trust and The Jennifer Flynn Living Trust

and

Canadian National Railway Company, E. Hunter Harrison, Claude Mongeau, Olivier Chouc, Keith Creel, John Dalzell, Michael Cory, Nazam-U-Din Hasham, Michael Farkouh, Dave Roy, Nick Nielsen, Serge Meloche, Ben Fusco, Bruce Power, Robert Michael Zawerbny, Scott William McCallum, Marc Pontenier and Janice Shirley Maureen Holmes

BEFORE: Justice J.A. Thorburn

COUNSEL:
Monique Jilesen and Julia Lefebvre for the moving party Canadian National Railway Company

David Porter and Eric Block for the moving parties John Dalzell, Serge Meloche, Ben Fusco, Bruce Power, Robert Zawerbny, Scott McCallum and Marc Pontenier

Norman Groot for the responding party, Derrick Snowdy

DATE HEARD: January 7 and 20, 2014

E N D O R S E M E N T

The Issues to be Determined

[1] The moving parties seek an Order “to restrain Derrick Snowdy from directly or indirectly assisting any person to disclose any documentary or oral discovery in these proceedings or the content of any such documentary or oral discovery.”

[2] The Respondent Snowdy is a private investigator who is not a party to this action.

[3] The deemed undertaking rule set out in Rule 30.1.01 of the Rules of Civil Procedure, R.R.O., 1990, Reg. 194 provides that, “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.” This rule applies to both documentary and oral discovery.

[4] The issues in this case are:

a) can a third party be restrained from retaining, using and/or disclosing to others, documents obtained through the discovery process; and

b) should Snowdy be so restrained.

[5] Snowdy claims he no longer has these documents in his possession, and had given an undertaking, “not to acquire any documents produced by CN on discovery from Holmes or anyone else subject to the deemed undertaking rule, for the duration of this action.”

The Evidence

Legal Proceedings

[6] In August 2008, Canadian National Railway (CN) commenced this civil proceeding against Holmes and others. Holmes was a former track supervisor in the engineering group at CN. CN claims he approved fraudulent invoices from companies owned or controlled by him. Damages for deceit, breach of contract, breach of trust, breach of fiduciary duty, breach of confidence, deceit, conversion and conspiracy are sought against Holmes and others. Also in August 2008, a Mareva injunction and Anton Piller Order were granted against Holmes.

[7] In February 2011, Holmes brought an action against CN claiming misconduct against CN and some of its current and former officers and employees.

[8] In March 2011, the court ordered that the Crown brief in a related criminal proceeding (which had been stayed) be provided to Holmes.

Circumstances Surrounding the Collection of Documents from Holmes

[9] Snowdy claims he was retained by a client (whom he did not identify) to conduct an investigation into CN. He says he has been collecting documents about CN since 2008 and has created an anonymous “mailbox” for persons who wish to provide information without attribution.

[10] Snowdy got to know Holmes in 2011. In Snowdy’s factum, it is admitted that,

“Snowdy enticed Holmes to communicate with him by providing Holmes with information about the historical working relationship between Justice Campbell and CN solicitor Peter Griffen…where an alleged concern was raised that Mr. Griffen and Campbell enjoyed an extraordinary relationship beyond that which was apparent and known to the people who appeared before them”.

[11] On his cross-examination in respect of this motion, Snowdy admitted that he further enticed Holmes, “by advising him that he had information on [CN] solicitor Jileson such as her home address, husband’s identity, her financial picture and her phone records…related to her participation in a scheme related to a horribly constructed criminal investigation” and that someone had gone through her garbage.

[12] At the time he received the documents from Holmes, Snowdy says he believed he was allowed to have them.

[13] Holmes provided Snowdy with a USB key that contained thousands of CN documents that were produced to Holmes in this legal proceeding against him.

Motions to Prevent Dissemination of CN Discovery Documents

[14] On October 1, 2013 CN served a motion record on Holmes claiming that “the documents provided by Holmes to the media and to the OPP are the property and confidential information of CN and are subject to the deemed undertaking rule.” On October 17, CN brought its motion to prevent Holmes from disseminating documents subject to the implied undertaking rule. Snowdy says,

“At the October 17 motion, I learned that documents that Holmes gave me may be the subject of his deemed undertaking rule obligation. I advised my clients that CN may bring a motion against me to acquire my CN investigation file on their suspicion that the document in the APTN article was provided to them by me, and that it was not safe for me to remain in possession of my CN investigation file. Accordingly, it was agreed that I would transfer it to New York, outside of the jurisdiction of the Ontario courts.”

[15] On October 17th, Holmes was ordered to produce a list of all documents he disseminated to third parties and the names of the third parties who received them.

[16] On November 1st, Holmes advised CN that he had given Snowdy a USB device containing documents and that, “without prior knowledge or consent of Holmes, Mr. Snowdy recovered the residual data from the aforementioned deleted files and has distributed some or all of the recovered documents to third party recipients, including the APTN…”

[17] On November 7th, Holmes was ordered to seek the immediate return of the electronic storage devices that contained some or all of CN’s documentary discovery.

[18] On November 14th, Holmes asked Snowdy to return any electronic storage device that might contain CN’s documents in this proceeding. Snowdy advised that it was not in his client’s interests “to divulge what materials have been obtained in my investigation wholly or in part.”

[19] On November 26th, Snowdy advised CN that Holmes had provided him with a USB device that contained, “several thousand pages of documents related to the litigation between CN Rail and Holmes.” Snowdy advised that he had provided documents to third party media outlets.

[20] In light of Snowdy’s receipt and dissemination of CN’s productions to third parties, CN brought this motion to seek an Order to restrain Derrick Snowdy from directly or indirectly assisting any person to disclose any documentary or oral discovery in these proceedings or the content of any such documentary or oral discovery.

Snowdy’s Admissions on Cross Examination

[21] At his cross examination on December 19th, Snowdy testified that he had “no idea” that CN was looking for the CN documents given to him by Holmes. He later conceded that Holmes had advised him in early October 2013, that CN was bringing a motion because they wanted the documents returned.

[22] Snowdy also testified that he and others went through “extraordinary efforts” to remove the CN files from the jurisdiction. Sometime after November 11, 2013, he put everything he received from Holmes onto several external hard drives, took them to Ottawa and then to the Peninsula Hotel in New York. He claims he does not know the name of the client in New York.

[23] He took the documents to New York so that they would not be subject to the jurisdiction of the Ontario courts. After being asked to retrieve the documents, he called his client in New York to determine what had happened to the documents and where they had been sent. He received no response to his message and claims he has no other means of contacting his client.

[24] Snowdy states he no longer has any of the documents he was given by Holmes. The USB key, and any copies he had, were given to the Independent Supervising Solicitor who was retained by the moving parties, in part, to receive documents from Snowdy.

Snowdy’s Reponse to the Request for Injunctive Relief

[25] Snowdy’s position is that no restraining order should be granted for the following reasons:

a) he is not a party to this proceeding and is therefore not covered by the deemed undertaking rule in Rule 30.1.01 of the Rules of Civil Procedure;

b) at the time he collected the documents from Holmes, he had no idea there was a rule preventing Holmes from disclosing them to him;

c) CN has made no effort to seek the return of documents from other third parties to whom Snowdy disclosed the information and thus, there is no irreparable harm;

d) Snowdy no longer has any of the CN documents in issue;

e) the appropriate remedy for Holmes’ decision to disclose documents to Snowdy contrary to the implied undertaking rule, is to strike Holmes’ claim; and

f) in his affidavit filed after the first day of hearing, he stated that, “I undertake to this Court not to acquire any [documents related to CN] from Holmes or anyone else subject to the deemed undertaking rule related to this action for the duration of this action.”

Analysis of the Law and Conclusion

Legal Interpretation of the Deemed Undertaking Rule

[26] Rule 30.1.01 of the Rules of Civil Procedure provides that all parties are deemed to undertake not to use evidence or information obtained on discovery for any purpose other than the proceeding in which the evidence was obtained.

[27] Rule 30 does not explicitly address the use by third parties of documents subject to the deemed undertaking rule.

[28] However, the Supreme Court of Canada in Juman v. Doucette, 2008 SCC 8, [2008] 1 S.C.R. 157, at para. 25, held that, “[t]he general ideal [of the deemed undertaking rule], metaphorically speaking, is that whatever is disclosed in the discovery room stays in the discovery room unless eventually revealed in the courtroom or disclosed by judicial order.”

[29] Similarly, in Globe and Mail v. Canada, 2010 SCC 41, [2010] 2 S.C.R. 592, at para. 77, the Supreme court held that the deemed undertaking rule “is meant to allow the parties to obtain as full a picture of the case as possible, without the fear that disclosure of the information will be harmful to their interests, privacy-related or otherwise.”

[30] The UK decision in The Distillers Co. (Biochemicals) Ltd. v. Times Newspapers Ltd., [1975] 1 All E.R. 41, deals specifically with the application of the deemed undertaking rule to third parties. In that case, a number of claimants sued the plaintiff for damages arising out of the use of the drug thalidomide. On discovery, the plaintiff provided the claimants with a large number of documents which they handed over to a third party retained to advise them. The third party sold the documents to the Times Newspapers Ltd.. The court issued an injunction against the Times, restraining its publication of the documents. In so doing, the court held that,

a) those who disclose documents on discovery are entitled to the protection of the court against any use of the documents otherwise than in the action in which they are disclosed;

b) this protection can be extended to prevent the use of the documents by any person in whose hands they come unless it be directly connected with the action in which they are produced; and

c) it is a matter of public interest that documents disclosed on discovery should not be permitted to be put to improper use and that the court should give its protection in the right case.

[31] In Fraser v. Evans [1969] 1 QB 349, 361, Lord Denning held that, “the jurisdiction is based … on the duty to be of good faith. No person is permitted to divulge to the world, information which he has received in confidence, unless he has just cause or excuse for doing so. Even if he comes by it innocently, nevertheless, once he gets to know it was originally given in confidence, he can be restrained from breaking that confidence.”

[32] Rule 1.04 of the Ontario Rules of Civil Procedure provides that the Rules are to be “liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.”

[33] The deemed undertaking rule prohibits the use of materials or information obtained in discovery for an ulterior or collateral purpose: see Kitchenham v. AXA Insurance Canada, 2008 ONCA 877, 94 O.R. (3d) 276, at paras. 28, 31; and Goodman v. Rossi (1995), 1995 1888 (ON CA), 24 O.R. (3d) 359 (C.A.), at pp. 367-371. The rationale is that parties will be reticent to make full disclosure if they believe documents they produce in the course of discovery may be used for an ulterior purpose.

Application of the Deemed Undertaking Rule to the Facts of this Case

[34] Although Snowdy was not a party to these proceedings, he sought out Holmes knowing Holmes was a party to the litigation. Snowdy enticed Holmes to provide him with the documents he had obtained from CN in the course of discovery.

[35] When Snowdy found out that CN had obtained an Order requiring Holmes to return CN’s discovery documents, and knowing that CN might seek an Order against him to return the documents in his possession, Snowdy sought to circumvent that process by taking the documents out of the jurisdiction.

[36] Snowdy told the solicitors for CN that if he had been asked to return them, he would “sanitize” them.

[37] Snowdy’s acts demonstrate his animosity toward CN and its solicitors. His acts are also a deliberate attempt to circumvent the deemed undertaking rule that is meant to prevent the use of the documents by any person in whose hands they come unless it be directly connected with the action in which they are produced.

[38] Snowdy’s actions lead me to believe that his undertaking is insufficient and that an Order restraining him is required.

[39] Finally, Snowdy admitted that Holmes provided him with thousands of documents which were comingled with other documents pertaining to CN, and it is therefore possible that he retains some of them in his possession. Moreover, his answers on cross-examination as to whether he retained any of the CN documents he received from Holmes were equivocal.

[40] For these reasons, an Order is granted to restrain Derrick Snowdy from directly or indirectly assisting any person to disclose any documentary or oral discovery in these proceedings or the content of any such documentary or oral discovery.

[41] If the parties are unable to agree on costs, they may provide me with brief written submissions and an outline of costs within 15 days.

Thorburn J.

DATE: January 24, 2014