Ontario Psychological Association v. Mardonet, 2015 ONSC 1286
COURT FILE NO.: CV-14-508239
DATE: 20150226
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ONTARIO PSYCHOLOGICAL ASSOCIATION
Plaintiff
– and –
CHARLOTTE (CARLA) MARDONET, SARAH ESAAFI, GABRIAL BENSUSAN, 2181420 ONTARIO INC., BDO CANADA LLP, VERN E. PENNER AND DR. JOHN SERVICE
Defendants
David F. O.’Connor and Jason J. Tan for the Plaintiff
Paul D. Stern and David M. Landesman for the Defendant Charlotte (Carla) Mardonet
Peter-Paul E. Du Vernet for the Defendants Gabrial Bensusan and 2181420 Ontario Inc.
HEARD: February 23, 2015
PERELL, J.
REASONS FOR DECISION
A. INTRODUCTION AND OVERVIEW
[1] With the high stakes of pending criminal proceedings and also a pending Mareva injunction motion, three Defendants to this civil proceeding; namely: (1) Charlotte (Carla) Mardonet; (2) her husband, Gabrial Bensusan; and (3) Mr. Bensusan’s corporation, 2181420 Ontario Inc., bring motions for orders to keep confidential or sealed: (a) the affidavits they respectively intend to deliver for the Mareva injunction motion; and (b) the transcripts of the subsequent cross-examinations of the affiants.
[2] The Defendants submit that their Charter protected rights against self-incrimination are being compromised. They ask the court to make a protective order.
[3] As I shall explain below, however, the Defendants’ fears are mistaken and no orders are required.
[4] For its part, the Plaintiff, the Ontario Psychological Association (“OPA”), opposes the Defendants’ motions, but by cross-motion, it seeks a confidentiality order for its motion material.
[5] More precisely, the OPA seeks an order that the filed Motion Record be comprised of a redacted Motion Record. The OPA submits that the Motion Record should be redacted to protect the confidentiality and privacy interests of the OPA and its members.
[6] If the OPA’s motion is successful, the filed Motion Record will be different (because of the redactions) from the Motion Record the judge and the parties will actually use on the return of the Mareva injunction motion.
[7] For the reasons described below, although I do not see any particular harm in authorizing the OPA’s request given the innocuous and well-intentioned redactions of essentially irrelevant information, I shall, nevertheless, as a matter of principle, dismiss the OPA’s request for a confidentiality order.
[8] In my opinion, the test for a sealing order is not satisfied in the circumstances of this case. If a sealing order were granted in this case, then as a matter of principle, it should be granted in every case based on nothing more than a party’s personal desire to keep its information private and confidential.
[9] It is also my view that to the extent that the OPA’s request was motivated by concerns to be compliant with the Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5, Schedule 1 (“PIPEDA”), this concern was misconceived, because the OPA will not be breaching PIPEDA by filing an unredacted Motion Record that contains personal information subject to the Act.
[10] Before turning to the discussion, I note that the OPA, to quote from its factum, also “seeks some form of relief regarding service on the Defendant, Sarah Esaafi,” who is the daughter of Ms. Mardonet and Mr. Bensusan. As I understand it, Ms. Esaafi is not directly affected by the pending Mareva injunction motion, and this part of the motion was not argued. I am, therefore, adjourning this request for relief sine die.
[11] I also note that the Defendants’ oral arguments at the hearing were largely ex tempore, and different from the arguments in the competing factums. This meant, for instance, that the OPA’s request to have certain affidavit evidence struck became moot. In these Reasons for Decision, I will, therefore, not discuss the moot issues, and I will focus my attention on the argument from the hearing.
B. FACTUAL AND PROCEDURAL BACKGROUND
[12] For 25 years, 1989 to 2013, Ms. Mardonet was employed by the OPA, which is a volunteer professional organization representing psychology in Ontario. In November 2013, the OPA terminated her employment for cause.
[13] In May 2014, the OPA contacted the police regarding financial irregularities in its accounts, and subsequently, Ms. Mardonet was charged for fraud exceeding $5,000 pursuant to s. 380 (1)(a) of the Criminal Code of Canada.
[14] On July 11, 2014, by Notice of Action, the OPA commenced a civil action against Ms. Mardonet, her husband Mr. Bensusan, his corporation, and other defendants who are not relevant for present purposes.
[15] The Statement of Claim was issued on August 11, 2014 and served on September 10, 2014.
[16] .
[17] In the Statement of Claim, the OPA alleges that Ms. Mardonet, Mr. Bensusan, and his corporation were involved in defrauding the OPA.
[18] The OPA brought a motion for a Mareva injunction. This motion was made on notice, and on January 23, 2015, Justice Himel scheduled the hearing of the OPA’s motion for April 29, 2015.
[19] The timetable set by Justice Himel provides that: (1) Ms. Mardonet/Mr. Bensusan are to serve any Responding Record by March 3, 2015; (2) any Reply is to be served by March 8, 2015; (3) any Sur-Reply Record is to be served by March 13, 2015; and (4) cross-examinations are to be completed by April 3, 2015.
[20] As noted in the introduction, with the Mareva injunction motion pending, there are now three motions before the court: (1) Ms. Mardonet moves for an order that all documents including affidavits and transcripts of examinations of or from any of Ms. Mardonet, Mr. Bensusan or his corporation be treated as confidential, not be filed and be sealed from the public record; (2) Mr. Bensusan and 2181420 Ontario Inc. seek a similar order to the one sought by Ms. Mardonet; and (3) the OPA moves for a confidentiality order.
[21] For the following reasons, I dismiss all the motions.
C. DISCUSSION AND ANALYSIS
1. Safeguarding the Right against Self-incrimination
[22] Both parties referred to my decision in ACI Brands Inc. v. Pow, 2014 ONSC 2784 where I undertook an examination of the right against self-incrimination in the context of a Mareva injunction motion. I will not repeat that analysis here.
[23] One major difference between the ACI Brands Inc. case and the case at bar is that in ACI Brands Inc. there was an interim Mareva injunction Order that compelled several defendants to deliver an incriminating affidavit of disclosure to the plaintiffs.
[24] To make a very long analysis short, in ACI Brands Inc., I concluded that the defendants were already protected from self-incrimination in accordance with the Canadian approach to the principle against self-incrimination, (which differs from the historic common law approach and the current American approach to the principle). I concluded that no additional protection was required in the circumstances of that case.
[25] In the case at bar, there is no similar compulsion for the Defendants to make any disclosure, but Ms. Mardonet, Mr. Bensusan, and his corporation intend to deliver affidavits without the compulsion of a court order. As emerged during the oral argument, which, as I already have noted, was quite different than the argument in Ms. Mardonet’s factum, the Defendants’ concern is that if they give voluntary evidence, they will lose their Charter protected right against self-incrimination.
[26] Because there are a matrix of factors involved in the principle against self-incrimination, while I can understand why parties might become confused about how the principle against self-incrimination works in various situations, the Defendants’ concern in the immediate case is misconceived.
[27] The principle against self-incrimination is engaged notwithstanding that there is no formal court order directing the Defendants to provide evidence.
[28] Although, unlike the situation in ACI Brands Inc., the Defendants are not under the compulsion of a court order to deliver affidavits, a witness is, nevertheless, regarded as under compulsion if the witness is statutorily compellable to give evidence. The Defendants could be compelled as parties or as witnesses to give evidence in these civil proceedings. If they testify as a witness in civil proceedings and give incriminating evidence, they are protected by the principle against self-incrimination, which may be actualized in a variety of ways.
[29] In civil proceedings, a party’s attendance at an examination for discovery is compulsory, but the case law establishes that a person examined at a civil trial or an examination for discovery or an affiant in civil proceedings is treated as a compelled witness: Sun-Times Media Group, Inc. v. Black, [2007] O.J. No. 795 (S.C.J.); R. v. Nedelcu, 2012 SCC 59; R. v. Dubois, 1985 10 (SCC), [1985] 2 S.C.R. 350; R. v. Henry, 2005 SCC 76; Ezeh v. 2317706 Ontario Inc. (c.o.b. Club Seventy-Seven), 2010 ONSC 4692, [2011] O.J. No. 3568 (S.C.J.).
[30] In R. v. Nedelcu, supra, the Supreme Court was unanimous in concluding that compelled testimony meant statutorily compellable testimony. Justice Moldaver, for the majority opened his judgment by agreeing with the dissenting Justice LeBel’s reasons for judgment on the issue of compulsion.
[31] As will emerge from Justice LeBel’s analysis, only witnesses who may waive their non-compellability are voluntary witnesses. (For example, an accused is non-compellable at his or her own trial.) Justice LeBel’s analysis is found at paragraphs 101-109 of the judgment, where he stated:
Compelled Testimony
One of the Crown's main submissions is that the respondent was not "compelled" to testify at his examination for discovery in the civil action against him in the sense described in Henry. The Crown argues that the respondent was not subjectively compelled, because he freely decided to attend the discovery proceeding [FAP 36], and that he was not objectively compelled, because he chose to file a statement of defence and to therefore put himself "within the grasp of procedural rules ... that would, only then, compel his evidence" (A.F., at para. 37).
Although Binnie J. did not fully canvass what constitutes "compelled" evidence in the Henry sense, he did note that an accused who chooses to testify freely at his or her first trial and then at a retrial is not "compelled" and so does not qualify for s. 13 protection (para. 43). He also stated parenthetically that "[f]or present purposes, evidence of compellable witnesses should be treated as compelled even if their attendance was not enforced by a subpoena" (para. 34; emphasis added).
Binnie J.'s observation that evidence from an accused who decides to testify is "voluntary" simply means that, because accused persons have a right not to be called to testify in their own defence under s. 11(c) of the Charter, any accused who chooses to testify waives his or her right not to be compellable. In contrast, a witness who voluntarily gives evidence at someone else's trial is not giving evidence "voluntarily" within the meaning of Henry even if the witness decides to testify on his or her own volition, for example, to assist the accused. The difference is this: An accused who testifies voluntarily is waiving a constitutional right by choosing to testify. Any other witness can otherwise be compelled, meaning the witness is statutorily compellable regardless of whether he or she "volunteers" to take the stand. This view is confirmed by Binnie J.'s observation that "evidence of compellable witnesses should be treated as compelled even if their attendance was not enforced by a subpoena".
Therefore, whether the respondent freely decided to attend the discovery proceeding is irrelevant. Whether a witness was compelled should not be determined on a subjective standard. It would be unprincipled to give a lesser degree of Charter protection to a witness who testifies willingly than to a witness who must be subpoenaed or otherwise forced to give evidence, if both could have been statutorily compelled to testify in any event. Therefore, to determine whether the quid pro quo is engaged in a particular case, the court should consider whether the witness was statutorily compellable and not whether the witness felt subjectively compelled to testify. The relevant question is this: Was the respondent statutorily compelled to give evidence in the proceeding?
The Crown's second argument on compulsion is that the respondent was not objectively compelled because he chose to file a statement of defence, and therefore that he voluntarily put himself within the grasp of the powers of civil discovery.
This argument must also fail. First, as noted by the intervener Advocates' Society, the integrity of the civil discovery process could be undermined if courts considered that those who defend civil actions are not "compelled" for the purposes of s. 13. Parties facing criminal proceedings might then find it advantageous not to co-operate in any civil action, thereby forcing the other party to obtain a court order compelling their testimony on discovery.
More importantly, however, there is a principled reason why a defendant who gives evidence in a civil discovery proceeding is "compelled" for the purpose of s. 13. Again, the relevant question to ask is: Was the respondent statutorily compelled to give evidence in the proceeding? In this case, Rule 31.04(2) of the Rules of Civil Procedure is the statutory authority that compels a defendant in a civil action to be examined for discovery whether or not the defendant files a statement of defence:
(2) A party who seeks to examine a defendant for discovery may serve a notice of examination under rule 34.04 or written questions under rule 35.01 only after, the defendant has delivered a statement of defence and, unless the parties agree otherwise, the examining party has served an affidavit of documents; or the defendant has been noted in default.
Therefore, failing to file a statement of defence does not allow the respondent to "avoid coming within the grasp of the procedural rules ... that would, only then, compel his evidence", as the Crown asserts (A.F., at para. 37). Had the respondent failed to file a statement of defence, the plaintiff could have noted him in default and then, under Rule 31.04(2)(b), obliged him to be examined for discovery. I note that whether the plaintiff actually took the step of noting the respondent in default is irrelevant. Just as it does not matter for the purposes of s. 13 that a witness who can be statutorily compelled to testify chooses to testify uncoerced, it does not matter that a plaintiff does not resort to the available statutory powers to compel a defendant to be examined for discovery. In either case, there is a statutory route by which to compel the witness to give evidence. This is what makes a witness compellable. Whether or not that route is actually taken does not change the fact that it was available and could have been taken.
I conclude, therefore, that the respondent was statutorily compellable, and therefore "compelled" within the meaning of Henry and for the purposes of s. 13.
[32] In civil proceedings, while a party rarely summonses or subpoenas his or her opponent as a witness for an interlocutory motion or at trial, the opponent is, nevertheless, a statutorily compellable witness.
[33] Thus, regardless of whether Ms. Mardonet and Mr. Bensusan are in fact being compelled (as they would be to attend and give evidence at an examination for discovery) they are compellable throughout the action, and, thus, any incriminating evidence they proffer is compelled testimony. The so called quid pro quo of the principle against self-incrimination is triggered, and the Defendants are entitled to the protection that s. 13 of the Charter offers.
[34] Finally, on the question of whether the Defendants should be granted a protective order, it is also my view that while, strictly speaking, the deemed undertaking rule applies to the discovery procedure and not to the motion procedure, the common law’s implied undertaking applies to the Mareva injunction motion.
[35] The common law implied undertaking limits the use that the recipient of compelled disclosure can make of information obtained by that disclosure: Kitchenham v. AXA Insurance Canada, 2008 ONCA 877 at para. 29. The implied undertaking accepts that the privacy interests of litigants must yield to the disclosure obligation within the litigation, but that those interests should be protected in respect of matters other than the litigation: Juman v. Doucette, 2008 SCC 8, [2008] 1 S.C.R. 157 at paras. 23-27. And thus, in the case at bar, the Defendants also have the protection of the implied undertaking, as far as it goes, which is not that far, because the deemed or implied undertaking does not apply to evidence disclosed in open court.
[36] For these reasons, I dismiss the Defendants’ motions.
2. Confidentiality and Protection of Privacy Rights
[37] Turning to the OPA’s request for a confidentiality order, in its Amended Notice of Motion, the OPA seeks:
A confidentiality order … pursuant to s. 137(2) of the Courts of Justice Act, R.S.O. 1990, c. C-43 and Rule 30.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 permitting the Plaintiff to file redacted materials for a Mareva motion … and the proceedings and imposing confidential terms regarding certain documents that are no public and are confidential and/or privileged, commercially sensitive or personal and private;
[38] In the case at bar, the evidentiary basis for a confidentiality order is provided by the affidavit evidence of Mary Janet Kasperski, the Chief Executive Officer of the OPA.
[39] Ms. Kasperski deposes that the action concerns irregularities in transactions involving the OPA’s eight bank accounts between at least 2003 and 2013. She says that the evidence on the Mareva injunction provides financial information and identifies the bank account numbers and account numbers for credit card transactions. The OPA treats this information as commercially sensitive, private, and confidential. The OPA wishes the information to be redacted “to avoid a potential misuse of the account information.” The OPA is concerned that “a member of the public may misuse the account information and … cause financial harm, misappropriate/misdirect funds, etc.”
[40] I take it from Ms. Kasperski’s affidavit that the OPA is concerned that some member of the public will review the court file and perpetrate identity theft or in some other way misuse the publically available information.
[41] Further, Ms. Kasperski deposes that certain records refer to the names of members of the OPA or persons who may be members, social insurance numbers, and addresses. She says that these records are treated as commercially sensitive, private, and confidential under the OPA’s Privacy of Information Policy. She says that the OPA seeks a confidentiality order to avoid contravening PIPEDA. Asking the members for their consent would be difficult, impractical, time-consuming, and embarrassing to the OPA, causing it reputational harm and discouraging member participation.
[42] Further still, Ms. Kasperski deposes that certain documents reveal payments to legal advisers and this information is privileged and confidential and also irrelevant.
[43] In my text with John Morden, The Law of Civil Procedure in Ontario, (2nd ed.) at pp. 249-252, I discuss the court’s jurisdiction to grant sealing orders that provide protection for the privacy and confidentiality interests of litigants, as follows (omitting the citations):
Section 137(2) of the Act [Courts of Justice Act, R.S.O. 1990, c. C.43] authorizes the court to order that any document filed in a civil proceeding before it be treated as confidential, sealed and not form part of the public record. In Nova Scotia (Attorney General) v. MacIntyre, the Supreme Court stated:
Access can be denied when the ends of justice would be subverted by disclosure or the judicial documents might be used for an improper purpose. The presumption, however, is in favour of public access and the burden of contrary proof lies upon the person who would deny exercise of the right. In Sierra Club of Canada v. Canada (Minister of Finance), … the Supreme Court of Canada formulated a test for when a sealing order should be granted. 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.
Justice Iacobucci added that when an important commercial interest was the justification for a sealing order, then under the first branch of the test (necessity), there were three elements: (1) The risk must be real and substantial and be well grounded in the evidence; (2) The interest cannot merely be specific to the party requesting the order and must be one which can be expressed in terms of a public interest in confidentiality; the open court rule only yields where the public interest in confidentiality outweighs the public interest in openness; and (3) Courts must be alive to the fundamental importance of the open court rule.
He added that the court must not only consider whether reasonable alternatives to a confidentiality order are available, but also restrict the order as much as is reasonably possible while preserving the commercial interest in question.
A sealing order is an exceptional measure, and it is only granted to protect social values of superordinate importance. Although in Sierra Club, the Supreme Court reversed the lower courts and granted a sealing order, given the strictness of the Sierra Club test and the emphasis placed on the open court principle, sealing orders will likely remain only a slightly less rare occurrence. Before Sierra Club, sealing orders were rarely available to prevent public disclosure of commercial sensitive documents, and it will remain particularly difficult to show the necessity of such an order to protect commercial as opposed to personal privacy interests.
While courts are reluctant to grant a sealing order, there are grounds that would justify a sealing order, and courts have been prepared to grant sealing orders in a variety of circumstances including:
• protecting the privacy of infants and parties under a disability, particularly a mental disability;
• protecting the safety of a child of a wealthy couple involved in a custody case from an appreciable risk of being kidnapped if information regarding the child was made public;
• protecting the identity of a police informant;
• protecting the privacy of personal medical information in a class action;
• protecting the privacy of victims of a sexual assault;
• protecting a genuine trade secret or confidential property;
• preventing the disclosure of a non-parties’ confidential information, especially where disclosure by a party would contravene a confidentiality agreement;
• protecting the disclosure of information subject to the privilege for communications in furtherance of settling litigation (litigation settlement privilege);
• preventing the subject matter of the litigation from being ruined by its disclosure; and
• preventing the efficacy of proceedings under the Companies’ Creditors Arrangement Act from being undermined.
[44] In my opinion, no superordinate public interest in maintaining the privacy and confidentiality of the OPA’s documents has been demonstrated that would justify diminishing the open court rule. As Justice Iacobucci stated, the open court rule only yields where the public interest in confidentiality outweighs the public interest in openness and the interest cannot be specific to the party requesting the order.
[45] In the case at bar, the OPA’s concern that some member of the public may scrutinize the court file and commit identity theft is perhaps understandable having regard to the nature of this lawsuit but it is not a sound basis for a court to seal its own files. Put simply, the OPA has not met the onus of justifying a sealing order.
[46] The OPA is also mistaken in submitting that it needs permission to file a redacted record or a sealing order because otherwise it will be breaching its obligations under PIPEDA. Section 7(3) of PIPEDA provides for circumstances when an organization may disclose personal information without the knowledge or consent of the individual concerned. The Act provides several exceptional circumstances where disclosure of personal information may be made without the individual’s consent. Section 7(3)(c) states:
(3) For the purpose of clause 4.3 of Schedule 1, and despite the note that accompanies that clause, an organization may disclose personal information without the knowledge or consent of the individual only if the disclosure is …
(c) required to comply with a subpoena or warrant issued or an order made by a court, person or body with jurisdiction to compel the production of information, or to comply with rules of court relating to the production of records;
[47] In my opinion, the disclosure of personal information in the OPA’s Motion Record is within the scope of s. 7(3)(c).
[48] I am not aware of any cases on the point. The case law about s. 7(3)(c) has focused on the issue of when the exemption for “court orders” is available. The case law holds that s. 7(3)(c) of PIPEDA does not provide a free-standing court jurisdiction to grant an exemption from obtaining the individual’s consent and a court order must be made relying on jurisdiction outside of PIPEDA.
[49] Thus, s. 7(3)(c) standing alone does not itself authorize disclosure. Section 7(3) authorizes the disclosure of personal information without the affected individual’s consent if the order for disclosure is based on an authority or rule separate from PIPEDA. See: Royal Bank of Canada v. Trang, 2014 ONCA 883, Citi Cards Canada Inc. v. Pleasance, 2011 ONCA 3; and Mountain Province Diamonds Inc. v. De Beers Canada Inc., 2014 ONSC 2026. As Justice Blair stated in Citi Cards at para. 25, it is circular to argue that disclosure is required because disclosure is required by an order not yet made.
[50] The exemption in s. 7(3) of PIPEDA, however, is not limited to court orders but extends “to compliance with rules of court relating to the production of records”.
[51] Thus, s. 7(3)(c) automatically applies to the formal discovery stage of an action, but it makes little sense to limit the operation of s. 7(3)(c) to the documentary and oral discovery stage of an action and to exclude its operation from interlocutory motions and proceedings by application that do not have affidavits of documents and examinations for discovery but do have cross-examinations and summonses of witnesses in aid of the motion or application.
[52] In the case at bar, if a Mareva injunction motion had not interrupted the progress to documentary and examinations for discovery, the same documents that the OPA is disclosing for the Mareva injunction motion would be disclosed to comply with the rules of court relating to the production of records.
[53] I conclude that the exemption to obtaining the consent of the affected individual to the disclosure of personal information provided by s. 7(3)(c) of PIPEDA is available to the OPA and no further order is required.
D. CONCLUSION
[54] For the above reasons, I dismiss all the motions.
[55] If the parties cannot agree about the matter of costs, they may exchange and deliver submissions in writing within thirty days of the release of these Reasons for Decision. My current view is that there should be no order as to costs or that the costs should be in the cause of the Mareva injunction motion.
Perell, J.
Released: February 26, 2015
COURT FILE NO.: CV-14-508239
DATE: 20150226
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ONTARIO PSYCHOLOGICAL ASSOCIATION
Plaintiff
– and –
CHARLOTTE (CARLA) MARDONET, SARAH ESAAFI, GABRIAL BENSUSAN, 2181420 ONTARIO INC., BDO CANADA LLP, VERN E. PENNER AND DR. JOHN SERVICE
Defendants
REASONS FOR DECISION
PERELL J.
Released: February 26, 2015