



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Schober v. Tyson Creek Hydro Corporation









2014 BCCA 12




Date: 20140110

Docket: CA041379

Between:

Peter Schober

Appellant

(Petitioner)

And

Tyson Creek Hydro
Corporation

Respondent

(Respondent)

THIS FILE IS SUBJECT
TO A SEALING ORDER OF THE COURT OF APPEAL.

THE SEALING ORDER
WAS LIFTED BY THE SUPREME COURT OF CANADA ON JUNE 12, 2014.




Before:



The Honourable Mr. Justice Low

The Honourable Madam Justice Stromberg-Stein

The Honourable Mr. Justice Willcock




On appeal from the
Supreme Court of British Columbia, November 8, 2013
(
Schober v. Tyson Creek Hydro Corporation
, 2013 BCSC 2042
Vancouver Registry No. S136825)

Oral Reasons for Judgment




Counsel for the Appellant:



D.P. Church, Q.C. and
  M.W. Bhuler





Counsel for the Respondent:



J.M. Sullivan and L.
  Cundari





Place and Date of Hearing:



Vancouver, British
  Columbia

January 7, 2014





Place and Date of Judgment:



Vancouver, British
  Columbia

January 10, 2014








Summary:

The appellant sought an
order declaring that a transcript of his examination for discovery, given on
behalf of his employer in an underlying suit, is subject to an implied
undertaking of confidentiality from his employer and, consequently, his
employer should be prohibited from disclosing the transcript and the
information contained within it for any purpose outside of the underlying
action. On appeal, the appellant argued that the implied undertaking of
confidentiality applies not just to the party seeking the information on
discovery, but to all parties to the action.

Held: appeal dismissed. The
implied undertaking of confidentiality is given to the court by the inspecting
party and is meant to protect the privacy interests of the party giving
evidence on discovery. This undertaking does not extend so far as to prevent
the party that is being discovered from using any information presented in
discovery for purposes beyond the subject litigation.

[1]

WILLCOCK J.A.:
The appellant, by petition filed on September 12,
2013, sought an order declaring that the transcript of his examination for
discovery conducted on May 23, 2013, and the information in the transcript are
subject to an implied undertaking of confidentiality by the respondent, Tyson
Creek Hydro Corporation (TCHC) and an order prohibiting the disclosure of that
information or the use of the transcript for any purpose outside the action
pending between TCHC and others in the Vancouver Registry of the Supreme Court
(the Underlying Litigation).

[2]

The petition was dismissed by Mr. Justice Cohen on November 8, 2013, for
reasons indexed at 2013 BCSC 2042, which have since been sealed by order of the
Supreme Court and this Court.

[3]

The appellant seeks to set aside the order dismissing the petition and to
substitute in its place an order describing the undertaking it says should be
binding upon TCHC in relation to the transcript and information disclosed on
discovery.

Background

[4]

The underlying litigation arises out of damage to electrical generating
equipment constructed by TCHC at Tyson Creek on the Sunshine Coast of British
Columbia, as result of the entry of particulate matter into the turbine, and an
order preventing the continued operation of that equipment for a period of time
as a result of the discharge of that particulate matter into Tyson Creek. That
damage and the interruption in the use of the plant are said to have arisen as a
result of the unexpected accumulation of glacial flour in Tyson Lake when the
surface level of the lake was reduced by the operation of the electrical
generating equipment. The underlying litigation is founded upon claims in
contract and negligence against parties TCHC says caused or contributed to
design flaws that led to unexpected abrasion and damage to the Tyson Creek facility
and to the discharge of unexpected effluent into Tyson Creek.

[5]

The flow of water to the TCHC turbine was drawn from Tyson Lake and was
intended to be returned to Tyson Creek and, ultimately, the Tzoonie River. The
TCHC project was planned, built, and operated on the understanding that TCHC
would obtain necessary permits to draw water for its operation from the
regulatory authority established by the Province of British Columbia pursuant
to the
Water Act
, R.S.B.C. 1996, c. 483. Those permits required periodic
reporting to the Province.

[6]

At all material times Mr.
Schober, the appellant, was an officer, director, and manager of TCHC. In May
2013, he was examined for discovery with respect to matters at issue in the
litigation by Mr. Hirst, counsel for the defendant
, Kerr Wood Leidal
Associates Limited.
After the conclusion
of the first portion of his examination for discovery (which has been adjourned
but is continuing) representatives of TCHC
met with staff of the
Ministry of Forests, Lands and Natural Resource Operations of the Provincial
Government and made some disclosure of evidence gleaned from the appellants
examination with respect to the accuracy of the records kept and the nature of
the reporting the appellant had made to the regulatory authority on behalf of
TCHC.

[7]

On being advised of TCHCs intention to disclose information from his
examination for discovery to the regulatory authorities, the appellant brought
the petition, the dismissal of which has led to this appeal.

Decision Appealed From

[8]

The appellants petition was founded upon the proposition that all
evidence obtained on discovery is produced pursuant to an implied undertaking
on the part of all parties to the litigation, that the evidence will be used
for no purpose other than the prosecution or defence of the litigation in which
the discovery is conducted. The appellant says he was compelled to attend the
examination for discovery and he could have been found to be in contempt of
court if he had refused to attend or give responsive answers. He says anyone
compelled to attend at discovery is entitled to the benefit of an implied
undertaking of confidentiality. He argues such an undertaking was implicitly
given to him not only by the party conducting the examination for discovery but
by all other parties to the litigation, including TCHC, on whose behalf he was
testifying. He says that undertaking ought to preclude TCHC from making use of
any of the information disclosed on his discovery and should specifically
preclude TCHC from providing a transcript of the examination for discovery to
the regulatory authorities.

[9]

Following an
in camera
hearing on September 23, 2013, the
appellants petition was dismissed. The judge referred to authorities limiting
the use that may be made of the transcript by the other parties. He held:  it
is well-settled that the implied undertaking only applies where the opposing
party attempts to use the evidence outside the action. He held the law does
not support the submission made by the appellant that applying the implied
undertaking to the circumstances in this case would serve the interests of
justice. He held:

[46] I do not view this
application as one to protect the privacy of the petitioners personal
information potentially damaging to his interests. The petitioners conduct,
which is at the center of TCHCs concern, is conduct he did in TCHCs name. In
my view, TCHC is not and should not be precluded by an implied undertaking from
disclosing its own conduct to the provincial regulator.

[10]

The appellant says the judge erred in concluding that the appellants
privacy interest in the damaging information was not protected by the implied
undertaking of confidentiality.

[11]

This is said to be a case of first instance.

Discussion

[12]

The narrow question in this case is whether an authorized representative
of a corporation can rely upon a doctrine intended to protect the privacy of
persons compelled to testify in civil proceedings, to preclude the corporation from
disclosing testimony with respect to information in its care or control he has
given on its behalf at an examination for discovery.

[13]

The implied undertaking of confidentiality is considered to be necessary
so the public interest in complete and candid discovery does not trench upon
the privacy interests of individuals compelled to testify. It is a measure of
protection afforded to privacy interests.

[14]

The undertaking
was restated in British Columbia by this Court in
Hunt
v. T & N plc
, [1995] 5
W.W.R. 518, 4 B.C.L.R. (3d) 110, where
the history of the doctrine was
briefly described as follows:

[42]      Keeping in mind that pre-trial proceedings are
generally private, and that papers are often the dearest property a man can
have, per
Entick v. Carrington
(1765), 95 E.R. 807 at 818, we have no
doubt that, prima facie,
a party obtaining production of documents is under
a general obligation, in most cases, to keep such documents confidential
,
whether or not they disclose private or confidential material. Such seems to
have been the view of all the judges in
Kyuquot
[
Kyuquot Logging Ltd.
v. British Columbia Forest Products Ltd.
(1986), 5 B.C.L.R. (2d) 1, 30
D.L.R. (4th) 65, (B.C.C.A.)].

[43]      This view seems to receive considerable support
from an historical perspective, much of which was reviewed in
Kyuquot
,
starting with an ancient text,
The Principles and Practice of Discovery
,
by Edward Bray, 1885, where it was stated, at p. 238:


A party who has
obtained access to his adversary's documents under an order for production has
no right to make their contents public or communicate them to any stranger to
the suit
...nor to use them or copies of them for any collateral
object....If necessary an undertaking to that effect will be made a condition
of granting an order....

In another passage, Bray stated that documents obtained on
production could not be used except under the authority of the Court.

[44]
Bray,
of course, wrote in the context of the English practice before discovery of
documents could be obtained without an order. However, we believe the principle
he states is the correct one. As Esson J.A. points out in
Kyuquot
, at p.
8, the law stood relatively unchanged until
Alterskye v. Scott
, [1948] 1
All E.R. 469 (C.A.)
when, for the first time, it was held that the
receipt of documents created an implied undertaking not to use them for any
purpose outside the action in which they were produced and that such obligation
could be enforced by proceedings for contempt.

[45]      In
due course, this led to the notable case of
Home Office v. Harman
(1982),
[1983] 1 A.C. 280 (H.L.), which, to say the least, dramatically confirmed the
existence of such an undertaking in England. This decision has been much
criticized, but it established the context for the decision in
Kyuquot
.

[Emphasis
added.]

[15]

In
Home Office v. Harman
, the implied undertaking was described
as a safeguard against abuse of what Lord Diplock referred to at page 300 as
the inroad, in the interests of achieving justice, upon the right of the
individual to keep his own documents to himself... In that case the issue was
described in the following terms at page 302:

So the questions of law in this
appeal are: whether it is the duty of the solicitor of one party to civil litigation,
who in the course of discovery in that litigation has obtained possession of
copies of documents belonging to the other party to the litigation, to refrain
from using the advantage enjoyed by virtue of such possession for some
collateral or ulterior purpose of his own not reasonably necessary for the
proper conduct of the action on his clients behalf; and if so, whether a breach
of that duty constitutes a contempt of court.

[16]

This principle led to the expression of the rule at page 304 of the judgment
in
Home Office v. Harman
in the following terms:

an order for production of
documents to a solicitor on behalf of a party to civil litigation is made upon
the implied undertaking given by the solicitor personally to the court (of
which he is an officer) that he himself will not use or allow the documents or
copies of them to be used for any collateral or ulterior purpose of his own, his
client or anyone else; and any breach of that implied undertaking is a contempt
of court by the solicitor himself. Save as respects the gravity of the contempt
no distinction is to be drawn between those documents which have and those
which have not been admitted in evidence; to make use for some collateral or
ulterior purpose of the special advantage obtained by having possession of
copies of any of an adverse partys documents obtained upon discovery is, in my
view, a contempt of court.

[17]

The specific object of the law in imposing the obligation was described
by Lord Denning M.R. in
Riddick v. Thames Board Mills Ltd.,
[1977] Q.B.
881 at 896:

Compulsion [to disclose] is an
invasion of a private right to keep one's documents to oneself. The public
interest in privacy and confidence demands that this compulsion should not be
pressed further than the course of justice requires.

[18]

That concern is reflected in Rule 31.22 of
The Civil Procedure Rules
1998 (U.K.)
, No. 3132 (L. 17), dealing with documentary
discovery, which specifically refers to the use that may be made of documents
by the party to whom a document has been disclosed.

[19]

The decision of this Court in
Hunt,
founded upon these
principles
,
was considered and followed in Ontario in
Goodman v.
Rossi
(1995), 24 O.R. (3d) 359, 125 D.L.R. (4th) 613 (C.A.). In that case,
the court noted that the commentary of Bray in
The Principles and Practice
of Discovery
on the rule appeared under the heading: 
as
to the
obligation
of the inspecting party
not to divulge the contents of the
documents to other persons (emphasis added). The Ontario Court of Appeal cites
Hobhouse J. in
Prudential Assurance Co. v. Fountain Page Ltd.
, [1991] 1
W.L.R. 756 (Q.B.D.) to describe the rationale for the rule in the following
terms:

The rational basis
for the rule is that where one party compels another,
either by the
enforcement of a rule of court or a specific order of the court,
to
disclose documents or information whether that other wishes to or not, the
party obtaining the disclosure is given this power because the invasion of the
other partys rights has to give way to the need to do justice between those
parties in the pending litigation between them; it follows from this that the
results of such compulsion should likewise be limited to the purpose for which
the order was made, namely, the purposes of that litigation then before the
court between those parties and not for any other litigation or matter or any
collateral purpose. [Emphasis in original.]

[20]

The scope and purpose of the implied undertaking was considered by the
Supreme Court of Canada in
Juman v. Doucette
, 2008 SCC 8. In that case the
pressing question before the court was whether there is or should be an
exception to the implied undertaking of confidentiality permitting the
disclosure of evidence of criminal misconduct. The court underlined the
important function of the rule in encouraging candor. The undertaking was
described in broad terms at paragraphs 25 to 28 of the judgment in that case.
Throughout, however, the undertaking was considered to have been implied on the
part of the party obtaining discovery with the assistance of the compulsion of
the Rules. At paragraph 4 of the judgment Binnie J., for the court, held:

Thus the rule is that both
documentary and oral information obtained on discovery, including information
thought by one of the parties to disclose some sort of criminal conduct,
is
subject to the implied undertaking. It is not to be used
by the other
parties
except for the purpose of that litigation, unless and until the
scope of the undertaking is varied by a court order or other judicial order or
a situation of immediate and serious danger emerges.

[Emphasis in
original.]

[21]

The undertaking is
properly considered to be given to the court by parties obtaining discovery
with the assistance of the court process and thereby invading anothers private
rights. It does not extend, for example, so far as to preclude a lawyer from
disclosing documents produced to him by his own client where that lawyer is
being discovered by another party in a subsequent action. In rejecting such a
claim, the Ontario Court of Appeal in
Sobeski v.
Mamo,

2012 ONCA 560
,
held:

[33]      As this court stated
in
Kitchenham v. AXA Insurance (Canada)
, 2008 ONCA 877, 94 O.R. (3d) 276,
at para. 10, the Rule exists to protect the privacy interest of the party
compelled by the rules of disclosure to provide that information
to
another party
to the litigation [emphasis of Armstrong J.A.].

[22]

While the court in that case was considering the undertaking now
embodied in the
Rules of
Civil Procedure
,
R.R.O. 1990, Reg. 194
, the description of the protected privacy interest
and the limitation of the undertaking to the use of information given to
another
party
(and not an undertaking between individuals who have collectively
made discovery for one party) is, in my view, apposite.

[23]

The party making discovery need give no undertaking as to the use it
will make of the information in its own possession or control.

[24]

The undertaking has never stood as a bar to a party voluntarily
disclosing information or testimony from its own examination for discovery.

[25]

Further, the undertaking does not relieve a party of the obligation to
disclose its own testimony in prior litigation with respect to the matters in
issue in current litigation, or to permit a party to shield such information
from discovery
.
In that respect I regard as correct the views expressed
by Ehrcke J. in
Wilson v. McCoy
, 2006 BCSC 1011 at para. 13 (also
referred to by Binnie J. in
Juman
), by Williams J. in
British
Columbia v. Tekavec,
2012 BCSC 1348 at para. 11, and in Peter Fraser, John
W. Horn and Susan A. Griffin,
The Conduct of Civil Litigation in British
Columbia
, 2d ed., loose-leaf (Markham, Ont.: LexisNexis, 2007), in the
following terms at 17-34:

However, the undertaking does not
apply to allow a party to resist disclosure of materials in a second action
that originated with that resisting party in an earlier proceeding, such as the
resisting partys own examination for discovery transcripts or notices to
admit.

[26]

The same result
has obtained in Ontario, where the Court of Appeal has determined that both the
common law rule and the provision in the Ontario Rules constrain only the
recipient of information and that no undertaking to the court is given by the
party making discovery. (See
Kitchenham v. AXA
Insurance (Canad
a)
,
supra
, and
Tanner v. Clark

(2003), 63 O.R. (3d) 508
(C.A.), affg
(2002), 60 O.R. (3d) 304
(Div. Ct.), leave to appeal to S.C.C.
refused,
[2003] 3 S.C.R. viii
,
[2003] S.C.C.A. No. 192
.)

[27]

There is no dispute in this case that the material evidence of the
appellant was evidence with respect to information collected by TCHC and on its
behalf. The appellants testimony with respect to his own conduct was testimony
with respect to the manner in which he discharged obligations owed to the
company as its manager.

[28]

I agree with the conclusion of the chambers judge in this case that we
should not imply an undertaking on the part of TCHC to the court to maintain
the confidentiality of the evidence of its own representative with respect to
corporate knowledge and corporate actions at his examination for discovery as
its representative.

[29]

In my view, there was ample basis to support the chambers judges
conclusion that the appellant personally had no privacy interest in the
information disclosed on his examination for discovery, which was conveyed to
the Ministry of Forests, Lands and Natural Resource Operations.

[30]

There is no basis on the evidence to find that discovery trenched upon the
appellants personal privacy interest. It is that personal privacy interest
that is protected, properly and vigorously, by the court with a view toward
ensuring complete and candid discovery. In my view the chambers judge was
correct in rejecting the appellants argument that he could prohibit TCHC from
disclosing his testimony or information in his possession to the provincial
government, simply because he disclosed that information at his examination for
discovery.

[31]

On this appeal counsel has vigorously advanced the position that the
appellant has a personal interest in maintaining confidentiality of the
evidence given on his examination for discovery because its disclosure might
result in his prosecution. There is no doubt that he has a personal interest in
the issue. The real question is whether he ought to be entitled to assert a
personal claim to privacy in the information or evidence given on his
examination for discovery. In my view the chambers judge was correct in finding
that he could not assert such a claim. That being the case, I see no reason to
extend to him the protection of an implied undertaking or to find that TCHC, as
the party giving discovery, is not free to use that discovery as it sees fit,
without limitation.

[32]

For those reasons I would dismiss the appeal.

[33]

LOW J.A.:
I agree.

[34]

STROMBERG-STEIN J.A.
: I agree.

[35]

LOW J.A.:
The appeal is dismissed.

The Honourable Mr.
Justice Willcock


