On July 9, 2010, the Federal Court of Canada restricted the
scope of the definition of "commercial activity" under
the Personal Information Protection and
Electronic Documents Act (PIPEDA), when it was asked
to determine whether the provisions of PIPEDA apply to evidence
collected by an insurer, on behalf of an insured, in a tort
Specifically, State Farm Mutual Automobile Insurance Company
(State Farm) had used video surveillance to inquire about the
activities of a third party (Plaintiff) who had brought an action
against an insured of the insurer in connection with a motor
vehicle accident (State Farm has a duty to defend such an insured
pursuant to New Brunswick insurance laws). The Plaintiff
subsequently made a request to State Farm that, pursuant to PIPEDA,
all information collected in the course of its investigation be
disclosed to him. State Farm indicated that PIPEDA did not apply
and denied the request. The insurer had also claimed litigation
privilege over the surveillance tapes and associated documentation.
The Plaintiff subsequently complained to the Privacy Commissioner
of Canada (Commissioner) who decided to proceed with an
investigation in connection with the Plaintiff's
In this case, State Farm sought an application
for judicial review to challenge the decision of the Commissioner
to proceed with her investigation.
State Farm argued that such an investigation was not within the
jurisdiction of the privacy legislation, which would compel the
insurer to provide access to information that would otherwise be
covered by solicitor-client privilege or litigation privilege. The
Commissioner argued that because the relationship between the
insurance company and the insured was for services paid, this was a
"commercial activity" as defined in PIPEDA and therefore
fell within the scope of her jurisdiction.
The Court found that, pursuant to subsection 4(1)(a) of PIPEDA,
"commercial activity" applies to every organization with
respect to personal information that "the organization
collects, uses or discloses in the course of commercial
activities." However, the Court concluded that if this is read
with respect to the logic of the Commissioner, PIPEDA would impede
on client privilege or litigation privilege, which was not the
intention of Parliament in adopting the act. It concluded that the
purpose of PIPEDA is to protect personal information that is
collected, used or disclosed in the course of commercial activity
in the Canadian market, and that in this particular case the
primary activity was not commercial, but rather simply incidental,
and should therefore remain exempt from PIPEDA.
The Court ordered that where the organization being investigated
raises solicitor-client or litigation privilege, the
Commissioner's investigative authority is limited. It granted
the application for judicial review, declared the
Commissioner's decision invalid and awarded costs to State
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