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 action.
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 complaints.
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 Farm.
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