Canada: Confidentiality In The Litigation Process: The Implied Undertaking, Confidentiality And Sealing Orders

Last Updated: July 8 2011
Article by Mark Andrews and Gavin Cameron

I. Introduction

This article addresses the confidentiality of material disclosed in the course of legal proceedings in the Supreme Court of British Columbia. It is primarily concerned with the scope and effect of the obligation of confidentiality of discovery material received from the other parties to the litigation – the "implied undertaking" rule. The paper also briefly discusses how that protection can be augmented by express confidentiality agreements and orders; and applications to seal the Court record, or parts of it.

After a ten year period between 1985 and 1995 in which the onus was placed upon a party giving discovery to apply for a confidentiality order in order to protect itself against its production being used for some other purpose, a five member panel of the Court of Appeal made it clear in Hunt v. T&N1 that an enforceable obligation of confidentiality attaches to discovery materials and it is the party obtaining discovery that requires the owner's permission or the Court's leave in order to use them for any purpose other than discovery in the litigation in which the production was made.

The Court stated:

Keeping in mind that pre-trial proceedings are generally private, and that "papers are often the dearest property a man can have", per Entinck 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.

As is clear from Hunt,2 while the case law and practice employ the term "implied undertaking" the obligation is an obligation that is imposed by law. It is imposed upon both the parties and their representatives. It continues in effect after the case is over.3

Accordingly, the responsibilities of counsel with regards to discovery extend not only to ensuring proper production by the client but also that the client understand the obligations of confidentiality that adhere to the discovery it receives. Furthermore the obligation extends directly to counsel and any other person that receives the production, such as an insurer.4

Breach of this obligation can have serious consequences for both counsel and client, as any improper use of the documents is a contempt of court.

While the existence of the implied undertaking is well known, and the general aspects of the rule are easy to state, more nuanced issues can arise in practice. This paper will address the following specific issues that arise under the general rule:

  • What is covered by the implied undertaking of confidentiality and what is not?
  • How does the rule apply to the use of documents and discovery transcripts from other litigation?
  • Does the undertaking end once the information becomes part of the court record?
  • How hard is it to get judicial relief from the undertaking?
  • What are the consequences of a breach of the implied undertaking?

In addition, we will give some consideration to the obtaining of confidentiality orders when, for some reason, it is considered that the implied undertaking is insufficient.

Finally, we will review the basics of obtaining a sealing order in those cases where any publication of confidential information in the Court file threatens extraordinary harm to a party.

II. The Implied Undertaking of Confidentiality: What Is it, and Why Does it Exist?

A. The Rule

Where the implied undertaking of confidentiality applies, a party receiving discovery is circumscribed in the use it may make of the information it obtains. In an oft-cited passage, Lord Denning M.R. stated the common law rule as follows:

A party who seeks discovery of documents gets it on condition that he will make use of them only for the purposes of that action, and no other purpose. To use a document produced for inspection for a collateral or ulterior purpose is a misuse against which the court will proceed for contempt or by injunction...5 The general rule is succinctly stated as follows: Generally when a party is obliged by either a rule of court or a court order to give discovery by producing documents or by submitting to oral examination, the party who obtains that discovery is obliged to maintain the documents and testimony in confidence unless relieved of that obligation by court order.6

The rule does not arise as a result of a Court Order, or the application of any written rule (at least in British Columbia). Rather, the obligation is imposed by law, and the duty is owed to the Court. Mr. Justice Hobhouse has explained these points as follows:

This undertaking is implied whether the court expressly requires it or not. The expression of the obligation as an implied undertaking given to the court derives from the historical origin of the principle. It is now in reality a legal obligation which arises by operation of law by virtue of the circumstances under which the relevant person obtained the documents or information. However, treating it as having the character of an implied undertaking continues to serve a useful purpose in that it confirms that the obligation is one which is owed to the court for the benefit of the parties, not one which is owed simply to the parties; likewise, it is an obligation which the court has the right to control and can modify or release a party from. It is an obligation which arises from legal process and therefore is within the control of the court, gives rise to direct sanctions which the court may impose (viz. contempt of court) and can be relieved or modified by an order of the court. It is thus a formulation of the obligation which has merit and convenience and enables it to be treated flexibly having regard to circumstances of any particular case.7

B. The Rationale

Having described the nature and source of the rule, it is important to briefly address its philosophical underpinnings.

It is clear that the implied undertaking of confidentiality is a procedural safeguard, developed to balance the public interest in encouraging full disclosure so that the truth may be discovered, against a desire to minimize intrusions on privacy. The rationale for the implied undertaking has been described as follows:

... to ensure full and complete disclosure while maintaining the confidentiality of a private process. The principle driving this undertaking is that the discovery process represents an intrusion on the general right to privacy under the compulsory process of the Court. The necessary corollary is that this intrusion should not be allowed for any purpose other than that of securing justice in the proceeding in which the discovery takes place.8

While "privacy" is often referred to as the primary justification for the implied undertaking of confidentiality, other considerations are also relevant, including the promotion of "full discovery". Citing an English text on discovery, the Ontario Court of Appeal has noted that:

The primary rationale for the imposition of the implied undertaking is the protection of privacy. Discovery is an invasion of the right of the individual to keep his own documents to himself. It is a matter of public interest to safeguard that right. The purpose of the undertaking is to protect, so far as is consistent with the proper conduct of the action, the confidentiality of a party's documents. It is in general wrong that one who is compelled by law to produce documents for the purpose of particular proceedings should be in peril of having those documents used by the other party for some purpose other than the purpose of the particular legal proceedings and, in particular, that they should be made available to third parties who might use them to the detriment of the party who has produced them on discovery. A further rationale is the promotion of full discovery, as without such an undertaking the fear of collateral use may in some cases operate as a disincentive to proper discovery. The interests of proper administration of justice require that there should be no disincentive to full and frank discovery.9

Thus, the implied undertaking of confidentiality provides a measure of comfort to the reluctant client, who fears documents she must disclose in the litigation process will be misused for other purposes.

Finally, it is important to note that there is a distinction between the concept of privilege and the implied undertaking of confidentiality. Information covered by the implied undertaking rule does not take on a privileged character simply because it has been disclosed in the discovery process; rather, the rule simply restricts how a receiving party may use that information.10

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Footnotes

1 Hunt v. T & N plc (1995), 4 B.C.L.R. (3d) 110 at para. 63 (C.A.); reversing, per curiam, the decision of the Court in Kyuquot Logging Ltd. v. British Columbia Forest Products Ltd. (1986), 5 B.C.L.R. (2d) 1 67 (C.A.).

2 At para. 64

3Lac d'Amiante du Québec Ltée v. 2858-0702 Québec Inc., 2001 SCC 51 at para. 76: "The rule applies during the case to both a party and the party's representatives, and it remains applicable after the trial ends".

4 Sullivan & Associates Inc. v. Tilson, 2007 SKQB 115 at para. 17; Chonn v. DCFS Canada Corp dba Mercedez-Benz Credit Canada, 2009 BCSC 1474 at para. 25.

5 Riddick v. Thames Board Mills Ltd., [1977] 3 All E.R. 677 at 687 (C.A.)

6 Blindman Livestock Feeder Co-Op Ltd. (Receiver of) v. Snyder, 2005 ABQB 689 at para. 4.

7 Prudential Assurance Co. Ltd. v. Fountain Page Ltd., [1991] 1 W.L.R. 756 at 765 (Q.B.D.).

8 Colortech Painting and Decorating Ltd. v. Toh, 2000 ABQB 814, 276 A.R. 262 at para. 34.

9 Goodman v. Rossi (1995), 24 O.R. (3d) 359 at para. 29 (C.A.), citing Matthews and Malek's Discovery (1992) at page 253; See also the judgment of Esson J.A in Kyuquot at para. 67.

10 Juman v. Doucette, 2008 SCC 8 at para. 56.

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