Much to the chagrin of a defendant, first prosecuted in regulatory proceedings and then sued, a court in Alberta has required regulatory records obtained from third parties to be disclosed by the regulatory agencies also sued in the civil action. The court concluded these records, constituting possible evidence in the prosecution, were not subject to the "implied undertaking rule".
Unless you're a lawyer regularly conducting civil trials, you probably haven't heard of the "implied undertaking rule". This rule requires that parties to a civil action undertake to the court that they will not use documents they have disclosed to each other other than for the purposes of the litigation. All relevant documents, not subject to solicitor-client privilege, have to be turned over.
Until these documents become exhibits in open court, they are confidential to the process. That means no running off to the media on your way to the court house with a juicy bit of information your opponent has given you because of the rules of court.
The applicability of the "implied undertaking" rule came under scrutiny in Floate v Gas Plus Inc, where defendants in a civil suit – we'll call them the polluting defendants – were resisting the disclosure of documents from third party defendants, who we'll the regulator defendants. The regulator defendants were sued on the basis of regulatory negligence.
Through a plea bargain, the regulator defendants successfully prosecuted the polluting defendants in earlier regulatory proceedings. Because there were guilty pleas, no documents became part of the public record through that process. But through the civil action, the regulator defendants had a lot of documents they argued they had to disclose to all the parties in the civil action. (Either way, because of the "implied undertaking" rule, the documents would remain confidential to the numerous parties in the civil litigation now occurring.)
In a twist on the civil rule, the polluting defendants resisted this disclosure and claimed that the regulator defendants had an "implied undertaking" that they would not use these documents outside of the context for which they were collected, that is for regulatory purposes. Specifically, they argued that records that the regulator defendants got from third parties who supplied the information through compulsion, as opposed to records generated by the regulators themselves through their own activities, were subject to the "implied undertaking" rule: they could not be used outside of the regulatory process and could not be disclosed in the civil action.
The irony of this is that the polluting defendants also should have had possession of these very documents, as the regulator defendants had to disclose all of these documents to the polluting defendants in the course of the earlier prosecutions (known as Stinchcombe disclosure). And in that case, the polluting defendants had an obligation to turn them all over in the civil action in any event.
The polluting defendants claimed they no longer had control over those disclosure records, however, as they were with prior defence counsel, with whom their relationship had gone south. Ergo, they did not have control over them any more and could not disclose them. That just left the regulator defendants with possession and an obligation to turn them over, unless the "implied undertaking rule" prevented them from doing so.
Unsurprisingly, the court concluded that there was no implied undertaking that the regulator defendants were not to disclose the documents in the civil action. The court held this for several reasons, including the following:
- The implied undertaking rule is a rule of the courts and an undertaking owed to the court. When it comes to regulatory matters, however, the legislature is in charge. The court concluded that if the legislature had intended these documents not be disclosed in civil proceedings, they would have said so in the governing legislation. The court buttressed this argument by noting that freedom of information legislation prohibits the disclosure of personal information collected in the course of a regulatory investigation, except as required during civil litigation, or as required to be disclosed by a court.
- The burden of the implied undertaking proposed by the polluting defendants far outweighed any benefit. This approach would have the effect of preventing regulators from ever disclosing any of the information received from third parties without an order of the court.
- The approach of the polluting defendants would reverse the presumption of discoverability in a civil process that it is all to be disclosed, unless privileged. The court saw no benefit in requiring the parties to engage the court more often than necessary on their way to settlement or trial.
- A just resolution is more likely where more information is on the table.
The court was also not impressed by the polluting defendants assertion that they were not able to produce the records themselves because of their estranged relationship with defence counsel. The court required the polluting defendants to do more to obtain the records from former counsel, and reaffirmed the polluting defendants obligation to produce them, even if the regulatory defendants also released the very same records.
Procedural shenanigans rarely help in litigation. This motion was doomed to fail and largely was a waste of everyone's time. Disclosure is the trend, and it is no surprise the court required it, with carefully considered reasons.
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