Canada: Confidentiality Orders and the Open Court Principle - More Court Documents Seeing Light of Day

Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Litigation & Dispute Resolution, December 2010

Commercial litigants may not be able to count on confidentiality orders to protect sensitive documents, even when sought on consent. Recent decisions by Ontario courts suggest it may be becoming more difficult to keep commercial information that is filed with the courts out of the public domain. The open court principle and section 2(b) of the Canadian Charter of Rights and Freedoms provide a general entitlement to access documents filed with the courts. Where confidentiality or sealing orders are sought in civil cases, the private commercial interests of litigants will not be protected unless they can be expressed in terms of a broader public interest in confidentiality. However, information belonging to third parties to the litigation may be more likely to be protected.

A General Right of Access to Court Exhibits

The Ontario Court of Appeal has recently recognized the constitutional right to access court exhibits. In R. v. Canadian Broadcasting Corporation, the CBC sought access to video exhibits from the preliminary inquiry of four correctional officers charged in connection with the 2007 death of 19-year-old Ashley Smith while she was in custody. The Ontario Superior Court held that the CBC was entitled to access and copy only the portion of the video exhibits that were played in open court, but that it was not permitted to copy the portion of the video exhibit showing the actual circumstances of Ashley Smith's death, even though it was played in open court.

On appeal, Sharpe J.A. held that the open court principle and the section 2(b) Charter right to freedom of expression meant that the CBC could access and make copies of all the exhibits filed with the court, regardless of whether they were actually played in open court. He confirmed that the onus is on those seeking to block access to show that there is a countervailing interest sufficient to satisfy the test set out by the Supreme Court of Canada (SCC) in Dagenais v. Canadian Broadcasting Corp. and R. v. Mentuck. As a result of this decision, the media will not be limited to accessing exhibits based on what the parties choose to play or read out during a hearing, or by a judge's personal view of what is appropriate for publication. Based on the decision, there should be presumptive access to documents that are part of the court record.

Confidentiality or Sealing Orders Will Only be Made in Limited Circumstances

R. v. CBC addressed access to court exhibits by the media. In another recent decision, the Ontario Superior Court considered the granting of a confidentiality or sealing order in circumstances where both sides to the litigation agreed that certain documents should be protected.

In Fairview Donut Inc. v. The TDL Group Corp., a group of franchisees brought a proposed class action against the popular franchisor Tim Hortons, claiming that a 2002 change in its baking system had decreased profit margins. Tim Hortons moved for a confidentiality or sealing order to restrict access to certain documents in its motion record on certification and summary judgment. At issue was information about Tim Hortons' costs, sales and margins that it claimed would allow competitors to increase their market penetration and therefore cause damage to Tim Hortons and its franchisees. The plaintiffs agreed that a confidentiality order was warranted for certain of the documents in question.

In considering the motion by Tim Hortons, Strathy J. of the Ontario Superior Court applied the test for granting confidentiality or sealing orders found in the SCC's decision in Sierra Club of Canada v. Canada (Minister of Finance). Such an order will be granted where:

1. it is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonable alternative measures will not prevent the risk; and
2. the salutary effects of the order outweigh its deleterious effects.

Applying this test to the facts of the case, Strathy J. was not satisfied that the interests affected extended beyond the private commercial interests of Tim Hortons and its franchisees, a requirement of the first branch of the Sierra Club test. The interests at stake could not be expressed in terms of the broader commercial interest in the preservation of confidential information or the promotion of fair competition. While much of the information in question had been treated by Tim Hortons and its franchisees as confidential, this would be true in almost every business relationship since, in the ordinary course of business, there would be no reason to disclose it. Strathy J. was also not satisfied that the risk of harm was real and substantial or grounded in the evidence. It was simply speculative that information on the successful implementation of Tim Hortons' eight-year-old baking system would give competitors an unfair advantage. In relation to the second branch of the Sierra Club test, Strathy J. found that a class action engages broader interests than an ordinary civil action, and concluded that a sealing order could have significant adverse effects on public confidence in the administration of justice.

Information Belonging to Third Parties May be More Likely to be Protected

In two other Ontario Superior Court decisions from this past year, sensitive financial and technical information belonging to third parties to litigation was protected. In Andersen v. St. Jude Medical Inc., Lax J. made an order sealing technical information belonging to a third‑party supplier. She noted that, unlike in Fairview, in this case it was a non-party's commercial interests at stake and the information at issue was highly technical and specific. She also noted that the defendants were under a continuing contractual obligation to preserve the confidentiality of the information in question.

Blakes acted for the successful moving party, St. Jude Medical.

In Himel v. Greenberg, Spies J. ordered a partial sealing order in relation to financial information belonging to a third-party real estate development company, Minto. Spies J. rejected Minto's argument that the documents should be sealed because disclosure would result in economic harm to the company, as "mere economic harm" was not an important commercial interest sufficient to override the open court principle. However, Spies J. agreed to seal financial information on the basis of confidentiality provisions in Minto's shareholders' agreement. She noted that her decision to partially seal the court record took account of the fact that Minto was not a party to the litigation, and was forced to provide disclosure due to the marital troubles of one of its shareholders.

Conclusion

Recent case law in Ontario indicates a trend toward greater public access to documents filed with the courts. Potential litigants should be aware that, depending on the facts, private commercial interests may not be enough to obtain a sealing or confidentiality order with respect to sensitive commercial information. While the consent of the other party to the dispute is a factor the court can consider in granting such an order, it is not determinative as the court must carefully scrutinize any limits placed on the open court principle.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.