31 December 2014

Summary Of Société Financière Manuvie v. Dominic D’Alessandro And Others

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Confidential, but relevant: documents provided to OSFI must be communicated
Canada Litigation, Mediation & Arbitration
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Confidential, but relevant: documents provided to OSFI must be communicated

A.          Overview of the Appeal

The appellant Manulife appealed against an interlocutory judgment rendered on May 7, 2014 by the Superior Court, District of Quebec (Justice Alicia Soldevila), dismissing its objection to the communication of documents based on an alleged statutory immunity found at sections 2 and 3 of the Supervisory Information (Insurance Companies) Regulations (SOR/2001-56) (the "Regulation"). Justice Soldevila thus ordered the communication of four (4) non-redacted documents and fifty-seven (57) other documents, mainly on the basis that notwithstanding their "confidential nature", these documents appeared relevant to the issues to be debated on the merits.

In reasons by Justice Bélanger in which Justice Gagnon concurred, the Court of Appeal dismissed the appeal, with costs and confirmed the Superior Court's decision ordering the communication of the documents. .

In dissent, Justice Morin would have allowed the appeal and allowed the objection raised by the appellant in respect to the communication to MEDAC of information contained in sixty three (63) documents, with costs against MEDAC.

B.          The Context of the Appeal

The respondents, the Mouvement d'éducation et de défense des actionnaires (MEDAC) and Marc Lamoureux, were authorized to file a class action against the appellant Manulife and some of its officers, for alleged breaches of continuous disclosure obligations and for false and/or misleading representations on the secondary market relative to guaranteed insurance products and internal risk management policies.

In the context of examinations after defence, the appellant made an objection, pursuant to sections 2 and 3 of the Regulation, with regard to the communication of sixty-three internal documents that contained information regarding the supervision of Manulife by the Office of the Superintendent of financial institutions ("OSFI") during the financial crisis.

The trial judge determined that the Regulations provided only an obligation of confidentiality and did not provide for a statutory immunity. She therefore dismissed the objection raised by the appellant and ordered the communication to respondents of the documents at issue.

The appeal thus raised the question of whether sections 2 and 3 of the Regulation provide for specific and absolute prohibition on disclosure of supervisory information in the context of litigation or if these sections rather enunciate a simple statutory obligation of confidentiality.

C.          The Majority's Decision

After setting out the general legal principles applicable to the  communication of documents under Quebec civil law, Justice Bélanger provided an overview of the legislative context surrounding the Regulation. In 2001, sections 2 and 3 were enacted to limit the communication of supervisory information. Justice Bélanger noted that while the Regulation provided for a prohibition on communicating supervisory information, certain exceptions were stipulated. As such, she did not believe that the Regulation created an absolute prohibition on disclosure. She noted that it is not because a legislative provision qualifies the nature of information or documents as "confidential" that it follows that the legislator sought to impose an absolute prohibition on disclosure, including disclosure in the context of litigation.

In addition, in 2012 the legislator amended the Office of the Superintendent of Financial Institutions Act  to add section 39.1, which created a complete immunity from disclosure for the Superintendent and the members of the staff. Justice Bélanger observed that this immunity was in addition to the statutory obligation of confidentiality that was already provided since 2001. Therefore, the 2012 amendment did not modify the confidentiality obligation imposed on companies such that it became an absolute prohibition on disclosure. Justice Bélanger noted that if this had been the intention of the legislator, it would have been clear from the statute itself. The legislator's sole objective through this amendment was to prevent the Superintendent and his staff from being summoned to appear in court. No such immunity was provided to companies subject to the Regulation.

Justice Bélanger also noted that the parties had already put in place a confidentiality agreement regarding the documents at issue, and that there was no indication that these measures were insufficient to maintain confidentiality.

D.          The Dissent

In dissenting reasons, Justice Morin saw nothing in the applicable legislative provisions that would allow him to conclude that there was a relative obligation not to disclose information regarding the supervision of the Superintendent of Financial Institutions. Rather, this prohibition on disclosure was absolute, and applied to all supervisory information.

E.         Takeaways

The Cour of Appeal reiterates the general principle according to which relevant information and documents must be disclosed in the context of litigation, despite such information or documents being confidential by means of the law or otherwise.  It is important to note that the Court of appeal did appreciate the fact that the parties had concluded a confidentiality agreement that provided sufficient parameters to protect the confidential information that was to be disclosed to Respondents. Such confidentiality agreements are an interesting and oftentimes necessary tool to limit the disclosure of confidential documents  to the parties and protect the information from being leaked to the public at large.


1 Société financière Manuvie c. D'Alessandro, 2014 QCCA 2332

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