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Torts - Infringement of Privacy (3). Grid Link Corp. v. Foglia et al
In Grid Link Corp. v. Foglia et al (Div Court, 2024) the Divisional Court considered an appeal from a judgment that allowed a (breach of privacy tort?) action where the defendant breached a common law 'deemed undertaking' rule, here in an administrative context (not a civil context as under RCP R30.1):[1] The issue on this appeal is whether the respondents breached an implied undertaking by using documents disclosed in a proceeding at the Ontario Labour Relations Board to start the underlying court action.
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[5] The appellants brought the underlying motion in court to dismiss or permanently stay the action. They alleged Grid Link breached the common law implied undertaking rule by using documents disclosed in the Board proceeding to assist in starting their court action. The motion judge dismissed the motion: see Grid Link Corp. v. Foglia et al, 2023 ONSC 2014. Although the motion judge found Grid Link had used the documents to initiate the action, he concluded Grid Link’s conduct did not constitute a breach of the deemed undertaking in r. 31.1.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. He reasoned that r. 31.1.01 supplanted the common law rule and did not cover information received from a Board proceeding.
[6] The appellants submit the motion judge erred in concluding the common law implied undertaking rule was supplanted. In their submission, r. 31.1.01 does not override the common law implied undertaking rule. They submit Grid Link breached the implied undertaking owed at common law and ask the court to stay the action.
[7] For the reasons that follow, I agree that a common law implied undertaking arising from a Board proceeding is enforceable in a court action. In the circumstances of this case, Grid Link breached the undertaking. However, given the absence of prejudice, staying the action is not an appropriate remedy. Instead, I would order costs of the appeal against Grid Link on a substantial indemnity basis.
Is a common law implied undertaking arising from a Board proceeding enforceable in a court action?
[8] Grid Link submits r. 31.1.01 supplants the common law implied undertaking. Since the information at issue does not fall within the scope of that rule, it was permitted to use the information in the court action.
[9] I disagree. Both parties acknowledged before the motion judge that documents disclosed at the Board are subject to an implied undertaking: Grid Link Corp., para. 10. Parties implicitly undertake not to use any produced documents from a Board proceeding in another proceeding unless the documents are legitimately available outside the litigation process: for example, see Carpenters’ District Council of Ontario, United Brotherhood of Carpenters and Joiners of America v. NLG 2011 Inc., 2016 CanLII 74122 (Ont. L.R.B.), at para. 8. However, once the document becomes an exhibit at a Board hearing, the implied undertaking ends: The Building Union of Canada v. Labourers’ International Union of North America, 2020 CanLii 86655 (Ont. L.R.B.), at para. 29, citing Tiercon Corp. v. Workers United Ontario Council, 2010 CanLII 74590 (Ont. L.R.B.), at para. 249.
[10] There are important policy reasons for recognizing implied undertakings, as set out in Juman v. Doucette, 2008 SCC 8, [2008] 1 S.C.R. 157. These include to encourage complete and candid discovery and to support the public interest in finding the truth, while also maintaining a measure of protection for privacy interests.
[11] I do not interpret the Rules of Civil Procedure as supplanting the undertaking arising from matters before the Board. Instead, it applies only to information obtained in civil proceedings. Subrule 31.1.01(1) states that the rule applies to evidence and information obtained under certain other rules as follows:30.1.01(1) This Rule applies to:
(a) evidence obtained under,
(i) Rule 30 (documentary discovery),
(ii) Rule 31 (examination for discovery),
(iii) Rule 32 (inspection of property),
(iv) Rule 33 (medical examination),
(v) Rule 35 (examination for discovery by written questions); and
(b) information obtained from evidence referred to in clause (a). [12] Subrule (2) then states that the rule does not apply to evidence or information obtained otherwise than under the rules referred to in subrule (1).
[13] However, according to r. 30.1.01(3), the rule only addresses evidence and information obtained in the context of a civil proceeding. Subrule 30.1.01(3) governs the use of evidence or information obtained in a “proceeding.” It provides that all parties and their lawyers are “deemed to undertake not to use evidence or information to which this Rule applies for any purposes other than those of the proceeding in which the evidence was obtained.” “Proceeding” is defined in r. 1.03 to mean “an action or application.” Therefore, on the plain words of the provision, it does not oust the application of the common law rule with respect to evidence obtained in another context, such as at the Board.
[14] This interpretation is consistent with Tanner v. Clark (2002), 2002 CanLII 62434 (ON SCDC), 60 O.R. (3d) 304 (Div. Ct.), aff’d (2003), 2003 CanLII 41640 (ON CA), 63 O.R. (3d) 508 (C.A.). There, the plaintiffs in two cases were injured in motor vehicle accidents. As part of the arbitration proceedings seeking accident benefits, they were compelled to submit to medical examinations. They also started tort actions. The defendants in the tort actions requested production of the medical reports prepared from the accident benefits medical examinations.
[15] This court expressly found that the deemed undertaking in r. 30.1.01(3) had no application to the circumstances, since the medical reports at issue were not obtained in a civil proceeding. The court stated, at para. 34, “[t]he wording in subparagraph 3 makes it clear that the rule does not provide for a deemed undertaking with respect to evidence or information obtained in any process other than a proceeding governed by the rules.”
[16] The court also accepted in obiter that the common law implied undertaking rule, at least as it pertained to information obtained outside the civil process, had not been supplanted. It went on to consider whether the common law implied undertaking rule limited the disclosure of the medical reports in the tort action. It found the common law undertaking did not apply in the circumstances of the case since the plaintiffs were the parties with access to the documents. They were not seeking to use the documents for an ulterior or collateral purpose, which is what the rule was designed to prevent. Although the court was not called upon to specifically rule on the ongoing application of the common law rule, its analysis assumed its continued existence.
[17] The motion judge in the current case was concerned that statements in Tanner, together with comments of the Supreme Court of Canada in Juman, showed that r. 30.1 had overridden the common law rule. I interpret those statements differently. In Juman, the Supreme Court stated that the implied undertaking rule is subject to legislative override and that some jurisdictions have enacted rules “more or less codifying the common law”: Juman, at para. 39. These comments arose in the context of rules governing discovery in the civil court process and did not address administrative proceedings. In Tanner, this court stated that r. 30.1 partially codified the implied undertaking principle. In my view, this statement emphasized the limited reach of the rule in that the codification was only “partial” and, as set out above, the rule only applied to “proceedings.” In short, neither this court nor the Supreme Court of Canada found the rule supplanted a common law undertaking related to information from administrative proceedings.
[18] Overall, the implied undertaking rule promotes important interests: comprehensive discovery, the protection of privacy and the search for the truth. Rule 30.1 applies only to information obtained from civil proceedings. It does not oust the enforceability of an undertaking arising from proceedings before the Board.
[19] Finally, while it arose from Board proceedings, the implied undertaking in this case is enforceable in court. There is no question it would be within the Board’s jurisdiction to rule on an alleged breach of the undertaking and order remedies within its jurisdiction. The Board could also exercise its discretion to relieve against or modify the undertaking. But the remedy sought in this case was a stay of the court action, which is an issue for the court to determine.
Did Grid Link breach the implied undertaking?
[20] Although the motion judge was of the view an implied undertaking could not be enforced, he went on to make factual findings that demonstrated a breach of the undertaking if it existed.
[21] A breach occurs where a party uses information obtained in one proceeding in another proceeding unless the information has become public in the litigation process or is otherwise available outside that process. A party may seek relief from the implied undertaking rule but should do so before making use of the documents, rather than asking for forgiveness after the breach: Juman, at para. 30; Brome Financial Corp. v. Bank of Montreal, 2013 ONSC 6834, at paras. 34, 47.
[22] The motion judge found: (1) Grid Link used documents disclosed in the Board proceeding in deciding to sue the respondents and (2) Grid Link only entered the documents into evidence at the Board after it had used them for the purposes of the court action: Grid Link Corp., at para.31. There is no reason to interfere with these findings. Grid Link therefore breached the implied undertaking.
What remedy should be ordered?
[23] The appellants submit the appropriate consequence of the breach is a permanent stay of the court action. In their submission, Grid Link’s conduct was improper and the court should not be seen to condone it. Further, Grid Link would not suffer the prejudice that would normally flow from a stay because Mr. Foglia has started a proceeding seeking oppression remedy orders under the Business Corporations Act, R.S.O. 1990, c. B.16. According to the appellants, Grid Link can continue to seek its alleged damages in that case. The appellants also submit they have suffered specific prejudice in that the breach of the implied undertaking precluded them from asserting a limitation period defence in the action.
[24] I disagree that a stay is appropriate in the circumstances of this case. The appellants have suffered no prejudice. Although the motion judge found Grid Link used the produced documents to start the action, there is also evidence that Grid Link was aware of its claim before the production order. In January 2020, seven months before the August 2020 production order, Grid Link’s counsel wrote a cease-and-desist letter raising similar allegations to those in the action. Grid Link repeated those allegations in its May 2020 response at the Board. All the documents Grid Link used to start its action also subsequently became exhibits in the Board proceedings, although only after Grid Link’s improper use of them.
[25] In Juman, at para. 35, the Supreme Court stated that “where discovery material in one action is sought to be used in another action with the same or similar parties and the same or similar issues, the prejudice to the examinee is virtually non-existent.” That is the situation here.
[26] The appellants’ submission that they were precluded from raising a limitation period defence has no merit. They acknowledge that Grid Link became aware of its claim in December 2019. The production order was made in August 2020 and the Board hearing started in February 2021. It was completed in September 2021, still before the two-year limitation period. Therefore, if Grid Link had not used the documents prior to their becoming exhibits, it plainly had time to do so during or after the Board hearing.
[27] The existence of the oppression proceeding also does not eliminate the prejudice of a stay to Grid Link. Grid Link’s claim in that proceeding is only for a set off of damages. Unlike the underlying action, it depends on Mr. Foglia’s success in demonstrating his entitlement to an oppression remedy. If Mr. Foglia does not obtain a remedy, Grid Link will be without recourse.
[28] While the appellants have not suffered any specific prejudice from the use of documents that subsequently became public exhibits, I agree that the court should not condone the breach of the implied undertaking. Grid Link had a number of options. As the motion judge stated, counsel should have raised the use of the documents with opposing counsel and sought consent to rely on them. If unsuccessful, counsel could have sought a waiver of the implied undertaking from the Board. Alternatively, they could have waited for the documents to become exhibits at the Board before starting the action.
[29] In Brome Financial Corp., Brown J. (as he then was) found the plaintiff had breached the deemed undertaking in r. 30.1. After receiving productions in an initial action, Brome started a separate action against BMO. However, Brome had investigated and considered the issues leading to the second action before receiving the BMO disclosure. While this did not alter the fact that Brome used BMO’s productions, there was little substantive prejudice to BMO. The court ordered substantial indemnity costs against Brome.
[30] I find the same remedy to be appropriate here. Although Grid Link is permitted to use the documents for the purpose of the action, its conduct is deserving of sanction in the form of an order for substantial indemnity costs. Grid Link shall pay costs to the appellants on a substantial indemnity basis in the agreed-upon amount of $9,000. I do not see a basis to interfere with the motion judge’s decision that no costs were payable on the motion. . Del Giudice v. Thompson
In Del Giudice v. Thompson (Ont CA, 2023) the Court of Appeal considered whether various causes of action emanating from data hacking were made out, here in determining whether causes of action where pleaded in class certification purposes.
In these quotes the court considered Jones v Tsige 'intrusion upon seclusion':i. Intrusion upon seclusion
[31] The appellants advance a claim of intrusion upon seclusion against Ms. Thompson, Capital One, and Amazon Web. The elements of this cause of action were set out in Jones v. Tsige, 2012 ONCA 32, 108 O.R. (3d) 241, at para. 71, and recently reiterated in the trilogy of Owsianik v. Equifax Canada Co., 2022 ONCA 813, 164 O.R. (3d) 497, at para. 54; Obodo v. TransUnion of Canada, Inc., 2022 ONCA 814, 164 O.R. (3d) 520, at paras. 22-23; and Winder v. Marriot International, Inc., 2022 ONCA 815, 164 O.R. (3d) 528, at paras. 20‑21:(i) The defendant without lawful justification intrudes physically or otherwise into the seclusion of the plaintiff in his or other private affairs or concerns;
(ii) The defendant’s intrusion is intentional or reckless; and
(iii) The invasion would be highly offensive, causing distress, humiliation or anguish to a reasonable person. [32] The motion judge found it plain and obvious that there is no viable claim for intrusion upon seclusion against either Capital One or Amazon Web. He reasoned that:1. the failure to prevent the intrusion by Thompson could not itself be an intrusion;
2. even if the failures of Capital One or Amazon Web to prevent an intrusion could be considered an intrusion, then the intrusion was authorized by the terms of the application form, credit agreement, and privacy policy, which were incorporated by reference into the pleading;
3. the alleged misconduct of Capital One and Amazon Web was neither intentional nor reckless; and
4. Capital One and Amazon Web’s alleged mistakes in safeguarding the appellants’ data did not give rise to the requisite degree of offense. [33] After the motion was decided, this court released its judgments in Owsianik, Obodo, and Winder, which established that a hack of a database by a third party does not constitute intrusion upon seclusion by the database operator. That disposes of the question that was before the motion judge.
[34] However, the appellants now seek to distinguish the trilogy on the basis that their claim is not based in negligent custodianship, but concerns the improper retention and misuse of data, which includes its improper aggregation and ultimate migration to a third-party platform.
[35] Regardless, the claim cannot succeed. Some of the flaws identified by the motion judge are easily transposed onto the new argument. One in particular is dispositive. Whether the alleged misdeeds of Capital One and Amazon are characterized as mistakes in safeguarding information or improper retention and misuse of that information, neither characterization satisfies a key element of intrusion on seclusion: that the conduct be of a highly offensive nature causing distress, humiliation, or anguish to a reasonable person. In the specific circumstances of this case, the aggregation and sale of the financial information obtained by Capital One – even on the generous assumption that the appellants could succeed on the argument that they did not consent to its use – is not highly offensive and could not be considered humiliating by a reasonable person. Unlike genuine intrusion claims, there is nothing into which the Capital One can be said to have intruded. It solicited information and that information was given. The data was aggregated and inputted into algorithms to be used for marketing purposes. Nowhere, in any of this, is anything of an individual’s biographical core exposed to public or private view. No individual is placed in a spotlight. Whatever may be objectionable with what Capital One did, it is not aptly described as an intrusion into seclusion.
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