Case Report – ABCA addresses investigatory remedy for anonymous internet use

Norwich Pharmacal orders, also called “equitable bills of discovery,” enable a person to conduct pre-action discovery against a third-party who is likely to have important information about a bona fide wrongdoing. The development of the Canadian standard for these and similar third-party orders is of high relevance today because they are a potential means of investigating and pursuing claims based on anonymous internet use.

On February 12th, the Alberta Court of Appeal dismissed an appeal arguing for a Norwich Pharmacal order brought by an organization that had sued its former chief executive officer for fraud and sought information from the bank accounts of various third-parties (presumably to whom payments were made).

The judgement is not particularly principled. The Court ultimately dismissed the appeal because the appellant had not proven the order was necessary, but did not opine in detail on the standard of proof. It did, however, say this about the “innocent bystander” requirement:

While the party sought to be discovered must be more than a mere witness or bystander to the wrongdoing, it is not necessary that the party be, or be suspected to be, guilty of or privy to “wrongdoing” before a Norwich order is granted against it. The reality is that commercial and financial frauds, not to mention, breaches of trust and fiduciary duty, not infrequently involve the use of innocent parties such as financial institutions. Whether a wrongdoer uses a financial institution for the purpose of laundering money, impeding efforts to trace monies secured in breach of trust or through fraud, receiving secret payments in return for improper actions or simply as a vehicle in which to park ill-gotten gains does not really matter. If the reach of the Norwich order only applied to those complicit in a wrongdoer’s actions, then a wrongdoer could easily cover up financial misdeeds by the simple expedient of using innocent financial institutions. Thus, we do not agree that financial institutions used by alleged wrongdoers are necessarily “mere witnesses” who cannot be the subject of a Norwich order. However, if there is to be a Norwich order against third parties, there must be a bona fide claim of wrongdoing to which the third parties are somehow connected, innocently or otherwise.

The leading case in Canada remains the Federal Court of Appeal’s 2005 decision in BMG Canada Inc. v. Doe, an intellectual property infringement case in which the Court detailed the factors to be considered in balancing the public interest in the effective administration of justice against individual privacy rights.

A. B. v. C. D., 2008 ABCA 51 (CanLII).

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