Existence of unfound docs no reason to allow a hard drive inspection (Ontario)

On December 19th, Justice Morgan of the Ontario Superior Court of Justice made the following statement of principle in dismissing a request to inspect a party’s hard drive that followed the party’s service of a supplementary affidavit of documents:

Plaintiff’s counsel submits that computers do not err, and the fact that a document was overlooked the first time implies that the search was unredeemably deficient. However, computer storage and search systems, like traditional filing systems, are subject to human error. The Defendant’s obligation is to make every effort to produce what the Rules require it to produce, but there must be evidence stronger than a corrected error for a court to order that the Plaintiff actually take control of the search through the Defendant’s computer hard drive.

Justice Morgan also dismissed a request for an order requiring the provision of information about how the party’s electronic search was conducted. He commented that the Rules “do not require a party to explain how or where the relevant documents were found or the methodology of its search for those documents.”

Zenex Enterprises v Pioneer Balloon, 2012 ONSC 7243 (CanLII).

Lawyer free to use documents received from client and produced to opposing party

Yesterday the Court of Appeal for Ontario held that the deemed undertaking rule does not apply to documents that a lawyer receives from a client for the purposes of documentary production. The Court held that such documents are not obtained by counsel under compulsion by the Rules and that the purpose of the deemed undertaking is only to protect against misuse of information received by a party to litigation.

In this case, a lawyer wanted to use documents he received from his former client in her matrimonial dispute to defend a defamation claim brought by the former client’s ex-spouse. The Court’s disposition allows him to do so, subject to the former client’s right to a return of her documents and the lawyer’s ability to obtain an order for third-party production.

Sobeski v Mamo, 2012 ONCA 560 (CanLII).

Nova Scotia court says parties should share search parameters

The Nova Scotia Supreme Court issued a notable e-discovery decision on August 2nd.

The Court dismissed a motion to compel further documentary production as premature because the discrepancy in production volume between the parties was insufficient proof that the party producing fewer documents had failed to meet its obligations. More importantly, however, the Court accepted the moving party’s argument that (in the absence of a discovery agreement) it was entitled to information about the other party’s search protocol before oral discovery. The Court described the argument as follows:

The basic position of the defendants is that the Civil Procedure Rules contemplate that the parties will make a good faith effort to try and agree on the criteria to be used in conducting searches for electronic information to be disclosed. In other words, each party should apply the same relevance analysis in reviewing their electronic records. Even in the absence of an agreement, the parties should be required to disclose the criteria which they used so that the other parties know the basis on which the affidavit of disclosure was prepared.

In many cases, discovery examinations include questions directed at identifying additional undisclosed documents to be produced. Counsel for the defendants does not believe that disclosure of the electronic search criteria should be left to the discovery process. He suggests that this would result in bifurcation with an initial discovery on the scope of disclosure followed by an adjournment todeal with newly identified records. It would then be necessary to have a second discovery on the substantive issues.

The Court also made some findings about the requirements for an “affidavit disclosing relevant electronic information” under the Nova Scotia Civil Procedure Rules.

Velsoft Training Materials Inc v Global Courseware Inc, 2012 NSSC 295 (CanLII).

Case Report – Alberta Court says statutory privilege does not preclude an action

On July 14th, the Alberta Court of Appeal held that the privilege embodied in section 241 of the Income Tax Act was not a basis for striking a claim against the federal government based on the manner in which it administers the ITA.

The Court held that it was not clear section 241 would preclude the plaintiff from obtaining evidence from the government. More broadly, it held that a party’s ability to obtain evidence is not a proper consideration on a motion to strike:

In any event, the section does not preclude the plaintiff from deriving the evidence it needs from sources other than the defendant Canada. It is reasonably common for a defendant to be in the possession of relevant and material information which need not be disclosed because it is privileged, but that does not prevent the lawsuit from proceeding. The plaintiff can try to prove its case without that evidence. Further, whether a pleading discloses a cause of action is a distinct issue from whether the plaintiff will be successful in marshalling the evidence needed to prove that cause of action. Section 241 is not determinative of this appeal.

The Court ultimately did strike the claim as disclosing no reasonable cause of action based on a finding that the government did not owe the plaintiff a private law duty of care.

783783 Alberta Ltd. v. Canada (Attorney General), 2010 ABCA 226 (CanLII).

Case Report – Master Short deals with deficient production allegations

On June 22nd, Master Short of the Ontario Superior Court of Justice addressed motions by two parties alleging each other provided deficient electronic production.

Motion A – Form of producing electronic documents deficient

Apotex sought a further and better affidavit of documents from Ercos, who initially produced approximately 1700 PDF files on a DVD. The PDF’s were named in a coded form, but the codes did not correspond with the codes Ercos had provided in its Schedule A index. Instead, it provided a table of concordance to allow the two different codes to be matched. One day after Aptoex served its notice of motion for a further and better affidavit of documents, Ercos produced a CT Summation load file to Apotex, but argued this was done as courtesy and that its original production was proper. Master short disagreed, stating:

While I am not being critical of counsel in this specific case, I do however take this opportunity to express my view in general that in cases of this nature the new rules put an onus on counsel, in situations such as this, to not use electronic production to gain tactical advantage. The requirement, in part arising from the “equality of arms” component of proportionality, does not mean that a party need provide a computer system to their opponents, but they do need to work together to facilitate the exchange of information and a practical production and exchange of the “bibliographic data” attached to their productions.

Master Short did not make an order in the circumstances.

Motion B – Paltry production justifies further and better affidavit

Ercos sought leave to cross-examine Apotex’s affiant and a further and better affidavit of documents from Apotex, who was claiming $100 million in damages as a result of delayed marked entry related to supply problems. Despite the nature of its claim, Apotex delivered a sworn and certified Affidavit of Documents that listed only 56 documents in Schedule A, all of which related to issues of liability and none that related to damages claimed. When pressed, it eventually produced an additional 14 documents related to damages claimed.

In ordering Apotex to provide a further and better affidavit of documents, Master Short did not expressly infer deficiency from the number of documents Aptoex had produced, but he did note the “totality of the circumstances” and the “entirety of the matters discussed.” He also found Aptoex’s own evidence and position flawed. Apotex adduced evidence on the motion that “counsel requested that Apotex forward all documents related to the issues of liability” and argued that a motion for production of documents related to damages claimed was premature in advance of oral discovery. Master Short said:

I regard this position as approaching a total disregard for the expectation of Rules. A party cannot unilaterally bifurcate its case, fail to disclose documents relating to remedy, and then, assert that the disclosure of the existence and content of any additional documents can wait until discovery.

Perhaps more significant to those engaged in e-discovery, Master Short suggested (subtly) that the “field filtering” document collection process followed by Apotex was not sufficient. He said counsel should have been “more proactive” and that he was not satisfied documents were “effectively requested from the client.”

Master Short did not order cross-examination on the deficient affidavit on the assumption that full production would be provided “in accordance with the directions and spirit of [his] reasons.”

Apotex Inc. v Richter Gedeon Vegyszeti Gyar RT, [2010] O.J. No. 2718 (S.C.J.).

Case Report – Man CA affirms deferral of spoliation hearing to trial

On December 1st, the Manitoba Court of Queen’s Bench dismissed a motion for an order striking out a statement of defence on the basis of a spoliation claim. It stressed that spoliation claims will ordinarily be dealt with at trial. (Full summary here.) On March 18th, the Manitoba Court of Appeal issued a short endorsement in dismissing an appeal of this finding.

Commonwealth Marketing Group Ltd. v. The Manitoba Securities Commission, [2009] M.J. No. 77 (C.A.) (QL).

Case Report – Appeal court restores defence struck as a remedy for spoliation

On February 13th the Prince Edward Island Court of Appeal held that a motions judge erred in striking a statement of defence as a sanction for non-production. The Court suggested that such a strong sanction should not be utilized for discovery abuse in the absence of a finding of bad faith or contempt given the difficulties in assessing relative prejudice before trial. It nonetheless sanctioned the defendant by imposing conditions on the use of records subsequently found, by specifying that the trial judge may presume damages and by awarding costs of the motion and appeal to the plaintiff.

Jay v. DHL, 2009 PEICA 2 (CanLII).

Case Report – No basis for questioning preservation steps

In a June 16th order, Master MacLeod had the opportunity to consider whether a party should be compelled to answer, in the ordinary course of oral discovery, questions about its efforts to preserve evidence. He said:

Q. 823 was originally a question about producing pharmacy records. Apparently when the request was made, the pharmacy only had computer records going back to 2001. There was a follow up question as to when the request was made. Q. 945 asked for a microbiological report which is not available. The question is asked as to whether the document did exist and if it was destroyed, when that occurred and when did the plaintiffs first take steps to preserve the evidence? These follow up questions, if they are relevant, are relevant only to an argument that an adverse inference at trial should be drawn if it appears the plaintiffs did not take adequate steps to preserve available evidence once litigation was contemplated or when it first became apparent that this evidence might be relevant. There are certainly circumstances in which compliance with litigation holds or compliance with undertakings may make it relevant if a party has been so slow in complying with its obligations as to give rise to a spoliation inference or sanctions for what in the United States is sometimes described as “purposeful sluggishness”. There is no evidence before me to suggest this is the case here and I decline to exercise my discretion by ordering this question to be answered.

Andersen v. St. Jude Medical Inc., [2008] O.J. 2452 (S.C.J.) (QL).

Civil justice reform report addresses discovery abuse

On November 22nd the Ontario government released the Summary of Findings and Recommendations from the Civil Justice Reform Project. The report, authored by The Honourable Coulter Osborne, contains 81 recommendations on civil justice reform. Here is a summary of the four recommendations most significant to the readers of this blog, with excerpts from Mr. Coulter’s rationale for each.

1. Establish proportionality as an overarching principle of interpretation

Proportionality, in the context of civil litigation, simply reflects that the time and expense devoted to a proceeding ought to be proportionate to what is at stake. It should be expressly referenced in the Rules of Civil Procedure as an overarching, guiding principle when the court makes any order.

2. Narrow the scope of discovery by implementing a “relevance” standard

The “semblance of relevance” test ought to be replaced with a stricter test of “relevance.” This step is needed to provide a clear signal to the profession that restraint should be exercised in the discovery process and, as the Discovery Task Force put it, to “strengthen the objective that discovery be conducted with due regard to cost and efficiency.” In keeping with the principle of proportionality, the time has come for this change to be made, which I hope in turn will inform the culture of litigation in the province, particularly in larger cities.

3. Give weight to the Ontario E-Discovery Guidelines and Sedona Canada Principles

I believe it would help if reliance on the E-Discovery Guidelines and The Sedona Canada Principles were encouraged through a Practice Direction. This would state that the court may refuse to grant discovery relief or may make appropriate cost awards on a discovery motion where parties have failed to consider and, to the extent reasonable, apply the E-Discovery Guidelines and The Sedona Canada Principles – in particular the requirement to meet and confer on the identification, preservation, collection, review and production of electronically stored information.

4. Make litigation budgets mandatory

In addition, counsel should as a matter of routine provide clients with a pro forma budget setting out, albeit in a somewhat imprecise way, the estimated cost (legal fees and disbursements, including expert witness fees) of commencing or defending a proceeding. Periodic updates should also be provided. There is, of course, no need for this in personal injury litigation where contingency fee arrangements are typical. Nor would this requirement be applicable to defence counsel retained by property (casualty) insurers who have developed their own methods of controlling solicitor and client cost exposure.

The government has stated that Mr. Coulter’s full report will be released later this year.