Recent OCA journalist-source case a “squeaker” with good statements of principle

The Court of Appeal for Ontario’s March 27th decision in 1654776 Ontario Limited v Stewart is a journalist-source privilege decision in which the Court made some significant statements of principle in protecting a journalist’s confidential sources.

The case is about whether the Court would reveal the identities of two insiders to the attempted takeover of BCE in 2008. The insiders provided information about the tenor of confidential negotiations to the Globe and Mail, who published the information and protected its sources. The plaintiff claimed the insiders breached the Securities Act by making false and materially misleading statements. He sought their identities, stressing that the insiders were not whistleblowers leaking information about wrongdoing and, rather, had merely given business information to a journalist and used the Globe to manipulate the markets.

Here are the statements of principle Justice Juriansz made on behalf of the Court:

  • It is an error of law to apply an elevated standard in the first step of the Norwich Pharmacal test because an expressive interest is involved; at the first step, an applicant must merely demonstrate a bona fide claim. This finding weighs against protection.
  • Courts should recognize that “generally” the relationship between a journalist and a confidential source should be “sedulously fostered”; concerns about the value of the specific source-journalist relationship at issue should be considered in weighing competing interests. This finding weighs in favour of protection.

On the facts, Justice Juriansz protected the sources, noting the case was “difficult.” The lack of evidence to support the plaintiff’s assertions was significant to Justice Juriansz as was the plaintiff’s alternative potential remedy against several corporate actors. Justice Juriansz did not devalue the journalist-source claim because the insiders were not whistleblowers; making information about the transaction available was in the public interest, he held. However, given the plaintiff’s attack on the quality of the sources’ information, Justice Juriansz held that the public’s right to know was a neutral factor in the circumstances. It seems, therefore, that if the plaintiff had a stronger factual basis for his claim lawsuit he would have prevailed in his quest to identify the anonymous sources.

1654776 Ontario Limited v Stewart, 2013 ONCA 184 (CanLII).

Employer Denied Order to Have Telco Produce Text Messages

On May 18th, the Ontario Superior Court of Justice dismissed an employer’s application for an order to compel a telephone company to produce text messages in aide of an internal investigation.

The employer, a social services agency, was investigating an allegation that a caseworker had an inappropriate sexual relationship with a client. The client admitted the relationship and the caseworker did not. The client said he no longer had text messages between he and the caseworker that would prove the allegation but consented to their release from the TBay Tel. The caseworker and her union refused to consent.

Rather than discipline or discharge the caseworker and seek a production order through the grievance arbitration process as necessary to defend a grievance, the employer deferred the completion of its investigation and sought a production order in court. It argued this was in the best interest of “all concerned,” likely a sign that it did not want to rest its discipline case too heavily on its client.

Justice Fregeau denied the order, primarily because it was not necessary. He said:

CLFFD has some evidence that J.T. violated their employment policy. They are in a position to discipline her for her conduct should they choose to do so. Their expressed position during the hearing of this Application is that for the interests of all concerned, they do not want to do so without “full information” or the “best evidence” available. It would certainly be advantageous or beneficial for CLFFD to have the information sought, but I do not find that they require it to proceed with the discipline of J.T.

While a Norwich order is a discretionary, flexible and evolving remedy, it is also an intrusive and extraordinary remedy that must be exercised with caution. I do not feel that it is appropriate to grant Norwich relief on all the facts and circumstances of this case.

Notably, the caseworker’s union opposed the requested order as being beyond the Court’s jurisdiction because the essential nature of the dispute arose out of the collective agreement between the caseworker’s union and the employer (i.e., because of the Weber principle of exclusive arbitral jurisdiction). The Court did not decide this issue.

This case should be considered by employers considering a Norwich order as an aide to an internal investigation. They should also beware that many (if not most) telephone companies do not log text messages.

Community Living v. TBay Tel et al., 2011 ONSC 2734 (CanLII).

Case Report – Court won’t order production of bank records to help judgement creditor

On March 24th, the Ontario Superior Court of Justice declined to order the production of bank records so the applicant, a judgment creditor, could initiate a Sheriff’s sale.

The applicant held a first mortgage on the debtor’s home, which he owned and mortgaged jointly with an estranged wife who continued to live in the home. The respondent bank held a second mortgage.

The applicant filed a writ of execution after receiving a judgement and later sought to initiate a sale of the home. The Sheriff would not do so without documentation showing the debtor’s equity in the home, so the applicant asked the respondent bank for documentation. When the bank refused, the applicant applied for production. It argued that an order was necessary because it could not find the debtor to serve him with a judgement debtor notice of examination, and even if it could find the debtor, that it was more efficient to simply order production of the bank statements.

The Court held that the applicant was not entitled to the documentation under the Mortgages Act and declined to order production based on its equitable jurisdiction. It held that the bank was not implicated in a wrongdoing in the sense that banks often are when individuals flow monies obtained by fraud through bank accounts. Moreover, it held that the order was not necessary given the applicant could examine the debtor’s wife, who had a privacy interest in her (joint) bank records and an important interest in the property at risk of sale. Instead, the Court granted leave to add the debtor’s wife as a respondent so it could seek an order, to be made on notice, for her examination.

Citi Cards Canada v. Pleasance, 2010 ONSC 1175.

Case Report – Proprietary rights weigh against non-party production order

On March 18, the Perell J. of the Ontario Superior Court of Justice dismissed a motion for non-party production. In doing so, he made some notable comments about how to weigh the interests of non-parties whose information is sought by parties to litigation.

The plaintiffs in a proposed class action sought production from an automotive sector market research company. Their expert obtained the data under an academic license and used it to prepare an opinion supporting allegations that General Motors, the defendant, had engaged in anti-competitive behavior. The non-party research company claimed that the expert had breached his license, that its reputation was built on independence and that would be harmed if its data was allowed to be used against industry members, including its customer General Motors.

Perell J. dismissed the motion based on a finding that the plaintiffs did not prove necessity. He said, “all they have proven is that they must find another way to prove that they have a way to satisfy some of the criteria for certification.” He went on, however, to consider the fairness component of the test for production and gave heavy recognition to the market research company’s direct proprietary interest in the data. Perell J. said:

I appreciate that the court has the power and has exercised it to take away a non-party’s rights of property and privacy, but, in my opinion, the exercise of the power to compel production must be rare when a non-party wishes to assert its property and privacy rights as opposed to objecting merely on the grounds that the information it has is irrelevant to the proceedings or on the grounds that it would simply be bothered or inconvenienced by producing the information.

In some cases, a non-party may simply have the property right of possession over such things as banking records, accounting records, medical records, minutes of meetings, contractual documents, deeds and certificates of ownership, etc., and in those instances a court may be more ready to exercise its power, but in the case at bar, JATO has valuable proprietary rights that go beyond possession and rather the property being sought is its stock in trade and its forced sale of its products may harm JATO’s goodwill.

The last paragraph is more likely about the distinction between information with commercial value and information with operational value than a comment on the ability to access non-party records that one possesses on behalf of others who have a personal privacy interest in the records.

Tetefsky v. General Motors Corp., 2010 ONSC 1675 (CanLII).

Case Report – Court won’t order disclosure of health professional’s identity

On January 27th, the British Columbia Supreme Court denied a request for an order requiring an online contact lens and eyeglass business to disclose the identity of an eye care professional it employs.

The College sought the identity of the registrant who worked for the respondents (affiliated companies) in the course of an investigation. The College applied to the Court for an order based on the Court’s equitable jurisdiction (a Norwich Pharmacal order), or alternatively, its inherent jurisdiction (in aide of an inferior tribunal).

The Court held that an order should not be made on either basis. This was partly based on a finding that the evidence did not show the unidentified registrant was involved in the matter under investigation. The Court also held that an order would not be appropriate in light of the statutory powers granted to the College. The Court suggested that the College had ample means to identify the registrant without relying on the Court, noting its power to inspect the premises and records of a registrant, the possibility of asking for warrant to search a non-registrant’s premises and the possibility of requiring registrants to file their business address and telephone number.

College of Opticians of British Columbia v. Coastal Contacts Inc., 2010 BCSC 104 (CanLII).

Case Report – Court says government must not use Norwich orders to investigate crime

On January 4th, Justice Donald Brown of the Ontario Superior Court of Justice made the following statement in dismissing a motion for a Norwich order (for pre-action production) that was brought by the Attorney-General for the purpose of tracing funds in anticipation of an application for forfeiture of money:

Norwich orders should not be used for purposes of criminal investigation. The Criminal Code and Provincial Offences Act both contain tools, available in specified circumstances, to assist in the investigation of crime. The equitable jurisdiction of the courts on which rests the power to issue Norwich orders should not be used to assist in criminal investigations. In my view courts must be vigilant in ensuring that requests for Norwich orders by the AGO, or any other government department or agency, are limited to the purpose of assisting in initiating civil proceedings, and not subtly converted into a device to investigate crime. Requests by government actors to compel disclosure of personal information from third parties, such as financial institutions, engage the consideration of privacy interests which are protected by section 8 of the Canadian Charter of Rights and Freedoms. To ensure the continued protection of such interests in the context of civil proceedings initiated by the government, the courts should screen and measure carefully requests by government parties for the issuance of the “rare and extraordinary” device of the Norwich order.

On the facts, Justice Brown dismissed the motion because the Attorney-General’s materials did not demonstrate a sufficient link between the information requested and the tracing of funds recoverable under the Civil Remedies Act.

Attorney General of Ontario v. Two Financial Institutions, 2010 ONS 47 (CanLII).

Case Report – Court orders identity of Gmail user to be disclosed… good discussion of balancing of interests

On September 9th, the Ontario Superior Court of Justice ordered Bell and Rogers to identify an individual who used a gmail account to communicate allegedly defamatory statements about York University and its president. The case is notable for two points. First, it contains a relatively detailed discussion of the balancing of interests factor and the privacy interests of the anonymous poster. Strathy J. considered that both Bell and Rogers had privacy policies and terms of service that lowered the individual’s expectation of privacy. Second, Strathy J. held that, in some circumstances, an individual whose identity may be disclosed should be given notice of the proceeding and an opportunity to participate. He did not elaborate, but held that York’s failure to give notice in this case did not tip the balance against making an order.

York University v. Bell Canada Enterprises, 2009 CanLII 46447 (ON S.C.).

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).