Kirkbi AG v. Ritvik Holdings Inc. (T.D.) [2001] 1 F.C. 681
Date: 20001101
Docket: T-2799-96
B e t w e e n:
KIRKBI AG and LEGO CANADA INC.
Plaintiffs/
Defendants by Counterclaim,
- and -
RITVIK HOLDINGS INC./GESTIONS RITVIK INC.,
and RITVIK TOYS INC./JOUETS RITVIK INC.
Defendants/
Plaintiffs by Counterclaim.
REASONS FOR ORDER AND ORDER
Muldoon, J.
[1] This is an appeal by the defendants against an order of Prothonotary Lafrenière dated 15 May 2000, denying Ritvik relief from the implied undertaking rule on discovery. The defendants seek an order quashing the decision of the prothonotary and permitting them to make certain publicly obtainable documents available to local counsel in parallel litigation and proceedings in which Ritvik and Lego are parties in other jurisdictions.
Facts
[2] The facts, as they may be ascertained from the submissions of counsel, consist of the following. The general action is one of trade-mark passing off in which the plaintiffs (Lego), allege that the defendants (Ritvik), have breached their trade-mark rights in the three dimensional knob configuration of toy building bricks. The plaintiffs refer to this trade-mark as the "Lego Indicia Mark". The defendants counter with the assertion that the Lego Indicia Mark is functional and cannot, therefore, act as a trade-mark. These claims have caused actions and proceedings involving these parties to be commenced in at least ten jurisdictions worldwide, in addition to proceedings in which Lego is a party and of which Ritvik is aware.
[3] The difficulty now faced by the defendants, and the subject matter of this motion, is that the plaintiffs have not listed all the relevant actions in which they are, or have been, involved in their affidavit of documents. On discovery, the defendants required the plaintiffs to produce all publicly available documents where statements regarding functionality were made. In response, Lego produced pleadings, transcripts of viva voce evidence, declarations and affidavits which were used and filed in open court proceedings in a variety of jurisdictions outside Canada. Many of these documents contain statements against interest respecting the functionality of the Lego Indicia Mark. The defendants now seek relief from the implied undertaking rule so that these documents may be provided to counsel in the other various actions involving these same parties and issues.
Submissions
Defendants
1. Argument
[4] The defendants make this motion and claim relief from the implied undertaking due to special circumstances on the following grounds:
| 1. the documents sought are publicly available from proceedings in other countries and contain statements against interest regarding the subject matter of this motion; |
| 2. it is in the interests of justice to provide relief from the implied undertaking rule as the litigation proceedings being pursued in other jurisdictions involve substantially the same parties and issues; |
| 3. some of the publicly available documents may no longer be stored with court registries or may have been destroyed by the courts due to the lapse of time since the initial hearings (ie. the documents in the Israeli proceeding are no longer available due to court destruction); |
| 4. the documents are the best evidence available as some of the deponents have passed away; |
| 5. the defendants seek to use the documents as a means to shield their rights rather than as a sword against the plaintiffs' rights; |
| 6. the plaintiffs have provided no evidence that prejudice will result from disclosure; |
| 7. the documents in question are not the plaintiffs' internal documents, but are acknowledged to be publicly available in various court jurisdictions; and, |
| 8. if the documents are not made available, the courts and tribunals in the other various jurisdictions will be forced to make a determination in the absence of a complete record. |
[5] The defendants submit that the prothonotary's order refusing to grant the relief sought was discretionary, and may be overturned if the order is clearly wrong in that the discretion was based on a wrong principle of law or the misapprehension of facts. Such an order may also be overturned if the prothonotary considered factors vital to the final determination of the issues, but this is not at issue in this appeal. This test constitutes the standard of review which must necessarily be met before a prothonotary's exercise of discretion may be overturned.
[6] The implied undertaking rule associated with the discovery process is meant to protect private information which is judicially compelled through the disclosure/discovery process and could not otherwise have been legitimately obtained. The implied undertaking results where it is expected that the receiving party will not use the disclosed information for any ulterior or collateral purpose outside the litigation for which it is intended. The defendants submit that this rule is intended to protect the privacy interests of the disclosing party. Thus, they assert that the rule does not apply to public documents.
[7] Ritvik contends that as they have made attempts to obtain the publicly available documents and found some of them to be destroyed, special circumstances exist whereby release from the implied undertaking is the only manner by which these documents may be obtained. Thus, they assert the legal test that a party may be released from the implied undertaking where the interests of justice outweigh the potential prejudice suffered by the discovered party.
[8] The defendants maintain that should they be held to the implied undertaking and prevented from providing the documents to other local counsel, they will be the party that suffers injustice. Especially since the primary purpose of the implied undertaking is the protection of privacy and publicly available documents are not in need of such a protection.
| 2. Law - defendants (appellants) |
[9] The defendants provided a number of jurisprudential examples to support their position, but relied on the principles enunciated in a few pivotal decisions. In Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.), Mr. Justice MacGuigan enunciated the standard of review to be applied to prothonotarial decisions.
| Discretionary orders of prothonotaries ought not to be disturbed on appeal to a judge unless: |
| (a) they are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts, or |
| (b) they raise questions vital to the final issue of the case. (449) |
The Court went on to note that in cases where either of these factors arise, a judge ought to exercise his own discretion de novo.
[10] In introducing the issue of the implied undertaking rule, the defendants rely on the decision of Madam Justice Reed in Canada v. ICHI Canada Ltd. (1991), 40 C.P.R. (3d) 119 (F.C. T.D.). The oft cited paragraph of explanation states:
| The defendant will know from the text of these reasons that an implied undertaking automatically arises so that information obtained on discovery is to be used only for the purposes of the litigation for which it is obtained. This does not, of course, restrict the use of any information which subsequently is made party of the public record. Nor does it affect the use of information which while obtained on discovery may also have been obtained from some other source. An implied undertaking cannot operate to pull under its umbrella documents and information obtained from sources outside the discovery process merely because they were also obtained on discovery. In addition, the implied undertaking does not prevent a party from applying, in the context of collateral litigation, for release from the implied undertaking, so that information obtained on discovery might be used in that litigation. This, however, is a matter to be determined in the context of that proceeding ... (124) |
[11] In reasserting this principle, the Ontario Court of Appeal in Goodman v. Rossi (1995), 24 O.R. (3d) 359, note that "the purpose of the undertaking is to protect, so far as is consistent with the proper conduct of the action, the confidentiality of a party's documents."
[12] In Goodyear Canada Inc. v. Meloche, (1996) 41 C.B.R. (3d) 112, 50 C.P.C. (3d) 398, [1996] O.J. No. 1711 (Ont. Gen. Div.), the Court held that there cannot be a privacy interest in publicly available documents.
[13] In furtherance of this viewpoint, the Federal Court of Appeal determined in Eli Lilly and Co. v. Interpharm Inc., (1993) 156 N.R. 234, 50 C.P.R. (3d) 208, [1993] F.C.J. No. 758 (C.A.), that the implied undertaking rule does not apply to documents that are made part of the public record, nor to ones that, while obtained on discovery, could have been made available from another source.
Plaintiffs
1. Argument
[14] The plaintiffs assert that, as a discretionary order, the decision of the prothonotary must stand as it has not been established that it was clearly wrong or based on a misapprehension of the facts. Moreover, the decision cannot be overturned simply on the basis that the hearing judge would have ruled otherwise.
[15] It is also contended that where a discovered party is compelled to disclose those documents upon which it relies in litigation, whether or not they have been publicly available, the implied undertaking attaches.
[16] The plaintiffs submit that although the documents in question have been publicly available in other court jurisdictions, they have not been available in the form provided on discovery. Their position is based on the contention that this particular "set" of documents has not been publicly available as it was compiled for the sole purpose of answering the defendant's questions on discovery. Moreover, the issue is not the plaintiffs' privacy interest in the sense of document confidentiality, but rather it is having material which was expressly prepared by and for its own archives used against it for the purpose of collateral litigation which has caused the plaintiffs' opposition.
[17] The plaintiffs maintain that there is a number of factors which must be considered in determining if relief from the implied undertaking is necessary. They are: 1) the existence of special circumstances; and, 2) weighing the resulting injustice between the parties between granting or denying relief from the rule.
3. Law - plaintiffs (respondents)
[18] In rebutting the jurisprudence provided by the defendants, the plaintiffs rely on the decision in VISX Inc. v. Nidek Co., (1998) 80 C.P.R. (3d) 437, [1998] F.C.J. No. 409 (T.D.). In discussing the implied undertaking rule, Mr. Justice Rothstein outlined two factors which must be considered before a release from the undertaking may be granted. They are: 1) the existence of special circumstances; and, 2) the weighing of the injustice between the parties between granting or denying the application for relief from the rule.
[19] In referring to the decision of the prothonotary in that situation, Rothstein, J. quoted from the reasons. It is a quotation which is expressly applicable under the current circumstances.
| If the documents are exigible in the Court in England from the same source as they were obtained in Canada, there is no need to relieve from the implied undertaking applicable here. If the documents are not exigible in England, I see no special circumstances which would indicate that this Court should relieve from the implied undertaking here. |
[20] The plaintiffs also looked to Hayden Manufacturing Co. v. Canplas Industries Ltd., (1998) 161 F.T.R. 57, 86 C.P.R. (3d) 17; [1998] F.C.J. No. 1842 (T.D.), for support of their position. In discussing the prothonotarial decision on appeal, the Court stated that "... even if I would have made a different order, unless the prothonotary erred in the manner described previously, this Court should not interfere."
[21] Moreover, the plaintiffs rely on the analysis of the implied undertaking rule provided by John Laskin in the article "The Implied Undertaking in Ontario." Specifically, the quote taken from Lord Keith in Home Office v. Harman, [1983] 1 A.C. 280 (H.L.), provides particular attention to the issue of how broadly the implied undertaking rule is to be applied:
| ... the fact that a certain inevitable degree of publicity has been brought about does not ... warrant the conclusion that the door should therefore be opened to widespread dissemination of the material by the other party or his legal advisers, for any ulterior purpose whatsoever ... (301) |
[22] The Ontario Court of Appeal decision in Goodman v. Rossi (1995), 24 O.R. (3d) 359, also supports the position of the plaintiffs in its definition of "collateral or ulterior purpose." In yet another quote from the English case of Home Office, the Court states that the phrase is used to
| indicate some purpose different from that which was the only reason why, under a procedure designed to achieve justice in civil actions, [a party] was accorded the advantage, which [it] would not otherwise have had, of having in [its] possession copies of other people's documents. (374) |
Reasons of the prothonotary
[23] At the initial hearing of this matter, Prothonotary Lafrenière dismissed the defendants' motion for release from the implied undertaking so as to be able to make the "publicly available" documents accessible to other local counsel. The decision was rendered as such as it was determined that the defendants had failed to establish adequately that they should be relieved from the rule based on the criteria set out by Goodman. In outlining the balancing test applied, prothonotary Lafrenière held that the potential prejudice to the plaintiffs and the general importance of promoting the implied undertaking rule sufficiently outweighed the defendants' interest in disseminating the information for collateral purposes.
Analysis
[24] With the standard of review of a prothonotarial decision being "clearly wrong" in a situation such as this, a number of factors must be considered. They include, inter alia: 1) were the documents in question actually publicly available; 2) is it the "set" of documents or the individual productions that are protected by the implied undertaking; 3) how will each of the parties suffer prejudice/injustice should their respective positions be denied; and, 4) are there any special circumstances existing which would permit the defendants to be relieved from the implied undertaking.
[25] With respect to the general principle behind the implied undertaking, the Court in Mark Anthony Properties Ltd. v. Victor International Inc., [2000] F.C.J. No. 180 (T.D.), reiterated that:
| the implied undertaking arises automatically to protect information disclosed in the discovery process, save and except for two categories of information obtained on discovery: information that becomes part of the public record in the proceeding or information that could also have been obtained from a source other than discovery.(para.7)(emphasis added) |
Attention is drawn to the highlighted phrase due to its potential impact on the interpretation of the rule as stated by Madam Justice Reed in Canada v. ICHI, (supra).
[26] In ICHI, the rule could be construed as stating that documents which were copies of those produced on discovery fell outside the confines of the implied undertaking because they were public and, therefore, obtained by other means. However, the use of the phrase "could also have been obtained" in the above decision may be construed as modifying Madam Justice Reed's interpretation. The word "could" seems to indicate that although a party gained possession of a document through discovery, if it were possible to obtain it through other legitimate means, the rule did not apply since the document could not then be construed as private. If it is possible that a document may be obtained in a manner which does not involve the discovered party, then it cannot be classified as private and confidential. As has been noticed in a number of cited decisions, including Nap, Inc. v. Reitmans Inc., (1996) 114 F.T.R. 6, 67 C.R.R. (3d) 235; [1996] F.C.J. No. 561 (T.D.), "the implied undertaking is an undertaking to the Court, which arises from the compulsory disclosure of a party's private information" (emphasis added).
[27] The particular set of documents which form the subject matter of this motion present an unusual dilemma. The plaintiffs prepared the documents and produced them to the defendants in response to specific discovery questions. And while individually they may be publicly available, this particular configuration of collected documents is not. Essentially, the defendants seek to have the documents exempted from the implied undertaking as a means by which they will save themselves from expending the time, effort and resources necessary to obtain the documents on their own. Yet, one must then question whether it is the set of documents that is protected or each individual production. This provides an additional conundrum when one considers that several of the documents sought are no longer publicly available for such reasons as the courts which held them have since had them destroyed.
[28] Many of the documents sought can be found in the public records of court proceedings throughout the world. Thus, although it will be a costly and time extensive exercise, the defendants could put forth the effort and receive the documents outside the realm of the discovery process thereby suffering no prejudice. By approaching the matter from this perspective, the implied undertaking is removed as a consideration and the defendants would then be free to disseminate the material to all concerned counsel. But what does one do regarding the destroyed documents now held only by the plaintiffs?
[29] If the decision of the prothonotary is upheld and all the documents are determined to be individually protected by the implied undertaking, the defendants remain in the same position which they now occupy. However, if it is the set of documents which is protected and not the individual ones, then the defendants' position changes.
[30] In consideration of Madam Justice Reed's decision in ICHI, and on application of the Aqua-Gem criteria, it is not possible to state that the prothonotary was clearly wrong in the whole application of the test. However, while the set of documents submitted in answer to the defendants' discovery questions may be protected due to the nature of its creation, the fact that the individual documents form part of the public record in various jurisdictions means that they are not. Yet, this also means that the defendants are free to obtain the documents from those jurisdictions and cannot rely on the plaintiffs for release of the undertaking which applies to the set.
[31] Notwithstanding the above application of the implied undertaking rule, the defendants have sufficiently demonstrated a situation where special circumstances may be found. In applying the VISX test, the existence of special circumstances exists where the court registries which have held a number of these documents have since had them destroyed. In situations such as this, the documents were publicly available and the defendants did attempt to obtain them, but through no fault of their own have found it impossible to do so. As the only copies which remain are in the possession of the plaintiffs, the individual destroyed documents are not under the umbrella of the implied undertaking rule. Their production is ordered because a greater injustice would be suffered by the defendants in knowing that the documents existed but have been destroyed, than by the plaintiffs who are aware of their contents.
Conclusion
[32] The appeal from prothonotary Lafrenière's order is allowed in part, as noted herein, below.
O R D E R
This Court accordingly orders that those publicly available documents, including all pleadings, trial and appeal transcripts, declarations and affidavits associated with the action in Inter Lego A/S v. Exin Lines Bros. SA et al, in the Tel Aviv District Court, Israel, CA 513/89 (Winograd), disclosed as exhibits during the discovery of Mr. Sten Juul Petersen which are no longer held by public sources are not subject to the implied undertaking rule. Because the prothonotary failed to consider this factor in making the impugned order, he proceeded without invoking the requisite test, and applied an incorrect principle of law to these unusual circumstances. Because of the alleged destruction of those documents - which appears to be, or is true - no order of this Court can help their owners to protect the owners' privacy of or in their contents. That, after all, is the purpose of the implied undertaking rule.
[33] This Court dismisses the remainder of the appeal, since the defendants have not demonstrated that any of the pleadings, trial and appeal transcripts, affidavits and declarations from related hearings in other international jurisdictions are no longer available from the respective court registries. Therefore, the prothonotary rightly concluded that the set of documents produced on discovery is protected by the implied undertaking rule. If the documents sought are publicly available elsewhere, then it is for the defendants to seek them out, because it is not for this Court to determine what evidence may be heard in proceedings conducted outside its territorial jurisdiction.
[34] Costs, on a party and party basis, shall be in the cause, if so ultimately awarded.
Ottawa, Ontario
November 1, 2000 Judge
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2799-96
STYLE OF CAUSE: KIRKBI AG ET AL.
v. RITVIK HOLDINGS INC. ET AL.
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: JUNE 5, 2000
REASONS FOR ORDER AND ORDER OF JUSTICE MULDOON
DATED: NOVEMBER 1, 2000
APPEARANCES:
| MARK ROBBINS REPRESENTING THE PLAINTIFFS |
| DINO CLARIZIO REPRESENTING THE DEFENDANTS |
SOLICITORS OF RECORD:
| BERESKIN & PARR FOR THE PLAINTIFFS |
TORONTO, ONTARIO
| DIMOCK STRATTON FOR THE DEFENDANTS |
CLARIZIO
TORONTO, ONTARIO