In this issue:
1. Ontario Pilot Program for Long Combination Vehicles
2. Federal Court is Not a Surrogate Divorce Court for Warring Spouses
3. Has the Horse Forever Left the Barn? The "Deemed Undertaking"
Rule in Ontario
1. Ontario Pilot Program for Long Combination Vehicles
This summer the province of Ontario
will begin a pilot program to allow a limited number of commercial
truck operators to pull two full-sized trailers - referred to as
long combination vehicles (LCVs) - on designated Ontario highways.
Each LCV replaces two 23 metre tractor-trailers.
Ontario will carefully control LCV
operations and the province will gradually issue permits for up
to 100 LCVs over a one year period. LCVs have been on the road in
Western Canada, Quebec, and more than 20 American states for decades.
The province touts that LCVs have an excellent safety record, with
fewer collisions reported than single-trailer trucks. A 2005 Alberta
study shows that LCVs had 60 per cent fewer collisions reported
than single-trailer trucks.
Rules for LCVs include:
- Can only operate on designated
divided highways (primarily 400-series highways)
- Can generally travel no more than two kilometres
off designated highways, and only on approved routes
- Must have special safety equipment, including enhanced
braking requirements and an electronic stability control system
- May not drive in or through the Greater Toronto
Area during rush hours
- May not carry more weight than existing single
- May not operate at the start and end of long weekends
- May not carry dangerous goods that would require
a warning on the vehicle's exterior
- May not carry livestock
- May not operate during winter months (December,
January, and February)
- Are prohibited from driving in bad weather or slippery
- May not exceed 90km/hr
The province is also promoting the
economic advantages for the province's retailers and manufacturers.
LCVs should reduce transportation costs. It will allow Ontario retailers
and manufacturers to bring voluminous, lightweight goods to market
at a lower cost.
Ontario promises to be among the most
stringent of all the regions that currently allow LCVs. The rules
differ from Quebec's most notably with lower GVW (63,500 kgs compared
to 67,500 kgs. in Quebec) and with such requirements as stability
control, which didn't exist back when Quebec wrote its rules.
Ontario car drivers should be watching
this new development closely. Try passing these behemoths with a
small car with a small motor!
2. Federal Court
is Not a Surrogate Divorce Court for Warring Spouses
The Federal Court of Canada does not have jurisdiction
in divorce cases yet sometimes, to its chagrin, it too gets dragged
into proceedings involving warring spouses. In Ricci v. Tully (2009) FC 493 the court had to consider an application for the sale
of a vessel which was at the centre of a divorce.
The vessel "FOREVER LOST" was, as the court
described, "the apocryphal name of the 48 foot sailboat which
is at the centre of this proceeding." Claudia Ricci and John
Tully were married and involved in concurrent divorce proceedings
in the Ontario Superior Court of Justice. There was a dispute as
to the ownership of the vessel between Claudia and John. Claudia
claimed that she was the equitable owner of the vessel because she
provided all of the purchase funds. She raised those funds by taking
out a mortgage on her home which she had owned free and clear and
which she had purchased and lived in prior to her marriage to John.
For his part, John claimed ownership by of gift from Claudia and
also alleged that he spent endless hours repairing and restoring
the vessel. The court, tongue in cheek, stated at the beginning
of the decision that the "FOREVER LOST" was indeed forever
lost to Claudia and John and required the vessel to be sold.
The court heard evidence of how Claudia and John cohabited
together, John became bankrupt and had negligible assets, Claudia
had a job, purchased the home, and provided the funds to purchase
the vessel, which was intended as a retirement investment. John
and Claudia viewed it as being the basis of a charter company and
that they would eventually retire and live aboard the vessel in
the Caribbean. A common dream which ended in a common nightmare.
John found the boat and was to register the vessel in both their
names. He registered the vessel in his name only. Claudia refinanced
her home to consolidate the debts incurred with respect to the vessel.
She paid the mortgage payments.
The marriage did not last long and Claudia and John
separated. John moved out of the home and kept possession of the
sailboat. Claudia did not have any keys, pass codes or any access
or use of the sailboat. In a separation agreement John agreed to
pay for the monthly mortgage payments on the debt. The debt was
secured by the home. In March 2008 a cheque provided by John for
such a payment did not clear. In April 2008 Claudia had the vessel
arrested and brought a claim in the federal court to determine ownership
of the vessel and to have the boat sold. A vessel query search from
Transport Canada's website completed after the action was commenced
indicated the ownership of the vessel was registered to Marguerite
Dunning after the arrest of the sailboat. Ms. Dunning was apparently
the woman with whom John had a relationship subsequent to his separation
from Claudia. In July 2008 the vessel ownership was switched back
to John. At the time of the proceeding the vessel was under court
In a preliminary motion the court ordered John to
obtain insurance on the vessel and to make monthly payments for
the debt. It allowed Claudia to obtain an independent survey of
the vessel. It prohibited John from dealing with the vessel. It
allowed John to continue living on the vessel.
John failed to comply with the court order, by defaulting
in making the monthly payments and failing to maintain insurance
on the sailboat. He continued to reside and have full use of the
Claudia obtained insurance on the vessel which required
the removal of propane tanks from the vessel. John informed the
insurer that he had removed the propane tanks. Claudia advised the
court that Marguerite had advised that the tanks had not been removed.
This was confirmed by the survey. To add to the financial woes and
the precarious position of the sailboat, the dockage fees were in
In a bizarre twist at the hearing before the court,
John's lawyers brought an application to remove themselves from
the case (presumably because they had not been paid.) John objected
to this. The court granted the application removing John's lawyer
from the case. Then a most bizarre twist occurred. This was described
by the court as follows:
"John's counsel was then advised that he
was excused. There then occurred a somewhat Monty Pythonesque exchange
between the Court and John's former counsel. He advised that he
did not wish to leave and notwithstanding the Order that he no longer
represented John, wished to remain and make submissions on Claudia's
motion. He based this position on the fact the Order made removing
him as solicitor of record did not take effect until proof of service
on John was filed which he argued had not yet happened. Orders of
the Court take effect from the time they are made by the judicial
officer. In this case, there could be no doubt that John was fully
aware of the Order of the Court. The protection of Rule 125(4) was
not required and I ruled that counsel could not have it both ways
- be removed as counsel and then remain and make submissions when
his client was clearly present and representing himself. Counsel
advised that what he was "hoping to do is obtain a just hearing
of the issues at issue on this motion [Claudia's motion]".
This comment provoked an extensive colloquy between the Court and
John's former counsel regarding his participation, John's right
to be heard and my overarching responsibility as a judicial officer
to comply with my oath of office to ensure a fair hearing.
As a result of this exchange, John and his former counsel entered
into a form of retainer agreement whereby John authorized his former
counsel to make submissions on his behalf on the merits of Claudia's
The court allowed John's counsel to make submission
to the court. He raised the spectre of the Court becoming a backdoor
divorce court over family owned boats and for one embittered spouse
to "seek an illegitimate juridical advantage" over the
other by proceeding in the Court to obtain possession or sale of
a family asset. This argument was based largely on the fact that
John used the vessel as his home and so he argued that he should
not be dispossessed until the matrimonial proceedings, commenced
after this proceeding, was concluded.
The Court held it had jurisdiction to deal with the
vessel. The Court held that there was clear evidence that the vessel
while in the sole possession of John was in jeopardy from fire (the
propane tanks), seizure by creditors (fees owed for dockage) or
other danger (not mentioned). The Court held it had the jurisdiction
and power to prevent further deterioration of the vessel or to ensure
that it was not put in jeopardy to third party creditors.
It ordered the vessel to be listed, sold and the proceeds
paid into the Federal Court pending the decision of the Ontario
Superior Court's decision on the division of assets in the divorce.
John was ordered to deliver up possession of the vessel to Claudia
for sale. And who says there is no justice in the world!
3. Has the Horse Forever Left the Barn? The "Deemed Undertaking"
Rule in Ontario
As a party to a lawsuit your lawyer tells you that
you must provide copies of relevant documents for production to
the other side as a part of the examination for discovery process.
You want to comply but you've concerns that the documents contain
sensitive, perhaps even propriety material. What protection is there
that the other side will not use that information outside of dealing
with the lawsuit? The answer - being a culmination of an evolving
clash between the interest of the court system in full and frank
discovery disclosure and the interest of the party disclosing information being able to maintain privacy - is the imposition of
the "deemed undertaking rule" on the party in a
lawsuit receiving the documents [and information contained
therein] as a part of the examination for discovery process.
The Court of Appeal for Ontario recently issued its
decision in Kitchenham v. AXA Insurance Canada (2009) 94
O.R. (3d) 276 in which it revisits the "deemed undertaking
rule" (hereafter the "rule") as it applies in Ontario
based litigation. Prior to reviewing the facts of this interesting
case a review of the rule would be helpful.
The Deemed Undertaking Rule
The Rules of Civil Procedure requires each litigant
to disclose the existence of "every document relating to
any matter in issue in an action that is or has been in the possession,
power or control of a party to the action
whether or not
privilege is claimed in respect of the document. " (Rule 30.02).
The disclosure of such a list of documents invariably leads to their
production to the opponent with the exception of those in which
a claim for 'privilege' may be asserted. Those familiar with the
litigation process will be familiar with the prescribed 'Affidavit
of Documents' which is be served by each litigant on other parties
in the litigation. The Affidavit must list and describe all documents
relating to any matter in issue in the action, in certain schedules,
grouped as either:
i) Schedule "A": being in that party's
possession, control or power and that the party does not object
to producing for inspection,
ii) Schedule "B": that are (or were) in
that party's possession in which it objects to producing on the
grounds of privilege [i.e. 'solicitor - client privilege',
pertaining to documents generated in the context of a client soliciting,
or obtaining legal advice, as the case may be, or 'litigation
privilege', concerning documents said to have come into existence
as a result of contemplated or pending litigation], and
iii) Schedule "C": that were formerly
in that party's possession, control or power, but are no longer
in that party's possession, control or power.
This disclosure obligation is significant: The affidavit
of documents contains a confirmation that the party has never had
in its possession, control or power any document relating to any
matter in issue in the action other than those listed therein.
The policy of the drafters of the "Rules of Court"
is clear. Litigation can only be fairly and efficiently conducted
if basic rules of fairness are followed in terms of the timely and
thorough disclosure of relevant information. To be efficient, the
system is devised to facilitate, if not encourage, early and timely
'out of court' settlements, which goal is largely achieved through
liberal rights of discovery into the other litigant's case. Forget
the 'television legal tactic' of the last minute eve of trial 'documentary
ambush' on an opponent. There are repercussions that could seriously
hamper one's case at trial if timely and full disclosure has not
been made to the other side. For example, where a party fails to
disclose a document, or fails to produce a document as required,
if favorable to that party's case it may not use the document at
the trial except with leave of the trial judge. If not favorable
to the offending party's case, the trial judge may make such order
as is just as concerns the use of that 'last minute document' by
the other (innocent) party.
With this 'compelled disclosure' regime there is then
the concern that the disclosing party is making itself vulnerable
by the dissemination of what might otherwise be private or sensitive
information. The law endeavors to balance this concern, recognizing
the compliance with the 'rules of the game' by restricting what
can be done by the other party with the documents being disclosed,
and the information contained in those documents.
Has the 'horse forever left the barn' once documents
are disclosed and produced to the other side in a lawsuit? What
element of control remains with the 'producing party' as to what
can be done with the information?
The deemed undertaking rule [Rule 30.1.01(3)]
seeks to put a qualified "rein on the horse":
"All parties and their counsel 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".
The Rule applies to evidence [and information contained
in such documentary embodiment] obtained from:
i) the discovery of another litigant's documents produced
in a law suit;
ii) examinations for discovery
iii) inspection of property by court order, or by consent of parties
in a law suit;
iv) medical examinations, and
v) examinations for discovery by written questions
The Rule However is Not Absolute: it has Exceptions
and a 'Shelf Life'
The rule does not apply to evidence obtained through
sources other than those listed above. While information given by
a discovery witness on an examination for discovery, or by way of
a document listed in an affidavit of documents, would at first blush
trigger the rule, if it happens to be available through other means,
the rule does not apply and the recipient is not precluded in the
use of such information beyond the lawsuit. The "horse has
left the barn" by the information having entered into the public
sphere other than by the compelled disclosure in the lawsuit. Thus,
in this sense, the rule is a qualified 'leash'. It is also qualified
in other respects.
The Rule does not prohibit any use outside of the
lawsuit to which the person who disclosed the evidence consents.
Additionally, the rule is limited in terms of its
"shelf life". It affords a certain degree of protection,
or an element of control in the producing party only until a certain
point; that is, the rule effectively loosens, if not loses, its
grip upon certain steps being taken or events occurring in a lawsuit.
In this respect the rule does not prohibit the use, for any
i) evidence that is filed with the court;
ii) evidence that is given or referred to during a hearing; or
iii) information obtained from evidence filed with the court or
that is given or referred to during a hearing.
Accordingly once information is filed in connection
with a court application, or is led in evidence at a trial, the
same is for all intents and purposes, considered 'public'. (There
is one limited exception: in rare circumstances, where "for
example" a publication ban is imposed on court proceedings,
or documents or information are ordered 'sealed' for review only
by the court [an approach adopted, in cases involving very sensitive
material] information is considered to remain guarded and under
the control of the court). Hence, subject to these somewhat rare
exceptions, the limited protective element of 'control': a party
might be compelled to disclose information. It can attempt to limit
dissemination by perhaps settling a case before one of the above
litigation steps occurs, or edit what it chooses to lead as evidence
in a proceeding. It might seek a 'sealing order' or some specific
judicial relief limiting the access to information by the other
party. Alternatively, it might proactively choose to dampen the
undesired effect of information becoming public by publishing information
to control the 'spin' or use to which information might be put,
should it be high profile or of a very sensitive nature. The idea
is that the information not be 'spilled', or 'used' by the opponent,
before the litigation process enters into the 'open courtroom' phase.
It should be noted that the rule does not prevent
a party in a lawsuit from using information taken during the discovery
process to 'impeach' testimony being given by a witness in the context
of a subsequent lawsuit.
The above all said, the Rules of Court permit a party to apply to
a judge to 'lift' the application of the rule if there is a legitimate
'use' to which information obtained during the discovery process
might be put outside of the context of the lawsuit in which the
information was obtained. Where the "interest of justice"
outweighs any prejudice that would result to a party who disclosed
the evidence in question, a judge may permit the use of evidence
or information obtained, subject to such terms as may be ordered:
The Kitchenham Case
This case presents an example of the while clarifying
certain aspects of its application.
Janet Kitchenham was in a car accident in January
1993. She sued the driver of the other vehicle in an action commenced
in 1995 (the "tort action"). The defendant in that action
obtained an order requiring Ms. Kitchenham to submit to an independent
medical examination. This culminated in a defence medical report
(the "defence medical"). A copy was provided to Ms. Kitchenham
in compliance phase with the discovery obligations in the tort action.
The defendant in the tort action conducted surveillance of the Ms.
Kitchenham. During discoveries, a copy of this videotape (the "surveillance
tape") was also provided to Ms Kitchenham, likewise in compliance
with the documentary disclosure rules.
The tort action settled in 2000. However, in 1996,
Ms. Kitchenham had commenced a separate law suit against her own
insurer, AXA Insurance, claiming that she was disabled and unable
to work and that certain benefits were owing to her by AXA in respect
of the accident giving rise to the tort action. Discoveries took
place in the AXA lawsuit. On this discovery, the plaintiff was asked
for, but refused to produce a copy of the surveillance videotape
and the defence medical from the tort action.
The plaintiff refused to produce these, claiming that
she was bound by the deemed undertaking rule, also citing privacy
concerns in the very nature of those documents. AXA brought a motion
challenging the refusals. The court proceedings that followed, involving
various lawyers of appeal, provide an elucidation of the rule and
how it applies.
Round #1: The Motion by AXA to the Superior Court
of Ontario to compel Production of the Surveillance Videotape and
the Defence Medical
The judge held that both the surveillance videotape
and the defence medical triggered the deemed undertaking rule, notwithstanding
that the plaintiff was the recipient of those documents as
opposed to being the disclosing party in the tort action.
This was on the basis of the judge's emphasis and reliance on the
opening language to the rule which states that "All parties
and their counsel are deemed to undertake
." as governing
both the party disclosing the evidence as well as the party receiving
it, as well as their respective counsel. The judge however concluded
that while the rule precluded the use of the documents, if used
for a proper purpose, specifically, to impeach a witness's testimony
in a subsequent lawsuit, it did not preclude their disclosure. Somehow
distinguishing between the "use" of information from its
"disclosure", the judge ordered production of the
surveillance videotape and the defence medical, for the limited
use of impeachment of the plaintiff at trial (i.e. should AXA wish
to contradict the plaintiff on evidence given by her at trial compared
to what was in those documents).
Round #2: Both AXA and the plaintiff appeal to
the Divisional Court
Neither party was happy with the outcome from round
#1. On appeal to the Divisional Court [where appeals on judge's
orders other than final orders disposing of actions are taken]
that court agreed with the initial judge's ruling that the surveillance
videotape and the defence medical were caught by the deemed undertaking
rule, but disagreed with the original order that those documents
should be produced to AXA. The Divisional Court ruled that these
documents could not be produced by the plaintiff in the discovery
process of the AXA action, as they were caught by the rule. In other
words, while they might be useful for impeachment of a witness in
a subsequent lawsuit, this did not make them producible to displace
the application of the rule. The Court ruled that this would be
the approach to be taken, subject to an order being issued by a
judge "lifting" the application of the rule.
The Divisional Court agreed with the initial judge
that the deemed undertaking rule applied not just to the recipient
of documents, but also to the party producing the documents.
It however disagreed with the original order that documents coming
within the rule should still be disclosed as they might be
used for impeachment purposes. The court ruled that the simple disclosure in a subsequent proceeding (such as in the AXA action) was itself
a form of 'use'. As such, the mere disclosure of documents caught
by the rule in the subsequent AXA action would be prohibited. Accordingly
the Divisional Court concluded that the videotape and the defence
medical report were protected from disclosure by the deemed undertaking
rule, irrespective of which party was the discloser or recipient
of the information. The Court accordingly directed that an application
for 'relief' from the rule should be brought by way of a motion
to a judge of the Superior Court under subrule (8), cited above.
Round #3: AXA appeals to the Ontario Court of Appeal
The Court of Appeal varied the outcome from both of
that of the initial judge and the Divisional Court. The Court ruled
that both court levels below had misinterpreted a key element of
the deemed undertaking rule: the rule works to protect only the
party who disclosed the document or information in the earlier discovery
process, not the party who received it. Thus, notwithstanding
the earlier court's reliance on the reference in the rule to "All
parties and their counsel are deemed to undertake not to use evidence
" this wording was read down, or limited,
to the party who obtained disclosure or information from another
party by the latter complying with the discovery rules of court.
The Court provides a useful summary of the purpose
of the rule:
The rule exists to protect the privacy interest
of the party compelled by the rules of disclosure to provide that
information to another party to the litigation. The rule provides
that protection by prohibiting the party who obtained the information
through compelled disclosure from using that information outside
of the litigation, except where certain exceptions apply or the
court makes an order permitting its use".
The Court of Appeal went on to state that:
"The promotion of full and frank disclosure,
and the protection of the privacy interests of those who are compelled
to make disclosure during discovery are both served by restricting
the use that the party obtaining the information can make of that
information. Neither rationale for the implied undertaking justifies
any restriction on the subsequent use of the information by the
party who produced that information. To the contrary, wrapping
all information produced in the discovery process in one action
in a cloak of non-disclosure for any subsequent purpose and requiring
a court order to remove that cloak of secrecy would inevitably
interfere with the effective operation of the discovery process".
The court focused on the word "obtained"
in statement of the rule [Rule 30.1.01(3)] in buttressing the finding
that it applies to evidence received through the discovery
process and not to information provided in that process.
The Court of Appeal disagreed that rule 30.1.01(6)
(the above cited 'impeachment exception') requires the disclosure
of protected evidence for impeachment purposes. As explained by
if party "A" sues party
"B" and obtains certain documents on discovery, the
deemed undertaking rule will prohibit "A" from using
those documents for any purpose outside that of the litigation.
However, should party "A" become involved in a second
lawsuit, subrule (6) would permit party "A" to utilize
the evidence lawfully obtained in the prior action to impeach
the testimony of a witness in the second proceeding. There is
no need to exempt production on discovery from the scope of the
deemed undertaking rule to give meaning to the impeachment exemption
to the rule."
The Court of Appeal agreed with the Divisional Court
that there is no basis to distinguish between the 'production' of
a document and the 'use' of that document. Where the undertaking
applies, it reaches production of evidence captured by the rule,
just as it captures any use of that evidence outside of the pending
Accordingly, as the surveillance videotape and the
defence medical were obtained by the Ms. Kitchenham in the
course of discovery in the tort action, and their disclosure by
her in the subsequent benefits action would constitute a use of that evidence, it follows that that material was subject to the
deemed undertaking rule. It could not be disclosed or produced by
Ms. Kitchenham. As none of the exceptions applied to remove the
application of the rule, the court noted that AXA was then limited
to either seeking to obtain the material either by getting the consent
of the defendant in the tort action (who initially disclosed the
same) for Ms. Kitchenham to give these materials to AXA, or to obtain
an order under subrule (8) lifting the deemed undertaking as it
applies to the two documents.
The Court of Appeal confirmed that the relevant test
on an application for the deemed undertaking to be lifted would
be for the applicant (seeking to obtain the information) to show
that the interest of justice outweighs any prejudice to be caused
to the party who disclosed the evidence. Are there factors would
favour permitting the subsequent use of information? Where the motion
arises in the context of a party who seeks to use the information
in subsequent litigation, the more valuable the information to the
just and accurate resolution of the subsequent litigation, the more
the interest of justice will be served by permitting the use of
that information. The interests of the party who was compelled to
disclose the information are the only interests that can justify
maintaining the undertaking and deciding not to "lift"
the rule. The discretion in subrule (8) must be exercised on a case
by case basis. Where the beneficiary of the undertaking resists
relief from that undertaking, the undertaking should only be set
aside in exceptional circumstances. Where the interests of the party
protected by the deemed undertaking would not be adversely affected
by the use of the material, and assuming the material has relevance
in the subsequent proceeding, the interest of justice would inevitably
outweigh any resulting prejudice to the party who had disclosed
Conclusion - Outcome of the Case.
The Court of Appeal did not rule whether the deemed
undertaking rule would be lifted in the interest of justice in this
case. Despite noting the above principles, the Court reserved on
the point because it was only during the appeal process (on the
arguments cited above, as to whether the deemed undertaking rule
applied) that AXA filed a separate application to a judge of the
Superior Court under subrule (8) to lift the application of the
rule. In that proceeding, the judge ordered the plaintiff to produce
the videotape but refused to order production of the defence medical
report on the particular facts presented on that hearing. Both sides
have obtained leave to appeal that order to the Divisional Court.
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