2004
 
LITIGATION PRIVACY: 
Recent personal
information legislation sets out ground rules for how private sector
organizations may collect, use or disclose personal information in
the course of commercial activities1. In British Columbia
the Personal Information Protection Act (“PIPA”) came into
force January 1, 2004. In the federal sphere the Personal
Information and Electronic Documents Act (“PIPEDA”) has been in
force since 2001. PIPA has not yet attracted judicial comment.
PIPEDA, however, has begun to be the focus of judicial
consideration. This article focuses on how courts and quasi-judicial
bodies, such as labour arbitrators, are applying and interpreting
PIPEDA. The issue of who
is entitled to make a complaint under PIPEDA was considered in
2003 by the Federal Court in Maheu v. IMS Health
Canada2. In that case, Maheu’s company and IMS were
corporate rivals in the business of obtaining and selling
prescription information to drug companies. While Maheu’s company
obtained the information with the knowledge and consent of
prescribing physicians, IMS obtained it surreptitiously from
pharmacists. Maheu complained to the Privacy Commissioner, alleging
that IMS was in breach of PIPEDA by violating the physicians’ right
to privacy. The Commissioner found that IMS was not in breach, as
the information collected was not personal information of the
prescribing physicians. Maheu then applied to the Federal Court for
a hearing regarding the Commissioner’s decision. The Court
determined that despite Maheu’s company having a commercial interest
in the hearing, and despite that Maheu’s own personal information
was not the subject of the application, Maheu was nonetheless
entitled to make a complaint to the Commissioner and to subsequently
apply for a hearing before the Federal Court. Courts and labour
arbitrators have also been called on to consider whether PIPEDA can
be used to prevent personal information from being used as evidence
at trial or at a labour arbitration. However, there does not appear
to be consensus on this issue. For example, in Ross v. Rosedale
Transport Ltd.3, a labour arbitrator appeared to rule
that since the employer had breached PIPEDA by surreptitiously
videotaping the employee, the video tape evidence was not admissible
for the arbitration. However, in
Ferenczy v. MCI Medical Clinics and Dr. Gary
Weinstein4, the Court clearly stated that despite
evidence constituting a breach of PIPEDA, such a finding has no
impact on the issue of admissibility of evidence at trial. The Ferenczy
decision is also important for the conclusions drawn by the
Court regarding the character of personal information, such
as surveillance footage, collected by another individual at the
behest of a litigant. The plaintiff argued that the private
investigator hired by the defendant to carry out video surveillance
of the plaintiff was doing so for a commercial purpose and thus,
PIPEDA required the plaintiff’s knowledge and consent. The Court
disagreed and stated that in such circumstances, the individual
collecting the information is an agent of the opposing party and
thus the collection is not for a commercial purpose. This approach
ensures that litigants are able to carry out their own fact-finding
missions in order to defend themselves or advance their claims. In 2003, the
Federal Court heard the case of Englander v. Telus Communications
Inc.5. Englander had made a complaint to the Privacy
Commissioner regarding Telus’ unlisted phone number charges. The
Commissioner found that Telus’ practices did not violate PIPEDA, and
Englander brought an application to the Federal Court. The main issue
considered by the Court was whether Telus had valid consent under
PIPEDA to publish its customers’ personal information in
directories. The Court
determined that customers have a reasonable expectation that unless
they subscribe to an unlisted number service their information will
be published. This “reasonable expectation” was based on a
“long-established practice” by which phone companies include
directory listings as part of residential phone service. As PIPEDA
allows information to be collected and used for purposes that a
reasonable person would consider appropriate, the Court determined
that Telus was not in breach. While it appears
that the Courts have not looked favorably upon litigants attempting
to use PIPEDA as a shield against liability, the Federal Court has
recognized the balance that must be struck between the right to
privacy and the ability to prosecute. In BMG Canada Inc. v. John
Doe6, the Federal Court was called on to consider
whether members of the music industry could force internet service
provides to hand over information which would disclose the identity
of individuals downloading music from the internet. While the Court
relied mainly on equitable principles to determine whether the
plaintiff were entitled to discover the identity of the internet
users, the Court also applied PIPEDA. While the protection of
individual privacy is fundamental, PIPEDA is not designed to protect
individuals from civil or criminal liability. PIPEDA requires the
Court to balance privacy rights against the rights of other
individuals and the public interest. In this case, the Court
concluded that the public interest in disclosure did not outweigh
the individuals privacy concerns, and thus BMG was not entitled to
information on the internet users. By far, the most
comprehensive analysis which has been undertaken by the Federal
Court of Canada in relation to PIPEDA is the case of Eastmond v.
Canadian Pacific Railway. Eastmond brought a complaint to the
Privacy Commissioner regarding surveillance cameras which had been
installed by CPR in the workplace. CPR submitted that the cameras
were put in place to reduce vandalism, deter theft, and reduce CPR’s
potential liability for property damage and to provide security for
staff. The Privacy
Commissioner applied a four part test to determine whether it was
reasonable for CPR to use the surveillance cameras: 1) was the
measure demonstrably necessary to meet a specific need, 2) was it
likely to be effective in meeting that need, 3) was the loss of
privacy proportional to the benefit gained, and 4) was there a less
privacy-invasive way of achieving the same end? The Commissioner
found that a reasonable person would not consider the circumstances
sufficient to warrant such intrusive measures, and ordered CPR to
remove the cameras. CPR applied to the Federal Court for a
hearing. In considering the
nature of the proceeding, the Court, citing the decision in
Englander, confirmed that an application to the Federal Court
following a decision of the Commissioner is a fresh application and
the Court is required to exercise its own discretion but the
Commissioner is accorded some deference. The Court then
turned to the merits of Eastmond’s application. In order to
determine whether CPR had breached its obligations under PIPEDA, the
Court was required to determine: 1) whether the reasons given by CPR
for the installation of the surveillance cameras were purposes which
a reasonable person would consider appropriate in the circumstances,
and 2) whether Eastmond had consented to the surveillance. The Court
determined that a reasonable person would consider CPR’s purposes
for the surveillance cameras appropriate in the circumstances, and
cited the following reasons: 1) was there a legitimate need for the
cameras, based on past incidents of theft and vandalism, 2) the
information was not collected in a manner or put to any use which
was contrary to CPR’s needs, 3) the cameras were effective in
meeting CPR’s needs, as there were no recorded incidents of theft or
vandalism since the installation of the cameras, 4) the loss of
privacy was minimal, as the employees had a low expectation of
privacy in the work place anyway, and 5) there were no cost
effective alternatives. In sum, CPR had satisfied PIPEDA’s
requirement of reasonableness. In considering
whether consent was required for the collection of the information,
the Court noted that the tapes were never viewed by CPR unless an
incident occurred which had to be investigated. The Court accepted
CPR’s argument that the information was not really “collected” until
CP officials viewed the recording. PIPEDA does not require consent
where “the collection is reasonable for purposes related to
investigating a breach of an agreement or a contravention of the
laws of Canada or a province”. Thus, the Court concluded that CPR
did not require the employee’s consent. From these cases, a
few general principles can be gleaned. First, virtually
any individual has standing to make a complaint to the Privacy
Commissioner or to apply for a subsequent hearing before the Federal
Court. In addition, an application to the Federal Court is not an
appeal of the Commissioner’s findings, nor a judicial review, but a
fresh application during which the Court must exercise its own
discretion, except where the Commissioner may be afforded some
deference. Second, it is
unlikely that PIPEDA can be used to exclude evidence at trial, but
it may be used in this manner by quasi-judicial adjudicators such as
labour arbitrators. Third, information
is not deemed to be collected for a commercial purpose where it is
collected at the behest of a litigant for the purpose of defending
or advancing their position. Lastly, the two
essential factors which the Court will consider when determining
whether there has been a breach of PIPEDA is whether the purpose for
the collection was reasonable in the circumstances and whether there
was consent. However, the Court will also attempt to balance the
interests of the individual with the interests of the public. For further
information on this, or other privacy law or business litigation
issues, please contact Larry Munn (lm@cwilson.com,
604.643.3160), or any of the other Clark Wilson LLP lawyers listed on
page 6. Mr. Munn wishes to acknowledge and thank his associate,
Valerie Dixon, for assisting in the preparation of this
article. 1 See http://www.privcom.gc.ca/faq/faq_01_e.asp#001 2 2003 FCT 1;
aff’d 20003 FCA 462 3 [2003]
C.L.A.D. No. 237 (Canada Labour Arbitration) 4 [2004] O.J.
No. 1775 5 2003 FCT
705 6 2004 FC
488
DIRTY REAL ESTATE IN B.C.: A PRIMER ON ENVIRONMENTAL CONTAMINATION AND LIABILITY INSURANCE COVERAGE (PART II)
Q: What do
environmental contamination, business in British Columbia and
liability insurance have in common? A: Perhaps
millions of dollars more than you might have thought before you
received this newsletter. In Part I of this article, we discussed
statutory liability for the cost of cleaning up environmental
contamination under the B.C. Environmental Management Act. In
this Part II, we will consider defence and indemnity for such
‘cost recovery’ claims under general liability, errors and omissions
or other commercial liability insurance policies. LIABILITY INSURANCE AND THE ‘NOT
SO ABSOLUTE’ POLLUTION EXCLUSION There are two things that every
policyholder (and all of their insurance brokers) should be aware of
regarding liability coverage for environmental contamination. First,
coverage can be triggered under more than one policy, over numerous
periods. This is good news for owners of property and operators of
businesses because it means that more than one - and potentially a
large number - of their consecutive annual insurance policies may
have to respond to claims against them. Second, pollution exclusion
clauses have not proved to be nearly as effective as their drafters
must have hoped. This is also good news for B.C. businesses, further
improving their prospects for obtaining insurance ‘funding’ for
environmental claims against them. Multiple Policies
Responding to Claims Particularly as a result of the ‘leaky
condo’ crisis, many insurance policyholders in B.C. will be aware of
the “continuous” or “triple trigger” theory of coverage under
occurrence-based liability policies. That is, generally speaking, an
“occurrence” is defined to include “continued or repeated exposure
to the same general harmful conditions”. Such grant of coverage
limits an insurers’ exposure to the loss or damage which ‘occurred’
during the period of a particular policy. However, unlike a motor
vehicle accident, for example, a poorly constructed building does
not leak and deteriorate instantaneously. That kind of loss or
damage happens over a number of years and, as we have seen,
environmental contamination can take place over decades.
Perhaps the most famous Canadian case (because it happened in
Ontario) which illustrates this principle is Alie v.
Bertrand. An earlier example, here in British Columbia, is
Surrey v. General Accident. Both are Court of Appeal
decisions. Alie concerned defective concrete,
which deteriorated over time, and Surrey involved repeated
flooding of a golf course. What these and other cases clearly
establish is that where more than one policy is triggered, both
indemnity (settlement and/or judgment) and defence costs
(environmental litigation can be very expensive) can be
payable by more than one insurer, based on their respective ‘times
on risk’. A corollary principle is that, if the insured cannot prove
the existence of a policy for any part of that period, then it will
be deprived of coverage, and treated as self-insured, for a
proportionate share of the loss or damage claimed against it. Such ‘continuous’ or ‘triple triggerage’
is the first chink in insurers’ armor regarding progressive injury
cases, specifically, regarding environmental contamination. The
second is the narrow - contra proferentum - interpretation of
exclusionary wording in insurance policies. Ineffective Pollution
Exclusions By the mid-1980s, most insurers had
incorporated so-called ‘absolute’ pollution exclusion clauses into
their liability policies. And since the 1970s, insurers limited the
scope of such exclusions to ‘sudden and accidental’ escape of
pollutants. But before then, environmental contamination was not on
the insurance industry’s radar screen at all. Absent such
exclusions, both sudden and accidental, and even slow and steady (if
not actually deliberate) pollution would be covered under commercial
liability policies. Such long-tail environmental risks, most
notably asbestos contamination and related disease, has cost
insurance companies literally billions of dollars. Asbestos
companies went bankrupt, and so did insurers, such as Canadian
Indemnity. As the Britannia - which dated back to 1905 - and
Beazer - back to 1929 - cases (discussed in Part I)
graphically illustrate, environmental contamination claims can have
very long tails indeed. Think leaky condos, but add a zero to the
time on risk. Not just years, but decades of liability policies can
be called on to respond to such cases. A typical ‘absolute’ pollution exclusion
provides as follows: Pollution Liability a. "Bodily injury" or
"property damage" arising out of the actual, alleged or threatened
discharge, dispersal, release or escape of pollutants: 1. At or from premises
owned, rented or occupied by an insured; 2. At or from any site or
location used by or for an insured or others for the handling,
storage, disposal, processing or treatment of
waste; 3. Which are at any time
transported, handled, stored, treated, disposed of, or processed as
waste by or for an insured or any person or organization for whom
the insured may be legally responsible; or 4. At or from any site or
location on which an insured or any contractors or subcontractors
working directly or indirectly on behalf of an insured are
performing operations: a. if the pollutants are
brought on or to the site or location in connection with such
operations; or b. if the operations are
to test for, monitor, clean up, remove, contain, treat, detoxify or
neutralize the pollutants. 5. Any loss, cost, or
expense arising out of any governmental direction or request that
you test for, monitor, clean up, remove, contain, treat, detoxify or
neutralize pollutants. Over the past few years, courts in Canada,
as well as the United States, have identified a number of weaknesses
in such clauses. And in B.C. there is a unique further loophole -
see item c. below - that could well be exploited by policyholders as
the law develops. Such problems for insurers include the
following: a. The wording of
absolute pollution exclusions tends to focus on active polluters:
those who (ex.) “transported, handled, stored, treated, disposed of
or processed” contaminating substances. These clauses can therefore
be less effective against owners, whose contribution to
contamination is generally more passive (ex. CNR in the Beazer
case) (see, ex. Trafalgar v. Imperial Oil - Ontario, and
U.S.F.&G. v. Specialty Coatings - Illinois). b.
Many of the
polluting activities are described in the present tense: (ex.)
“handling”, “working” and “performing operations”. As a result,
coverage may be available to owners or operators, for their
activities in the past, so long as they cause loss or damage in the
present (see, ex. Trafalgar). c.
Any “loss,
cost or expense arising out of … governmental direction or request”
is specifically excluded. However, a cost recovery action by a
private party under the EMA - particularly if the clean-up of
the site was done voluntarily (i.e. not by “governmental direction
or request”) - does not readily fit that description. Businesses in
B.C. may therefore be able to obtain funding for the very
substantial cost of defending many, if not most, environmental
contamination claims against them. Further, because of the incredibly long
tail of pollution risks, document retention and file destruction
policies could become a very significant issue for companies and
individuals who ever carried on business in B.C. This will include
retention of historical insurance policies. SO … A FEW WORDS OF ADVICE First, policyholders and their insurance
brokers should not hesitate to report cost recovery actions or other
environmental claims under liability policies. As noted, although
insurers have tried to exclude pollution, courts have been prepared
to find coverage for such claims, regardless. Second, environmental claims should be
reported to all insurers on risk back in time to when the
contamination would have begun. Policyholders should therefore
contact both their current and previous brokers if they are sued for
environmental contamination. Third, both policyholders and brokers
should be very wary of destroying files, and therefore copies of
insurance policies. Policyholders should retain copies for their own
records, and brokers should consider offering duplicate copies to
their clients, as and when they destroy their own files. This is to
avoid a situation where, like the Surrey case, policyholders
have to pay some of the loss or damage (and even related defence
costs) themselves, because they cannot prove coverage for part of
the time period in question. Last, but not least, brokers should also
consider and advise their business clients, and the clients would be
well-advised to inquire of their brokers, about the potential
necessity and availability of environmental coverage under the
various specialized insurance products which are now available. For further
information on this, or other environmental law, insurance or other
business litigation issues, please contact Neo Tuytel (njt@cwilson.com
, 604.643.3180) or any of the
other Clark Wilson LLP lawyers listed on page 6.
STOCK PROMOTER A THIEF, SAYS ANONYMOUS3672:
As internet
bulletin boards and chatrooms become more and more popular with
internet users, so does the frequency with which users of these
services, generally under screen nicknames, post defamatory
messages. These messages can pose special challenges for internet
service providers (“ISPs”), who can find themselves subjected to
lawsuits anywhere in the world. The Tort of
Defamation Defamation has
traditionally been divided into two classes, slander (oral
statements) or libel (written statements). Libel is by far the most
common form of defamation, and has been extended to television
broadcasts, photographs and the like. This is the class of
defamation applicable to internet postings. In order to succeed
in a claim for defamation, the Plaintiff must prove that the words
complained of are defamatory, the words were published, and the
Plaintiff was the person defamed. Books have been written on this
subject, and it is impossible to cover all the nuances of this
seemingly simple test in an article of this type. However, in a
general sense, a defamatory statement is one which tends to lower a
person in the estimation of right thinking members of society, or
exposes that person to hatred, contempt or ridicule. While the
defamatory statement might specifically refer to the Plaintiff by
name, more often, and particularly in the internet context, the
Plaintiff is referred to by a nickname or by initials. In such
cases, it must be proven that an ordinary person would reasonably
understand the words to refer to the Plaintiff. While the first and
third branches of the test are essential to any claim in defamation,
it is the second branch of the test, publication, which is of
greatest significance to an ISP. Publication occurs where the
defamatory statement is communicated to a party other than the
Plaintiff. However, in the context of the internet, it is not always
obvious when the publication takes place, and indeed who the
publisher is. When does the
Publication Occur? In Carter v.
B.C. Federation of Foster Parents Assn. (2004), 27 BCLR (4th)
123 (SC), the BC Supreme Court considered the Godfrey case in the
context of a limitation defence raised by the operator of an
internet forum. The Court referred to American authorities holding
that access to the website did not constitute republication, and
distinguished Godfrey (a 1999 U.K. case) on the basis that English
legislation contained no discoverability rule as found in BC’s
Limitation Act. In BC, a limitation period begins to run when
the person has the means of knowing that an action lies. Thus the
Court held that to find that a separate publication occurs each time
the site is accessed would result in no limitation period ever
applying against an internet operator. The Court held that people
who know of a defamatory posting “simply cannot let the defamation
perpetuate itself without commencing their actions in the requisite
time” (at para. 95). Therefore, the rule suggested by the Carter
case is that in British Columbia, the publication will occur at
the later of the date the statement is first posted and the date on
which the Plaintiff discovers it. Who is the
Publisher? While the English
and Canadian rules differ in respect of republication, the two rules
are consistent in that regardless of the jurisdiction, the initial
posting of a defamatory statement on the internet will constitute a
publication. This raises the question of how to address an ISP who
simply provides a medium for users to post their comments. Larger
service providers which operate multiple chat rooms can receive
thousands of postings each day on many subjects, making it
impossible to review each posting for defamatory content. In the United
States, the problem has been addressed by the enactment of the
Communications Decency Act, which states that providers and
users of an interactive computer service are simply not treated as
publishers of information provided by another information content
provider. In Canada, however,
no such law exists, and internet service providers are left with the
common law of defamation. Long before the internet existed, the
common law recognized the defence of innocent dissemination. In the
Carter decision, the Court adopted an English ruling, circa
1900: if he
succeeds in shewing [sic] (1.) that he was innocent of any knowledge
of the libel contained in the work disseminated by him, (2.) that
there was nothing in the work or the circumstances under which it
came to him or was disseminated by him which ought to have led him
to suppose that it contained a libel, and (3.) that when the work
was disseminated by him, it was not by any negligence on his part
that he did not know that it contained libel, although the
dissemination of the work by him was prima facie publication of it,
he may nevertheless, on proof of the before-mentioned facts, be held
not to have published it. (Carter at para. 61) In Society of
Composers, Authors and Music Publishers of Canada v. Canadian
Association of Internet Providers, 2004 SCC 45, the Supreme
Court of Canada described the defence more succinctly: [The]
defence of innocent dissemination [is] sometimes available to
bookstores, libraries, news vendors, and the like who, generally
speaking, have no actual knowledge of an alleged libel, are aware of
no circumstances to put them on notice to suspect a libel, and
committed no negligence in failing to find out about the libel. It seems to flow
from these definitions that a service provider who merely provides
the medium for postings by strangers and plays no active editorial
role could, depending on the facts of the case, fit within the
defence and escape liability. It is significant
that in the Carter decision, the Defendant did not exercise
any editorial role in the impugned posting, and until becoming aware
of the defamatory comment, played only a passive role in the
publication of the defamatory material. Once aware of the
defamation, the operator took steps to close the forum and eliminate
the posting. Therefore, while those who perpetuate defamatory
comments by permitting such comments to remain at premises
controlled by them are liable even though they did not author or
authorize the original publication, a defendant who takes steps to
remove the postings upon becoming aware of them will be deemed to
have acted reasonably, and may not be liable for publication. The Law of
Privacy As anyone who has
visited a chat room, forum or bulletin board is aware, the vast
majority of users operate under personal screen names which provide
no clue as to the identity of the person posting the message. The
result of this is that in the majority of cases, the Plaintiff knows
only the identity of the internet provider, and not the person
posting the message. To further
complicate matters for Plaintiffs, most service providers have been
reluctant to divulge the names of their users. The most significant
reason for this reluctance is that both Federal (Personal
Information Protection and Electronic Documents Act) and
Provincial (BC’s Personal Information Protection Act) privacy
legislation prohibits the disclosure of personal information except
in specific circumstances. One of these circumstances is where the
disclosure is required by law. As a result, the
Plaintiff has two options. One is to sue the service provider and a
John Doe user, and to seek to compel the information through the
discovery process. The other way is to sue only John Doe, and then
apply to the Court for disclosure of the personal information under
the Rules of Court applicable to documents in the possession of
third parties (which include electronic documents). In either case,
the ISP will be drawn into the litigation. Resolution of the
Defamation Claim for the ISP Any ISP which
operates a forum or bulletin board runs the risk of being sued for
defamation arising out of anonymous postings. The challenge is in
how to extract themselves from these lawsuits with a minimum of time
and expense. In order to do this, it is essential that ISPs develop
policies for dealing with defamatory comments posted on their
websites. As the Carter
case suggests that reasonable conduct in dealing with defamatory
postings will exonerate an ISP, it is essential for the ISP to have
a complaints process in place. Once the complaint is received, the
ISP should take steps to remove the offending post. This procedure
is simple and inexpensive, and is the safest means of avoiding
liability. Further, if there are complaints relating to multiple
postings by the same user, it is prudent to suspend the user’s
account, for the same reason. Having such
policies in place will often allow the ISP to quickly bring an end
to litigation with a minimum of expense. Settlements will often
include an agreement by the ISP to take no position on an
application by the Plaintiff for disclosure of the true identity of
the John Doe user, and it is often possible to negotiate a release
agreement with the Plaintiff, whose main target is rarely the ISP.
Additional settlement terms may be necessary or desirable based on
the facts of the case, and should be explored with counsel on a case
by case basis. For further
information on this, or other related issues, please contact
Jonathan Hodes (jlh@cwilson.com,
604.643.3168) or any of the other Clark Wilson LLP lawyers listed on
page 6. THE FULL COURT PRESS VIA EMAIL
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