Document Disclosure Principles

This case provides a great overview of the principles for document disclosure.  McLeod v Balakrishnan, 2018 BCSC 908 (CanLII)

`The principles to be considered on applications for document disclosure were summarized in Marsh Canada Limited v. BFL Canada Insurance Services Inc., 2014 BCSC 1171, beginning at para. 65:

[65]      The Rules provide a two-tier process for document disclosure:

(a)        Disclosure under Rule 7-1(1) requires “all documents that are or have been in the party’s possession or control and that could, if available, be used by any party of record at trial to prove or disprove a material fact”. This standard of relevance is significantly narrower than Peruvian Guano, and presents a necessary limitation to the application of the 19th century test to 21st century records: More Marine Ltd. v. Shearwater Marine Ltd., 2011 BCSC 166 at paras. 10-11.

(b)        Disclosure under Rule 7-1(11)-(14) requires documents that “relate to any or all matters in question in the action”. This is substantially the Peruvian Guano test, identifying any document that relates to a matter in question in the action which not only would be evidence upon any issue, but also which contains information which may, not which must, either directly or indirectly, enable the party either to advance his own case or to damage the case of his adversary: Kaladjian v. Jose, 2012 BCSC 357 at paras. 44-45, citing with approval Przybysz v. Crowe, 2011 BCSC 731 at paras. 27-29.

[66]      Furthermore, by applying the proportionality principle embodied in Rule 1-3(2), an attempt is made to balance the burden of producing the documents in terms of time, cost and effort against their materiality and probative value. Proportionality does not only relate to monetary quantification, it also relates to the importance of the issue in question: Isman v. The City of New Westminster, 2011 BCSC 1066 at para. 14.

[67]      The following principles also apply:

(a)        Full and complete disclosure between or among litigants prior to trial is essential to the truth-seeking function of the litigation process and the proper administration of justice: Nikolic v. Olson, 2011 BCSC 125 at para. 93.

(b)        It is the pleadings that determine relevance: Burgess v. Buell Distribution Corporation, 2012 BCSC 1494 at paras. 16-17.

(c)        The interests of justice may require production of relevant documents, notwithstanding the high interest of a party in keeping it confidential: A.M. v. Ryan, [1997] 1 S.C.R. 157 at para. 37.

(d)        A party asserting that a document is privileged bears the onus of establishing the privilege: Hamalainen v. Sippola (1991), 62 B.C.L.R. (2d) 254 (C.A.) at para. 19.

(e)        The removal of the Peruvian Guano “train of inquiry” test of relevance will generally require a party to provide some evidence to support an application for additional documents where a demand is made under Rule 7-1(11) or Rule 7‑1(18): Kaladjian v. Jose at para. 62.

[68]      The plaintiff says that its demand for documentary disclosure relates to the first tier of disclosure in that what it now seeks should have been produced at first instance. Be that as it may, I will consider both the plaintiff’s and defendants’ applications from the broader second tier of the process referred to in para. 65(b) above.

[69]      The principles that apply in respect of the balance between disclosure and confidentiality were summarized in Altec Design Group Ltd. v. Motion Works Inc., [1992] B.C.J. No. 2451 (S.C.):

  • The necessity for complete disclosure in litigation cases supersedes the fact that a party may lose a competitive advantage when disclosure is made. Forestral Automation Ltd. v. R.M.S. Industrial Controls Inc., Dunstan, Braun and Schroeder(1977), 4 B.C.L.R. 219, 80 D.L.R. (3d) 341, 35 C.P.R. (2d) 114.
  • In maintaining a balance between disclosure and confidentiality, the governing principal is to lean in favour of openness and disclosure. Deveron-Hercules Inc. v. Gill et al, 21 C.P.C. (2d) 455.
  • The party viewing the confidential materials shall give an undertaking to the court and the opposite party, the terms of which may vary from case to case. GEAC Canada Ltd. et al v. Prologic Computer Corp., 24 C.P.C. (3d) 566.
  • The party whose documents are being disclosed to be examined by an expert is entitled to have a representative present during the examination. GEAC Canada Ltd.
  • An order preventing counsel from showing relevant documents to his client should only be granted in exceptional circumstances. Deprenyl Research Ltd. et al v. Canguard Health Technologies Inc. et al, 41 C.P.R. (3d) 288.
  • The onus is on the party requesting the restriction to establish a legitimate reason for the restriction. Deprenyl Research Ltd.
  • In matters that do not require technical expertise, the parties may be required to produce the documents to a third party for the examination and report to the court. Webster v. Mastercraft Development Corporation, (1991) 55 B.C.L.R. (2d) 121.
  • In instances in which the probative value of the documents is not sufficiently great to outweigh the real and very considerable averse affect of disclosing the trade secret, disclosure ought not to be ordered. W.L. Properties Ltd. v. W.R. Grace & Co. of Canada Ltd.(1992), 70 B.C.L.R. (2d) 180.

Also, when document disclosure is inadequate prior to an Examination for Discovery, these are considerations which were highlighted in JTG Management Services Ltd. v. Bank of Nanjing Co. Ltd., 2017 BCSC 242 (CanLII):

  • An order under R. 7-1(8), requiring an affidavit verifying a party’s list of documents, is a discretionary order.
  • Where document disclosure is inadequate and where it is evident that relevant documents have been omitted, it is appropriate for the court to require an affidavit of documents verifying its list: Synergy Management Group Ltd. v. Walker Systems Corp., [1992] B.C.J. No. 2109 (S.C.); Copithorne v. Benoit, 2010 BCSC 130 (CanLII) at paras. 11-14. 
  • An affidavit of documents is required where document production is inadequate or dilatory, or where a court considers relevant documents have been omitted. 
  • If this issue has not been established or satisfied, it may be further addressed on discovery.
  • This approach was outlined in Han v. Choi, 2008 BCSC 1621 (CanLII) at para. 32, where Griffin J. noted that there would be little prejudice to the plaintiffs if the defendants did not file affidavits describing their document production efforts because they could be questioned about such efforts on discovery.

Also, if document disclosure is inadequate, special costs may be ordered.  See Shawnigan Residents Association v British Columbia (Director, Environmental Management Act), 2018 BCSC 121 (CanLII)

[59]        As pointed out by Justice Lambert in Garcia, it is sufficient that the conduct of a party against whom an award of special costs is claimed be worthy of reproof. The conduct need not be scandalous or outrageous to warrant an award of special costs. In this case I am satisfied that CHH failed to make prompt and proper disclosure of documents in its control that established that there was a partnership-like relationship with the principals of Active Earth. I also conclude that the affidavits filed in response to SRA’s initial document disclosure application were misleading. In my view this is conduct that is worthy of reproof.

[60]        I therefore conclude that an award of special costs against CHH is warranted.

A review of Special Costs:

The leading case with respect to special costs is Garcia v. Crestbrook Forest Industries Ltd. (1994), 1994 CanLII 2570 (BC CA), 9 B.C.L.R. (3d) 242 (C.A.), [1994] B.C.J. No. 2486:

17        Having regard to the terminology adopted by Madam Justice McLachlin in Young v. Young, 1993 CanLII 34 (SCC), 84 B.C.L.R. (2d) 1, to the terminology adopted by Mr. Justice Cumming in Fullerton v. Matsqui, 74 B.C.L.R. (2d) 311, and to the application of the standard of “reprehensible conduct” by Chief Justice Esson in Leung v. Leung, 77 B.C.L.R. (2d) 314, in awarding special costs in circumstances where he had explicitly found that the conduct in question was neither scandalous nor outrageous, but could only be categorized as one of the “milder forms of misconduct” which could simply be said to be “deserving of reproof or rebuke”, it is my opinion that the single standard for the awarding of special costs is that the conduct in question properly be categorized as “reprehensible”. As Chief Justice Esson said in Leung v. Leung, the word reprehensible is a word of wide meaning. It encompasses scandalous or outrageous conduct but it also encompasses milder forms of misconduct deserving of reproof or rebuke. Accordingly, the standard represented by the word reprehensible, taken in that sense, must represent a general and all encompassing expression of the applicable standard for the award of special costs.

[44]        Special costs may be awarded only for conduct that occurred in the course of the litigation. Pre-litigation conduct, no matter how egregious, cannot give rise to an award of special costs: Smithies Holdings Inc. v. RCV Holdings Ltd., 2017 BCCA 177 (CanLII 

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