Turner v. Turner, 2011 ABQB 309

Court of Queen ’ s Bench of Alberta Citation: Turner v. Turner, 2011 ABQB 309 Date: 20110505 Docket: 0803 04515 Registry: Edmonton Between: Stacey William Turner and Stacey Turner Family Trust Applicants - and - Doyle Thomas Turner, Doyle Turner Family Trust , Stewart John Cameron, Stewart Cameron Family Trust and 724849 Alberta Ltd. Respondents _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.B. Veit _______________________________________________________

Summary [ 1 ] Invoking Rules 6.28 of the Alberta Rules of Court, the liquidator of 724849 Alberta Ltd. applies to restrict public access to the court hearing of the liquidator ’ s application for court approval of an offer for the purchase of some of 724's property and to temporarily seal the liquidator ’ s Fourth Report. [ 2 ] The application is granted.

While the open court principle applies in commercial litigation, here, the liquidator has satisfied the four tests for the granting of a confidentiality order - or, restricted court access order, as such orders are known in Alberta - established by the Supreme Court in Sierra Club of Canada : evidence establishes that if information about the marketing efforts to date and the terms of the current offer were made public but the offer did not lead to a vesting of the property in the offeror, the parties would lose a crucial market advantage and this constitutes a serious threat to a commercial interest; the commercial interest affected is an “ important commercial interest ” because, as noted in the Alberta Bill of Rights , there is a public interest in maintaining property rights including the right to maximize the market value of property; there is no reasonably alternative measure to a confidentiality order, at least on a temporary basis because all of the oral submissions and the written material deal directly with the subject matter of the application;

and, the salutary effects of the confidentiality order outweigh its nefarious effects since the restriction on public access to information about a private, unregulated, company is temporary and full public transparency will be achieved once the corporate property vests in the proposed purchaser. [ 3 ] Although all of the parties with a direct interest in the matter consented to a restricted court access order, the court has an independent obligation to ensure that the open court principle is respected.

Similarly, the fact that no representative of the media appeared at the hearing to contest the granting of a restricted court access order is not relevant to the issue of whether the applicant has met the required burden. Cases and authority cited [ 4 ] By the liquidator: Sierra Club of Canada v Canada (Minister of Finance) 2002 SCC 41 , [2002] S.C.J. No. 42 ; Robertson v Edmonton (City) Police Service (#8) 2004 ABQB 242 , [2004] A.J. No. 364 ; K. v E.K. 2004 ABQB 847 , [2004] A.J. No. 1322 ; Innovative Health Group Inc. v Calgary Health Region 2006 ABCA 7 , [2006] A.J. No. 50 . 1.

Background [ 5 ] In October, 2008, this court appointed a liquidator of the property of 724849 Alberta Limited, a private, unregulated, Alberta company. Since then, the liquidator has made concerted and sustained efforts to market the real property owned by the company.

The liquidator has now entered into an agreement of purchase and sale of the real property and applies to the court for approval of that arrangement. [ 6 ] In an affidavit filed in support of the application, the Senior Vice President of the liquidator states that the real property owned by 724849 Alberta Ltd. is unique property and has attracted a number of offers but that none of those offers has resulted in the sale of the property. The offer which is currently in the hands of the liquidator is subject to a number of conditions which have not yet been satisfied.

There is, therefore, the potential that the agreement may not close. If the agreement does not close, the liquidator will be required to re-market the property. The liquidator swears that “ in the interest of obtaining the highest and best sale of the [property] it is essential that the terms and conditions of the agreement remain confidential until the [property] has vested in the purchaser ” . [ 7 ] The liquidator advises that it has confirmed with the Clerk of the Court that notice of today ’ s application was posted as required by the Rules of Court.

No representative of the media appeared at the hearing. [ 8 ] The Alberta Bill of Rights includes the following sections: 1 It is hereby recognized and declared that in Alberta there exist without discrimination by reason of race, national origin, colour, religion or sex, the following human rights and fundamental freedoms, namely: (

a) the right of the individual to liberty, security of the person and enjoyment of property , and the right not to be deprived thereof except by due process of law; (

b) the right of the individual to equality before the law and the protection of the law; ... 2 Every law of Alberta shall, unless it is expressly declared by

an Act of the Legislature that it operates notwithstanding the Alberta Bill of Rights , be so construed and applied as not to abrogate, abridge or infringe or to authorize the abrogation, abridgment or infringement of any of the rights or freedoms herein recognized and declared. (Emphasis added)

[ 9 ] The court granted the restricted court access order as requested at the hearing, and undertook to give reasons, to follow. These are those reasons. 2.

While the open court principle applies to commercial as well as to other legal proceedings, confidentiality orders may issue in commercial matters where the applicant for a restricted court access order satisfies the tests established by the Supreme Court in Sierra Club [ 10 ] As the Supreme Court of Canada pointed out in Sierra Club , although the open court principle applies to all court proceedings, a court can, in appropriate circumstances, restrict public access to the court system through the use of a confidentiality order. [ 11 ] With respect to commercial matters, the Supreme Court has established four tests which an applicant must satisfy in order to obtain a confidentiality order: A confidentiality order under Rule 151 should only be granted when: (

a) such an order is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonably alternative measures will not prevent the risk; and (

b) the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible court proceedings. 54 As in Mentuck, I would add that three important elements are subsumed under the first branch of this test.

First, the risk in question must be real and substantial, in that the risk is well grounded in the evidence, and poses a serious threat to the commercial interest in question. 55 In addition, the phrase "important commercial interest" is in need of some clarification. In order to qualify as an "important commercial interest", the interest in question cannot merely be specific to the party requesting the order; the interest must be one which can be expressed in terms of a public interest in confidentiality.

For example, a private company could not argue simply that the existence of a particular contract should not be made public because to do so would cause the company to lose business, thus harming its commercial interests. However, if, as in this case, exposure of information would cause a breach of a confidentiality agreement, then the commercial interest affected can be characterized more broadly as the general commercial interest of preserving confidential information. Simply put, if there is no general principle at stake, there can be no "important commercial interest" for the purposes of this test.

Or, in the words of Binnie J. in F.N. (Re) , [2000] 1 S.C.R. 880 , 2000 SCC 35 , at para. 10 , the open court rule only yields "where the public interest in confidentiality outweighs the public interest in openness" (emphasis added). 56 In addition to the above requirement, courts must be cautious in determining what constitutes an "important commercial interest". It must be remembered that a confidentiality order involves an infringement on freedom of expression.

Although the balancing of the commercial interest with freedom of expression takes place under the second branch of the test, courts must be alive to the fundamental importance of the open court rule. See generally Muldoon J. in Eli Lilly and Co. v.

Novopharm Ltd. (1994), 56 C.P.R. (3d) 437 (F.C.T.D.) , at p. 439 . 57 Finally, the phrase "reasonably alternative measures" requires the judge to consider not only whether reasonable alternatives to a confidentiality order are available, but also to restrict the order as much as is reasonably possible while preserving the commercial interest in question. [ 12 ] Each of these tests will be considered in turn. However, overall, the court recognizes the fundamental importance of the open court principle.

In particular, although all of the parties with a direct interest in the matter consented to a restricted court access order, the

court has an independent obligation to ensure that the open court principle is respected. Similarly, the fact that no representative of the media appeared at the hearing to contest the granting of a restricted court access order is not relevant to the issue of whether the applicant has met the required burden.

a) Has the applicant established a serious threat to a commercial interest? [ 13 ] The affidavit of the senior vice president of the liquidator establishes that public access to the evidence outlining the substance of the agreement of purchase and sale would pose a serious threat to the commercial interest of all the parties, including the parties to the liquidation and the offeror: if that information were revealed, the parties would lose their market advantage of requiring all bidding parties to make their bids without knowing the fate of other bids.

b) Has the applicant established that the commercial interest which is threatened is an “ important commercial interest ” , i.e. that there is a general commercial interest at stake? [ 14 ] Having in mind the foundational character of the open court principle and the constitutional protection of the freedom of speech, it is obvious that not every commercial interest deserves recognition as an important commercial interest.

As the Supreme Court put it in Sierra Club : In order to qualify as an "important commercial interest", the interest in question cannot merely be specific to the party requesting the order; the interest must be one which can be expressed in terms of a public interest in confidentiality.

For example, a private company could not argue simply that the existence of a particular contract should not be made public because to do so would cause the company to lose business, thus harming its commercial interests. [ 15 ] I have concluded that the situation here presents a public interest in confidentiality. [ 16 ] In coming to that conclusion, I have considered, first, that while there is no Charter protection of property rights that establishes a direct opposition to the constitutional right of freedom of speech, the Supreme Court has told us in Sierra Club that a Charter protected interest is not a necessary pre-requisite to a confidentiality order. [ 17 ] In any event, in Alberta, there is a quasi-constitutional protection of the enjoyment of property rights in the Alberta Bill of Rights , which remains in force, alongside the Charter.

The identification of property rights in the Alberta Bill of Rights testifies to the status of property rights in this province.

One aspect of the enjoyment of property is the right to dispose of it in a way that will maximize benefit; a common law rule - here the requirement of public access to discussion and documents while negotiations are still in progress - that attempted to remove that right must be applied in the narrowest manner possible. [ 18 ] There may be substantive protections for property rights in the Canadian Bill of Rights , but it is not necessary for me to explore that area. [ 19 ] Apart altogether from Charter or Bill of Rights considerations, there has long been a recognition in the law of the confidentiality of negotiations leading to the establishment of rights: in a somewhat analogous situation, a tender process can legitimately protect the confidentiality of bids until a decision has been made to accept one bid.

Indeed, overall, the law cloaks negotiations with confidentiality and only requires disclosure of settled arrangements. That result will be achieved here.

c) Has the applicant established that no reasonably alternative measures would prevent the risk to the important commercial interest?

[ 20 ] The applicant has established that there are no reasonably alternative measures that would prevent the risk to their interests. [ 21 ] In coming to that conclusion, I have considered, mainly, that the information which is the potential subject matter of the confidentiality order is not collateral to the application, but is of the essence of the application. The application is to approve the proposed sale; all the discussion at the hearing involved matters pertaining to the proposed sale and the 4 th report of the liquidator deals only with the proposed sale. Therefore, no editing or redacting is possible.

Nor is this a situation where an “ eyes only ” restriction could operate. [ 22 ] At the same time, the applicant ’ s proposal that the confidentiality order should apply only until the proposed sale has been completed narrows the reach of the order in a way which balances public access with the commercial interest.

d) Has the applicant established that the salutary effects of the confidentiality order outweigh its deleterious effects? [ 23 ] The applicant has established that the salutary effects of the confidentiality order outweigh its deleterious effects. [ 24 ] In coming to that conclusion, I have noted that the deleterious effect of the confidentiality order is, essentially, to prevent public access to private negotiations until those negotiations have resulted in a completed sale. [ 25 ] On the other hand, the salutary effect of the restricted court access order is to protect the interests of all of those involved in the litigation: all of the parties to the litigation have agreed with the proposed offer, the implementation of which would be in their mutual interest. [ 26 ] In other words, the context of “ litigation ” , which is the crux of the open court principle, is only peripheral here.

If there had been no litigation commenced by the parties, if they all had agreed amongst themselves on how best to deal with the property in which they had joint interests, they would not have had to ask the court to resolve their dispute and the issue of the open court principle would not have needed to be addressed. At the moment, the parties to the litigation are all in agreement about how their mutually owned property should be dealt with; therefore, at the moment, there is no prospect of a trial.

In that sense, the granting of the order will not affect the fairness of a trial. [ 27 ] Overall, in the circumstances here, the temporary restriction of access to the court process does not materially impinge upon the open court principle. Heard on the 29 th day of April, 2011. Order granted on the 29 th day of April, 2011, Reasons issued at the City of Edmonton, Alberta this 4 th day of May , 2011.

J.B. Veit J.C.Q.B.A. Appearances: Ray C. Rutman and Lorena K. Harris, Fraser Milner Casgrain LLP for Grant Thornton Limited (Liquidator) James R. Vaage, Emery Jamieson LLP for Stacey Turner and Stacey Turner Family Trust Brian W.L. Tod, Q.C., Miller Thomson LLP for Doyle Turner and Doyle Turner Family Trust Brock I. Dagenais, for Stewart Cameron and Stewart Cameron Family Trust