MICHAEL P. RITTER v. NEWPORT PACIFIC FINANCIAL GROUP S.A., 2003 ABQB 282

Ritter v. Hoag, 2003 ABQB 282 Date: 2003 0328 Action No. 0203 17936 IN THE COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL DISTRICT OF EDMONTON BETWEEN: MICHAEL P. RITTER and NEWPORT PACIFIC FINANCIAL GROUP S.A. Plaintiffs - and - PAUL DOUGLAS HOAG, SUSAN LORRAINE EDWARDS, SUAN KIM GEORGINA LEE and HOWARD YEUNG Defendants AND BETWEEN: PAUL DOUGLAS HOAG, SUSAN LORRAINE EDWARDS, and SUAN KIM GEORGINA LEE Plaintiffs by Counterclaim - and - MICHAEL P. RITTER, NEWPORT PACIFIC FINANCIAL GROUP S.A. ALLAN F. R. MAKSYMEC and DERIS L. SPENCER Defendants by Counterclaim _______________________________________________________

MEMORANDUM OF DECISION of the HONOURABLE MR. JUSTICE BRIAN R. BURROWS _______________________________________________________ APPEARANCES: Jeffery R. W. Rath, Rath & Company for Newport Pacific Financial Group S.A., Allan F. R. Maksymec and Deris L. Spencer Robert M. Curtis, Q.C. and Frank P.K. Friesacher, McCuaig Desrosher for Paul Douglas Hoag, Susan Lorraine Edwards, and Suan Kim Georgina Lee Grant S. Dunlop, Ogilvie LLP for Howard Yeung [ 1 ] I issued Reasons for Judgment in respect of several applications made in this case managed action on February 6, 2003.

On February 13, before a formal order had been entered I issued Additional Reasons correcting an error I had made in the February 6, 2003 reasons. [ 2 ] On February 26 the parties appeared before Berger J.A. of the Alberta Court of Appeal in connection with an application by the plaintiffs for a stay of my order pending the plaintiffs’ appeal of it.

The Reasons for Decision issued by Berger J.A. ( 2003 ABCA 74 ) indicate that at that hearing the plaintiffs abandoned at least a portion of their application, the portion relating to my order to unseal the court file. [ 3 ] Those reasons also indicate that other matters were discussed before Berger J.A.

He said: (para. 4) The one remaining possibility, and it could only occur at this juncture with the concurrence of all concerned, is that you go back to Burrows, J., and advise him that he might not have been informed that there were, allegedly, interceptions of private communications and that you are concerned about these other documents being disclosed to third parties. You have seen them, you have them, they are under seal. I do not know whether copies were made. I have read the material and I am in some doubt as to whether copies were or were not made or where those copies might be.

Apart from that, the concern seems to be that these documents would be released. You might ask Burrows, J. whether he intended that the scope of his Order would embrace these intercepted communications, whether lawfully intercepted or not. It seems to me that this is an approach that you might wish to avail yourselves of. I leave that in your good hands.

If you would like time to discuss this, I am happy to take a break and come back in ten minutes and you can tell me if you have agreed on that course of action or not. [ 4 ] The reasons indicate that after the adjournment counsel advised Berger J.A. that they had agreed that, at his direction, counsel would appear before me and request that I revisit my previous order, “mindful of the allegations which have been disclosed in Court today”. Berger J.A. indicated it would be open to me to amend my previous order. He also indicated he was seized with the motion that was before him.

[ 5 ] When counsel appeared before me on March 4, 2003 in connection with other applications, they spoke to this matter. I was advised that the plaintiffs’ concern was as to the scope of the amendment I ordered to paragraph 19 of the ex parte injunction granted by Gallant J. on September 19, 2002 in this action.

I gather the suggestion is that if I had been aware of certain information which had been revealed on cross-examination on affidavits held after the application before me (or in respect of which the transcript was not available at the time of the application before me) I might not have made the order I did. [ 6 ] I directed that counsel provide me with written submissions in connection with the plaintiffs’ reconsideration application. They have done so. I have read them. [ 7 ] For convenience I will set out both the original and the amended paragraph 19 of the ex parte injunction order: Original Paragraph 19: 19.

Until further order of this Honourable Court, the Clerk of the Court shall seal the Court’s file on this matter. The Defendants Hoag, Edwards, Lee and Yeung are enjoined from disclosing to any person, other than their counsel, any documents in this action or any information about third parties know ( sic) to them through their employment by the Plaintiff Newport or by these proceedings. Similarly counsel for the Defendants shall not disclose to any third party documents filed in this action or any information regarding third parties known to them through this action. Amended Paragraph 19: 19.

The Defendants Hoag, Edwards, Lee and Yeung are enjoined from disclosing to any person, other than their counsel, any information about third parties known to them through their employment by the Plaintiff Newport, other than in the course of defending this action. [ 8 ] In paragraph 11 of his written submissions Mr. Rath’s submits that Paragraph 19 should be restored to its original form because, he suggests, the amendments I made did not arise out of the application that was before me on January 22. I disagree. [ 9 ] The original paragraph 19 contained 3 sentences.

The changes I ordered to paragraph 19 were to remove the first and third sentence and alter the second. In my view all of these were within the scope of the applications before me at the time. [ 10 ] The first sentence sealed the court file. The January 22 application clearly was directed to whether or not that sealing should continue. [ 11 ] The third sentence enjoined counsel for the defendants from disclosing documents and information to third parties.

That was also clearly challenged in the defendants’ Notice of Motion before me on January 22 in which the defendants sought “an Order specifically permitting the Defendants to discuss any aspect of this matter with any party they do desire at any time, without restrictions of any kind.” [ 12 ] As to the second sentence, I removed the words “documents in the action” and “or by these proceedings” and added the words “other than in the course of defending this action”.

The plaintiffs’ Notice of Motion had sought confirmation and continuation of the original order’s injunction of the defendants “from filing any documents containing information that is highly specialized or is special or peculiar to the business of the Plaintiff Newport or that they obtained through their employment with or in conjunction with services provided to the Plaintiff Newport”. I determined they should not have that relief.

The changes to the second sentence of paragraph 19 were necessary to deny it to them. [ 13 ] I therefore reject the plaintiffs’ submission that paragraph 19 should be restored to its original wording.

[ 14 ] In the alternative the plaintiffs seek to have me restore at least the words “documents in this action” to the second, no only, sentence of paragraph 19. They express their concern in paragraphs 9 and 10 of Mr. Rath’s written submissions: By deleting references to “documents in this action”, the Defendants would be free to communicate with the world through documents filed in this action that would be subject to Court privilege. The Plaintiffs would likely not have a claim against them for these communications, if they were made under the cloak of a court document.

The variation of Paragraph 19 also allows them to disclose stolen documents, which include unlawfully intercepted emails, some of which are privileged and confidential. [ 15 ] I expressed my reasons relative to this point in paragraphs 41 to 50 of my Reasons for Judgment dated February 6, 2003. For convenience I set out those paragraphs below: Defendants’ Confidentiality Obligations [41] The plaintiffs submit that the defendants owe confidentiality obligations to the plaintiffs.

They do not submit, however, that the existence of those duties restricts the defendants in putting materials before the court in this action. Clearly such a submission would be wrong. Obviously a plaintiff cannot sue a defendant and then raise the defendant’s confidentiality obligation to prevent the defendant from effectively defending the action. This would unacceptably hinder the defendant’s “capacity to make full answer and defence or, expressed more generally, the [defendant’s] right, as a civil litigant, to present its case”: Sierra Club of Canada v.

Canada (Minister of Finance), 2002 SCC 41 (CanLII) , [2002] SCC 41 , 211 D.L.R. (4 th ) 193 , para 50 . [42] Rather the plaintiffs submit the existence of the defendants’ confidentiality obligations justifies sealing the file or expunging the confidential information from the publicly available copy of court file materials. [43] In my view, having disposed of the privilege and foreign law submissions advanced by the plaintiffs, whether or not confidential information filed in these proceedings should be sealed does not depend on whether or not the defendants owe the plaintiffs a duty to keep it confidential.

Rather, it depends on the factors considered in Sierra Club, to which I now turn. Sierra Club Case [44] In the Sierra Club case, the defendant Canada sought an order under the Federal Court Rules of Court providing that only the parties and the court would have access to certain documents it wished to put in evidence.

The order would have prevented the dissemination of the confidential documents to the public. [45] Iacobucci J., writing for the court, observed that the defendant’s need to keep the documents confidentiality put its right to make full answer and defence in conflict with the principle of open and accessible court proceedings. Of the latter he said (para. 52): The importance of public and media access to the courts cannot be understated, as this access is the method by which the judicial process is scrutinized and criticized.

Because it is essential to the administration of justice that justice is done and is seen to be done, such public scrutiny is fundamental. The open court principle has been described as “the very soul of justice,” guaranteeing that justice is administered in a non-arbitrary manner. [46] He adopted the following test to balance these conflicting interests (para. 53):

A confidentiality order under [Federal Court] R. 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. [47] He further clarified the test (paras. 54 to 57): . . . 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. . . .

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 the 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. . . . the open court rule only yields “where the public interest in confidentiality outweighs the public interest in openness”. . . . . . . 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. [48] Obviously the Federal Court Rule interpreted in Sierra Club does not apply in this case.

However, the principles addressed in the case should be applied to the plaintiffs’ application for essentially the same kind of order as the Rule contemplated. [49] Applying these considerations to the application before me, I question whether the plaintiffs have established that an important commercial interest, of the type described by Iacobucci J., is present here. Mr.

Ritter’s affidavit focuses more on the consequences to Newport’s business of a public disclosure of client information than on consequences to the clients or, more importantly, the public interest. [50] But whether or not the first branch of the test, the necessity branch, is satisfied, the second branch is not. I have already concluded in the context of the plaintiffs’ claim of privilege that the public’s interest in open proceedings outweighs Newport’s interest in keeping their clients’ identity and business confidential (para. [31] above).

That conclusion, and the considerations that lead me to it, apply with equal force here. [ 16 ] My reasoning depended on whether the plaintiff’s were seeking to protect “an important commercial interest” and, if they

were, whether that interest outweighed the public’s interest in open proceedings. Nothing about how the defendants obtained documents which the plaintiffs fear might be filed in the action, whether it be by interception of private e-mails or otherwise, and nothing about their contents, affects my application of those Sierra Club case principles. The “new” information simply does not impact my reasoning. [ 17 ] I am therefore not inclined to change my order. WRITTEN submissions filed March 24 and 26, 2003 . DATED at Edmonton, Alberta, March 28, 2003. __________________________ J.C.Q.B.A.