A-550-92
Labatt Brewing Company Limited (Appellant)
(Defendant)
V.
Molson Breweries, a Partnership, and Miller
Brewing Company (Respondents) (Plaintiffs)
INDEXED AS: ifOLSON BREWER/ES V. LABATT BREW/NG CO.
(CA.)
Court of Appeal, Heald, Mahoney and MacGuigan
JJ.A.—Ottawa, May 22 and June 3, 1992.
Practice — Discovery — Production of documents — Confi
dential or secret information — In trade mark case concerning
passing off and infringement, Court granting ex parte interloc
utory protective order allowing respondents to designate confi
dential industrial information (concerning production, market
ing, advertising, sales, bookkeeping and auditing) as secret, to
be disclosed to Court only — Appellant contending order con
trary to rules of natural justice, bringing administration of jus
tice into disrepute — Appeal from protective order allowed —
General rule: parties and counsel should not be denied access
to material relevant to Court's decision — However, in excep
tional cases, openness curtailed to protect confidentiality of
documents by diclosing documents to parties' counsel on
undertaking counsel will maintain confidentiality even with
respect to clients — Blanket order of secrecy as well as confi
dentiality, granted ex parte, far from minimum trenching on
principle of openness required by law — Order unjustified —
Moreover, Motions Judge in effect creating new, more rarefied
category of secret, as opposed to confidential documents, for
which special considerations apply — No precedent for new
"secret" category and no need to establish one.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Federal Court Rules, C.R.C., c. 663, R. 337(5).
CASES JUDICIALLY CONSIDERED
APPLIED:
Scott v. Scott, [1913] A.C. 417 (H.L.); Attorney General
of Nova Scotia et al. v. Maclntyre, [1982] 1 S.C.R. 175;
(1985), 49 N.S.R. (2d) 609; 132 D.L.R. (3d) 385; 96
A.P.R. 609; 65 C.C.C. (2d) 129; 26 C.R. (3d) 193; 40
N.R. 181; C.D. v. M.N.R., [1991] 2 F.C. 412; (1991), 91
DTC 5210 (C.A.); Hunter v. Canada (Consumer and Cor
porate Affairs), [1991] 3 F.C. 186; (1991), 29 C.P.E. (3d)
321; 35 F.T.R. 75 (C.A.); Official Solicitor v. K., [1963] 3
All E.R. 191 (H.L.); Edmonton Journal v. Alberta (Attor-
ney General), [1989] 2 S.C.R. 1326; (1989), 103 A.R.
321; 64 D.L.R. (4th) 577; [1990] 1 W.W.R. 577; 71 Alta.
L.R. (2d); 45 C.R.R.I; 102 N.R. 321; Pacific Press Ltd. v.
Canada (Minister of Employment and Immigration),
[1991] 2 F.C. 327; (1991), 127 N.R. 325 (C.A.); Deprenyl
Research Ltd. v. Canguard Health Technologies Inc.,
T-3003-91, Strayer J., order dated 17/2/92, F.C.T.D., not
yet reported.
DISTINGUISHED:
Kimberly-Clark Corp. v. Proctor & Gamble Inc. (1990),
31 C.P.R. (3d) 207 (F.C.T.D.).
APPEAL from an interlocutory order (T-724-92,
Cullen J., order dated 22/4/92, F.C.T.D., not
reported) made by the Motions Judge allowing the
respondents to designate documents as "secret", to be
disclosed to the Court only. Appeal allowed.
COUNSEL:
James D. Kokonis, Q.C. and Thomas R. Kelly
for appellant (defendant).
John S. Macera and Elizabeth G. Elliott for
respondent (plaintiff) Molson Breweries, a Part
nership.
Gordon F. Henderson, Q.C. for respondent
(plaintiff) Miller Brewing Company.
SOLICITORS:
Smart & Biggar, Ottawa, for appellant (defen-
dant).
Macera & Jarzyna, Ottawa, for respondent
(plaintiff) Molson Breweries, a Partnership.
Cowling, Strathy & Henderson, Ottawa, for
respondent (plaintiff) Miller Brewing Company.
The following are the reasons for judgment ren
dered in English by
MACGUIGAN J.A.: This is an appeal from a portion
of an interlocutory order of April 22, 1992.
The action, for passing off and trademark infringe
ment, was brought by the respondents as plaintiffs on
March 30, 1992. In the action, the respondents seek
injunctions and monetary relief against the appellant
arising from its introduction of "Labatt Genuine
Draft", a beer allegedly similar in packaging and
labelling to a "Genuine Draft" beer product of the
respondents.
By order of April 14 [T-724-92, per Cullen J.], all
proceedings were stayed pending production by the
respondents of certain documents of title that formed
the basis of certain pleas in their statement of claim.
By notice of motion of April 22, the respondents
made application for a protective order, which was
heard and decided the same day on the ground that
written agreements between the two respondents con
tained confidential information which does not in any
way relate to the subject of the present action. This
confidential information was said to consist of beer
recipes and protection techniques, marketing and
advertising strategies and expenditures, sales per
formance objectives and projections, bookkeeping
and auditing provisions, and product research mat
ters.
The appellant appeals against paragraph 1 of the
April 22, 1992, order made by the Motions Judge,
which reads as follows (Appeal Book, at pages 74-
75):
1 (a) In this Order, the term "secret" information or "secret
document" means any information or documents or por
tion of document respectively, which is designated by any
party as secret.
(b) Secret documents will be disclosed only to the Court
unless otherwise ordered by the Court and portions of the
documents designated as secret will be deleted by the
designating party from all documents produced or ten-
dered in evidence. No document shall be accepted as
secret until it has been so designated by an Order of the
Court, said application to be made ex parte.
The appellant also appeals against paragraph 12,
but only to the extent that it makes reference to
"secret documents" ("Secret documents and confi
dential documents").
On April 23 [T-724-92, per Cullen J.] an applica
tion was made before the same Motions Judge to vary
the order of April 22, pursuant to Rule 337(5) [Fed-
eral Court Rules, C.R.C., c. 663]. This application
was dismissed.
The Motions Judge gave no reasons for his order
of April 22, but his reasons for the order of April 23,
when the appellant sought reconsideration of the first
order, throw some light on his approach to it (Appeal
Book, at pages 85-86) [at pages 2-3 of the reasons]:
The defendant has, in my view, failed to bring himself within
the provisions of Rule 337(5) in that paragraph (a) is not appli
cable as no reasons had been given and paragraph (b) would
require that some matter should have been dealt with and had
been overlooked or accidentally omitted. That was not the
case. Given the fact that I was allowing certain documents to
be called "secret" and to be filed in a file labelled with that
word, it seemed that the determination should not be made by
counsel simply declaring documents secret and putting them in
the file but rather that counsel would be required to establish to
the satisfaction of the Court that such a document or docu
ments be labelled "secret". Counsel for the plaintiffs argued
most strenuously at the hearing on April 22, 1992 that their
clients should not be required to produce documents that were
clearly irrelevant and cited, for example, that the recipe for the
product made by their clients was clearly irrelevant to the
issues at hand. However, I was satisfied that other reasons
might be advanced why a document should be placed in the
secret file and I did not wish to fetter colleagues who may be
called upon to make these determinations.
For the reasons stated above I do not feel that the defendant
has brought himself within the requirements of Rule 337(5)(b).
In my view, deleting the phrase dealing with ex porte applica
tions would be changing my Order which I arrived at after a
somewhat lengthy hearing and a good deal of thought follow
ing the hearing. Also, incorporating the phrase sought here by
counsel for the defendant would have changed the intention,
and yes, the meaning of my Order.
It was argued by counsel for the defendant that counsel for
the plaintiffs had not argued in favour of an ex parte applica
tion but it was clear to me at least that certainly counsel for
Miller Brewing Company emphasized that very point, namely
that his clients would not wish the irrelevant material such as
the recipe to be given even to counsel for the other side.
On April 28 [T-724-92, per Cullen J.] the respon
dents obtained an ex parte order designating docu
ments or portions of documents as secret. On April
29, in compliance with the orders of the Motions
Judge, the appellant was provided with copies of all
documents of title referred to in paragraphs 5, 6 and
16 of the statement of claim, with those portions des
ignated as secret deleted. The stay of proceedings
was thus lifted as of April 29.
The appellant contended before us that the ex parte
procedure provided for in the order of April 22 is
contrary to the rules of natural justice and would
bring the administration of justice into disrepute. It
also argued that the evidence was insufficient to jus
tify the granting of the order.
The leading English authority on confidentiality at
common law is Scott v. Scott, [1913] A.C. 417
(H.L.), where Viscount Haldane L.C. laid down the
broad principle that the courts must administer justice
in public. He qualified this general principle by nar
rowly defined exceptions based on "a yet more fun
damental principle that the chief object of Courts of
justice must be to secure that justice is done" (at page
437). The relative priorities of the two principles
have been somewhat differently stated in Canada,
where Dickson J. (as he then was) wrote in Attorney
General of Nova Scotia et al. v. Maclntyre, [1982] 1
S.C.R. 175, at pages 186-187:
In my view, curtailment of public accessibility can only be
justified where there is present the need to protect social values
of superordinate importance.
Hence Décary J.A. for this Court in C.D. v. M.N.R.,
[1991] 2 F.C. 412, at page 417 declared that Scott is
the law in Canada only to the extent that it has been
adopted in Maclntyre.
Décary J.A., in reviewing confidentiality at com
mon law for the majority of this Court in Hunter v.
Canada (Consumer and Corporate Affairs), [1991] 3
F.C. 186, at pages 202-203 put the relevant principles
this way:
Confidentiality at common law
It can be safely said that three fundamental premises on
which our judicial system is based, are (1) that trials take place
in open court, (2) that the procedure followed is an adversarial
one, and (3) that rules of natural justice apply, amongst which
is the rule that each party is entitled to see everything which is
relevant to the Court's decision.
It is a combination of these three principles which is at the
source of the rule that hearing should not be conducted in cam
era, even less in private, that representations should not be
made ex parte and that parties and their counsel should not be
denied access to the material that is relevant to the Court's
decision.
That rule, as most rules, is not an absolute one. The courts,
albeit reluctantly, have softened it "in exceptional cases, where
the administration of justice would be rendered impracticable
by the presence of the public" [Dickson J. in Maclntyre, at p.
188] and, in some cases, one may add, by the presence of all
the parties. One of these exceptional cases, most certainly, is
proceedings where the confidentiality of a document is pre
cisely what is at stake. To allow the public and the parties to
see the document before the question of its disclosure is
decided might well render the whole process utterly useless
and frustrate the end result of the proceedings.
Practice with respect to the protection of confidentiality
In proceedings where there is a need to protect the integrity
of confidential information, one of the means developed by the
courts to preserve to the greatest possible extent the openness
and the adversarial nature of the judicial system and to enable
the parties to properly argue their case, is to provide counsel
for the parties with access to the information subject to various
conditions including the provision by counsel of undertakings
to maintain the confidentiality of the information even with
respect to their clients.
I might add that while this practice has generally been justi
fied in terms of natural justice and advantage to counsel, it has
also proved most useful to judges. Issues in which confidential
documents are at risk tend to be rather complex, either techni
cally, as in commercial matters, or legally, as in public interest
matters, and it is not always fair to the Court to force it to
make important decisions when having heard one side of the
argument only.
It seems clear, from these enunciations of it, that the
law leans against any fetter on the openness of pro
ceedings, and that the normal way of reconciling the
conflicting demands of openness and confidentiality,
where required with respect to documents, is to dis
close to parties' counsel any confidential informa
tion, on their undertaking that they will maintain that
confidentiality even from their clients.
What is of capital importance is that disclosure
should be limited as minimally as possible. This was
emphasized by Lord Devlin in Official Solicitor v. K.,
[1963] 3 All E.R. 191 (H.L.), at page 210, where he
said, quoting the Trial Judge, "when full disclosure is
not made, it should be limited only to the extent
essential ... and no further." Cory J. made a similar
point in Edmonton Journal v. Alberta (Attorney Gen
eral), [1989] 2 S.C.R. 1326, at page 1347:
The importance of freedom of expression and of public
access to the courts through the press reports of the evidence,
arguments and the conduct of judges and judicial officers is of
such paramount importance that any interference with it must
be of a minimal nature.
That principle was applied by this Court in Pacific
Press Ltd. v. Canada (Minister of Employment and
Immigration), [1991] 2 F.C. 327 (C.A.).
In a case somewhat analogous to that at bar,
Deprenyl Research Ltd. v. Canguard Health Technol
ogies Inc., T-3003-91, F.C.T.D., decided February
17, 1992, where the defendants sought to have
declared confidential certain information (to be dis
closed only to the plaintiff's solicitors and two
outside independent experts), Strayer J. said, at page
2, in refusing the order:
An order preventing counsel from showing relevant evidence
to his client in order to get instructions, while not unknown,
should only be granted in very unusual circumstances. The
onus is on the defendants to establish the need for such a
restriction on the ordinary disclosure of materials which may
be relevant to the issues in the case, and the evidence so far is
not compelling.
Strayer J. found that at the very least such an order
was premature, since the defendants had not yet (as is
also true in the case at bar) filed a statement of
defence.
The Motions Judge in the case at bar not only
granted an order of secrecy as well as of confidential
ity, but did so ex parte, and not only for the docu
ments required to be produced by the order of April
14, but apparently for all subsequent documents in
the proceedings. This is far from the minimum
trenching on the principle of openness required by
law.
The only precedent that is of any comfort to the
respondents is Kimberly-Clark Corp. v. Proctor &
Gamble Inc. (1990), 31 C.P.R. (3d) 207 (F.C.T.D.),
where, in a patent action, the Court allowed the plain
tiffs to produce licence agreements referred to in the
statement of claim with certain paragraphs deleted.
Joyal J., after examining unexpurgated copies of the
licence agreements, held that substantially all the
deletions were warranted on the basis that they dealt
with matters irrelevant to the issues in the action.
However, even apart from the fact that the patent
claim was a more defined type of action than is that
brought by the respondents here, the matter there did
not arise on an ex parte motion.
It is in my view no answer to the appellant's case
for the respondents to point out that it is always pos
sible for the appellant to contest the ex parte order
subsequent to its being made. The appellant has
already been placed at a needless disadvantage by the
fact that it has been made ex parte,' forcing him to
bring a global motion without information as to the
documents protected or as to the Motions Judge's
reasons for granting such an order. Moreover, the
I While it is true that the motion in Kimberly - Clark had to
be brought after the fact, because the plaintiffs simply prod
uced the licence agreements in expurgated form, both parties
were on a level playing field on the motion in that no protec
tive order had been made.
Motions Judge has in effect created a new, more rar
efied category of secret, as opposed to merely confi
dential documents, for which special considerations
apply. We were shown no precedents for such a cate
gory, and I can find no necessity in the present facts
for establishing one.
II
Merely to strike out paragraph 1 and to amend para
graph 12 of the order of April 22, as the appellant
seeks, possibly would leave the order somewhat
unbalanced, especially in the light of the concerns
expressed by the respondent Miller Brewing Com
pany with respect to its secret formula. Nevertheless,
since there is no cross-appeal before us, there is no
way to rectify that situation on the present appeal.
The order, being interlocutory, is entirely amenable
to revision by the Trial Division. It might be wise,
before pleadings have closed and the issues been
defined, not to try to deal with situations that can
arise only during pre-trial discovery.
The appeal must be allowed with costs. Paragraph
1 of the order dated April 22, 1992, should be struck
out as should be the reference to "secret documents"
in paragraph 12.
HEALD J.A.: I agree.
MAHONEY J.A.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.