British Columbia Court of Appeal upholds implied undertaking of confidentiality

Introduction

In the recent case of Association of Professional Engineers and Geoscientists of the Province of British Columbia v. Engineer X, 2023 BCCA 211, the British Columbia Court of Appeal considered whether the implied undertaking should be lifted to allow a professional regulatory body to make use of pre-trial discovery evidence disclosed in breach of the undertaking to investigate a complaint against three of its members. The chambers judge declined to lift the undertaking. The Court of Appeal upheld the chambers judge’s decision, finding that it was not appropriate to lift the undertaking.

Facts

The appellant, the Association of Professional Engineers and Geoscientists of British Columbia (“EGBC”), is the professional regulatory body responsible for the regulation of the engineering and geoscience professions in BC. EGBC applied for leave to use information subject to the implied undertaking in order to investigate a complaint against three of its members.

The pre-trial discovery evidence subject to the implied undertaking was produced in the course of a Supreme Court action concerning injuries suffered by a young man who fell from an exterior fire escape, resulting in catastrophic injuries, including quadriplegia due to brain trauma. The young man commenced a civil action alleging that the fall was due to the disrepair of the fire escape.  The action named several parties, including an engineering company (X Engineering Ltd.), retained by the building owners to design a replacement fire escape.

The plaintiff in the action retained an engineer to provide expert opinion evidence on the state of the fire escape. The action was settled prior to trial. Two days after the settlement, the plaintiff’s expert engineer (the “Complainant”) sent a letter to EGBC (the “Complaint”) raising concerns about the professional conduct of three professional engineers who had had previous involvement with the fire escape (Engineers X, Y and Z). The Complainant raised concerns as to whether the engineers had met their professional and ethical responsibilities and enclosed documents in the Complaint that he received in the course of acting as an expert in the action (the “Contested Materials”).

Upon learning of the source of the Contested Materials, EGBC took no further steps in investigating the Complaint and brought a petition in the British Columbia Supreme Court seeking leave to make use of the materials for the purpose of investigating and potentially instituting disciplinary proceedings against the three engineers.

Chambers Judge’s decision

The chambers judge proceeded on the assumption that the Contested Materials were subject to the implied undertaking and that the Complainant should have obtained leave to disclose them to EGBC. The chambers judge accepted that the statutory mandate of EGBC, as set out in its governing legislation, should be considered in weighing the public interest in pursuing the Complaint versus the public interest in protecting the implied undertaking.

The chambers judge identified Juman v. Doucette, 2008 SCC 8 as the leading case on the waiver or variation of the implied undertaking. After outlining the factors relevant to the weighing exercise, she concluded that EGBC had not demonstrated that its public interest in investigating the engineers was of greater weight than the principles and public interests the implied undertaking is design to protect.

Court of Appeal’s decision

The Court of Appeal noted that the question before the chambers judge was whether the public interest in having a complaint investigated by EGBC in the circumstances of this case had greater weight than the public interest in upholding the values the implied undertaking is designed to protect. In conducting this assessment, the chambers judge was not required to address a prescriptive list of factors. She was entitled to focus on factors that were significant in the context of the application.

The Court of Appeal addressed the following grounds of appeal:

1. The chambers judge failed to account for the minimal impact that using the Contested Materials would have on the engineers’ privacy interests

With respect to the engineers’ privacy interests, EGBC argued, among other things, that the fact that some of the Contested Materials were public documents provided to the City of Vancouver meant that the engineers had no or little privacy interest at stake. Further, none of the engineers were parties to the underlying action, although Engineer X’s company was a party. EGBC argued that the chambers judge did not consider the extent of the privacy interests and failed to give effect to the specific nature of the privacy interests of the engineers, which was minimal and favoured a waiver of the undertaking. The Court of Appeal rejected this argument, finding that the chamber judge recognized the contextual, and fact-specific, nature of the privacy inquiry. The Court of Appeal stated that the chambers judge recognized that the privacy factor had little weight and, therefore, did not tip the scales in favour of non-waiver, leaving the application to turn on other factors.

The Court of Appeal rejected EGBC’s argument that use of the Contested Materials would not be prejudicial to the engineers. As stated by the Court of Appeal:

… Without the Contested Materials, there would be no complaint.  Allowing their professional regulatory body to use the Contested Materials would expose the Engineers to investigatory and disciplinary proceedings which would not otherwise take place.

2. Requiring EGBC to adduce evidence of the seriousness of the Complaint

EGBC argued that the chambers judge erred in concluding that it had to show something more than the public interest in its statutory duty to investigate complaints in order to overcome the public interest in upholding the implied undertaking. EGBC argued that it could not adduce such evidence in the absence of an investigation. The Court of Appeal rejected this argument noting that the chamber judge distinguished between the substantive merit of the Complaint (i.e. could it be proven) and the seriousness of the alleged offences (i.e. the strength of the public interest in seeing the Complaint investigated). While substantive merit could not be considered, EGBC could have done more to demonstrate the seriousness of the allegations in the Complaint and the particular public interest in having the Complaint investigated. EGBC’s statutory role to investigate complaints was not, in itself, sufficient to justify lifting the undertaking.

3. Impact of granting leave on future applications

EGBC argued that the chambers judge erred in concluding that permitting EGBC to use the Contested Materials would encourage professionals to breach the undertaking, confident that their professional regulatory body would obtain permission after the fact, and it would set the bar for overriding the undertaking so low that in virtually every case involving regulated professions, the statutory mandate would trump the public interest in upholding the undertaking and encouraging full and frank disclosure in civil proceedings.

The Court of Appeal rejected EGBC’s arguments, stating that there was no basis to challenge the judge’s view that accepting the statutory mandate alone as sufficient to generally trump the undertaking would significantly weaken the protection of the values the implied undertaking is intended to effect. Professionals who are sued or otherwise subject to discovery would not be encouraged to provide full and frank disclosure if they knew that their privacy would not be protected and that any information provided in a civil proceeding could readily fall into the hands of their regulator.

4. Interference with EGBC’s mandate

EGBC argued that denying it use of the Contested Materials interfered with its statutory mandate to protect the public interest, as it would not be able to carry out its mandate to investigate the Complaint. The Court of Appeal rejected this argument, upholding the chambers judge’s reasoning that the denial of further investigation was a necessary consequence of the requisite balancing of competing public interests.

On this point, the Court of Appeal also noted the source of the Contested Materials, stating:

It is also significant in this case that the EGBC finds itself with a complaint alleging contraventions of professional standards only as a result of the Complainant’s breach of an undertaking to the court. The EGBC should never have been in possession of the documents it now knows about and wishes to use. That fact weakens the strength of the submission that it must act on what it now knows. To give effect to that proposition would be to implicitly condone the manner in which the material came into the hands of the EGBC: ….  In short, the tainted source of the information is a factor that supports giving less weight to the inability of the EGBC to pursue an investigation in this case.

The Court of Appeal accepted that EGBC had other means by which to protect the public interest, including its Practice Advice Program.

Take away

While the Court of Appeal left open the possibility of a case in which the public interest in having a complaint investigated will have greater weight than the public interest in protecting the implied undertaking, the Court of Appeal confirmed that EGBC’s statutory mandate to investigate complaints does not, in itself, trump the implied undertaking. This decision should provide some comfort for professionals sued in civil actions that documents and information disclosed in the context of that action cannot be used by EGBC, absent a court application and the clear demonstration of a public interest beyond EGBC’s statutory mandate.

Should you have any questions or concerns, please feel free to reach out to a member of Miller Thomson’s Insurance Defence team.