Using Documents from One Proceeding to Start Another: Breach of the Implied Undertaking Rule?
In Grid Link Corp. v. Foglia et al, 2024 ONSC 19 (“Grid Link 2024”), the plaintiff used documents disclosed in a Labour Relations Board proceeding to start a civil action. The defendants brought a motion to dismiss or permanently stay the action based on breach of the common law implied undertaking rule. The motion was dismissed and the defendants appealed.
Context
The plaintiff, Grid Link Corp., commenced an action against Sebastiano Foglia, one of its former executives, and Mr. Foglia’s new employer for alleged misappropriation of funds. The defendants brought a motion to dismiss or permanently stay the action on the basis that the plaintiff used documents disclosed in a prior proceeding at the Ontario Labour Relations Board to assist in starting the litigation, and that this breached the common law implied undertaking rule.
At the motion, the Court referred to a description of the implied undertaking rule as follows: “There is an implied undertaking applicable to parties to a Board proceeding that they will not use any documents produced in that proceeding in any other Board matter, unless those documents are otherwise legitimately available outside of the litigation process…” (Grid Link Corp. v. Foglia et al, 2023 ONSC 2014 at para 11).
The motion judge dismissed the motion. He agreed that the plaintiff had used documents produced at the Board to start the action. Nonetheless, he determined that the deemed undertaking rule in Rule 30.1.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 supplanted the common law implied undertaking rule, which ultimately does not cover information received from a Board proceeding:
RULE 30.1 DEEMED UNDERTAKING
30.1.01 (1) This Rule applies to,
(a) evidence obtained under,
(i) Rule 30 (documentary discovery),
(ii) Rule 31 (examination for discovery),
(iii) Rule 32 (inspection of property),
(iv) Rule 33 (medical examination),
(v) Rule 35 (examination for discovery by written questions); and
(b) information obtained from evidence referred to in clause (a).
(2) This Rule does not apply to evidence or information obtained otherwise than under the rules referred to in subrule (1).
Deemed Undertaking
(3) All parties and their lawyers are deemed to undertake not to use evidence or information to which this Rule applies for any purposes other than those of the proceeding in which the evidence was obtained.
The defendants appealed the motion judge’s decision.
Decision
The appeal was allowed, but a stay of the proceedings was not ordered because the appellants had suffered no prejudice. Instead, Grid Link was ordered to pay the appellants costs, on a substantial indemnity basis, in the amount of $9,000.
Reasons
Justice O’Brien disagreed that Rule 31.1.01 supplants the common law implied undertaking rule. Rather, Rule 31.1.01 applies only to information obtained in civil proceedings, given that “Proceeding” is defined in Rule 1.03 as “an action or application”. Therefore, Rule 31.1.01 “does not oust the application of the common law rule with respect to evidence obtained in another context, such as at the Board” (Grid Link 2024 at para 13).
Justice O’Brien concluded that Grid Link breached the implied undertaking rule. Grid Link used documents disclosed in the Board proceeding in deciding to sue the defendants, and it only entered the documents into evidence at the Board after it had used them for the purposes of the court action (Grid Link 2024 at para 22).
Ultimately, Justice O’Brien found that the appellants had not suffered any specific prejudice from Grid Link’s use of the documents. In order to avoid condoning the breach of the implied undertaking rule, Justice O’Brien ordered costs of the appeal against Grid Link on a substantial indemnity basis.
Takeaways
This decision is a helpful reminder of the implied/deemed undertaking rules, and to be wary of using documents sourced from other matters, whether civil proceedings or otherwise.
[1] Grid Link Corp. v. Foglia et al, 2024 ONSC 19. [2] Grid Link Corp. v. Foglia et al, 2023 ONSC 2014. [3] Rules of Civil Procedure, R.R.O. 1990, Reg. 194.