Production of documents subject to conditions

David Carter brought an action against his employer, Municipal Construction Limited, for wrongful dismissal. He also claimed that, as a result of certain representations and undertakings made at the time of his original hiring, he was entitled to a shareholders’ interest in Municipal Construction.

In defending the action, Municipal Construction alleged that Mr. Carter was terminated for cause and that he had no legal entitlement to any financial interest in the company.

During the course of the pre-trial discovery, the parties exchanged a list of documents as required by the rules of the court. Municipal Construction objected to the production of certain financial information on the grounds that the information was confidential and proprietary and did not relate to the claim by Mr. Carter.

Mr. Carter brought a motion seeking an order requiring Municipal Construction to produce certain financial records for his inspection. He argued that the financial information in question consists of documents “relating to the matter in question” in the proceeding, in accordance with the rules of the court and that no basis for objecting to production of the information had been established by Municipal Construction.

Municipal Construction argued that the information was confidential and proprietary in nature and that access to and disclosure of the financial information was not relevant or material to the claims by Mr. Carter. Alternatively, they argued that if the information is relevant or material, production of the documents should be postponed until after liability is established or should be made subject to a protective order restricting disclosure of information.

In order for a Court to issue an order for production of documents, three things must be satisfied:

•the documents in question must “relate” to a matter in question in the proceeding;

•the Court must be of the opinion that an order for production is “necessary for disposing fairly of the proceeding or for saving costs” and is not injurious to the public interest; and

•the document is not privileged from production.

The Court also has inherent jurisdiction to ensure that all relevant documents are before it in order to determine properly and fairly the issues between the parties.

To establish that the document relates to a matter in question in the proceeding, the Court must be satisfied that the production of the document might advance the case of the party seeking production, or damage the case of his or her adversary even if the document may not in itself tend to prove or disprove a fact in issue or may not be admissible at trial.

Mr. Carter argued that the documents for which production was sought related to matters in the proceedings in three respects.

First, they related to the allegation in the pleadings that, as a result of representations made to him, he was entitled to a shareholders’ interest in the company. Access to the financial records of the company may circumstantially support or refute the allegation of a shareholder interest.

Second, Mr. Carter alleged in his claim that he had been hired away from another company to promote the growth of Municipal Construction and in the two years following his hiring, he achieved a major expansion of the company’s road construction operations. The financial information is relevant not only to the assessment of damages but to liability as well in the sense that the financial information would be circumstantially relevant to support the allegation that he was promised an interest in the company.

Third, the company had counterclaimed against Mr. Carter in respect of certain loans and advances which were allegedly made to him and which had not been repaid. Mr. Carter took the position that these were not loans or advances but were part of his remuneration.

The company took the position that the financial information was not relevant in that it had no probative value as to whether the plaintiff was to receive an ownership interest nor was it relevant, beyond the issue of assessment of damages, to the allegation that Mr. Carter’s efforts resulted in a substantial increase in the value of the company.

The Court held that Mr. Carter had established that the financial information met the test of “relating to a matter in question in the proceeding.”

None of the documents being sought for production were subject to privilege so as to resist production. The categories of privilege which can be relied upon to resist production of a document are solicitor-client privilege, litigation privilege and claims of public interest immunity. None of these categories was asserted as grounds for non-production in this case.

Although the Court held that the documents were relevant to the proceedings, given the confidential and proprietary nature of the information contained therein, the Court imposed conditions on the production of the documents. The conditions were that:

•the documents or copies were to be maintained in confidence in the possession of Mr. Carter’s solicitor without any additional copies being made;

•the solicitor could confer with Mr. Carter with respect to the documents but that Mr. Carter was not entitled to retain possession of any of the documents or copies;

•Mr. Carter and his solicitor not disclose, disseminate or discuss the documents or their contents with any other person without further order of the Court.

For more information:

Carter v. Municipal Construction Ltd., Newfoundland Trial Division, Docket No. 2000 01T 1812, Aug. 30/01.

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