July 12, 2007 By: Peter J.E. Cronyn
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The personal injury bar has been left in a unique conundrum in the wake of a recent Divisional Court decision regarding the implied undertaking rule. The rights of their clients in regard to the rule will be treated differently whether they proceed through the courts or the Financial Services Commission of Ontario (FSCO).

In the case of Kitchenham v. AXA Insurance Canada, [2007] O.J. No. 3477, the Divisional Court held that a plaintiff in an accident benefits lawsuit was not required to produce an independent medical examination (IME) report and surveillance evidence which was produced in a tort action arising out of the same car accident.

This decision stands in direct conflict with the Court of Appeal decision in the cases of Tanner v. Clark; Reimer v. Christmas, [2003] O.J. No. 677, in which the court held that the plaintiff in a tort proceeding was compelled to produce to the defendant the medical examination reports prepared in the context of FSCO proceedings arising out of the same accident.

The different treatment arises from the fact that in Kitchenham both proceedings were court proceedings, while in Tanner, one proceeding was in the courts and the other was before an administrative tribunal.Therefore, in Kitchenham, Rule 30.1.01 applied, and in Tanner, the common law applied.

The Court of Appeal held in Tanner that the accident benefits insurers who received the medical examination reports were bound by the implied undertaking rule not to use the information outside the FSCO proceeding.

However, the plaintiffs who had received copies of the reports in the context of those FSCO proceedings were not bound by the rule and had to produce them in the subsequent tort proceeding.

In the Kitchenham case, because both the accident benefits claim and the tort claim were court proceedings, Rule 30.1.01 governed both. The Divisional Court found that the rule imposes an undertaking on "all parties and their counsel," which is an obvious reference to the party disclosing the evidence and the party receiving it, as well as their respective counsel.

The decision again raises the issue of just how far the implied undertaking rule is intended to apply. Is it intended to protect only against the collateral use of documents or information obtained in the course of litigation by the recipient of such documents or information, or is it intended to protect against any and all use of the documents and information outside the proceeding in which it was produced?

The wording of Rule 30.1.01 suggests the latter because "all parties and their counsel" are prohibited from using the documents and information (and the rule makes it clear that it applies to all forms of discovery including IMEs). As the law currently stands, it would appear that the common law protects only against the former use.

The essence of the Court of Appeal ruling in Tanner is that the implied undertaking rule is to protect "against use by the recipient of the information, not to protect the information from all uses."

However, that interpretation gives rise to a distinction which circumvents the true purpose of the rule. The implied undertaking rule has its foundation in the notion that to ensure complete and full disclosure in any proceeding, the parties should be reassured that the production of information they would otherwise not have to produce will be limited to the purposes of the dispute in hand.

The common thread in these personal injury cases is that the plaintiff is compelled to subject himself or herself to a medical examination, an examination which would not occur but for the proceeding.

The person subjecting himself or herself should be protected from that information being used in any proceedings other than the one through which the examination arose. This is particularly so when the defending parties in any collateral proceedings are entitled to their own medical examination(s) in that process. It is not as though they are deprived of their own discovery process.

As the law currently stands, plaintiffs will be afforded different protection in regard to information they are compelled to provide in collateral proceedings arising out of the same accident, depending on the forum in which they choose to litigate their accident benefits case. If they proceed through the courts, then they enjoy the protection of Rule 30.1.01; if through FSCO, then they do not.

The insurer in Kitchenham is seeking leave to appeal the Divisional Court decision. If leave is granted, the Court of Appeal may not address this anomaly because that case involves two court proceedings.

The common law implied undertaking rule should be brought into line with Rule 30.1.01 and should be given an interpretation which encourages full disclosure by ensuring that the information that must be produced will not be used beyond the proceedings which gave rise to the production.

Peter Cronyn is a partner at Nelligan O'Brien Payne LLP and leader of the litigation practice group. He practises in the areas of personal injury, insurance defence and civil litigation.

[This article is reprinted with permission and first appeared in the December 2007 issue of The Lawyers Weekly.]

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2017 Nelligan O’Brien Payne LLP.