State Farm Mutual Automobile Insurance Co. v. Privacy Commissioner (Can.) et al., (2010) 376 F.T.R. 59 (FC)

• Judge: Mainville, J.
• Court: Federal Court (Canada)
• Case Date: April 13, 2010
• Jurisdiction: Canada (Federal)
• Citations: (2010), 376 F.T.R. 59 (FC);2010 FC 736

State Farm v. Privacy Commr. (2010), 376 F.T.R. 59 (FC)

MLB headnote and full text

Temp. Cite: [2010] F.T.R. TBEd. JL.021

State Farm Mutual Automobile Insurance Company (applicant) v. Privacy Commissioner of Canada and Attorney General of Canada (respondents)

(T-604-09; 2010 FC 736)

Indexed As: State Farm Mutual Automobile Insurance Co. v. Privacy Commissioner (Can.) et al.

Federal Court

Mainville, J.

July 9, 2010.

Summary:

Vetter and Gaudet were involved in a motor vehicle accident in New Brunswick. Vetter's insurer, State Farm, retained counsel for Vetter, and hired private investigators to inquire about Gaudet's activities. The investigators used video surveillance. Gaudet's counsel requested from State Farm, under the Personal Information Protection and Electronic Documents Act (PIPEDA), the information it had collected. State Farm denied the request on the ground that PIPEDA did not apply. Vetter claimed litigation privilege over the surveillance reports and video tapes. Gaudet complained to the Privacy Commissioner. State Farm conveyed its position that the Privacy Commissioner had no jurisdiction to proceed. A May 17, 2007 letter from the Privacy Commissioner notified State Farm of its opinion that it had jurisdiction. State Farm sought a declaration that the Privacy Commissioner did not have statutory or constitutional authority to act on Gaudet's complaint.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported at 329 N.B.R.(2d) 151; 844 A.P.R. 151, decided that the Federal Court was the appropriate forum to determine the issues. State Farm appealed.

The New Brunswick Court of Appeal, in a decision reported at (2009) 341 N.B.R.(2d) 1; 876 A.P.R. 1, ruled that since the Federal Court had exclusive jurisdiction over the statutory vires question regarding the Privacy Commissioner's authority to act under PIPEDA, and concurrent jurisdiction to hear the constitutional validity issue, it was the proper forum for the resolution of the dispute. State Farm initiated this judicial review proceeding and submitted a notice of constitutional question.

The Federal Court granted the application for judicial review. The May 17, 2007 decision was declared invalid, quashed and set aside. The Privacy Commissioner had no authority to issue the May 17, 2007 letter under which she purported to assume jurisdiction over the matter, nor did she have the authority to request justifications from State Farm in regard to its privilege claims. The court issued the following declaration: PIPEDA did not apply to document disclosure or privilege within the framework of the defence by State Farm for Vetter of the personal injury tort action claim instituted against her before the Court of Queen's Bench. In light of those conclusions, it was not necessary to address the constitutional questions raised by State Farm.

Evidence - Topic 3686

Documentary evidence - Private documents - Photographs, movies, videotapes, etc. - Videotapes - [See second Trade Regulation - Topic 9404 ].

Practice - Topic 4578

Discovery - What documents must be produced - Privileged documents - Documents prepared in contemplation of litigation (litigation privilege or work product privilege) - Surveillance tapes - [See Trade Regulation - Topic 9424 ].

Trade Regulation - Topic 9404

Protection of personal information and electronic documents - General - Application and interpretation of legislation (e.g. Personal Information Protection & Electronic Documents Act) - The Federal Court decided that the collection of evidence (including surveillance tapes and reports) by an insurer acting for one of its insured in the defence of a third party tort action was not "commercial activity" within the meaning of the Personal Information Protection and Electronic Documents Act (PIPEDA), and was thus not prohibited under s. 7(1) - It was not the intention of Parliament in adopting PIPEDA that all collection of evidence about a plaintiff by third parties retained by a defendant in response to a tort action would be prohibited, unless the plaintiff were to consent to such collection of evidence - "PIPEDA is a compromise between competing interests, and its provisions must be interpreted and applied with flexibility, common sense and pragmatism" - Reasonableness was moreover the overriding standard set out in s. 3 - The collection of information in order to properly defend a civil tort action had little or nothing to do with the purposes of PIPEDA - See paragraphs 100 to 105.

Trade Regulation - Topic 9404

Protection of personal information and electronic documents - General - Application and interpretation of legislation (e.g. Personal Information Protection & Electronic Documents Act) - The Federal Court decided that the collection of evidence by an insurer acting for one of its insured in the defence of a third party tort action was not "commercial activity" within the meaning of the Personal Information Protection and Electronic Documents Act (PIPEDA) - "[O]n a proper construction of PIPEDA, if the primary activity or conduct at hand ... is not a commercial activity contemplated by PIPEDA, then that activity or conduct remains exempt from PIPEDA even if third parties are retained by an individual to carry out that activity or conduct on his or her behalf. The primary characterization of the activity or conduct in issue is thus the dominant factor in assessing the commercial character of that activity or conduct under PIPEDA, not the incidental relationship between the one who seeks to carry out the activity or conduct and third parties. In this case, the insurer-insured and attorney-client relationships are simply incidental to the primary non-commercial activity or conduct at issue" - The court therefore ruled that the investigation reports and related documents and videos prepared by or for State Farm or its lawyers to defend the insured in the civil tort action were not subject to PIPEDA - See paragraphs 106 and 107.

Trade Regulation - Topic 9404

Production of personal information and electronic documents - General - Application and interpretation of legislation (e.g. Personal Information Protection & Electronic Documents Act) - The Federal Court decided that the collection of evidence by an insurer acting for one of its insured in the defence of a third party tort action was not "commercial activity" within the meaning of the Personal Information Protection and Electronic Documents Act (PIPEDA) - The court was comforted in that interpretation by s. 26(2)(b) of PIPEDA - Pursuant to that provision, the Governor in Council had exempted from the application of PIPEDA almost all organizations in British Columbia, Alberta and Quebec which were not a federal work, undertaking or business - Though Parliament's intentions under PIPEDA were not necessarily to be surmised from the Governor in Council's interpretation, "the fact remains that Parliament entrusted the Governor in Council with the authority to exempt the application of PIPEDA on finding provincial legislation to be 'substantially similar' to its provisions. These findings of the Governor in Council are therefore entitled to some weight in the context of PIPEDA" - See paragraphs 108 to 112.

Trade Regulation - Topic 9424

Protection of personal information and electronic documents - Remedies (incl. complaints, investigation, reports and particular remedies) - Power to investigate - An insurer acting for its insured in the defence of a third party tort action challenged the jurisdiction of the Privacy Commissioner of Canada to investigate under the Personal Information Protection and Electronic Documents Act (PIPEDA) and to compel access to information which was covered by solicitor-client privilege or litigation privilege - The Federal Court ruled that the investigation reports and related documents and videos concerning the plaintiff were not subject to PIPEDA - However, this did not necessarily mean that the Privacy Commissioner was without authority to investigate following the plaintiff's complaint - "Indeed, under subsection 12(1) of PIPEDA, the Privacy Commissioner must conduct an investigation in respect of a complaint made under that act. However, where such as here, the organization being investigated raises solicitor-client privilege or litigation privilege, the Privacy Commissioner's investigative authority is limited" - The court concluded that the Privacy Commissioner had no authority to assume jurisdiction over the matter or to request justifications from the insurer in regard to its privilege claims - See paragraphs 113 to 118.

Trade Regulation - Topic 9429

Protection of personal information and electronic documents - Remedies (incl. complaints, investigation, reports and particular remedies) - Judicial review and appeals - The Federal Court stated that "It is trite law that a judicial review proceeding is conducted on the basis of the record which was before the decision maker whose decision is being reviewed. However, there are exceptions to this well-known principle, most notably when the affidavit and exhibits are produced as background information concerning the issues to be addressed in judicial review ... ,where the evidence concerns the jurisdiction of the decision maker or of the Federal Court itself to hear and determine the matter ... or where the evidence pertains to violations of natural justice or procedural fairness by the decision maker ... or again where the evidence relates to a constitutional issue raised within the framework of the proceedings" - See paragraph 54.

Trade Regulation - Topic 9429

Protection of personal information and electronic documents - Remedies (incl. complaints, investigation, reports and particular remedies) - Judicial review and appeals - An insurer, in order to defend its insured in a third party tort action, collected evidence on the plaintiff (Gaudet) - Gaudet requested from the insurer, under the Personal Information Protection and Electronic Documents Act (PIPEDA), the information it had collected - The insurer denied the request - Gaudet complained to the Privacy Commissioner - The Privacy Commissioner decided to assume jurisdiction and to investigate - The insurer applied for judicial review - The Federal Court did not accept the prematurity arguments raised by the respondents - The argument that the Privacy Commissioner should be given an opportunity to prepare a position on the scope of "commercial activity" found in PIPEDA was without merit - Further, there was no guarantee that Gaudet would apply under s. 14 or 15 of PIPEDA, leaving State Farm without a judicial forum - Also, the Privacy Commissioner had years to issue a report but did not do so - Moreover, this was a test case, and it would not be in the interest of justice to decline to decide its merits - Finally, judicial non-interference with ongoing administrative processes had no application here - See paragraphs 73 to 80.

Trade Regulation - Topic 9429

Protection of personal information and electronic documents - Remedies (incl. complaints, investigation, reports and particular remedies) - Judicial review and appeals - A main issue in this judicial review proceeding was the interpretation of the expression "commercial activity" found in the Personal Information Protection and Electronic Documents Act (PIPEDA) - The Federal Court concluded that the applicable standard of review was that of correctness - First, PIPEDA contained no privative clause concerning the Privacy Commissioner - Second, the role of the Privacy Commissioner under PIPEDA was incompatible with a standard of deference - "The Privacy Commissioner is clearly not acting in an adjudicative capacity under PIPEDA, and may appear as a party to a hearing before the Federal Court under that statute; this has important consequences on the standard of review" - Third, the nature of the question at issue was fundamentally jurisdictional - Indeed, the decisions made by the Privacy Commissioner were set out in jurisdictional terms - Finally, the Privacy Commissioner had no special expertise in the interpretation of the provisions of PIPEDA since the statute itself entrusted the court with the authority and mandate to do so, notably through ss. 14 and 15 - See paragraphs 81 to 92.

Words and Phrases

Commercial activity - The Federal Court interpreted the expression "commercial activity" found in the Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5.

Cases Noticed:

Ferenczy v. MCI Medical Clinics et al., [2004] O.T.C. 362 (Sup. Ct.), refd to. [para. 15].

City National Leasing Ltd. v. General Motors of Canada Ltd., [1989] 1 S.C.R. 641; 93 N.R. 326; 32 O.A.C. 332; 58 D.L.R.(4th) 255, refd to. [para. 22].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 31].

Khosa v. Canada (Minister of Citizenship and Immigration), [2009] 1 S.C.R. 339; 385 N.R. 206; 2009 SCC 12, refd to. [para. 31].

Chopra v. Canada (Treasury Board) et al. (1999), 168 F.T.R. 273 (T.D.), refd to. [para. 54].

Sha v. Canada (Minister of Citizenship and Immigration), [2010] F.T.R. Uned. 275; 2010 FC 434, refd to. [para. 54].

McEwen, Re, [1941] S.C.R. 542, refd to. [para. 54].

Kenbrent Holdings Ltd. et al. v. Atkey (1995), 94 F.T.R. 103 (T.D.), refd to. [para. 54].

Abbott Laboratories Ltd. v. Canada (Attorney General) et al., [2009] 3 F.C.R. 547; 382 N.R. 280; 2008 FCA 354, refd to. [para. 54].

Liidlii Kue First Nation v. Canada (Attorney General) et al. (2000), 187 F.T.R. 161 (T.D.), refd to. [para. 54].

Canada (Attorney General) v. Brar et al., [2007] F.T.R. Uned. 857; 78 Admin. L.R.(4th) 163; 2007 FC 1268, refd to. [para. 58].

Fairmont Hotels Inc. et al. v. Director Corporations Canada et al. (2007), 308 F.T.R. 163; 2007 FC 95, refd to. [para. 58].

Greater Moncton International Airport Authority v. Public Service Alliance of Canada et al., [2008] N.R. Uned. 19; 2008 FCA 68, refd to. [para. 58].

Powell (C.B.) Ltd. v. Canada Border Services Agency (President) et al. (2010), 400 N.R. 367; 2010 FCA 61, refd to. [para. 80].

Englander v. Telus Communications Inc., [2005] 2 F.C.R. 572; 328 N.R. 297; 247 D.L.R.(4th) 275; 2004 FCA 387, refd to. [para. 84].

Rousseau v. Privacy Commissioner (Can.) - see Rousseau v. Wyndowe et al.

Rousseau v. Wyndowe et al. (2008), 373 N.R. 301; 2008 FCA 39, refd to. [para. 84].

Blood Tribe Department of Health v. Privacy Commissioner (Can.) et al., [2007] 2 F.C.R. 561; 354 N.R. 302; 274 D.L.R.(4th) 665; 2006 FCA 334, refd to. [para. 84].

Johnson v. Bell Canada, [2009] 3 F.C.R. 67; 334 F.T.R. 44; 299 D.L.R.(4th) 296; 2008 FC 1086, refd to. [para. 84].

Lawson v. Accusearch Inc., [2007] 4 F.C.R. 314; 308 F.T.R. 186; 280 D.L.R.(4th) 358; 2007 FC 125, refd to. [para. 84].

Morgan v. Alta Flights (Charters) Inc. et al. (2005), 271 F.T.R. 298; 2005 FC 421, refd to. [para. 84].

Blood Tribe Department of Health v. Privacy Commissioner (Can.) et al., [2008] 2 S.C.R. 574; 376 N.R. 327; 2008 SCC 44, refd to. [para. 89].

Main v. Goodine et al. (1997), 192 N.B.R.(2d) 230; 489 A.P.R. 230 (C.A.), refd to. [para. 95].

Duchesne v. Great-West compagnie d'assurance-vie, J.E. 95-263 (Que. S.C.), refd to. [para. 111].

Syndicat des travailleuses et travailleurs de Bridgestone/Firestone de Joliette (CSN) v. Trudeau, [1999] R.J.Q. 2229 (C.A.), refd to. [para. 111].

Servant v. Excellence (L'), compagnie d'assurance-vie, 2008 QCCA 2180, refd to. [para. 111].

Lefort v. Desjardins Sécurité financière, [2007] R.R.A. 1213; 2007 QCCQ 10192, refd to. [para. 111].

Bolduc v. S.S.Q. Société d'assurance-vie inc., [2000] R.R.A. 207; J.E. 2000-337, refd to. [para. 111].

Privacy Commissioner (Can.) v. Air Canada (2010), 367 F.T.R. 76; 2010 FC 429, refd to. [para. 115].

Rousseau v. Wyndowe et al. (2006), 302 F.T.R. 134; 2006 FC 1312, refd to. [para. 115].

R. v. Graham - see R. v. Hafey et al.

R. v. Hafey et al., [1985] 1 S.C.R. 106; 57 N.R. 321, refd to. [para. 119].

R. v. Nystrom, 2005 CMAC 7, refd to. [para. 119].

Statutes Noticed:

Personal Information and Protection of Electronic Documents Act, S.C. 2000, c. 5, sect. 4(1)(a), sect. 4(2)(b), sect. 5(1), sect. 5(3), sect. 7(1), sect. 26(2)(b), sect. 30 [para. 93].

Counsel:

Peter M. Rogers, Q.C., Jane O'Neill and David T.S. Fraser, for the applicant;

Frederick C. McElman, Q.C., and Nicholas Russon, for the respondents.

Solicitors of Record:

McInnes Cooper, Saint John, New Brunswick, for the applicant;

Stewart McKelvey, Fredericton, New Brunswick, for the respondents.

This application for judicial review was heard at Halifax, Nova Scotia, on April 13, 2010, before Mainville, J., of the Federal Court, who delivered the following reasons for judgment and judgment, dated July 9, 2010.