Court Outlines Rules For Production of Documents Held By Third Parties

Rules For Production of Documents

The decision Nikolic v. Olson 2011 BCSC 125 is a veritable chestnut of law relating to the principles of court ordered production of documents held by third parties, whether within or outside, the Province of British Columbia.

The application for records was opposed on inter alia the grounds that the order of the court would not be binding on parties outside of the jurisdiction of the court, namely BC.

Disinherited apologizes for quoting so much of the text of the jdugement, but there is simply so much in the judgment relating to the review of the cases in this area,  that I have only editied out portions and left other large portions in the quotes.

 

 

“It is fundamentally important in civil litigation that litigants are provided with all relevant documents pertaining to the issues confronting them. Discovery (a term encompassing document production, interrogatories, examinations for discovery and medical examinations) encompasses the entire legal process through which each litigant to the action or proceeding is able to learn about the opposing case (claim or defence). The objectives are to promote settlement and, where settlement cannot be reached, to narrow the issues in dispute before trial. In short, this process gives the parties an opportunity to ascertain the facts. That opportunity is only meaningful where the litigants disclose evidence which they each will rely upon or which may assist opposing parties at trial, in the manner and to the extent required by law.

[19]         The purpose underlying the rules of document production was articulated by L. Smith J. in Homalco Indian Band v. British Columbia (1998), 56 B.C.L.R. (3d) 114, [1998] B.C.J. No. 2102 (QL) (S.C.), at para. 17 of B.C.L.R.:

What is the underlying purpose of Rule 26? An examination of its terms and of the authorities considering it leads to the conclusion that its purpose is to promote the resolution of disputes on their merits by forcing disclosure in advance of all documents upon which a party plans to rely at trial and, in addition, all documents which may assist the other party at trial (subject to privilege). In this manner, Rule 26 avoids surprise and prevents the destruction, suppression or fabrication of evidence. The end is trial on the basis of full information; the means is disclosure of documents.

[20]         Although considered under the Saskatchewan Rules, I find the view of Walker J. in Zerr v. Rahn (1987), 63 Sask.R. 74, [1987] S.J. No. 682 (QL) (Q.B.), at p. 4 of QL, that disclosure ought to be obtained in the most expedient way (both in terms of time and costs) as is appropriate in the circumstances, to be sound:

The modern tendency is toward full and complete disclosure and flexibility in the manner of obtaining it. In keeping with the principle of broad discovery and in all common sense, it is appropriate to order the plaintiff to make a request to all physicians, physiotherapists and chiropractors [the third party record-holders] for the various documents referred to by the defendants as requested. It is within the power of the plaintiffs to cause the professionals and the hospital to produce the documents. The plaintiff must make her best efforts. Until the medical people and the hospital refuse the plaintiff’s request, the documents are in the plaintiff’s power. Another approach, not requested in this application, is that the plaintiff be ordered to request these same medical people, with respect to the same documents, to permit the defendants to inspect and copy them and to communicate their response to the defendant.

[21]         Moreover, at least one policy concern arising from the application before me comes to mind. The dismissal of applications such as the one at bar may allow a litigant to shirk legal obligations by hiding otherwise compellable records in the hands of third parties residing outside British Columbia. This general concern was evident in Sunnar v. U-Haul Co. (Canada), [1998] B.C.J. No. 1850 (QL), 24 C.P.C. (4th) 179 (S.C. Chambers) [Sunnar cited to QL], where the sought-after documents (namely, accident claims records) could not be obtained because they were held outside the province by the corporate defendant’s insurer and adjuster. The danger, as Allan J. recognized, was that the legal structure of a corporate entity may effectively thwart the mandatory production of relevant records (see, for example, paras. 12, 14 and 18). She ordered, presumably under R. 26(1.1) and R. 26(10), the defendant U-Haul to produce the documents which were sought on the basis that it had access and thus the power to produce them (at para. 20). The situation in Sunnar causes me to believe that dismissing applications for an order compelling authorization of foreign third party production could potentially lead to unjust results and even possibly to a perversion of the Rules of Court.

C.       Overview of Relevant Court Rules

[22]         I mentioned earlier that this Court’s jurisdiction to make an order requiring a litigant to authorize third party production is founded upon the Rules of Court. An overview of the Rules is accordingly warranted. While the present case is decided under the former Rules, equivalent provisions in the Supreme Court Civil Rules, B.C. Reg. 168/2009 [the “current Rules”], which may offer further context and future guidance, are provided.

[23]         I begin by highlighting that the object of the Rules of Court is “to secure the just, speedy and inexpensive determination of every proceeding on its merits”: R. 1(5) of the former Rules; R. 1-3(1) of the current Rules. R. 1-3(2) of the current Rules adds the principle of proportionality: proceedings ought to be conducted in ways that are proportionate to “the amount involved”, “importance of the issues in dispute” and “complexity of the proceeding”.

[24]         Rule 26 of the former Rules and R. 7-1 of the current Rules grant the court broad jurisdiction over the discovery of documents; specifically, the court has the power to order production in any manner it deems just or appropriate. Rule 26(10) of the former Rules stipulates that “The court may order the production of a document for inspection and copying by any party or by the court at a time and place and in the manner it thinks just”; and, R. 7-1(17) of the current Rules stipulates that “The court may order the production of a document for inspection and copying by any party or by the court at a time and place and in the manner it considers appropriate” [emphasis added].

[25]         More generally, R. 1(12) of the former Rules provides that “When making an order under these rules the court may impose terms and conditions and give directions as it thinks just”; and, R. 13-1(19) of the current Rules provides that “When making an order under these Supreme Court Civil Rules, the court may impose terms and conditions and give directions it considers will further the object of these Supreme Court Civil Rules” [emphasis added]. These two general powers may be exercised over any orders made under the Rules of Court, including those pertaining to document discovery.

[26]         Rule 26(1) of the former Rules and R. 7-1(1) of the current Rules deal with litigant-versus-litigant documents. Rule 26(1) of the former Rules specifies that a party is required, on demand, to deliver a list of documents that “are or have been in the party’s possession or control relating to every matter in question in the action”. Under this former Rule, the test for relevance on an application for discovery of documents is broad. Rule 7-1(1) of the current Rules does away with the need for a demand, making instead the preparing and serving of a list of documents mandatory barring the parties’ agreement or court order to the contrary and limits the scope of discovery to documents that “are or have been in the party’s possession or control and that could, if available, be used … to prove or disprove a material fact”.

[27]         The obligation to disclose only refers to documents in a litigant’s possession or control. In order to be in possession of a document, a litigant must have a proprietary interest in it; mere custody is not sufficient: Manson v. Manson, [1997] B.C.J. No. 203 (QL), at para. 11. Control, on the other hand, means an enforceable right to obtain the documents from the person who has actual possession of them: Lacker v. Lacker (1982), 42 B.C.L.R. 188, [1982] B.C.J. No. 1514 (QL) (S.C.), at p. 193 of B.C.L.R.

[28]         Rule 26(1.1) of the former Rules empowers the court to order a litigant to deliver “a list of the documents that relate to a matter in question in the action and that, although not in the possession or control of the party against whom the order is made, are within that party’s power”. The word “power” is interpreted to be broader than control: Sunnar at para. 21. “Power” means the litigant has access to the documents: Net1 Products (Canada) Ltd. v. Mansvelt and Belamant et al., 2001 BCSC 906, [2001] B.C.J. No. 1282 (QL) (Chambers), at para. 14 of BCSC. Thus, this rule broadens the basis upon which documents held by non-parties could be obtained from litigants themselves. Put another way, R. 26(1.1) compels disclosure of documents that are in the hands of third parties but to which the litigant (to whom the request is being made) has a right to access. R. 26(1.1) only requires a litigant to list documents that are in his or her power. The Rules do not expressly provide for the inspection and/or copying of documents that are within a litigant’s “power”.

[29]         Under the former Rules, R. 26(7) governs the inspection of the listed documents and R. 26(9) provides that copies of documents which a litigant is entitled to inspect may be requested. Both rules refer only to documents in a party’s possession or control – the word “power” is not used. Therefore, it seems on the face of these two rules that a litigant is not required to produce documents within his or her power. This interpretation, if adopted, would render R. 26(1.1) meaningless.

[30]         In any case, R. 26(10) allows the court to “order the production of a document for inspection and copying”. That document, I note, may be one over which the litigant has only “power”. In interpreting R. 26(10) in this manner, I am guided and persuaded by the opinion of Hood J. in Lewis at para. 88 where he concluded that the drafters intended documents in a litigant’s power to be treated and produced under R. 26 in the same manner as documents in a litigant’s possession or control and that the former Rules do not make much sense if that is not the case.

[31]         Moreover, I note that R. 26(8) requires a litigant, on notice, to produce a document referred to in his or her pleadings or affidavits; and, it is possible that that document may also be one over which he or she has only “power”.

[32]         The current Rules seem to do away with what might be seen as the legislative anomaly of the former Rules. They unify the obligations to list, inspect and copy documents in one’s possession, control and power. Rule 7-1(11) provides that a party who believes the served list of documents should include additional documents that “are within the listing party’s possession, power or control” may, on written demand, require that listing party to serve an amended list and make the newly listed documents available for inspection and copying. If a litigant fails to comply with a R. 7-1(11) demand, R. 7-1(14)(b) empowers the court, on an application for compliance made under R. 7-1(13), to order a litigant to amend and serve a list of additional documents in that litigant’s “possession, power or control relating to any or all matters in issue in the action” and make the newly listed documents available for inspection and copying.

[33]         Further, under the current Rules, R. 7-1(15) enables a party to inspect any listed documents, and R. 7-1(16) enables a litigant to obtain copies of documents to which he or she is entitled to inspect, that is, all listed documents. Thus, if a demand under R. 7-1(11) has been made, then those listed documents (or those documents to which a litigant is entitled to inspect and/or copy) would include documents in a party’s “possession, power or control”.

[34]         Rule 26(11) of the former Rules and R. 7-1(18) of the current Rules deal with direct third party production. If a listed record is in the possession or control of a third party residing within the court’s jurisdiction, that third party may be ordered to produce it directly to the requesting litigant. I note that the word “power” is not included, probably because its inclusion would unduly broaden the scope of direct third party production. It is a pre-condition of the application of R. 26(11) that the documents sought are not in the possession, control or power of a litigant: Lewis at para. 31. I conclude this interpretation is implicit given the nature and object of the rules. Implying such a pre-condition would enhance efficiency by ensuring that production is sought first through the litigants.

[35]         The purpose of R. 26(11) is “to provide a litigant with the means of ascertaining whether documents in the possession [or control] of a non-party … relate to an issue in the action, or contain information which may relate to an issue in the action”: Dufault v Stevens (1978), 6 B.C.L.R. 199, [1978] B.C.J. No. 1219 (QL) (C.A.) [Dufault cited to B.C.L.R.], at p. 205. However, where a third party resides outside this Court’s jurisdiction (that is, outside British Columbia), the requesting litigant does not have the right to apply under R. 26(11) for direct third party production: Saunders v. Nelson, [1994] B.C.J. No. 3039 (QL), 35 C.P.C. (3d) 168 (S.C.) [Saunders cited to QL], at para. 4.

[36]         The table below summarizes the Rules of Court pertaining to document discovery relevant to my analysis of the case before me.

 

 

Former Rules

Current Rules

Court’s general power to ORDER production

R. 26(10)

R. 7-1(17)

Obligation to LIST documents in party’s possession or control

R. 26(1)

R. 7-1(1)

Right to INSPECT listed documents

R. 26(7)

R. 7-1(15)

Right to COPIES of listed documents

R. 26(9)

R. 7-1(16)

Listing and producing documents in party’s POWER (includes extra-provincial third party records)

R. 26(1.1) and

R. 26(10) respectively

R. 7-1(11); if party does not comply

R. 7-1(14)(b)

Production of documents referred in PLEADINGS or AFFIDAVITS

R. 26(8)

No equivalent rule

Intra-provincial DIRECT THIRD PARTY production, inspection and copying

R. 26(11)

R. 7-1(18)

 

Each of the above can be seen as a separate stage in document discovery. However, in many cases, the first stage (listing of documents) flows, without incident, to the next stages (production, inspection and copying).

[37]         I turn now to application of the formerRules to the facts in this case. R. 26(11), which allows for direct third party production, is of no assistance to the Olsons because this Court cannot order non-parties in Saskatchewan to directly produce the requested records in its possession or control. However, Mr. Nikolic has a right of access to the documents sought and therefore has power over them. Accordingly, he may be required to list those requested records (pursuant to R. 26(1.1)) and to produce them (pursuant to R. 26(10)) in a manner the court thinks is just (pursuant to R. 1(12)), for example, by way of an order compelling authorization.

CONCLUSION & ORDER

[93]         In British Columbia, relevant non-privileged documents are compellable in a civil action. Full and complete disclosure between or among litigants prior to trial is essential to the truth-seeking function of the litigation process and proper administration of justice.

[94]         This Court has the authority under the formerRules to compel production and to specify the mechanics of its production orders. Rule 26(1.1) permits the court to order a litigant to list documents in his or her power, which may include those held by foreign non-parties. Rule 26(10) empowers the court to order a litigant to produce a document for inspection and copying in the manner it thinks just. Furthermore, R. 1(12) grants the court wide discretionary powers, in the making of orders, to impose terms and conditions and give directions as its thinks just. Read collectively, a master or judge of this Court has the jurisdiction to create the mechanisms by which relevant non-privileged documents in a litigant’s “power” will be produced, including the jurisdiction to order him or her to execute the necessary documentation allowing a record-holder, whether residing in or outside British Columbia, to effect the release of those documents.

[95]         In my view, the following excerpt from para. 110 of Hood J.’s reasons in Lewis is apt:

There is also no doubt that the Court has substantive jurisdiction or power pertaining to the discovery and inspection of documents under Rule 26, particularly the compelling or ordering of production of documents. … In my opinion, the manner in which production is achieved is for the Court. The Court’s substantive jurisdiction or power to compel the production of documents includes the jurisdiction or power to create the mechanisms or the means by which production is made.

[96]         As expressed in the jurisprudence, there are, no doubt, potentially unwieldy implications of a court order compelling authorization of third party production. Given these concerns, such orders should not be granted lightly. In this respect, L. Smith J. in McKay v. Passmore, 2005 BCSC 570, [2005] B.C.J. No. 1232 (QL), offers worthwhile guidance. That was a personal injury case arising from a motor vehicle collision. An application was brought for an order that the plaintiff execute an authorization allowing the defendants to obtain records held by the Manitoba Workers Compensation Board. Her Ladyship held, at para. 36, that while the court has jurisdiction to grant such an application, there was insufficient basis on the evidence to do so. She concluded, at para. 40, that the circumstances of the case before her did not warrant the order sought in light of the R. 26(11) criteria provided by the Court of Appeal in Dufault, which she outlined at para. 38:

1.         The applicant must satisfy the court that the application is not in the nature of a “fishing expedition.”

2.         He or she must show that a person who is not a party to the action has a document or documents in his or her possession that contains information which may relate to a matter in issue.

3.         If the applicant satisfies those criteria, the court should make the order unless there is a compelling reason not to make it (i.e. because a document is privileged or because grounds exist for refusing the application in the interests of persons not parties to the action who might be affected adversely by an order for production and the adverse affect would outweigh the probative value of the document.)

[97]         Obviously these criteria, among other relevant factors, ought to be considered by a court considering an application for an order compelling a litigant to authorize production of documents held by a third party whether located within or outside British Columbia.

[98]         For two examples as to how the McKay/Dufault criteria may apply, see Distinctive Photowork Co. v. Prudential Assurance Co. of England Property and Casualty (Canada) (1994), 98 B.C.L.R. (2d) 316, [1994] B.C.J. No. 3231 (QL) (S.C. Chambers); and Tetz v. Niering, [1996] B.C.J. No. 2019 (QL), 1996 CarswellBC 1887 (S.C. Chambers).

[99]         These cases, although they raise slightly different issues, do not detract from, but rather inform, the basic proposition that where a litigant is under an obligation to make disclosure of documents, then that obligation must be honoured. Where such documents are in the hands of third parties, the usual format will entail the litigant voluntarily agreeing to provide a document authorizing the record holder to release the material, and that will resolve the matter. However, in other cases, where consent is refused, litigants are entitled to seek relief and the court has jurisdiction to enforce the disclosure obligation, specifically by making an order whereby the party whose records are being sought will “consent” to their release. While the wording is unfortunate and has engendered a regrettable state of controversy, the underlying concept is, in my view, straightforward.

[100]     The Olsons have a legitimate interest in obtaining the requested records and I am satisfied that their application is not in the nature of a fishing expedition. I also find that the third parties named by the defendants in their application possess the requested records which relate to a matter or matters in this case. By way of obiter dicta, I note that the common law test for relevance under the formerRules is broader than what seems to be provided by the wording of the current Rules. There are, furthermore, no compelling reasons why the order sought should not be made.

[101]     Accordingly, I order the respondent/plaintiff, Mr. Nikolic, to provide signed authorizations allowing the applicants/defendants, Josiah Olson and Joel Olson, to obtain from the third parties named the records listed in clauses (c), (d), (e) and (f) of the proposed order reproduced at para. 3 of these reasons.

“The Honourable Mr. Justice Williams”

Trevor Todd

Trevor Todd is one of the province’s most esteemed estate litigation lawyers. He has spent more than 40 years helping the disinherited contest wills and transfers – and win. From his Kerrisdale office, which looks more like an eclectic art gallery than a lawyer’s office, Trevor empowers claimants and restores dignity to families across BC. He is a mentor to young entrepreneurs and an art buff who supports starving artists the world over. He has an eye for talent and a heart for giving back.

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