Court Denies Privilege and Compels Worker’s Evidence

By Daniel Standing LL.B., Editor, First Reference Inc.

The vague yet intriguing title of the case, in the Matter of B, 2020 ONSC 7563 (CanLII), foretells some of the secrecy and confidentiality of the facts behind the matter. The Honourable Barbara A. Campbell, Justice of the Ontario Superior Court of Justice authors an interesting decision sure to please any aficionado of the law of evidence. In it, she considers whether an employment agreement’s confidentiality clause sufficiently shields an employee from testifying about his or her employer in an investigation by the Ontario Securities Commission. Does the clause render the information privileged, or does the employee still have to answer the Commission’s questions? Read on to find out.

Background

In early March 2020, the Commission started an investigation under the province’s Securities Act to determine if the employer was complying with securities law. In that context, it issued a summons to the employee along with a date for testifying. The employee worked as an administrative assistant at a law firm. The employee’s lawyer told the Commission that the confidentiality clause in the employee’s contract prevented the employee from having the discussion. The Commission took the view that the summons compelled the employee to testify. When it became obvious that the Commission intended to proceed as scheduled, the employee applied to court for directions and an order exempting the employee from answering the Commission’s questions.

The court’s decision

Justice Conway began by reviewing the relevant portions of the Securities Act. It provided that once served with the summons, the employee was required to attend and answer the Commission’s questions, subject to the employee’s right to assert a claim of privilege. A refusal to do so exposed the employee to a finding of contempt of court.

Rather than asserting privilege over specific questions, the employee asserted a blanket right of privilege. This was found to be inappropriate in light of the clear wording in the law. The employee only tried to assert privilege in October 2020, months after the summons was heard and in delaying risked a finding of contempt.

The court determined that as of this date, the employee’s claim of privilege crystallized giving the court jurisdiction to determine it. Unlike “class privileges,” “case-by-case” privileges are not presumptively inadmissible. Rather, a court will evaluate the situation according to the general framework of the “Wigmore criteria” to determine if a case-by-case privilege should be recognized.

1. The communications must originate in a confidence that they will not be disclosed.
2. This element of confidentiality must be essential to the full and satisfactory maintenance of the relation between the parties.
3. The relation must be one which, in the opinion of the community, ought to be sedulously fostered.
4. The injury that would inure to the relation by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of litigation.

In this case, the employee was not able to meet the above test to protect against disclosing the information at issue. The employee’s affidavit evidence gave no context about the nature of employment, job duties, what type of information the employee receives from the employer or what the employee does with it. It merely set out that an employment agreement exists, and provided the wording of the confidentiality clause. According to the court, while there was no doubt that the communications originated in a confidence that they would not be disclosed, the employee could not have reasonably expected that confidence would be maintained if the employee was required to disclose the information by law.

The employee failed to meet the second element of the test as well. Courts have noted the difference between relationships where confidentiality is desirable and those which depend on confidentiality for their existence. In the present case, the employee gave no evidence showing that confidentiality was integral to the relationship, or even that the employee actually received or dealt with such information.

Both parties agreed that the third criteria was met. Under the fourth criteria, the court had to balance the injury to the relationship against the value to the litigation, presuming that disclosure is allowed. On this point, evidence showed that such refusals to testify on the basis of confidentiality concerns are exceedingly rare. The court concluded that the lack of any evidence rendered entirely speculative the potential of injury to the employer-employee relationship. There was also an important public policy reason for rejecting the employee’s request in this case. The Ontario Securities Commission serves a public interest role in protecting investors and in ensuring the proper functioning of capital markets and by compelling production of documents and other evidence from witnesses. The integrity of its investigative process is protected.

For these reasons, the court favoured disclosing the information. The Commission’s public interest role in protecting the investing public carried more weight than the potential for harm to the parties’ relationship. As a result, the court ordered the employee to attend the interview and answer the Commission’s questions, despite the confidentiality obligations in the contract.

Takeaways

This case shows that even the most well-drafted confidentiality clauses in employment contracts are vulnerable in limited situations such as those which give an administrative body the power to investigate and determine matters within its jurisdiction. Many pieces of legislation dealing with occupational health and safety and employment standards allow such administrative bodies to summon and interview witnesses under oath. Sometimes confidentiality clauses may protect trade secrets or other valuable intellectual property of the company. Chances are the confidentiality clauses are not relied on too frequently to shield third parties from probing too much in these areas. It is probable that most reliance on and enforcement of confidentiality clauses is in relation to poorly handled complaints or disciplinary processes. Regardless of the forum, a party’s bad faith or illegal conduct will come to light. Therefore, the best precaution for many operations is avoiding the need to rely on confidentiality in the first place. In other cases, obtaining proper legal help in drafting a solid employment contract will save time and expense in the long run.