O.I. Group of Companies v. Canada (Minister of National Revenue)

O.I. Group of Companies v. Canada (Minister of National Revenue) Court (s) Database Federal Court of Appeal Decisions Date 2006-06-28 Neutral citation 2006 FCA 234 File numbers A-97-06, A-98-06 Decision Content : 20060628 Dockets: A-97-06 A-98-06 Citation: 2006 FCA 234 CORAM: NOËL J.A. NADON J.A. SEXTON J.A. BETWEEN: A-97-06 ROGER OBONSAWIN, LJUBA IRWIN AS REPRESENTATIVES OF THE O.I. GROUP OF COMPANIES Appellants and HER MAJESTY THE QUEEN IN RIGHT OF CANADA AS REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND MARGARET HORN Respondents A-98-06 ROGER OBONSAWIN, LJUBA IRWIN AS REPRESENTATIVES OF THE O.I. GROUP OF COMPANIES Appellants and HER MAJESTY THE QUEEN IN RIGHT OF CANADA AS REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND SANDRA WILLIAMS Respondents Heard at Toronto, Ontario, on June 20, 2006. Judgment delivered at Ottawa, Ontario, on June 28, 2006. REASONS FOR JUDGMENT BY: NOËL J.A. CONCURRED IN BY: NADON J.A. SEXTON J.A. Date: 20060628 Docket: A-97-06 A-98-06 Citation: 2006 FCA 234 CORAM: NOËL J.A. NADON J.A. SEXTON J.A. BETWEEN: A-97-06 ROGER OBONSAWIN, LJUBA IRWIN AS REPRESENTATIVES OF THE O.I. GROUP OF COMPANIES Appellants and HER MAJESTY THE QUEEN IN RIGHT OF CANADA AS REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND MARGARET HORN Respondents A-98-06 ROGER OBONSAWIN, LJUBA IRWIN AS REPRESENTATIVES OF THE O.I. GROUP OF COMPANIES Appellants and HER MAJESTY THE QUEEN IN RIGHT OF CANADA AS REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND SANDRA WILLIAMS Respondents REASONS FOR JUDGMENT NOËL J.A. [1] These appeals are from two interlocutory orders made by the Chief Justice of the Federal Court in actions T-2241-95 and T-2242-95. The orders in question are directed at the two Appellants, who are not parties to the actions, and require them to produce documents, which they have so far refused to produce in their unedited form. Relevant Facts [2] The two Plaintiffs in the Court below (Margaret Horn and Sandra Williams together referred to as "the Plaintiffs") are Indians within the meaning of the Indian Act, R.S.C. 1985, c. I-5, and are employed by Native Leasing Services ("NLS"), which is a sole proprietorship owned and operated by one of the Appellants, Mr. Obonsawin (Williams' and Horn's Fresh As Amended Statements of Claim, paras. 1, 9 and 10). NLS contracted with Odawa Native Friendship Centre and with the Hamilton-Wentworth Chapter of Native Women to provide the services of the Plaintiffs. [3] The O.I. Group of companies (the "O.I. Group"), which includes NLS, is owned by Mr. Obonsawin (Horn's and Williams' Fresh As Amended Statements of Claim, para. 11). The O.I. Group's and NLS's offices are located on the Six Nations of the Grand River Reserve (Horn's Fresh As Amended Statement of Claim, para. 12, and Williams' Fresh As Amended Statement of Claim, para. 10). [4] The Plaintiffs brought their actions against the Crown as a result of a change in the administration of the tax exemption under section 87 of the Indian Act, brought in 1994, whereby the salary which they were paid "from" NLS's head offices (O.I.E.L. in the case of Williams) ceased to be considered as being exempt from taxation (Horn's Fresh As Amended Statement of Claim, para. 19, and Williams' Fresh As Amended Statement of Claim, para. 20). Amongst other reliefs, they seek a declaration that their salaries are exempt from taxation pursuant to section 87. [5] By orders dated November 10, 2005, Hugessen J., as case management judge, directed the Plaintiffs to ask Mr. Obonsawin to produce the books and records in his possession with respect to the financial operations of the O.I. Group for the 1995 and 1996 taxation years. By orders issued the same day, Hugessen J. allowed the Crown's motion for leave to examine Mr. Obonsawin and ordered that the examination take place on or before November 30, 2005. [6] The orders requiring the production of documents were made pursuant to Rule 233(1) of the Federal Courts Rules which provides: 233. (1) Production from non-party with leave - On motion, the Court may order the production of any document that is in the possession of a person who is not a party to the action, if the document is relevant and its production could be compelled at trial. 233. (1) Production d'un document en la possession d'un tiers - La Cour peut, sur requête, ordonner qu'un document en la possession d'une personne qui n'est pas une partie à l'action soit produit s'il est pertinent et si sa production pourrait être exigée lors de l'instruction. [7] On November 22, 2005, Mr. Obonsawin attended for his examination. Regarding the documents which were ordered to be produced, Mr. Obonsawin's counsel advised that, "Mr. Obonsawin is not prepared to produce those documents at this time" and he expressed privacy concerns in his cross-examination on December 29, 2005, by the Defendant on his affidavit sworn on December 9, 2005. [8] On January 6, 2006, Hugessen J. rendered the following order in each file: 1) Under reserve of objections to such production, Mr. Obonsawin or Ms. Irwin as representatives of the O.I. group of companies shall, on or before January 12, 2006, produce for examination by representatives of the defendant Crown the financial statements for the O.I. group of companies for the years ended January 31, 1993, and January 31, 1994, together with the source documents provided to and relied upon by the accountant who prepared those statements and shall thereafter submit to examination for discovery on such statements and documents at a date to be fixed by counsel or in default of agreement to be set in an order to attend. 2) Similar provisions shall apply with respect to financial statements and supporting documents of the O.I. group of companies for the year ended January 31, 1995, which are to be produced for inspection no later than January 31, 2006. 3) The financial statements and supporting documents for the year ended January 31, 1996, shall be produced for inspection as soon as possible. 4) The Crown's motion presently before the Court is adjourned sine die and may be brought on by any party by appointment with the Registrar. [9] On January 19, 2006, counsel for Mr. Obonsawin filed Notices of Appeal in respect of Hugessen J.'s orders of January 6, 2006, which were discontinued on February 24, 2006. [10] In response to Hugessen J.'s orders of January 6, 2006, the Appellants delivered to the Crown financial statements relating to their business, as well as the supporting source documents. However, certain information was whited out, more specifically, names of clients (the "client placement organizations") to which members of the O.I. Group leases employees. [11] On February 8, 2006, Lutfy C.J. assumed the duties of case management judge in these proceedings. [12] On February 17, 2006, Mr. Obonsawin sought to have adjudicated the issue of whether production of the documents with the names of the client placement organizations whited out complied with Hugessen J.'s orders of January 6, 2006. [13] Counsel for Mr. Obonsawin submitted that the names of the client placement organizations were properly whited out on the basis that they were not relevant to the issues raised in the two actions. In the alternative, counsel advised that Mr. Obonsawin had given undertakings not to disclose the names and was bound to abide by these undertakings. [14] Counsel for the Crown challenged the refusal to disclose the names and took the position that if a document is relevant, it must be made available in its unedited form. [15] Lutfy C.J. ruled in favour of the Crown, he held that the Appellants had fallen far short of establishing the exceptional situation warranting deviation from the general rule that relevant documents are to be produced in their unedited form. He issued an order accordingly and further ordered that Mr. Obonsawin or Ms. Irwin make himself or herself available for further examination. [16] Notices of Appeal and Amended Notices of Appeal were filed by the Appellants against the aforementioned orders of Lutfy C.J., and the present appeal ensued. Errors Alleged in the Orders under Appeal [17] In support of their appeals, the Appellants allege that Lutfy C.J. erred in law in declining to find that the names of the client placement organizations were irrelevant, and therefore, ought not to be revealed. [18] The Appellants also allege that Lutfy C.J. erred in failing to find that they were bound by an undertaking of confidentiality which was given to the client placement organizations and in failing to consider the overarching interest in protecting private information belonging to these clients. [19] Finally, the Appellants argue that Lutfy C.J. had a duty to give notice of the impending orders to the client placement organizations so as to allow them to be heard on the matter. The Appellants submit that the failure to give such a notice is, in itself, sufficient ground to allow the appeals. [20] The Plaintiffs, although they did not file an appeal, have produced a Memorandum of Fact and Law in which they allege essentially the same errors, and put forth the same arguments as the Appellants. Analysis and Decision [21] The primary error alleged by the Appellants and the Plaintiffs is that Lutfy C.J. assumed, without inquiry, that the documents in their unedited form were relevant. According to them, Lutfy C.J. even questioned their right to raise the issue of relevance. In this respect, reference is made to Lutfy C.J.'s statements that: [18] It does not, in my view, lie in the mouth of a non-party to a proceeding to say what is or is not relevant as between the parties where the information in issue has been ordered to be disclosed... and that [12] At no point have I understood the plaintiffs to dispute the relevance of the documents. [See paras. 18 to 25 of Plaintiffs' Memorandum of Fact and Law and paras. 38 to 42 of Appellants' Memorandum of Fact and Law.] [22] With respect, I do not believe that Lutfy C.J. was stating that the Appellants did not have the standing to argue that parts of the documents were irrelevant, nor that there was to be no debate on the issue. Rather, it appears that he was adopting the general proposition (put forth by the Crown) that, where a document has been found to be relevant and has been ordered to be produced, (as was done by Hugessen J. in this instance), it will have to be produced in its entirety (Glaxo Group Ltd et al. v. Novopharm Ltd. (1996), 122 F.T.R. 192; 70 C.P.R. (3d) 300; [1996] F.C.J. No. 1423 (QL) at paras. 16 and 17; North American Trust Co. v. Mercer International Inc., (1999) 71 B.C.L.R. (3d) 72; [1999] B.C.J. No. 2107 (QL), at para. 13; Vernon and District Credit Union, [1999] B.C.J. No. 364 (QL) (B.C.S.C.) at para. 7; Fougere v. Acadia Drug (1969) Ltd. et al., (1993) 206 N.B.R. (2d) 1 (N.B.Q.B.) at paras. 10-12). In so holding, Lutfy C.J. was obviously of the view that the Appellants had failed to bring the redacted portions of the documents within any exception to the general rule (see for instance Lewis v. Petryk, 2005 BCSC 77 at para. 15, where it was held that "clearly irrelevant " portions of relevant documents can be excluded). [23] The further statement by Lutfy C.J. that the Plaintiffs did not at any time dispute the relevance of the documents accurately reflects the fact that neither of them took the position that the documents as such were not relevant. I do not agree with the Appellants' and the Plaintiffs' characterization of the reasons for judgment. [24] When regard is had to the record, the only question which was before the Chief Justice is whether the redacted portions of the documents could be withheld on the basis that the information which they revealed was not relevant to the issues raised by the pleadings or subject to a recognized privilege. Lutfy C.J. held that the documents had to be produced in their unedited form. I see no basis for interfering with this conclusion. [25] Whether a document is relevant must be ascertained by reference to the pleadings. Whether part of a relevant document can be withheld because it is irrelevant must also be ascertained by reference to the pleadings. [26] In this case, Horn pleads as a material fact that the O.I. Group (NLS in the case of Williams) provides significant benefits to reserves, including, but not limited to, direct financial benefits and direct contributions to economic development. It is also pleaded that the objects of O.I. Group (NLS in the case of Williams) include the enhancement of Aboriginal rights by offering human resources assistance to employers (i.e., client placement organizations) and employees (Horn's Fresh As Amended Statement of Claim, paras. 11 and 13, and Williams' Fresh As Amended Statement of Claim, paras. 14 and15). [27] When regard is had to these allegations, it is difficult to understand the basis upon which the Appellants contend that the identity of the client placement organizations is not relevant. What is put in issue by the pleadings is the true nature of the connection between the O.I. Group, N.L.S., and reserves (compare The Queen v. Shilling, [2001] 4 F.C. 364). [28] The client placement organizations are an integral part of the business of the O.I. Group and NLS. They constitute one third of the three-party contractual arrangements which underlie every lease concluded. It cannot be seriously argued that the identity of these clients is not relevant to the assessment of the true nature of the connection between the O.I. Group, NLS and the reserves, and the alleged benefits which they bring. [29] There is, in my view, no basis for the contention that this information is not relevant based on the pleadings as they have been framed. [30] The Appellants further contend that Lutfy C.J. erred in failing to recognize the duty of confidentiality that they owed to the client placement organizations and in failing to give this duty any weight. [31] Assuming for the moment that such an undertaking could override a legal obligation to produce relevant information, the Appellants must first establish the existence of this undertaking. In this respect, it has not been shown that Lutfy C.J. made an overriding or palpable error in finding as a fact that no such undertaking was made (Reasons, para. 20). [32] Indeed, the record discloses no undertaking of confidentiality in the otherwise detailed contractual agreements between the O.I. Group and its client placement organizations. Furthermore, the record reveals that in practice the O.I. Group and their clients have not acted in a manner that is consistent with the existence of such an undertaking. I refer in particular to the fact that specific client relationships have been promoted in newsletters and broadcast on the Group's website. [33] Furthermore, I do not believe that the Appellants have established the existence of an implied duty of confidence. An implicit duty of confidence can only arise in respect of information which is by its nature confidential. It was, therefore, incumbent upon the Appellants to identify the information, which by its nature would give rise to an implied duty of confidentiality. In this case, aside from asserting that "financial information" will be disclosed, the Appellants have not indicated which information is by its nature confidential and stands to be disclosed if the names are revealed. [34] I see no basis for interfering with the decision of Lutfy C.J. insofar as he held that no undertaking of confidentiality was established. [35] Finally, I see no merit to the argument that Lutfy C.J. erred by failing to give notice of the impending order to the client placement organizations. Neither of the Appellants argued before Lutfy C.J. that such notice ought to have been given and I note that both were in a position to make it known to their respective clients that such an order was being sought. [36] I would dismiss the appeals with costs. "Marc Noël" J.A. "I agree M. Nadon J.A." "I agree J. Edgar Sexton J.A." FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-97-06 (APPEAL FROM AN ORDER OF THE HONOURABLE THE CHIEF JUSTICE, FEDERAL COURT, DATED MARCH 2, 2006, T-2241-95) STYLE OF CAUSE: ROGER ABONSAWIN, LJUBA IRWIN AS REPRESENTATIVES OF THE O.I. GROUP OF COMPANIES v. HER MAJESTY THE QUEEN IN RIGHT OF CANADA AS REPRESENTED BY THE MINISTER OF NATIONAL REVENUE and MARGARET HORN PLACE OF HEARING: Toronto, ON DATE OF HEARING: June 20, 2006 REASONS FOR ORDER BY: Noël J.A. CONCURRED IN BY: Nadon J.A. Sexton J.A. DATED: June 28, 2006 APPEARANCES: G. James Fyshe For the Appellant Gordon Bourgard Sandra Phillips Maxime Faille For the Respondent, The Queen For the Respondent, Margaret Horn SOLICITORS OF RECORD: PAGE, ARNOLD LLP Barristers and Solicitors Hamilton, ON For the Appellant John H. Sims, Q.C. Deputy Attorney General of Canada GOWLING LAFLEUR HENDERSON LLP Barristers and Solicitors Ottawa, ON For the Respondent, The Queen For the Respondent, Margaret Horn FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-98-06 (APPEAL FROM AN ORDER OF THE HONOURABLE THE CHIEF JUSTICE, FEDERAL COURT, DATED MARCH 2, 2006, T-2242-95) STYLE OF CAUSE: ROGER ABONSAWIN, LJUBA IRWIN AS REPRESENTATIVES OF THE O.I. GROUP OF COMPANIES v. HER MAJESTY THE QUEEN IN RIGHT OF CANADA AS REPRESENTED BY THE MINISTER OF NATIONAL REVENUE and SANDRA WILLIAMS PLACE OF HEARING: Toronto, ON DATE OF HEARING: June 20, 2006 REASONS FOR ORDER BY: Noël J.A. CONCURRED IN BY: Nadon J.A. Sexton J.A. DATED: June 28, 2006 APPEARANCES: G. James Fyshe For the Appellant Gordon Bourgard Sandra Phillips Maxime Faille For the Respondent, The Queen For the Respondent, Sandra Williams SOLICITORS OF RECORD: PAGE, ARNOLD LLP Barristers and Solicitors Hamilton, ON For the Appellant John H. Sims, Q.C. Deputy Attorney General of Canada GOWLING LAFLEUR HENDERSON LLP Barristers and Solicitors Ottawa, ON For the Respondent, The Queen For the Respondent, Sandra Williams