The Deemed Undertaking Rule – Hull on Estates #102
Listen to the deemed undertaking rule.
This week on Hull on Estates, Paul and Allan discuss the deemed undertaking rule and its application to estate matters.
The Deemed Undertaking Rule – Hull on Estates Podcast #102
Paul Trudelle: Hello and welcome to Hull on Estates. You’re listening to Episode #102 on Tuesday, March 18th, 2008.
Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada. Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills. Now, here are today’s hosts.
Paul Trudelle: Hi, I’m Paul Trudelle.
Allan Socken: Hi, and I’m Allan Socken.
Paul Trudelle: Hi Allen, how are you today?
Allan Socken: I’m good, thank you. How are you Paul?
Paul Trudelle: Good, withstanding the winter?
Allan Socken: Yeah, hopefully it’s close to an end.
Paul Trudelle: The end is in sight, we’re almost there. With respect to our podcast today and we’re now up into the triple digits, we thought we’d talk a bit about the deemed undertaking rule. The deemed undertaking rule is a rule that applies in litigation, it’s a common law rule, that talks about the use of evidence, and it’s now codified in the Rules of Civil Procedure.
Allan Socken: I think it’s also just important to make mention that while this appears to be standard practice in all jurisdictions in Canada, it’s interesting to note that only P.E.I. and Ontario have this codified within our Rules of Practice.
Paul Trudelle: Yeah, that is a bit strange, but we have it codified in Ontario and that’s the system that we’re working under, so we’re going to talk a bit about the rule as it applies in Ontario. However, it should be noted that it probably applies to the same effect in other jurisdictions as well, being a common law rule that is now codified.
With respect to the purpose of the rule, it basically… the rule is set to limit the use that one can make use of when obtaining evidence in the litigation process. And there’s a very good quote from the Ontario Court of Appeal decision of Goodman v. Rosi that talks about the basis upon which the rule exists or why it exists.
Allan Socken: It basically says the principle is based on recognition of the general right of privacy which a person has with respect to his or her documents. The discovery process represents an intrusion on this right under the compulsory processes of the Court. The necessary corollary is that this intrusion should not be allowed for any purpose, other than that of securing justice in the proceeding in which the discovery takes place.
Paul Trudelle: Right, and I think that’s a great quote and I think it summarizes the purpose of the rule quite well and quite succinctly … I guess, put another way or restated, if you’re going to be forced to the litigation table by someone and you’re forced to disclose your documents, the documents only need to be disclosed for that limited purpose and they shouldn’t be disclosed for the whole world to see or they shouldn’t be used in some other proceeding and come back to bite you that way.
Allan Socken: I think also to point out, I think the purpose of the deemed undertaking rule as is set out in Rule 30.1.01 sub 1, is that you can only use evidentiary documents that relate to the discovery and inspection of property, medical examination and the like. That’s what the rule tries to capture. So, for example, if you are in Court and there’s evidence given, then that probably isn’t captured under the deemed undertaking rule.
Paul Trudelle: That’s right. The principle of the rule is if you’re forced to disclose information in the litigation process before it gets to open Court, it’s that information that’s going to be protected by the deemed undertaking rule. And the rule sets out that the rule applies to evidence obtained under the rules relating to documentary discovery, Examination for Discovery, that’s of the parties and of witnesses as well, inspection of property, medical examination, written interrogatories if they are used, and even as far as examinations in aid of execution after judgment is obtained. So it is of limited application, however, in the context of litigation, it seems to protect most evidence that you are able to obtain from the other party or from the witnesses.
Allan Socken: For example, for Will challenges, a lot of the time, it’s very standard to ask for complete disclosure of medical, financial and legal information. And especially in the case of legal materials, when you do a Will challenge, it may be necessary or it may be an option for the client subsequent to the Will challenge or during the Will challenge, to want to pursue a negligence claim against the solicitor in certain circumstances.
Paul Trudelle: That’s right, Allen. And I think that that’s very important from an estate point of view. The only way we are able to obtain evidence, usually from medical practitioners, and perhaps more importantly from solicitors, is through the litigation process. If that evidence is protected by the deemed undertaking rule, that’s going to have a significant impact on the rights of the parties to pursue those types of claims, and we’ll talk about that in a minute.
The substance of the rule, I think we should mention briefly, we talked about what evidence it applies to. With respect to the substance, that’s set out in the rule itself. And the rule states that all parties and their counsel are deemed to undertake not to use evidence or information to which the rule applies, and we talked about that, for any purposes other than those of the proceeding in which the evidence was obtained. So that’s very limiting. You can’t use it for any other purpose other than the purpose of the very litigation that’s before the Court. And that’s quite restrictive. Having said that, there are exceptions to that rule and perhaps we can talk about some of the exceptions that are set out in the rule itself.
Allan Socken: Sure. Some of the exceptions are that the deemed undertaking rule does not apply to evidence that is filed with the Court. Similarly, it doesn’t apply to evidence that is given or referred to during the hearing, as well as information obtained from evidence regarding the evidence filed within the Court, or evidence that is given or referred to in the hearing.
Paul Trudelle: That’s right. So once the material is aired in an open Court, then its open game and the parties are able to … the protection no longer applies. Similarly, if you obtain some information and it’s disclosed in open Court that leads to other information, that information isn’t protected either. There’s another exception that deals with using evidence to which the parties consent. So if you get the consent of the person with respect to the evidence that’s disclosed, then it can be used for another purpose. Although if you’re going to be suing that person, it’s probably not likely you’re going to be getting their consent.
Allan Socken: And I think another exception is the deemed undertaking rule doesn’t apply when the interests of justice outweigh the prejudices of the parties. I think that’s kind of an interesting exception, simply because it’s such a broad exception and it could probably capture a number of situations.
Paul Trudelle: That’s right. And to deal with that exception, you’d need to get an order of the Court allowing you to use that evidence for the ulterior purpose or for the purpose of the other proceeding. What you would need to do is show the Court that, just as the rule states, that the interests of justice outweigh any prejudice that would result to a party. That is often a sort of a way of saving yourself or allowing you to proceed with the action after the fact. If you obtain evidence through the examination process or the discovery process and there is no other way to get that, you may be able to argue that you have a legitimate interest in using that evidence for the purpose of the subsequent proceeding.
Allan Socken: From your experience, Paul, is it easy to get that kind of order?
Paul Trudelle: I think that that’s a very tough thing to do because I think that we have to look at the overriding purpose and the intrusive nature of the disclosure process. People are dragged to the table and forced to disclose their evidence, their documents. And to allow that sort of fishing expedition to be used to commence another proceeding against another party, I think, is something that the Courts are not going to do lightly. Having said that, if there was no other way to get that evidence, or it’s clear that the evidence ought not to be protected, then the Court, I think, will make that type of an order and allow it to proceed. I think that’s still a very tough order to get, though.
Allan Socken: Absolutely. I mean, because, I think, in most matters, certainly a Court would be very careful before it goes ahead and grants a rule or grants an order which basically prejudices a party in a certain way.
Paul Trudelle: That’s right. With respect to the exceptions, there’s another exception. You can use that evidence to impeach someone’s testimony in another proceeding. So the evidence, if it’s… documents are given in one proceeding, they can be used in another proceeding to impeach testimony. And that’s another exception as set out in the rules.
We were talking, or you mentioned before, the estates context and I think that’s what we should maybe touch on before we wrap up. In the estates context, we usually get an order in a Will challenge, that would allow the parties to obtain evidence on examination or through witnesses. That may be, for example, the evidence of a solicitor who prepared the Will and the instructions that were given to that solicitor. That information may be protected by the rule and it may preclude a party from bringing an action as against a solicitor. There was a case back in 1998 that’s an unreported decision of Giamanco and Zahora that dealt with that very issue. And there, the Court was faced with a motion to consolidate proceedings. There was a Will challenge, there was an action against a solicitor and there was a motion to consolidate. The solicitor resisted that, as did the parties to the other lawsuit, on the basis that the deemed undertaking rule was breached. And the Court there dealt with the issue of the deemed undertaking rule.
Allan Socken: And what’s also interesting about that case was, it cited a decision known as Orfis Realty and D.J. Jewellery of Canada Ltd., which basically says that if you try to use evidence from one proceeding to another, notwithstanding the deemed undertaking rule, that a contempt order can be issued against the party who tries to do that. And notwithstanding that ruling, Justice Mossep in the Giamanco decision did not proceed to make a contempt order in the Giamanco decision. But the Justice did make mention of the fact that the solicitor, the defendant, could go ahead and try to stay the proceedings. But what’s interesting about it is Justice Mossep didn’t, on its on volition, try to stay the proceeding.
Paul Trudelle: That’s right. I think she left it open to the party to bring the appropriate motion in the second proceeding to have it stayed. And I think that’s maybe something we can touch on before we wrap up, which is the remedies where there is a breach of the deemed undertaking rule. You mentioned that contempt was one of them. And the other was a motion or a staying of the second proceeding or perhaps even a dismissal of that. You think that might be a fair conclusion?
Allan Socken: Absolutely.
Paul Trudelle: Okay. Now how do we, as parties to a litigation, when we’re going to be getting evidence from solicitors, how do we protect the right to pursue an action, if one is advisable, as against the third parties or those people who are giving evidence?
Allan Socken: Well generally, when we do a Will challenge, in that kind of situation, when we proceed with the order giving direction, which basically sets out the procedure for the litigation, we’ll specifically ask the Court within that order to ensure that this rule, the deemed undertaking rule, doesn’t apply for that litigation.
Paul Trudelle: And the Court can make an order that the deemed undertaking rule doesn’t apply. Often, in estate matters, we seek that in the order giving directions, usually on the basis that there’s no other way to get that information. The solicitor is…the information that he has can only be produced on a Court order in this proceeding because the person who gave the instructions is deceased. In effect, the parties are stepping into the shoes of that deceased person to get the information. And on that reasoning, we would argue that the deemed undertaking rule shouldn’t apply and that evidence shouldn’t be protected from an action, if it turns out that such an action is warranted.
Okay, well I think that’s a good, initial discussion with respect to the deemed undertaking rule, and when it can be invoked and the considerations to be taken into account. Thank you very much, Allan.
Allan Socken: Thanks Paul.
Paul Trudelle: And just before we go, we welcome your comments and we ask for your comments. You can send us an e-mail at firstname.lastname@example.org and send in any comments, your questions or suggestions that you might have.
Allan Socken: And be sure to visit our blog at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practice of estate law.
Paul Trudelle: And we also have a comment line. You can call us at 206-350-6636, and give us your comments and you might even end up on the air, on our podcast, if you leave a comment.
Well, thanks a lot Allan, that was very good. It was a pleasure blogging with you this week.
Allan Socken: Likewise, Paul.
Paul Trudelle: Podcasting with you, and I look forward to doing this again, thank you.
Allan Socken: Thanks.
This has been Hull on Estates with the lawyers of Hull & Hull. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.
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