Introduction
Employers involved in labour disputes should be aware of the Ontario Superior Court’s recent decision in Grid Link Corp. v. Foglia et al, 2024 ONSC 19 (CanLII). This case clarifies the application of the common law implied undertaking rule regarding documents disclosed in administrative proceedings, such as those before the Ontario Labour Relations Board (OLRB), and their potential use in later litigation.
What is an Implied Undertaking?
An implied undertaking is a legal principle that restricts parties from using documents obtained in one legal proceeding for another purpose unless they become part of the public record. This rule encourages full disclosure while ensuring the confidentiality of sensitive information.
The Facts and the Motion
Grid Link Corp. initiated legal action against a former executive, Mr. Foglia, and his new employer, Staal Incorporated, alleging financial misappropriation. Before filing the lawsuit, Grid Link obtained approximately 15,000 pages of documents during an unrelated OLRB proceeding, where the union sought to extend bargaining rights to Staal employees.
The defendants brought a motion in court to dismiss or permanently stay the action. They alleged Grid Link breached the common law implied undertaking rule by using documents disclosed in the Board proceeding to assist in starting their court action.
The motion judge dismissed the motion. Although the motion judge found Grid Link had used the documents to initiate the action, he concluded Grid Link’s conduct did not constitute a breach of the deemed undertaking in r. 31.1.01 of the Rules of Civil Procedure. He reasoned that r. 31.1.01 supplanted the common law rule and did not cover information received from a Board proceeding. The defendants appealed.
Court’s Findings on Appeal
On appeal, the Court decided in the defendants’ favour and made the following determinations:
- The implied undertaking rule applies to documents disclosed in OLRB proceedings.
- Grid Link’s use of these documents before they became public exhibits constituted a breach of the rule.
- However, since the defendants were not prejudiced by this use, insofar as the documents eventually became public, the court declined to stay the action.
- Instead, and as a punitive measure, Grid Link was required to pay costs to the defendants for the appeal of the motion on a substantial indemnity basis.
Key Considerations for Employers
1. Documents from Administrative Proceedings Are Protected
Employers should be aware that documents obtained in an OLRB proceeding are subject to an implied undertaking and should not be used in other litigation unless they are publicly disclosed.
2. Wait for Public Disclosure Before Using Documents
If documents are expected to become exhibits in a tribunal hearing, employers should wait before using them in any separate legal proceedings.
3. Seek Permission Before Using Protected Documents
Employers who may need to use such documents should consider:
- Requesting consent from the other party, or
- Applying for a court or tribunal order to lift the undertaking.
4. Non-Compliance May Result in Costs
While the court did not dismiss Grid Link’s lawsuit, it did impose financial penalties. Adhering to procedural rules can help avoid unnecessary legal expenses.
This publication provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hunter Legal LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hunter Legal LLP.