The plaintiff claimed damages alleging that the defendant failed to account for profits earned while the parties were operating an internet-driven animal supplies business. The plaintiff also sought disgorgement of profits earned by the defendant who allegedly continued using the plaintiff’s customer list, website and database after the agreement was terminated.
In this application, the plaintiff requested production of certain documents. The documents were classified in one of three categories; a machine readable copy of the database customers of the original website and the defendant’s new website, bank statements for any accounts held by the defendant to the date of trial, and pharmacy administrator reports for the original and the new website showing weekly sales, cost of goods, and profits.
Under a Profit Sharing Agreement, the plaintiff and defendant each attended to different aspects of the business, but the profits were to be split 50/50. Between 2007-2008 the plaintiff realized that it was being underpaid, while the defendant was diverting money from the account to itself.
The agreement was terminated in 2009, and the plaintiff sought damages for, in part, the defendant’s failure to deliver the database back to the plaintiff, and for using the customer list for its new competing website.
Originally, Justice Rice had ordered that the customer databases of both websites be delivered up to the plaintiff in accordance with a clause in the agreement for division of the assets. This order was appealed and the appeal judge remitted the issue of what conditions should attach to the production of those documents to the trial judge.
The defendant argued that the order of Rice J. should be subject to conditions. First, that the requested data from both the original website and the new conflicting website should be referred to an expert who would obscure all private customer information and code each such entry. Then those customers whose codes appeared on both list would be identified in a list to be produced by the expert to the parties.
The defendant submitted that the customers of the new website had legitimate privacy concerns in terms of their credit card and personal information being supplied to the plaintiff. They also argued that the plaintiff’s implied undertaking not to misuse the information obtained on discovery was not enough assurance, since the plaintiff had no employees, assets, or real place of business in British Columbia. The defendant argued that an anonymity system as described above would not prejudice the plaintiff’s case, would protect the confidentiality of the customers, and should be paid for by the plaintiff.
The plaintiff argued that the cost of vetting the 30,000-40,000 customer list would be substantial, and that its principals were professionals, so there was no risk of the information being misused.
The Court found that the implied undertaking not to misuse the confidential information was sufficient. Further, the Court noted that there must be some evidence that the party whose information is to be protected had an expectation of confidentiality vis-à-vis the information at issue.
The judge noted that the court should strive to consider the need to protect the privacy interests of third parties in this instance. However, the implied undertaking may be sufficient to ensure that the private information would not be misused by the plaintiff. In coming to this decision, the judge had considered the object of the Rules and the principle of proportionality in Rule 1-3(2). The judge ultimately decided to have the two principals of the plaintiff corporation sign confidentiality agreements.
With regards to the “Pharmacy Administration Reports,” the defence counsel attempted to avoid disclosure by distinguishing between “charts” and “reports,” only the former of which the plaintiff had specifically requested. The Court held that this semantic distinction did not prevent the defendant from having to disclose all relevant documents.
Finally, Justice Armstrong then went on to consider the electronic data that the Plaintiff requested. Upon considering the Rules of the Court, and the relevant case law, the judge was clear that electronic data falls under the broad definition of “document,” and as such must be produced. He added that if the data is stored in electronic form, it must be produced to the Plaintiff in that form.