Implied Undertaking Rule Inapplicable in Context of Independent Medical Examination
Unifund Assurance Company v Churchill, 2016 NLCA 73
In this case, the Newfoundland & Labrador Court of Appeal considered the scope of the implied undertaking rule in circumstance involving an independent medical examination.
Churchill, who was injured in a motor vehicle accident, commenced a tort claim against the other driver. He also claimed, and initially received, wage-indemnity benefits from his automobile insurer, Unifund. When these benefits were later terminated, Churchill sued Unifund for breach of contract. By that time, the tort action had settled.
Unifund served Churchill with Interrogatories as permitted by Rule 31. The interrogatories included the following question:
Have you submitted to any independent medical examinations in connection with the tort claim [against the other driver], arising out of the motor vehicle accident of December 13, 2010, and/or Canada Pension Plan Disability and/or pension/disability providers? If so, when and with whom?
Rule 31.03(2) provides that “An objection to answering any interrogatory may only be taken on the ground of privilege or that it is not relevant”. Churchill declined to answer the question “based on relevancy, litigation privilege and the implied undertaking rule”.
The principles underlying the implied undertaking rule were set forth by the Supreme Court of Canada in Juman v. Doucette, 2008 SCC 8. This rule provides that evidence compelled during pretrial discovery from a party to civil litigation is not to be used by the other parties except for the purpose of that litigation, unless the scope of the undertaking is varied by judicial order, or in the event that a situation of immediate and serious danger emerges.
Unifund applied to compel Churchill’s reply and sought production of any independent medical examination (“IME”) reports identified. The applications judge held that the contemplated IME reports would be relevant and not protected by litigation privilege. However, the implied undertaking rule applied relieving Churchill from any obligation to answer the question or produce any IME reports, the use of which was deemed to be “strictly confined” to the tort litigation.
On appeal, the Court held that any IME reports prepared since the accident would be relevant to Unifund’s defence because Churchill’s claim was premised on the allegation that he had been continuously disabled as a result of, and since, the accident.
Litigation privilege was held to be inapplicable because Churchill’s tort litigation had concluded. Litigation privilege, if it exists, terminates when the litigation that gave rise to the privilege is ended. Citing Morrissey v. Morrissey, 2000 NFCA 67, the Court also noted that the purpose of litigation privilege is to aid in the adversarial process, not to impede the discovery of relevant facts which could not otherwise be obtained with due diligence, which would be the effect in this circumstance.
With regards to the implied undertaking rule, the Court similarly highlighted the proposition that “[t]he ultimate aim of any trial, criminal or civil, must be to seek and to ascertain the truth” (Imperial Oil v. Jacques, 2014 SCC 66). The Court also relied on Juman for the proposition that proper pre-trial discovery is essential to prevent “litigation by ambush”, to encourage settlement and to narrow the issues.
The Court found it “difficult to see” how the implied undertaking rule applied in this case, given the factual nature of a medical report. Furthermore, insofar as the rule could be said to be engaged, it would be overridden by the requirements of Rule 31 (Interrogatories) and Rule 34 (IME reports), being subordinate legislation requiring disclosure of medical reports. Finally, according to the Court, there was no public policy reason for the implied undertaking rule to apply in this case. This was contrasted with the situation in Juman, which dealt with the use of information obtained in civil discovery proceedings in a criminal prosecution, where considerations such as self-incrimination were involved.
Having found that the IME reports were relevant and that neither litigation privilege nor the implied undertaking rule would apply to prevent disclosure, the Court ordered that: (1) the IME reports must be included in Churchill’s list of documents; (2) Churchill was required to answer the interrogatory; and (3) Churchill was required to provide to Unifund a copy of any IME reports referenced in the interrogatory.
Although not referenced in the Court of Appeal decision, the result reached in this case is consistent with Kitchenham v. AXA Insurance (Canada), 2008 ONCA 877, and Parlee v. Aviva Insurance Company of Canada, 2014 NBQB 116, two decisions which consider the application of the implied undertaking rule in very similar fact scenarios.