Recent changes to the Rules of Court in several jurisdictions of Canada have introduced the rule of proportionality to the civil litigation process.  While some consider that proportionality has always been a part of Canada’s jurisprudence the changes to the Rules ensure that proportionality will be given much more attention during the discovery process than it has in the past.   The purpose of this paper is to review the concept of the rule of proportionality and how these changes to the rules of discovery have been applied by the courts.

What is the Rule of Proportionality?

In Innovative Health Group, Inc. v. Calgary Health Region, a 2008 decision of the Alberta Court of Appeal, Justice Conrad made the following reference to the “rule of proportionality”:

The widespread use of computers for record keeping, communication and information storage has vastly expanded the breadth of potential discovery in litigation. Although technology is helpful in the sense that it makes fuller disclosure possible, it also creates an unfortunate paradox. The cost of sorting and producing all the relevant information in a party’s possession may put litigation beyond the economic ability of a vast number of litigants. Thus, it is necessary to ask such questions as: How much discovery is enough? Do all cases justify the same type of disclosure? Should there be some rule of proportionality that governs production based upon the issues in the lawsuit? How is irrelevant and immaterial information protected from production in those situations where a court orders production of a hard drive for examination by an expert? Who pays the cost?

The foundation of the rule of proportionality and its application to the discovery process can be traced to the Sedona Canada Commentary on Proportionality in Electronic Disclosure and Discovery published in October 2010.    This commentary was conceived in the Spring of 2009 in response to the planned changes to the rules in Ontario, British Columbia, and Alberta where the concept of proportionality was to be introduced.  A diverse group of lawyers offering the perspectives of the private sector, the public sector, trial lawyers, and inside counsel formed the working group that decided that the commentary “should offer principles-based guidelines along with advice on the application of proportionality, recognizing the need for both theoretical and practical guidance”.

The principles on proportionality in discovery put forward in the commentary were listed as follows:

1. The burdens and cost of preservation should be weighed against the potential value and uniqueness of the information when determining whether its preservation is required.
2. Discovery should initially focus on those sources of information relevant to allegations, defences, and issues that are supported by material facts.
3. Only reasonably accessible and non-duplicative information in support of plausible causes of action should be requested or produced.
4. Requests for further production should be reasonably specific and targeted.
5. The burden, cost, and delay of further production should be balanced against the probability of yielding unique information that is valuable to the determination of the issues.
6. Refusals to requests for further production, not based on relevance or privilege, should include details of the burden, cost, delay, and/or prejudice on which the refusing party is basing its position.
7. Burden and expense that are the result of actions taken by the party asserting undue burden or expense should be weighed against that party.
8. A party’s previous efforts to resolve problems through candour and cooperation should be considered, including in the cost award.
9. Non-monetary factors should be considered when evaluating the burdens and benefits of discovery.
10. The value of technological tools and approaches to reduce the volume of irrelevant and/or duplicative information should be considered in weighing the burden and cost.

As noted in the commentary, while the inclusion of the explicit proportionality rule is recent, Canadian courts have effectively applied the rule of proportionality in the exercise of their discretion to balance the interests of the parties to ensure fairness during the discovery process.  Some of the examples cited are limiting disclosure to what the parties will rely on in cases where small amounts are at stake, placing reasonable limits on the extent of document disclosure until there evidence that establishes that further disclosure is warranted, limiting production to specific addresses of email from key custodians, date range for document identification, and the use of key words as search terms.

In 2007, the Court of Queen’s Bench of Alberta recognized the growing importance of proportionality as follows:

It appears to be accepted in Canadian practice that the obligation of discovery is tempered by the application of proportionality or cost/benefit ratio: in Alberta, this means that records must be only be disclosed if they are not only relevant, but also material. Although this is a principle of general proportionality that is articulated in the Rules of Court, I accept that there is an implicit requirement that limits production to those records which are reasonably accessible.

Also, in Andersen v. St. Jude Medical, Inc., Master MacLeod highlighted the role of proportionality in achieving fairness and justice under the rules of civil procedure:

Rules of civil procedure are designed to serve and effect justice. They do not define it. Fairness and justice require that there be a sense of balance and proportionality. There are at least three imperatives in the justice system. The imperative of fairness has to be balanced against considerations of cost and delay in proportion to the complexity of the action and the importance of the issues in dispute. This balance should be the touchstone if the court is called upon to exercise its discretion in expanding or restricting discovery rights.

What are the Changes to the Rules?

As can be seen from the forgoing judicial comments many have considered proportionality to be part of the rules of civil procedure and the discovery process even before any changes to the rules.   With that in mind some may argue that the new rules have simply codified what the courts had already implemented while others will argue that these are substantial changes to the rules.  Regardless, the changes to the Rules of Court have now solidified the concept of proportionality in many jurisdictions.

The focus of this paper will be the changes to the Rules of Court for British Columbia which came into effect on July 1, 2010.  While changes to the rules in other jurisdictions (e.g. Ontario on January 1, 2010 and Alberta November 1, 2010) are different the introduction of the concept of proportionality and some of the issues arising from these changes in the British Columbia rules will no doubt be of interest to those dealing with these new rules in the other jurisdictions.

The Object of the Rules

Prior to these changes the object of the rules was “to secure the just, speedy and inexpensive determination of every proceeding on its merits”.  However, this rule has now been modified such that the “proceeding on its merits includes, so far as practicable, conducting the proceeding in ways that are proportionate to (a) the amount involved in the proceeding, (b) the importance of the issues in dispute, and (c) the complexity of the proceeding”.

The effect of this modification to the object of the rules, while seemingly insignificant, is likely to have a profound impact on how the Courts manage cases.  Even before these rules were enacted the Supreme Court of Canada in Marcotte v. Longueuil (City) 2009 SCC 43 noted the importance of proportionality in the exercise of the Court’s discretionary power to intervene in case management:

The requirement of proportionality in the conduct of proceedings reflects the nature of the civil justice system, which, while frequently called on to settle private disputes, discharges state functions and constitutes a public service. This principle means that litigation must be consistent with the principles of good faith and of balance between litigants and must not result in an abuse of the public service provided by the institutions of the civil justice system. There are of course special rules for the most diverse aspects of civil procedure. The application of these rules will often make it possible to avoid having recourse to the principle of proportionality. However, care must be taken not to deny this principle, from the outset, any value as a source of the courts’ power to intervene in case management.

With the object of the rules now being modified to specifically require that the proceedings be conducted in a “proportionate” manner it is more likely that the Courts will apply this principle on a more regular basis.

Discovery of Documents

One of the most significant and important changes to the Rules of Court in British Columbia is with respect to the disclosure and production of documents.  We will focus our review of the case law relating to this rule change as an example of how the concept of proportionality is now being applied.

Prior to the changes to the rule with respect to the discovery of documents each party was required to list “documents which are or have been in the party’s possession or control relating to any matter in question in the action”.  The change to this rule now requires a party to only list documents which either could be used by any party to “prove or disprove a material fact” or “which a party intends to refer at trial”.  However, “a court may order” a party to amend its list of documents to list additional “documents that are or have been in the party’s possession, power or control relating to any or all matters in question in the action”.

Prior to the change in the rules a document “relating to any matter in question in the action” was broadly defined utilizing the test in the Peruvian Guano case as one which:

(a) Contained information which may directly enable the party requiring discovery to advance his/her own case or to damage the case of his/her adversary, or

(b) Contained information which may lead the party requiring discovery on a train of inquiry which may indirectly enable that party to advance his/her own case or damage his/her adversary’s case.

Under the new rule, the Peruvian Guano test does not apply as the party is only required to list a document which could be used by any party to “prove or disprove a material fact”.  However, something “close to” the Peruvian Guano test would apply should a court order a party to amend its list of documents:  see  Edwards v. Ganzer, 2012 BCSC 138 at para. 45.

What is a Material Fact?

One of the first decisions to consider the changes to the document discovery rule was the decision of Biehl v. Strang, 2010 BCSC 139.  In that case the Court concluded, in an action for damages for a breach of contract, that documents containing information about the plaintiff’s history of drug use were documents which could be used at trial to prove or disprove a “material fact”, namely, the existence of the contract.  In reviewing “What is a Material Fact?” the Court stated:

In Alan W. Bryant, Sidney N. Lederman & Michelle K. Fuerst, The Law of Evidence in Canada, 3d ed. (Markham: LexisNexis Canada, 2009) at para. 2.50, relevance is distinguished from materiality:

§2.50 A distinction has also been drawn between relevance and materiality. Evidence is material in this sense if it is offered to prove or disprove a fact in issue. For example, evidence offered by a plaintiff in a conversion action to prove a loss of profit is not material since loss of profits cannot be recovered in such an action, and evidence that an accused charged with forcible entry is the owner of the land is immaterial since the offence can be committed by an owner. This evidence may very well be immaterial, but it is also simply irrelevant. This excluded evidence is no more required to make out the case than is evidence that the accused owns three other properties or owns a black dog for that matter. There is no probative connection between the fact to be proved and the facts in issue as determined by the substantive law. Little is added to the analysis by adding a concept of materiality, as different results do not depend on the distinction. The concept of materiality, however, requires the court to focus on the material issues in dispute in order to determine if the proffered evidence advances the party’s case. [Footnotes omitted. Emphasis added.]

In other words, the requirement that the disclosure relate to a material fact limits the breadth of what is relevant.

However, the Court then went on to state that the new rule “does not restrict production to documents that in themselves prove a material fact” and that “it includes evidence that can assist in proving or disproving a material fact”.   Since the ability of the plaintiff to remember was, in the Court’s opinion, relevant to proof of a material fact, namely the existence of a contract based on oral terms, the documents relevant to his memory must be produced.

In Biehl v. Strang the plaintiff attempted, unsuccessfully, to argue that the documents being requested related solely to the issue of credibility and, as a result, production was not required.   A similar argument was made successfully in Morvay v. Warke, 2012 BCSC 303 in which the Court noted that “the issue of proportionality must be viewed from the context of the scope of the issues raised in the pleadings, the complexity of those issues and their importance of the issues to the parties”.

In Whitcombe v. Avec Insurance Managers Inc. 2011 BCSC 204 the Court noted that where the issues go beyond simple negligence and involve opposing allegations of misfeasance, proportionality must be interpreted to allow the parties a wider, more Peruvian Guano type disclosure in order to defend and protect their respective professional reputations and abilities to carry on in the business community.

Demand for Additional Documents

As noted above, a party can seek an order for production of additional documents beyond those produced to “prove or disprove a material fact”.  However, the party requesting further production must make a “written demand that identifies the additional documents or classes of documents with reasonable specificity and that indicates the reason why such additional documents or classes of documents should be disclosed”.

In Anderson v. Kauhane and Roome (unreported, February 22, 2011, Vancouver Registry No. M103201) it was suggested that because of this rule there was a “higher duty” on a party requesting such documents to identify the documents and the reason why they should be disclosed.

In More Marine Ltd. v Shearwater, 2011 BCSC 166 the Court noted that under the new rules the duty to answer questions on discovery were broader than the duty to disclose documents.   It suggested that one reason for this anomaly was that “if a court is to be persuaded that the broader document discovery is appropriate in a particular case, some evidence of the existence and potential relevance of those additional documents will be required” and that “the examination for discovery is the most likely source of such evidence”.  This case is often cited to suggest that before an application is made seeking production of additional documents an examination for discovery should be done.  However, this can, in some cases, defeat the object of the rules “to secure the just, speedy and inexpensive determination of every proceeding on its merits” as it would likely then require the party to undertake more than one examination for discovery.

In Przybysz v. Crowe, 2011 BCSC 731 the Court refused to produce the plaintiff’s Medical Services Plan record in a personal injury motor vehicle accident case despite the fact that the defendants had pled a pre-existing injury.  The Court found that the defence had not met the evidentiary burden required by the new rule.  The plea of a pre-existing injury was pro forma and the defendants had not demonstrated a connection between the plaintiff’s pre-existing and accident-related complaints beyond a “mere possibility”.  The Court went on to state that if it was wrong with respect to the defendants’ failure to meet the evidentiary burden, then it exercised its discretion and relieved the plaintiff from producing the MSP records “at this stage of the litigation” and noted “it is proportional and reasonable that issues of a pre-existing injury be explored at an examination for discovery before the cost (however minimal) is incurred in production of a potentially unnecessary or irrelevant set of documents”.

Evidence Required for Production of Additional Documents

What “evidence” will support an order for further production will vary from case to case. In Global Pacific Concepts Inc. v. Owners of Strata Plan NW 141, 2011 BCSC 1752 at para. 15 the Court recognized that, in some cases, the need for broad disclosure will be inherent in the issues that have been pleaded. Thus, the court may require no more than the pleadings themselves to order further production.

The narrowing of the document discovery obligations of parties and most particularly the removal of the Peruvian Guano “train of inquiry” test of relevance will generally require a defendant to provide some evidence to support an application for additional documents:  see Kaladjian v. Jose, 2012 BCSC 357.  Accordingly, before an order will be made for production of additional documents the applicant must demonstrate a connection between the documents sought and the issues beyond a “mere possibility” or “there must be some ‘air of reality’ between the documents and the issues in the action”:  see Edwards v. Ganzer, 2012 BCSC 138, at para. 51.

In other instances, the applicant may, but need not, have some proof of this existence of further documents or further classes of documents.  For example, in Credential Securities Inc. v. Qtrade Canada Inc., 2012 BCSC 1902 the Court recognized that “there will clearly be some limited cases where a party is simply unaware of a document or a class of documents that are relevant and where such documents would, if the party could identify them, be ordered to be produced”.   The Court cited as examples cases of fraud or conspiracy where the very fact that the plaintiff does not know what has occurred may impede its ability to demand production of additional documents and identify such documents with “reasonable specificity”.  The Court noted that part of this concern is addressed by the words “reasonable specificity” which encompasses varying levels of “specificity” that may depend on the nature of the case and what is “reasonable” in that case.  However, even a flexible interpretation of what is “reasonable” in a given case may not properly ensure that adequate disclosure has taken place.  Accordingly, the Court suggested that “there will be limited cases, where proportionality concerns are not engaged, and which a party will be able to establish that it either cannot or should not be required to identify with specificity the full range of documents that it seeks”.

Conclusion

While a Court should be wary of “fishing expeditions” (as noted in Kaladjian) it should be equally wary of too readily impeding further discovery of documents (as noted in Credential Securities).   Individual cases are infinitely variable. That variability inhibits constructing a framework for the production of further documents under the new rules that is unduly rigid. Instead, each case requires a proper balancing and recognition of the object of proportionality, the nature of the particular case and the causes of action it advances, and the evidence advanced on any application for production of additional documents.

The foregoing brief review of the new rules of proportionality and its application to the disclosure and production of documents is just an example of how the rule can be both an effective and complicating factor in securing “the just, speedy and inexpensive determination of every proceeding on its merits”.