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IN THE MATTER OF AN ARBITRATION

BETWEEN

FORTISBC ENERGY INC.
(the “Employer”)

-and-

INTERNATIONAL BROTHERHOOD OF ELECTRICAL
WORKERS, LOCAL 213
(the “Union”)

(Trevor Douglas - Recordings)

ARBITRATOR:

Robert Pekeles

COUNSEL:

Chuck Harrison, for the Employer
John MacTavish, for the Union

DATE OF DECISION:

September 9, 2016

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INTRODUCTION

The Union seeks an order that the Employer is barred from making use of the audio
recordings that the Union disclosed in pre-hearing disclosure, or any of the information
the Employer gained through the disclosure, for any purpose other than the conduct of the
present arbitration. The arbitration is scheduled to continue in the last week of September
2016. The Employer opposes the Union’s application.

BACKGROUND

By letter dated December 1, 2015, the Employer’s counsel wrote to the Union’s counsel
seeking production of the Union’s reliance documents. On December 11, 2015 the
Union’s counsel provided the Employer’s counsel with some documents as part of prehearing disclosure. The documents included a set of audio recordings (the “Recordings”)
that the Grievor had made in the workplace. In his letter, Union counsel said that the
Union did not concede the admissibility or relevance of the Recordings.

Employer counsel replied by letter dated December 23, 2015 advising that as he had only
sought production of the Union’s reliance documents, the Union’s disclosure of the
Recordings was voluntary. He asked Union counsel to clarify whether the Recordings
had been produced on an implied undertaking not to use them for purposes other than in
relation to the current proceeding. By email dated December 29, 2015, Union counsel
advised Employer counsel that the Union would decide whether to rely on the Recordings
after hearing the Employer’s case at arbitration. He confirmed that the Recordings were
subject to the implied undertaking rule i.e., that the Employer could not use them for any
purpose outside this proceeding, and that the undertaking would be breached if the
Employer used the Recordings otherwise without the Union’s consent or an order.

The arbitration hearing commenced on January 27, 2016 with counsel’s openings. The
Employer’s opening did not mention the Recordings.

The Union then opened and

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referred to the Recordings in its opening statement, but did not enter them as evidence.
The Recordings were not marked as exhibits.

Counsel for the Union stated that the Grievor had made “secret audio recordings”. He
further stated that the Recordings were absolutely reasonable in the circumstances. He
offered the example of the Employer’s record of a December 17, 2014 meeting which,
according to Union counsel, in some cases was different altogether than the Grievor’s
recording of it.

After both parties made their opening statements, and before any evidence was tendered,
the parties decided to put the arbitration on hold and attempted to reach a mediated
settlement. The mediation was not successful.

On February 1, 2016, a member of the Employer’s human resources staff emailed the
Grievor asking that he preserve and produce any recordings he had made in the
workplace. On the Union’s advice, the Grievor did not produce the Recordings.

The Union has not yet decided whether it will tender the Recordings as evidence. The
Union did not anticipate making that determination until after the Employer has put in its
evidence.

ARGUMENT

The Union is concerned about the Employer’s February 1, 2016 email to the Grievor. It
submits that outside the discovery process leading up to the hearing, the Employer would
have had no knowledge of the Recordings. It submits that it was a breach of the implied
undertaking rule for the Employer to use that knowledge to demand that the Grievor
provide copies of the Recordings.

Both parties rely on the Supreme Court of Canada’s decision in Juman v. Doucette, 2008
SCC 8 (“Juman”). I will discuss that decision at greater length in the Analysis below.

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The Union submits that the purpose of the implied undertaking rule is to preserve the
privacy of those participating in legal proceedings and to encourage full and frank prehearing disclosure. The objective is to “avoid a situation where a party is reluctant to
disclose information out of fear that it will be used for other purposes.” … Lac d’Amiante
du Quebec Ltee, [2001] 2 S.C.R. 743, at para 60.

The Union further submits that the implied undertaking covers not just the Recordings,
but also the information that the Employer may have derived from the Recordings.

The Union further argues that there is no exception to the implied undertaking rule
simply because a party believes, even in good faith, that the information discloses a
crime.

The Union concedes that it did refer to the Recordings in the course of its opening
statement at arbitration. Opening statements do not, however, constitute evidence. The
Union notes that it did not tender the Recordings as evidence or even provide the
Recordings to myself as Arbitrator to be marked as an exhibit. The Union had stated its
intention to tender the Recordings as evidence only if necessary after hearing the
Employer’s case.

Until such time as one of the parties enters the Recordings, or

information about them, into evidence at the hearing, those materials remain subject to
the implied undertaking.

The Union requests a declaration that the Employer breached the implied undertaking
rule on February 1, 2016 when it emailed the Grievor asking for the Recordings. It also
seeks an order that the Employer may not use the Recordings themselves or any of the
information that the Employer gained through the disclosure of the Recordings for any
purpose other than the conduct of this arbitration.

The Employer notes that the Supreme Court of Canada in Juman affirmed that
documentary and oral information obtained in pre-trial discovery is subject to the implied

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undertaking of confidentiality, meaning that such information cannot be used by the other
party, except for the purpose of that litigation, absent a court order.

However, the implied undertaking is not of an indefinite duration. Where the discovery
evidence at issue is used “at trial”, the implied undertaking is extinguished: Juman, at
paras 21, 25 and 51; IBEW Local 213 v. Hochstein, 2009 BCCA 355 (“Hochstein”), at
paras 20-21; Chellappa v. Kumar, 2016 BCCA 2, at para 35.

The Employer submits that the information relied on by the Employer in seeking to
initiate an investigation, has been introduced “at trial”. It notes that the Union elected to
open its case. It was not obliged to do so at that time. It was entitled to wait until the
close of the Employer’s case before giving its opening. In short, the Union’s statement in
opening that a series of workplace recordings had been made, has been introduced “at
trial”. It notes the BC Court of Appeal’s statement in Hochstein that “What happened in
the discovery room is superseded by what the Union did in the courtroom”: at para 28.
The Employer argues that the Union has chosen to introduce the fact that Recordings
were made as part of its case “in the courtroom” in this arbitration, thereby superseding
any implied undertaking that attached to that information when disclosed prior to the
commencement of the hearing. The Employer notes that the existence of the Recordings,
including specific reference to a December 17, 2014 recording, was identified by the
Union on the first day of the arbitration hearing. Union counsel stated that the Grievor
had made “secret audio recordings”, including at a meeting on December 17, 2014.

The Employer notes that it is seeking to investigate facts asserted in the Union’s opening
statement. The Employer argues that it is entitled to act upon the statement that secret
audio recordings were made by the Grievor. The fact that pre-arbitration disclosure had
preceded the statement at arbitration, cannot function to remove the Employer’s right to
investigate the statement made at arbitration that the Grievor had made “secret audio
recordings”. The Union has referred to the Recordings in “open court”, similar to the
situation in Hochstein. Having disclosed them at the arbitration hearing, the Union cannot
claim confidentiality with respect to them.

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The Employer argues that it, accordingly, did not breach the implied undertaking rule on
February 1, 2016 when it emailed the Grievor asking for any recordings made in the
workplace. The Employer may use the information disclosed by Union counsel in his
opening statement, outside the arbitration. The Employer submits that I should dismiss
the Union’s application.

In reply, the Union argues that what extinguishes the implied undertaking is not a mere
reference to a document during a hearing, but rather the introduction of the document into
evidence by either party: see Hochstein, at paras 28-29. It submits that the case law does
not support a conclusion that mentioning a document in an opening statement, which falls
outside the evidentiary portion of a hearing, extinguishes the implied undertaking.

The Union goes on to argue that such a conclusion would be detrimental to the arbitration
process. It submits that there are sound policy reasons for encouraging counsel to make
comprehensive opening statements at the outset of an arbitration hearing. Openings
assist the arbitrator, not only to make sense of the case and the evidence to come, but also
to play an effective mediation role when needed.

If counsel had to worry about

extinguishing the implied undertaking during opening statements, that would have a
chilling effect on forthright openings that facilities a cost effective arbitration process.

ANALYSIS AND DECISION

I begin with Juman. The judgment of the Supreme Court of Canada was delivered by
Binnie, J. In the course of the decision, he wrote in part as follows:

21…The vast majority of civil cases never go to trial. Documents are
inspected or exchanged by counsel at a place of their own choosing. In
general, oral discovery is not conducted in front of a judge. The only
point at which the “open court” principle is engaged is when, if at all, the
case goes to trial and the discovered party’s documents or answers from
the discovery transcripts are introduced as part of the case at trial.
• • •

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24. In the first place, pre-trial discovery is an invasion of a private right to
be left alone with your thoughts and papers, however embarrassing,
defamatory or scandalous. At least one side in every lawsuit is a reluctant
participant. Yet a proper pre-trial discovery is essential to prevent surprise
or “litigation by ambush”, to encourage settlement once the facts are
known, and to narrow issues even where settlement proves
unachievable…
25. The public interest in getting at the truth in a civil action outweighs the
examinee’s privacy interest, but the latter is nevertheless entitled to a
measure of protection. The answers and documents are compelled by
statute solely for the purpose of the civil action and the law thus requires
that the invasion of privacy should generally be limited to the level of
disclosure necessary to satisfy that purpose and that purpose alone.
Although the present case involves the issue of self-incrimination of the
appellant, that element is not a necessary requirement for protection.
Indeed, the disclosed information need not even satisfy the legal
requirements of confidentiality set out in Slavutych v. Baker, [1976] 1
S.C.R. 254. The general idea, metaphorically speaking, is that whatever is
disclosed in the discovery room stays in the discovery room unless
eventually revealed in the courtroom or disclosed by judicial order.
26. There is a second rationale supporting the existence of an implied
undertaking. A litigant who has some assurance that the documents and
answers will not be used for a purpose collateral or ulterior to the
proceedings in which they are demanded will be encouraged to provide a
more complete and candid discovery…
27. For good reason, therefore, the law imposes on the parties to civil
litigation an undertaking to the court not to use the documents or answers
for any purpose other than securing justice in the civil proceedings in
which the answers were compelled (whether or not such documents or
answers were in their origin confidential or incriminatory in nature)…
• • •
51. As mentioned earlier, the lawsuit against the appellant and others was
settled in 2006. As a result the appellant was not required to give
evidence at a civil trial; nor were her examination for discovery transcripts
ever read into evidence. The transcripts remain in the hands of the parties
and their lawyer. Nevertheless, the implied undertaking continues. The
fact that the settlement has rendered the discovery moot does not mean the
appellant’s privacy interest is also moot. The undertaking continues to
bind. When an adverse party incorporates the answers or documents
obtained on discovery as part of the court record at trial the undertaking is
spent, but not otherwise, except by consent or court order…(emphasis
added)

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Upon fully reviewing that decision, I have concluded that the Court was not referring to a
reference to a document in an opening statement. Rather, I conclude that the reference is
to the introduction of evidence at trial. The Court expressly noted that the appellant there
was not required to give evidence at a civil trial. Nor were her examination for discovery
transcripts ever read into evidence.

I take the Court’s statements emphasized above to refer to the introduction of documents
or discovery transcripts as evidence at trial, not mere reference to them in an opening
statement by counsel. Opening statements, of course, are not evidence.

I am reinforced in this conclusion by the recent judgement of the BC Court of Appeal in
Chellappa v. Kumar, wherein the Court stated:

The implied undertaking rule is not absolute. A party bound by the
undertaking may apply to the court for leave to use the information or
documents otherwise than in the action. Further, the implied undertaking
of confidentiality is extinguished when the evidence is used in open court.
(at para 35; emphasis added)
I turn to another decision of the BC Court of Appeal relied upon by the Employer,
namely Hochstein, where the Court stated:
28. But there is more a fundamental reason why the deemed undertaking
cannot in my view now be relied on by the Union – the fact that it was not
the ‘adverse party’, but the Union itself, who introduced the Documents
into evidence as part of its own case at trial. None of the authorities to
which we were referred supports the continuation of the undertaking,
binding on the party against whom the documents were used (here, the
defendants), in such circumstances. The policy rationales that found the
obligation – the prevention of surprise at trial, the encouragement of
settlements, the desirability of narrowing issues prior to trial and generally
the public interest in “complete and candid” disclosure – become
irrelevant once the party asserting confidentiality elects to enter the
Documents as exhibits in an open courtroom, even if he or she did also
disclose them in discovery… (emphasis added)

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While guided by the Court jurisprudence, I must pause here to set out certain differences
between the civil trial setting and that of a labour arbitration. First, in a civil trial, the
judge has the benefit of the parties’ pleadings. By contrast, there are no pleadings in a
labour arbitration. Not uncommonly, the first that the labour arbitrator hears of the
issues, both factual and legal, is at the start of the hearing with counsel’s openings.
Second, I must advert to Section 2 of the Labour Relations Code (the “Code”), which
provides as follows:

The board and other persons who exercise powers and perform duties
under this Code must exercise the powers and perform the duties in a
manner that
(a) recognizes the rights and obligations of employees, employers and
trade unions under this Code,
(b) fosters the employment of workers in economically viable businesses,
(c) encourages the practice and procedures of collective bargaining
between employers and trade unions as the freely chosen
representatives of employees,
(d) encourages cooperative participation between employers and trade
unions in resolving workplace issues, adapting to changes in the
economy, developing workforce skills and developing a workforce and
a workplace that promotes productivity,
(e) promotes conditions favourable to the orderly, constructive and
expeditious settlement of disputes,
(f) minimizes the effects of labour disputes on persons who are not
involved in those disputes,
(g) encourages that the public interest is protected during labour disputes,
and
(h) encourages the use of mediation as a dispute resolution mechanism.
An arbitrator is a person who exercises powers and performs duties under the Code: see
Part 8 of the Code.

I agree with the Union’s submission that there are sound policy reasons for encouraging
counsel to make comprehensive opening statements at the outset of an arbitration. I note
that in the overwhelming majority of arbitration cases, counsel for both parties provide
opening statements at the outset of the hearing. Openings not only enable the arbitrator to
become familiar with the case and make sense of the evidence to come, but also to enable

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him/her to encourage the use of mediation as a dispute resolution mechanism in pursuit of
the Code’s mandate in Section 2(h).

Mediation is frequently encouraged by arbitrators immediately after counsel’s opening
statements.

Accordingly, the more comprehensive those openings are, the better

equipped the arbitrator is to encourage the use of mediation as a dispute resolution
mechanism, as well as to encourage a settlement of the dispute. Settlement of the dispute
between the parties themselves, whether mediated or not, is the most orderly,
constructive and expeditious settlement of the dispute, in keeping with the Code’s
mandate in Section 2(e). Moreover, even if settlement is not reached, the more
comprehensive those openings are, the better equipped the arbitrator is to encourage the
narrowing of issues in the dispute, again in keeping with the Code’s mandate in Section
2(e).

I further agree that if counsel had to worry about potentially extinguishing the implied
undertaking during opening statements, this could well have a chilling effect on how
forthright counsel might be in their opening statements, with potentially negative effects
on the use of mediation as a dispute resolution mechanism, the potential for settlement of
the dispute, and the potential for narrowing the issues in the dispute, all antithetical to the
statutory mandate in Section 2 of the Code.

I have carefully reviewed the Courts’ decisions, and have focused on the distinct features
of labour arbitration as compared to civil trials, particularly the statutory mandate in
Section 2 of the Code. Having done so, I conclude that the Employer should not have
emailed the Grievor on February 1, 2016. Until such time as one of the parties enters the
Recordings, or information about them, into evidence at the arbitration hearing, they
remain subject to the implied undertaking not to use them for any purpose other than the
arbitration.

Having concluded as much, I should add that the evidentiary part of the hearing will
begin on September 27, 2016. The Employer noted in its submission that:

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. . . by putting the recordings at issue in its opening statement, the Union
has now effectively forced the Employer to deal with the recordings as
part of its case. Employer witnesses who were involved in relevant,
recorded meetings will have to ensure they are familiar with (the)
recordings and testify to the facts of the recordings as part of the
Employer’s case.
In short, the Employer may well be seeking to introduce the Recordings, and the
information contained in them, as evidence in the arbitration. Subject to an objection by
the Union to their introduction, if and when the Recordings, or information about them, is
entered as evidence, the implied undertaking will be extinguished.

Dated at the City of Vancouver in the Province of British Columbia, this 9th day of
September 2016.

_________________________
Robert Pekeles
Arbitrator