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mercredi 14 janvier 2015

The Scope of the Prohibition on the Disclosure of Information Provided to the Office of the Superintendent of Financial Institutions

By Sarah D. Pinsonnault

In Société financière Manuvie c. D'Alessandro, 2014 QCCA 2332, an appeal is brought forth by Société Financière Manuvie (“Manuvie”) of an interlocutory Superior Court decision that dismissed its objection, following an examination on discovery after defence, to the communication of certain documents it deemed highly confidential. Manuvie claimed that these documents – being documents that were provided to the Superintendent of Financial Institutions as part of its supervision and regulation mandate (“prescribed supervisory information”) - were subject to an absolute ban on disclosure pursuant to sections 2 and 3 of the Prescribed supervisory information (Insurance Companies) Regulations, SOR/2001-56 (the “Regulation”) which state that a company “shall not, directly or indirectly, disclose” such information. The majority of the Court of Appeal of Quebec however agreed with the trial judge and held that the scope of this prohibition on disclosure of prescribed supervisory information consists more of a statutory obligation of confidentiality as opposed to an absolute one.

Context

The present interlocutory proceedings fall within a larger class-action lawsuit that the Respondents, Mouvement d’éducation et de défense des actionnaires and Marc Lamoureux, were authorised to institute against Manuvie and certain of its officers. The Respondents allege that the latter, inter alia, breached their continuous disclosure obligations pursuant to the Securities Act, CQLR c V-1.1 and its associated regulation.


Manuvie’s aforementioned qualification of the prohibition on disclosure prescribed in the Regulation was based on both the modern rules of interpretation and its claim that the communication of these documents could have a negative effect on the overarching objectives of the legislator behind its monitoring of the financial sector. It argued that the disclosure of prescribed supervisory information would threaten the quality of the exchanges between companies and the Superintendent of Financial Institutions. This would, in turn, undermine companies’ confidence in the Regulation’s disclosure regime, and thus erode the overall efficiency of the government’s monitoring of the Canadian financial system.

The Respondents argued however that sections 2 and 3 of the Regulation prescribed a simple obligation of confidentiality and backed this argument with the notion under Quebec Civil Law that parties have the right to obtain all relevant evidence in civil proceedings.

Decision

The majority of the Court of Appeal reviewed the general principles of law that governed these proceedings, such as the “cardinal principle” in civil proceedings that allows for the disclosure of all evidence that is relevant and that leads to the discovery of the truth, save when an exception to this rule is either prescribed in legislation or established by the courts.

It was however found that no such exception (i.e. immunity from disclosure) existed in the Regulation at hand and, accordingly, that the prohibition on the disclosure of prescribed supervisory information was not absolute:

“[37] Malgré l’établissement de ce canal de communication privilégié entre les assujettis et le surintendant, certains éléments portent à croire que nous ne sommes pas en présence d’une interdiction absolue de divulgation pour les sociétés assujetties. »
This conclusion was arrived at in part because exceptions to this prohibition on disclosure already exist in the Regulation:

“[35] Certaines exceptions sont cependant prévues au Règlement. Elles autorisent expressément la communication d’informations autrement confidentielles à un cercle restreint de personnes qui doivent, elles aussi, assurer leur confidentialité. De plus, il serait possible pour la société, sous réserve de certaines conditions, de révéler les informations à un éventuel acquéreur. »
The majority of the Court of Appeal then proceeded with an overview of the modification brought to the relevant provision of law (section 39.1 of the Office of the Superintendent of Financial Institutions Act, RSC 1985, c 18 (3rd Supp)) and concluded as follows:

« [39] … [C]e n’est pas parce qu’une disposition statutaire met en place un régime de confidentialité que l’on doit en conclure que le législateur a voulu pour autant imposer une interdiction absolue de divulgation, y compris une divulgation en justice. 
[…]
[45] Or, si le législateur avait voulu mettre en place une interdiction absolue, il aurait spécifié que toute communication, « même en justice », est interdite…
[46] En terminant sur ce point, je souligne l’opinion émise par les professeurs Ducharme et Panaccio qui estiment avec justesse que « [L]orsqu’une loi se limite à déclarer qu’un document est confidentiel, il faut […] présumer que cette confidentialité s’applique uniquement dans un contexte extrajudiciaire comme devoir de discrétion, sauf s’il est manifeste que l’intention du législateur est de lui conférer une immunité de divulgation en justice ».
[47] J’estime ne pas être en présence de l’un de ces rares cas où il est manifeste que le législateur a voulu conférer une immunité de divulgation, même en justice.» (références omises)
In closing, we are reminded once again of the fundamental rule of evidence which dictates that all relevant evidence – whether it is public or confidential – is admissible and must be communicated to the opposing party (except for the cases specifically provided for under article 2858 of the Civil Code of Quebec). With respect to evidence that is deemed confidential, parameters may be put in place (as was done in the case at bar) in order to ensure the preservation of its confidentiality throughout the judicial proceedings.

To read this decision in its entirety, along with the dissenting reasons of Justice Morin, click here

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