Law Times

August 9, 2010

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Law Times • augusT 9, 2010 When your luck's bad, it's all bad W ith the legislature off until September, there's usually precious little going on and, to be frank, most people like it that way. That's not the case this year. Not only are there committees sitting to clean up some issues before the house, the spin doc- tors are working overtime. The ship may not have actu- ally hit the big iceberg, but there's big water coming in over the bulkheads. Between the eco fees, the Ontario Provincial Police in- vestigation into dealings at three ministries, the spat with the TTC over the transit agency's plan to go it alone with a fast-pay system for riders, and the rollback of the feed- in tariff of 80 cents a kilowatt hour for solar energy, the government benches are taking on water faster than the Liberals can bail it out. Add in the harmonized sales tax, the G20 fallout, and the string of issues that have dogged this government for the last 18 months — eHealth and the On- tario Lottery and Gaming Corp., for example — and there's a long list of problems leaving the Lib- erals to flounder. Unfortunately, the hits keep coming. Just last week, NDP Lead- er Andrea Horwath and justice critic Peter Kormos complained to Information and Privacy Commis- sioner Ann Cavoukian that they suspected an Ontario government web site had been involved in the theft of a Niagara-area resident's identity who had gone online to update his driver's licence. As the government notes, the ServiceOntario web site processes 1.8 million changes to personal data annually. If there was any leakage or vulner- ability to hacking, it constitutes another major credibility blow to this government. Conservative Leader Tim Hudak has also been busy call- ing for Stewardship Ontario to open its books and deploring the fact that it's not subject to free- dom of information requests. With public funds subsidizing the agency during the interim re- view forced over its bungled im- plementation of the eco fees, he says it should be accountable. The eco program essentially seeks to recover the costs of dispos- ing of products deemed municipal hazardous or special waste. In theory, as Environmen- tal Commissioner Gord Miller notes, it's a good program. The quick reaction to the public outcry over the pro- gram's implementation on July 1 and the resultant retraction on July 20 were the right moves that nevertheless allowed more water to spill over the sides. Adding to the deluge of bad news were the headlines com- ing out of hearings into bill 68, an omnibus bill known as the open for business act. Like the eco fees, in theory it sounds plausible. Why not stream- line the myriad of government regulations to make doing business Queen's Park Inside By Ian Harvey easier and remove the red tape? The problem is the bill contains more than 100 changes to 50 dif- ferent pieces of legislation spread over 10 ministries. The plan might have been to slip the changes through under a fog of confusion, but that was before labour groups seized on provisions affecting the Employment Standards Act. The result was a slate of head- lines accusing the government of victimizing workers trying to collect back wages from dead- beat bosses. If passed as is, the changes will require workers to contact their employer before they can file a complaint under the act over vacation, overtime, statutory holidays, wrongful dis- missal, and working conditions. The bill would also empower authorities to negotiate settle- ments through changes designed to deflate the massive 14,000- case backlog at the Ontario La- bour Relations Board. Big labour groups, however, say the provi- sions will only hurt low-level workers, especially immigrants. Even what should have been a good news story didn't bring much goodwill. Legislation enacted last year came into effect Aug. 1 that bans new drivers or those who are 21 and under from having any al- cohol in their system. This is the surviving piece of policy from an initial proposal that would have restricted teen- age drivers to only one other teen passenger in their vehicles. The outcry, especially from ru- ral areas where carpooling is a staple of teen social life, forced the government to back off. Teens and G1 and G2 driv- ers caught with booze in their blood face a 24-hour licence suspension and risk further sanctions of 30 days and fines of up to $500. Second-time of- fenders are hit with a 90-day suspension, while third-time losers forfeit their licences. Of course, with groups like Mothers Against Drunk Driv- ing suggesting the changes will see a drop of up to 20 per cent in traffic fatalities among teens, there's little political mileage in campaigning for their rights to imbibe and drive. Still, there's grumbling among those affected. The changes have even prompted a challenge under the Charter of Rights and Freedoms from one disgruntled 20-year-old driver. Some days, I'll bet this gov- ernment figures it just can't win for losing. LT Ian Harvey has been a journalist for 32 years writing about a diverse range of issues including legal and political affairs. His e-mail address is ianharvey@rogers.com. COMMENT PAGE 7 Privacy watchdog told to butt out of private investigations BY NORMAN GROOT For Law Times R ecent events, such as the May 25 first reading of legislation amending the Personal Information Protection and Electronic Documents Act and the July 9 Fed- eral Court judgment in State Farm Mutual Au- tomobile Insurance Co. v. Privacy Commissioner of Canada are signaling the end of the federal privacy watchdog's interference with private in- vestigations in Canada. On the legislative front, the government introduced enhancements to private- sector privacy legislation in a bill seeking to amend PIPEDA. Bill C-29 propos- es to implement the government's response to the fourth report of the standing committee on access to information, privacy, and ethics dealing with the statutory review of PIPEDA. With respect to private-sector investigations, PIPEDA currently only provides for non-consent collection, use, and disclosure of personal infor- mation where there's existing evidence of a breach of contract or law. The privacy commissioner has been of the view that mere suspicion of a crime or contract breach is insufficient grounds for a private-sector company or individual to conduct a covert investigation to protect their interests. The proposed amendments, which would bring PIPEDA in line with private-sector privacy legis- lation in Alberta and British Columbia, allow for the non-consensual transfer of personal informa- tion to detect and prevent unlawful activity. The proposed amendments to PIPEDA would permit organizations to collect, use, and disclose personal information, without the knowledge or consent of an individual, for the purposes of: — Preventing, detecting or suppressing fraud and protecting victims of financial abuse. — Conducting due diligence with respect to prospective or completed business transactions. — Taking witness statements related to insur- ance claims and investigations in employment, business or professional matters. — Establishing, managing, and terminating employment relationships of federally regu- lated companies. These four proposed amendments pertain to the three major areas of private investigations: insurance, employment, and corporate due-dil- igence investigations. Under the existing PIPE- DA provisions, many insurers, corporations, and federal employers were uncertain what investiga- tive steps they could take without running afoul of Canadian private-sector privacy law. For example, since PIPEDA came into force in 2004, the insurance industry has been criti- cal of the lack of clarity relating to third-party personal information contained in witness state- ments. Bill C-29 removes any notion that the inclusion of third-party information in a witness statement without that person's consent is some- how prohibited. Likewise, some lawyers have been critical of the privacy commissioner's views that covert surveillance is an investigative tool of last resort. Bill C-29 proposes to give employers greater discretion over their investigations. The other notable development is the State Farm matter. In March 2005, a New Brunswick driver insured by State Farm, Jennifer Vetter, was involved in a collision with Gerald Gaudet. He then issued a notice to her and State Farm, which placed him under covert surveillance both before and after the initiation of his personal injury tort action. Before initiating the action, Gaudet made an access request pursuant to PIPEDA to State Farm for all of his personal information they had collected and, in particular, any covert surveillance and accompanying reports. State Farm denied Gaudet's access request on the grounds that PIPEDA didn't apply. Gaudet then lodged a complaint with the www.lawtimesnews.com federal privacy commissioner alleging State Farm was in breach of PIPEDA. During the course of its investigation, the privacy commissioner's office requested access to the reports and tapes from the investiga- tion, as well as the retainer agreement between State Farm and its private investigators. As a result of this request, State Farm began Speaker's Corner an application in Federal Court seeking a dec- laration that Canada's privacy commissioner didn't have the statutory or constitutional authority to investigate, make recommendations or otherwise act upon such complaints. State Farm's primary argument was a statuto- ry one revolving around the fact that PIPEDA regulates only commer- cial activity in the private sector and that, when defending its clients, it's not involved in such a relationship with Gaudet. The company re- lied upon the decision of the Ontario courts in Ferenczy v. MCI Medical Clinics, which applied the principle of agency and ruled that the de- fendants in an action aren't engaged in a "com- mercial activity" for the purposes of PIPEDA if they use an agent such as their insurer or an investigator to conduct a covert investigation. Remarkably, the privacy commissioner ar- gued that the comments of the court in Ferenc- zy were obiter and not precedent. The privacy commissioner also said the State Farm applica- tion was premature. In its ruling, the Federal Court held the pri- vacy commissioner's request for further time to prepare an argument to be "without merit." It fur- ther ruled that the standard of review was correct- ness and that PIPEDA doesn't contain a privative clause concerning the privacy commissioner. In addition, it held that, as the privacy commission- er isn't acting in an adjudicative capacity under PIPEDA, her role is incompatible with a standard of deference. At the same time, it ruled that "the privacy commissioner has no special expertise in the interpretation of the provisions of PIPEDA, since the statute itself entrusts the Federal Court with the authority and mandate to do so." The court concluded that the collection of evidence relating to a plaintiff by a defendant in a tort action doesn't constitute a commercial ac- tivity for the purposes of PIPEDA. In its view, such an interpretation couldn't have been the intention of Parliament since the history and purpose of PIPEDA is a compromise between competing interests and its provisions must be interpreted with flexibility, common sense, and pragmatism. Accordingly, it ruled that inves- tigation reports and covert surveillance aren't subject to PIPEDA and aren't matters over which the privacy commissioner may interfere. In terms of their ramifications, the proposed amendments to PIPEDA and the findings in the State Farm decision are arguments the Canadian Association of Private Investigators and the Ca- nadian Association of Special Investigation Units have been making for some time. In our view, it follows that if the privacy commissioner doesn't have the jurisdiction to demand documents relat- ing to access-request complaints into private-inves- tigative matters, the federal watchdog also doesn't have jurisdiction to issue guidelines pertaining to covert surveillance in the private sector. The privacy commissioner's guidelines on covert surveillance in the private sector decree that all third-party images collected by private investigators must be pixilated prior to disclosure to their clients. Such decrees have resulted in insurers requiring pixilation tech- nology at great expense to both the investigation and insurance industries. LT Norman Groot is a lawyer with Investigation Counsel Professional Corp. He can be reached at 416-637-3141 or ngroot@investigation- counsel.com.

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