Considering covert video surveillance by PIs

The first event, on the legislative front, is the introduction of amendments to the Personal Information Protection and Electronic Documents Act (a.k.a. PIPEDA); the second event, on the judicial front, is the recent decision of the Federal Court of Canada in the case of State Farm Mutual Automobile Insurance Company v. Privacy Commissioner of Canada (“State Farm”)2

The federal government, wisely (in this columnist’s humble opinion), introduced amendments to PIPEDA that, if enacted, will permit the transfer of personal information about an individual (without that individual`s consent) to detect and prevent unlawful activity.3 Bill C-29 would bring the federal legislation into alignment with Alberta’s and British Columbia’s privacy legislation, which allows such transfer. 

Specifically, the proposed amendments would permit organizations to collect, use, and disclose personal information, without the knowledge or consent of an individual, for the purposes of:

(a)    investigating a breach of an agreement, or a contravention of the laws of Canada or a province, that has been, is being, or is about to be committed;
(b)    preventing, detecting, or suppressing fraud when it is reasonable to expect that the disclosure with the knowledge or consent of the individual would undermine the ability to prevent, detect or suppress the fraud;
(c)    preventing or investigating financial abuse of an individual;
(d)    assessing, processing, or settling an insurance claim based on information contained in a witness statement;
(e)    conducting due diligence regarding prospective or completed business transactions; and,
(f)    establishing, managing, or terminating an employment relationship between an individual and the federal work, undertaking, or business.

If enacted these proposed changes will clarify what investigative steps can be taken by insurers, corporations, and federal employers and provide certainty in this, presently confusing, area.  

According to a news release found on the Industry Canada website these “proposed amendments will reaffirm the view that the information needs of law enforcement and security agencies can be met while respecting the privacy rights of Canadians. Proposed amendments would make it clear that organizations may collaborate with government institutions, such as law enforcement and security agencies that have requested personal information, in the absence of a warrant, subpoena, or order. To avoid jeopardizing investigations, new provisions would prohibit organizations from notifying an individual about the disclosure of their personal information to law enforcement and security agencies where the government institution to whom the information was disclosed objects.” 4

In State Farm, the Federal Court of Canada concluded that the provisions of PIPEDA do NOT apply to evidence collected by an insurer on behalf of an insured in order to defend that insured in a third party tort action.  That evidence includes covert video surveillance evidence obtained by private investigators employed by the insurer or its lawyers.
Specifically, the Federal Court ruled that the investigation reports and related documents and videos, concerning (the plaintiff) and prepared by or for State Farm or its lawyers to defend (the defendant) in the civil tort action taken against her by (the plaintiff), are not subject to PIPEDA.

The Federal Court also decided whether the collection of evidence by an insurer acting for one of its insured in the defence of a third party tort action is “commercial activity” within the meaning of PIPEDA.  The Federal Court ruled that it is not.

Per Mainville, J: 5
I conclude that, on a proper construction of PIPEDA, if the primary activity or conduct at hand, in this case the collection of evidence on a plaintiff by an individual defendant in order to mount a defence to a civil tort action, is not a commercial activity contemplated by PIPEDA, then that activity or conduct remains exempt from PIPEDA even if third parties are retained by an individual to carry out that activity or conduct on his or her behalf. The primary characterization of the activity or conduct in issue is thus the dominant factor in assessing the commercial character of that activity or conduct under PIPEDA, not the incidental relationship between the one who seeks to carry out the activity or conduct and third parties. In this case, the insurer-insured and attorney-client relationships are simply incidental to the primary non-commercial activity or conduct at issue, namely the collection of evidence by the defendant Vetter in order to defend herself in the civil tort action brought against her by (the plaintiff) Gaudet.

The federal court also considered whether the federal privacy commissioner had the authority to investigate under PIPEDA following the complaint from the plaintiff given the claim for privilege by the insurer. The Federal Court found that in this particular case, the Commissioner did not have that authority to assume jurisdiction over the matter or to request justifications from State Farm in regard to its (solicitor-client) privilege claims.

It has been argued that “if the privacy commissioner doesn’t have the jurisdiction to demand documents relating to access-request complaints into private-investigative matters, the federal watchdog also doesn’t have jurisdiction to issue guidelines pertaining to covert surveillance in the private sector.” 6 Such guidelines include the recommendation that private investigators must blur or block or pixilate all third party images they collect, prior to disclosing same to their clients. 7  This columnist believes that whether or not the privacy commissioner has such jurisdiction, the guidelines are helpful and should be consulted.

Rest assured that when Bill C-29 is enacted, it will be reviewed in this column. Until then, stay tuned!

Elliott Goldstein, B.A., LL.B. is a Woodbridge, Ont.-based lawyer. elgold@rogers.com

1 Groot, N., Law Times – Speaker’s Corner:  Privacy watchdog told to butt out of private investigations.” Aug. 9 2010.   
www.lawtimesnews.com and see last footnote below.  
2 2010 FC 736 (CanLII) available from www.canlii.org/en/ca/fct
3 Bill C-29, An Act to amend PIPEDA, received first reading on May 25, 2010.
3 Bill C-29, An Act to amend PIPEDA, received first reading on May 25, 2010.
4 See www.ic.gc.ca, news releases.
5 2010 FC 736 (CanLII) at para # 106.
6 Groot, N., Law Times – Speaker’s Corner:  Privacy watchdog told to butt out of private investigations.” Monday 09 August 2010.   www.lawtimesnews.com
7 See Guidance on Covert Video Surveillance in the Private Sector, (May 2009), Guidelines for Overt Video Surveillance