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Surveillance and Disability Claim Update

SURVEILLANCE AND DISABILITY CLAIM By David Share

UPDATE: THE IMPACT OF CODIFIED PRIVACY RIGHTS
The Personal Information Protection And Electronic Documents Act (PIPEDA) has only been with us for a short period of time and it is still too early to tell what sort of an impact it and other similar legislation will have on the dissemination of information both at the claims, adjudication and litigation levels in the handling of disability claims. The objective of this paper and presentation is to discuss this developing area of the law, and in particular recent developments that will assist in predicting how such legislation will impact on the use of surveillance in disability claims.

The insurance industry has taken to heart the findings of the Ontario Superior Court in the case of Ferenczy v. MCI Medical Clinics,1 where Justice Dawson ruled that notwithstanding the provisions of PIPEDA, video surveillance was admissible at trial for the purpose of impeaching the Plaintiff. Justice Dawson stated, at paragraph 10:

Accepting as I do the submission that the video did not become relevant until the plaintiff testified in an unanticipated fashion at trial, I conclude, (as I believe I stated in Court at the time) that Jones v. Heidel(1985), 6 C.P.C. (2d) 318(Ont. H.C.) and Machado v. Berlet(1986), 57 O.R. (2d) 207(Ont. H.C.), are directly applicable. To similar effect are the decisions in Giroux v. Lafrance, [1993] O.J. No. 2358(Ont. Gen. Div.) and Youssef v. Cross (1991), 80 D.L.R. (4th) 314(Ont. Gen. Div.). Applying the reasoning in these cases I concluded that the fair way to deal with the matter was to permit the plaintiff to be cross-examined on the video which would be shown to the Jury, but to restrict the Jury's use of the evidence to assessing the credibility of the plaintiff and not for substantive purposes."2

This passage from the judgment summarizes the common law position regarding the admissibility of surveillance to impeach a witness's credibility at trial. The Plaintiff submitted at trial that PIPEDA altered the criteria for admissibility insofar as PIPEDA requires the Plaintiff's consent to the recording of the surveillance because the private investigator was, during the course of commercial activity recording private information about the plaintiff. "Commercial activity" is defined in PIPEDA as:

""¦means any particular transaction, act or conduct or any regular course of conduct that is of a commercial character, including the selling, bartering or leasing of donor, membership or other fund-raising lists"3

The Court rejected this argument and characterized the surveillance activity not as commercial activity, but rather on behalf of the defendant, whose purpose was to defend himself from the allegations being made by the Plaintiff in the action.

Justice Dawson specifically referred to section 3 of PIPEDA, which outlines the purpose of the legislation:

3. The purpose of this Part is to establish, in an era in which technology increasingly facilitates the circulation and exchange of information, rules to govern the collection, use and disclosure of personal information in a manner that recognizes the right of privacy of individuals with respect to their personal information and the need of organizations to collect, use or disclose personal information for purposes that a reasonable person would consider appropriate in the circumstances. 4

The Court concluded that surveillance was not a commercial activity, undertaken for the purpose of commercial gain, but rather solely for the purpose of a party defending oneself in the action. Justice Dawson went on to say that, in any event, the Plaintiff implicitly consented by virtue of commencing the action and thus putting her physical and mental condition at issue.

This may only be the first word on how Ontario courts will view PIPEDA, but is likely not the last. An example of a case released in November, 2004 that decided differently that Ferenczy is Cowles v. Balac,5 where Justice MacFarland distinguished Ferenczy primarily because Cowles concerns a case where there were conversations between the investigator and the plaintiff, rather than purely observations, as was the case in Ferenczy. 6

The investigator was retained by the defendant's solicitor and through affidavit evidence it was disclosed that the investigator engaged in conversations with the Plaintiff. At the time of the putative conversations, counsel represented the Plaintiff, and no communication of this having occurred was communicated to plaintiff's counsel until the pre-trial that was held in October 2004. The surveillance had been carried out between September 1996 and August 2000. The Court found that the investigator had an obligation to disclose who he was and his purpose and should not have engaged in any conversation whatsoever.

The Court did not specifically rely upon any provisions in PIPEDA, but did make reference to the Law Society of Upper Canada's Rules of Professional Conduct and in particular Rule 4.03 (2), which states that a lawyer shall not approach or deal with a person who is represented by another lawyer, save through or with the consent of that party's lawyer, whether such contact is direct or indirect (ie., using an agent such as investigator). The entire investigation file was ordered to be produced in order to ensure that none of the information that had been improperly obtained would be used.

The significance of the Cowles case, in light of Ferenczy is that the legitimate purpose contemplated by PIPEDA has its' legal limits. It raises the question of how far surveillance can go once a claimant is represented by counsel both pre, during and post-litigation. It further raises questions about whether an investigator should ever engage in attempts to converse with a claimant in the hopes of obtaining credibility damaging admissions, as such conversations may not be admissible.

In Telus Corp. v. T.W.U.7 , surveillance evidence was ruled admissible adopting a similar approach to the Court in Ferenczy, the Arbitrator stated:
"In reserving my decision on the admissibility of the surveillance evidence, I concluded that PIPEDA codifies a standard of reasonableness already well established in arbitral decisions. The arbitral test is:

1. Was it reasonable in all the circumstances, to undertake surveillance of the employee's off duty activity?

2. Was the surveillance conducted in a reasonable way, which is not unduly intrusive and which corresponds fairly with acquiring information pertinent to the employer's legitimate interests?" 8

and then went on to conclude:

Having the benefit of all of the evidence, "the full flavour of the case", in the words of Michel Picher in his article "Truth, Lies and Videotape: Employee Surveillance at Arbitration", I have concluded the Employer here had a plausible basis for resort to surveillance. Evidence about the extent of the Grievor's activities, particularly his daily trips to the A&W for coffee, which involved driving, puts the circumstances beyond mere suspicion. Mr. Fenske told Mr. Foss he was unable to drive as a result of medications he was taking and yet there was information, albeit hearsay, that he was driving regularly. In November 2002, Mr. Foss himself saw the Grievor driving. Even though the evidence did not establish that Mr. Fenske was lifting propane tanks and in fact had sold his fishing business before this time, the evidence about his level of activity, particularly his driving, coupled with the other factors outlined above, in my view, exceeds the threshold." 9

In a paper prepared by Barbara Franklin at last year's conference entitled "Recent Legal Developments in the Use of Surveillance Evidence" 10, a number of cases were commented on. A survey of cases decided since those decisions follows:

(i) Levy v. Traders General Insurance Co.,11 was considered in an arbitration case decided by the Ontario Financial Services Commission. In Coles v. Dominion of Canada 12 where the arbitrator ruled that surveillance evidence was admissible, although, not all of the surveillance was admitted due to the manner in which the insurer disclosed, or failed to disclose subsequent surveillance. The comments of the arbitrator and paragraph 54-55 of the decision are helpful in understanding how adjudicators will deal with surveillance:

54 There are dangers in relying too heavily on surveillance evidence. The investigator cannot observe the subject resting after a period of activity, and cannot photograph pain. The camera is also insensitive to the necessity for the observed activity; an injured person who needs to see her doctor, lawyer, or therapist has no choice but to leave her home and manage her pain or limitations as best she can. And because surveillance is usually intermittent and of short duration, it is generally a poor predictor of performance in the workplace, with its demands of reliability and sustained productivity. For these reasons, surveillance evidence must be assessed in the context of the evidence as a whole and weighed accordingly.

55 However, surveillance can provide an objective contemporaneous snapshot of what a person could do at a given moment on a given day. It is especially helpful in the absence of other objective contemporaneous evidence of disability."

(ii) Stevens v. Okrainec 13 was considered in the Alberta superior court case of Sluth v. Kostyniuk14 which demonstrates the limitations on the utility of surveillance evidence as noted above in the Coles case.

(iii) Druken v. R.G. Fewer15 was considered in the Alberta case of R. v. A. (W.) where the Plaintiff sought an injunction to prevent one party from conducting surveillance, and the Court granted a temporary injunction pending receipt of an assessment from an independent expert regarding the plaintiff's ability to withstand the normal rigours presented by litigation and surveillance. The court ruled that granting such temporary relief was not frivolous; the damages emanating from the surveillance were of the type that redress that could be awarded at trial would be insufficient; and finally, that the balance of convenience favoured the Plaintiff, insofar as nothing significant was likely to change in the four to five months it would take to obtain the necessary report from an independent expert. The case contains a discussion regarding what constitutes the normal rigour of litigation (or I would argue the normal rigours of adjudicating a disability claim). In this case there was a reasonable likelihood of severe psychological harm to the Plaintiff if surveillance were to proceed. In the context of disability cases involving severe depression or other psychiatric or mental conditions, it may not be difficult to make out a case for reasonable apprehension of severe psychological harm from surveillance being carried out. Individuals suffering from social phobias or other conditions that make extensive human interaction difficult, may be subject to injunctive relief to prevent surveillance or other invasions of privacy.

(iv) Walker v. Woodstock 17 received consideration in Evans v. Jenkins18 where surveillance obtained by one defendant who had entered into a Mary Carter Agreement19 with the Plaintiff was ordered to be produced at trial for use by the remaining defendant during cross-examination of the plaintiff. Following Walker and the line of cases mentioned therein, Justice Stinson noted that defendants have an obligation to disclose the particulars of the surveillance conducted but not the actual videotape, film or digital imaging of the surveillance until and unless the defendant wished to use it during cross-examination of the plaintiff at trial.

(v) Adams v. Confederation Life Insurance Co.20 was considered in Fidler v. Sun Life21. The Fidler case is currently under appeal to the Supreme Court of Canada, however, the British Columbia Court of Appeal reversed the trial judge's decision to disallow the claim for punitive damages, and the use of surveillance was specifically invoked as the basis for awarding punitive damages. The Court stated as follows:

"Sun Life is not in my view to be criticized for having undertaken a video surveillance of Ms. Fidler. However, having done so, it exaggerated internally, and misrepresented to Ms. Fidler, the information obtained by that surveillance. The doubtful value of that information was demonstrated by Sun Life's delay (over seven months) in acting upon it, and the insurer's subsequent refusal to disclose the video to the plaintiff. And contrary to Sun Life's letter of 12 May 1997 to Ms. Fidler, that video information was not "incompatible with [her] alleged disability".

The insurer's one-sided approach to handling Ms. Fidler's claim continued after it terminated her benefits. Sun Life failed to provide Ms. Fidler with details of her activities that were "not consistent with her disability". And although Sun Life proposed internally to make the video available to an IME physician, it refused to provide a copy to Ms. Fidler. This seriously impaired Ms. Fidler's ability to appeal Sun Life's termination of her benefits and is inconsistent with the obligation to treat a claimant fairly"¦22

This case suggests that with or without PIPEDA, insurers should use surveillance cautiously when considering a termination of benefits. It will be interesting to see how the Supreme Court of Canada deals with this aspect of the case when they hear it later this year or early in 2006.

In terms of developing case law, the Office of the Privacy Commissioner ("OPC), issues decisions where an application has been made for either disclosure or non-disclosure of information in a pre-litigation context. They have issued a number of decisions that are accessible on their website.23

Case summary #269 involved a complaint by a former employee against his employer who used video surveillance to justify termination of his employment. The evidence gathered suggested that the employee had misrepresented his state of health and relied upon this to terminate him. The OPC found that the Company's use of video surveillance did not violate PIPEDA for the following reasons:

  • There was no question that the company had collected the complainant's personal information without his knowledge and consent. The issue was whether paragraph 7(1)(b) of the Act could be applied in this instance.
  • To accept the company's reliance on paragraph 7(1)(b) to justify collecting personal information without knowledge and consent, by means of video surveillance, a number of factors must be considered. This exception cannot be read in isolation. The Assistant Commissioner noted that an organization must have substantial evidence to support the suspicion that the relationship of trust has been broken, must be able to show that it has exhausted all other means of obtaining the information that it requires in less privacy-invasive ways, and must limit the collection to the purposes to the greatest extent possible.
  • The Assistant Commissioner noted that the company had, for nearly two years, attempted to accommodate the complainant with his workplace requirements. In June 2001, he was cleared to return to work with limitations. Yet he continued to be frequently absent from work for reasons related to his medical conditions. From October 2001 until the decision to engage a private investigation firm in July 2002, the company tried, unsuccessfully, to obtain up-to-date medical information. When the complainant agreed to the independent assessment, the results did not refute a growing suspicion on the part of the employer that the complainant was not accurately representing the state of his health.
  • In light of these circumstances, the Assistant Commissioner was satisfied that the company's purpose, namely, to determine whether the complainant was violating his employment contract by misrepresenting the state of his health, was based on substantial evidence.
  • The Assistant Commissioner was also satisfied that the company had tried less privacy-invasive ways to gather the information it required. There were numerous attempts, verbally and in writing, to obtain accurate medical information, but these met with resistance from the complainant. He was offered the opportunity to submit to the independent capacity assessment, which he reluctantly did. All of these steps are considerably less privacy invasive, but, in this instance, they did not dispel the organization's concerns. When the company took the step of hiring the private investigator, it outlined what information it was looking for, thereby focussing inasmuch as possible the collection of personal information on the complainant.
  • In sum, the Assistant Commissioner accepted the company's reliance on paragraphs 7(1)(b) and 7(2)(d) to collect and use the complainant's personal information without his knowledge and consent. The company had reasonable and probable cause to believe that he was violating his employment contract, and was clearly having difficulty in obtaining accurate information from him with his knowledge and consent. 24

It is important to note the particular criteria enumerated by the OPC in permitting surveillance to be carried out. In the case of Ross v. Rosedale Transport Ltd. Adjudicator Brunner ruled that video surveillance was inadmissible in the hearing of a complaint under the Canada Labour Code. Ross' complaint was that he was unjustly terminated, and the company relied on alleged misrepresentation of his health status as captured on video surveillance in support of the termination. The reasons for Brunner's decision are as follows:
In the instant case, there was absolutely no evidence that Ross had ever been anything other than an honest employee. He had no disciplinary record. He had never submitted a false or fraudulent claim for insurance or other benefits. There were a number of other means that were available to the employer to test the true extent of Ross' restrictions and the bona fides of his recovery as of April 6, 2002. As late as March 21, 2002, Rosedale had in its possession, a statement from Ross' physician that he was only fit for clerical duties and that a prognosis for full recovery was questionable. If the employer really thought that Ross was malingering or pretending that he was not yet fully able to resume the duties of a driver/associate, it was open for Rosedale to ask for an independent medical examination a matter that was conceded by Topping. His failure to do so was left unexplained. This is a case, where an employer, without any evidence that the employee was malingering or had made misrepresentations or spread disinformation as to his physical abilities, orders a surreptitious video surveillance in the hope of trapping the unsuspecting employee during the course of moving furniture at his place of residence at a time and place that he had voluntarily disclosed to his employer. In this respect, the words of Arbitrator M. G. Picher in Canadian Pacific Ltd. v. B.M.W.E., (supra), are very appropriate:
as a general rule, (the employer's interests) does not justify resort to random video surveillance in the form of an electronic web, cast like a net, to see what it might catch. Surveillance is an extraordinary step which can only be resorted to where there is, beforehand, reasonable and probable cause to justify it. What constitutes such cause is a matter to be determined on the facts of each case.
In my opinion, this is exactly what Topping attempted to do, namely, to cast an electronic web to see whether he could catch Ross while moving his family on April 6, 2002. In my view, the collection of this personal information in the form of the video surveillance tape was not reasonable for any purpose related to the investigation of a breach of the employment agreement. Its collection without the knowledge and consent of Ross violated Section 7(1)(b) of the Act. It was for these reasons that I ruled on the first day of the hearings that the videotape was not admissible in evidence.

These two decisions suggest that video surveillance may receive greater scrutiny within the employment context, and the manner in which it is carried out will be crucial for use in terminating employees, may ultimately impact the manner in which courts will view the admissibility of surveillance evidence in civil actions.

As surveillance continues to be a tool to scrutinize "questionable" claims, savvy claims adjudicators and counsel for both plaintiff and defence should be monitoring OPC decisions and Arbitral case law to see whether PIPEDA will begin to creep more into the civil case law as both a sword and shield, in this new era of justifiably heightened concern about privacy and the dissemination of information.


1 [2004] O.J. No. 1775
2 Ibid., paragraph 10
3 PIPEDA, definitions
4 Ibid. paragraph 30.
5 [2004] CanLII 35084 (ON S.C.)
6 Ibid, paragraph 37.
7 [2005] L.V.I. 3528-2 (Can. Arb. Bd. Nov 04, 2004)
6 Ibid, paragraph 193.
9 Ibid, paragraph 195.
10 Managing and Litigating Depression Disability Claims, June 3 & 4, 2004, The Canadian Institute, Tab X
11 [1998] O.I.C.D. No. 113.
12 2002 WL 42520 (F.S. Trib.), 2002 CarswellOnt 5283
13 [1997] A.J. No. 1158.
142004 ABQB 917
15 [1998] N.J. 312
16 2002 CarswellAlta 264, 2002 ABQB 201
17 [2001]O.J. No. 157
18 29 C.P.C. (5th) 299
19 Booth v. Mary Carter Paint Co. (1967), 202 So. 2d (U.S. Fla. Ct. App. 2 Dist.)
20 [1994] A.J. No. 308
21 Leave to appeal allowed, 239 D.L.R. (4th) 547, 13 C.C.L.I. (4th) 25, 27 B.C.L.R. (4th) 199, [2004] 8 W.W.R. 193, 196 B.C.A.C. 130, 322 W.A.C. 130, 2004 BCCA 273, 2004 CarswellBC 1086, [2004] B.C.W.L.D. 717, [2004] I.L.R. I-4299 (B.C.C.A.); Reversed (In part), 2002 BCSC 1336, 2002 CarswellBC 2287, [2002] B.C.W.L.D. 1010, 6 B.C.L.R. (4th) 390, [2002] 11 W.W.R. 352, [2003] I.L.R. I-4139, 42 C.C.L.I. (3d) 272, [2002] B.C.J. No. 2209 (B.C.S.C.)
22 Fidler, supra note 20 at paragraphs 67-68.
23 http://www.privcom.gc.ca/index_e.asp
24 http://www.privcom.gc.ca/cf-dc/2004/cf-dc_040423_e.asp (A more complete discussion of PIPEDA both within the context of Surveillance and other matters can be found in "The Monster Under Your Bed? PIPEDA'S Impact on Litigation in the Personal Injury and Employment Law Practice, Harold Geller and Amy R. Gough Farnworth, 2005.
25 2003 WL 22682804 (Can. Arb. Bd.), 2003 CarswellNat 3620, [2003] C.L.A.D. No. 237
26 Canada Labour Code, R.S.C. 1985, c. L-2, as amended
27 Ibid, note 25 at paragraphs 36-37