Canadian Underwriter

Insurer’s challenge of privacy commissioner’s authority should go to federal court, provincial court rules

February 18, 2009   by Canadian Underwriter

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An insurance company seeking to challenge the authority of Canada’s privacy legislation and the privacy commissioner in an auto injury case will have to go to the Federal Court to make its case, the New Brunswick Court of Appeal has ruled.
In State Farm Mutual Automobile Insurance Company v. Privacy Commissioner of Canada and Attorney General Canada, State Farm argued that Canada’s privacy regime does not apply to surveillance tapes the insurer commissioned following a motor vehicle accident in 2005.
In March 2005, Jennifer Vetter, insured by State Farm, was involved in a motor vehicle collision with Gerald Gaudet.
State Farm subsequently hired a lawyer in anticipation of litigation by Gaudet against Vetter. The insurer also hired private investigators that conducted video surveillance on Gaudet.
Gaudet filed a request under Canada’s privacy legislation, the Personal Information Protection and Electronic Documents Act (PIPEDA), that State Farm turn over to him the personal information it had compiled, including copies of the surveillance reports and tapes.
State Farm went to the New Brunswick Court of Queen’s Bench asking for “declaratory” relief on several issues.
Among other things, the insurer asked for a court order declaring that PIPEDA did not apply to information obtained in a bodily injury damages claim. It also asked the court for an order confirming that the privacy commissioner had no right or authority to compel State Farm to turn over the documents.
The privacy commissioner asked for a stay of proceedings in the New Brunswick court, arguing that the authority of the privacy commissioner was a matter for the Federal Court (which has jurisdiction over federal legislation such as the PIPEDA).
The New Brunswick Appeal Court noted both the provincial and federal courts have jurisdiction to hear cases about the constitutionality of federal legislation. But only the Federal Court could determine the outcome of a direct challenge to the authority of the privacy commissioner.
The New Brunswick court thus stayed proceedings and found the Federal Court had proper jurisdiction over the proceedings.

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