Dow Chemical Canada Inc. et al. v. Nova Chemicals Corp.,

• Judge: Wittmann
• Neutral Citation: 2015 ABQB 2
• Citation: (2015), 605 A.R. 85 (QB),2015 ABQB 2,605 AR 85,(2015), 605 AR 85 (QB),605 A.R. 85
• Date: 15 December 2014
• Court: Court of Queen's Bench of Alberta (Canada)

Dow Chemical Can. Inc. v. Nova Chemicals Corp. (2015), 605 A.R. 85 (QB)

MLB headnote and full text

Temp. Cite: [2015] A.R. TBEd. JA.146

Dow Chemical Canada Inc. and Dow Europe GmbH (plaintiffs/defendants by counterclaim/applicant) v. Nova Chemicals Corporation (defendant/plaintiff by counterclaim/respondent)

(0601 07921; 2015 ABQB 2)

Indexed As: Dow Chemical Canada Inc. et al. v. Nova Chemicals Corp.

Alberta Court of Queen's Bench

Judicial District of Calgary

Wittmann, C.J.Q.B.

January 2, 2015.

Summary:

The defendant, Nova Chemicals Corp. ("Nova"), applied for further and better particulars of a reply and defence to counterclaim. It also sought the production of a document for inspection.

The Alberta Court of Queen's Bench, in a decision reported at (2007), 423 A.R. 106, determined the issues accordingly. The plaintiffs, Dow Chemical Canada Inc. and Dow Europe GmbH ("Dow"), sought leave to amend their amended statement of claim. Nova consented to the proposed amendments that updated Dow's damages claim and other uncontested issues. Nova opposed any amendments respecting three new claims.

The Alberta Court of Queen's Bench allowed the application. Nova applied for an order compelling Dow to provide answers, or further and better answers, to a number of undertakings and interrogatories.

The Alberta Court of Queen's Bench, in a decision reported at (2014), 581 A.R. 382, determined the issues accordingly. Nova appealed.

The Alberta Court of Appeal, in a decision reported at (2014), 577 A.R. 335; 613 W.A.C. 335, allowed the appeal in part. Dow brought two applications. The first requested relief respecting "Nova's multiple failures to make record discovery". It sought that Nova be "directed immediately to produce ... documents as more specifically discussed above". Dow's second application sought relief for "Defendant's non-compliance with Court Orders and other significant deficiencies". By way of a Supplementary Brief, Dow asked the court for a remedy under rule 3.68(4) of the Alberta Rules of Court, asking that parts of Nova's defence be struck out.

The Alberta Court of Queen's Bench dismissed the applications.

Evidence - Topic 512

Presentation of evidence - Rebuttal evidence - To contradict witnesses - [See both Evidence - Topic 4716 ].

Evidence - Topic 4716

Witnesses - Examination - Cross-examination - On testimony to be contradicted - The Alberta Court of Queen's Bench stated that "The rule in Browne v Dunn (1893), 6 R.67 (H.L.), briefly stated, concerns a party that undertakes a cross-examination, failing to put evidence to a witness that contradicts the witness' testimony. The rule later allows the Court to lessen the weight of contradictory evidence usually adduced later in the proceeding. Subsequent authority in Canada has shown that the rule is not a rule, but rather gives rise to the exercise of judicial discretion. It is a guide to fairness." - See paragraph 53.

Evidence - Topic 4716

Witnesses - Examination - Cross-examination - On testimony to be contradicted - The plaintiffs ("Dow") sought relief for "Defendant's [Nova's] non-compliance with Court Orders and other significant deficiencies" - By way of a Supplementary Brief, Dow asked the court for a remedy under rule 3.68(4) of the Alberta Rules of Court, asking that parts of Nova's defence be struck out - Nova filed three affidavits in opposition to the Striking Application: the Choma Affidavit, the Flint Affidavit and the Apuzzo Affidavit - None of these deponents were cross-examined - However, their evidence was impugned by other evidence put forward by Dow in terms of excerpts from the evidence of prior questioning of Flint, Choma and Apuzzo, and the questioning of Woelfel and Tulk - The Alberta Court of Queen's Bench applied the underlying concept or principle surrounding Browne v. Dunn and held that "The lack of cross-examination ..., coupled by the use of other evidence, namely the questioning of Woelfel and the antecedent questioning of Flint, Tulk and Choma, gives rise to the exercise of this Court's discretion to discount the evidence relied on by Dow." - See paragraphs 52 and 53.

Practice - Topic 2232

Pleadings - Striking out pleadings - Grounds - Noncompliance with discovery rules - The plaintiffs ("Dow") and the defendant ("Nova") co-owned an ethylene processing plant (E3) - Nova operated it - Dow alleged that Nova had unlawfully taken, for its own use and advantage, a portion of their ethylene and other products produced at E3, and that Nova failed to optimize production at E3 - Dow brought two applications - The first requested relief respecting "Nova's multiple failures to make record discovery" and requested that Nova be directed to produce specific documents immediately - Dow's second application sought relief for "Defendant's non-compliance with Court Orders and other significant deficiencies" - By way of a Supplementary Brief, Dow asked the court for a remedy under rule 3.68(4) of the Alberta Rules of Court (ARC), asking that parts of Nova's defence be struck out - The Alberta Court of Queen's Bench dismissed the applications - The court was not satisfied that Dow had satisfied the onus of showing that Nova had, without sufficient cause, withheld or failed to produce relevant material documents pertaining to certain issues - Regarding E3 capacity, the court stated that "There are many facets to the production capacity of any plant. Regular maintenance, unforeseen breakdown, perhaps even operator error are among them. Dow has put prudent operation in issue through its expert reports. Nova has now focused on that issue. It may have been an oversight not to do so earlier, but the Court need not decide whether those documents ought to have been produced earlier. The ARC 5.10 recognizes that a party may find relevant and material records later, after an affidavit of records has been served. Notice and disclosure to the other party is mandated. That is what happened here. There was sufficient cause within the meaning of ARC 3.68(4) and I so find." - See paragraphs 29 to 46.

Practice - Topic 4252

Discovery - Examination - Range of - Questions related to or relevant and material to issues between the parties - The Alberta Court of Queen's Bench stated that "The Court of Appeal in Dow Chemical Canada ULC v Nova Chemicals Corporation, 2014 ABCA 244 at paragraph 17, after quoting ARC [Alberta Rules of Court] 5.2(1), indicated that relevance is primarily determined with reference to the pleadings, but materiality concerns whether the information can assist directly or indirectly to prove a fact in issue (para. 17). The point is that the scope of document production or production of records as it is now called, and questioning, formerly oral examination for discovery, has been narrowed since 1999. Secondly, it is to be remembered that it is the legal obligation of the party producing records or delivering an Affidavit of Records to decide what is relevant and material and what is not. That is not to say that differences cannot arise. But it is the obligation of a party, assisted by counsel, where available, to disclose relevant and material records." - See paragraph 15.

Practice - Topic 4550

Discovery - Production and inspection of documents - General - The Alberta Court of Queen's Bench stated that "In Weatherill Estate v Weatherill, 2003 ABQB 69, Slatter J. (as he then was) admonished counsel to take a pragmatic view of the scope of discovery. He suggested that rather than spend thousands of dollars on disputing whether a document ought to be produced, counsel ought to produce an arguably irrelevant document, if it cannot help or hurt his client and that 'the pragmatic counsel will produce it rather than fight over it' (para 13). It is the view of this Court, that this approach is highly dependent on context. In the context of that litigation, it is wise counsel. In the context of this litigation, producing irrelevant and immaterial documents, spawns a plethora of ill-advised and costly disclosure." - See paragraphs 50 and 51.

Practice - Topic 4573

Discovery - What documents must be produced - Documents related to or relevant and material to matters in issue - [See Practice - Topic 4252 ].

Practice - Topic 4573

Discovery - What documents must be produced - Documents related to or relevant and material to matters in issue - The plaintiffs ("Dow") and the defendant ("Nova") co-owned an ethylene processing plant (E3) - Nova operated it - Dow alleged that Nova had unlawfully taken, for its own use and advantage, a portion of their ethylene and other products produced at E3, and that Nova failed to optimize production at E3 - Dow applied for the immediate production of documents which it alleged Nova had failed to produce, including documents relating to "R3" - The Alberta Court of Queen's Bench dismissed the application - The court stated that "Based on the filed materials and the submissions of counsel, this Court will not make a further Order for document production as it pertains to R3 records. Dow has not established, on the balance of probabilities that relevant and material records either exist, or if they exist, have been withheld by Nova. Nova has repeatedly stated that their outside counsel has reviewed all of the documents Dow says must exist, using the criteria of what is relevant and material. The Court comments parenthetically that drafts of speaking notes for a presentation to a Board or a CEO need not be produced, if they are not 'relative to the projected ethylene production volumes or capability of E3.' The Court has no reason to doubt the integrity or diligence of Nova's counsel when they make the assertions they have made in this regard. As will be seen below, where a mistake has been made or document overlooked, Nova has acknowledged its mistake or error. No such mistake or error has been made evident when it comes to the relevant and material records relative to the projected ethylene production volumes or capability of E3 during the R3 approval process." - See paragraphs 17 to 21.

Practice - Topic 4573

Discovery - What documents must be produced - Documents related to or relevant and material to matters in issue - The plaintiffs ("Dow") and the defendant ("Nova") co-owned an ethylene processing plant (E3) - Nova operated it - Dow alleged that Nova had unlawfully taken, for its own use and advantage, a portion of their ethylene and other products produced at E3, and that Nova failed to optimize production at E3 - Dow applied for the immediate production of documents which it alleged Nova had failed to produce, including MIMI documents reflecting the alleged conversion of Dow's E3 ethylene - MIMI was computer software that Nova used that was linked to meters at Joffre, Alberta, in order to divide E3's ethylene between Dow and Nova - The MIMI software code had default settings to divide E3's ethylene production 50/50 between Nova and Dow, based on the relevant joint venture project agreements between the parties - According to the November 22, 2010, questioning of Choma, Nova's Ethylene Contract Administrator at the material time, her practice was to access the MIMI program by overriding the default on a daily basis and manually replacing the values deviating from 50% percent for Dow and 50% percent for Nova - Choma swore that this was not a "record" that she would preserve, use or refer to in the ordinary course of business and that it was nothing more than a data entry tool - Exhibit "B" to her Affidavit was a report called "TOP 773-1" - She swore that each co-owners' (Dow's and Nova's) percentage ethylene take was entered and the MIMI reporting reflected the change on the TOP 773-1 report - She stated that "Historical Input Screens" were accessible for a rolling 12 month period and that she could access historical input screens going back a year - During oral argument, Nova's counsel said that they could have Choma take screen shots back for 395 days and sit in front of a screen for two or three days "for absolutely no benefit whatsoever. It is abusive and it's a waste of time." - The Alberta Court of Queen's Bench refused to order Nova to produce the MIMI screen shots - They were relevant and material - However, in view of the difficulty and the actual information produced to Dow as to their daily allocation and the ability to calculate a percentage, it would be abusive to require Nova to create screen shots - See paragraphs 22 to 28.

Cases Noticed:

Czuy and Czuy v. Mitchell, Edmonton General Hospital and General Hospital (Grey Nuns) of Edmonton (1976), 1 A.R. 434; 72 D.L.R.(3d) 424 (C.A.), refd to. [para. 12].

Hirtz v. Public Trustee (Alta.) (2002), 303 A.R. 25; 273 W.A.C. 25; 2002 ABCA 29, refd to. [para. 13].

Sun Life Assurance Co. of Canada v. Tom 2003-1 Limited Partnership #2 et al. (2010), 516 A.R. 95 (Q.B.), refd to. [para. 33].

Wagner v. Petryga Estate et al. (2001), 292 A.R. 320; 2001 ABQB 690, refd to. [para. 33].

Harden v. Chang et al. (2013), 434 Sask.R. 57; 2013 SKQB 419, refd to. [para. 33].

Stacey v. Foy, [2014] A.R. Uned. 407; 2014 ABCA 394, refd to. [para. 33].

British Columbia v. Imperial Tobacco Canada Ltd. et al. (2011), 419 N.R. 1; 308 B.C.A.C. 1; 521 W.A.C. 1; 2011 SCC 42, refd to. [para. 33].

Operation Dismantle Inc. et al. v. Canada et al., [1985] 1 S.C.R. 441; 59 N.R. 1, refd to. [para. 33].

McElheran v. Canada et al., [2006] A.R. Uned. 869; 2006 ABCA 161, refd to. [para. 33].

Hryniak v. Mauldin (2014), 453 N.R. 51; 314 O.A.C. 1; 2014 SCC 7, refd to. [para. 33].

Dow Chemical Canada ULC et al. v. Nova Chemicals Corp. (2014), 577 A.R. 335; 613 W.A.C. 335; 2014 ABCA 244, refd to. [para. 33].

Lay v. Lay et al., [2012] A.R. Uned. 534; 2012 ABCA 303, refd to. [para. 33].

Marcotte et al. v. Longueuil (Ville), [2009] 3 S.C.R. 65; 394 N.R. 1; 2009 SCC 43, refd to. [para. 49].

Browne v Dunn (1893), 6 R. 67 (H.L.), refd to. [para. 53].

Statutes Noticed:

Rules of Court (Alta.), rule 3.68(4)(b)(ii), rule 3.68(4)(b)(iii) [para. 29]; rule 5.10 [para. 30].

Counsel:

B.C. Yorke-Slader, Q.C., B.R. Crump and A.D. Grosse, for the plaintiffs/defendants by counterclaim, Dow Chemical Canada Inc. and Dow Europe GmbH;

W.J. Kenny, Q.C., C.C.J. Feasby, M.E. Comeau and T. Gelbman, for the defendant/plaintiff by counterclaim, Nova Chemicals Corp.

These applications were heard on December 15, 2014, by Wittmann, C.J.Q.B., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following decision on January 2, 2015.