Spar Aerospace Ltd. v. Aerowerks Engineering Inc. et al.

• Jurisdiction: Alberta
• Court: Court of Queen's Bench of Alberta (Canada)
• Judge: Veit, J.
• Citation: 2007 ABQB 543,(2007), 428 A.R. 84 (QB)
• Date: 31 August 2007
• Subject Matter: PRACTICE

Spar Aerospace Ltd. v. Aerowerks Eng. (2007), 428 A.R. 84 (QB)

MLB headnote and full text

Temp. Cite: [2007] A.R. TBEd. SE.024

Spar Aerospace Limited (plaintiff) v. Aerowerks Engineering Inc., Steven Gentles, Kevin Morris, Tyler Pahl and Meta-Fleet International Corporation (defendants)

(0403 24218; 2007 ABQB 543)

Indexed As: Spar Aerospace Ltd. v. Aerowerks Engineering Inc. et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Veit, J.

August 31, 2007.

Summary:

Spar Aerospace Ltd. (the plaintiff) sought a declaration that the defendants failed to provide an adequate affidavit of records within the time prescribed by a court order. Spar also sought a collateral declaration that an order of a case manager that entitled Spar, on default of a timely affidavit of records, to obtain the defendants' imaged hard drives and all records seized during the execution of an Anton Piller order, could now be enforced by Spar.

The Alberta Court of Queen's Bench granted the declarations sought. In particular, the court imposed an admittedly "unusually high level of disclosure" of electronic documents in this case, having regard to the Anton Piller order, the size of the claim (over $50 million) and the level of IT expertise of the parties.

Practice - Topic 3679

Evidence - Affidavits - Use of - Admissibility - Spar Aerospace Ltd. (the plaintiff) sought a declaration that the defendants failed to provide an adequate affidavit of records within the time prescribed by court order - Spar also sought a collateral declaration that an order of the case manager that entitled Spar, on default of a timely affidavit of records, to obtain the defendants' imaged hard drives and all records seized during the execution of an Anton Piller order, could now be enforced by Spar - A legal assistant swore an affidavit in support of Spar's motion respecting the state of disclosure - An admissibility issue arose - The Alberta Court of Queen's Bench held that the affidavit of the legal assistant was admissible - The court stated that because the facts concerning disclosure were within the legal assistant's knowledge, Spar had met the applicable test for admissibility - This was not a situation where the legal assistant's affidavit was used as the basis to initiate a cause of action or a request for particulars, both of which depended upon an understanding of legal principles which might be presumed to be beyond the competence of a legal assistant - Also this was not a situation where the court should give little weight to sworn evidence because of the overall circumstances, or because better evidence was available (i.e., a legal assistant was in as good a position as any to provide evidence about the state of disclosure) - See paragraphs 35 to 37.

Practice - Topic 4157

Discovery - General principles - Collateral use of discovery information (implied or deemed undertaking rule) - The Alberta Court of Queen's Bench noted that, unlike the situation in United States, in Canada disclosure which was compelled during the litigation process was protected, without any protective order, by the general law which included, and enforced, an implied undertaking that the discovered material would be used solely for the purposes of the litigation in which it was obtained - "The material compelled in discovery cannot be used in direct competition; moreover, the accurate recording of the material provided in disclosure will presumably actively discourage attempts to use the material in competition because of the ease with which that material can be traced. As indicated above, however, even in Canadian practice, the implied undertaking should be shored up by contracts with the various persons and individuals to whom the disclosure of confidential records may be made with a view to extending to them the undertaking that binds the parties' and the parties' lawyers" - See paragraph 47.

Practice - Topic 4573.3

Discovery - What documents must be produced - Computerized documents or electronic data - Spar Aerospace Ltd. (the plaintiff) sought to enforce a direction of a case manager that Spar was entitled, on default of a timely affidavit of records, to obtain the defendants' imaged hard drives and all records seized during the execution of an Anton Piller order - The Alberta Court of Queen's Bench held that Spar was entitled to enforce that direction - The court was satisfied that the defendants had not produced all relevant and material emails - Further, the court ordered the defendants to list on their affidavit of documents all of the material and relevant records that had been deleted even if no electronic or paper copy existed and to take reasonable efforts to produce those deleted records - Also the defendants were required to provide to Spar all passwords, systems and software necessary to access the records produced - The defendants were also ordered to produce their metadata, which the court considered to be a record - The court stated that "while metadata presumably need not be produced in most situations, because it is irrelevant to know, for example, when a document was printed, the production of such records is material and relevant here where the pleadings disclose that the identity of the author of electronic records, the timing of the treatment of those records - including if and when they were modified, the dates and tracking routes of e-mail, are all potentially at the very core of the issues that are raised in the litigation" - Spar was also entitled to immediate access to the defendants' hard drives - See paragraphs 56 to 85.

Practice - Topic 4573.3

Discovery - What documents must be produced - Computerized documents or electronic data - The Alberta Court of Queen's Bench, in discussing the issue of disclosure of electronic records, stated that "it appears to be accepted in Canadian practice that the obligation of discovery is tempered by the application of proportionality or cost/benefit ratio: in Alberta, this means that records must be only be disclosed if they are not only relevant, but also material. Although this is a principle of general proportionality that is articulated in the Rules of Court, I accept that there is an implicit requirement that limits production to those records which are reasonably accessible. However, in this case, Spar [the plaintiff] claims damages of $50 million, or an accounting of profits, and punitive damages in the amount of $1 million. Moreover, all the parties are extremely IT competent. In those circumstances, proportionality is not a major feature of the discovery process" - See paragraph 57.

Practice - Topic 4642

Discovery - Affidavit or list of documents - Computerized documents or electronic data - Production of - [See both Practice - Topic 4573.3 ].

Cases Noticed:

Nicolardi v. Daley et al., [2002] O.T.C. 129 (Sup. Ct. Master), refd to. [para. 11].

Simon Prop. Group L.P. v. MySimon Inc., 11 F.R.D. 639 (S.D. Ind.), refd to. [para. 11].

Cholakis v. Cholakis et al., [2000] Man.R.(2d) Uned. 13 (Q.B.), refd to. [para. 11].

Canadian Engineering and Surveys (Yukon) Ltd. et al. v. Banque Nationale de Paris (Canada) (1995), 179 A.R. 394 (Q.B.), affd. (1996), 196 A.R. 1; 141 W.A.C. 1 (C.A.), refd to. [para. 11].

Wilson v. Servier Canada Inc. et al., [2002] O.T.C. 719; 2002 CanLII 3615 (Sup. Ct.), refd to. [para. 11].

Tolko Industries Ltd. v. RaiLink Ltd. et al. (2003), 333 A.R. 270; 2003 ABQB 349, affd. (2003), 346 A.R. 78; 320 W.A.C. 78; 2003 ABCA 332, refd to. [para. 11].

Prism Hospital Software Inc. v. Hospital Medical Records Institute, [1991] B.C.J. No. 3732 (S.C.), refd to. [para. 11].

Baldwin Janzen Insurance Services (2004) Ltd. v. Janzen, [2006] B.C.T.C. 554; 2006 BCSC 554, refd to. [para. 11].

Ireland v. Low, [2006] B.C.T.C. 393; 2006 BCSC 393, refd to. [para. 11].

Balboa Threadworks Inc. v. Stucky, 2006 U.S. Dist. LEXIS 24938, refd to. [para. 11].

Sigalov v. Tranmer (1996), 184 A.R. 221; 122 W.A.C. 221 (C.A.), refd to. [para. 11].

Windship Aviation Ltd. et al. v. deMeulles et al., [2005] A.R. Uned. 199; 2005 ABCA 239, refd to. [para. 11].

Kin Franchising Ltd. v. Donco Ltd., [1993] A.J. No. 40 (C.A.), refd to. [para. 11].

Anderson Preece & Associates Inc. v. Dominiun Appraisal Group Inc. et al. (2000), 264 A.R. 177 (Q.B.), refd to. [para. 11].

Desgagne v. Yuen et al., [2006] B.C.T.C. 955 (S.C.), refd to. [para. 11].

I.M.P. Group Ltd. v. Canada (Minister of Public Works and Government Services) et al. (2006), 303 F.T.R. 192; 2006 FC 1223, refd to. [para. 11].

Schaffhauser Kantonalbank v. Ulrich, Chmiel (1988), 89 A.R. 387; 1988 CarswellAlta 546 (C.A.), refd to. [para. 11].

Canada Southern Petroleum Ltd. et al. v. Amoco Canada Petroleum Co. et al. (1997), 193 A.R. 273; 135 W.A.C. 273 (C.A.), refd to. [para. 11].

Allied Signal Inc. v. Dome Petroleum Ltd. - see Canada Southern Petroleum Ltd. et al. v. Amoco Canada Petroleum Co. et al.

Mikisew Cree First Nation v. Canada et al. (2002), 303 A.R. 43; 273 W.A.C. 43; 2002 ABCA 110, refd to. [para. 11].

Magrath Market Place Ltd. v. 401624 Alberta Inc. (1991), 83 Alta. L.R.(2d) 94; 1991 CarswellAlta 175 (Q.B.), refd to. [para. 11].

Firemaster Oilfield Services Ltd. v. Safety Boss (Canada) (1993) Ltd. et al. (1996), 183 A.R. 155 (Q.B.), refd to. [para. 11].

Stafford v. Lowrie, 1992 WL 1334585; 1992 CarswellOnt 2339 (Gen. Div.), refd to. [para. 11].

Liu v. West Edmonton Mall Property Inc. et al. (2000), 279 A.R. 305 (Q.B.), refd to. [para. 11].

Ringrose v. LeRiche et al. (1981), 36 A.R. 437 (Q.B.), refd to. [para. 11].

Ontario (Minister of Correctional Services) v. Goodis et al. (2006), 350 N.R. 154; 214 O.A.C. 377 (S.C.C.), refd to. [para. 14].

Celanese Canada Inc. v. Murray Demolition Corp. et al. (2006), 352 N.R. 1; 215 O.A.C. 266 (S.C.C.), refd to. [para. 14].

Merck & Co. et al. v. Apotex Inc. et al. (2004), 253 F.T.R. 178 (F.C.), refd to. [para. 14].

Murphy Oil Co. et al. v. Predator Corp. et al. (2002), 328 A.R. 308 (Q.B.), refd to. [para. 14].

Zeneca Pharma Inc. v. Canada (Minister of National Health and Welfare) et al., [1994] F.C.J. No. 543 (T.D.), refd to. [para. 14].

Apotex Inc. and Novopharm Ltd. v. Wellcome Foundation Ltd. (1993), 69 F.T.R. 161; 51 C.P.R.(3d) 305 (T.D.), refd to. [para. 14].

Glaxco Group Ltd. et al. v. Novopharm Ltd. (1998), 227 N.R. 80; 81 C.P.R.(3d) 185 (F.C.A.), reving. (1995), 65 C.P.R.(3d) 128 (T.D.), refd to. [para. 14].

Grant v. Monsanto Canada Ltd. and United Grain Growers Ltd. (1979), 30 A.R. 451 (T.D.), refd to. [para. 14].

Pfizer Canada Inc. et al. v. Novopharm Ltd. et al. (1996), 122 F.T.R. 199 (T.D.), refd to. [para. 14].

Merck & Co. v. Brantford Chemicals Inc., [2005] F.T.R. Uned. A99 (F.C.), refd to. [para. 14].

Automated Tabulation Inc. v. Canadian Market Images Ltd., [1995] O.J. No. 1910 (Gen. Div.), refd to. [para. 14].

Lundbeck Canada Inc. v. Canada (Minister of Health) et al. (2007), 312 F.T.R. 1 (F.C.), refd to. [para. 14].

Miller (Ed) Sales & Rentals Ltd. v. Caterpillar Tractor Co. et al. (1986), 72 A.R. 354 (Q.B.), refd to. [para. 14].

CPC International Inc. v. Seaforth Creamery Inc., [1996] O.J. No. 1353 (Gen. Div.), refd to. [para. 14].

Sierra Club of Canada v. Canada (Minister of Finance) et al., [2002] 2 S.C.R. 522; 287 N.R. 203, refd to. [para. 15].

Canadian Broadcasting Corp. v. Dagenais et al., [1994] 3 S.C.R. 835; 175 N.R. 1; 76 O.A.C. 81, refd to. [para. 15].

R. v. Mentuck (C.G.), [2001] 3 S.C.R. 442; 277 N.R. 160; 163 Man.R.(2d) 1; 269 W.A.C. 1, refd to. [para. 15].

Statutes Noticed:

Rules of Court (Alta.), rule 186.1 [para. 33]; rule 187.1(2)(b) [para. 41].

Authors and Works Noticed:

McClelland, Denise H., and Morris, Shannah J., The "Attorneys' Eyes Only" Designation and Other Disclosure Restrictions in Trade Secrets Litigation, generally [para. 47].

McClelland, Denise H., and Morris, Shannah J., Three Tiers of Restricted Disclosure Used in Trade Secret Litigation, http://www.frostbrowntodd.com/new/publications/detail.aspx?pub=1312, generally [para. 14].

Ontario, Task Force on the Discovery Process, Guidelines for the Discovery of Electronic Documents in Ontario (2005), generally [para. 11].

Sedona Conference, Sedona Principles, Addressing Electronic Document Production (2007 Canadian Ed.), http://www.thesedonaconference.org, generally [para. 16].

Sedona Conference Working Group on Best Practices for Electronic Document Retention & Production, The Sedona Principles: Best Practices, Recommendations & Principles for Addressing Electronic Document Production (2005), generally [para. 11].

Counsel:

Kenneth W. Fitz and James Mallet (McLennan Ross), for Spar Aerospace Ltd.;

Dennis L. Picco and Cristina Wendel (Fraser Milner Casgrain LLP), for Aerowerks Engineering, Steven Gentles, Kevin Morris, Tyler Pahl, and Meta-Fleet International Corp.

This matter was heard December 20 and 22, 2006, before Veit, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following decision on August 31, 2007.