Date: 20040428
Docket: T-1884-01
Citation: 2004 FC 627
Montréal, Quebec, April 28, 2004
Present: RICHARD MORNEAU, ESQ., PROTHONOTARY
BETWEEN:
N.M. PATERSON & SONS LIMITED
Plaintiff
and
THE ST. LAWRENCE SEAWAY
MANAGEMENT CORPORATION
Defendant
REASONS FOR ORDER AND ORDER
[1] This is a motion by the defendant directed to outstanding questions from the further examination for discovery of the representative of the plaintiff held on July 11, 2003. Said representative, Mr. Alexander Paterson, was initially examined for discovery on August 8 and 9, 2002.
[2] This motion takes place in the context of the plaintiff's action in which the latter seeks damages totalling about $30,000,000 as a result of a collision on August 11, 2001 between its vessel, the M.V. Windoc, and lift bridge 11 of the Welland Canal which is owned and operated by the defendant.
[3] Plaintiff's statement of claim calls for net revenue loss, business losses, including but not limited to goodwill, and capital losses as a result of the collision, estimated at approximately $2,000,000 per annum.
[4] In an affidavit in support of the motion at bar, the defendant states that answers to the outstanding questions are necessary for a proper review of the qualification of the plaintiff's claim in damages.
The Law on Questions on Discovery
[5] As stated by MacKay J. in Sydney SteelCorp. v. Omisalj (The), (1992) 2 F.C. 193, at page 197:
[...] the standard for propriety of a question asked in discovery [...] is whether the information solicited by a question may be relevant to the matters which at the discovery stage are in issue on the basis of pleadings filed by the parties.
[6] That is basically what rule 240(a) of the Federal Court Rules, 1998 requires.
[7] In an earlier decision, Reading & Bates Construction Co. et al. v. Baker Energy Resources Corp. et al. (1988), 24 C.P.R. (3d) 66, at 70, Mr. Justice McNair of this Court had stated the following principle on production of documents, which principle applies as well, as far as I know, to a question put on discovery:
The principle for determining what document properly relates to the matters in issue is that it must be one which might reasonably be supposed to contain information which may directly or indirectly enable the party requiring production to advance his own case or to damage the case of his adversary, or which might fairly lead him to a train of inquiry that could have either of these consequences.
[8] With this principle in mind, I shall now evaluate the propriety of the questions and documents requested.
Analysis
[9] Before turning to the outstanding questions, the plaintiff requests in essence that the affidavit submitted by the defendant be struck out since the justification it contains for the information requested is not sustained based on the personal knowledge of the deponent of the affidavit, but is derived from the advice provided to said deponent by an expert accountant retained by the defendant.
[10] I do not intend to strike the affidavit submitted by the defendant. Rule 81(1) allows under a motion the production of an affidavit on information and belief. The caveat to that situation is provided by rule 81(2); it could affect the weight to be given to such an affidavit. Rule 81 reads:
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81. (1) Affidavits shall be confined to facts with the personal knowledge of the deponent, except on motions in which statements as to the deponent's belief, with the grounds therefor, may be included.
(2) Where an affidavit is made on belief, an adverse inference may be drawn from the failure of a party to provide evidence of persons having personal knowledge of material facts. |
81. (1) Les affidavits se limitent aux faits dont le déclarant a une connaissance personnelle, sauf s'ils sont présentés à l'appui d'une requête, auquel cas ils peuvent contenir des déclarations fondées sur ce que le déclarant croit être les faits, avec motifs à l'appui.
(2) Lorsqu'un affidavit contient des déclarations fondées sur ce que croit le déclarant, le fait de ne pas offrir le témoignage de personnes ayant une connaissance personnelle des faits substantiels peut donner lieu à des conclusions défavorables. |
[11] I do not intend to draw here an adverse inference since I am of the view that the bulk of the information and documentation ordered herein stems from matters already discussed by Mr. Paterson during his discovery on August 8 and 9, 2002.
[12] I shall now turn to the outstanding questions using the numbering retained by the parties in their written representations.
[13] As for question 25, it deals in fact with three sub-questions which are:
25(1) To advise whether Mr. Paterson was aware of the practice of companies keeping vessels that are not active for the purpose of getting allocation from the Wheat Board for cargo.
25(2) To advise whether Paterson is one of those companies.
25(3) To advise whether a decision was made to keep two or more vessels because of the Canadian Wheat Board.
[14] As for question 25(1), I believe that the plaintiff has answered said question at its discovery on August 8, 2002 (see page 76, answer 239, of the August 8, 2002 transcript, page 216 of the defendant motion record).
[15] As for question 25(3), I believe that it is a fair avenue of inquiry for the defendant to pursue since if the plaintiff did engage in the practice of keeping vessels that are not active for the purpose of getting allocation from the Wheat Board for cargo, said decision might have a bearing on the value of the Windoc at the time of the collision.
[16] In addition, on August 8, 2002 (see pages 75 to 78 of the transcript of that date) the plaintiff has already started to answer this line of questioning.
[17] Consequently, question 25(3) is relevant and shall be answered. Considering that conclusion, question 25(2) need not be answered.
[18] Questions 26 and 35 can be addressed together.
[19] As for question 26, it calls for the production of the full financial statements of the entire plaintiff company.
[20] The plaintiff has admitted at its August 8, 2002 discovery that the plaintiff corporation comprised two divisions, the Grain Division and the Marine Division. It has admitted also that it was nevertheless in fact "one corporation", and that money from the Marine Division could be used for expenses in the Grain Division and vice versa. It appears also that both divisions finance their operations through the "Head Office Division". However, so far, the plaintiff has only provided financial information relating to its Marine Division. I am of the view that all those factual elements render question 26 a fair and relevant question. It shall therefore be answered. Corollary question 35 which requests the production of the consolidated audited financial statements for the entire company for the year 2002 shall also be answered. This documentation does exist and I do not see really what prejudice it could cause the plaintiff to produce same. I appreciate that the defendant wants to see said documentation in order to ensure that the information therein matches the information found in the operating statements.
[21] Question 28 deals with two sub-questions which read:
28(1) The fleet is assumed to be worth $15 million. To ask Mr. Price how that figure was arrived at.
28(2) To produce the Ernst & Young file up to the date of the accident.
[22] As for question 28(1), counsel for the plaintiff has undertaken to provide the defendant with the calculation behind the figure of $15 million. That answer shall be sufficient to fully answer question 28(1).
[23] As for question 28(2), it appears to seek the production of the working papers and files of a consultant who has produced for the plaintiff in 1995 or 1996 a cost/benefit analysis regarding the plaintiff winding up a part of its operation.
[24] One appreciates that the documentation requested relates to an analysis which was made six years before the collision at issue. It appears that the plaintiff does not intend to base its case upon said analysis. In addition, the issue which the Court ultimately will decide is the value of the Windoc just prior to the collision.
[25] Consequently question 28(2) need not be answered since I fail to see how the documentation sought by the defendant would likely throw any light on any relevant issues in the case at bar.
[26] As for question 31, it calls for the plaintiff to convey to the defendant an opinion coming from a third party. This question is irrelevant and need not be answered.
[27] Question 33 deals with the production of a valuation report regarding a sale that took place on July 22, 2001 where the shares of the Paterson family members involved in the Marine Division were sold to a cousin, the principal shareholder of the Grain Division.
[28] I accept that said report might contain a discussion with respect to the plaintiff's future plans for its fleet and for the Windoc in particular, and that said plans could have an impact on the valuation to be accorded to the Windoc. The fact that the plaintiff has produced already some financial information in this regard is not a bar under the present circumstances to preclude the production of the valuation report. The fact that the sale of July 11, 2001 is an inter-family transaction is a fact that the Court could appreciate on the merits should the documentation requested find its way into the evidence at trial.
[29] Question 33 shall therefore be answered.
ORDER
CONSEQUENTLY, THIS COURT ORDERS that
- The plaintiff shall answer within thirty (30) days of the date of this order questions 25(3), 26, 35, 28(1) to the extent indicated by counsel for the plaintiff, and 33;
- The plaintiff shall re-attend within three weeks of producing answers to the questions above to answer any further questions arising out of the answers to be so provided;
- As success is divided, costs shall be in the cause.
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Richard Morneau |
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Prothonotary |
FEDERAL COURT
COUNSEL AND SOLICITORS OF RECORD
DOCKET:
STYLE OF CAUSE:
T-1884-01
N.M. PATERSON & SONS LIMITED
Plaintiff
and
THE ST. LAWRENCE SEAWAY MANAGEMENT CORPORATION
Defendant
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: April 19, 2004
REASONS FOR ORDER: Richard Morneau, Esq., Prothonotary
DATE OF REASONS FOR ORDER: April 28, 2004
APPEARANCES:
| Mr. David F.H. Marler Mr. Murray Froese |
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FOR THE PLAINTIFF |
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| Mr. Simon Barker |
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FOR THE DEFENDANT |
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SOLICITORS OF RECORD:
| Marler & Associates Knowlton, Quebec |
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FOR THE PLAINTIFF |
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| Fernandes Hearn Toronto, Ontario |
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FOR THE DEFENDANT |
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