COURT FILE NO

CV-10-8845-00CL

HEARD: 20130410

ENDORSEMENT RELEASED: 20140423

ONTARIO

SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

B E T W E E N:

SIEMENS CANADA LIMITED and SERVICES INC. and

SIEMENS IT SOLUTIONS and SERVICES GMBH

Plaintiffs

and

SAPIENT CANADA INC.

Defendant

BEFORE: Master D. E. Short

COUNSEL:
Peter H. Griffin Fax: (416) 865-3558
Shara N. Roy Fax: (416) 865-3973

for the plaintiffs

Alexander Cobb Fax: (416) 862-6666 Karin Sachar for the defendants

REasons for Decision

Preamble

[1] The accomplishment of any major change is rarely made without significant difficulties. Much work is required to overcome those difficulties in order to achieve the desired improvements.

[2] This case arises from problems encountered between two respected experienced corporations that had been retained to participate in the upgrading of the electronic record systems of a major utility.

[3] This motion arises from problems encountered between two experienced law firms that were retained with respect to an action that was commenced in July of 2009, shortly before the Rules of Civil Procedure in Ontario were amended to include, inter alia, the concept of proportionality in discovery. (The rate of progress in this litigation to date is indicated by underlined dates throughout these reasons.)

[4] The issues also relate to the changing environment in electronic document management as the available litigation support technology and search capability was expanding.

[5] While this matter was under reserve the editors of the Oxford Dictionary announced the addition of a new word to their dictionary. That word aptly describes what the moving parties seek:

“Do-over (n.): an instance or chance of doing something for a second or further time, after an unsuccessful or unsatisfactory first attempt.”

[6] These reasons are intended to reflect an endeavour to appropriately address the intersection of all these elements while seeking to adhere to the established principles of our current Rules that are to be “liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.”

I. Nature of Motions

[7] The first motion is brought by the Plaintiffs, Siemens Canada Limited and Services Inc. and Siemens IT Solutions and Services GMBH (collectively, “Siemens”) for an order:

(a) to impose a Discovery Plan on the parties which sets out, amongst other things, the scope of documentary discovery and the custodians whose documents ought to be searched;

(b) for a further and better Affidavit of Documents of the Defendant, Sapient Canada Inc. (“Sapient”); and

(c) for timely production by Sapient of any relevant documents, not already produced.

[8] Siemens asserts that the defendant Sapient has rejected the Plaintiffs’ proposed definition contained in a draft Discovery Plan with regard to the scope of documentary discovery and would not agree to collect and search the documents of additional “custodians” which the Plaintiffs believe will result in the identification of additional relevant documents.

[9] In response, Sapient filed a cross-motion seeking, only in the event Siemens is successful in its motion, an order for further documentary production with respect to specific named Siemens executives.

II. Project Background

[10] A changeover with respect to any computer system is, more often than not, likely to lead to problems and finger-pointing. This is one such case.

[11] Siemens was the subcontractor to Sapient on a project at Enbridge Gas Distribution Inc. (“Enbridge”) to implement a SAP system. I understand that SAP products include “enterprise resource-planning software, which is the term for “applications forming the backbone of supply chains, inventory management and financial records”.

[12] Sapient, with Siemens participation, was awarded the contract at the end of an extensive Request for Proposals process. Siemens’ role in the Enbridge SAP project was to perform certain tasks during the installation phase of the project, in particular around data conversion, as well as provide application support following the implementation of the new SAP program.

[13] Siemens alleges that Sapient wrongfully terminated and breached the subcontract and an amending agreement and suffered damages amounting to over $21 million as a result.

[14] Sapient is counterclaiming, pursuant to allegations of unpaid invoices, breach of contract and negligence, for damages amounting to more than $10 million. Sapient alleges that Siemens’ actions delayed the project whereas Siemens has taken the position that the delays were the result of delays caused by “other work streams” involved in the overall Enbridge project (i.e. not data conversion related).

III. Litigation Progress to Date

[15] A Notice of Action was issued on July 10, 2009, prior to the amendments to the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 which required the parties to enter into a Discovery Plan. That amendment came into force in January 1, 2010.

[16] Regrettably, the parties did not establish a Discovery Plan at the time but proceeded to make production of lists of documents, on the basis of their newly defined obligations under the Rules to produce all documents “relevant to any matter at issue” in the action.

[17] As a consequence, both sides proceeded towards discovery, largely in accord with what had been “the traditional way” for complex commercial litigation in Ontario.

[18] Prior to the commencement of discoveries, Siemens had produced 120,043 documents while Sapient had produced 23,356 documents.

[19] Part of the way through document production, which occurred in several tranches, counsel for Siemens raised the concern that it was producing many more documents than Sapient. Around February 14, 2011, Siemens’ counsel sought an explanation for the discrepancy. Counsel for Sapient did not identify any omissions in its document production efforts at that time.

[20] At the outset of any commercial litigation matter, counsel seek to identify the individuals with the most knowledge of the matters giving rise to the dispute and to obtain and preserve their files, both paper and electronic. In the modern business environment, many of those files are only retained only in electronic form.

[21] Electronic discovery preparation is initially done by reviewing stored data using electronic search engines to identify possibly relevant documents one of the ways of identifying such documents is to search the names and files of the key players involved in the dispute. In the traditional way, those individuals would be asked to collect their paper files and to make them available to counsel for inspection with a view to preparing an affidavit of documents.

[22] Thus the threshold question turns on who are regarded as the key players. Electronic discovery managers thus endeavour to establish who were the “custodians” of the data, with a view to extracting and preserving their electronic files and email archives. In my view, that identification process ought to be done jointly between the two sides in the litigation.

[23] As well, it is normal to establish “keywords” which will be entered as search terms with a view to identifying documents stored electronically and any point in the database that may have a bearing on an identified issue in the litigation.

[24] Somewhat surprisingly, in this case the parties apparently did not exchange lists of custodians nor keyword search terms prior to undertaking their respective document production.

[25] In November, 2011, the parties proceeded to mediation. That mediation was ultimately unsuccessful.

[26] Siemens again raised the issue of the production documents in December 2011 and sought to ensure that all relevant documents had been produced. Counsel for Sapient again asserted that Sapient had produced the relevant documents in the action.

[27] Some months later a timetable was imposed by Justice Morawetz, by Order dated July 16, 2012, which established deadlines for examinations for discovery and further steps in the proceeding, leading to trial.

[28] The Plaintiffs’ representative, Holger Kormann, was examined for discovery on September 26 and 27, 2012. At the conclusion of the examination, it became clear that the defendant Sapient’s counsel had put documents to Mr. Kormann which were not previously disclosed or produced to the Plaintiffs.

IV. Upon Further Review

[29] This led to counsel to Sapient advising Siemens that it had not produced 17,474 documents as part of documentary discovery, due to inadvertence. The documents not produced were housed in a document repository called ResultSpace, which was maintained by Sapient for the purposes of the Enbridge SAP project. On or around October 16, 2012, Sapient produced an additional 17,474 documents, almost doubling their initial production.

[30] Upon realization of the magnitude of the missing documents, the scheduled examinations for discovery of Sapient’s representative, Robert Childs, and Siemens’ second representative, Martin Stangl, were put on hold.

[31] The Plaintiffs were very concerned about Sapient’s failure to produce relevant documents and proposed establishing a Discovery Plan to clarify the scope of documentary discovery and to understand the document collection processes that had been undertaken by the parties.

(Complete judgment text continues exactly as provided above, unchanged.)

DS/ R.63 .

DATE: April 23, 2014 Master D. E. Short