CITATION: R. v. Durward, 2015 ONSC 1562
COURT FILE NO.: 09-300-68
DATE: 2015/03/09
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HER MAJESTY THE QUEEN
– and –
Marina Durward, Susan Laycock, Philip McDonald, Donald Powell, Thomas Townsend, Ronald Walker, David Watts, The Devon Group Ltd., Spearhead Management Canada Ltd., and TPG Technology Consulting Ltd.
Defendants
Denis Pilon, Valerie Chénard and Narissa Somji, for the Crown
Patrick McCann for the Defendant Philip McDonald, Peter N. Mantas for the Defendant TPG Technology Consulting Ltd., and Leslie Wilbur for the Defendant Ronald Walker
HEARD: January 28 and February 2, 2015
Ruling on APPLICATION BY DAVID WATTS
FOR A DIRECTED VERDICT OF ACQUITTAL
Madam Justice B. R. Warkentin
[1] Following the close of the Crown’s case, the Applicant, David Watts, a self-represented accused, brought this application seeking an order directing a verdict of acquittal on the two counts on which he had been charged.
[2] The application was heard on January 28, 2015, however, I asked the Crown to provide additional submissions, which they did on Monday February 2, 2015. At the conclusion of the Crown’s additional submissions, I directed a verdict of acquittal on the charges against Mr. Watts, being counts one (bid-rigging) and eleven (conspiracy) with these written reasons to follow.
Background
[3] Mr. Watts is one of seven individual accused and three corporate accused in this trial on charges of bid-rigging contrary to s. 47(2) of the Competition Act (R.S.C., 1985, c.C-34) and conspiracy (to bid-rig) contrary to s. 465(1)(c) of the Criminal Code (R.S.C., 1985, c. C-46). He was charged on counts one (bid-rigging) and eleven (conspiracy) on an indictment with a total of 22 counts. The charges against Mr. Watts stem from the submission of a proposal by his company, The Devon Group Ltd., which was part of a larger Joint Venture titled “Team Devon” used to respond to a Request for Proposal (“RFP”) issued by Transport Canada on August 5, 2005 (solicitation number T8080-04-0418). Mr. Watts was the president of The Devon Group Ltd. and continues to hold that position in the company today.
[4] Mr. Watts waived his right to a preliminary inquiry and therefore a judge had not previously reviewed the evidence against him.
[5] This trial began on September 23, 2014, before a jury. The Crown concluded its case on January 27, 2015.
[6] Mr. Watts, acting for himself and as agent for The Devon Group Ltd. (“The Devon Group”), sought an order directing a verdict of acquittal for himself only, not The Devon Group.
[7] Mr. Watts is alleged to have been a member of a conspiracy between the remaining nine accused, as well as several other individuals and corporations, who coordinated bids for IT service contracts with Transport Canada in response to the RFP in violation of the Competition Act.
[8] The RFP provided that there would be three winning proposals. The winning companies and/or joint ventures would then be given contracts to enable them to compete for future work when Task Requisitions were issued by the client department within Transport Canada on an “as and when required” basis.
[9] While a significant issue in the trial is whether or not the RFP was a bid or tender, that issue does not form part of Mr. Watts’ application. The only issue I have been asked to consider is whether or not the Crown has produced evidence of Mr. Watts’ knowledge or involvement in the illegal activity alleged. Mr. Watts has submitted that there is no evidence upon which a jury, properly instructed, could reasonably convict him of either bid-rigging or conspiracy.
[10] The theory of the Crown is that all of the accused, including Mr. Watts, as well as a number of other individuals and corporations, decided to unify their efforts to win all three contracts (dubbed the “three bid strategy”) to be awarded under the Transport Canada RFP. The Crown alleges that this conduct amounted to bid-rigging by the individual accused and conspiracy (to bid-rig) by both the individual and corporate accused. (The Crown has noted that when proceeding by indictment before a jury the legislation does not permit corporations to be charged with bid-rigging.)
[11] Mr. Watts and the other accused in this trial, as well as the other individuals and corporations that are not part of this trial, some of whom have been granted immunity or pled guilty and others who are to be tried before a judge alone following this trial, are alleged to have engaged in the three bid strategy via the following conduct:
a) they participated in numerous meetings and communications (orally and in writing), sharing information about technical requirements and the pricing of bids in order to come to an agreement with regard to the proposals submitted to the person calling for bids or tenders;
b) they delegated specific roles among themselves for the preparation of their bids, sharing in the recruitment of resources, the preparation of proposals and the meeting of technical requirements specified in the RFP;
c) they maintained a "tracking list" to identify the participants, the resources and the prices;
d) they acted collectively in responding to those calling for bids or tenders, and if successful, they agreed to deal collectively with the resulting contracts awarded; and,
e) they failed to disclose these agreements or arrangements to the person calling for the bids or tenders.
[12] It is the Crown’s position that in response to the Transport Canada RFP, The Devon Group Ltd. entered into a Contractual Joint Venture (“CJV”) with seven competitors, namely: Spearhead Management Canada Ltd. (“Spearhead”), Veritaaq Technology House (“Veritaaq”), TRM Technologies Inc. (“TRM”), Brainhunter (Ottawa) Inc. (“Brainhunter”), S.i. Systems Inc. (“Si Systems”), TPG Technology Consulting Ltd. (“TPG”) and Donna Cona Inc. (“Donna Cona”).
[13] The evidence confirmed that on October 6, 2005, the closing date, these eight companies submitted three separate proposals in response to the Transport Canada RFP, as “Team Devon”, “Team TPG” and “Team Donna Cona”. The Devon Group was one of six companies forming Team Devon. It is the Crown’s position that because the Team Devon proposal failed to disclose its collaboration and Contractual Joint Venture with Team TPG and Team Donna Cona to the person calling for bids or tenders, Mr. Watts violated s. 47(2) of the Competition Act (bid‑rigging) as well as committed the criminal offence of conspiracy.
[14] The Crown acknowledged that they do not have the same amount or quality of evidence about Mr. Watts’ participation in responding to the Transport Canada RFP that they have against the other accused. The Crown submitted however, that Mr. Watts, as President of The Devon Group, was a party to the alleged illegal activity. The Crown argued that the evidence that supports the inferences they draw comes from the various email communications on which Mr. Watts was copied as well as the emails sent by Mr. Watts himself in response to some of the emails sent to him.
[15] The Crown asserts that they have produced ample documentary evidence to establish Mr. Watts’ knowledge of and participation in the illegal activity alleged and that the evidence establishes that:
a) Mr. Watts initiated the idea of a joint venture with TPG and others, and was fully aware and informed at all times of The Devon Group’s participation in this joint venture;
b) Mr. Watts was involved in reviewing and commenting on the written Contractual Joint Venture Agreement (“CJV Agreement”) that was circulated by his business partner, Ronald Walker, (one of the other accused) to all of the members of the CJV including the members of Team TPG and Team Donna Cona. The CJV Agreement made reference to all the participants in the three separate team proposals;
c) Mr. Watts participated in the preparation and submission of the Team Devon proposal and signed the financial component of the proposal; and,
d) Mr. Watts’ response to S.i. Systems’ (one of the six companies named as a member of the Team Devon joint venture proposal) request to withdraw from the joint venture following the submission demonstrates Mr. Watts’ knowledge and awareness of the participation of his own company with its competitors in the alleged three bid strategy.
Legal Principles for a Directed Verdict
[16] In responding to Mr. Watts’ application, the Crown need only demonstrate that there is some evidence of a conspiracy to rig the Transport Canada RFP and that Mr. Watt’s was a probable member of that conspiracy. The Crown argued that it has introduced both direct and circumstantial evidence that is admissible against Mr. Watts.
[17] Before turning to my analysis of the issues raised by this motion, I will first set out the principles that must guide my decision. It is not my role on a motion for a directed verdict to review the evidence and conclude whether that evidence would satisfy me of proof of any offence beyond a reasonable doubt. Rather, my role is much more limited. The proper approach to be taken is summarized by Chief Justice McLachlin in the Supreme Court of Canada case, R. v. Arcuri, 2001 SCC 54, [2001] 2 S.C.R. 828, at para. 21:
The question to be asked by a preliminary inquiry judge under s. 548(1) of the Criminal Code is the same as that asked by a trial judge considering a defence motion for a directed verdict, namely, ‘whether or not there is any evidence upon which a reasonable jury properly instructed could return a verdict of guilty’: [citation omitted]. Under this test, a preliminary inquiry judge must commit the accused to trial ‘in any case in which there is admissible evidence which could, if it were believed, result in a conviction’. [citation omitted]
[18] Thus, the test that I must apply in this motion for a directed verdict is whether there is sufficient evidence to permit a properly instructed jury, acting reasonably, to find David Watts guilty of bid-rigging and conspiracy.
[19] If there is direct evidence on every element of the offence, the application for a directed verdict must be dismissed. Where there is indirect evidence on one or all of the elements of the offence, the trial judge is required to engage in a limited weighing of the evidence, but must not usurp the function of the trier of fact:
The judge must therefore weigh the evidence, in the sense of assessing whether it is reasonably capable of supporting the inferences that the Crown asks the jury to draw. This weighing, however, is limited. The judge does not ask whether she herself would conclude that the accused is guilty. Nor does the judge draw factual inferences or assess credibility. The judge asks only whether the evidence, if believed, could reasonably support an inference of guilt. (See: Arcuri, at para. 23)
[20] When the Crown adduces direct evidence on all the elements of the offence, the case must proceed to the jury regardless of the existence of defence evidence. Conversely, when the Crown’s evidence consists entirely of, or includes, circumstantial evidence, the trial judge must engage in a limited weighing of the whole of the evidence to determine whether, if the Crown’s evidence is believed, it would be reasonable for a properly instructed jury to infer guilt.
[21] In Arcuri, the court commented that the task of “limited weighing” never requires consideration of the inherent reliability of the evidence itself: “[i]t should be regarded, instead, as an assessment of the reasonableness of the inferences to be drawn from the circumstantial evidence” (Arcuri, at paras. 30 and 33).
[22] When the evidence is circumstantial, the trial judge is not permitted to choose between competing inferences. If there are competing inferences, it is then the jury’s role to determine whether or not the accused is guilty. The trial judge must assess all the evidence as a whole and not analyze the evidence on a piecemeal basis and must determine whether the inferences sought by the Crown are available on the whole of the evidence. (See: R. v. Sazant, [2004] 3 SCR 77, at paras. 18, 23-26; and R. v. Muir, 2008 ONCA 608, 87 W.C.B. (2d) 352, at para. 1.)
[23] In response to a motion for directed verdict in a conspiracy case, the Crown need only demonstrate that there is some evidence of the existence of a conspiracy and some evidence that the accused was a member of that conspiracy. The participation of an accused in the conspiracy is established by evidence—direct or circumstantial—admissible against him or her. (See: R. v. Rojas, 36 W.C.B. (2d) 13, [1997] OJ 3756, at paras. 5, 6 and 16.)
[24] Even if the trial judge finds there is no direct evidence of membership in a conspiracy, the trial judge may consider evidence of knowledge and acts in furtherance of the criminal scheme as circumstantial evidence of the participation of an accused in the conspiracy. (See: R. v. Blake, 2005 32566 (ON CA), 2005 OAC 4269, 206 C.C.C. (3d) 233, at para. 47; and, R. v. F.(J.), 2013 SCC 12, [2013] 1 SCR 565 at paras. 51-52.)
Relevant Facts
[25] The evidence the Crown introduced against Mr. Watts arises from admissions. Where the evidence was not specifically admitted, it is not in dispute.
[26] The evidence from the Transport Canada RFP and related Addendums is as follows:
a) The Transport Canada RFP was issued and posted on MERX (the Federal Government website where RFPs, amendments to RFPs and notices of contract awards are posted) on August 5, 2005, with a scheduled closing date of September 16, 2005.
b) On August 24, 2005, the closing date was extended to September 30, 2005, and on September 22, 2005, the closing date was again extended to October 6, 2005, which was the final closing date.
c) The RFP required those submitting proposals to submit resumes of 39 resources.
d) On August 24, 2005, in Addendum #1 to the RFP, many of the terms of the RFP were clarified, including that: “in order to achieve maximum points, a bidder would have to submit the maximum number of resources in each category. The number and experience of resources available from bidders in each stream and category is an inherent factor in the evaluation process.” This meant that all 39 resource categories would have to be filled for a proposal to be compliant.
e) In that same Addendum in response to Question #20, vendors were informed that an individual resource could only be proposed by one bidder; in other words, resources were to be exclusive.
f) In Addendum #6 released on September 26, 2005, the RFP was amended to remove the exclusivity requirement of the resources, stating: “It is no longer a requirement of this Request for Proposal to provide proof of exclusivity agreements between the firm and the resources bid.” This allowed more than one vendor company to submit the same resource. Addendum #6 also informed vendors that only one proposal per legal entity would be permitted.
g) Addendum #7 released on September 28, 2005, in answer to a question seeking clarification, confirmed that resources were no longer exclusive to one bidder. That amendment also deleted the September 26, 2005 amendment, which permitted only one proposal per legal entity, replacing that requirement with information stating that the proposals would be evaluated in accordance with the predetermined criteria. By virtue of this amendment, it appeared that a legal entity was now entitled to submit more than one proposal.
[27] The Crown’s witness, Ms. Beverly Shawana, the contracting authority for Transport Canada, testified to the following:
a) This was the third time Transport Canada had issued an RFP of this type. Based upon this history, she knew that no vendor company working alone would be able to provide the 39 different resources required by the RFP. She knew that companies would work together and form joint ventures in order to respond, as they had in the past.
b) Ronald Walker, The Devon Group’s CEO, was responsible to the contract authority (Transport Canada) on behalf of Team Devon, and was listed as Team Devon’s prime contact person. Team Devon’s proposal specified that all liaison and call-ups were to be directed to Mr. Walker.
c) The contracting authority neither required nor expected that subcontractor arrangements would be declared on proposals that were submitted in response to the RFP.
d) There was nothing wrong with a vendor company acting as a prime contractor on one proposal and also acting as a subcontractor to another company that submitted a proposal.
[28] In his motion materials and submissions, Mr. Watts set out the evidence he claimed was purely circumstantial and insufficient to support the charges against him:
a) The Crown’s witness, Ms. Shannon Lambert, who pled guilty to charges of bid-rigging related to this RFP, stated that she had never met Mr. Watts when her company Veritaaq was part of the Team Devon proposal. She testified that he never attended the regular planning meetings of the consortium that was planning to submit a proposal to the RFP as a Joint Venture. She also stated that it was her understanding that Ronald Walker was the lead member from The Devon Group for this proposal in response to the Transport Canada RFP.
b) Mr. Watts authored only five short emails prior to the October 6, 2005, closing date with respect to this proposal. They are as follows:
i. On August 9, 2005, Mr. Watts wrote to Mr. McDonald and Mr. Powell of TPG Technology House Inc. advising that The Devon Group would like to submit a proposal in response to the Transport Canada RFP as part of a joint venture with The Devon Group as the lead. This email was copied to Ronald Walker. (Exhibit 665, Count 12959)
ii. On August 16, 2005, Mr. Watts forwarded an email he had received from Mr. McDonald to an employee at The Devon Group with the sole message “FYI”. The email from Mr. McDonald, dated August 15, 2005, described an upcoming bid team meeting with information about the requirements of the Transport Canada RFP, with a suggestion for the approach to be taken in collecting the 39 resources required for the Transport Canada proposal. (Exhibit 654, Count 10267)
iii. On September 23, 2005, Mr. Walker sent an email to Mr. Watts asking for some input with regard to a response to the Resource Skills Upgrade, with which Mr. Walker was having difficulty. On September 26, 2005, Mr. Watts responded to Mr. Walker advising that he felt Mr. Walker had said all he could say, ending the email, “For what it is worth.” (Exhibit 665, Count 12961)
iv. Also on September 23, 2005, Mr. Walker sent an email to both Mr. Watts and Mr. Powell in which he asked them for input into a term for the CJV Agreement that covered call-up reporting to CJV members. The term was attached to the email and titled “Draft 1, Contract Reporting to CJV Members”. Mr. Watts responded to Mr. Walker on September 26, 2005, advising that he had made one minor amendment and run spell check. (Exhibit 655, Count 13075 is the email and Count 13076 is the attachment)
v. Later that day on September 26, 2005, in the same email chain, Mr. Walker asked Mr. Watts to attach the revised version and on the 28th, Mr. Watts responded saying “Details! Details! Details!” (Exhibit 665, Counts 13075 and 13076 as above)
[29] Mr. Watts did not sign the CJV Agreement.
[30] Mr. Watts was on the email distribution list for emails exchanged between the alleged CJV members. The members of this same distribution list discussed where and when team meetings for the joint venture would be scheduled, and information about those meetings, including: agendas, updates, and copies or amendments to their CJV Agreement. Emails of this nature, on which Mr. Watts was copied, continued to the closing date of the Transport Canada RFP on October 6, 2005. In total there were between 40 and 50 such emails.
[31] Except for the five emails set out above, Mr. Watts did not respond to any of the group emails where he was part of the distribution list.
[32] The Crown sought to include two other emails as evidence against Mr. Watts that imply that he had knowledge of the CJV. In an August 29, 2005, email, a staff person from The Devon Group, Heather McKendry, emailed Mr. Walker and indicated that she had spoken with Mr. Watts about the company, TRM, joining the Joint Venture. She indicated that Mr. Watts’ response had been: “he mentioned we might need them on that CSE thing.” (Exhibit 657, Count 10452)
[33] The second email sent on September 2, 2005, was between two of the accused, Mr. Walker to Mr. Townsend. Mr. Walker informed Mr. Townsend that he had discussed the joint venture with Mr. Watts and “Mr. Watts has agreed to approach another competitor, Ajja, to join the group.” (Exhibit 631, Count 86)
[34] Mr. Walker kept handwritten notes regarding some of the meetings and other issues related to the Transport Canada RFP. In one set of notes on August 25, 2005, Mr. Walker made the following comment as part of a To Do list: “To do: how to crack bidding same resources multiple times.” Below, in the same page of notes he wrote: “(illegible) comments from Dave.” (Exhibit 664, Count 12570, Page GNHM 158)
[35] Mr. Watts and Mr. Walker jointly signed the financial proposal submitted by Team Devon on October 6, 2005, as the President and CEO of The Devon Group, respectively. That same document listed Ronald Walker as the contact person at The Devon Group for the RFP.
[36] On November 17, 2005, about six weeks after the RFP had closed, Si Systems, one of the companies named as part of Team Devon proposal, informed Mr. Walker that they were refusing to participate in the Team Devon proposal.
[37] Mr. Watts authored four more emails referencing the Transport Canada RFP between November 17, 2005, and January 13, 2006.
[38] On November 17, 2005, Mr. Watts sent an email addressed to Mr. Walker in which he suggested that the CJV team members should be part of a discussion regarding the withdrawal of Si Systems from the Team Devon proposal. (Exhibit 665, Count 13061) This email was in response to an email that Mr. Walker sent to Mr. Watts and to three TPG representatives regarding the withdrawal of Si Systems from the Team Devon proposal. Mr. Watts’ reply to Mr. Walker was also sent to the three TPG representatives.
[39] On December 13, 2005, Mr. Watts emailed Mr. Walker to tell him that Mr. Walker had his “full support” after Team Devon withdrew its proposal to the Transport Canada RFP. (Exhibit 665, Count 12963)
[40] On December 14, 2005, Mr. Watts emailed Mr. Walker to suggest that Mr. Walker inform Si Systems that “the bid has been formally withdrawn.” (Exhibit 665, Count 12965)
[41] On January 13, 2006, Mr. Watts replied to an email from Ms. McKendry asking her to email those members who had assisted with the bid. (Exhibit 657, Count 10663)
[42] Mr. Watts was also copied on emails from Mr. Walker and others regarding the Transport Canada RFP between November 17, 2005, and January 13, 2006.
Analysis
[43] The Crown argued that the nine emails sent by Mr. Watts (five prior to the closing date and four after the closing date) and his signature as president of The Devon Group on the financial proposal for Team Devon are direct evidence against him. The Crown submitted that the nine emails demonstrate his awareness of The Devon Group’s participation in a three bid strategy and a CJV with Team TPG and Team Donna Cona. They claimed that his signature on the financial proposal demonstrates that he knew about and participated in the alleged conspiracy to bid-rig in Transport Canada RFP.
[44] In 2005 the Devon Group was a small company with two senior officials, Mr. Walker and Mr. Watts, with most of their business being the provision of IT services to the Federal Government. The Crown submitted that given the small size of the company, any suggestion that Mr. Watts had no knowledge of or involvement in the Transport Canada RFP and the CJV with Team TPG and Team Donna Cona was unrealistic.
[45] In considering the direct evidence, the Crown argued that a jury could infer that Mr. Watts had also read and had knowledge of the content of all of the other 40 to 50 emails on which he had been copied, including the documents attached to those emails. The Crown agreed that this evidence is circumstantial.
[46] The Crown also submitted that the two emails and the notes prepared by Mr. Walker, in which Mr. Watts is referenced, (also circumstantial evidence) demonstrate that Mr. Watts provided both input on membership in the joint venture and played an active role in recruiting members of the joint venture.
[47] The August 29, 2005, email sent by Ms. McKendry to Mr. Walker is not admissible against Mr. Watts. Ms. McKendry was not called as a witness and therefore the comments in her email about Mr. Watts are inadmissible hearsay. I have disregarded this email in my assessment of the evidence against Mr. Watts.
[48] The second email between Mr. Walker and Mr. Townsend and the reference to Mr. Watts in Mr. Walker’s personal diary are also hearsay as against Mr. Watts. However, there is a principled exception for hearsay acts or statements made by co-conspirators in furtherance of the conspirators’ common design. That exception applies only where the trier of fact is satisfied beyond a reasonable doubt that the alleged conspiracy existed and that the accused was a member of the alleged conspiracy. (See: R. v. Carter, 1982 35 (SCC), [1982] 1 S.C.R. 938, [1982] S.C.J. No. 47 at para. 11, and R. v. Burrows, (2003) 2003 BCCA 242, 12 C.R. (6th) 186, 174 C.C.C. (3d) 301 (B.C. C.A.).) The exception is not applicable unless, “there is some evidence of the accused’s membership in the conspiracy directly admissible against him without reliance upon the hearsay exception raising the probability of his membership.” (See: Carter, at para. 11; and R. v. Parrot, 1979 1658 (ON CA), 106 D.L.R. (3d) 296, 51 C.C.C. (2d) 539, at para. 14.) In addition, the statement must have been made during the term of the conspiracy and in furtherance of it. (See: R. v. Miller, (1975) 1975 927 (BC CA), 63 D.L.R. (3d) 193, 24 C.C.C. (2d) 401 (B.C. C.A.); and R. v. Lynch, (1978) 1978 2347 (ON CA), 40 C.C.C. (2d) 7, [1978] O.J. No. 614 (Ont. C.A.).)
[49] For the purpose of my analysis, I have included the email of September 2, 2005 and the note made by Mr. Walker on August 25, 2005.
[50] The Crown conceded that on its own, the direct evidence is not sufficient to support the charges against Mr. Watts, but when taken together with the circumstantial evidence the inferences support their position that there is sufficient evidence against Mr. Watts to prove the elements of the offences of bid rigging and conspiracy.
[51] When the case for the prosecution rests on circumstantial evidence, I am entitled to weigh the evidence to a limited degree. I must consider the evidence in the limited sense of assessing whether the evidence is capable of supporting the inferences the Crown asks be drawn to prove the essential elements of the offences of bid rigging and conspiracy. Without making any assessments of credibility, I must determine the reasonableness of the inferences to be drawn from the circumstantial evidence. I must bear in mind that the process of drawing inferences from evidence is not the same as speculating, even where the circumstances permit an educated guess. Equally, when there are competing inferences, I may not prefer inferences that do not support the Crown.
[52] The question then becomes: does the evidence in this case rise to that relatively low threshold required to be demonstrated by the Crown to support the offences of bid rigging and conspiracy?
[53] In their submissions regarding the circumstantial evidence, the Crown relied upon the common law possessory principle, arguing that the court can infer that Mr. Watts was in possession of the emails sent to him and that, because he was in possession of them, a jury is entitled infer that he had knowledge of their contents, even where he did not respond.
[54] The Crown conceded that many of those 40 or 50 emails that Mr. Watts did not respond to but was copied on were not found on Mr. Watt’s own computer; rather, they were found on either The Devon Group’s server or on computers of other participants in the alleged undisclosed three bid, CJV. In other words, the circumstantial evidence the Crown seeks to include against Mr. Watts was not actually found in his possession.
[55] Regardless of whether or not Mr. Watts was in possession of the emails to which he did not respond, I do not find that there is any evidence, either direct or circumstantial, upon which a reasonable jury properly instructed could return a verdict of guilty.
[56] In reaching this decision, I note that the Crown has incorrectly assumed Mr. Watts’ involvement in an alleged criminal conspiracy to bid-rig without taking into consideration the particular aspects of the Transport Canada RFP regarding the exclusivity of resources up until September 26, 2006, as well as the changes to the RFP as the solicitation proceeded. Nor did the Crown consider the other facts as a whole that I have set out in these reasons.
[57] The Crown began its argument by suggesting that the first email sent by Mr. Watts on August 9, 2005, to Mr. Powell of TPG suggesting they work together to respond to the Transport Canada RFP demonstrated that Mr. Watts was the instigator of a conspiracy, similar to the allegations made against the other accused on the remaining 18 bid-rigging and conspiracy charges in the indictment. However, the Crown appears to have failed to consider or acknowledge that at this stage in the process, a few days after the Transport Canada RFP had been published, The Devon Group, including both Mr. Watts and Mr. Walker, did not participate in any of the other RFPs that form the rest of the counts in this indictment where the alleged three bid strategy was more fully discussed among participants.
[58] When considered in this context, there is no evidence before the court to demonstrate that on August 9, Mr. Watts was familiar with the alleged three bid strategy that the other accused in this indictment are alleged to have developed in order to win all of the contracts available for each of the various RFPs.
[59] I specifically asked the Crown to direct me to any evidence to show that Mr. Watts had any knowledge that he was participating in a three bid, bid-rigging scheme and provided them time to do so. The Crown’s argument appears to rest on their contention that any agreement between competitor companies in responding to an RFP constitutes a conspiracy to bid-rig and by then submitting a proposal, the accused have committed the offence of bid rigging.
[60] This however, was not supported by the evidence. Ms. Shawana, the tendering authority for the Transport Canada RFP, testified that vendor companies had to work together in order to respond. She testified that without working together either as Joint Ventures or Prime/Sub relationships, they could not respond. She stated that she expected them to work together in gathering the 39 resources that were required and that the only relationships they were required to declare were Joint Ventures. Moreover, she confirmed that the amendment in the RFP changing them from exclusive to non-exclusive entitled more than one vendor company or joint venture to submit the same resource multiple times.
[61] The only conclusion supported by the Crown’s evidence is that prior to September 26, 2005, all nine companies were working together to submit one large joint venture, an activity that was entirely legal. The landscape changed when the RFP was amended to permit non-exclusivity of the resources as set out above. The email correspondence that followed this change in the RFP in which Mr. Watts was copied, only supports the fact that circumstances had changed and the strategy among competing companies was being reconsidered.
[62] The Crown pointed to two emails on which Mr. Watts was copied between September 26, 2005, and the submission of the Team Devon proposal on October 6, 2005, as evidence against Mr. Watts. One was sent on October 4 and the second on October 5, 2005. Both emails were from Mr. Walker and copied to Mr. Watts. The email of October 4, sent to all the members of the original CJV indicated that the CJV Agreement had been modified “to reflect the three bid approach to Transport.” The revised CJV Agreement was attached to that email. On October 5, Mr. Walker emailed the same group asking them to sign and fax Schedule A (the signature page) of the CJV Agreement to TPG Technology.
[63] Neither Mr. Walker nor Mr. Watts (or anyone from TPG) signed that amendment, or any other version of the CJV Agreement.
[64] I have also considered Crown’s argument that there was “post offence conduct” by Mr. Watts to support the inferences they say may be drawn from the whole of the evidence. While, not specifically post offence conduct under the usual definition of post offence conduct, there were an additional four emails authored by Mr. Watts between November 17, 2005, and January 13, 2006, as well as a few emails on which he had been copied that took place after the RFP closed on October 6, 2005.
[65] The Crown relied heavily upon two pieces of that evidence in particular, as follows:
a) The November 17, 2005, email response by Mr. Watts to Mr. Walker, after the withdrawal of Si Systems from Team Devon, in which Mr. Watts suggested to “Ron” (Mr. Walker) that the rest of the Team members be informed. Mr. Walker’s original email had been sent to Mr. Watts and copied to Mr. Powell and Mr. McDonald at TPG. Mr. Watts’ response was also copied to Mr. Powell and Mr. McDonald; and
b) The letter Mr. Walker authored on November 21, 2005, (Exhibit 587A) directed to the President of Si Systems in which he set out the alleged plan for the CJV members’ response to the Transport Canada RFP. This letter was copied to all of the original members of the CJV and to Mr. Watts.
[66] The Crown claimed that Mr. Watts’ immediate reply to the November 17, 2005, email to Mr. Walker demonstrates that Mr. Watts was well aware that The Devon Group participated in a joint venture and that TPG was part of the CJV Agreement even though they were not named in the Team Devon proposal and that there were additional competitors who participated in the joint venture.
[67] The Crown also argued that Mr. Walker’s letter of November 21, 2005, demonstrates the plan by all the accused and other members of the three teams that responded to the Transport Canada RFP to develop a three bid strategy in order to win all three of the contracts available under the Transport Canada RFP. As such, Mr. Watts had to have been a party to this plan in light of the rest of the evidence against him.
[68] As with the rest of the evidence the Crown has presented against Mr. Watts, there is nothing in the communications that occurred after the closing of the RFP to support the inferences the Crown seeks to draw from the evidence.
[69] The leap one would have to take to put Mr. Watts in the alleged conspiracy is simply not supported by any evidence. None of the threads that tie Mr. Watts to the allegations against him, even when woven together, are strong enough to support the Crown’s position.
[70] I therefore find that the Crown’s argument that a jury could infer both bid-rigging and participation in a criminal conspiracy by Mr. Watts, on the basis of the evidence before the court, fails, even when all the evidence is considered as a whole and given its very highest interpretation.
[71] The only inference or conclusion that can be drawn from an assessment of the direct and circumstantial evidence is that Mr. Watts knew about the Team Devon joint venture proposal and participated in that proposal to the limited extent that his role as president of The Devon Group required. There is nothing illegal in these actions.
[72] It is an entirely unreasonable inference to conclude that Mr. Watts was part of the larger alleged conspiracy. The Crown has asked the court to interpret the evidence introduced against the other accused as though it also applied to Mr. Watts.
[73] Having considered the evidence in the limited sense permitted on a motion of this nature, I am not satisfied that there is any evidence capable of supporting the inferences that the Crown asks be drawn to prove the essential elements of the offences of bid-rigging and conspiracy as against Mr. Watts.
[74] Mr. Watts’ application is granted and I have directed a verdict of acquittal on both counts against Mr. Watts.
Madam Justice B. R. Warkentin
Released with publication ban: March 9, 2015
Released for publishing: April 27, 2015
CITATION: R. v. Durward, 2015 ONSC 1562
COURT FILE NO.: 09-300-68
DATE: 2015/03/09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HER MAJESTY THE QUEEN
– and –
Marina Durward, Susan Laycock, Philip McDonald, Donald Powell, Thomas Townsend, Ronald Walker, David Watts, The Devon Group Ltd., Spearhead Management Canada Ltd., and TPG Technology Consulting Ltd.
Defendants
RULING ON APPLICATION OF DAVID WATTS
FOR A DIRECTED VERDICT of acquittal
Warkentin J.
Released with publication ban: March 9, 2015
Released for publishing: April 27, 2015