COURT FILE NO.: 14-62779 DATE: June 6th, 2016

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: William Thompson, Alexander Lomasney, Mike Coyle and C. Scott Reynolds Plaintiffs (Moving parties)

and

Arcadia Labs Inc., Pierre Roberge, Indre Roberge and Maxime Lamothe-Brassard Defendants (Responding parties)

BEFORE: MASTER MACLEOD

COUNSEL: Bryce V. Geoffrey, for the plaintiffs M. Gosia Bawolska, for the defendants

HEARD: March 29, 2016

ENDORSEMENT

[1] The plaintiff brought a motion for various heads of relief including amendment of the statement of claim, certain orders respecting the discovery of the defendants, and an order for a further and better affidavit of documents.

[2] The defendant Arcadia Labs Inc. is a Quebec Corporation founded by the personal defendants who remain its principal shareholders, directors and officers. In 2013 Arcadia was a startup business hoping to obtain contracts for cyber security consulting services. The plaintiffs allege that they performed important services for Arcadia which assisted it to organize itself and to successfully bid on contracts. They allege breach of contract and unjust enrichment and seek a share of the defendants’ profits.

Pleading Amendment

[3] The plaintiffs originally sued for $500,000 but they now seek to amend the statement of claim to increase the prayer for relief to $5,000,000. This is based on their discovery that the defendant has been successful in securing a very large contract. The defendants do not consent to the amendment because they do not wish to be taken as condoning what they contend is a baseless claim but they do not oppose the motion.

[4] Leave will therefore be granted to amend the statement of claim by increasing the claim for damages in the form proposed.

Location and Manner of Discovery

[5] Discovery of the Roberge personal defendants has proven challenging because of difficulty obtaining information about their whereabouts. When the claim was issued they resided in the United Kingdom but during the course of the litigation they relocated to Andalucia, Spain. Various attempts to negotiate a protocol to discover them in Canada or in Spain were unsuccessful. They have now relocated to Vilnius, Lithuania.

[6] The evidence is insufficient to satisfy me that the behavior of these defendants should be construed as refusing to be examined or as purposefully attempting to thwart the plaintiffs in the exercise of their discovery rights. But I am satisfied they conducted themselves without regard to their positive obligation to co-operate. They knew or ought to have known that they were obliged to identify where they were living and to make arrangements to be discovered. They should have been aware that the plaintiffs were making plans to conduct discoveries in Spain when they relocated to Lithuania. They failed to make useful or practical suggestions through their counsel in a timely fashion.

[7] Although the defendants were ultimately willing to be examined for discovery by videoconference or Skype from Lithuania, this has not been satisfactory to the plaintiffs. Mr. and Mrs. Roberge are now willing to be examined in Ottawa when they plan to be here at the end of June. This appears to resolve a number of problems and to call for the robust application of common sense. I am therefore directing that the Roberges may be examined in Ottawa on June 29 and 30th 2016.

[8] If the Roberges or either of them cannot be examined or completely examined when they are already planning to be in Canada, then at the option of the plaintiffs they may either be examined by Skype or other videoconference system when they return to Europe or in person at a location of the plaintiffs’ choosing.

[9] If the plaintiffs wish to examine Mr. and Mrs. Roberge face-to-face at a time when they are not planning to be in Canada, they may either do so in Ottawa or in Lithuania. In the former case, they must pay the travel and accommodation expenses for the family and in the latter they may arrange for an Ontario lawyer and court reporter to conduct the discovery in Lithuania at a place agreeable to both parties.

[10] As parties to the litigation in Ontario, the defendants are obliged to co-operate and to collaborate on a procedural level. The discoveries are to be completed and the defendants are to make themselves available either in June as proposed or no later than the end of August if the plaintiffs choose not to use these dates or cannot complete the discoveries in the time available.

Adequacy of Productions

[11] Several issues have complicated production of documents. Firstly there is a large volume of electronic documents. The parties have failed to agree on a protocol for electronic indexing and exchange of documents. They have also failed to agree on how the vast number of documents can best be captured in the affidavit of documents.

[12] The scheme for organizing production set out in Rule 30 of the Rules of Civil Procedure and in Forms 30A & 30B has always required adjustment to meet the needs of individual cases. Unlike jurisdictions where production of documents is driven only by demands for production, Ontario requires each party to spontaneously disclose all documents which are or were in the party’s “possession, power or control” and which are “relevant to any matter in issue”.

[13] The schedules to the affidavit of documents are supposed to “list and describe” “all documents” which are relevant and to arrange them into three schedules. When combined with the definition of “document” in Rule 30.01 (1) (a) that includes “a sound recording, videotape, film, photograph, chart, graph, map, plan, survey, book of account, and data and information in electronic form” and the broad reach of Rule 30.01 (b) this requirement can be extremely onerous in any case involving large numbers of documents.

[14] This is not a new problem. [1] But it is a problem that is greatly compounded when dealing with any significant amount of electronically stored information. In such cases, listing and describing all relevant documents is virtually impossible and threatens to become a hugely expensive make work project of little practical utility. What is required instead is to unearth the important and probative documents that will be necessary to prove or disprove facts that are in issue.

[15] Under the Sedona Canada Principles incorporated into the rules, counsel are to actively co-operate in formulating a practical discovery plan. Counsel are required to seek agreement on the subset of potentially important relevant information and how it is to be located, preserved, exchanged, organized, described and retrieved. Some form of mutually acceptable electronic indexing that permits rapid identification and retrieval of each document should be adopted for purposes of production, discovery and trial. It is for this reason that the parties are now expected to engage in a collaborative discovery planning exercise in which they are to robustly apply the principle of proportionality. [2]

[16] Counsel have their primary duty to their clients of course but they also have a systemic responsibility as officers of the court to seek maximum procedural efficiency and to seek court intervention or guidance as appropriate. Counsel might usefully refer to the e-discovery checklist and the public comment version of an alternative affidavit of documents as well as other resources and precedents found on the “E-discovery Implementation Committee” pages on the Ontario Bar Association web site. [3] These documents are also accessible from the Advocates Society web site. [4]

[17] In the case at bar, the record is replete with technical production problems and unilateral attempts to satisfy production obligations. Malfunctioning USB keys, courier delivery of hard copies, delivery of copies on DVDs and refusal to make use of web based technology such as Google Docs are some examples. While there are many issues with cloud based storage of sensitive documents almost all of these can be overcome. The advantages and speed of a secure web based document vault utilizing standardized document formats and software should be readily apparent. Correctly utilized, such tools can eliminate production delays and arguments about who produced what and when.

[18] I find myself in agreement with the position taken by Arcadia in its factum that there should have been far more engagement between counsel about the form and method of production of documents that are not in dispute. I also agree that providing documents that are functionally accessible such as documents “93 and 94” which are electronic folders containing readily identifiable e-mail folders from identified custodians may be more useful than a 16 page long “schedule A” utilizing tiny font and descriptions which are indistinguishable. What is required is compliance with the purpose and objective of the affidavit of documents rather than mere formal or technical compliance. [5]

[19] On the other hand a party cannot use volume or the arduous nature of making proper and complete production to avoid fulfilling discovery obligations. Each party is obligated in good faith to produce the documents that tend to prove or disprove material allegations in dispute whether it helps or hurts the producing party. Jurisprudence establishes that a party cannot simply produce a banker’s box or filing cabinet of paper and invite the other party to look through it. This is no different in the electronic world. Documents must be identified with precision. [6]

[20] The party with the obligation to produce, must index the documents and identify the ones that are relevant. The court will support attempts to find a better way of doing this than the schedules to the affidavit of documents in accordance with nos. 2 & 4 of the Sedona Canada Principles, but this does not permit either party to unilaterally shift the burden of locating and identifying documents to the other party.

[21] Of course production through affidavit of documents process is not the end of the story. There are at least four other ways to extract documents from the other party. The first is a demand to inspect documents under Rule 30.04, the second is by listing documents in the Notice of Examination, the third is by cross examination on the affidavit of documents as part of the discovery process and the fourth is by obtaining disclosure and undertakings through the discovery process itself.

[22] Sometimes it is more efficient to simply get on with discovery rather than arguing about the adequacy of production. The party which has failed to properly produce documents will inevitably wind up having to give undertakings, or end up on the wrong side of a refusals motion and may have to reattend for a further round of discovery. Counsel have an obligation to minimize needless disputes, motions, delay and costs and by seeking to minimize scope of argument about the extent of relevant production. Discovery planning is one of the tools to accomplish this.

[23] Agreement will not always be possible of course. In that case parties may proceed unilaterally but they should at least try to be transparent. For example if one party wishes a search run on electronic documents using certain search terms, and the other party does not agree they are the correct terms, in the absence of agreement the party having the production obligation may choose to proceed but should disclose what it is doing. Of course it runs the risk of having to repeat the process if the results are found to be wanting by the other party and the court.

[24] In the case at bar, counsel should be directed to meet, confer and co-operate in an attempt to eliminate all technical issues which are impeding the efficient exchange of documents. They should try resolutely to eliminate, narrow or focus any disagreement concerning scope. They may then return to court on a case conference – which will be appropriate if summary direction from the court is required. Or they may bring another motion – which will be necessary if the court must first make findings of fact based on affidavit evidence.

Plaintiff created documents and Meta Data

[25] The plaintiff alleges that all of the documents created by the plaintiffs for the defendants were uploaded to a web site to which the plaintiffs no longer have access. The plaintiffs therefore seek production of all documents and all iterations of documents created by the plaintiffs. The plaintiff also seeks production of “Google logs” or other records showing when such documents have been accessed or altered.

[26] Since the basis of the claim is that the plaintiffs did valuable work for the defendants that the defendants used to their benefit, the work done by the plaintiffs and the use made of those documents are central issues in the litigation. Assuming that “meta data” showing whether the documents were accessed, copied or altered is available, then that meta-data would be a document under the Ontario rules. This production is relevant and may be important to adjudication of the issues in dispute. Pursuant to the Sedona Canada Principles, it should be produced unless the costs, burden or delay outweigh the importance of the evidence.

[27] As I understand it, the defendant is not taking the position that the logs are not relevant, they are simply inviting the plaintiffs to access the information themselves. [7] They have not listed the Google logs in the affidavit of documents. As I indicated earlier, there is much to be said for web based production and the use of document vaults. This is not the same thing as inviting the other party to access the originals of the web site and to extract their own information without concern for forensic continuity or admissibility of the evidence. Counsel should not be put in the position of becoming a witness as to the provenance of documents.

[28] These logs are relevant and must be produced. Counsel should be open to electronic access to productions but a party cannot avoid its production obligations by saying in effect “go and look for yourself”. The logs must be identified and produced by a means that is reliable and admissible and can be authenticated.

Confidential Productions

[29] A further complication in this case is the question of sensitivity and secrecy. The defendant corporation is apparently engaged in defence work for the government of Canada and other countries. This raises a question about confidentiality agreements and sealing orders as a precondition to production. On this the parties had also failed to reach agreement.

[30] First and foremost, it is important to observe that simply because documents are confidential does not render them privileged. It is only privileged documents that are ostensibly immune from production and even then, depending on the nature of the privilege, it may have to yield to the requirement of doing justice between the parties.

[31] It is a thorny problem to deal with the obvious reluctance of parties to disclose sensitive commercial information or even highly secret information that is necessary evidence in a civil law suit. This problem arises frequently and the law has devised a number of devices to minimize harm.

[32] The first line of defence of course is the deemed undertaking rule. This is expressed in Rule 30.1 but it is an obligation imposed by Canadian common law that goes beyond the undertaking set out in the rule. Essentially a party who compels production of private information from the other party in civil litigation undertakes to the court not to misuse that information and it is contempt of court to do so.

[33] A further tool that is used in cases of trade secrets or commercially sensitive information is a confidentiality order. This takes matters a step further and it limits who may see the information. Usually that is limited to counsel and to an individual representing the client who is instructing counsel. It may include experts and support staff but in extreme cases even the law firm is subjected to an order about control of the information, storage of the information, copying of the information and return of the information following the trial and any appeal. [8]

[34] A further possibility is a sealing order. This provides that contrary to the usual open court principle, any of the secret information filed in court or used in evidence will be kept secret and the record sealed. Such orders are not made lightly but they are possible.

[35] A party which is faced with the need to produce sensitive and confidential information may seek to adopt any combination of these strategies but it cannot simply refuse to make production.

[36] Confidentiality may play some role in discovery planning and in a proportionality analysis. If the relevance, utility and probative value of the information appears low and the potential prejudice of producing the information appears high then the court will be hesitant to order production and likely will do so on strict terms. [9]

[37] There is no doubt that the extent to which the defendant has been successful in obtaining contracts based on the work allegedly done by the plaintiffs is relevant information. Unless it is conceded that the services to be delivered under these contracts are related to that work, then the nature of each contract as well as the amount earned will be important to the assessment of liability and damages.

[38] The need for confidentiality should not be allowed to delay production obligations. It is the party which asserts the need for such an order that has the obligation to take steps to obtain it. This ought to be done in a timely manner.

Conclusion

[39] In summary I conclude that the production is deficient for the reasons outlined above. I am not persuaded that a better affidavit of documents is the most useful response. Rather the parties should re-engage in collaborative planning taking the direction in these reasons into account. The resultant plan should include a method of clearly identifying and retrieving all documents. The parties must engage with one another concerning the production of the e-mails from the identified document custodians, the production of the Google logs, the method of document exchange and how to preserve confidentiality.

[40] In the event they fail to reach agreement they may request further direction from the court.

Costs

[41] Counsel may arrange to speak to costs within the next 30 days. Pursuant to Rule 29.1.05 the court may deny costs when the parties have failed to agree to a discovery plan or to renegotiate the plan as required. I am considering such an order in the present case and unless counsel seek to make submissions, that will be the disposition.

Decision and Order

[42] In summary, for the reasons given above, the court orders as follows:

1. Leave is granted to amend the statement of claim in the form proposed.
2. The Roberge defendants may be examined by the plaintiffs in Ottawa on June 29th and 30th, 2016 when they are scheduled to be in the country.
3. If these dates are not satisfactory to the plaintiffs or provide insufficient time then the plaintiffs may have an election. They may either: a) Examine the Roberges or either of them in Europe by videoconference or other electronic means; or, b) At the expense of the plaintiffs, examine the Roberges in Lithuania or in Ottawa. In the latter case, the plaintiffs will pay the reasonable travel and accommodation expense for the Roberges and their daughter.
4. All expenses incurred by any party in connection with the discoveries shall be costs or disbursements recoverable in the cause.
5. The defendants shall fully co-operate with the plaintiffs to make themselves available for discovery in compliance with this order. If it is not completed in June, the discoveries are to be completed by the end of August, 2016.
6. The defendants are obliged to produce the Google logs or other meta-data required to determine when documents were uploaded by the plaintiffs and when and if that information was accessed, edited, copied or otherwise used by the defendants.
7. The defendants are obliged to produce an index for all of the documents contained within the folders marked as documents 93 and 94 or any similar documents that contain sub-folders or multiple files.
8. This order does not necessarily require that the documents be indexed and described in schedules to the affidavits of documents if the parties agree or the court determines that some other method of indexing, identifying and retrieving the documents would be more useful.
9. Prior to taking any further steps concerning production, counsel are to meet confer and seek to co-operate having regard to the second edition of the Sedona Canada Principles (November 2015). If agreement cannot be reached then they may request a case conference.
10. The defendants may identify documents which are relevant but which they believe should be subject to a confidentiality order or sealing order and may seek a court order prior to production provided it is done in a timely manner.
11. There will be no costs of this motion unless counsel arrange to speak to costs within the next 30 days and the court otherwise orders.

June 6th, 2016

Master C. MacLeod

Footnotes:

[1] See Mirra v. Toronto Dominion Bank [2002] O.J. No. 1483 (Master) and cases referred to therein [2] Rules 29.1, 29.2 and 1.04 [3] https://www.oba.org/Sections/Civil-Litigation/E-Discovery/Implementation-Committee [4] http://www.advocates.ca/new/advocacy-and-practice/e-discovery.html [5] L’Abbé v. Allen-Vanguard, 2011 ONSC 4000 (Master) [6] Mirra, supra @ paras 4 -9 & 12 - 14 [7] Q. 111, Cross Examination of Jeanette O’Sullivan [8] Eisses v. CPL Systems Canada Inc. [9] Eisses v. CPL Systems Canada Inc., supra