Court File and Parties

COURT FILE NO.: CV-22-00000913-0000 DATE: 2024/04/15 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Campbell Drug Stores Ltd., Plaintiff/Defendant by Counterclaim AND Attorney General of Canada, Defendant/Plaintiff by Counterclaim

BEFORE: Justice R. Ryan Bell

COUNSEL: David R. Elliott, for the Plaintiff/Defendant by Counterclaim Walter Kravchuk and Adrian Zita-Bennett, for the Defendant/Plaintiff by Counterclaim

HEARD: March 21, 2024

Endorsement

The text of the original Endorsement dated April 4, 2024, was amended on April 15, 2024 and the explanation of the amendment is appended.

Overview

[1] Campbell Drug Stores Ltd. moves for an order redesignating the Crown’s designated representative for discovery. Campbell argues that the Crown’s designated representative has no personal knowledge of, and had no involvement in, the communications, events, and circumstances giving rise to Campbell’s claim and that the court’s intervention is required to permit Campbell to conduct a fair and productive discovery of a suitable witness.

[2] For its part, the Attorney General of Canada submits that the Crown has the authority and primary role in designating its discovery representative, and that court interference is not appropriate in this case because Campbell has not demonstrated that the Crown’s designated representative is a “demonstrably unsatisfactory” witness.

[3] For the following reasons, Campbell’s motion is granted. Jeffrey Smallwood is redesignated as the Crown’s designated representative for discovery.

Factual context

[4] Much of the factual context for this motion is set out in the affidavit of Ruby Dhalla, Campbell’s affiant. For the purpose of this motion, the Attorney General takes no position with respect to the facts or allegations set out in Ms. Dhalla’s affidavit.

The First Contract

[5] Campbell is a supplier of medical products. In March 2020, Campbell responded to the Crown’s urgent request for surgical gowns as part of its emergency response to the COVID-19 pandemic. As the Crown’s Contracting Authority, Mr. Smallwood requested and received information from Campbell regarding the type and quantity of surgical gowns required, as well as pricing and delivery.

[6] On March 27, 2020, Campbell received a call from Mr. Smallwood to advise that Campbell would receive a contract to supply 20 million gowns. The same day, Mr. Smallwood provided email confirmation of the order: “This is the go ahead for 20 million units of what has been agreed to. Please provide the mail address and banking info as well as an official quote. In the quote please detail the delivery and amounts.”

[7] A further exchange followed between Campbell and Mr. Smallwood on March 27 regarding the breakdown of sizes for the order of 20 million surgical gowns. Mr. Smallwood advised Campbell to “please go ahead and place the order. Contract will follow shortly.” Mr. Smallwood stated that he was going to “embed in the contract an option for 10 to 15 million more units based on the spec that you have previously sent.” Campbell confirmed that the order had been placed.

[8] On March 29, 2020, Campbell received a signed copy of the contract for the 20 million surgical gowns (the “First Contract”). In addition to providing for the Crown’s purchase of 20 million gowns, the First Contract provided an option for up to an additional 15 million gowns.

[9] After Campbell received a copy of the First Contract, Mr. Smallwood provided a number of instructions changing the type, level, and size of gowns, payment terms, and delivery locations. Campbell delivered 20 million gowns to the Crown under the First Contract, as amended, by the end of March 2021. Campbell has received payment from the Crown under the First Contract, with the exception of two invoices totalling $1,319,343.30 claimed by the Crown as a set-off in this action.

Events relating to the alleged second contract

[10] Shortly after executing the First Contract, Mr. Smallwood contacted Campbell about a requirement for an additional 15 million gowns. On April 21, 2020, Mr. Smallwood requested information about a manufacturer that could supply an additional 15 million gowns on an urgent basis. Later that day, Mr. Smallwood called to advise that only 3.5 million additional gowns would be needed. On April 23, Mr. Smallwood confirmed the breakdown of the sizes for the 3.5 million gowns required.

[11] On May 20, 2020 Ms. Dhalla had a call with Mr. Smallwood in which he advised that he had received approval to order an additional 4.5 million gowns. Mr. Smallwood told Campbell to proceed with the order as soon as possible. In the same call, Mr. Smallwood requested further changes to the sizes of gowns under the First Contract. At Mr. Smallwood’s request, Ms. Dhalla sent an email to Mr. Smallwood confirming a) the new gown sizes under the First Contract, and b) the new order for an additional 4.5 million gowns.

[12] Thereafter, Mr. Smallwood called and emailed Campbell, requesting updates regarding the delivery timeframe for the 4.5 million gowns. On May 26, 2020, Mr. Smallwood asked for further particulars in order to draft the contract. On June 4, Campbell sent an email to Mr. Smallwood to confirm that the option for the additional 4.5 million gowns had been exercised at $9.92 per gown. Mr. Smallwood responded by asking about the delivery timeframe, with Campbell stating “1.75 million in June, 2.75 million in July and c’est fini.”

[13] In the months that followed, Campbell and Mr. Smallwood had numerous communications regarding gown shipments and expected deliveries. Campbell’s evidence is that, at all times, it dealt exclusively with Mr. Smallwood in relation to the alleged second contract and to provide updates.

[14] On August 28, 2020, Ms. Laurin, of Public Works and Government Services Canada, emailed Campbell and forwarded the signed First Contract and the unsigned contract for 4.5 million gowns. Ms. Laurin was the first Crown representative other than Mr. Smallwood who had contacted Campbell for an update. The Crown’s internal records as of August 28, confirm that Mr. Smallwood was the Contracting Authority responsible for awarding the 4.5 million gown contract to Campbell.

[15] On August 29, 2020, Ms. Laurin advised that the alleged second contract “never amounted to a formal contract.” On August 31, Mr. Smallwood asked Ms. Dhalla for “the email for the 4.5 million gown authorization.” In response, Ms. Dhalla sent Mr. Smallwood two emails dated May 20. On October 23, Mr. Smallwood emailed Ms. Dhalla to advise that the “4.5 million unit contract was never authorized by the authorized party.”

The claim and counterclaim

[16] The existence of the First Contract is not in dispute. With the exception of two invoices, Campbell has received payment from the Attorney General under the First Contract. In relation to the alleged second contract, Campbell claims in excess of $50 million in damages for breach of contract, unjust enrichment, and breach of the duty of good faith and honesty in contractual performance.

[17] The Attorney General denies there was a contract with Campbell for the supply of 4.5 surgical gowns. The Attorney General alleges that because of Campbell’s oversupply of gowns under the First Contract, the Attorney General has withheld final payments under that contract by way of set-off. In its counterclaim, the Attorney General claims damages in respect of the unauthorized oversupply of gowns for storage, administration, shipping, and recycling costs.

The Crown’s designated representative

[18] The Crown’s designated representative is Daniel Fitzpatrick. The first time Mr. Fitzpatrick was included on any communications with Campbell was on April 8, 2021, when Ms. Dhalla received an email from Mr. Smallwood on which Mr. Fitzpatrick was copied. The uncontroverted evidence on this motion is that Mr. Fitzpatrick did not have any involvement in the negotiations leading to the First Contract, nor did he have any involvement in any of the events, communications or dealings in relation to the alleged second contract. It is also uncontroverted that Mr. Fitzpatrick has been with Public Works since 2015, and worked at the director-level in 2021 and 2022. The Attorney General pleads that Public Works learned that Campbell delivered gowns without reference to a contract in 2021, and that the Attorney General’s efforts to recycle or dispose of the gowns were made in 2021 and 2022.

Analysis

[19] The Crown may designate a representative for discovery pursuant to s. 7 of the Crown Liability and Proceedings (Provincial Court) Regulations [1]. Section 7 of the Regulations provides:

Subject to sections 37 to 39 of the Canada Evidence Act, where, under the provincial rules, there is provision under which, if an action were an action between a corporation (other than an agency of the Crown) and another person, an officer or servant of the corporation could be examined for discovery, such officer or servant of the Crown or an agency of the Crown, as the case may be, as may be designated for the purpose by the Deputy Attorney General or after such designation by order of the court, may be examined for discovery during an action subject to the same conditions and with the same effect as would apply to the examination for discovery of the officer or servant of a corporation.

[20] The parties agree that to substitute the Crown’s designated representative, the onus is on Campbell, the moving party, to demonstrate that the designated representative is demonstrably unsatisfactory by being (i) uninformed, and (ii) incapable of being informed: Lindgren (Guardian ad litem of) v. Parks Canada Agency, 2016 BCCA 459, at para. 26 [2].

[21] The Attorney General argues the fact that a discovery witness has to give undertakings in order to answer questions does not lead to the conclusion that another representative should be produced for discovery. The Attorney General says that Campbell has not met its onus of demonstrating Mr. Fitzpatrick is a demonstrably unsatisfactory witness because there is no evidence that he is not informed or is incapable of being informed about key events and exchanges related to the dispute between the parties.

[22] The test is not to be interpreted such that the Crown’s designated represented will always be acceptable unless it is impossible for them to be informed by following up on questions asked at discovery: Lindgren, at para. 30. Instead, the test must be sufficiently flexible in its application in the circumstances of a particular case to permit a fair and meaningful discovery process: Lindgren, at para. 30.

[23] In Quadrangle Group LLC, et al. v. Attorney General of Canada, 2019 ONSC 1478, Hainey J. agreed that where the Crown has designated a witness to represent it on its examination for discovery, that designation “is entitled to deference and should only be interfered with in the clearest of circumstances”; however, “this deference must be balanced with the plaintiffs’ entitlement to a fair and meaningful discovery process.” [3] In that case, Hainey J. determined that the plaintiffs’ entitlement to a fair and meaningful discovery process includes the right to examine a representative of the defendant who is free from any conflicts of interest that may affect that person’s evidence: Quadrangle, at para. 27.

[24] In Northern Goose Processors Ltd. v. Canadian Food Inspection Agency, 2000 MBCA 10894 [4], the Manitoba Court of Appeal allowed an appeal by the plaintiff from the motion judge and redesignated the Crown’s designated representative for discovery. The Court concluded that the motion judge erred by giving undue weight to the plaintiff’s concession that no one representative of the defendant had all the relevant knowledge, and by overlooking the fact that credibility findings would play a significant role in the outcome of the case: Northern Goose, at paras. 27-28. While the Court agreed with the motion judge that personal knowledge is not the “overriding factor” for designation of an individual for discovery in all cases, in this case, the employment status of the Crown’s designated representative did not balance the efficiency that the proposed designate’s personal knowledge would bring to the examination, given the issues raised and evidence presented: Northern Goose, at paras. 28-30.

[25] In Norway Insulation Inc. v. Parson, 2001 CarswellOnt 4417 (Ont. S.C.J.) [5], the court granted the plaintiff’s motion to substitute the Crown’s designated representative. The court observed that “the plaintiffs are entitled to examine for discovery the individual who has had some direct involvement with the parties and the circumstances out of which the claim arises” and that “[t]he allegations against the Attorney General truly require a response from a representative of the defendant who possessed some personal knowledge of the circumstances leading to the prosecution of the plaintiffs”: Norway Insulation, at paras. 13-14.

[26] The Attorney General seeks to distinguish Norway Insulation because in that case, the plaintiffs had already completed discoveries of two Crown employees who were named defendants, and the allegations were negligence and malicious prosecution. In my view, the decision by the court in Norway Insulation, granting the plaintiff’s motion to substitute the Crown’s designated representative, rested on the court’s conclusion regarding the importance of examining a representative of the Attorney General with personal knowledge of the circumstances where credibility was “clearly at issue.”

[27] The same is true in this case. The crux of this case is whether the parties had an agreement with respect to the supply by Campbell of 4.5 million gowns to Public Works. The Crown’s own records show that, as of August 28, 2020, Mr. Smallwood was the Contracting Authority responsible for awarding the 4.5 million gown contract to Campbell. Mr. Smallwood was the only individual at Public Works with whom Campbell dealt until August 28, when Ms. Laurin forwarded the signed First Contract and the unsigned contract for 4.5 million gowns. The very next day, Ms. Laurin wrote to Campbell to advise that the alleged second contract did not amount to a “formal contract.” Mr. Smallwood’s evidence and his credibility will be central to the determination of the key issue in this case.

[28] By contrast, Mr. Fitzpatrick has no personal knowledge of, and had no personal involvement in, the events, discussions, and communications between Campbell and Mr. Smallwood from the spring of 2020 and in the months following when Campbell alleges the second contract was formed. Indeed, Mr. Fitzpatrick was not part of the pandemic response group; he worked at the director-level of Public Works in 2021 and 2022, in the months after Campbell alleges a second contract was formed. While the Attorney General argues that the matters at issue in the litigation go beyond the spring and summer of 2020 to when Public Works was required to deal with Campbell’s oversupply and intermingling of gowns, the Attorney General’s allegations arise from the central issue in the case: was there a second contract formed between the parties.

[29] Because Mr. Smallwood was the only individual at Public Works with whom Campbell had dealings in the spring and summer of 2020, his evidence is critical. Contrary to the Attorney General’s argument, the test does not require Campbell to “prove on evidence, not inference,” that Mr. Fitzpatrick is incapable of being informed about key events or exchanges related to this dispute. The Attorney General’s approach is tantamount to interpreting the test such that the Crown’s designated representative will always be acceptable unless it is impossible for them to be informed by following up on questions asked at discovery. This is contrary to the approach espoused by Hainey J. in Quadrangle where deference to the Crown’s choice of a designated representative must be balanced with the plaintiff’s entitlement to a fair and meaningful discovery process. I conclude that in the circumstances of this case, a fair and meaningful discovery process requires that Mr. Smallwood be examined for discovery on behalf of the Attorney General.

[30] In support of its position on this motion, the Attorney General suggested that Campbell’s motion was premature because Campbell had not first proceeded to examine Mr. Fitzpatrick before bringing this motion for redesignation: Hubrisca Enterprises Ltd. v. Canada (Attorney General), [1998] B.C.J. No. 122 (S.C.) [6], at para. 19. A two-step process was expressly rejected by the motion judge and the Manitoba Court of Appeal in Northern Goose [7], as being contrary to the philosophy that examinations for discovery should proceed in the most efficient and expeditious manner possible. Nor did the court in Norway Insulation require the plaintiff to engage in a two-step process given the court’s conclusion that the allegations “truly require[d] a response from a representative of the Attorney General who possessed some personal knowledge of the circumstances leading to the prosecution of the plaintiffs”: Norway Insulation, at para. 14. In Quadrangle, the designated representative’s conflict of interest only emerged during his examination for discovery.

[31] In my view, it was not necessary for Campbell to wait until after the discovery of Mr. Fitzpatrick before bringing this motion. The record before me amply demonstrates that Mr. Smallwood should be examined on behalf of the Attorney General to permit a fair and meaningful discovery process.

Conclusion

[32] The motion to redesignate the Crown’s designated representative for discovery and for an order that Mr. Smallwood attend for examination for discovery as the representative of the Attorney General in place of Mr. Fitzpatrick is granted.

[33] In the event the parties are unable to agree on costs of the motion, they may make written submissions limited to a maximum of three pages, excluding relevant attachments. Campbell shall deliver its costs submissions by April 18, 2024. The Attorney General shall deliver his responding costs submissions by May 2, 2024. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.

Justice R. Ryan Bell Date: April 15, 2024

Appendix

Paragraph 27 previously stated:

The same is true in this case. The crux of this case is whether the parties had an agreement with respect to the supply by Campbell of 4.5 million gowns to Public Works. The Crown’s own records show that, as of August 28, 2020, Mr. Smallwood was the Contracting Authority responsible for awarding the 4.5 million gown contract to Campbell. Mr. Smallwood was the only individual at Public Works with whom Campbell dealt until August 28, when Ms. Laurin forwarded the signed First Contract and the unsigned contract for 4.5 million gowns. The very next day, Ms. Laurin wrote to Campbell to advise that the alleged second contract did not amount to a “formal contract.” Mr. Campbell’s evidence and his credibility will be central to the determination of the key issue in this case.

Paragraph 27 now reads as follows:

The same is true in this case. The crux of this case is whether the parties had an agreement with respect to the supply by Campbell of 4.5 million gowns to Public Works. The Crown’s own records show that, as of August 28, 2020, Mr. Smallwood was the Contracting Authority responsible for awarding the 4.5 million gown contract to Campbell. Mr. Smallwood was the only individual at Public Works with whom Campbell dealt until August 28, when Ms. Laurin forwarded the signed First Contract and the unsigned contract for 4.5 million gowns. The very next day, Ms. Laurin wrote to Campbell to advise that the alleged second contract did not amount to a “formal contract.” Mr. Smallwood’s evidence and his credibility will be central to the determination of the key issue in this case.

Citations

[1] SOR 91-604, made under the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50. [2] 2016 BCCA 459. [3] 2019 ONSC 1478, at paras. 26-27. [4]. [5] 2001 CarswellOnt 4417 (Ont. S.C.J.). [6] [1998] B.C.J. No. 122 (S.C.). [7] Northern Goose, at paras. 23-24.