Date: 20030312
Docket: T-668-96
Neutral citation: 2003 FCT 297
Ottawa, Ontario, this 12th day of March 2003
Present: THE HONOURABLE MR. JUSTICE SIMON NOËL
BETWEEN:
MIL-DAVIE INC.
Plaintiff
and
HIBERNIA MANAGEMENT AND DEVELOPMENT COMPANY LTD.
Defendant
REASONS FOR ORDER AND ORDER
INTRODUCTION
[1] This is a motion by the defendant, Hibernia Management and Development Company Ltd. ("Hibernia"), for summary judgment pursuant to Rules 213-219 of the Federal Court Rules, 1998 against the Plaintiff, Mil-Davie Inc. ("Mil-Davie").
[2] The motion is for an order in favour of Hibernia:
i) upholding its defence as stated in paragraphs 27-33 and 35 of its Statement of Defence, in respect of the claims set out in the Statement of Claim which are, in pith and substance, a complaint that the Defendant breached s. 45 of the Canada-Newfoundland Atlantic Accord Implementation Act, S.C. 1987, c.C-3 (the "Federal Accord Act") and the Canada-Newfoundland Atlantic Accord Implementation Newfoundland Act, R.S.N. 1990, c. C-2 (the "Newfoundland Accord Act") (collectively referred to herein as the "Accord Legislation"), and that, as a result of the alleged breach, Hibernia is liable in damages to the Plaintiff;
ii) determining that the Defendant did not breach its obligations under section 45 of the Accord Legislation;
iii) determining that the Plaintiff cannot sustain a civil cause of action arising solely out of an alleged failure of the Defendant to meet the Defendant's obligations under the Accord Legislation, or out of an alleged failure of the Defendant to meet the Defendant's obligations under the Hibernia Benefits Plan filed by the Defendant with, and approved by, the Canada Newfoundland Offshore Petroleum Board ("the Board") pursuant to the Accord Legislation;
iv) determining that there are no legal obligations of the Defendant to a specific contractor, such as the Plaintiff, arising from the Accord Legislation and/or the Hibernia Benefits Plan;
v) determining that if any such legal obligations exist arising from the Accord Legislation or the Hibernia Benefits Plan, a breach of such obligations, in and of itself, without more, does not constitute an undue lessening of competition, and, in turn, a breach of the Competition Act, R.S.C. 1985, c. C-34, as amended; and
vi) dismissing the claims of the Plaintiff that the Defendant breached its obligations under section 45 of the Accord Legislation, that the Defendant is liable in damages to the Plaintiff for a breach of its obligations under the Accord Legislation or the Hibernia Benefits Plan, and that a breach of obligations which arise under the Accord Legislation or the Hibernia Benefits Plan constitute an undue lessening of competition and a breach of the Competition Act.
THE ISSUES
[3] The points in issue are:
i) With respect to those claims of the Plaintiff which are referenced in paragraph 2 hereof, and with respect to which the Defendant seeks summary judgment in its favour, is there a genuine issue to be tried?
ii) If the Court determines that there is a genuine issue to be tried, then, is the material before the Court sufficient for it to determine the questions of law or fact and law raised by Hibernia's motion, and is it just, considering the circumstances, to grant summary judgment?
iii) If the material before the Court is sufficient to permit this Court to grant summary judgment, and it is just in the circumstances to do so, then the issues are:
a) Did the Defendant breach any of its obligations under section 45 of the Accord Legislation?
b) Can the Plaintiff sustain a civil cause of action arising solely out of an alleged failure of the Defendant to meet the Defendant's obligations under the Accord Legislation and/or under the Hibernia Benefits Plan?
c) Do any legal obligations of the Defendant to a specific contractor, such as the Plaintiff, arise from the Accord Legislation and/or the Hibernia Benefits Plan?
d) If any such legal obligations exist, does a breach of such obligations constitute, on its own, an undue lessening of competition and, in turn, a breach of the Competition Act?
BACKGOUND
[4] Mil-Davie, a corporate body duly incorporated, operates a shipyard located in Lauzon, Quebec.
[5] Hibernia is a corporate body duly incorporated under the laws of Canada. The nature of the Defendant's business is the exploration, development and production of petroleum resources in the Hibernia field, off the coast of Newfoundland.
[6] Mil-Davie brought a claim against Hibernia following its decision to award to a third party, Saint John Shipbuilding Limited ("Saint John Ltd."), a completion contract related to the construction of M71 and M72 drilling modules which form part of the Hibernia offshore oil production platform. Mil-Davie did participate in the bidding of the original contract without success for the construction of the M71, M72 and M73 drilling modules. The original contract was awarded by Hibernia to a Newfoundland shipyard owned by Vinland Industries Ltd. ("Vinland Shipyard"), which failed to complete all the work on a timely basis as required by its contract.
[7] Mil-Davie alleges that Hibernia's decision to award the contract to Saint John Ltd. was made without seeking tenders, in bad faith, with malice and in violation of the Competition Act, the Federal Accord Act, the Newfoundland Accord Act and the Hibernia Benefits Plan.
[8] The Accord Legislation contains a complete joint Federal and Provincial regulatory regime relating to offshore oil and gas exploration and production management. One of the fundamental components of the scheme is the establishment of the Canadian-Newfoundland Offshore Petroleum Board as regulator to administer and enforce the Accord Legislation.
[9] Section 45 of the Accord Legislation requires a developer such as Hibernia to submit a Canada-Newfoundland Benefits Plan ("Benefits Plan") for review and approval by the Board as part of the development plan approval process, prior to the issuance of a development plan approval by the Board. The Benefits Plan must set out the proposed plans for the employment of Canadians, and in particular members of the Newfoundland labour force. The Benefits Plan must also set out a proposal for the provision of a full and fair opportunity for manufacturers, consultants, contractors and service companies, both in Newfoundland and other parts of Canada, to participate on a competitive basis in the supply of goods and services necessary to the project. Accordingly, non-compliance with a term or condition of an approved Benefits Plan may result in revocation or suspension by the Board of the operating license or other authorization.
[10] In accordance with its obligations under the Accord Legislation, Hibernia submitted a Benefits Plan to the Board. The Benefits Plan was approved by the said Board. This approval permitted Hibernia to contract with Vinland Shipyard for the construction of the M71, M72 and M73 drilling modules. When Vinland Shipyard was unable to respect its contractual obligations with Hibernia, the Defendant, without establishing a bidding process and without involving the Board, gave the completion contract to Saint John Ltd. to the detriment of Mil-Davie's interest.
CLAIMS OF MIL-DAVIE
[11] Firstly, although the Statement of Claim is not clear as to the claims being made, Mil-Davie appears to be alleging that Hibernia has breached section 45 of the Accord Legislation and/or the Benefits Plan approved by the Board and that by awarding the completion contract without a bidding process to Saint John Ltd., the Plaintiff was not given a full and fair opportunity to obtain the contract. Furthermore, it seems that Mil-Davie argues that Hibernia must respect some legal obligations in relation to the Plaintiff as per the Accord Legislation or the Benefits Plan.
[12] Secondly, Mil-Davie submits that by allowing the completion contract to Saint John Ltd., Hibernia breached section 45 of the Competition Act. The Plaintiff relies on the special recourse provided in section 36.1(a) of the said Act to justify its claim. (See paragraphs 10 and 11 of the memorandum of Mil-Davie).
[13] Thirdly, although unclear after a careful review of the Statement of Claim, Mil-Davie appears to allege that Hibernia failed to act in good faith. Allegations of restrictive commercial practices or restrictive trade practices to unduly restrain competition are made against Hibernia, which appear to relate to the alleged legal obligations existing in favour of Mil-Davie by Hibernia upon the Accord Legislation and the Benefits Plan.
[14] Finally, Mil-Davie claims damages for loss of profit and loss of contribution to overhead expenses ($ 6,500,000.00) arising from its failure to obtain the completion contract. In order to be successful with these claims, Mil-Davie must be able to show that Hibernia had a legal and enforceable obligation to grant Mil-Davie the completion contract or, at least, to grant it a chance to participate in the competition to obtain the completion contract. The Plaintiff alleged that such a legal and binding obligation is based on an alleged failure of Hibernia to comply with section 45 of the Accord Legislation and the Benefits Plan.
[15] Mil-Davie is also claiming exemplary and punitive damages ($5,000,000.00). In order to discharge its burden in this regard, the Plaintiff will have to prove some elements of bad faith and that Hibernia's conduct and behaviour were contrary to the alleged obligations provided in the Accord Legislation and the Benefits Plan.
[16] Furthermore, Mil-Davie claims $ 5,000,000.00 in damages to its reputation affected by the treatment it received from Hibernia.
[17] It is Mil-Davie's submission that there are a good number of disputed facts which will bring into question the credibility assessment of witnesses and that there is a need for oral testimony of witnesses.
THE HIBERNIA'S MOTION
[18] Relying on Rules 213 - 219 of the Federal Court Rules, Hibernia argues that it did not breach its obligations under section 45 of the Accord Legislation and that the Court should uphold Hibernia's defence set out in paragraphs 27-33 and 35 of its Statement of Defence.
[19] Hibernia is of the opinion that a civil cause of action based on an alleged failure of Hibernia to meet its obligations under the Accord Legislation or the Benefits Plan, cannot be sustained and that in any event, the Accord Legislation and/or the Benefits Plan do not create any legal obligations towards a specific contractor, such as Mil-Davie.
[20] In the alternative, Hibernia submits that even if there are such legal obligations contained in the Accord Legislation and/or the Benefits Plan, a breach constitutes neither an undue lessening of competition, nor a breach of the Competition Act, therefore, the damages claimed cannot be justified in law.
[21] Hibernia is of the opinion that there are no litigated factors to be assessed by this Court in deciding the present motion and that there is no issue about the credibility of witnesses. It is Hibernia's opinion that the material before the Court is sufficient to determine the questions of fact and/or fact and law raised by the motion.
LAW AND JURISPRUDENCE ON SUMMARY JUDGMENT
[22] In the matter Granville Shipping Co. v. Pegasus Lines Ltd. S.A., [1996] 2 F.C. 853 (F.C.T.D.), affirmed by the Federal Court of Appeal's decision in ITV Technologies Inc. v. WIC Television Ltd., 2001 FCA 11, [2001] F.C.J. No. 400 (F.C.A.), Tremblay-Lamer J. reviewed the jurisprudence in a very practical way and categorized the general principles applicable to a motion for summary judgment at paragraph 8:
"I have considered all of the case law pertaining to summary judgment and I summarize the general principles accordingly:
1. the purpose of the provisions is to allow the Court to summarily dispense with cases which ought not proceed to trial because there is no genuine issue to be tried (Old Fish Market Restaurants Ltd. v. 1000357 Ontario Inc. et al., [1994] F.C.J. No. 1631, 58 C.P.R. (3rd) 221 (T.D.));
2. there is no determinative test [...] but Stone J.A. seems to have adopted the reasons of Henry J. In Pizza Pizza Ltd. v. Gillespie [(1990), 75 O.R. (2nd) 225 (Gen. Div.)]:
It is not whether a party cannot possibly succeed at trial, it is whether the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial;
3. each case should be interpreted in reference to its own contextual framework [...];
4. provincial practice rules (especially Rule 20 of the Ontario Rules of Civil Procedure, [R.R.O. 1990, Reg. 194]) can aid in interpretation [...];
5. this Court may determine questions of fact and law on the motion for summary judgment if this can be done on the material before the Court [...];
6. on the whole of the evidence, summary judgment cannot be granted if the necessary facts cannot be found or if it would be unjust to do so [...];
7. in the case of a serious issue with respect to credibility, the case should go to trial because the parties should be cross-examined before the trial judge [...] The mere existence of apparent conflict in the evidence does not preclude summary judgment; the court should take a "hard look" at the merits and decide if there are issues of credibility to be resolved.
[23] In Radil Bros. Fishing Co. Ltd. c. Sa Majesté La Reine (1998), 158 F.T.R. 313, at paragraphs 14 and 15, Rouleau J. explained that in a summary judgment motion, as long as a real litigated question exists in relation to essential facts, the strength or weakness of a claim or a defence does not have to be taken in consideration:
The purpose of the summary judgment provisions in the Federal Court Rules is to allow the Court to summarily dispense with those cases which it considers ought not to proceed to trial because there is no genuine factual dispute between the parties. It is a determination to be made on the particular circumstances of each case and on the law and the facts submitted in support of the claim or defence.
A motion for summary judgment is not intended, and should not be treated, as a substitute for a trial. In determining whether a trial is unnecessary and would serve no purpose, a motions judge has a restricted function and must guard against assuming the role of a trial judge and deciding the issues between the parties. Provided a genuine issue exists with respect to the material facts, it matters not how weak or strong the impugned claim or defence may be. The case should proceed to trial in order that the issue may be resolved by the trial judge. Accordingly, summary judgment should only be granted in the clearest of cases.
As mentioned by Rouleau J., when granting a summary judgment, a judge must do so as long as it appears evident to him that such a conclusion is clear from the situation presented to him in law and in fact.
[24] On the question of fact turning on the credibility assessment of witnesses, Evans J. (as he then was) held in F. Von Langsdorff Licensing Ltd. v. S.F. Concrete Technology Inc., [1999] F.C.J. No. 526 (F.C.T.D.) at paragraph 10:
"However, a motion for summary judgment is not appropriate for deciding questions of fact that turn on credibility, or that require the kind of weighing and assessing of conflicting evidence that is properly the province of the trial judge. "
[25] Having reviewed some of the jurisprudence on summary judgment motions, I will now be considering the following two questions:
1. Is there a genuine issue to be tried with respect to Mil-Davie's claims and Hibernia's position in this motion?
2. If the first question is answered in the affirmative and consequently there is a genuine issue to be tried, is the material before the Court sufficient to determine the questions of fact and law raised by Hibernia's motion and if so, is it reasonable in the circumstances to grant a summary judgment?
ANALYSIS
1. Is there a genuine issue to be tried with respect to Mil-Davie's claims and Hibernia's position in this motion?
[26] Sections 45 of the Accord Legislation reads as follow:
"45. Definition of "Canada-Newfoundland benefits plan"
(1) In this section, "Canada-Newfoundland benefits plan" means a plan for the employment of Canadians and, in particular, members of the labour force of the Province and, subject to paragraph (3)(d), for providing manufacturers, consultants, contractors and service companies in the Province and other parts of Canada with a full and fair opportunity to participate on a competitive basis in the supply of goods and services used in any proposed work or activity referred to in the benefits plan.
(2) Canadian and Newfoundland participation. - Before the Board may approve any development plan pursuant to paragraphs 139(4) or authorize any work or activity under paragraph 138(1)(b), a Canada-Newfoundland benefits plan shall be submitted to and approved by the Board, unless the Board directs that such requirement need not be complied with.
(3) Particular provisions of plan. - A Canada-Newfoundland benefits plan shall contain provisions intended to ensure that
(a) before carrying out any work or activity in the offshore area, the corporation or other body submitting the plan shall establish in the Province an office where appropriate levels of decision-making are to take place;
(b) consistent with the Canadian Charter of Rights and Freedoms, individuals resident in the Province shall be given first consideration for training and employment in the work programme for which the plan was submitted and any collective agreement entered into by the corporation or other body submitting the plan and an organization of employees respecting terms and conditions of employment in the offshore area shall contain provisions consistent with this paragraph;
(c) expenditures shall be made for research and development to be carried out in the Province and for education and training to be provided in the Province; and
(d) first consideration shall be given to services provided from within the Province and to goods manufactured in the Province, where those services and goods are competitive in terms of fair market price, quality and delivery.
(4) Affirmative action programs. - The Board may require that any Canada-Newfoundland benefits plan include provisions to ensure that disadvantaged individuals or groups have access to training and employment opportunities and to enable such individuals or groups or corporations owned or cooperatives operated by them to participate in the supply of goods and services used in any proposed work or activity referred to in the benefits plan.
(5) Duties of Board in reviewing plans. - In reviewing any Canada-Newfoundland benefits plan, the Board shall consult with both Ministers on the extent to which the plan meets the requirements set out in subsections (1), (3) and (4).
(6) Directives. - Subject to any directives issued under subsection 42(1), the Board may approve any Canada-Newfoundland benefits plan. [1992, c.35, s.47]
[27] Hibernia is of the opinion that the above section does not create any obligations on Hibernia in favour of Mil-Davie and that only the Board under both the Accord Legislation, has the right to enforce the obligations that could exist in the approved Benefits Plan.
[28] In support of its position, Hibernia referred the Court to the Newfoundland Superior Court decision of Mr. Justice Osborn in St. John's (City) v. Canada-Newfoundland Offshore Petroleum Board [1998] N.J. No. 233 (N.L.S.C.T.D.), where he stated:
" There is no clear and absolute duty resting on the Board to enforce" a condition of approval of a benefits plan, and it follows that there is no person to whom such duty is owed and hence no person ... with a right to seek performance of that duty."
[29] I believe the case at bar can somewhat be distinguished from the above case. Without having to do research at this stage of the proceeding on whether a third party (such as Mil-Davie) has a right of action if a breach of the Accord Legislation and/or of the approved Benefits Plan occurs, I note that the Plaintiff in the jurisprudence cited above is the City of St. John's while the Plaintiff in our case is a shipyard company. Also, as opposed to the City of St. John's, Mil-Davie had in the past a relationship with Hibernia when it was assessed as a potential service supplier in the original biding process for the initial contract.
[30] Furthermore, section 45 of the Accord Legislation specifically refers to the providers of services such as Mil-Davie and grants them a fair and full opportunity to participate on a competitive basis in any proposed work, which was not the case with the City of St. John's.
[31] The facts as admitted by both parties give the impression that the requirement of fairness and the right to participate on a competitive basis in any proposed work, as provided in s. 45 of the Accord Legislation, was not made available to Mil-Davie. Having said that, it does not automatically mean that Mil-Davie has a right of action or that a breach of Sections 36 and 45 of the Competition Act occurred.
[32] Although I noted that Hibernia's defence seems to have a sound basis, I am not in a position to evaluate the chance of success of such arguments. As Rouleau J. held in Radil, supra, if there is the appearance of a real legal argument then the issue can only be qualified as genuine and the argument's chance of success should not be taken in consideration.
[33] In addition, considering the objectives of the Competition Act, Mil-Davie's argument that there was a breach of ss. 36 and 45 of the same Act cannot be fully assessed at this time. Although there is a strong basis for the defence against the alleged breach, I cannot conclude that it is evident that this argument cannot be successful.
[34] Therefore, the arguments as presented by Mil-Davie raises some genuine issues.
2. Having determined that there are some genuine issues to be tried, is the material before the Court sufficient to determine the questions of fact and law raised by Hibernia's motion and consequently, is it reasonable in the circumstances to grant a summary judgment?
[35] Hibernia argues that there are no disputed facts since the facts necessary to conclude this motion can be found in Mil-Davie's Statement of Claim, in Hibernia's admissions contained in the Statement of Defence, in the Accord Legislation and in the Board's decisions approving the Benefits Plan and in the affidavits on record.
[36] Hibernia submits that the motion for summary judgment raises issues of statutory interpretation but that there are no issues regarding the credibility of witnesses calling for a hearing before a trier of fact.
[37] Contrarily, Mil-Davie argues that there are a number of contentious factors involving the two parties and that the credibility of witnesses will have to be assessed by a trial judge. I was told during the oral submissions that it was Mil-Davie's intention to present to the trial judge oral testimony of witnesses which would bring into consideration the assessment of the credibility of such witnesses.
[38] I looked seriously at the potential merits of the case and whether issues of credibility will have to be resolved, and at this time I cannot minimize this possibility (Granville Shipping Co. v. Pegasus Lines Ltd. S.A., [1996] 2 F.C. 853 (F.C.T.D.).
[39] Therefore, as I have been told by Mil-Davie that the credibility of witnesses will be important and, as the jurisprudence has established that when issues of credibility arise, I must conclude that the questions before me are ones that only a trial judge can deal with.
[40] For the reasons mentioned above and because of Mil-Davie's oral and written submission, I do not think that the material presented to me is sufficient to determine the questions of law or fact and law.
[41] Finally, I cannot go without indicating that I have doubts as to the potential success of the claims being made by Mil-Davie. However, to conclude positively in favour of the motion for summary judgment would not be in accordance with the criteria established by the jurisprudence when interpreting rules 213-219 of the Federal Court Rules. As the motion judge, I do not feel that I have all the available information to conclude on the finality of the matter and if it is Mil-Davie's intention to pursue the matter, I think that the interests of justice will be better served by a trial judge hearing all the evidence.
[42] As discussed at the hearing, the question of jurisdiction might have to be addressed again by the trial judge. It is therefore unnecessary for me to discuss this matter on this motion.
ORDER
THIS COURT ORDERS THAT:
The motion for summary judgment is denied and costs are to follow the cause.
"Simon Noël"
Judge
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-668-96
STYLE OF CAUSE: MIL DAVIE INC. v. HIBERNIA MANAGEMENT
AND DEVELOPMENT COMPANY LTD.
PLACE OF HEARING: ST. JOHN'S, NEWFOUNDLAND AND LABRADOR
DATE OF HEARING: DECEMBER 17, 2002
REASONS FOR ORDER : SIMON NOËL J.
DATED: March 12, 2003
APPEARANCES:
MICHEAL HARRINGTON AND FOR PLAINTIFF
MAUREEN RYAN
JEAN RIOU FOR DEFENDANT
SOLICITORS OF RECORD:
STEWART MCKELVEY STIRLING SCALES FOR PLAINTIFF
ST. JOHN'S
MORISSET VAILLANCOURT BERNIER FOR DEFENDANT
SAINTE-FOY
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