Date: 20080813
Docket: T-2223-07
Citation: 2008
FC 947
Vancouver, British
Columbia,
August 13, 2008
PRESENT: Roger R. Lafrenière, Esquire
Prothonotary
BETWEEN:
SHIELDS
FUELS INC.
Plaintiff
and
MORE MARINE LTD., MORECORP
HOLDINGS LTD.,
KERRY MORRIS, THE M.V. "GULF
RANGER",
AND THE BARGE "MM ORCA"
Defendants
REASONS FOR ORDER AND ORDER
LAFRENIÈRE P.
[1]
The Plaintiff, Shields Fuels Inc. (Shields), moves for an Order pursuant
to Rules 223(1), 226(1) and 227 of the Federal Courts Rules requiring
the Defendants, More Marine Ltd. and Morecorp Holdings Ltd. (Corporate
Defendants), to deliver Supplementary Affidavits of Documents listing the
financial records of the two companies for 2007 and 2008, including the monthly
income statements and balance sheets.
Background
[2]
Shields is a company in the business of selling fuel products to various
customers on the coast of British Columbia. It brought an action on December
20, 2007 seeking damages for breach of contract against the Corporate
Defendants, their president, and the Barge “MM Orca” (Defendant Barge). Shields
also requested a permanent injunction enjoining the Defendants from conversion
of fuel allegedly owned by Shields being carried on board the Defendant Barge.
The Defendant Barge was arrested shortly after the lawsuit was launched.
[3]
The Defendants filed a Statement of Defence and Counterclaim on February
6, 2008 denying that the Defendant More Marine Ltd. entered into a contract of
carriage with Shields, or that Shields suffered any damages. In their Counterclaim,
the Defendants claim a lien against the inventory of fuel on board the
Defendant Barge “MM Orca”, as well as damages for the wrongful and continued
arrest of the Defendant Barge.
[4]
Shortly after serving their Affidavit of Documents on May 1, 2008, the
Defendants delivered a draft Amended Statement of Defence and Counterclaim
(which has since been filed on consent of the parties). At subparagraph 14(e)
of the Counterclaim, the Defendants allege that Shields caused the Defendant
Barge to be arrested in order to take advantage of the Defendants “when the
Plaintiff knew or ought to have known that the Corporate Defendants did not
have the means to provide a bond”.
[5]
At the examination for discovery held on May 8, 2008, the Defendants’
representative stated that More Marine Ltd. “did not have the funds”, and that
it had insufficient financial capacity to provide the required bond of
$10,000.00 for the release of the Defendant Barge. Shields subsequently
requested production of the Corporate Defendants’ financial records for 2007
and 2008 in order that the issue of their financial means could be explored on
discovery.
[6]
After several requests, the Defendants produced unedited balance sheets
dated May 31, 2008. Shields considers the documents produced insufficient
to allow it to examine the Defendants on their capacity to provide a bond.
According to Shields’ Finance Manager, in order to calculate whether the
Corporate Defendants had the cash flow available, the Defendants would have to
provide, at a minimum, monthly balance sheets and income statements for the
period in question, or alternatively, account receivable and disbursement
ledgers or an equivalent record of cash received and disbursed.
[7]
On June 18, 2008, the Defendants provided satisfactory security to allow
the Defendant Barge to be released from arrest.
[8]
In his affidavit filed in opposition to the motion, Mr. Kerry Morris,
President of the Corporate Defendants, states that the Defendants have produced
all of the relevant financial records that are or were in their possession. Mr.
Morris deposes that the reports produced are the only reports used by the
Defendants. He explains that both the accounts payable and accounts receivable
reports update on payments made and received “and then fall away”. He declares
that neither the Defendants’ current employee nor himself have sufficient
knowledge of the accounting system to produce different reports. In order to
determine whether the specific reports requested by Shields could be produced,
the Defendants would have to engage a consultant, or a former employee who set
up the Corporate Defendants’ financial reporting system, at a cost of $500.00
to $750.00.
[9]
At the hearing of the motion, counsel for Shields stated that his client
had offered to send a technician at its own expense to retrieve the information
from the Corporate Defendants’ database. The Defendants declined the offer.
Analysis
[10]
The only issue on this motion is whether the Defendants should be
compelled to produce documents that do not currently exist.
[11]
Counsel for the Defendants acknowledges that in the normal course, if a
document in electronic format is relevant, it should be produced. While not
disputing that the accounting information in the Defendants’ possession is
relevant, counsel argues that since reports in the form requested by Shields do
not exist, the Defendants should not be required to expend time and resources
to create tailor-made documents.
[12]
Rules 222 to 226 contemplate the production of documents “in the
possession, power or control” of a party. The most relevant electronic data and
information in the “control” of a party will be that which can be accessed by
the party’s computer users in the ordinary course of business, otherwise known
as the active data.
[13]
The rules should not be interpreted, however, so narrowly as to prevent
a party from obtaining other relevant information, such as archival data that
is still readily accessible and not obsolete. In exercising its discretion
whether to compel production, the Court should have regard to how onerous the
request for a generated record may be when balanced against its relevance and
probative value.
Conclusion
[14]
On the evidence before me, I am not satisfied that the Defendants have
made reasonable efforts to locate or generate the reports requested by Shields.
The information requested by Shields consists of basic archival accounting
records that would be available to a company in the usual course of business. The
evidence of Mr. Morris is of little assistance since he is admittedly unfamiliar
with the Defendants’ accounting system and the different reports that could be
created using available software. Since there appears to be an existing program
that can print out a report in readable form at little cost to the Defendants, I
conclude that the Plaintiff’s motion should be granted.
ORDER
THIS
COURT ORDERS that:
1.
The
Defendants on or before August 21, 2008 shall deliver to the Plaintiff a
Supplementary Affidavit of Documents listing either monthly balance sheets for
each of the Corporate Defendants for the end of each month from December 31,
2007 to July 31, 2008, or a list of all cash receipts and disbursements
received and made by the Corporate Defendants from December 1, 2007 to July 31,
2008.
2.
The
Defendants shall on or before August 21, 2008 deliver copies of the documents
listed in the Supplementary Affidavit of Documents to the solicitor for the
Plaintiff.
3.
If the
Defendants fail to deliver a Supplementary Affidavit of Documents listing the
documents described in paragraph 1 on or before August 21, 2008, the Defendants
shall between August 21 and 31, 2008 provide full access and co-operation to an
independent information technologist retained by the Plaintiff to allow that
technologist to produce the records shown in paragraph 1 above.
4.
All records
produced by the independent information technologist shall be placed in a
sealed envelope and delivered to the solicitor for the Defendants to list
in a Supplementary Affidavit of Documents. The independent
information technologist shall treat the information received as confidential
except for the parties herein.
5.
The cost of
the independent information technologist shall be paid in the first instance by
the Plaintiff but shall be costs in the cause.
6.
The solicitor
for the Defendants shall upon receipt of the documents promptly list them in a
Supplementary Affidavit of Documents and deliver the Supplementary Affidavit of
Documents and the new documents to the solicitor for the Plaintiff.
7.
The costs of
this motion shall be costs to the Plaintiff in the cause.
“Roger R. Lafrenière”
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