Cogent Group Inc. v. EnCana Leasehold Limited Partnership, 2011 ABQB 335

Court of Queen ’ s Bench of Alberta Citation: Cogent Group Inc. v. EnCana Leasehold Limited Partnership, 2011 ABQB 335 Date: 20110516 Docket: 0901 18601 Registry: Calgary Between: The Cogent Group Inc. Plaintiff - and - EnCana Leasehold Limited Partnership Defendant _______________________________________________________ Memorandum of Decision of J.L. Mason, Master in Chambers _______________________________________________________ [ 1 ] The Cogent Group Inc. had a long standing contractual relationship with EnCana Power and Processing ULC that started in 1999.

In 2007, it obtained a further contract with another EnCana entity, EnCana Leasehold Limited Partnership. The EnCana Leasehold contract was terminated on June 17, 2009, after EnCana Leasehold took exception to an interview given to the Globe and Mail by Cogent ’ s principal, Judith Athaide. EnCana Power terminated its contract with Cogent the next day. [ 2 ] Rod Crockford, President and CEO of EnCana Power, told Ms.

Athaide that “he was asked to terminate the [ EnCana Power contract] because the [ EnCana Leasehold contract] had been terminated and Encana was ‘one big happy family’”. [ 3 ] Cogent settled with and released EnCana Power in December, 2009. On that same day, Cogent commenced this action against EnCana Leasehold for wrongful termination of the EnCana Leasehold contract and for wrongful interference with the EnCana Power contract.

[ 4 ] As part of its pre-trial questioning of EnCana Leasehold, Cogent wants to question Mr. Crockford, notwithstanding that he is not an employee of EnCana Leasehold, but an employee of EnCana Power. [1] [ 5 ] Cogent wants to question Mr. Crockford as a service provider to EnCana Leasehold pursuant to Rule 5.18, or alternatively pursuant to Rules 1.2 and 1.4. [ 6 ] The following issues are raised: 1. Is Mr. Crockford a service provider to EnCana Leasehold within the meaning of Rule 5.18? 2. If Mr. Crockford is a service provider, are the pre-conditions in Rule 5.18 met? 3. Alternatively, can Mr.

Crockford be questioned pursuant to Rules 1.2 and 1.4? [ 7 ] For the reasons that follow, Mr. Crockford is not a service provider to EnCana Leasehold within the meaning of Rule 5.18, nor can he be questioned pursuant to Rules 1.2 and 1.4. 1. Is Mr. Crockford a service provider to EnCana Leasehold within the meaning of Rule 5.18? [ 8 ] Rule 5.18 states in part: 5.18(1) Subject to subrules (2) and (3), if (

a) a party cannot obtain relevant and material information from an officer or employee or a former officer or former employee of a corporation that is a party adverse in interest, (

b) it would be unfair to require the party seeking the information to proceed to trial without having the opportunity to ask questions about the information sought, and (

c) the questioning will not cause under hardship, expense or delay to, or unfairness to, any other party or to the person to be questioned, the party may question, under oath, a person who has provided services for the corporation and who can provide the best evidence on the issue . ...

(4) Evidence from a person questioned under this rule is to be treated as if it were evidence of an employee of the corporation .[Emphasis added.]

[9] EnCana Power is not a party to this action but is related to EnCana Leasehold insofar as both companies are controlled byEnCana Corporation. Mr. Crockford is not an employee or officer of EnCana Leasehold. While Mr. Crockford has provided someservices to EnCana Leasehold in the past, it has not provided services to EnCana Leasehold in regard to the issues in this litigation.Cogent concedes that the knowledge sought to be elicited through questioning Mr.

Crockford is unrelated to the past services heprovided to EnCana Leasehold. [10] Cogent submits, however, that the wording of Rule 5.18 does not require that the knowledge be acquired by virtue of theservices provided to the party corporation. Rather, Cogent asserts that so long as it can establish that Mr.

Crockford has provided servicesto EnCana Leasehold at some point and can provide the best evidence on the wrongful interference claim, he is a service provider toEnCana Leasehold within the meaning of Rule 5.18 and his evidence is to be treated as if he were an employee of EnCana Leaseholdpursuant to Rule 5.18(4). [11] EnCana Leasehold and EnCana Power argue that the knowledge sought to be elicited by questioning under Rule 5.18 musthave been acquired by virtue of the services provided to the corporate party. They submit that the services provided must be related to theissues in the action.

Otherwise, they assert, it would be possible to question mere witnesses under Rule 5.18 and that could not have beenthe intention of the rule. [12] In considering this threshold issue, it is helpful to review the genesis of Rule 5.18. Former Rule 200 [13] Employees and officers of an adverse party were discoverable under former Rule 200.

Employees could be examined if theyhad or appeared to have knowledge of a matter in issue that was acquired “by virtue of that employment”. [14] Alberta case law decided under Rule 200 permitted pre-trial examination of individuals who did not strictly meet the legaldefinitions of “officer” or “employee” of an adverse party, yet still had relevant and material evidence to offer by virtue of the servicesthey had provided to the party. See for example: Cana Construction Co. v. Calgary Centre for Performing Arts, (1986), 1986 ABCA175 , 71 A.R. 158 (C.A.); Petro-Canada Products Inc. v.

Dresser-Rand Canada Inc., 2003 CarswellAlta 1939 (Q.B.), aff’d(2004), 2004 ABCA 144 , 348 A.R. 81 (C.A.). [15] The required connection between the services provided and the acquisition of the knowledge is specifically addressed inHarcap Investments Inc. v. Alberta Permit Pro Inc., 2007 ABQB 590, 438 A.R. 202 and Wilbur v. Foothills Hospital, 2005 ABCA220, 367 A.R.191. [16] Harcap Investments Inc. v. Alberta Permit Pro Inc. was an action for wrongful termination. The plaintiffs wanted todiscover the wives of the principals of the defendant corporation.

The wives had been present at a meeting where their husbandsdiscussed the individual plaintiff’s future with the defendant corporation. [17] Graesser J. found that the wives had provided services to the corporation and appeared to have acquired relevant knowledge atthe meeting, but that there was no evidence to suggest that they had acquired that relevant and material knowledge as a result of theservices they performed.

He noted that while the wives may have something to say, that did not make them discoverable, and observedthat non-party witnesses have never been subject to examination for discovery, citing the Court of Appeal decision in Wilbur v. FoothillsHospital. [18] In that case, the plaintiff alleged medical malpractice. Informed consent was in issue. The plaintiff recalled little, but his wifehad been present for most of the germane discussions. The defendant wanted to examine the non-party wife.

The Court held that therewas no evidence to suggest that the plaintiff had employed his wife to act in any of the transactions or events at issue and overturned thedecision below to permit her examination.

[ 19 ] These cases emphasize that non-party witnesses are not subject to pre-trial examination. [ 20 ] This jurisprudence is reflected in “new” Rules 5.17 and 5.18. [ 21 ] New Rule 5.17 is the successor to former Rule 200. It permits examination of officers and employees with relevant and material information acquired “because” the person is or was an officer or employee of the party. [ 22 ] This requirement in Rule 5.17 is consistent with former Rule 200. [ 23 ] Rule 5.18 captures decisions such as Cana Construction Co. v. Calgary Centre for Performing Arts and Petro-Canada Products Inc. v.

Dresser-Rand Canada Inc. in its express provision for the pre-trial questioning of persons who have “provided services for the corporation and who can provide the best evidence on the issue”. Rule 5.18 is an extension of Rule 5.17 and fills the gap identified in the prior case law. Knowledge must arise from services provided to party [ 24 ] Rule 5.18 does not expressly state that the information of the person sought to be questioned needs to have been acquired by virtue of the services provided to the corporate party.

In my view, however, the purpose of the Rule is to allow questioning of persons akin to employees who have gained relevant and material knowledge as a result of providing services to a party corporation. The required connection is implicit in the rule and fundamental to the Alberta approach to questioning non-parties prior to trial. [ 25 ] At the hearing, I queried why an officer or employee could only be examined under Rule 5.17 if their relevant and material knowledge was obtained because of their employment or role as officer, yet a service provider would not similarly be subject to that requirement.

Counsel for Cogent was not able to supply a rationale. [ 26 ] In my view, it would be inconsistent with the requirements of Rule 5.17 and former Rule 200, the judicial

interpretation of which is now captured in Rule 5.18, to conclude that service providers who may have acquired relevant and material knowledge outside of the service relationship, can be questioned prior to trial in the same fashion as an employee of a party. It is the provision of services in relation to the matters at issue in the action that transforms a mere witness into a service provider within the meaning of Rule 5.18. [ 27 ] While I appreciate Mr.

Crockford’s role in the termination of the EnCana Power agreement, and that he appears to have relevant knowledge in this regard, there is no dispute that he gained this knowledge outside of his past role as a service provider to EnCana Leasehold. Those past services do not relate to the issues in this action. To borrow the words of Graesser J. in Harcap Investments Inc. v. Alberta Permit Pro Inc . at paragraph 23 , just because Mr.

Crockford may have something to say, does not make him subject to questioning. [ 28 ] Cogent submits that it is the corporate relationship between EnCana Leasehold and EnCana Power that most strongly supports its entitlement to question Mr. Crockford as a service provider of EnCana Leasehold. [ 29 ] It is important in this context to emphasize that Rule 5.18 requires the person sought to be questioned to have provided services to the party, and it is on the basis of the provision of services, not a corporate relationship or affiliation, that a person may be questioned under the rule.

Relying on the corporate relationship between EnCana Leasehold and EnCana Power in order to access a rule based on the provision of services is not appropriate in my view. It is inconsistent with the genesis and purpose of Rule 5.18 and with basic principles of corporate law. [ 30 ] Mr. Crockford is not a service provider to EnCana Leasehold within the meaning of Rule 5.18.

2. If Mr. Crockford is a service provider, are the pre-conditions in Rule 5.18 met? [ 31 ] Given my conclusion that Mr. Crockford is not a service provider to EnCana Leasehold, it is not necessary to address this issue. 3. Alternatively, can Mr. Crockford be questioned pursuant to Rules 1.2 and 1.4? Rule 1.2 [ 32 ] Rule 1.2 provides in part: 1.2(1) The purpose of these rules is to provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost-effective way. 1.2(2) In particular, these rules are intended to be used (

a) To identify the real issues in dispute, (

b) To facilitate the quickest means of resolving a claim at the least expense, (

c) To encourage the parties to resolve the claim themselves, by agreement, with or without assistance, as early in the process as practicable... Rule 1.4 [ 33 ] Rule 1.4 gives the court broad jurisdiction to enact procedural orders to achieve these purposes, but the power is expressly limited, as follows: 1.4(1) To implement and advance the purpose and intention of these rules described in rule 1.2...the Court may, subject to any specific provision of these rules , make any order with respect to practice or procedure, or both, in an action, application or proceeding before the Court [Emphasis added.]. [ 34 ] Rule 1.4(2) , which lists powers of the Court, is similarly limited: 1.4

(2) Without limiting [Rule 1.4(1)], and in addition to any specific authority the Court has under these rules, the Court may, unless specifically limited by these rules , do any one or more of the following...[Emphasis added.] ... (

c) give orders or directions or make a ruling with respect to an... application...

[ 35 ] Counsel for Cogent made able arguments that a short session of questioning pursuant to Rule 1.4(2)(

c) would fulfill the purposes served by the rules as reflected in Rule 1.2. However, it would not be appropriate to issue a procedural order under Rule 1.4(2)(

c) to permit questioning that does not meet the requirements of Rule 5.18, the specific rule that addresses the matter. Rules 1.2 and 1.4 are not intended to provide a platform to subvert other rules. Rather, they augment specific rules and allow the court to craft remedies appropriate to particular circumstances as needed. Conclusion [ 36 ] Cogent’s application to question Mr. Crockford is dismissed. [ 37 ] If the parties cannot agree on costs, they may contact me within 30 days of the date of these reasons. Heard on the 18 th day of April, 2011. Dated at the City of Calgary, Alberta this day of 16 th May, 2011.

J.L. Mason M.C.C.Q.B.A Appearances: Dunphy Best Blocksom LLP Michelle H. Hollins, Q.C. For the Plaintiff Bennett Jones LLP Munaf Mohamed For the Defendant

Fraser Milner Casgrain LLP Phillilp Scheibel For EnCana Power and Processing ULC and Rod Crockford [1] Cogent has already examined EnCana Leasehold’s officer, Ken Hornby, who advised he did not ask Mr. Crockford to terminate the EnCana Power contract. Mr. Hornby has also undertaken to inquire of others at EnCana Leasehold in this regard.