Araam Inc. v. Aman Building Corporation, 2011 ABQB 631

Court of Queen ’ s Bench of Alberta Citation: Araam Inc. v. Aman Building Corporation, 2011 ABQB 631 Date: 20111013 Docket: 0703 05172 Registry: Edmonton Between: Araam Inc. Applicant - and - Aman Building Corporation, Langford Electric Ltd., Philips Electronics Ltd., Philips Electronics Ltd.

Carrying on Business Under the Name and Style of Philips Lighting, Earth Tech (Canada) Ltd., Earth Tech (Canada) Inc., ETC Earth Tech (Canada) Inc., AECOM Canada Ltd., Bolt Security Systems Ltd., Voxcom Incorporated, Beretta Protective Services International Inc., United Protection Services Inc., Eger Construction Management Inc., Rexel Canada Electrical Inc., Rexel Canada Electrical Inc.

Carrying on Business In the Name and Style of Westburne Electrical Supply Alberta, Prolux Lighting Edmonton Ltd., Cooper Industries (Electrical) Inc., Cooper Industries (Electrical) Inc., Carrying on Business In the Name and Style of Cooper Lighting Respondents Corrected judgment: A corrigendum was issued on October 19, 2011; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Gerald A. Verville _______________________________________________________

Introduction [ 1 ] This is an application brought before me as case manager by the Plaintiff Araam Inc. ( “ Araam ” ) to compel answers to undertakings sought from Defendant Philips Lighting ( “ Philips ” ). [ 2 ] It is Philips ’ position that it should not be required to provide answers on the basis that these questions are irrelevant to Araam ’ s cause of action, they are unduly onerous to answer, or the materials are covered by litigation privilege.

Facts [ 3 ] In 2002, Araam contracted with various parties, all of which are named Defendants in this Action, to design and construct a warehouse (the "Araam Warehouse") for the express purpose of manufacturing mattresses and box springs. [ 4 ] The lighting system in the Araam Warehouse utilized 1000 Watt MH 1000/U Metal Halide Lamps manufactured and distributed by Philips ( “ Halide Lamps ” ) in open suspended metal halide luminaries above the fabricating, finishing and wood-shop area. [ 5 ] A fire occurred on or around May 23, 2005 (the “ Fire ” ), at the Araam Warehouse, and an investigation conducted by Edmonton Fire Rescue Services determined that the Fire was caused by a Halide Lamp.

The Halide Lamp had failed and exploded causing hot particles from the Halide Lamp's quartz “ arc-tube ” to fall onto stacks of plastic packaging materials stored on top of a wooden pallet, causing the Fire. [ 6 ] Araam alleges that the Fire, and the resulting fire-extinguishment and clean up efforts caused Araam to incur losses, including business interruption and payroll expenses, totalling $2,710,736.50. [ 7 ] Araam alleges inter alia that the Fire and the damages resulting therefrom were caused by the design, manufacture, and distribution of the defective and unreasonably dangerous Halide Lamp by Philips.

Alberta Rules of Court - Disclosure of Information [ 8 ]

Part 5 of the Rules of Court relates to disclosure of information. Rule 5.1(1) provides: 5.1(1) Within the context of rule 1.2, the purpose of this

Part is (

a) to obtain evidence that will be relied on in the action, (

b) to narrow and define the issues between parties, (

c) to encourage early disclosure of facts and records,

(

d) to facilitate evaluation of the parties' positions and, if possible, resolution of issues in dispute, and (

e) to discourage conduct that unnecessarily or improperly delays proceedings or unnecessarily increases the cost of them. [ 9 ] Rule 5.25(1)(

a) provides that a person is only required to answer relevant and material questions. With respect to when something is relevant and material, Rule 5.2(1) states: 5.2(1) For the purposes of this Part, a question, record or information is relevant and material only if the answer to the question, or the record or information, could reasonably be expected (

a) to significantly help determine one or more of the issues raised in the pleadings, or (

b) to ascertain evidence that could reasonably be expected to significantly help determine one or more of the issues raised in the pleadings. The Pleadings [ 10 ] The specific allegations against Philips are set out in paragraphs 19, 20 and 21 of the Amended Statement of Claim The parties agree that the following are generally the issues for trial that are raised specifically as they relate to Philips: a. Did Philips design, manufacture, and distribute a defective and unreasonably dangerous product? b.

Did Philips know or ought it to have known, prior to the date of the loss, that the Halide Lamp was a defective and unreasonably dangerous product? c. Was Philips negligent, and did it breach a duty of care to Araam by designing, manufacturing, marketing, and distributing the Halide Lamp which it knew or ought to have known was dangerous? d. Was Philips negligent, by failing to warn Araam of the Halide Lamp which it knew or ought to have known was dangerous? The Questions [ 11 ] Philips provided partial answers to four questions and declined to answer two others.

The issue with respect to the four questions partially answered is whether Philips is obliged to provide information pertaining to the time period subsequent to the Fire. The questions and positions taken by Philips are as follows: 1. Undertaking No. 19: (Under advisement in relation to the present) Inquire and advise as to any changes in the arc tube design from 1983 to the present and what those changes were, and if it is already in the documents, pinpoint where in the documents it ’ s located. Post 2005 declined.

2. Undertaking No. 20: (Under advisement in relation to the present) Produce a copy of reports generated from the testing of thechanges in the arc tube design since 1983 to the present. Post 2005 declined. 3. Undertaking No. 25: (Under advisement in relation to the present) Produce a copy of any and all complaint documentation withrespect to non-passive failures of 1,000 watt bulbs from 1990 to the present. Post 2005 declined. 4.

Undertaking No. 35: (Under advisement) If required by the Canadian Standards Association, provide the consent of PhilipsLighting to access their file with respect to the investigation, testing and certification of metal halide bulbs. Declined. 5. Undertaking No.42: (Under advisement) Advise as to any design changes generally for the 1,000 watt metal halide bulb from2002 to present and produce a copy of any supporting documentation with respect to those design changes. Post 2005 declined. 6.

Undertaking No. 43: Produce the statistics of the number of lawsuits against Philips Lighting from 2000 to the present relating tothe non-passive failure of metal halide bulbs. With respect to those lawsuits, provide a copy of reports of expert witnesses delivered by oron behalf of complainants in those actions and provide a copy of all pleadings in those actions. Declined. Preliminary Finding Undertaking No. 35 [12] With respect to Undertaking No. 35 it, in my view, is unnecessary to consider the Rules or the case law at this point in time.

Ifind that Undertaking No. 35 “If required ...” is premature and speculative in that Araam has not yet made the request to the CanadianStandards Association. Analysis [13] The parties referred to a number of cases including: Weatherill (Estate) v. Weatherill, 2003 ABQB 69, 337 A.R. 180 at paras.16 - 17; D’Elia v. Dansereau, 2000 ABQB 425, 267 A.R. 157 at para. 17; Dunn v. Dunn, 2001 ABQB 852 , 2001ABQB 852,297 A.R. 365, at para. 8, Tremco Inc. v.

Gienow Building Products Ltd., 2000 ABCA 105, 255 A.R. 273 at para. 15; Hepworth v.Canadian Equestrian Federation, 2000 ABCA 327, 277 A.R. 138 (C.A.) at paras. 9 - 10; Cominco Ltd. v. Westinghouse Canada Ltd.(1979), (BC CA), 11 B.C.L.R. 142, [1979] B.C.J. No. 1963 (C.A.) at paras. 37 - 39; Jones v. Schloss, 1999 ABQB 812 at paras. 4, 7- 8; Mahamad v. Matthews, 2011 ABQB 187 at para. 12;Mustard v. Brache, 2006 ABCA 265, 397 A.R. 361 at paras. 11-12; Baker v. Suzuki Motor Co. (1993), (AB KB), 143 A.R. 1, [1993] A.J. No. 605 (Q.B.) at paras. 86,126; Nicholson v.

John Deere Ltd. (1986), (ON SC), 58 O.R. (2d) 53, [1986] O.J. No. 1320

(H.C.J.) at paras. 10 - 11, 26; Hollis v. Dow Corning Corp., (SCC), [1995] 4 S.C.R. 634, [1995] S.C.J. No. 104 at para20; Algoma Central Railway v. Herb Fraser and Associates Ltd. (1988), 31 O.A.C. 287, [1988] O.J. No. 1849 (Div.Ct.); Sandhu(Litigation guardian of) v. Wellington Place Apartments, 2008 ONCA 215, 234 O.A.C. 200 at paras.54 - 62, appeal disc’d August 20,2008: [2008] S.C.C.A.

No. 26; and Prosser v. 20 Vic Management Inc., 2009 ABQB 177, 8 Alta L.R. (5th) 68 at para. 36. [14] In Weatherill, Slatter J. (as he then was) stated: 16 In determining whether a document is relevant and material, the starting point is the pleadings. The pleadings define the issues, andrelevance must be determined with respect to the issues. The pleadings are also relevant with respect to the issue of materiality. However,with respect to materiality one must also have regard to the issue in question. Where does the burden of proof lie?

Is the issue somethingthat is capable of direct proof, or is it something like a person's state of mind, which can only be proven indirectly. Does one partyessentially have to try and prove a negative? How are cases of this type usually proven at trial? The less amenable a fact is to directproof, the wider will be the circle of materiality. There are some facts that can only be proven by essentially eliminating all thecompeting scenarios, thereby leaving the fact in issue as the sole logical inference.

When a state of mind is in issue, it can generally onlybe proven by demonstrating a pattern of conduct of the person whose state of mind it is. In deciding whether a particular document ismaterial, one must take a very pragmatic view, viewing the situation from the perspective of the party who must prove the fact inquestion. At an interlocutory stage of proceedings, the Court should not measure counsels' proposed line of argument too finely; ifcounsel can disclose a rational strategy in which the disputed document plays a material part, that should be sufficient.

Again it must beremembered that the purpose of the Rule was to avoid abusive, excessive, and unnecessarily expensive discovery, not to cut offlegitimate lines of inquiry. 17 That relevance is determined by the pleadings, while materiality is more a matter of proof can be seen by the wording of the Rule.The Rule talks about records that can "help determine" an issue, or that can “ascertain evidence” that will determine an issue.

These arewords of proof, and materiality must be determined with that in mind. [15] In Mustard the Court stated: 11 Discovery of records is now confined to eliciting facts of primary relevance, i.e., facts that are directly in issue, or of secondaryrelevance, i.e., facts from which the existence of the primary facts may be directly inferred. Both primary and secondary relevance aredetermined by reference to the issues raised by the pleadings.

Records seeking information that could reasonably be expected to lead tofacts or records of secondary relevance need not be produced. 12 In addition to being relevant within the meaning of Rule 186.1, records must also be material, that is, they must be reasonablyexpected to significantly help determine one or more of the issues raised in the pleadings. The materiality of evidence refers to itspertinency or weight in relation to the issue it is adduced to prove: Black's Law Dictionary, (6th ed. 1990).

Records may be relevantwithin Rule 186.1, but, either alone or in combination with other evidence, be of no significant help to the examining party in proving afact in issue: NAC Constructors Ltd. v. Alberta Capital Region Wastewater Commission, [2006] A.J.

No. 1051, 2006 ABCA 246, atpara. 13. [16] In Mahamad Veit J. held: 12 Rule 5.2(1) states that a record is relevant and material only if the record could reasonably be expected to significantly helpdetermine one or more of the issues raised in the pleadings, or to ascertain evidence that could reasonably be expected to significantlyhelp determine one or more of the issues raised in the pleadings. This rule is much narrower than its predecessor.

Not only is tertiaryrelevance excluded, but, more importantly here, the materiality or weight of the evidence must be addressed with a view to determiningwhether the record will significantly help to determine one of the issues raised in the pleadings.

[17] The above cases provide guidance with respect to whether Philips should have answered the impugned questions. In my view,there is not a one size fits all answer in the circumstances, and each question must be looked at separately. However undertakings 19, 20and 42 are related in that they deal with design changes and testing of changes. The two remaining undertakings require separateconsideration. Undertakings 19, 20 and 42 [18] Philips submits that the two primary elements in a product liability claim are the applicable standard of care and how thedefendant may have failed to maintain that standard of care.

It says further that evidence of industry standards as of the date of design isat best evidence of secondary relevance, citing Baker and Nicholson.

However these were not disclosure cases but rather trial decisionsand in Baker, Bielby J. (as she then was) noted at para. 126 that the plaintiff had not alleged that Suzuki knew of any flaw in themotorcycle. [19] Philips further asserts that in product liability actions it has been argued that the probative value of remedial actions after aloss is slight and that additional precautionary measures after an accident should not be used as a sword to prove negligence. [20] What use if any is to be made of remedial measures after an occurrence has been considered in Algoma, Cominco, Sandhuand Prosser.

In Algoma, Chilcott J. for the Court stated: 39 It is my opinion that the weight of authority in Ontario is in accordance with the position adopted by Wigmore and that Rule 403 ofthe Federal Rules of Evidence (U.S.) states that position aptly. May I attempt an outline of what I consider to be the rule which the courtshould apply to the matter of evidence at hand? 1. Neither at trial nor at examination for discovery is it necessary for a defendant to answer questions as to remedial measures taken aftersome allegedly negligent occurrence if the only purpose is to seek evidence on the issue of negligence. 2.

If the questions are directed in a bona fide way to some issue in the action other than the issue of negligence then such questionsshould be answered either on examination for discovery or at trial. An example of such issue would be the feasibility and practicability ofthe remedial measures having been taken prior to the occurrence. 3.

In the event that the defendants concede that the remedial measures which they took after the occurrence were feasible and practicable,before the occurrence, then it is not proper to ask such questions with a view to showing their feasibility and practicability since that isnot a controverted issue. That not being a controverted issue, the only function left for such evidence to perform would be to tend toshow negligence. [21] In Sandhu, the Court considered the issue of relevance and admissibility where remedial steps were taken, stating: 56 ...

Apart from any inference of an admission of liability, the fact that repairs to the screens were made quickly and inexpensively afterthe accident was relevant in other ways. It was evidence from which the jury could infer that the appellants had failed to meet areasonable standard in keeping the building in good repair.

The evidence of repairs could also be evidence of a failure to take reasonablecare because it was capable of showing that the appellants' inspection of the building before the accident failed to meet a reasonablestandard. ... 58 However, it is argued that even if such evidence is relevant, it should be excluded for policy reasons. The policy argument withrespect to evidence of remedial measures is premised on the theory that defendants would be discouraged from taking necessary remedialmeasures if they knew that these measures would be admitted against them at trial as an admission of liability.

Courts have tended todiscount this policy argument. As Seaton J.A. said in Cominco Ltd. v. Westinghouse Canada Ltd. (1979), (BC CA),11 B.C.L.R. 142 at 157 (C.A.):

No case binding on us supports an exclusionary rule based on policy and I am not inclined to introduce such a rule. In my view a defendant will not expose other persons to injury and himself to further lawsuits in order to avoid the rather tenuous argument that because he has changed something he has admitted fault. [Emphasis added.] [ 22 ] In the instant case Araam has pleaded that Philips knew or ought to have known that the Halide Lamp was dangerous and failed to warn it of this fact.

Philips denies this allegation and says further in its Statement of Defence that the Lamp was accompanied by packaging and other materials which contained clear and plain directions and warnings as to its proper use. However as stated in Nicholson at para. 26 : A manufacturer does not have the right to manufacture an inherently dangerous

article when a method exists of manufacturing the same

article without risk of harm. No amount of or degree of specificity of warning will exonerate him from liability if he does. Therefore, it is possible for Araam to argue at trial that Philips could reasonably have taken feasible and practicable remedial measures prior to the date of the Fire. [ 23 ] In this case Philips does not concede that subsequent testing and design changes were feasible and practicable prior to the incident. In my view, it is premature to predict how this trial will unfold.

It appears Philips is hoping to succeed on its defence based, at least in part, on the fact that the Araam was aware of the risk. However, Araam may be able to raise the issue of whether Philips could have economically made design changes to significantly reduce the risk of fire, in other words, whether it was feasible and practicable - the test for admissibility as set out in Algoma and Sandhu . [ 24 ] Araam’s pleadings as previously stated raise the issue of the feasibility and practicability of the remedial measures having been taken prior to the occurrence.

In my view, the questions can reasonably be expected to significantly help determine this issue and accordingly are relevant and material. I therefore direct that Undertakings 19, 20 and 42 be answered by Philips. Undertaking 25 [ 25 ] Philips has declined to provide a copy of any and all complaint documentation with respect to non-passive failures subsequent to the date of the Fire. A review of Araam ’ s pleadings and its submissions does not inform as to how this information could reasonably be expected to significantly determine one of the issues.

I am not satisfied that this requested information is either relevant or material and accordingly Philips need not respond to the request. Undertaking 43 [ 26 ] Araam seeks statistics regarding the numbers of lawsuits against Philips following 2000 to the present arising out of non-passive Halide Lamp failures. It also seeks copies of the pleadings and complainants ’ expert reports from such lawsuits. [ 27 ] Araam argues that the extent of Philips ’ knowledge is directly at issue in the pleadings. Specifically it refers to paragraph 20 which states in part: 20.

Philips knew or ought to have known prior to the date of the loss that the Halide Lamp was a defective and unreasonably dangerous product, by reason of: ...

c) High rates of damage, injuries or deaths suffered by other users of this product and/or high rates of complaints by other users of this product; and

d) Reports of expert witnesses delivered by or on behalf of complaints in actions or causes in this court, or other courts of other jurisdictions, arising out of injuries or damages suffered by the users of this or similar products. [ 28 ] Araam asserts that: 1. Any complaints, investigations (expert or otherwise), demands, or lawsuits from 2000 until the date of the Fire are relevant and material to the prior knowledge of Philips as to the potential deficiencies in the Halide Lamps. 2.

Any complaints, investigations (expert or otherwise), demands, or lawsuits after the Fire are relevant and material as they may provide further evidence of what Philips reasonably ought to have known of potential deficiencies in the Halide Lamps. 3.

It is entitled to broad questioning at this stage of the action having regard to the pleadings and any decision of ultimate admissibility should be made by the trier of fact after placing the specific evidence elicited from the undertaking in the context of all evidence presented at trial. [ 29 ] Philips submits that none of the requests are with respect to information that is relevant or material. It says that it has already produced occurrence reports and that Araam has questioned on them.

It says that information regarding lawsuits, whether that information consists of statistics, pleadings or expert reports, can, by definition add nothing of probative value, whether primary evidence, secondary evidence or otherwise. [ 30 ] Philips submits further that: 1. A lawsuit is not evidence at all, but is simply an allegation as set out in the pleadings regarding completely different events at different times, and different locations, arising from different circumstances, which cannot possibly be relevant to this action or assist in proving any necessary ingredient of Araam ’ s claim. 2.

The pleadings and expert reports do not fall within the scope of the rule of relevance and materiality. 3. The request is also for expert reports prepared by or on behalf of complainants in different cases altogether. If they exist, such reports are not Philips ’ to give. They were generated, presumably paid for, and belong to others. 4. Any expert reports in different lawsuits are also covered by litigation privilege and Philips is not in control of these reports. [ 31 ] Philips produced occurrence reports and Araam has questioned on them.

One of the purposes of the disclosure of information rules is to discourage conduct that unnecessarily or improperly delays proceedings or unnecessarily increases the cost of them. In my view, this undertaking is tantamount to a fishing expedition which the current disclosure rules are designed to prevent. [ 32 ] I am not satisfied that the requested pleadings from other lawsuits are relevant and material. Regardless of whether experts ’ reports can be produced, they would not in my view significantly help determine the issue, but would rather simply confuse the issues. They would be of little or no weight.

Production would both improperly delay proceedings and increase the cost. For these reasons the undertaking need not be answered by Philips. Conclusion [ 33 ] Philips is directed to respond with respect to undertakings 19, 20 and 42, but not undertakings 25 and 43. The request for

compliance with undertaking 35 is premature at this time. Costs [ 34 ] The parties may speak to me about costs at the next case management meeting. Heard on the 30 th day of September, 2011 and the 5 th day of October, 2011. Dated at the City of Edmonton, Alberta this 12 th day of October, 2011. Gerald A. Verville J.C.Q.B.A. Appearances: Christopher Reain Black Sutherland LLP for the Applicant Danielle Bourgeois Field LLP for the Applicant W. Paul Sharek, Q.C. Emery Jamieson LLP for the Respondent _______________________________________________________ Corrigendum of the Reasons for Judgment of The Honourable Mr. Justice Gerald A. Verville

_______________________________________________________ Ms. Danielle Bourgeois added to appearance list as counsel.