Suncor Energy Oil Sands Limited Partnership v. Propak Systems Ltd., 2012 ABQB 789

Court of Queen ’ s Bench of Alberta Citation: Suncor Energy Oil Sands Limited Partnership v. Propak Systems Ltd., 2012 ABQB 789 Date: 20121221 Docket: 1001 14537 Registry: Calgary Between: Suncor Energy Oil Sands Limited Partnership Plaintiffs - and - Propak Systems Ltd. Defendants _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice G.H. Poelman _______________________________________________________ I.

Introduction [ 1 ] Suncor’s action seeks damages arising out of Propak’s work under an engineering, procurement and fabrication contract for a sulphur recovery plant at a Suncor site. Suncor alleges damages resulting from, among other things, delayed and defective work for which Propak was responsible.

[ 2 ] Propak made demands for particulars, which were not answered to its satisfaction. It also conducted two initial days of questioning of Suncor’s corporate representative, Wayne Abernethy, which gave rise to one hundred requests for undertakings. Most have been answered, but some remain in dispute regarding adequacy of the responses or whether answers are required at all. II.

Legal Principles [ 3 ] In my view, most of the disputes between these parties over undertaking requests can be determined by basic principles and purposes of the discovery process, now called disclosure and questioning in our rules. [ 4 ] The questioning process in an action is fundamentally an inquiry into relevant facts. [1] Further, questions may only seek facts of primary relevance (those directly in issue) or secondary relevance (from which the existence of primary facts may be directly inferred), not tertiary relevance (information that might lead to facts or records of secondary relevance). [2] [ 5 ] Furthermore, rule 5.25 (1)(

a) of the Alberta Rules of Court provides that “a person is required to answer only ... relevant and material questions.” Under rule 5.2 (1)(a), “a question ... is relevant and material only if the answer to the question ... could reasonably be expected ... to significantly help to determine one or more of the issues raised in the pleadings.” The Court of Appeal elaborated on that definition, as follows: The materiality of evidence refers to its pertinency or weight in relation to the issue it is adduced to prove: Black ’s Law Dictionary , (6 th ed. 1990).

Facts or documents may be relevant within Rule 186.1, but, either alone or in combination with other evidence, be of no significant help to the examining party in proving or disproving a fact in issue. As Slatter J. observed in Weatherill Estate v. Weatherill , (2003) 337 A.R. 180 (Q.B.), 2003 ABQB 69 at para. 17 , “... relevance is determined by the pleadings while materiality is more a matter of proof ...”. See also Tolko Industries Ltd. v. Railink Ltd. (2003), 14 Alta.

L.R. (4 th ) 388, 2003 ABQB 349 at para. 6 . [3] [ 6 ] Finally, rule 5.25 (3) allows a corporate representative to object to a question “on the basis that it would be unduly onerous ... to inform himself or herself in the circumstances.” [ 7 ] These principles are adequate to address the issues on this application. In light of the clear direction given in the disclosure rules (Part 5) and authorities, there is no need to resort to rule 5.1, which speaks of the purpose of the disclosure rules, or the “Foundational Rules” in

Part 1. III. Disputed Undertaking Requests [ 8 ] The undertaking requests Propak sought to enforce at the hearing of this application vary in some cases from those sought at questioning and set out in its brief. In what follows, I set out the undertaking requests sought at the hearing, and make my findings on these latest forms of the requests. [ 9 ] 84.

Provide a detailed list of each specification provided to Suncor ’s inspectors in order [to] inspect the Propak modules, broken down by module. [ 10 ] Suncor responded that its “inspectors were given the same list of specifications given to Propak as part of the contract.” In addition, by affidavit Suncor indicated that the specifications provided to the inspectors “were not module specific,” and that all of the specifications and related documents are contained in Suncor’s affidavit of records.

[ 11 ] Suncor’s response does not directly respond to the question. It is evasive and unhelpful to say, in effect, I gave them the same things that I gave you. It is not an adequate answer to this question to say that the information is in the records produced, go find it. The question is not what specifications Suncor has, but which ones were given to the inspectors.

Suncor must identify, by reference to its affidavit of records or (if necessary) by supplementary production, the specification and related documents it gave to its inspectors. [ 12 ] However, the undisputed evidence is that Suncor did not provide specifications on a “module-by-module” basis for purposes of the inspection. Therefore, Propak is not entitled to an answer that identifies the specifications by module. [ 13 ] 86.

Provide the back-up documentation, including but not limited to invoices, daily worksheets or timesheets, and any documents prepared by Flint, Suncor or Jacobs detailing the alleged Propak deficiencies, setting out the number of hours billed per deficiency to Suncor as a result of the alleged Propak deficiencies as set out on the spreadsheet for module 101. [ 14 ] Suncor’s response to the undertaking request, and its justification by affidavits, is that it has produced all of the Flint invoices with back-up documents.

However, it cannot provide documents setting out hours billed per deficiency because Flint’s invoices were issued regularly as part of its overall work on the project, and do not identify particulars of the work done or even what related to deficiency repairs. Further, it advises that Flint does not have records that would provide the requested information. [ 15 ] On the evidence, Suncor has satisfactorily responded to this undertaking. Propak expresses dissatisfaction with its inability to find the information in the mass of Flint invoices produced, but that is the information Suncor has.

Propak is entitled to nothing further. [ 16 ] 87.

Provide particulars and back-up documentation, including but not limited to any invoices, daily worksheets or timesheets and any documents prepared by Flint, Suncor or Jacobs detailing the alleged Propak deficiencies, that shows how Suncor calculated every amount Suncor alleges it incurred as set out in the binder marked Exhibit “7". [ 17 ] Propak’s current request is an elaboration of its original request, which (as stated by the court reporter), was as follows: In terms of the hours that Suncor is trying to claim against Propak, to provide not only the invoice with the hours broken out by it, but if not broken out, to advise how Suncor calculated every single amount that is being claimed against Propak in the binder marked Exhibit 7. [ 18 ] Suncor’s affidavit evidence and submissions of its counsel establish that there are no documents showing the calculations or breakdowns Propak requests.

The most that exist are loose-leaf collections of

summary documents prepared by Suncor with some back up material, initially assembled “without prejudice,” in support of various components of a claim that totals $63, 045,763.00.

The focus of some of Propak’s questioning and submissions on this application were spreadsheets prepared by Suncor, listing each alleged deficiency, providing a description of the deficiency, identifying a location by reference to construction drawings, and giving approximate “manhours” required to correct the deficiency. [ 19 ] In response to Propak’s demands for additional details and documents for each of the alleged deficiencies, Suncor says it has provided everything in its possession.

Further, it says the approximate manhours were rough estimates by Suncor engineering staff based on consultations with Flint for which there are no supporting documents. Finally, Suncor advised in undertaking responses that a final calculation of damages, including amounts for each deficiency, will probably require expert evidence.

I infer from this that the state of the documentation means it will require an expert to conduct an analysis and give an opinion on what actual costs can reasonably be allocated to the deficiencies, or what reasonable costs would be for those deficiencies. [ 20 ] In my view, Suncor has answered this undertaking reasonably to the extent possible based on information it now has. Suncor might wish it had a better foundation for the damages it seeks for each of the deficiencies, but it cannot create new facts.

It has already undertaken significant internal analysis to generate the documents on which much examination has been focussed. To require it to now do a further analysis in an attempt to reconstruct its initial estimates would entail significant labour for a result of little if any relevance or probative value. What Suncor representatives may now think was or should have been the cost of deficiency repair, buried in numerous Flint invoices, says little about what the costs were and it is highly doubtful that Propak would accept Suncor’s estimates.

The answers would simply be more fodder for arguments between these parties about what Suncor thinks its claim is worth or what it should be

worth, which is unlikely to be persuasive to anyone. [ 21 ] The questioning process is, as summarized above, fundamentally an inquiry into relevant and material facts and, within reason, clarification of what a plaintiff claims. Suncor’s answers have set out its claims with considerable detail, based upon its own analysis in the absence of hard, underlying facts, and have given the factual basis for its analysis. Propak’s demands for additional answers reflect its position that Suncor’s facts and analysis do not adequately support the claims, and there must be more.

Suncor says there is no more and that is a satisfactory answer for questioning. [ 22 ] 88 & 89. Provide documentation, including invoices, daily worksheets or timesheets, and any documents prepared by Flint, Suncor or Jacobs detailing the alleged Propak deficiencies, that show what work Flint performed as a result of each of the alleged Propak deficiencies broken down by each module. [ 23 ] These undertaking requests and the responses are essentially the same as for undertaking 87. For the same reasons, I find that Suncor’s responses are adequate. [ 24 ] 95.

Provide copies, or identify in the document production, each of the notices provided to Propak prior to January 1, 2010 pursuant to the warranty procedure under the fabrication amending contract. [ 25 ] 96. Provide copies, or identify in the document production, each of the deficiency notices to Propak after January 1, 2010. [ 26 ] 97. Identify in the document production or produce, whether in Suncor ’s possession or not, all of the warranty or deficiency notices sent to Propak prior to January 1,2010 for each deficiency on each module set out in Tab 7 and correspond to Exhibit “7". [ 27 ] 98.

Identify in the document production, or produce, the notice provided to Propak with respect to each of the 6896 deficiencies identified by Suncor. [ 28 ] The essence of these undertaking requests is to have Suncor advise what notices were given to Propak of the alleged deficiencies and identify which deficiencies were the subject of notices before or after January 1, 2010. (The contract required Suncor to give notice of defects or deficiencies during the warranty period, which terminated on January 1, 2010, and to give Propak the opportunity to repair defects or deficiencies.) [ 29 ] Suncor’s responses stated generally that “notices of deficiencies were provided to Propak through deficiency lists, punch lists, non-conformance reports, e-mails and letters” which, it stated, had already been produced, and gave several examples by reference to document number for each category. [ 30 ] In my view, Suncor’s responses to these undertaking requests are inadequate.

Propak is entitled to question, as a matter of fact, how Suncor gave notice of the deficiencies and when that notice was given. I am persuaded that the giving of notice and its timing is relevant and material to contractual issues in this action. [ 31 ] Suncor acknowledged during argument that, while there might be 15,000 alleged deficiencies, the number of notices is far less.

Further, Propak’s request does not ask Suncor to identify the date on which each notice was given but rather to group the notices into those given before and afer termination of the warranty period. [ 32 ] These undertaking requests must be answered by identifying the deficiency notices and advising of Suncor’s information on whether they were given before or after termination of the warranty period.

[ 33 ] The mere fact that a question requires reviewing documents in a production and identifying some of them does not make it impermissible. Indeed, it is clear from the record that Suncor has answered many undertakings on that basis. Here, the question is a proper one on a relevant and material fact: What notice was given, and when? [ 34 ] 90.

Provide details of the notice that was provided to Propak by Suncor with respect of all of the 15,000 alleged deficiencies prior to January 1, 2010, including the dates of such notice and the method by which such notice was given, and to the extent that notice was provided orally, advise who provided the notice and to whom, and the content of the notice.

To the extent notice was provided in writing, provide a copy of the written notice or identify the document production . [ 35 ] In my view, this undertaking request would be adequately answered with the answers to undertakings 95, 96, 97 and 98, except that in addition, where Suncor says any deficiency notices were given orally, as I have directed, it must give Propak its information on who provided the notice, to whom, the content of the notice and whether it was before or after January 1, 2010. [ 36 ] 91 & 93.

Provide details of each alleged deficiency, including a detailed breakdown of the nature of the deficiency, where it was located, both on the module and the particular piece of equipment, if applicable, and provide the Suncor standard or specification that applies to the particular deficiency. [ 37 ] My findings on this request are the same as above, regarding undertaking request 87. [ 38 ] The parties have leave to speak to costs, it they do not agree. Heard on the 13 th day of December, 2012. Dated at the City of Calgary, Alberta this 21 st day of December, 2012. G.H. Poelman J.C.Q.B.A.

Appearances: Melanie Gaston, Blake, Cassels & Graydon LLP

for the Plaintiffs Munaf Mohamed/Alison J. Gray, Bennett Jones LLP for the Defendants [1]NAC Constructors Ltd. v. Alberta Capital Region Wastewater Commission, 2006 ABCA 246, para. 12; Can-Air Services Ltd. v. BritishAviation Insurance Co. (1988), 1988 ABCA 341 , 91 A.R. 258 (C.A.), paras. 2, 6 & 7. [2]NAC Constructors Ltd, para. 12. [3]NAC Constructors Ltd., para. 13.