Geophysical Service Incorporated v NWest Energy Corp, 2017 ABQB 232

Court of Queen’s Bench of Alberta Citation: Geophysical Service Incorporated v NWest Energy Corp, 2017 ABQB 232 Date: 20170331 Docket: 1201 11934 Registry: Calgary Between: Geophysical Service Incorporated Appellant - and - NWest Energy Corp., Shoal Point Energy Ltd., and Vulcan Minerals Inc. Respondent _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice D.B. Nixon _______________________________________________________ Appeal from the Decision by J.R. Farrington, Master in Chambers Dated the 14 th day of October, 2016 I.

Introduction [ 1 ] This is an appeal from an Order issued in Masters Chambers. The matter concerns three undertakings that Geophysical Service Incorporated (“ GSI ”) asked of Shoal Point Energy Ltd. (“ Shoal Point ”). Shoal Point is one of three defendants in this lawsuit. [ 2 ] Shoal Point refused to answer the three undertakings. The Master ruled that the information did not have to be produced. Consequently, Shoal Point did not answer the underlying questions.

[ 3 ] The Master said that GSI was fishing. He held that fishing is not allowed in these circumstances. II. Issue [ 4 ] Is Shoal Point required to answer any of the three undertakings on which GSI is seeking answers (collectively, the “ Three Undertakings ”)? III. Facts [ 5 ] GSI provides seismic data services to the oil and gas industry. Its services included non-exclusive and exclusive seismic data acquisition, processing and storage of seismic, gravity and magnetic data. [ 6 ] GSI has a contract with NWest Energy Corp. (“ NWest ”).

GSI has no contract with Shoal Point. [ 7 ] The contract between GSI and NWest concerns the licence and use by NWest of seismic data that is owned by GSI. GSI takes steps to protect its copyright and proprietary interest over its seismic data. The contract in dispute is the NWest Master Seismic Data Licence Agreement (the “ MSDL Agreement ”). [ 8 ] Robert Webb was the corporate representative for NWest. Mr. Webb testified that a company called Geoseis Inc. (" Geoseis ") took possession of the GSI data after it was retained by NWest as a seismic data consultant.

Geoseis then prepared a report using the GSI data and other seismic information (the " Geoseis Report "). [ 9 ] GSI claims that NWest breached the MSDL Agreement. It commenced the underlying action against NWest and Shoal Point. The claim by GSI asserts copyright infringement, breach of obligations of confidence, conversion, and inducing breach of contract. [ 10 ] Subsequent to commencing this action, GSI made an application to Master’s Chambers to add additional defendants to its Statement of Claim.

The defendants that GSI proposed to add were Black Spruce Exploration Corp., Vulcan Minerals Inc., Ptarmigan Energy Inc., Geoseis Inc. and Companies A – Z, inclusive. [ 11 ] The Master granted leave for Vulcan Minerals Inc. (“ Vulcan Minerals ”) to be added as a defendant. The remainder of that application was dismissed. [ 12 ] GSI seeks answers from Shoal Point on the Three Undertakings. The particulars of those undertakings are as follows. a. Undertaking 19 – To identify the parties who accessed the data in the Dropbox, particularly after the point in time of which the GEOSEIS data was in the Dropbox. b.

Undertaking 24 – To advise of the names of the parties to whom the presentations were made. c. Undertaking 25 – To provide copies of the confidentiality agreements entered into before the presentations were made. [ 13 ] At questioning, Shoal Point refused to answer the Three Undertakings. GSI subsequently made an application to the Master’s Chambers to compel Shoal Point to answer the underlying questions. The Master held in favour of Shoal Point.

GSI appealed the decision of the Master concerning the refusal of Shoal Point to answer the Three Undertakings. [ 14 ] Shoal Point made power-point presentations to prospective partners. It obtained confidentiality agreements in respect of those presentations. Mr. Langdon was the corporate representative for Shoal Point.

He testified that confidentiality agreements were associated with obtaining access to a drop box that was organized by Shoal Point (the “ Shoal Point Drop Box ”). [ 15 ] Shoal Point initially refused to provide GSI with the confidentiality agreements that were signed by the parties for the purpose of accessing the Shoal Point Drop Box. However, Shoal Point subsequently forwarded those documents to GSI. The names of the parties opposite Shoal Point had been redacted from the confidentiality agreements.

In the correspondence that accompanied the copies of the confidentiality agreements, Shoal Point stated that the agreements were executed by all parties who may have had access to the Shoal Point Drop Box, or who may have otherwise had access to the information in the drop box or otherwise. [ 16 ] Shoal Point informed GSI that the “help desk” associated with the Shoal Point Drop Box had advised that no electronic ledger or report existed that would allow the administrator to determine if a client had accessed a particular file within the drop box. IV. Analysis A.

Standard of Review [ 17 ] The standard of review on an Appeal of an Order from a Master is correctness. B. The Law

1. Rules of Court – Purpose Thereof [18] Disclosure of information is governed by

Part 5 of the Alberta Rules of Court, Alta Reg 124/2010.

Section 5.1 of the Rules ofCourt (the “Rules”) reads as follows. 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.

(2) The Court may give directions or make any order necessary to achieve the purpose of this Part. 2. The Starting Point – The Pleadings [19] In litigation, the starting point in respect of any decision to compel the production of information is the pleadings: Araam Incv Aman Building Corporation, 2011 ABQB 631 at para 14; Mustard v Brache, 2006 ABQB 265 at para 10; and Weatherill (Estate) vWeatherill, 2003 ABQB 69 at paras 16 and 17. [20] Questioning under the Rules may only seek facts of primary or secondary relevance. Facts of primary relevance are thosedirectly in issue.

Facts of secondary relevance are those from which the existence of primary facts may be directly inferred: SuncorEnergy Oilsands Limited Partnership v Propak Systems Ltd., 2012 ABQB 789 at para 4; and Mustard, at para 11. [21] Both primary and secondary relevance are determined by reference to the issues raised by the pleadings. Records seekinginformation that could reasonably be expected to lead to facts or records of secondary relevance need not be produced: Mustard, at para11; see also Hunka v Degner, 2011 ABQB 195 at para 41. [22] Questioning in respect of tertiary relevance is not permitted.

Facts of tertiary relevance pertain to information that might leadto facts or records of secondary relevance: see Suncor Energy at para 4. [23] In addition to being relevant, records also must be material.

That is, records must be reasonably expected to significantly helpdetermine one or more of the issues raised in the pleadings: Mustard, at para 12. [24] The materiality of evidence refers to its pertinency or weight in relation to the issue it is adduced to prove: NAC ConstructorsLtd v Alberta Capital Region Wastewater Commission, 2006 ABCA 246 at para 13; see also Can-Air Services Ltd v British AviationInsurance Co. (1988), 1988 ABCA 341 , 91 A.R. 258 (C.A.) at paras 2, 6 and 7. [25] Consistent with the above mentioned starting point concerning the production of information, relevance is determined by thepleadings.

In contrast, materiality is more a matter of proof: NAC Constructors Ltd at para 12; see also Weatherill (Estate) at para 17;and Tolko Industries Ltd v Railink Ltd., 2003 ABQB 349 at para 6. [26] Parties to litigation are not permitted to demand the production of records on the basis of conjecture. There must be strongevidence of non-disclosure. It must go beyond mere speculation: Innovative Health Group Inc. v Calgary Health Region, 2008 ABCA219 at para 39. 3. Relevance and Materiality [27] Two important parameters in Questioning are relevance and materiality.

The test for those two parameters is outlined insection 5.2(1) of the Rules, which reads as follows (underlining added). 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 therecord 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 inthe pleadings. [28]

Section 5.2 of the Rules is to be construed narrowly. Information should be disclosed only if it would significantly helpdetermine the issues raised in the pleadings. This Rule is much narrower than its predecessor.

Section 5.2 (1)(

a) of the Rules framesprimary relevance.

Section 5.2(1)(

b) of the Rules frames secondary relevance. [29] To reiterate the point above, tertiary relevance is excluded. The materiality or weight of the evidence must be addressed with aview to determining whether the information sought will significantly help to determine one of the issues raised in the pleadings:Mahamad v Mathews, 2011 ABQB 187 at para 12.

[30] A party is only required to answer questions that are relevant and material. This is provided for in

section 5.25(1)(

a) of theRules, which reads as follows. 5.25(1) During questioning, a person is required to answer only (

a) relevant and material questions... 4. Redacting Documents [31] If only part of a document is relevant, then only that portion of the document needs to be disclosed. The proper procedure is todisclose only the relevant portion of the document or disclose the entire document with a statement that the irrelevant portion, or thecomponent that is not material, has been suppressed: Lazin v Ciba-Geigy Canada Ltd., 1976 CarswellAlta 80 (CA) at paras 5 and 6; andInnovative at paras 35-36.

See also Royal Bank v Wallis, (AB CA), [1918] 2 WWR 620, 13 Alta LR 416, (1918) 41DLR 383 [32] Concerning procedural steps to effect the redaction, the party who is producing the records is entitled to determine whetherthe information it is producing is relevant and material. It is not up to the party demanding the records to make that determination:Innovative at paras 42-43. C. Application of the Law to the Facts [33] The central issue in the underlying law suit that GSI is advancing relates to the alleged sharing of the information.

GSI assertsthat the subject information that was shared is both confidential and subject to copyright. [34] There is a common thread running through each of the Three Undertakings. That common thread is the seeking of the namesof persons who are not parties to this litigation. [35] Shoal Point objected to all Three Undertakings. First, it objected to a requested undertaking that it identify the parties whoaccessed the Shoal Point Drop Box. GSI was particularly interested in the names of the entities that accessed the drop box after theGeoseis data was in that electronic file (Undertaking 19).

Second, it objected to a requested undertaking that it identify the names of theentities to which presentations were made (Undertaking 24). Third, it objected to a requested undertaking that it provide copies of theconfidentiality agreements which the parties entered into before viewing the power-point presentations (Undertaking 25). [36] Each of the Three Undertakings relate to questions about business dealings that Shoal Point had with entities that are not partof the underlying lawsuit.

GSL is concerned that third parties had access to certain materials and information, which it claims wereconfidential. [37] Mr. Langdon testified that a copy of the Geoseis Report was provided to Shoal Point by Geoseis on an electronic thumb drive.He further testified that a copy of the Geoseis Report may have been included in confidential materials which were provided to ShoalPoint's prospective partners.

Shoal Point's prospective partners may have accessed the Geoseis Report through the Shoal Point Drop Boxor after receiving an electronic thumb drive from Shoal Point. [38] GSI argues that the Geoseis Report included information that belongs to it. That may be the case, but does that allegationrequire Shoal Point to answer any of the Three Undertakings? [39] As a general comment, it is important to recognize that fishing for facts is not permitted. Continuing with the analogy, theonly exception to that rule is where there is both (

a) evidence that there are fish in the pond, and (

b) a reasonable amount of fish in thatpond. Speculation is not enough. [40] The size of the pond is determined by the pleadings. In this case, the defendants are NWest, Shoal Point and Vulcan Minerals.While GSI had attempted to add many more parties, it was not successful in doing so. That being the case, the current list of defendantsframes the scope of this action.

Further, the pleadings determine what is relevant and material in the action. [41] GSI has framed the pleadings so that the central question is whether Shoal Point has, as a matter of fact, used, converted,produced, reproduced, or published GSI information. That is, GSI has framed at the pleadings to focus on what Shoal Point has done,and not with whom it has done it. This distinction is critical to the analysis below. [42] With the above in mind, we turn to address each of the Three Undertakings.

Undertaking 19 – To identify the parties who accessed the data in the Dropbox, particularly after the pointin time of which the GEOSEIS data was in the Dropbox. [43] The purpose of the Shoal Point Drop Box file was to have a secure electronic file within which the corporation could storedata, and to which a party must be invited. As identified above, GSI seeks the identity of the persons who had access to the Shoal PointDrop Box. [44] One of the purposes of

Part 5 of the Rules of Court is to ensure that the parties to the action obtain evidence that will be reliedon in the action: Rule 5.1(1)(a). In the context of this case, does that include the identity of the entities that accessed the data in the ShoalPoint Drop Box? [45] The evidence is that GSI has copies of the confidentiality agreements in respect of those entities which accessed the ShoalPoint Drop Box. As such, GSI knows how many entities had access to the drop box. That documentation evidences the fact that Shoal

Point had put a fence around the subject information. No one could have accessed the Shoal Point Drop Box unless the confidentiality agreement was in place. [ 46 ] GSI asserts that it needs more detail. As the court understands it, the only detail that GSI does not have are the names of those entities that signed the confidentiality agreements, and which, therefore, had access to the Shoal Point Drop Box. [ 47 ] The Court has reviewed the amended statement of claim. The Court considered the GSI argument carefully in the context of both the pleadings and the Applicant’s assertions relating to Undertaking 19.

It makes the following three findings. [ 48 ] First, the Court finds that the scope of the Amended Statement of Claim indicates that the names of the entities that signed the confidentiality agreements are not of primary relevance. The reason the Court makes this finding is because those redacted entities are not directly in issue. This is evidenced by the fact that the Master would not allow the unnamed Companies “A – Z” to be added as defendants.

Perhaps more importantly, this conclusion is supported by the fact that the relevant clauses in the underlying pleadings are focused on what Shoal Point has done, and not with whom it has done it. [ 49 ] Second, the Court finds that the names of the entities that signed the confidentiality agreements are not of secondary relevance. The reason the Court makes this finding is because the redacted names will not assist in establishing the existence of primary facts by any direct inference.

In making this finding, the Court notes that GSI has copies of the confidentiality agreements already, albeit with the names of redacted. With those documents in-hand, GSI has all of the information it needs to advance its claims against Shoal Point (and the other defendants). [ 50 ] Third, the Court finds that the pursuit by GSI of the names of the entities that signed the confidentiality agreements to be of tertiary relevance. The Court makes this finding because the disclosure of those names might lead to facts or records of secondary relevance, but no more. [ 51 ] In

summary, given the above three findings, the Court is compelled to find that the names of the entities that signed the confidentiality agreements are not material to this case. The reason the Court makes this finding is because the disclosure of the names sought would not significantly assist in the determination of any of the issues raised in the pleadings. The Court also finds that, under the circumstances, the redaction of the names from the confidentiality agreements was appropriate. [ 52 ] Given the above findings, the application by GSI in respect of Undertaking 19 is dismissed.

Undertaking 24 – To advise of the names of the parties to whom the presentations were made. [ 53 ] The names of the entities to whom presentations were made are the same names as those in the redacted confidentiality agreements. As noted elsewhere in this decision, those confidentiality agreements have been provided to GSI, albeit in redacted format. [ 54 ] The Court notes that GSI has had the presentations themselves for over a year and a half, and has not identified any GSI data in the presentations. The evidence of Shoal Point was that no GSI data is in the presentations. However, Mr.

Langdon was subsequently somewhat uncertain on this point. [ 55 ] It is not at all certain any GSI data made it into the Shoal Point Drop Box. Notwithstanding these uncertainties, the Court finds that none of the parties whose names are sought entered into any business transaction with Shoal Point as a result of the presentation. [ 56 ] GSI alleges that Shoal Point knowingly and wrongfully used, converted, produced, reproduced and/or published GSl's materials. These claims and allegations relate specifically to Shoal Point's actions, rather than the actions of other unrelated (redacted) parties.

The Court finds that the names of the entities to whom presentations were made are not relevant to the issues raised in the pleadings (either primarily or secondarily). [ 57 ] The Court also finds that disclosing the names sought will not help to determine any of the issues raised in the pleadings. This latter point goes to materiality. Further, the Court finds that the disclosure of the names sought is probative of nothing raised by the pleadings.

The issues in GSl's pleadings are whether Shoal Point, as a matter of fact, used, converted, produced, reproduced or published GSl's information, not with whom the information was shared. [ 58 ] GSI argues that this information is relevant and material because GSI wants to know the identity of the parties who accessed the Shoal Point Drop Box account, and who received the presentations from Shoal Point. GSI may want to know this but that does not make the sought after names relevant and material.

Mere curiosity does not cross the threshold. [ 59 ] GSI suggests that the names of the parties sought are relevant and material because it should be allowed to pursue further lines of Questioning to determine whether its data was used by Shoal Point and the unrelated parties in their decision making process. The Court is not persuaded by this argument because the claim that the materials were important in any decision making process is not part of the pleadings. Further, the redacted names do not assist in proving any of the underlying causes of action.

None of the parties whose name is being sought did any business with Shoal Point. In any event, a decision not to do business is probative of nothing in this lawsuit. [ 60 ] In

summary, the names of the parties to whom the presentations are made are neither relevant nor material. This is a fishing expedition. [ 61 ] Given the above findings, the application by GSI in respect of Undertaking 24 is dismissed. Undertaking 25 – To provide copies of the confidentiality agreements entered into before the presentations were made.

[ 62 ] GSI argues it wants to receive copies of the confidentiality agreements that were entered into before the presentations were made. As the court understands it, GSI wants complete copies of these agreements to determine whether the confidential nature of the Geoseis Report was adequately protected. [ 63 ] Undertaking 18 also involved requested information concerning the confidentiality agreements when Shoal Point made presentations or gave access to the Shoal Point Drop Box. While this information was refused at Questioning, it was subsequently addressed.

Redacted confidentiality agreements were provided to GSI. The only redactions are the names and signatories of the opposite entities to the agreements. [ 64 ] Considering the question as to whether the information in the presentations was adequately protected, this Court finds that only the text of the confidentiality agreement is required. For the reasons outlined in respect of Undertaking 19, above, the name of the entity is not required. [ 65 ] GSI has received copies of the confidentiality agreements.

That being the case, GSI is already in possession of that which it seeks. [ 66 ] The Court finds that the redaction of the names of the entities that signed the confidentiality agreements is appropriate in the circumstances of this case. The reason for this conclusion is that the names of the entities that signed the confidentiality agreement are irrelevant to the claims that are being advanced by GSI: Lazin at para 5 and 6. [ 67 ] The Court acknowledges that GSI asserts that the name of the entities are relevant because it is making a statutory claim under the under the Copyright Act , RSC 1985, c C-45.

The Court disagrees with that argument. While GSI has referred to the Copyright Act in the facts relied on, the remedy it has sought concerning the alleged infringement is focused on damages. There is no remedy sought for statutory damages. That being the case, disclosure of the names of the entity signing is not relevant. In any event, GSI knows the number of entities that signed the confidentiality agreements.

If the statutory damages under the Copyright Act are relevant, the quantum of damages can still be calculated, notwithstanding the redaction of the names of the parties that signed the confidentiality agreements. [ 68 ] The Court comes to this conclusion notwithstanding

section 38.1 of the Copyright Act . While that

section does allow a copyright owner to elect to recover an award for statutory damages, no such election has been made in this case. Absent such an election, the Court will not consider the matter further. [ 69 ] In

summary, unredacted copies of the confidentiality agreements entered into before the presentations were made do not have to be provided to GSI. This Court finds that the names of the parties to the confidentiality agreements are not relevant or material to this litigation. The disclosure of the redacted names will not advance this litigation in any material way, nor elucidate any matters or issues raised in the pleadings for the same reasons as those given in relation to the presentations pursuant to Undertaking 24. [ 70 ] Given the above findings, the application by GSI in respect of Undertaking 25 is dismissed.

V. Conclusion [ 71 ] Returning to the question proposed at the outset, Shoal point is not required to answer any of the Three Undertakings. This application is dismissed in its entirety. [ 72 ] As a penultimate comment, the Court notes the submissions of Shoal Point concerning the injunctive relief. Since that relief was not specifically mentioned in the Applicant’s Brief or in the Notice of Appeal, this Court will not consider it further.

If the parties wish to speak to the injunctive relief, they may bring the matter back before this Court. [ 73 ] The parties may speak to costs within the next 60 days, if required. Heard on the 2 nd day of December, 2014. Dated at the City of Calgary, Alberta this 31 st day of March, 2017. D.B. Nixon J.C.Q.B.A. Appearances: Brent Mescall

Gareth Williams for the Appellant Darren Reed Sarah Lulman for the Respondent