TDC Broadband Inc., in bankruptcy, by its participating creditors granted leave pursuant to section 38 of the Bankruptcy v. Insolvency, 2016 NSSC 206

SUPREME COURT OF Nova Scotia Citation: TDC Broadband Inc., in bankruptcy v. Nova Scotia (Attorney General) , 2016 NSSC 206 Date: 2016-08-05 Docket: Hfx , No. 312210 Registry: Halifax Between: TDC Broadband Inc., in bankruptcy, by its participating creditors granted leave pursuant to

section 38 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 , being Owen Huard, Christopher A. Chatterton, Merit Consulting Limited, Murray McNutt and Gerald R. Pineo Plaintiff v. The Attorney General of Nova Scotia representing Her Majesty the Queen in Right of the Province of Nova Scotia Defendant Judge: The Honourable Justice Patrick J. Duncan Heard: April 20, 21, 22, 23, 27, 28, 29, 30; May 4, 5, 6, 7, and 11, 2015 in Halifax, Nova Scotia Final Written Submissions: June 26, 2015 Counsel: Robert H. Pineo for the Plaintiff Melissa P. MacAdam Jeremy P.

Smith Terry Potter for the Defendant Sheldon Choo By the Court: Introduction [ 1 ] During the campaign leading up to the election of June 13, 2006, the then Premier of Nova Scotia, Rodney MacDonald, promised Nova Scotians that all would have access to affordable high speed internet access (Broadband) by 2009. This was of particular importance to rural regions of the province where this type of service was not available. Following their election the government tasked Nancy Flam with delivering on this promise. [ 2 ] Ms.

Flam had no technical background in the provision of broadband internet, no system to deliver the service, no specific geographical area in which to test a delivery system and a tight deadline to meet. [ 3 ] During the years 2004 to 2006 the persons who would become the principals of the plaintiff company invested significant time and capital into developing and deploying a successful internet delivery system that would apparently have satisfied all of the technical criteria of Ms. Flam’s project. [ 4 ] The question posed by this action is whether Ms.

Flam’s “Rural Broadband Project” received, in confidence, unique technical and/or business information of the plaintiff and used it for the purposes of that project without the plaintiff’s permission. If so, then the plaintiff submits that it is owed significant damages for the misuse of its information. The Province denies all elements of the claim. [ 5 ] For the reasons that follow I find the defendant liable for breach of confidence. Background

[ 6 ] Ted, Dennis and Carter Cockerill are three brothers who together funded, developed, and marketed a system for delivering wireless high speed broadband internet service to rural Nova Scotia. [ 7 ] The brothers initially operated under the names of Practical Networks and Custom Networks and had been experimenting with various technologies for delivering internet service. [ 8 ] In 2004 a rural Nova Scotia company located in Rawdon was looking for a solution to problems in its operations caused by an inadequate internet service that was hampering its ability to operate and compete.

The Cockerills provided a delivery system which met the need. [ 9 ] Their success in delivering the service to that company led to discussions with the Region of Queens Municipality (RQM) which was looking for providers of high speed internet service for residents who, like many in rural Nova Scotia, did not have access. [ 10 ] The Cockerills began working on the project with Everett Backman, a Rural Economic Development Officer with the defendant’s Office of Economic Development; Neil Emenau, Executive Director for the defendant’s Lunenburg-Queens Regional Development Agency; and Margaret Cartwright, Director of Tourism and Economic Development for the RQM. [ 11 ] In the period January to March 2005 Dennis Cockerill developed a satellite based delivery system to be tested at the North Queens Medical Centre.

On March 9, 2005, the system was demonstrated on site to approximately 70 people. It attained excellent data speeds for the time. Notably, this was achieved during a snowstorm, when telephone service and satellite television service in the area were interrupted, and where power was out in parts of the region. The test was considered a success. [ 12 ] Out of this arose the “Caledonia Project”.

The unique requirements for this project included that the delivery system had to: • provide a service that was comparable to or better than urban delivery systems; • be comparable in cost to urban delivery systems; (which is a function of the available income generating base and the cost to construct and deliver the service); • be able to generate a profit; • be robust enough to withstand weather in difficult to reach places where power outages were frequent and servicing could be difficult; • be more reliable than satellite delivery systems which were plagued with weather interruptions to service. (medical centre needs and businesses trading in real time, for example, could not rely on a service that was susceptible to such problems); • be made available in places where existing infrastructure for wired service was too expensive and/or too old or deteriorated to suit the purpose; and • be expandable. [ 13 ] To be eligible for government financial assistance for this project the Cockerills needed to incorporate, and in March of 2005 they did so creating the plaintiff company, TDC Broadband.

The then Minister of Economic Development, Ernest Fage, sent a letter dated April 13, 2005, to RQM enclosing $50,000 from the Province of Nova Scotia in “sponsorship” of the broadband to North Queens project. [ 14 ] In the ensuing months TDC focused on using towers as part of its delivery system.

As a result it constructed two towers and by February 2006 began to service customers in the Caledonia community. [ 15 ] The delivery system fulfilled the requirements for the provision of high speed wireless internet service in particularly difficult terrain, over a comparatively large geographic area and at a cost that was affordable and expected to be sufficient to sustain the company as it expanded its market.

At the time, as the evidence demonstrates, there were no other internet service providers offering the same combination of availability, speed and reliability in this type of topography. [ 16 ] Notwithstanding their technical success, TDC did not develop a sufficient income stream to support the operations and its own resources were being exhausted.

Bills from suppliers were not being paid in a timely manner and the service was at risk of being suspended. (In fact, service was suspended for a period beginning in the summer of 2006, due to financial difficulties). [ 17 ] Despite these problems, the Cockerills continued to seek out capital and to market the product around the province.

They had considerable interest from Regional Development Agencies (RDAs) and believed that because of their work with local Nova Scotia government officials in Queens they were well placed to obtain significant support from the Province which, if it came, would provide the financial stability to support the wide spread distribution of the delivery service. [ 18 ] However, when the Province decided in March 2006 to seek out proposals to provide broadband internet service to unserviced or underserviced areas of the province they did it in such a manner that it effectively ensured that TDC could not compete with the large service providers, even though TDC had a proven delivery model and their competition did not, or were unprepared to deploy one. [ 19 ] By the end of May 2006 the Province had selected an area near Tidnish, Cumberland County for a “Pilot Project”.

The Province then sent out a Request for Proposals to deliver broadband to the pilot area. In late November 2006, Seaside Communications was awarded the exclusive right to deliver broadband service to the Pilot area. [ 20 ] Seeing no hope for provincial or private funding the plaintiff could not continue to operate and on May 11, 2007, a Trustee in Bankruptcy took over the affairs of TDC.

[ 21 ] In June 2007 the defendant issued a Request for Proposals to provide Broadband throughout Nova Scotia. The province was divided into 7 zones. The successful bidders were Seaside (4 zones), Eastlink (2 zones) and Omniglobe in Halifax Regional Municipality. [ 22 ] A key component of the Province’s Request for Proposals was the “sustainability” of the project.

TDC scored poorly in the competition for the pilot project, largely as a result of the government’s view that it was financially unsustainable and that the business side of the company was poorly run. [ 23 ] The deck was stacked against TDC by the government’s roll out plan and the financial requirements of the RFPs. It was a “Catch 22”: in effect, the government would not give TDC the money necessary for their progress because TDC did not have the ability to pay their existing bills and was not attracting new investor money.

Having the only technology that was proven to work was not sufficient to overcome their lack of capital, or business acumen. [ 24 ] As time would show, the Province, while requiring the bidders to show significant financial stability at the point of submitting proposals, later gave the successful bidders very substantial grants to carry out their work. Seaside received $430,000 to assist with the pilot project.

This money was characterized in a Cumberland Regional Economic Development Association (CREDA) newsletter as funds to “cover project expenses”. [ 25 ] By the time of trial, the defendant had provided grants totaling $23.8 million to Seaside and $2.2 million to Eastlink to assist these companies as they attempted to fulfill the terms of their successful bids. [ 26 ] The plaintiff says that the Request for Proposals that the government put out for the Pilot Project (won by Seaside) included significant confidential information borrowed from TDC’s business proposals and technical specifications.

The plaintiff alleges that the Province breached their obligation to keep TDC’s information confidential and misused the information by giving it to TDC’s competitors thereby causing TDC significant financial injury, which ultimately led to the bankruptcy of TDC. [ 27 ] In short, the allegation is that the Province unlawfully gave TDC’s technology and business information to its competitors who had the capitalization that TDC lacked but not the technical expertise that TDC did have. Issues 1. Did the defendant breach its duty of confidence to TDC? (

a) Did the information supplied by TDC, namely the Delivery Method and Business Model, to the defendant have a quality of confidence about it? (

b) Was the information communicated in confidence and in circumstances that imparted an obligation of confidence? (

c) By providing details of the Delivery Method and Business Model within the Cumberland Request for Proposals, did the defendant misuse the information, or use the information in an unauthorized manner? 2. What compensation is due to TDC? Breach of Confidence: legal principles [ 28 ] The test for a breach of confidence was stated by LaForest, J. in International Corona Resources Ltd. v. LAC Minerals Ltd. [1989] SCR 574 as consisting of: 10 …. three elements : that the information conveyed was confidential , that it was communicated in confidence , and that it was misused by the party to whom it was communicated .

In Coco v. A.N. Clark (Engineers) Ltd. , [1969] R.P.C. 41 (Ch.), Megarry J. (as he then was) put it as follows (p. 47): In my judgment, three elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself, in the words of Lord Greene, M.R. in the Saltman case on page 215, must ‘have the necessary quality of confidence about it.’ Secondly, that information must have been imparted in circumstances importing an obligation of confidence.

Thirdly, there must be an unauthorized use of that information to the detriment of the party communicating it. [ 29 ] The court then described the burden that rests on the confidee in relation to the third element: 16 If, as we saw, each of the three elements of the above-cited test are made out, a claim for breach of confidence will succeed. The receipt of confidential information in circumstances of confidence establishes a duty not to use that information for any purpose other than that for which it was conveyed.

If the information is used for such a purpose, and detriment to the confider results, the confider will be entitled to a remedy. … 20 .... In establishing a breach of a duty of confidence, the relevant question to be asked is what is the confidee entitled to do with the information, and not to what use he is prohibited from putting it. Any use other than a permitted use is prohibited and amounts to a breach of duty. When information is provided in confidence, the obligation is on the confidee to show that the use to which he put the information is not a prohibited use. In Coco v. A.N.

Clark (Engineers) Ltd. , supra , at 48, Megarry J. said this in regard to the burden on the confidee to repel a suggestion of confidence: In particular, where information of commercial or industrial value is given on a business-like basis and with some avowed common

object in mind, such as a joint venture or the manufacture of articles by one party for the other, I would regard the recipient as carrying aheavy burden if he seeks to repel a contention that he was bound by an obligation of confidence. In my view, the same burden applies where it is shown that confidential information has been used and the user is called upon to showthat such use was permitted…. Analysis Issue 1(a): Quality of Confidence Did the plaintiff supply information to the defendant which had about it the necessary quality of confidentiality? [30] Mason J., writing in Pharand Ski Corp. v.

Alberta, (AB KB), [1991] A.J. No. 471, 116 A.R. 326 set out aguideline that assists in the determination of this question: 144 A list of factors to be considered to determine if the information has a quality of confidence about it may be found in AnsellRubber Co. v. Allied Rubber Industries Pty. Ltd., [1967] V.R. 37, and Deta Nominees Pty. Ltd. v. Viscount Plastics Products Pty. Ltd.,[1979] V.R. 167 at 193: see Kearney, p. 12.

They are: (1) the extent to which the information is known outside the owner’s business (2) the extent to which it is known by employees and others involved in the owner’s business (3) the extent of measures taken by him to guard the secrecy of the information (4) the value of the information to him and his competitors (5) the amount of money or effort expended by him in developing the information (6) the ease or difficulty with which the information could be properly acquired or duplicated by others [i.e. by their independentendeavours].

These factors are useful, but as Fullagar, J. states in Deta Nominees, [1979] V.R. 167 at p. 193 they are not exhaustive: I apprehend that neither he [namely Gowans J. in Ansell’s case] nor McInerney, J. in Mense v.

Milenkovic, [1973] V.R. 784 at 796-8,intended to convey that one should slavishly check off the factors against the information, as if one were counting spots on some strangecreature to see if it was indeed the species of leopard illustrated in the picture book. [31] The plaintiff asserts that it developed a system to deliver wireless broadband service at market competitive rates in locales thatwere geographically challenging and with smaller population bases. These areas either had no internet service or relied on less reliable,slower and/or more expensive delivery models, like satellite and hard wire.

The plaintiff assembled its system using an array of productsgenerally available to the public. [32] The defendant argues that the plaintiff’s use of “off the shelf” technology means that there was nothing unique about theplaintiff’s delivery system and therefore nothing capable of being considered confidential. In the defendant’s view the information wasin the public domain.

It supports its position by pointing to a delivery system being employed at that time by Seaside Communicationswhich the defendant says was similar to that of the plaintiff. [33] The defendant’s argument is not made out simply because the plaintiff’s delivery system used publicly available hardware. LordGreene’s decision in Saltman Engineering Co. v.

Campbell Engineering Co., [1963] 3 All ER 413 (CA) pointed out that (at p. 415): The information, to be confidential, must, I apprehend, apart from contract, have the necessary quality of confidence about it, namely, itmust not be something which is public property and public knowledge.

On the other hand, it is perfectly possible to have a confidentialdocument, be it a formula, a plan, a sketch or something of that kind which is the work done by the maker on materials which may beavailable for the use of anybody; but what makes it confidential is the fact that the maker of the document has used his brain and thusproduced a result which can only be produced by somebody who goes through the same process. (emphasis added) [34] The court in Saltman found there to be a breach of confidence in that case, concluding that the defendants dispensed with the: …necessity of going through the process which had been gone through in compiling these drawings, and thereby to save themselves agreat deal of labor and calculation and careful draughtsmanship. (at p. 415) [35] The court made the point of acknowledging that the work could be recreated by others but that by utilizing the plaintiff’sinformation the defendants saved themselves “the trouble”. [36] Dennis Cockerill’s evidence detailed the process he undertook over a lengthy period of trial and error researching, testing, andmodifying various technologies which he then mixed with other technologies seeking a combination that would overcome the challengesthat the topography in rural Nova Scotia presented in delivering broadband service.

There is a detailed description of the hardware andgeneral operation of the system set out in the evidence and summarized in paragraph 12 of the plaintiff’s post-trial brief. It is unnecessary

to describe the technical aspects. The issue is whether I accept that it was unique and had a quality of confidentiality about it. [ 37 ] Defendant’s counsel put its’ “off the shelf” theory to the witnesses. Carter Cockerill provided a very common sense analogy when he replied by saying: “… I can give you a grocery list, and you can go to a store – it doesn’t make you a chef”. [ 38 ] There is no question that the Cockerills believe that their delivery system was unique and therefore had a quality of confidence about it. I conclude that they were correct. [ 39 ] Dr.

Jean-Francois Bousquet Ph.D., PEng., is a professor of engineering at Dalhousie University. He was qualified as an expert in the field of Electrical and Computer Engineering, capable of giving opinion evidence on all aspects of wireless broadband Internet Technology.

A review of his qualifications demonstrates that he has been working since at least 2005 in areas relevant to the technology in this case. [ 40 ] In cross-examination, he explained that he was tasked to identify innovative aspects of the TDC technology as at 2004, and to determine whether there was information in the Province’s Request for Proposals that “could refer” to descriptions of TDC’s technology. [ 41 ] He concluded that, for its time, there were a number of technically innovative elements in the design of the delivery system.

He concluded that the Cockerills “had a leg up” in the use of the available research and technologies of the time. He opined that “They were really working on research”. [ 42 ] These elements included but were not limited to the design of the plaintiff’s technology which enabled them to provide wireless service to a large rural coverage area and at higher speeds than were available in rural Nova Scotia at that time.

Provision of “non-line of sight” service in 2004 was a “relatively new concept.” This was particularly important because rough terrain and heavy foliage reduced the “off the shelf” capabilities of the Motorola Canopy system that formed part of the TDC delivery system. It was the ability to overcome those obstacles that made this innovative. [ 43 ] Dr. Bousquet testified that most electrical engineers in the field would not have been able to deploy the TDC system. The knowledge needed was complicated and would take a lot of time to acquire. [ 44 ] I found Dr.

Bousquet to be credible and his opinion to be deserving of considerable weight. In saying this, I reject the defendant’s argument that his evidence should be afforded little weight because he acknowledged that he had not paid attention to the requirement set out in Rule 55.04(1)(

c) which states: 55.04

(1) An expert’s report must be signed by the expert and state all of the following as representations by the expert to the court: (

c) the report includes everything the expert regards as relevant to the expressed opinion and it draws attention to anything that could reasonably lead to a different conclusion; ... [ 45 ] It was readily apparent that in preparing his opinion and report that Dr. Bousquet looked for systems that could provide similar results to those of the plaintiff’s system. He has, by reason of his specialty, special browsing tools that he employed to conduct searches of scientific databases. He testified as to his search of published materials for the relevant time period and noted that he found only one

article published in 2004 that described a “somewhat similar” technology. In discussing this he drew attention to the differences in that system from that of the plaintiff. [ 46 ] He also undertook research as to whether other similar systems were in use in Nova Scotia at that time – there were none.

He did acknowledge the existence of satellite and DSL Cable delivery systems but did not discuss those in his report because they were not a part of the RFP criteria and operated differently. [ 47 ] In cross-examination he stated that he had no information as to whether other ISPs, like Eastlink or Seaside, were conducting research of a similar type of delivery system. In my view nothing turns on this. There is no evidence that they were doing this research. The results of the Cumberland pilot demonstrates that the successful proponent did not have the same capability as TDC had demonstrated. [ 48 ] Dr.

Bousquet was candid in acknowledging that there were aspects of the TDC system that he was not aware of and also that he did not test the system himself to see if it worked. This latter point is not controversial because Nancy Flam conceded in her testimony that the technology worked. Other witnesses also testified to the actual construction and successful operation of the system. [ 49 ] He also agreed that the pace of technology moves quickly and was unable to say how long the TDC delivery system would have remained at the forefront.

There are too many variables including whether TDC would have continued to maintain an advantage as it improved the system, and whether competitors committed to developing a similar product. [ 50 ] There is no evidence that contradicts Dr. Bousquet’s opinion, so while he may not have specifically turned his mind to the requirement set out in the declaration, it is apparent that he fulfilled the spirit of the requirement. I am confident that if he felt there was “anything that could reasonably lead to a different conclusion”, he would have told the court. [ 51 ] Roland McCaffrey testified.

He worked at Seaside Communications in 2005-2007. Mr. McCaffrey met with Carter Cockerill July 5, 2006, to explore a possible business relationship between Seaside and TDC. [ 52 ] He described the wireless system being used by Seaside in the relevant time period. Their delivery systems, which included the Motorola Canopy system for delivery of wireless internet service, could be differentiated from the TDC system in a number of particulars: • Seaside was not using a fibre optic feed;

• Seaside’s primary internet delivery was by cable which was expensive and required new cabling for new service areas; • Seaside only used a wireless system in a couple of locations that were line of sight, primarily across water where even then they encountered a fade in the signal caused by refraction.

They did not have the capability to deliver wireless internet through, around or over obstacles, as TDC could; • Seaside was not “lighting up” entire communities, as TDC was doing in Caledonia; and • Seaside was only deploying internet in a lateral band of 90-110 degrees, not 360 degrees that TDC was able to deliver. [ 53 ] Perhaps most significantly, Mr.

McCaffrey was the most knowledgeable of the defendant’s witnesses in relation to the technology utilized to deliver wireless internet service and he was not aware at that time of a technology that would deploy internet 360 degrees from a tower, as TDC was doing. [ 54 ] Whether TDC’s confidential information found its way into the RFPs will be addressed later.

With that proviso, I make the following findings in relation to the factors set out in Pharand : (1) the extent to which the information is known outside the owner’s business [ 55 ] The evidence shows that there were many public presentations in various parts of the province in which aspects of the delivery mechanism were discussed as part of the company’s marketing efforts. [ 56 ] At various times information that included some of the technology and/or the business plan was provided by the company on a confidential basis to various persons employed by the Province, ACOA and others engaged for the purposes of seeking assistance for the plaintiff’s operations. [ 57 ] Even then, the complete information that explained the components of the hardware, the configuration of the software and the interrelationship of the various components in making the system work were not known outside the TDC circle.

In fact, Dennis Cockerill maintained a largely exclusive understanding of the configurations that were essential to the operation of the system. [ 58 ] As evidenced by Roland McCaffery’s testimony, Seaside had only a rudimentary understanding of what TDC was doing, even after his meeting with Carter Cockerill to discuss possible joint business ventures. [ 59 ] If the plaintiff’s argument is accepted then the RFP(

s) provided sufficient information about TDC’s delivery system to direct the competitors’ lines of research and development.

Notwithstanding this “leg up” that the competitors might have been given, Eastlink requested an extension to the deadline for submission of a proposal for the pilot RFP stating in an email dated September 14, 2006, that: … to provide a comprehensive, credible solution to the Province of Nova Scotia will take several weeks of field work, engineering design, and related technical and financial assessment of wireline and/or wireless options. [ 60 ] It is apparent that Eastlink also did not know all that was necessary to develop the system, without some considerable investment of time and resources.

This of course does not answer the question of whether the RFP did, in fact, contain the information TDC alleges. (2) the extent to which it is known by employees and others involved in the owner’s business [ 61 ] As part of deploying the system in Caledonia it was necessary that a small, fixed group of persons that included the Cockerill brothers, family and employees were aware of the components of the system.

As pointed out previously, Dennis Cockerill maintained a largely exclusive understanding of the configurations and programming of the hardware and software that were essential to the operation of the system. There is no evidence that TDC’s information contained in the RFP(

s) was provided for the purpose of the Rural Broadband Project by any of those persons involved in TDC’s business. (3) the extent of measures taken by him to guard the secrecy of the information [ 62 ] I am satisfied that the principals of TDC made every reasonable effort to ensure the secrecy of their information. The plaintiff consistently and methodically sought to ensure that its business and technical information remained confidential. Where it was necessary for business reasons to disclose information they employed one or more of at least four different strategies to ensure confidentiality: 1.

A confidentiality agreement; 2. Notice to the recipient on the cover page of confidential documents that the information was “proprietary” and only to be used for authorized purposes; 3. Stating at the bottom of every page of a document that the information was “confidential and proprietary” to TDC; and 4.

Verbally or in writing advising people of their intention that the information be treated as confidential. (4) the value of the information to him and his competitors [ 63 ] The fact that Seaside and Eastlink needed significant grants of government money to try to replicate the TDC results in Caledonia renders it self-evident that the TDC information had value. If TDC had the same capitalization and a better business model, then it is reasonable to infer that in a fairly constructed tendering process it could have outscored its competitors in the bidding for the pilot project.

[ 64 ] Seaside was concerned that if the technology worked as TDC said, that it could open up their market in Cape Breton to unwanted competition, since they were not able at that point to provide the same service as TDC said that it could. Clearly, Seaside saw value in the system if it proved to work as described. (5) the amount of money or effort expended by him in developing the information [ 65 ] The testimony indicates that the Cockerill brothers devoted their time on a full time basis for three years (2004-2007) to develop and market the TDC delivery system.

The amount of $1,764,642.60 is alleged by the plaintiff to have been invested in the development of the system.

It was 2.5 years before they had the system developed and as noted above even large well-funded competitors were expecting significant challenges in developing a product that could provide similar results. (6) the ease or difficulty with which the information could be properly acquired or duplicated by others [i.e. by their independent endeavours]. [ 66 ] It is generally conceded that the technology of internet delivery systems advances so that what is cutting edge at one point in time may quickly become obsolete.

The cost of delivery to small remote population bases presents a deterrent to private internet service providers investing in better systems. The results of this project show that a large infusion of government money was necessary to attract the large private providers to the project. Mr. McCaffery felt that without provincial money the project goals could not be met as it was too expensive to privately fund 100% coverage as desired. [ 67 ] In this case, TDC demonstrated that it could deliver a broadband signal in a way that others in Nova Scotia did not.

So while others could develop the technology, it was not an attractive business proposition to do so, and even with substantial government funding it turned out to be a challenging task to meet the conditions set out by the Province in the RFPs. It is interesting to note that the pilot project was conducted in a topographical area quite unlike Queens. It was largely flat, following the Northumberland Strait and permitted line of sight delivery.

There were few large trees and the most significant hill in the Tidnish area required Seaside to “shoot” from Port Howe to New Brunswick and then back into Nova Scotia, rather than delivering the signal over or around the obstruction. [ 68 ] In addition to the technical aspects of the TDC internet project, the plaintiff developed what has been characterized as their “Business Plan” which was less detailed and used for promotional purposes. TDC provided a copy of this to Mr.

McCaffrey during the summer of 2006 when there was a meeting and some discussions as between Carter Cockerill and Seaside over a possible business relationship. The contents of that document are not particularly special to a competitor. [ 69 ] The more detailed “Business Proposal” was not shared with the world at large. It contained detailed technical information describing how the service would be delivered within a specified geographical location and how TDC intended to achieve the sought after service results.

This document was provided to various Regional Development Agencies for limited purposes that did not include use by the defendant’s Rural Broadband Project. [ 70 ] I have reviewed the evidence and conclude that the “Business Proposal” enjoys the same quality of confidentiality that the technical aspects of the TDC work product enjoyed. Conclusion as to Issue 1(a) [ 71 ] I am satisfied that the plaintiff’s technical information and its business proposals had the “necessary quality of confidentiality” required for the proof of the plaintiff’s case.

For reasons set out later in this decision I am also satisfied that the plaintiff’s technical information, business proposal and business plan were supplied by TDC to the defendant. Issue 1(b): Communicated in confidence Was the information communicated in confidence and in circumstances that imparted an obligation of confidence? [ 72 ] Again, the court in Pharand offers guidance in deciding this question: 154 Megarry J. in the Coco case, supra , in discussing the second element states that this is not a well-developed area of law where there are specific guides and tests to be exercised as an aid for the court.

He suggests that in the absence of such tests or guides, the test be one imparted from the law of tort, the test of the reasonable man. He states [p. 48]: It may be that that hard-worked creature, the reasonable man, may be pressed into service once more; for I do not see why he should not labour in equity as well as at law.

It seems to me that if the circumstances are such that any reasonable man standing in the shoes of the recipient of the information would have realised that upon reasonable grounds the information was being given to him in confidence, then this should suffice to impose upon him the equitable obligation of confidence. [ 73 ] Dennis Cockerill testified that he retained to himself the configurations and programming of the hardware and software, and that he deliberately kept this information to himself to avoid contamination of operations by multiple users.

I am satisfied that this information, together with the overall composition and operation of the delivery system was intended by TDC to be kept confidential. [ 74 ] Having said that, it is evident that TDC was required to provide information to various persons and in particular people who were employed by the defendant, or who were engaged by the defendant to assist in Ms. Flam’s “Rural Broadband Project”. I conclude that the plaintiff consistently and methodically sought to ensure that its business and technical information remained confidential.

Where it was necessary for business reasons to disclose information they employed various strategies intended to ensure confidentiality. ( infra , at para. 62) [ 75 ] I reject the argument that the plaintiff, through its principals, disclosed essential technical or business information to the public

or competitors in any way that constituted an intentional or unintentional surrender of the confidentiality attached to their business plans or technology. [ 76 ] I accept that the plaintiff, through its principals, did disclose its confidential information to various members of the Province of Nova Scotia, in particular employees of the Department of Economic Development. Everett Backman [ 77 ] Everett Backman was actively involved in assisting the Cockerills with the establishment of the “Caledonia Project” beginning in early 2005. His support of their work continued into 2007.

Over that time he was in close contact with TDC, in particular Carter Cockerill, and became privy to many business and technological aspects of TDC’s operations. [ 78 ] Mr. Backman was a very strong supporter of TDC. He saw the Cockerills as hard working, diligent, honorable, and deserving of any support he could contribute. In his view, their technology was a success in a region that he saw as the most difficult one in the province from both a business perspective (because of the demographics of the area) and a technological perspective because of the difficult topography.

He was of the opinion that if TDC could make their delivery system work in the Caledonia area then they could be successful anywhere in the province, but that funding and business guidance was needed to make it a reality. He consulted with and collaborated with representatives of his own Department, with ACOA, and InnovaCorp, among others, in efforts to obtain funding and business consulting assistance for TDC. [ 79 ] Relevant to this issue, Mr.

Backman testified that he believed that TDC was a client of the Province and that its information was to be treated as confidential, only to be used for purposes consented to by TDC. He resisted inquiries by those who he testified did not have TDC’s consent for access to their information. [ 80 ] Mr. Backman’s position was known to others. For example, he was asked to share TDC information with Nancy Flam. Ms. Flam admitted in cross-examination that Mr. Backman told her he could not share TDC’s information with her. In an email exchange of January 5, 2007, with Dan MacDonald, Ms.

Flam stated: I don’t know if Everett had access to the plan but he did say that he couldn’t share anything as the content was confidential…. which I guess makes sense. I know ACOA provided assistance to TDC regarding their financial analysis/statements through one of their programs. [ 81 ] In response Mr. MacDonald emailed: Let’s have the mtg with the minister, neil, me and see what we know. Neil will pump Everett before that mtg. [ 82 ] This is evidence that Mr. MacDonald and Ms. Flam knew that TDC information was not to be distributed to them.

It also shows a willingness to access it anyway by using Neil Conrad who was the Director of the Community Development Division in which Everett Backman worked. In other words, they intended to get Mr. Backman’s supervisor to “pump” Mr. Backman to disclose TDC’s information although they had already been told that it was not to be shared with them. Norman Cook [ 83 ] Mr. Cook was a Technical Advisor in Public Safety and Field Communications with the Nova Scotia Department of Transportation and Public Works.

His responsibilities in the relevant time period included the administration of the 30 provincially owned tower facilities located around the province that were part of the Nova Scotia Integrated Mobile Radio System. [ 84 ] These towers held equipment for a variety of users. The highest priority was given to public safety and emergency services communications equipment. Other users included Nova Scotia Power and Bell Mobility. His office received and vetted applications for use of the towers and managed the licencing costs charged to the users.

In particular, he was responsible for the “field work” necessary to ensure that the proposed licensee’s installations would meet a number of conditions that were necessary for grant of a licence including: • That the tower could safely hold the equipment; • That the installation would meet the standards set by the Province; • That Industry Canada approved of the use of the proposed bandwidth; • Confirmation that frequencies would not conflict with existing uses. [ 85 ] Between June 2006 and February 2007, Mr.

Cook was in regular communication with Carter Cockerill who presented an application to licence TDC to use some of the towers as points of presence for the delivery of rural broadband. TDC provided extensive information outlining the technical details of the equipment to be installed and the locations where it was to be installed. Mr. Cook was insistent on a great deal of this type of detail being provided to him. Once received he then in turn copied that information to his supervisor Blaise Fraser and to Nancy Flam. [ 86 ] Mr.

Cook testified as to the confidentiality that attached to the TDC information. [ 87 ] In an email to Nancy Flam dated January 19, 2007, Mr. Cook included information that he had received from TDC. In the email, which was in turn forwarded by Nancy Flam to Dan MacDonald, Mr. Cook states: As you know, this info’ is confidential since TDC is still a client whose research is proprietary. [ 88 ] In response to a series of questions in cross-examination he agreed with the following:

➢ That any information TDC gave him was confidential; ➢ That it was not to be used for any purpose other than what TDC specifically gave consent for; ➢ That the purpose for which TDC gave him their confidential information was to support its application to use the towers; ➢ That while no consent was given for him to provide the information to Nancy Flam or Blaine Fraser he viewed the duty to maintain confidentiality as extending to them because they “work as a team” and there is “confidentiality within government”. Neil Emenau [ 89 ] Mr.

Emenau, as the Executive Director of the Lunenburg Queens RDA, was responsible to the provincial Department of Economic Development, although funding was provided jointly by the federal, provincial and municipal governments. Approximately 60% of his work was in the business sector, helping proponents prepare business plans and seeking financing. He was introduced to the Cockerills in early 2005. [ 90 ] At that time, Eastlink was the only provider of internet service in the Lunenburg-Queens region and it was a wired service.

Attempts to have them expand their service were unsuccessful due to the lack of a good business case to do so. Similar approaches to Aliant were unsuccessful as the costs were perceived to be prohibitive for the provision of a wired service to a small area. [ 91 ] His agency provided some money to TDC to assist them in developing the broadband project in Queens. He outlined how, over the 2005-2007 timeframe efforts were made to assist TDC in obtaining public or private financing for their business.

These were unsuccessful as the company lacked an officer with adequate financial management skills. [ 92 ] He interacted with a number of persons and organizations in the course of his attempts to assist TDC. In his view their technology was “very strong” as was their ability to market the product. [ 93 ] As result of his various efforts on behalf of TDC he came into possession of their financial information. He testified that this information was received in confidence and that he was authorized to discuss it with Everett Backman.

He indicated that he would treat such information very carefully as he would with all businesses that he would be required to work with. [ 94 ] In cross-examination Mr. Emenau was referred to an email exchange as between himself and Nancy Flam January 30-31, 2007. In his email to Ms. Flam he states that a request for information about areas serviced with broadband access, originating with her, went initially to Neil Conrad, who referred it to Mr. Mallette, and down the organizational ladder to Mr. Backman who gave it to him. Mr. Emenau questioned Ms.

Flam as to the intended purposes of the information that he was asked to provide. He states: As you are aware, there is a small company in this area working diligently to provide high-speed broadband to unserviced rural areas. At this time, I will not provide information that potentially could be given to another service provider that will compete with this small startup company. [ 95 ] Ms. Flam responded: The information will be used to develop a rollout plan for enabling broadband availability to the unserved areas across Nova Scotia.

The Premier’s goal is to ensure that broadband is available to all Nova Scotia and so I would caution you against not including currently unserved areas. If you choose not to identify an area that is currently unserved and mark it as served, you may put that area at risk of continuing to be unserved. [ 96 ] In

summary, Mr. Emenau acknowledged receiving information in confidence from TDC understanding it to be his obligation to maintain that confidence. He conveyed that same belief to Ms. Flam. [ 97 ] To the extent that the request sought the plaintiff’s information Ms. Flam stated an intention to use whatever information she received as part of the Rural Broadband Project. Douglas Logan [ 98 ] Mr. Logan was retained in the late spring of 2006 by ACOA to review the business plan of TDC and to assess whether there was a business case to be made for its continued operation and ultimate growth.

He presented his final report entitled “TDC Broadband Financial Diagnostic and Market Analysis”, dated October 3, 2006. The Report begins with a “Notice to the Reader” that the information in the report “is intended for the exclusive use of TDC Broadband”. [ 99 ] In an email dated October 4, 2006 from Dan MacDonald to Mr. Logan he stated that he “heard you [Mr. Logan] were working on a rural broadband project…” and “would love to chat to you about it”. Mr. Logan then emailed Carter Cockerill requesting permission to speak to Mr. MacDonald. [ 100 ] Mr.

Logan followed this up with a second email dated October 10, 2006, in which he told Mr. Cockerill that he had informed Mr. MacDonald that he could not speak with him about TDC without Mr. Cockerill’s consent. Carter Cockerill responded by email granting “permission to confidentially discuss the Feasibility Study and information contained therein with Dan MacDonald of Innovacorp.” [ 101 ] In

summary, Mr. Logan received business information from TDC in confidence and acknowledged that he had an obligation to maintain that confidence. When Mr. MacDonald requested the information about TDC he was told that it was confidential and that release required Mr. Cockerill’s permission. [ 102 ] Mr. Logan testified that he would have distributed the report to TDC and to ACOA “probably”. He could not recall whether he had provided TDC information to anyone else.

Nancy Flam [ 103 ] The evidence clearly demonstrates that Ms. Flam was advised that the technical and business information of TDC was provided to employees of the defendant in confidence and for very limited purposes which did not include distribution of TDC information to the Rural Broadband Project, of which she was a coleader. [ 104 ] In cross-examination, Ms. Flam acknowledged that she had never sought nor obtained permission from TDC to use any of their information. She acknowledged as well that Mr. Backman told her that the information was confidential and that he would not share it with her.

Similarly, she acknowledged receipt of Mr. Cook’s email in which she was advised by him that the information he obtained from TDC was “confidential”. [ 105 ] As I will discuss in greater detail at a later point in this decision, Ms. Flam was determined to use her contacts within the Department to obtain the TDC technical and business information, notwithstanding that TDC was not asked for, nor had it provided, permission for their information to be made available for the Rural Broadband Project. Dan MacDonald [ 106 ] Mr.

MacDonald testified in cross-examination that the TDC Business Proposal was confidential and proprietary information as was their technology information. As a coleader of the Rural Broadband Project with Ms. Flam he was in regular communication with her and exchanged information about the project on regular basis. This included information received from Norman Cook, among other materials that would be relevant to the TDC project. [ 107 ] There is evidence to indicate that he too, independently, sought out information about TDC.

For example, Paul Hopper of CREDA sent an email dated June 21, 2006, that was responding to Mr. MacDonald’s request for information about Carter Cockerill and TDC. The email indicates that this was requested as a follow up to a meeting that Mr. MacDonald had with Mr. Hopper and the “Cumberland Group”. [ 108 ] There is also evidence from Mr. Logan which I referred to above indicating that Mr. MacDonald approached him to obtain information about TDC after learning that Mr. Logan had been engaged to work on their project. Mr. MacDonald would have known that any information obtained by Mr.

Logan in this capacity would have been confidential. [ 109 ] Mr. MacDonald also acknowledged receipt of a copy of Everett Backman’s email to Ms. Flam citing the confidential nature of the TDC information.

Conclusion as to Issue 1(b) [ 110 ] I am satisfied that beginning in 2005 and continuing into 2007 TDC’s information was communicated in confidence to various persons employed by the defendant in circumstances that imparted an obligation of confidence on the defendant. [ 111 ] TDC’s information was not provided to assist in the development of the “Rural Broadband Project” nor to assist competitors in meeting the objectives of the Province as set out in its Requests for Proposals. [ 112 ] Further, I am satisfied that the nature of the obligation was clear to the various employees of the defendant in that TDC information was being provided for very specific purposes related to developing its business plan, obtaining funding and obtaining access to provincial towers to act as points of presence for the delivery of their internet service. [ 113 ] I am also satisfied that the defendant’s employees, including Ms.

Flam, knew this to be the case from the outset. My conclusion is not founded on the January 2007 emails referred to above, as they are dated after the pilot RFP was drafted and awarded. In my view they are simply a subsequent confirmation of what was already well understood. Issue 1(c): Misuse (

c) By providing details of the Delivery Method and Business Model within the Cumberland Request for Proposals, did the defendant misuse the information, or use the information in an unauthorized manner? [ 114 ] The plaintiff alleges that its confidential information was used by the defendant in the drafting of the Request for Proposals for the pilot project. [ 115 ] The defendant’s officials who are central to this allegation were the co-leaders of the Rural Broadband Project, Nancy Flam and Dan MacDonald.

The Cumberland pilot RFP is labelled as “Prepared by Nancy Flam” but the evidence is clear that she relied heavily on Mr. MacDonald and others to assist in the drafting. [ 116 ] They needed the TDC information because of the tight timeframe in which to work but had no or insufficient technological background in this very complex area of science. Both had access to TDC’s information in the relevant time frame. Both knew that it was not available to them for use as part of the Rural Broadband Project.

Both deny having misused the TDC information. [ 117 ] The first question is whether there is evidence to support the allegation that TDC’s information was used in structuring the RFP issued in September 2006 seeking proposals for the Cumberland pilot project. [ 118 ] Dr. Bousquet gave evidence comparing the contents of the following documents: (

i) Exhibit 7, Tab 2: The TDC Business Plan;

(ii) Exhibit 7, Tab 3: The TDC Broadband “Cumberland County High Speed Internet Proposal” sent to Paul Hopper of the Cumberland Regional Economic Development Association on May 27, 2006 at 6:16:44 p.m. (also found as Exhibit 1, Tab 67); (iii) Exhibit 7, Tab 6: The Nova Scotia “Request for Proposals 60130191 Broadband Services for Rural Nova Scotia for the Office of Economic Development” created September 8, 2006 with a closing date of October 2, 2006 (the Cumberland Pilot), “Prepared by Nancy Flam, Corporate Strategist, OED”. (Also found as Exhibit 4, Tab 256, pp. 1701- 1723); (iv) Exhibit 7, Tab 8: The “Request for Proposals (RFP) Tender #60132228 Broadband for Rural Nova Scotia for the Department of Economic Development” created June 20, 2007, closing July 31, 2007. [ 119 ] Dr.

Bousquet was requested to analyze the contents of these documents to determine if the defendant’s RFP(

s) contained references to TDC’s technology. He concluded that there was information in the RFP(

s) that was consistent with the TDC technological information. [ 120 ] Dr. Bousquet indicates that the RFPs sought bidders to deliver broadband Internet to rural areas. Although wireless Internet at that time was still a new technology and competing with cable DSL and satellite communications, he concludes that the RFPs “strongly suggested” “wireless technology that is fully connected with the existing wired infrastructure… as a means of achieving cost-effective broadband Internet access to rural communities”.

He continues: In this aspect there are elements of the RFP that reuse the unique features of the wireless technology developed by TDC that are present both in the Business Plan and the Cumberland proposal. These unique features would only be understood by individuals who understand how to deploy cost-effective wireless technology and that techniques must be developed to route it to the International network. These are: 1) In the October 2006 RFP, wireless technology is strongly suggested. For example, in page 2,

Section 1.5, it is mentioned that: “it is likely that the same service providers will take advantage of state-of-the-art broadband wireless technologies”. 2) A map of the towers available in Nova Scotia currently equipped with VHF and Trunked Mobile Radio (TMR) technology is provided.

TMR operates in the 800 MHz spectrum and utilizes Motorola technology. 3) As written in the October 2006 RFP, bidders can deploy their own equipment on these towers, similar to what TDC Broadband had proposed to accomplish. 4) On page 4 of the October 2006 RFP, the government requests “network diagrams of how the local broadband network will connect to the regional, provincial and national systems and how users will access the local service”. This indicates that the network to be proposed will need to be connected through a dynamic IP allocation as was proposed by TDC.

The terminology used in this document is very similar to that written by TDC in the Cumberland County proposal, where they write: “TDC Broadband’s architecture is unique in that it provides local, provincial, national and international connectivity”. 5) On Page 4 of the October 2006 RFP, a process to ensure security is requested by the government, a service that had also been described by TDC Broadband. [ 121 ] In his review of the provincial RFP he states: 1) In

Section 5.1.3 of the 2007 RFP, the government also requests an analysis of the performance of the network where there are obstructions, such as foliage. This mode of operation was an important aspect TDC Broadband’s Business Plan in which it was referred to as a “non-line of sight” operation. 2) In the Appendix B of the 2007 RFP, there are some hints that the Motorola Canopy equipment should be used. They are: a. A point to multipoint link is described for operation at 900 MHz, which is the operating frequency of the Motorola canopy. b. The use of directional and omnidirectional antennas is recommended.

This type of equipment is included in the Motorola canopy product. [ 122 ] Dr. Bousquet makes the point, which I accept, that it is as much the concepts as the actual words which signal to the expert reader the significance of the information conveyed. [ 123 ] Dennis Cockerill gave extensive testimony in which he drew attention to the similarities in these documents. Taken individually the paragraph by paragraph comparisons offer seemingly vague similarities as between the Cumberland RFP and the TDC documents.

Many of the comments in the RFP would seem to be information that could be general knowledge or easily acquired in other ways than from the TDC proposal. There are some common phrases or language used in the respective documents. [ 124 ] Mr. McCaffrey confirmed (unknowingly) Dr.

Bousquet’s assessment of the Cumberland RFP when he testified: The tender was clear on what they wanted to do but you don’t always have to follow the tender requirements but if you don’t the chances of being kicked out of the tender process are clear and you are taking a risk but sometimes you can ask for certain exemptions in the tender or you can ask for clarifications… [ 125 ] In preparing the Seaside bid for the pilot project Seaside decided to use the Motorola Canopy system, which they had some experience with as described previously. Mr.

McCaffery estimated that the cost of preparing the Cumberland proposal was $10,000- $20,000, plus a “couple hundred hours” of time expended by consultants and in house employees. So even though the tender was “clear” an experienced ISP found that there was much work necessary to even make a proposal to meet the defendant’s objective of rural broadband internet access.

[ 126 ] The weight to attach to Mr. Cockerill’s (and Dr. Bousquet’

s) evidence is gauged by the degree to which one accepts that what appears as relatively unscientific language conveys a more substantial meaning to the reader who is technologically proficient in the science being described. Having considered the totality of the evidence I conclude that the RFPs do communicate specialized information to those who bid or intended to bid on the project. It was intended, as Mr.

McCaffrey stated, to convey a desire to achieve a result that paralleled, if not copied, the results of the Caledonia project. [ 127 ] When the evidence is taken in its entirety the contents of the TDC Proposal sent to Mr. Hopper at CREDA in May 2006 provided a “recipe book” for the drafting of the Cumberland pilot RFP. Mr. Hopper was one of the persons that Ms. Flam identified as contributing to the drafting of the RFP. [ 128 ] The commonality of contents of the TDC Proposal and the pilot RFP is challenged by the defendant’s textual analysis of the RFP and the TDC information.

Counsel’s submissions attack the comparisons drawn by Dennis Cockerill and asks the court to conclude that all of the individual points of comparison identified by Mr. Cockerill are inconclusive or unconvincing. Therefore, it is argued, the overall conclusion that there was a misuse of information fails. [ 129 ] This argument does not, in my opinion, adequately respond to the argument that the significant number of topics that overlap between the two documents is too much to be coincidence. [ 130 ] Ms. Flam was technologically unsophisticated.

She testified that she relied upon Dan MacDonald for the “technical requirements” in the RFP. Mr. MacDonald’s evidence as to his contributions does not adequately explain the degree of overlap that I find in the two documents. [ 131 ] Again, it must be remembered that this RFP was put together in less than 6 months from when Ms. Flam took over the project and less than 4 months from when Mr. Hopper received the TDC proposal, which was then attached to CREDA’s proposal for the pilot project.

See , Exhibit 3, Tab 186. [ 132 ] Counsel for the plaintiff summarized Dennis Cockerill’s comparison evidence in a chart included at paragraph 68 of their post- trial submissions. [Note: there is an error in the exhibit number associated with the Cumberland Proposal; it is in Exhibit 4 at Tab 238, pages 1482 – 1522, not Tab 239]. [ 133 ] Mr.

Cockerill identified approximately 22 portions of the Cumberland RFP that he correlated with approximately 28 portions of the TDC proposal to CREDA. (In some instances a specific portion of the RFP may refer to more than one place in the Proposal and in other instances a specific portion of the Proposal may be found in more than one part of the RFP). [ 134 ] The following terms generically describe topics that are in common to the two documents; the meaning of the terms may be found in the evidence and the list is not meant to be all inclusive: ➢ Adaptability ➢ Redundancy ➢ Reliability ➢ Scalability ➢ Excess Capacity/Expandable ➢ Project Management/Project

Schedule ➢ Technical Standards ➢ Performance Specifications ➢ Security ➢ Ongoing maintenance/ Network Reliability ➢ Confidentiality and proprietary nature of the contents ➢ Regulatory Compliance ➢ Environmental Specifications [ 135 ] “Appendix B” of the Cumberland RFP is a map showing the intended coverage area for the broadband access. Mr. Cockerill testified that TDC prepared that map.

He is partially correct but perhaps not for the reasons that he believed. [ 136 ] In my review of the evidence there are three versions of the Cumberland coverage map, one of which is flawed in that it was reproduced in the materials as a very small geographic area (possibly a reproduction error). [ 137 ] The other two may be distinguished for ease of reference by the border of the coverage at the northeast corner of the area. In one version the coverage area stops at a point between Port Howe and Pugwash (the smaller area).

In the other version (the larger area), the boundary is to the east of Wallace, several kilometers further east than in the first version. [ 138 ] Carter Cockerill emailed two versions of Cumberland coverage maps to Paul Hopper of CREDA on May 27, 2006. The smaller area map was emailed May 27, 2006 at 6:07 p.m. attaching the TDC Business Proposal to CREDA. That map can be found in Exhibit 1,

Tab 66 at page 373. [ 139 ] A few minutes later, at 6:16 pm, Carter Cockerill emailed a second version to Mr. Hopper attaching a corrected map showing the larger coverage area. This is Exhibit 1, Tab 67, at page 384. This version was attached to the TDC tender for the pilot which includes the larger map at page 1502 (and also shown at p. 1822). [ 140 ] The Cumberland RFP at Exhibit 4, Tab 251, at page 1666 (also found at p. 1721) includes a coverage map with the Northeast border at the same location as in the first one sent by Carter Cockerill to Paul Hopper at page 373. i.e., the smaller area.

This map is labelled as “Prepared by Service Nova Scotia… Nova Scotia Geometrics Centre” and cites the “Source Data” as “NS Atlas, June 2001 (revised). [ 141 ] The RFP map varies slightly along the southern border from that in the TDC smaller map sent to Mr. Hopper in error, and also does not extend as far into the Northumberland Strait as the TDC map but its boundary at the northeast corner is a distinct location that matches the TDC smaller area. [ 142 ] The evidence satisfies me that Paul Hopper was an active participant in drafting the pilot RFP and in close contact with Nancy Flam.

He had a copy of the TDC proposal to CREDA and the opportunity to make it available to the Project team. It is probable, in my estimation, that Mr. Hopper provided the erroneous first map to Ms. Flam or someone on the project team and that it became the template for the final version included in the RFP; or that as a result of his involvement in drafting the RFP he provided it specifically for that purpose.

Like the text of the RFP, it borrowed liberally on TDC ideas, but without replicating them identically. [ 143 ] Counsel for the plaintiff has also directed me to a distinct textual error that I am urged to accept as a further indicator that the defendant was using the TDC information improperly. [ 144 ] TDC incorrectly used the word “premise” where it intended the word “premises” in its Business Proposals. This error was identified in 40 different locations in the TDC documentary evidence presented in the trial.

One of those is found in its Cumberland Business Proposal at Exhibit 3, Tab 238, page 1490 where it states in respect of the expense of satellite technologies: Satellite connections-These use satellites to provide “cable” TV as well as Internet connections to residential and remote consumers. This technology is costly to purchase and install at the customer premise and is quite expensive to use on a monthly throughput plan. (emphasis added) [ 145 ] In an email to Dan MacDonald, dated August 28, 2006, Nancy Flam attached a draft copy of the RFP which she describes as containing some changes that she had made.

The tracked change found in Exhibit 4, tab 250, at page 1637 states: There have been also emerging service offerings based on satellite technologies.

However, functionality and price (customer premise equipment, installion [sic] and costly monthly connectivity costs) seemed to have affected the take-up of this offer. (emphasis added) [ 146 ] The erroneous use of the word “premise” is repeated in the final version of this paragraph located under heading 1.5 found in the Cumberland RFP at Exhibit 4, tab 251, at page 1653. [ 147 ] Counsel for the plaintiff is correct in saying that the word “premise”, as found in various dictionaries, is properly defined as a “previous statement or proposition from which another is inferred or follows as a conclusion”.

There are other alternate

definitions for the word, but none describe it as the singular version of the word “premises”. The latter word does refer to houses, buildings and other forms of property, and is clearly the correct word for use in the context of the RFP provisions set out above. [ 148 ] I will add to this that the context for the use of the term in the RFP and in the TDC material is identical. i.e., The high cost of satellite-based Internet delivery systems. I accept that this is further evidence that the RFP drew on the contents of the TDC Business Proposal to CREDA.

The evidence of the defendant as to the manner in which the RFP was composed. [ 149 ] In 2006, 72% of Nova Scotia communities and 85% of Nova Scotia’s population had access to broadband internet connectivity. Nancy Flam was appointed as leader of the defendant’s Rural Broadband Project in March 2006 and was directed to fulfill the government’s promise to increase that to 100% broadband internet coverage by 2009. [ 150 ] She faced many challenges, the most significant of which were her complete lack of knowledge about the technology involved and a very tight time line in which to complete the project.

As she testified, from the onset there was “a lot of pressure” being exerted on her by her Director and that she “was continually asked - when will this be done? When will this be done?

When will this be done?”. [ 151 ] None of the established ISPs were attempting nor interested in servicing that remaining segment of Nova Scotians because it was a population that was difficult to reach with the existing technologies, without the density to make it economically attractive and with demographics (as demonstrated in Caledonia) where the take up rate was not guaranteed. [ 152 ] As of March 2006 the plaintiff was the only ISP that had taken up the challenge and, with relatively minimal government financial assistance, had developed a delivery system that was proven to work.

The business model, however, was not proving to be successful in that region due largely to the low uptake of service. In time TDC ran out of capital. [ 153 ] Ms. Flam engaged Dan MacDonald as her co-leader. The parties did not seek to qualify Mr. MacDonald to give opinion evidence. In his testimony he admitted that while he was relied upon to provide technical guidance to the project he was not an engineer and not so proficient that he could design internet technology. In cross-examination, after being directed to his earlier Discovery evidence, he

agreed that he did not provide technical expertise on the drafting of the RFPs. [ 154 ] There is evidence that Ms.

Flam engaged a “technical advisor” from Dalhousie University to participate as a member of the team that evaluated the pilot RFP bids, but no evidence was adduced to show that similar technical expertise was employed for the drafting of the RFP itself. [ 155 ] So the question is: how did this project, relying upon persons who apparently did not have substantial technical expertise choose a suitable pilot area by the end of May 2006, design and issue an RFP for the pilot project by September 2006, and then design and issue a RFP in June 2007 that was to determine which ISPs would service the province?

The plaintiff says that I should draw the inference from the proven facts that this was accomplished by using its confidential information. The defendant says the evidence does not support such a conclusion. [ 156 ] There are a number of troubling elements in the responses of Ms. Flam to the TDC and RQM entreaties for government assistance during the May to September 2006 period. It is clear that TDC had serious financial problems and were not sustainable if relying on its own resources. That is not in issue. [ 157 ] Mr. Backman described Ms.

Flam as “cool” toward TDC and that he could not understand why, given the success of their work in Queens. [ 158 ] On August 17, 2006, Ms. Flam sent an email (Exhibit 3, Tab 199, at p. 1245) to Peter Wright of ACOA seeking “financial statements and projections” being prepared by Doug Logan. She also wanted any “technical, operational or support aspects” of the TDC project. [ 159 ] The following day, August 18, 2006, Ms. Flam presented a Briefing Note (Exhibit 4, Tab 248, page 1629) to her CEO about an

article to be released in a Queens County newspaper that would call into question the selection of Cumberland over RQM for the pilot project. Her comments are revealing. She outlines private financial information of TDC that she testified would probably have come from Neil Conrad’s Division (Mr. Emenau and Mr. Backman worked there), and ACOA. Mr. MacDonald thought some of the contents looked familiar to him, but he could not recall contributing to the Note. Ms.

Flam’s Note included: ➢ TDC’s attempts to find financing at a Credit Union; ➢ the assistance provided to TDC by ACOA (the Doug Logan report); ➢ her belief that “If TDC goes under, there are at least 2 companies that are interested in buying them out and continuing to deliver the service.” ➢ She expresses a lack of understanding for why TDC wouldn’t partner with these companies. (Of course, Seaside had just met with TDC a few weeks before this which begs the question of her source for this information). [ 160 ] The note also includes an assertion that a “sustainable” model, which TDC’s “model was anything but”, meant that any such proposal would “require minimal, if any, government funding.” This of course was not accurate.

Mr. McCaffrey testified that this project would not proceed without substantial government assistance and that Seaside received $430,000 without conditions attached as part of its start up on the pilot project. It is difficult to believe that by August of 2006, when she prepared this Note, Ms. Flam did not understand that substantial government funding was going to be necessary and that it was available to the successful proponents. It was disingenuous of her to suggest otherwise. [ 161 ] In responding to questions about the drafting of the pilot RFP Ms. Flam testified that in addition to Mr.

MacDonald, she relied upon the input of Norm Cook and Paul Hopper in drafting the RFP. Paul Hopper’s contribution to the RFP is evidenced in Exhibit 4, Tab 249 at p. 1631. Both of the latter, of course, had intimate knowledge of TDC’s technology and/or business proposals and were possible sources for including TDC’s information in the RFP. [ 162 ] Ms. Flam denied inputting

section 2.2, ( see , Exhibit 4, Tab 257 at page1733) which contains the detailed description of the proposed broadband service. This is a multi-point

section which contains much of the information that Dennis Cockerill identified as correlating to the TDC Business Proposal. She testified that this information “…would have come from either Dan or from a previous [RFP].”. [ 163 ] Dan MacDonald testified that he may have contributed to sections 1.3, 1.5, 3.9. Later he was referred to Exhibit 4, Tab 250 at pp. 1633-1649. This was the draft RFP Nancy Flam sent to him on August 28, 2006. Mr. MacDonald identified contributions that he made, in particular at pages 1638- 1640 which was an earlier draft of

section 2.2. When asked where his contributed information came from he answered that it would have originated with himself. He later testified that: I don’t recall specifically where I obtained that text….. I would say I had in my opinion I would have a fairly deep knowledge of those headings. When we were looking at other projects like this around the world we would of pulled different knowledge from different documents, different websites, etc. across the world and tried to come up with a logical way to present these different issues. [ 164 ] Ms.

Flam acknowledged that information about TDC’s financial problems was a factor in their low score on the pilot project RFP result. She could not remember who “on the evaluation team” provided TDC’s “financial and management restructuring” information. She could not remember who brought information to the discussion about TDC’s suspension of service in late July 2006. [ 165 ] The 2007 RFP for the provincial rollout was put to tender after the plaintiff went into bankruptcy. Dr. Bousquet noted similarities in this RFP with the TDC information. [ 166 ] Ms.

Flam was cross-examined on a number of aspects of this provincial RFP and how it was constructed. While the plaintiff does not rely on this in support of its claim, it does reflect the continued access to and probable use of TDC information to guide the

construction of the RFP. [ 167 ] For example, Exhibit 5, Tab 286 at pages1968-1970 is in attachment to an email dated June 18, 2007, from Todd Brown to Nancy Flam setting out three “deliverables” for inclusion to the RFP. The third is “Specification – Wireless Broadband Equipment”. Many of the equipment specifications point to the delivery system used by TDC. [ 168 ] An ensuing exchange of emails involving Dan MacDonald, Nancy Flam and Todd Brown focus on the degree of specificity they would include in the RFP to identify the use of the Motorola Canopy system and the 900MHz band.

On the latter question it was offered that Norm Cook recommended the 900 MHz because of its “superior coverage” and ability to “penetrate foliage”. This is the type of information that Norm Cook obtained from the Cockerills when they were negotiating the use of the provincial towers for use in the delivery system. Conclusion as to Issue 1(c) [ 169 ] There is a conflict in the evidence on this issue. I have concluded that the position of the plaintiff has been proven notwithstanding the evidence of Ms. Flam and Mr.

MacDonald that the plaintiff’s confidential information was not used in the Rural Broadband Project, a purpose for which they acknowledge TDC had not given consent. [ 170 ] The defendant’s employees had the need for TDC’s information and sought it out.

The evidence establishes that this information came into the possession of various employees of the defendant for certain well defined purposes and that some of those same persons were actively involved in drafting the pilot RFP. [ 171 ] The question of whether the information found its way into the pilot RFP is resolved by having regard to the totality of the evidence. I accept the evidence of Dr. Bousquet and that of Dennis Cockerill. Dr. Bousquet is an expert in the area and one whose opinion I accept as worthy of considerable weight.

His testimony and report were objectively based and fairly described. [ 172 ] While Dennis Cockerill was significantly affected by the failure of TDC I found his evidence also to be credible and consistent with the conclusion that TDC’s information was misused by the defendant. As the developer of the system, he had a keen understanding of the technology that TDC developed and was able to relate that information to the RFP. He was also aided in notes made at the time. [ 173 ] I am satisfied that the evidence establishes that the TDC’s confidential information was used to assist in constructing the pilot RFP.

The evidence of Roland McCaffery supports the plaintiff’s view that a person with expertise in the discipline would understand what the defendant intended by the contents of the RFP. [ 174 ] The events that are the subject of this action occurred approximately 9 years before the principal parties were called upon to give their testimony in a trial. For those like Ms. Flam and Mr. MacDonald it is a long time to try to recall important details and their testimony reflected that problem. In particular Ms.

Flam could not recall, beyond generalities, who contributed what information to the draft of the pilot RFP, and similarly certain of TDC’s confidential information used in the assessment of TDC’s bid for the pilot project. No other logical explanation was offered to explain how so much of the TDC information was referenced in the pilot RFP. [ 175 ] Mr. MacDonald testified that he contributed to various parts of the pilot RFP, and notably much of paragraph 2.2 which Dennis Cockerill argues was based upon TDC’s information. I found Mr.

MacDonald’s evidence to be vague and unconvincing when asked the sources of the information he used in preparing this text. It may be that he had the knowledge base to contribute this information and it may be that he was able to locate this kind of detail from internet references and his memory of previous experiences in the industry, but even if that is so it does not eliminate the use of TDC information in the drafting, which was similar in so many subjects areas. [ 176 ] In

summary, I am satisfied that the confidential technical and business information of the plaintiff was used by members of the defendant’s Rural Broadband Project which operated under the direction of Nancy Flam. I am further satisfied that Ms. Flam and others working on the project or within government divisions who had access to that information were aware that the information was confidential and that no permission had been granted by the plaintiff for use in the Rural Broadband Project.

Conclusion as to Issue 1: [ 177 ] In consequence of these findings I conclude that the plaintiff has proven that the defendant is liable for breach of confidence. Issue 2: Remedy [ 178 ] The plaintiff submits that the defendant’s breach of confidence caused it to suffer a compensable loss. TDC seeks damages for economic loss in the amount of $2,495,000; special damages associated with its bankruptcy in the amount of $56, 147; general damages of $300,000; punitive damages of $275,000; together with prejudgment interest, costs and disbursements. [ 179 ] Liability and damages were tried together in this trial.

The plaintiff’s focus was on demonstrating the complete loss of value for the delivery system. The calculation of damages flowed from that premise. I have concluded that the loss of value was something less than that claimed. [ 180 ] There were two significant aspects of the plaintiff’s confidential information used by the defendant to construct the RFP. The first was the Business Proposal, spoken to at length by Dennis Cockerill. The second was described by Dr. Bousquet who identified 5 different aspects of the TDC information in the pilot RFP. These are more fully described in paragraph 120, infra .

They may be summarized as: 1. identification of wi

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