Geophysical Service Inc. v. Hunt Oil Company of Canada, 2017 NSSC 344

Supreme Court of Nova Scotia Citation: Geophysical Service Inc. v. Hunt Oil Company of Canada , 2017 NSSC 344 Date: 20170504 Docket: Hfx No. 420361 Registry: Halifax Between: Geophysical Service Incorporated Plaintiff v. Hunt Oil Company of Canada Defendant Library Heading Judge: The Honourable Justice Patrick J. Murray Heard: February 28, 2017, in Halifax, Nova Scotia Written Decision: May 4, 2017

Summary: [ 1 ] GSI filed a motion seeking a ruling on pre-trial disclosure between it and the Defendant, Hunt Oil and sought a confidentiality order to protect information. [ 2 ] Issues: 1. Should a Confidentiality Order be issued? 2.

Should GSI’s disclosure obligations be modified? [ 3 ] Result: [ 4 ] Court not satisfied that it would be in accordance with law to grant a confidentiality order as required by Rule 85.04 , which order is now sought in lieu of modified disclosure on this second issue. [ 5 ] GSI’s motion was dismissed with costs to the Defendant. [ 6 ] Court granted the Defendant’s request for “throw away” costs in the amount of $500.00 payable forthwith. Costs of the motion awarded to the Defendant in the amount of $2,000.00. [ 7 ] Cases and Rules cited: Sierra Club of Canada v.

Canada , 2002 SCC 41 ; Canadian Financial Wellness Group , 2014 NSCA 98 ; Foster Jacques , 2012 NSCA 83 ; Scotia Innovators Inc. v. Bartlett Plastics & Precision Machine Ltd , 2004 NSSC 113 . Civil Procedure Rule : 14.08; 38.02; and 94.06. THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET. SUPREME COURT OF Nova Scotia Citation: Geophyiscal Service Inc. v. Hunt Oil Company of Canada , 2017 NSSC 344 Date: 20170504 Docket: Hfx. No. 420361 Registry: Halifax Between: Geophysical Service Incorporated

Plaintiff v.

Hunt Oil Company of Canada Defendant Judge: The Honourable Justice Murray Heard: February 28,2017 in Halifax, Nova Scotia Written Decision: May 4, 2017 Counsel: Gobhina Nagarajah, for the Plaintiff, Geophysical Service Incorporated Daniel Watt, for the Defendant, Hunt Oil Company of Canada By the Court: Introduction [ 8 ] The Plaintiff, Geophysical Service Incorporated (“GSI”) filed a motion seeking a ruling on pre-trial disclosure between it and the Defendant, Hunt Oil Company of Canada, (“Hunt Oil”). [ 9 ] In addition, the Plaintiff seeks a confidentiality order to protect information that it says is very confidential, and for which it has worked hard to keep confidential. [ 10 ] On the motion GSI sought three remedies as follows: 1.

Further disclosure from the Defendant, Hunt Oil; pursuant to Rule 14.12 ; 2. Modification of GSI’s disclosure obligations; pursuant to Rule 14.08 ; 3.

A confidentiality order that the court Record be kept confidential; pursuant to Rule 85.04. [ 11 ] The Defendant, Hunt Oil opposes the relief sought by GSI on the basis that GSI has failed to discharge its onus to prove, with cogent evidence that: 1) the open court principle should be displaced; 2 ) that the presumption of full disclosure should be modified; and 3) that the additional protection sought is necessary. [ 12 ] There has been several changes in GSI’s position since the motion was originally filed.

By letter dated February 21, 2017 GSI’s counsel advised the Court that they would not be seeking further disclosure from Hunt Oil (#1 above). [ 13 ] In addition GSI’s counsel advised the Court at the motion hearing on February 28, 2017, that it was no longer seeking an order with the terms contained in the draft order filed with the Court, as proposed. I will address this later. [ 14 ] The remaining issues therefore are: 3. Should a Confidentiality Order be issued? 4. Should GSI’s disclosure obligations be modified?

Background [ 15 ] GSI is a seismic service company which provides seismic data services to the oil and gas industry. As such the Plaintiff maintains it is the owner of certain confidential information, intellectual property and trade secrets. [ 16 ] Hunt Oil is an oil and gas company whose primary business was exploration and production activities.

Following a sale of its shares in February, 2016 Hunt Oil ceased operations in Canada. [ 17 ] In 2005 GSI and Hunt Oil entered into a licence agreement whereby GSI agreed to licence seismic and geophoto materials to Hunt Oil for a fee. [ 18 ] In this action GSI claims against Hunt Oil various breaches of contract, and other wrongful acts relating to the acquisition by Hunt Oil of those materials. [ 19 ] Included in the claims by GSI are copyright infringement, breach of confidence and unlawful acquisition and disclosure of the

materials by Hunt Oil. [ 20 ] The materials filed on this motion including Affidavits are as follows: Filed by Document Date Sworn Date Filed GSI Affidavit of P. Einarsson July 25, 2016 September 28, 2016 GSI Affidavit of P. Einarsson February 7, 2017 February 9, 2017 Hunt Oil Affidavit of B. Robertson February 16, 2017 February 21, 2017 Hunt Oil Affidavit of Daniel Watt February 14, 2017 February 16, 2017 GSI Rebuttal Affidavit of P. Einarsson February 22, 2017 February 23, 2017 [ 21 ] In Mr.

Einarsson’s affidavit sworn February 7, 2017 he states in paragraph 3, that he has reviewed the Brief of Fact and Law filed February 9, 2017 and confirms that the facts detailed in the brief at paragraphs 1 – 10, 15 – 17, 25 and 30 are true to the best of his knowledge and belief. [ 22 ] This is not what the Rules require. The Rules for affidavits require the affidavit itself to state that the information is within the personal knowledge of the affiant, except where stated to be based on information and belief.

In addition the Rules call for the source and the affiant’s belief in the source to be stated. [ 23 ] In addition as per the law in Waverly (Village) v. Nova Scotia (Municipal Affairs) , 1993 NSSC 71 , and the Civil Procedure Rules , the affidavit should not take on the nature of a plea or submission. [ 24 ] I turn now to deal with the issues on this motion. Issue #1 – Should a Confidentiality Order be issued? [ 25 ] GSI submits that the evidence in support of the motion meets the multipart test set out in Sierra Club of Canada v.

Canada , 2002 SCC 41 , for the granting of a confidentiality order. [ 26 ] That test was confirmed by the Nova Scotia Court of Appeal in Canadian Financial Wellness Group , 2014 NSCA 98 at paragraph 26 as follows: [26] To summarize the test’s two branches, the judge determines whether (1) the confidentiality order is necessary to prevent a serious risk to an important public interest, because reasonable alternative measures would not alleviate the risk, and (2) the salutary effects of the confidentiality order, that may include the promotion of a fair trial, outweigh its deleterious effects, that include a limitation on constitutionally protected freedom of expression and public access to the courts.

For the first branch, the important interest must (

a) be real, substantial and well-grounded in the evidence, and (

b) involve a general principle of public significance, rather than be merely personal to the parties, while (

c) the judge’s consideration of reasonable alternative measures must restrict the confidentiality order as much as possible while preserving the important public interest that requires confidentiality. [ 27 ] Rules 85.01 and 85.04 are relevant to the motion. These rules recognize the need for court records to be open to the public and that keeping a record confidential is the exception.

It may only be kept confidential if it is in accordance with law to do so. [ 28 ] GSI submits in this case it is lawful for a confidentiality order to be granted because there is a serious risk to an important commercial interest; that interest being GSI’s protection of its trade secrets, confidential information, copyright, and intellectual property. [ 29 ] GSI argues it has always taken steps to protect this information, and that the seismic materials and geophoto materials are highly technical requiring specialized skill and knowledge.

GSI says the materials are the result of such special knowledge and “know how” by its employees and from the use of specialized photo equipment. GSI says these materials have always been treated as confidential. [ 30 ] Hunt Oil argues in this motion that there is no solid evidentiary basis for the order sought, only “bald assertions” that there is a serious risk to GSI’s interest. [ 31 ] Hunt Oil submits that GSI must establish not only that the information is confidential, but how the “public” interest could reasonably be harmed.

Hunt Oil says this has not been done. [ 32 ] Hunt Oil says there is in fact, no public interest but only GSI’s “legitimate business interests”, as set out in the July 25, 2016 affidavit of Mr. Einarsson at paragraphs 6 & 7. [ 33 ] Further, Hunt Oil argues based on decisions such as Geophysical Service Inc. Encana Corp , 2016 ABQB 230 , that the importance of confidentiality, is outweighed by the public interest to that information after a certain period of time.

This Hunt Oil says is shown by the information submitted to the regulators. [ 34 ] Hunt Oil further submits the order GSI seeks is sweeping and overly broad. [ 35 ] I have reviewed the affidavits evidence submitted by GSI, and in particular, the rebuttal affidavit of Mr. Einarsson filed February 23, 2017. [ 36 ] I have paid particular attention to paragraphs 13, 14, 15, 17, 21, 28, 31, 33 and 35. I noted once again, paragraph 4 which states that paragraphs 48 and 49 of the Brief of Fact and Law are confirmed and that those paragraphs were left out of paragraph 3 of his February 7, 2017 affidavit in error.

This, was after Mr. Watt had submitted his brief on behalf of Hunt Oil. [ 37 ] I am satisfied GSI has always treated the seismic material and geophotos as confidential. I am further satisfied that GSI has

taken steps to protect this information with confidentiality provisions in leasing agreements, with labelling, and in commencing litigation to protect their interest. [ 38 ] As to whether there is a real risk grounded in the evidence that its proprietary commercial interest will be harmed, that is less clear from the evidence. [ 39 ] The evidence shows that this is a highly competitive industry and that it would be available for inspection by competitors and companies associated with the Defendant by accessing the court record. [ 40 ] As such GSI argues without an order their interest could be harmed. [ 41 ] GSI says the information is “too expensive” and “too technical”, not to be protected. [ 42 ] The test in Sierra requires that the important commercial interest in question must be capable of being expressed submits in terms of a “public interest” in confidentiality. [ 43 ] GSI submits what is at play is in this case is the public’s interest in fair competition and the ability of a company to protect it’s propriety information and intellectual property.

This GSI says is what drives technological progress and innovation. [ 44 ] There is a burden of proof that GSI is required to meet on this motion. [ 45 ] At the motion hearing GSI’s counsel advised they upon review were no longer seeking the extent of the protection in the Order submitted on the motion. [ 46 ] This has made the motion somewhat confusing in terms of the relief sought. [ 47 ] In abandoning the original order, GSI asks the Court to determine what protection will best suit their need while still being required to meet the test set out in Sierra . [ 48 ] The Court has difficulty with this approach, especially when the test requires the Court to consider “not only whether reasonable alternatives to a confidentiality order are available but also to restrict the order as much as possible.” ( Canadian Financial Wellness at paras. 26, 26). [ 49 ] The test stated in Sierra and summarized in Canadian Wellness requires that this must be “alive to the fundamental importance of the open court rule”. [ 50 ] As stated this Court has an obligation not only to consider reasonable alternatives to a confidentiality order but to restrict the order as much as reasonably possible, while still preserving the interest in question. [ 51 ] The Plaintiff GSI says the reason for its changed position is that the original order is too restrictive, and that it is not appropriate. [ 52 ] Under the Sierra test the Court must determine whether the confidentiality order is necessary (to prevent a serious risk to an important interest), and whether the salutary effects of the proposed order is outweighed by its deleterious effects, the latter being the second branch of the test. [ 53 ] GSI’s counsel points to alternative forms of orders contained in the Defendant’s affidavit (that of its solicitor Mr.

Watt) at Tabs G and H. I note that the Plaintiff has attached a form of order to the rebuttal affidavit of Mr. Einarsson as Exhibit “K”, which is a consent order, but GSI has not said that is the new order they are seeking. [ 54 ] Ordinarily the form of an order is dictated by the decision of the Court. The Court makes its decision and an appropriate order follows that would represent the result of the Court’s decision. [ 55 ] In this case, the first branch of the test requires the Court to consider certain factors including reasonable alternatives to an order.

Also the court must restrict the order as much as is reasonably possible. [ 56 ] In my respectful view GSI has failed demonstrate with any certainty the provisions it seeks in an order and accordingly how such provisions will address the specific confidentiality concerns.

This makes it most difficult for the Court to consider reasonable alternatives to the order and for the court to restrict the order because it is left to the Court to define the terms of the order. [ 57 ] It is not a sufficient discharge of the Plaintiff’s burden to refer the Court to similar types of orders that courts have granted in other cases. Those cases have their own facts and circumstances and the orders are often arrived at by consent.

Decision on Issue #1- Confidentiality Order [ 58 ] Under Rule 94.06 a rule that permits a party to make a motion for an order gives a judge the discretion to grant the order or provide relief that is in the judge’s discretion. [ 59 ] On the motion there is a burden of proof on the moving party to clearly establish the grounds for the motion on a balance of

probabilities. This is the case with a motion for a confidentiality order. (See Foster Jacques , 2012 NSCA 83 paragraph 23 – 34 ) [ 60 ] I have concluded that GSI has not been clear as to the relief it is seeking, in terms of the confidentiality order. This has impacted on their ability to meet the burden of proof. [ 61 ] It is their onus to prove with specific and cogent evidence that a confidentiality order is necessary to dispense of the open court principle.

Rule 85.01 states that this shall be done only in exceptional circumstances. [ 62 ] While I am satisfied that GSI has accumulated confidential information with a reasonable expectation of it being kept confidential, I am not satisfied that the motion should be granted. [ 63 ] In large measure this is due to GSI’s admission, that the original order sought was not appropriate in these circumstances, without providing a clear alternative.

The Plaintiff has done little more than pay “lip service” to other forms of orders available to the Court, such orders having been included in the Defendant’s brief and referred to as the “Alberta” consent orders. [ 64 ] GSI has not been made it sufficiently clear as to the type of confidentiality order it is seeking and as result it has failed to meet the burden of proof on this motion. [ 65 ] As a result the motion on issue # 1 is dismissed.

Issue #2 – Should GSI’s disclosure obligations be modified? [ 66 ] In the motion documents, GSI sought to modify its additional disclosure obligations, pursuant to Rule 14.08 .

The rule requires GSI to rebut the presumption of full disclosure by establishing modification is necessary to make cost, burden and delay proportionate to 1) the likely probative value of the evidence that may be acquired; and 2) the importance of the issue in the proceeding. [ 67 ] As required, under Rule 14.08(4) , GSI set out in paragraph 48 of its legal brief the evidence that is likely to be found through disclosure of the Requested Materials. The Requested Materials are those listed in 42(a), (b), and (

c) of the brief. [ 68 ] The materials in paragraph 42(

a) were provided to Hunt Oil concurrent with the filing of the motion. These were documents evidencing GSI’s ownership of the seismic materials. [ 69 ] This leaves for disclosure 42(

b) and (

c) which in abbreviated form, are (

a) applications to various regulators and government bodies to conduct surveys and (

b) reports submitted by GSI to various regulators and government bodies in request of surveys. [ 70 ] GSI’s position is twofold. First, the likely probative value of the requested materials is low. Second, none of the information and evidence that is likely to be found or acquired is relevant.

Based on the list provided by GSI, the information likely to be found has much to do with its exploratory work. [ 71 ] In paragraph 49, GSI submits in the alternative that even if this information is relevant, it still ought to be protected from disclosure because most of this material has not been disclosed, even to its licensees, who have committed to protect and keep confidential all seismic materials obtained from GSI. [ 72 ] Paragraphs 48 & 49 are two of the paragraphs “left out” of the Plaintiff’s affidavit but were included in their legal brief.

The Defendant correctly points out this is not in compliance with the Rules or is it in keeping with the best evidence. [ 73 ] I am prepared to admit these paragraphs in these limited circumstances . First, the paragraphs were adopted in a sworn affidavit by the Chairman of GSI.

Secondly, the Court may decide what weight it will give to these them. [ 74 ] As was the case on the first issue, GSI’s fluctuating position on the motion has made it difficult and confusing to properly deciding this issue. [ 75 ] At the motion hearing the Court (the Defendant Hunt Oil) heard for the first time that “upon review”, GSI realized the order requested was overly burdensome and inappropriate. After questioning by the Court, GSI’s counsel indicated that while they were initially requesting that disclosure be modified, they were now seeking a “counsel’s eyes” only order.

In other words, GSI’s concerns about limiting disclosure would be addressed by the Court applying confidentiality terms to the additional disclosure. [ 76 ] In Canadian Financial Wellness , Fichard, J stated: The pre-trial disclosure of documents carries an implied undertaking of confidentiality, acknowledged by Rule 14.03(1) .

As the private disclosure process does not involve the Court, it does not engage the open courts principle. [ 77 ] It is to GSI’s credit that they came forward but at the same time it continues to argue that the implied undertaking rule was not sufficient to deal with their confidentially concerns, relying on the case of Scotia Innovators Inc. v. Bartlett Plastics & Precision Machine Ltd , 2004 NSSC 113 . [ 78 ] At issue in Scotia Innovators was information such as client lists, pricing and market strategies. In its’ submission GSI quoted at length from Scotia Innovators at paragraphs 14 and 15.

In so doing, GSI argues that production of the requested information may well cause irrefutable harm to it as Plaintiff in this case. [ 79 ] In Scotia Innovators the defendants made application to the court seeking an order requiring the Plaintiff to fulfill undertakings given at discovery. In that case Scanlan, J. was satisfied the court should exercise its inherent jurisdiction to grant a protective confidentiality order. [ 80 ] GSI also quoted at length from Encana at paragraphs 56, 60, 61 and 78, in which the court referred to raw field data and

processed data that required “skill and judgment”. [ 81 ] In Encana , it was held that the Canadian Petroleum Resources Act created a separate regime in the oil and gas industry. As a result, the Boards to which seismic material was deposited did not breach the GSI’s rights under the Copyright Act . [ 82 ] GSI has referred to these cases to show that its proprietary information is also the type of information that requires protection and for which GSI has gone to great lengths to keep confidential.

GSI says the secretive nature of the data is also recognized by industry standards, and there is a real risk of the data being used or accessed. GSI states this is what brought this litigation in the first place. [ 83 ] The Defendant, Hunt Oil, has opposed the modification request and had made a number of arguments on the merits of the motion. Key among them is that the information is not confidential, arguing that GSI’s application to regulators are kept confidential only for a period of time. Hunt submits the authorizations given by GSI to government and the CNSOPBA confirm this.

In addition, Hunt argues that the Notice of Action, for example already refers to seismic data materials that GSI alleges were wrongfully accessed or possessed by Hunt Oil. [ 84 ] Without dwelling further on the submissions, I am going to come to the point as far as the Court is concerned. The crux of this issue at this time, is that the Court does not know exactly what GSI is proposing by way of a confidentiality order. [ 85 ] GSI’s counsel has made reference to a “counsel’s eyes only” order and in the alternative “the Alberta Orders”, referring to the orders in Exhibit G and H of Mr. Watt’s affidavit. As Mr.

Watt indicated, those orders are all different. The order at Exhibit G for example states, “the Defendants are not conceding that the information in deserving of protection, but are agreeable to the terms to move the matter forward in a timely fashion.” [ 86 ] In fairness GSI’s Counsel in her submissions stated, “these orders provide for how materials should be treated in the court record and how disclosure should be made outside the Court proceeding or how material that has been disclosed should be treated”.

This is true as it applied to those facts. [ 87 ] With respect, there was no further submission of the Sierra test and how it applied to the Requested Materials in this case.

There is very little in the way of a clear order, that would allow this Court to consider how lesser measures would protect the data, and whether other reasonable alternatives are available. [ 88 ] At the end of the day the motion documents and submissions fall short of satisfying the Court that modification of the disclosure they seek is necessary. [ 89 ] The fact is that the Defendant learned at the hearing, during submissions of Counsel that the modifications sought by GSI would be in the form of a further confidentiality order.

This is not in keeping with the Rules on pleadings which are designed to avoid surprise and ensure the opposing party is well aware of the case it has to meet. ( Rule 38.02 ) [ 90 ] In my view that is reason enough to deny the motion on its face. As it stands however, the Court has spent considerable time reviewing the motion, affidavits, briefs and authorities. [ 91 ] Without repeating all of the reasons given in the decision on the first issue, it is my view that the relief sought should fail.

With respect, GSI has been less than certain in its submissions, leaving the Court to sort through the vague description of the order sought and the uncertainty of the grounds upon which it is based. [ 92 ] On the whole of the evidence, the Plaintiff has not satisfied the Court on a balance of probabilities that it would be in accordance with law to grant a confidentiality order in the present case as required by Rule 85.04 , which order is now sought in lieu of modified disclosure on this second issue. [ 93 ] The motion is therefore dismissed with costs to the Defendant.

I shall grant the Defendant’s request for throw away costs on the issue of further disclosure by Hunt Oil.

Costs in any event of the cause in the amount of $500.00 are awarded to the Defendant and payable forthwith. [ 94 ] Costs of the motion itself are awarded to the Defendant in the amount of $2,000.00. [ 95 ] In keeping with the discretion afforded to me under Rule 94.06 the parties are encouraged, in the event of a further such motion, to consider entering into a consent order, given the nature of the proceeding. [ 96 ] This direction is in no way binding on the parties and is offered only for their consideration. [ 97 ] Order accordingly. Murray, J.