Civil Action Founded on Contempt--Lying on Discovery

Here's the link: http://www.canlii.org/en/ab/abqb/doc/2009/2009abqb469/2009abqb469.html

I can't improve on the decision itself which is not too long.

Introduction

[1] This was a Chambers application before me by the Plaintiff to declare the Defendant David Faria in contempt of court or, in the alternative, granting summary judgment in favour of the Plaintiff. I dismissed the application for summary judgment orally at the hearing but reserved the issue of contempt.

Issues

[2] The issue to be determined is whether Mr. Faria can be held in civil contempt for lying in examinations for discovery.

Background

[3] Mr. Faria was an employee of Security Bancorp Inc. which is a company that is involved in placing and servicing ABM machines (automatic banking machines) which are placed in merchant locations. Mr. Faria was manager of ATM Services. Mr. Faria signed a contract with the Plaintiff confirming he would maintain the confidence of the Plaintiff’s information during the course of his employment and for a period of two years after termination and that he would not use that information for his own benefit or the benefit of others. All contracts for ABM Services were to be the property of the Plaintiff. The Plaintiff alleges that in addition to the contract, Mr. Faria had other fiduciary obligations to the corporation.

[4] The allegation in the Statement of Claim is that Mr. Faria quit his employment taking with him confidential information and converted this information to his own use. It is alleged that he did this by setting up his own company and then having merchants breach their contracts with the Plaintiff and enter into contracts with him.

[5] At examinations for discovery, Mr. Faria referred to Security Bancorp Inc. as “the host” when talking about the operator of an ABM at a particular location. He confirmed that Security Bancorp Inc. was the host for a number of ABM machines referred to in this Statement of Claim. He was asked at examinations for discovery the following questions and gave the following answers:

P. 96, lines 19 to line 21 and P. 97, lines 1 to 3:
Q: Since the time that you ceased to work for Security Bancorp, have you operated as a host for any business?
A: No
Q: And so you would specifically deny having acted as a host for any of the merchants that are described in paragraph 24 of the Statement of Claim; correct?
A. Yes
Q. And you would deny having acted as a host for any of those merchants as described in paragraph 24 of the Statement of Claim prior to your ceasing employment for Security Bancorp; correct?
A. Yes

P. 100, lines 19 to line 24:
Q: You would deny, I take it, that you solicited any business from any of those merchants that are described in paragraph 24 of the Statement of Claim?
A. Before or after?
Q. Either one.
A. I deny that, yes.

P. 101 lines 3, 4 and 5:
Q: Do you or does Davetech act as a host, again to use your term, for any ATMs?
A: No.

[6] Mr. Faria was then asked specifically whether he did any work for a number of specific companies after he stopped working for Security Bancorp on June 15, 2006. He answered “No” to each of those questions.

[7] As a result of those examinations for discovery the Plaintiff obtained an order from a Master in the Court of Queen’s Bench to obtain information from a third party, TNS Smart Networks. That information confirmed that terminals had been set up between May 10, 2006 and June 14, 2006 with David Faria Services at the locations referred to in the examinations for discovery. This information clearly indicated that Mr. Faria had not been truthful in his testimony when he indicated that he had no dealings with these particular businesses and that he had not operated an ABM machine at those locations.

Analysis

[8] Neither party could provide any cases which deal with the issue of whether lying under oath at examination for discovery is contempt of court. Most cases that deal with this issue deal with it by way of a costs order. The Plaintiff here says however that this is far more serious than simply directing costs as against a party. It puts the entire administration of justice into disrepute. The discovery process is part of the court process and governed by the Rules of Court. The deponent takes an oath to tell the truth.

[9] The Defendant argues that this conduct does not fall under Rule 703 of the Alberta Rules of Court which deals with contempt. The Plaintiff says that the powers for contempt are broad and specifically cites Rule 703 (3) which indicates

... cite in contempt those who disobey the lawful orders of the court or who otherwise display contempt for its process ...

[10] I was able to locate two decisions which refer to this issue. The first is Orphan v. Roulston, 2000 BCSC 1062 (CanLII), 2000 BCSC 1062. In that decision the defendant initially refused to answer questions in discovery and was found in contempt. He later answered the questions but gave false answers. The Plaintiff brought an application to have the Defendant found in contempt for providing false evidence under oath during discovery. The Court refused to find the Defendant in contempt as there was no coercive or public purpose to be served by making a further declaration of contempt. However, in that case the defendant did concede that by providing false evidence in discovery he was in contempt of court. It appeared that the court determined that there was nothing further to be served by making a further declaration of contempt in the facts of that case.

[11] The other relevant decision is that of Arrow-West Equipment Ltd. v. GDT Trading Ltd. 2006 ABQB 762 (CanLII), 2006 ABQB 762. This was a case where the plaintiff applied to have the defendants found in contempt for, amongst other things, having sworn false evidence in their affidavits and confirmed that evidence during cross-examinations on their Affidavits. Acton, J. at para. 26 stated:

...In my view, giving evidence knowing it to be false ... also constitutes contempt of court...

[12] In the result, Acton J. did not find the defendants in contempt as the plaintiffs notice of motion was not sufficient to put the defendants on notice as to any alleged grounds of contempt nor was the contention proven beyond a reasonable doubt.

Decision

[13] While it would be extremely rare to find a party in civil contempt for lying in examinations for discovery I am satisfied that this is one of those cases where it is appropriate. The questions asked of Mr. Faria at examination for discovery were clear. Evidence obtained by the plaintiff to dispute those answers was clear. It shows the evidence that Mr. Faria gave was false. What makes this matter one for contempt rather than costs in my view is that the questions and answers deal directly with the main issue. It is not a peripheral issue or something that would not have much bearing on the outcome of the matter. It is the entire point of the lawsuit. Costs in my view would not adequately reflect the courts concern that Mr. Faria has shown contempt for the court process.

[14] I therefore find Mr. Faria to be in contempt of court.

[15] The parties may contact me to arrange a further hearing to deal with the issue of penalty.