File No. CT 2003 008 THE COMPETITION TRIBUNAL IN THE MATTER OF an Application for rescission of the Order Granting Leave to Barcode Systems Inc. pursuant to Section 103.1 of the Competition Act, RSC 1985 c. C-35 1 as amended, to commence an Application pursuant to Section 74 of the Competition Act. BETWEEN: SYMBOL TECHNOLOGIES CANADA ULC Applicant, ·and· BARCODE SYSTEMS INC. and PRICEWATERHOUSECOOPERS INC. as INTERIM RECEIVER of BARCODE SYSTEMS INC.
Respondents.
MEMORANDUM OF LAW AND FACT OF PRICEWATERHOUSECOOPERS INC. as INTERIM RECEIVER of BARCODE SYSTEMS INC.
COMPETITION TRlBUNAL TRlBUNAL DE LA CONCURRENCE
FILED I PRODUIT September 26, 2005 CT-2003-008 TAPPER CUDDY LLP Jos LaRose for I pour Barristers and Solicitors REGISTRAR I REGISTRAIRE 1000-330 St. Mary Avenue # 0029 Winnipeg, Manitoba OTTAWA, ONT R3C 325 RICHARD W. SCHWARTZ Telephone: (204) 944-8777 Fax: (204) 947-2593 File No. 032544
ARGUMENT 1. Pursuant to the Order made by Mr. Justice Schulman of the Manitoba Court of Queen's Bench on December 19, 2003 (the "Order"), PricewaterhouseCoopers Inc. was appointed as Interim Receiver (the "Interim Receiver'') of Barcode Systems Inc. rsarcode") pursuant to the provisions of the Bankruptcy and Insolvency Act.
2. The Order was made after Barcode had filed a Notice of Intention to File a Proposal.
3. Barcode subsequently filed a Proposal, which was accepted by a majority of its unsecured creditors and approved by Associate Chief Justice Oliphant of the Manitoba Court of Queen's Bench on May 21, 2004.
4. As such, Barcode is not bankrupt, nor can it be said that it is not legally entitled to emerge from the Interim Receivership proceedings and, moreover, carry on business at some point in the future.
5. Pursuant to an arrangement made as between David Sokolow (the principal of Barcode) and the Interim Receiver, Mr. Sokolow on behalf of Barcode was (and continues to be) entitled to carry on with the proceedings that Barcode instituted with the Competition Tribunal In respect of the matters alleged in its complaint.
2 6. While not taking an active role in these proceedings, the Interim Receiver, on behalf of Barcode's creditors, maintains an interest in them, given the potential benefit to those creditors.
7. Notwithstanding that the Interim Receiver has been content to rely on the material and submission made by Barcode lo date, the Interim Receiver has reviewed the Memorandum filed by Symbol Technologies Canada ULC ("Symbol"), and takes issue with certain assertions made therein.
8. In particular, the Interim Receiver notes as follows: a. As regards the "Supply Order" as described in paragraph 4 and the submissions made in that regard !n paragraphs 1B to 25 of Symbol's Memorandum, it is first noted that it was in fact obtained at the request of Symbol's then counsel {Colin MacArthur, Q.C. of Aikins, MacAulay & Thorvladson LLP). Attached in that regard at Tab 1 are the transcripts of a series of messages left on the voicemail at counsel for the Interim Receiver by Mr. MacArthur, together with a an email and two letters, all dated from January 9 to January 15, 2004. By way of background information, it is noted that the Interim Receiver begin discussions with Symbol !n January of 2004 in order to obtain Symbol product directly from Symbol so that it might continue Barcode's business and offer it for sale as a going concern. Initially, lt appeared that Symbol would agree to do so without the
3 need of a court order, but for its own reasons determined that a court order would be preferable. (See paragraph 9 of the Affidavit of David Johnson swam January 14, 2004 - Tab D to Michael Reid's Affidavit sworn February 21, 2005)
It is further noted that discussions as between counsel at the time were specifically premised on the notion that the Supply Order would be without prejudice to anyone's rights, given that it was designed to allow the Interim Receiver a relatively short amount of time to find a buyer (one who, presumably, would have to be acceptable to Symbol) for Barcode's business. That is in fact precisely what happened. (See paragraph 9 of the Affidavit of David Johnson sworn January 14, 2004 -Tab D to Michael Reid's Affidavit sworn February 21, 2005)
It is also noted that current counsel for Symbol was informed of the background to the Supply Order more than a year ago, but for reasons unknown has taken the position it has in its Application. Further, and in any event, it is noted that pursuant to the terms of the Supply Order, Symbol itself was entitled to apply to the Manitoba Court of Queen's Bench in the event it wanted to terminate or vary it. It did not, nor of course did Symbol appeal the Supply Order. (See paragraph 5 of the Supply Order - Tab E to Michael Reid's Affidavit sworn February 21, 2005)
b. As regards paragraph 32 of Symbol's Memorandum, the Interim Receiver refers to what is set out in paragraphs 5 and 7 hereof;
4 c. As regards paragraph 33 of Symbol's Memorandum, it is the Interim Receiver's understanding that the change in the style of cause was done by the Tribunal at its own instance, and not as a result of any motion or request by the Interim Receiver. As previously noted, the Interim Receiver was satisfied to allow the proceedings to continue in the way they had before as, apparently, was Symbol's previous counsel.
9. Finally, the Interim Receiver notes that Barcode has already filed material in response to Symbol's Application for Recession and that, by letter from its counsel dated August 17, 2005, advised that it did not intend to file anything further. The Interim Receiver takes no issue with that, or in Barcode continuing in the fashion that was agreed upon long ago.
ALL OF WHICH IS RESPECTFULLY SUBMITTED THIS 23rd DAY OF SEPTEMBER, 2005. ~l/ ... ·· ·· T AA C~DDY LLP B~ers a~d Solicitors
/ 1, =-33Q~ &t. Mary Avenue \,,,Winnipeg, ~itoba R3C 3Z5 Richard Schwartz Telephone: 944-8777 Counsel for the Interim Receiver
f t VOICE MAIL FROM: Colin MacArthur DATE: January 9, 2004 RE: PwC - Barcode Rick, it's Colin MacArthur. Sorry I missed you. I do not have instructions from my clients, but I have spoken to them. You may have anticipated or expected that I was receiving instructions, and I am, from the in-house legal people at Symbol so that they have to go to other executive to get a decision with respect to the proposal.
But there are some questions that have arisen that I would like to discuss with you dealing with ... to obtain some greater understanding in the manner in which the receiver intends to conduct business in the short term and who it intends to sell product to and
some idea of the volume of product that is anticipated that it will be ordering. Those kinds of questions. And as I've already discussed with you, there is very very significant concern on Symbol that nothing it does would be seen to be supplying product to Barcode or in any way authorizing Barcode to continue in business as one of the re-sellers for Symbol.
I do understand that we may not be able to talk today, Rick Please do try and get hold of me even if you get in from Court later this afternoon if we haven't talked then. I will be in my office I expect until 5 or 5:30 this afternoon. And I will be in on the weekend as welL So let's keep trying.
Thank you. My number's 957-4627.
( ,.. VOICE MAIL FROM: Colin McArthur DATE: January 13, 2004 {4:03 PM) RE: PwC - Barcode Rick, it's Colin McArthur. I'm back in my office·now and I got your message. I again phoned my client and have left a message for the person I take instructions from requesting that I be provided with instructions concerning your request. I've indicated as you can expect that there is an urgency, that you will be proceeding with your motion unless we are able to respond immediately. And as yet I have not heard from that person, but I've just left a message. I've been in meetings all day until now.
So I'm going back into another meeting Rick, but I'll be looking at my phone for messages a little later this afternoon.
Thanks.
VOICE MAIL FROM: Colin MacArthur DATE: January 14, 2004 (10:59 AM) RE: PwC - Barcode Rick, it's Colin MacArthur speaking. I went into a meeting immediately after getting your information about the timing for the motion.
I haven't yet spoken directly to my client, but I did receive a message from them before they even knew that the Receiver would go to Court indicating they've got that there was an agreement they could work out with the Receiver. There were questions that they have that they wanted to ask directly of the Receiver, just in terms of working out the details of the supply of product.
And there were a couple of other questions that were asked that I want to discuss with you. If you could call me please, 957-4627.
Rick, I may not be in my office, I've been working downstairs, but please speak to my secretary and make sure that she comes to find me if you don't get hold of me.
Thank you.
_,/ ·" i.
VOICE MAIL FROM: Colin MacArthur DATE: January 14, 2004 ( 11 :29 AM) RE: PwC - Barcode Rick, it's Colin MacArthur speaking. I have left messages for Mike Reid. He wasn't immediately available and of course I will speak to you again as soon as I have spoken to him.
Thank you.
Page 1 of I ( ( Richard Schwartz From: Richard Schwartz Sent: January 14, 2004 3:25 PM To: 'crm@aikins.com' Cc: 1effrey.b.johnson@ca.pwc.com'; Dave Johnson Subject: Barcode Importance: High
Colin, Further to our discussion earlier today, attached is my Notice of Motion. As discussed, I have not yet filed it. I do, however, intend to have it deUvered to Mr. Justice Schulman directly before the day is out under cover of a letter which advises that I hope not to have to file it tomorrow as
discussions to resolve the issue are ongoing. The point, of course, is to allow him at least some opportunity to understand what tomorrow's motion Is about.
/Js I write this, it is 3:30 PM, and tam concerned that I have not heard back from you in regards to Mike Reid's contact information. So as to speed that process, I ask that you call Jeff Johnson or Dave Johnson directly (at 926-2441 and 926-2423, respectively) when and if you receive the go-ahead from your client
Regards, Rick Schwartz Tapper Cuddy 1000-330 St Mary Ave. \Mnnipeg, Manitoba Canada R3C 3Z5 (204) 944~:1232 (phone)
(204} 947-2593 (fax)
This communication, including its attachments, if any, is confidential and intended only for the person(s) to whom it is addressed, and may contain proprietary and/or privileged material. Any unauthorized review, disclosure, copying, other distribution of this communication, or taking of any action in reliance an its contents, is strictly prohibited. If you have received this message in error, please notify us immediately so that we may amend our records. Please then delete this message (and its attachments, if any) without reading, copying, or forNarding it to anyone. •**~•••w••~••~••••~~•*****•~*••~*•~w•~~~•••*•••*•~;•****••*~~•·•-~•*****~••*••
14/01/2004
••• TAPPER CUDDY t. ·~ Barristers and So Ii c ito rs January 14, 2004 Richard W. Schwartz Direct line: {204) 941·3232
E~rna:t rws@:CV'l~£.00fr
By fax Aikins Barristers and Solicitors 30th Floor - 360 Main Street Winnipeg, Manitoba R3C4G1
Attention: Colin MacArthur, Q.C. Dear Sir: Re: Royal Bank of Canada v. Barcode Systems Inc. Court File No. BK 03-01-36054
Attached and hereby served upon you is another copy of our find Notice of Motion to be heard before Mr. Justice Schulman on January 15, 2004, at 1 :00 PM.
Aiso attached is a copy of our letter of even date to the Court, the contents of which are self-explanatory. We will provide you with the Affidavit of David A. Johnson in support of the motion shortly. Yours truly,
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(
January 14, 2004 Richard W. Schwartz Direct line : (204) 944·3232 E-ma;I: rws@tcwpg.coin
Sy fax Mr. Justice Schul n Court of Queen's encn 408 York Ave Winnipeg, R3C OP
Dear Sir: Re: Royal Bank of Canada v. Barcode Systems Inc. - Court File No. BK 03-01-36054
As the writer advised you in the message. he left for you yesterday, we act on behalf of PricewaterhouseCoopers lnc., the Interim Receiver of Barcode Systems Inc
Atta en ed in that regard is our Notice of Motion return ab le before you on Thurs day. January 15 , 20 04, at 1: 0 0 PM.
At the request of counsel for the respond in~ '.~_(Symbol Technologies), we have not yet filed it. Indeed, we are hopeful that it w ill unnecessary for us t<;)jjo so and that the matter will in fact be resolved before ~ :00 PM tomorrow. In such event, we ~hall 9f course advise you immediately. . ·:· · ... ··_·: As it may not be resolved, we are in the process of finalizing the supporting Affidavit of David A. Johnson,
which ;,ve anticipate being able to fax over later today.
Yours truly, TAPPER CUDDY
Per: Richard W. Schwartz
RWS/lf Enc.
J cc. Aikins Attention : Colin fv1acArthur
VOICE MAIL FROM: Colin MacArthur DATE: January 15, 2004 (9: 15 AM} RE: PwC - Barcode Rick, it's Colin MacArthur speaking. I've now spoken to my client. I did ... I just hung the phone from speaking with him. They are in the process of giving instructions to Mike Reid as I understand it to work out
the fine details of the, you know, way in which this transaction will be put together directly with 1he Receiver.
Would you give me a call, 957-4627, and I'll put in a call for Kent Paterson_ My recollection is that you had indicated he would be appearing with Schwartz and I know that you have obviously other commitments so you may not get my message.
Thank you.
,,,, ... { ( VOICE MAIL FROM: Colin MacArthur DATE: January 15, 2004 ( 11 :24 AM) RE: PwC - Barcode Rick, it's Colin. I do have instructions from Symbol now. They would prefer that an order to obtained. So my suggestion is that you would go down on an uncontested basis to obtain the order.
Now there was one matter that was brought up that we hadn't previously discussed. And Symbol's concerned about just the open-endedness of the supply. And I think the way that that should be addressed is that Symbol would have a right to terminate on two weeks' notice or even three weeks' notice, but a period of time which would allow the Receiver to get into Court if for some reason it had to protect its position at that time.
As well of course Symbol wanted me again to confirm that the Receiver will consent to the continuation of the counterclaim, or excuse me, the continuation of the claim by way of counterclaim that Symbol has against Barcode.
So if you could get back to me, 957 -4627. I haven't called Kent. I hope that we're communicating appropriately and rn hear from you shortly.
Bye.
••• l:t\PPER CUD D"Y LLP September 23, 2005
By email and regular mail The Competition Tribunal Thomas D'Arcy McGee Building 90 Sparks Street, Suite 600 Ottawa, Ontario K1P584
Attention: Registrar Dear Sir/Madam: Re: Symbol Technologies Canada ULC, Applicant, and Barcode Systems Inc. and PricewaterhouseCoopers Inc. as Interim Receiver of Barcode Systems Inc. File No. CT 2003 008
Attached is the Memorandum of Law and Fact of PricewaterhouseCoopers Inc. as Interim Receiver of Barcode Systems Inc.
Yours truly,
cc: Jeff Johnson (w. enc.) cc: Lindy Choy (w. enc.) cc: Steven Field (w. enc.)
Richard W. Schwartz Direct lhe: (2Q.i) 944·3232 E-mail: rws@tcwµg.com