Trevor Nicholas Construction Co. v. Canada (Minister of Public Work), 2005 FC 1301

Date: 20050922

Docket: T-1049-95

Citation: 2005 FC 1301

Ottawa, Ontario, this 22^nd day of September, 2005

PRESENT:    THE HONOURABLE MR. JUSTICE von FINCKENSTEIN

BETWEEN:

Trevor Nicholas Construction Co. Limited

Plaintiff

and

Her Majesty the Queen as represented

by the Minister for Public Works

Defendant

REASONS FOR ORDER AND ORDER

[1]    This matter originally began as a contract dispute concerning dredging contracts. By order dated May 3, 2001, Associate Chief Justice Lutfy (as he then was) ruled that a settlement made on February 24, 2000, in a related matter in Court File T-926-93 (the "2000 Settlement") was immaterial to the disposition of the issues.

[2]    Pursuant to an order of MacKay J. dated May 16, 2001, the matter was ordered to proceed to trial solely on the issue of the fairness of the tendering process employed by the Defendant.

[3]    In subsequent interlocutory proceedings, the Plaintiff tried to raise the 2000 Settlement, but Prothonotary Milczynski ruled against the Plaintiff on December 19, 2003. Her decision was upheld on appeal by Gibson J. on February 16, 2004, whose decision in turn was upheld by the Federal Court of Appeal on October 21, 2004.

[4]    The Defendant brought a motion for summary judgment on January 5, 2005.

[5]    Hugessen J., as case management judge, ordered on February 3, 2005 that affidavits should be served by April 15, 2005, cross examinations should be completed by May 24, 2005, and the motion be heard on August 24, 2005.

[6]    Pursuant to Hugessen J.'s order, the Defendant filed an affidavit of John Susin dated April 13, 2005 wherein it again made reference to the 2000 Settlement.

[7]    Scheduling problems arose regarding the cross examinations and the Defendant sought a case management conference.

[8]    The Plaintiff then moved before Prothonotary Lafreniere to strike paragraphs 12, 33 and 34 from the affidavit which made references to the 2000 Settlement.

[9]    In response, the Plaintiff produced a certificate of non-attendance for Joseph Grossi, and brought a motion seeking to strike the Defendant's statement of defence, or alternatively, seeking an order striking the supporting affidavit and the Defendant's motion for summary judgement.

[10]                        Prothonotary Lafreniere heard these two motions concurrently on July 18, 2005 and:

a)         struck out the direction to attend and the certificate of non-attendance for Joseph Grossi;

b)         struck out paragraphs 12, 33, and 34 of the affidavit of John Susin;

c)         ordered the parties to agree on a schedule for cross examinations; and

d)         ordered costs against the Defendant.

[11]The Plaintiff appeals this ruling. It is well established that the relevant law for appeals of a Prothonotary is laid down in Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 as reformulated in Merck & Co., Inc. v. Apotex Inc., [2004] 2 F.C.R. 459, namely:

discretionary orders of prothonotaries ought not be disturbed unless

            (a) the questions raised are vital to the final issue of the case, or

            (b) the orders are clearly wrong as based upon wrong principle or misapprehension of facts.

Where either of those factors exists, the reviewing court will exercise its discretion de novo.

[12]                        In this case, there are no issues vital to the final issue of the case. Thus, the only question is whether the decision is clearly wrong as based upon a wrong principle or misapprehension of facts.

[13]                        The plaintiff argues that Prothonotary Lafreniere:

i)          erred in holding that the terms of the 2000 Settlement were privileged;

ii)         erred in failing to consider prejudice to the Plaintiff; and

iii)                  had no authority to strike out the direction to attend and the certificate of non-attendance for Joseph Grossi as such relief was not requested.

[14]                        In support of his first point, the Plaintiff relies on Bauer Nike Hockey Inc v. Tour Hockey, 2003 FCT 451. However, that case only stands for the proposition that where a dispute arises as to the existence of a settlement, it is necessary for the Court to have access to the documents in order to resolve the conflict. In this case, there is no question that a settlement was made and signed by both sides. O'Keefe J. stated in his previous order in Trevor Nicholas Construction Co. v. Canada (Minister for Public Works), [2003] F.C.J. No. 357 at para 17):

Lutfy J. (as he then was), has already dealt with the issue of the "terms of release" or the settlement of another action. He ruled on May 3, 2001 that:

1. Paragraph 7 of the plaintiff's reply, filed on April 23, 2001, is struck.

2. Exhibit 2 to the examination of Joseph Grossi is struck.

Paragraph 7 of the plaintiff's reply relates to the settlement of the other action and Exhibit 2 is the minutes of settlement. Firstly, I cannot find where Prothonotary Lafrenière made any reference to the minutes of settlement. However, Lutfy J. (as he then was) has already disposed of the issue surrounding the minutes of settlement. I might add that John Sopinka, Signey M. Lederman and Alan W. Bryant, The Law of Evidence in Canada, 2d ed. (Toronto and Vancouver: Butterworths, 1999) at page 817 states:

However, the better view is that the privilege applies not only to failed negotiations, but also to the content of successful negotiations, so long as the existence or interpretation of the agreement itself is not in issue in the subsequent proceedings and none of the exceptions are applicable. The rationale behind the privilege supports this position. If parties to settlement negotiations believed that their statements might be used by a third party in subsequent proceedings, whether or not they reached agreement, they might be less frank in those discussions.

Accordingly, the minutes of settlement have been dealt with by the court.

[15]                        I might add that the textbook by John Sopinka, Sydney N. Lederman and Alan W. Bryant, The Law of Evidence in Canada, 2d ed. (Toronto and Vancouver: Butterworths, 1999) at page 817 states:

However, the better view is that the privilege applies not only to failed negotiations, but also to the content of successful negotiations, so long as the existence or interpretation of the agreement itself is not in issue in the subsequent proceedings and none of the exceptions are applicable.    The rationale behind the privilege supports this position.    If parties to settlement negotiations believed that their statements might be used by a third party in subsequent proceedings, whether or not they reached agreement, they might be less frank in those discussions.

[16]                        With respect to his second point, the Plaintiff refers to Sawbridge Band v. Canada, [2000] F.C.J. No. 192 where Hugessen J. stated at para 6:

In my view, in a sane modern procedure, irregularities in proceedings should not be made the subject of motions and should not require the Court to give orders striking out or correcting such irregularities unless the party attacking the irregularity can show that it suffer some sort of prejudice as a result thereof.

[17]                        Here, there had been no less than six judicial decisions regarding the relevance of the 2000 Settlement. Yet the Plaintiff tried to introduce it again in John Susin's affidavit. Prothonotary Lafreniere found this to be improper, abusive and irrelevant. Clearly, he considered the raising of this issue again as prejudicial to the Defendant. I fully concur in this finding and strongly feel the Plaintiff needs to be restricted from raising this issue again.

[18]                        Finally, the Plaintiff argues that the Defendant never asked for striking out of the direction to attend and the certificate of non-attendance for Joseph Grossi. There being no motion to that effect, Prothonotary Lafreniere erred in granting an order containing those terms.

[19]                        Prothonotary Lafreniere was case managing this matter. He had two conflicting motions before him. He had to make sense of this matter, reconcile the outcome of the motions, and give effect, as far as possible under the circumstances, to the scheduling order of Hugessen J. dated February 3, 2005. In so doing, he proceeded under Rules 385 and 53 of the Federal Court Rules, S.O.R./98-106. The combined effect of these two rules gives him all the necessary authority to make the order. I refer specifically to Rule 385(1)(a) which allows the Prothonotary to "give any directions that are necessary for the just, most expeditious and least expensive determination of the proceedings on its merits". It would unnecessarily restrict the elbow room of the Prothonotary to hold that he can only grant relief for which is specifically requested. In these circumstances, the Prothonotary acted reasonably and within the authority granted to him under the rules.

[20]                        Accordingly, I find the Plaintiff has not met the test in Canada v.Aqua-Gem Investments Ltd., supra and accordingly this application cannot succeed.

ORDER

THIS COURT ORDERS that:

1.       This appeal is dismissed with costs to the Defendant.

2.       The Plaintiff is prohibited from raising the terms of the settlement in Court File T-926-93 in any future proceedings without prior leave of this Court.

A Konrad W. von Finckenstein @

Judge

                                                             FEDERAL COURT

                                                     SOLICITORS OF RECORD

DOCKET:                                    T-1049-95

STYLE OF CAUSE:                   Trevor Nicholas Construction Co. Limited

and

Her Majesty the Queen as represented

by the Minister for Public Works

PLACE OF HEARING:              Toronto, Ontario

DATE OF HEARING:                 September 12, 2005

REASONS FOR ORDER

AND ORDER:                             The Honourable Justice von Finckenstein

DATED:                                        September 21, 2005

APPEARANCES:

SOLICITORS OF RECORD: