Date: 20041123
Docket: T-2012-01
Citation: 2004 FC 1645
Ottawa, Ontario this 23rd day of November 2004
Present: The Honourable Madam Justice Heneghan
BETWEEN:
SOUTH YUKON FOREST CORPORATION
Plaintiff
and
HER MAJESTY THE QUEEN
Defendant
REASONS FOR ORDER AND ORDER
[1] South Yukon Forest Corporation (the "Plaintiff") seeks leave, pursuant to the Federal Court Rules, 1998, SOR/98-106 (the "Rules") to join Liard Plywood and Lumber Manufacturing Inc. ("LPL") as a plaintiff. The Plaintiff also seeks leave to further amend the statement of claim. Her Majesty the Queen (the "Defendant") opposes both aspects of the motion.
[2] This action was commenced upon the filing of a statement of claim on November 9, 2001. The Defendant moved on May 29, 2002, to strike certain paragraphs of that statement of claim and by Order dated August 20, 2002, Prothonotary Hargrave struck certain paragraphs of the statement of claim without leave to amend those paragraphs, and permitted the Plaintiff to serve and file an amended statement of claim.
[3] The parties proceeded with discovery examinations. To date, the discovery examination of the Plaintiff's representative, Mr. Alan Kerr, has taken 21 days. The examination of the representative of the Defendant, Mr. Sewell, has taken 8 days. The discovery examinations have not been finished pending a determination as to who the ultimate parties will be.
[4] The Plaintiff argues that the Rules allow broad discretion in allowing amendments to the pleadings even up to the commencement of a trial. It submits that its proposed amendments arise from substantially the same facts that were pleaded in the original amended statement of claim. The proposed amendments address the promises, assurances, representations and commitments that were made to LPL by representatives of the Defendant from 1996 up to the early part of 1998. Subsequently, those promises were made to the Plaintiff. The Plaintiff, duly incorporated in November 1997, was only capable of engaging in communication with the Defendant after November 1997.
[5] The Plaintiff now wants to plead the existence of an assignment from LPL of all its legal rights etc. arising from the alleged promised assurances, representations and commitments made to it by the Defendant relative to the mill at Watson Lake, Yukon, beginning in 1996. It refers to a letter dated March 13, 1997, from the Minister of Indian and Northern Affairs to LPL relative to the Watson Lake undertaking. It says that the fact that the letter was sent to LPL demonstrates that that entity is a "necessary party" for the full adjudication of the issues raised in this action.
[6] In support of its notice of motion, the Plaintiff filed the affidavit of Mr. Alan Kerr. He describes himself as the President of the Plaintiff and the President of LPL. He claims to have knowledge of the matters deposed to in his affidavit, as a result of his position in both the Plaintiff and LPL. He was the representative of the Plaintiff for the purpose of the discovery examinations that commenced on February 6, 2003. Mr. Kerr appended extracts from his discovery examination to his affidavit as exhibits allegedly for the purpose of showing the issue of the assignment from LPL to the Plaintiff during his discovery examination. Counsel for the Defendant objected to this use of the discovery transcripts, particularly the inclusion of transcripts showing statements by counsel. A ruling on the admissibility of that evidence was reserved.
[7] Mr. Kerr's affidavit has been submitted in support of the two aspects of the Plaintiff's motion, that is the joinder of LPL and the amendment of the pleadings. According to the notice of motion, LPL itself seeks to be joined as a party in order to plead an assignment to the Plaintiff. As well, the Plaintiff seeks the amendment in order to advance a new cause of action, that is breach of contract after it establishes that a contract with the Defendant can be implied. The proposed further amended statement of claim provides, in part, as follows:
2. The Plaintiff South Yukon Forest Corporation is a corporation duly incorporated pursuant to the laws of the Yukon with its registered office at suite 300 - 204 Black Street, Whitehorse, Yukon, Y1A 2M9.
3. The Plaintiff Liard Plywood and Lumber Manufacturing Inc. ("LPL") is a corporation duly incorporated pursuant to the laws of Yukon with its registered office at Suite 300 - 204 Black Street, Whitehorse, Yukon, Y1A 2M9.
4. LPL brings this action on its own behalf and in its capacity as a joint venturer with 18232 Yukon Ltd., 3629597 Canada Inc., and their predecessors, which venturers, or their predecessors ("joint venturers" or "venturers"), in or about the fall of 1997 undertook a joint venture for the purposes of constructing and operating a wood manufacturing complex near Watson Lake, Yukon, and which joint venture designated South Yukon Forest Corporation as the operating entity of the joint venture which held the interests and assets of the joint venture in trust for the venturers.
5. South Yukon Forest Corporation brings this action on its own behalf and as trustee for said joint venturers.
6. In or about 1997, LPL caused South Yukon Forest Corporation to be incorporated for the purposes of acting as the operating entity of the joint venture and LPL assigned to South Yukon Forest Corporation all of its rights, titles, interests and equities in the Watson Lake sawmill project, including any and all actions, claims, demands, causes of action that it had or may have had against the Defendant.
7. Alternatively, in or about 1997, LPL entered into an agreement with 391605 British Columbia Ltd. wherein LPL contributed to the venture certain rights, titles, interests and equities, but retained any and all rights, claims, demands, causes of action against the Defendant with respect to assurances, representations, commitments and promises made by the Defendant to LPL.
[8] The Defendant opposes the proposed amendments. First, it argues that the joinder of LPL is not necessary for the effective and complete determination of the Plaintiff's claim. Further, if LPL were a necessary party, this was known, or should have been known, to the Plaintiff either when the action was commenced or at the time that the Plaintiff obtained leave to amend its statement of claim in August 2002. Finally, the Defendant says that the Plaintiff, by letter written on January 15, 2003, prior to the commencement of the discovery examinations, announced its intention to seek the joinder of LPL but did nothing about seeking leave to amend until the motion was filed on February 16, 2004.
[9] The statement of claim, as originally drafted and as amended in August 2002, casts the Plaintiff's claim in terms of negligence, including allegations of abuse of public office. In the proposed amendments to the statement of claim, the Plaintiff and LPL, as a proposed Plaintiff, seek to plead breach of contract. In that regard, the Plaintiff and LPL allege that there is an implied contract with the Defendant concerning the mill at Watson Lake. Paragraph 24 of the proposed further amended statement of claim provides as follows:
24. The Plaintiffs say that the said assurances, representations, commitments, and promises made by DIAND aforesaid and acceptance of same by the Plaintiffs, constituted a binding contract between DIAND and the Plaintiffs, the terms and conditions, either express or implied, of which are as follows:
a. The Plaintiffs, or their representatives or agents, would acquire, assemble, construct and operate a sawmill in the Watson Lake area in or about 1998 that would have the capacity to process 200,000 cubic metres of wood annually;
b. The said sawmill would employ residents of the Watson Lake area;
c. DIAND would ensure that there would be available to the sawmill at least 200,000 cubic metres of merchantable wood annually;
d. DIAND would continue to make available to loggers 350,000 cubic metres of wood in the Watson Lake area under the commercial timber permit system, to enable the Plaintiffs to acquire sufficient wood to allow the sawmill to operate efficiently, continuously and economically, and such volumes would continue to be available for disposition by the commercial timber permit system pending the implementation of a long term timber tenure process;
e. DIAND would complete forest management plans for the forest management units for the Watson Lake area within two to three years from March 1997;
f. Upon completion of the said forest management plans DIAND would implement a long term tenure process that would enable the Plaintiffs to obtain long term tenure, in the form of a timber harvest agreement of at least 200,000 cubic metres of wood annually;
g. The Plaintiffs and their agents, loggers and permitters would receive timber harvesting rights from DIAND within sufficient time to allow the Plaintiffs to efficiently harvest the timber allocated thereby within a reasonable time to enable the Plaintiffs to obtain a continuous supply of wood for the Plaintiffs' sawmill;
h. DIAND would initiate, process and complete in an efficient, diligent, reasonable and timely manner, the following administrative processes and procedures referred to in paragraph 21(g) hereof.
[10] The Plaintiff and LPL claim damages according to the proposed amended statement of claim. Those damages are as follows:
i. general damages;
ii. special damages
iii. punitive damages;
iv. pre-judgment and post-judgment interest;
v. and costs.
DISCUSSION
[11] A preliminary objection was raised by the Defendant about the admissibility of exhibits L to P attached to Mr. Kerr's affidavit. These are extracts from his examination for discovery.
[12] In my opinion, the Defendant's objections are well founded, having regard to the Rules governing the use of discovery examination, that is Rules 288 to 291, inclusive. The Rules address the adoption of the evidence of a person being "examined on behalf of an adverse party" but do not contemplate the use by a party of the evidence of its representative who has been examined.
[13] The Plaintiff argues that these Rules apply only to the use of discovery evidence at trial. I disagree. As a general rule, the evidence taken in a discovery examination cannot be used by the party being examined. I see no reason in principle to ignore this approach in the face of the objection raised by the Defendant.
[14] I agree with the argument advanced by the Defendant that if the Plaintiff wished to present factual evidence relating to the issue of the assignment from LPL to the Plaintiff, then it should have done so by means of an affidavit not by the attachment of extracts of a discovery examination to the affidavit of Mr. Kerr. After all, this is a motion and pursuant to Rule 363, evidence is submitted by means of affidavit. While I will not strike the extracts from the discovery examination of Mr. Kerr, I will accord them no weight, that is exhibits L to P of Mr. Kerr's affidavit.
[15] The first issue raised by the Plaintiff is the joinder of LPL as a Plaintiff. Joinder of parties is governed by Rule 104 which provides as follows:
| 104. (1) At any time, the Court may
(a) order that a person who is not a proper or necessary party shall cease to be a party; or
(b) order that a person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined be added as a party, but no person shall be added as a plaintiff or applicant without his or her consent, signified in writing or in such other manner as the Court may order.
(2) An order made under subsection (1) shall contain directions as to amendment of the originating document and any other pleadings.
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104. (1) La Cour peut, à tout moment, ordonner :
a) qu'une personne constituée erronément comme partie ou une partie dont la présence n'est pas nécessaire au règlement des questions en litige soit mise hors de cause;
b) que soit constituée comme partie à l'instance toute personne qui aurait dû l'être ou dont la présence devant la Cour est nécessaire pour assurer une instruction complète et le règlement des questions en litige dans l'instance; toutefois, nul ne peut être constitué codemandeur sans son consentement, lequel est notifié par écrit ou de telle autre manière que la Cour ordonne.
(2) L'ordonnance rendue en vertu du paragraphe (1) contient des directives quant aux modifications à apporter à l'acte introductif d'instance et aux autres actes de procédure.
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[16] The key criteria for adding a party is the necessity of its presence for the full adjudication of the matters in issue. In this regard, the Plaintiff referred to Warner-Lambert Canada Inc. et al. v. Canada (Minister of Health) (2001), 270 N.R. 314 (F.C.A.). The burden of demonstrating such necessity lies upon the moving party. On the basis of the evidence submitted in this case, I am not persuaded that the Plaintiff has shown that LPL is a necessary party.
[17] The alleged assignment is a question of fact and consequently, a question of evidence. A person is not a necessary party merely because that person can produce relevant evidence; see Stevens v. Canada (Commissioner, Commission of Inquiry), [1998] 4 F.C. 125 (C.A.).
[18] It appears to me that the issue of the assignment is peripheral to the Plaintiff's proposed amendment of the statement of claim in order to plead breach of contract. I do not see a necessary connection between the two issues.
[19] Further, Rule 104(1)(b) provides that a proposed plaintiff shall provide written consent to such joinder. There is no such written consent in this case and indeed, as noted by the Defendant, one of the members of the joint venture has written a letter expressing its lack of interest and intention to participate in this litigation.
[20] The Plaintiff claims to be the trustee for the joint venture. Counsel for the Plaintiff states, on the record, that the Plaintiff is not seeking the joinder of LPL so that it can pursue a representative action or a class action. That clarification was sought in light of the language used by the Plaintiff in the written argument filed in support of the motion. The representative action is no longer available following the repeal of Rule 114 in 2002 and the Plaintiff has not complied with the requirements for such certification of this action as a class action pursuant to Rules 299.1-299.42.
[21] As for the proposed amendments to the statement of claim, I acknowledge that Rule 75 confers a broad discretion. The Rule provides as follows:
| 75. (1) Subject to subsection (2) and rule 76, the Court may, on motion, at any time, allow a party to amend a document, on such terms as will protect the rights of all parties.
Limitation
(2) No amendment shall be allowed under subsection (1) during or after a hearing unless
(a) the purpose is to make the document accord with the issues at the hearing;
(b) a new hearing is ordered; or
(c) the other parties are given an opportunity for any preparation necessary to meet any new or amended allegations.
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75. (1) Sous réserve du paragraphe (2) et de la règle 76, la Cour peut à tout moment, sur requête, autoriser une partie à modifier un document, aux conditions qui permettent de protéger les droits de toutes les parties.
(2) L'autorisation visée au paragraphe (1) ne peut être accordée pendant ou après une audience que si, selon le cas :
a) l'objet de la modification est de faire concorder le document avec les questions en litige à l'audience;
b) une nouvelle audience est ordonnée;
c) les autres parties se voient accorder l'occasion de prendre les mesures préparatoires nécessaires pour donner suite aux prétentions nouvelles ou révisées.
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[22] Rule 76(b) is relevant and provides as follows:
| 76. With leave of the Court, an amendment may be made
...
(b) to alter the capacity in which a party is bringing a proceeding, if the party could have commenced the proceeding in its altered capacity at the date of commencement of the proceeding,
unless to do so would result in prejudice to a party that would not be compensable by costs or an adjournment.
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76. Un document peut être modifié pour l'un des motifs suivants avec l'autorisation de la Cour, sauf lorsqu'il en résulterait un préjudice à une partie qui ne pourrait être réparé au moyen de dépens ou par un ajournement :
...
b) changer la qualité en laquelle la partie introduit l'instance, dans le cas où elle aurait pu introduire l'instance en cette nouvelle qualité à la date du début de celle-ci.
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[23] The proposed amendments are not for the purpose of altering the capacity in which the Plaintiff brings this action but for the dual purpose of introducing a new party and a new cause of action, that is breach of contract arising from an implied contract with the Defendant. Otherwise, the proposed amendments refer to contractual arrangements between LPL and others, and particularize the claim in negligence against the Defendant.
[24] The recent jurisprudence from the Federal Court of Appeal concerning amendments to pleadings seems to favour granting such amendments. In this regard, I refer to Society of Composers, Authors and Music Publishers of Canada v. Landmark Cinemas of Canada Ltd. et al.(2004), 316 N.R. 387 (F.C.A.) and Iris, Le Groupe Visuel (1990) Inc. v. Trustus International Trading Inc., [2004] F.C.J. No. 752.
[25] In the result, the Plaintiff's motion to join LPL is dismissed. The motion to amend the statement of claim to introduce a claim in contract is allowed, on the basis that the Plaintiff shall bear all costs occasioned by such amendments.
[26] The matter of costs is reserved and the parties may make brief written submissions covering costs, including the costs consequences arising from the Plaintiff's abandonment of part of its motion. The Plaintiff is to serve and file its submissions within seven days of the order, the Defendant to serve and file her reply within seven days of receipt of the Plaintiff's submissions.
ORDER
The Plaintiff's motion to join LPL as a plaintiff is dismissed.
The Plaintiff's motion to amend the statement of claim and to introduce a claim in contract is allowed. The Plaintiff shall serve and file a clean statement of claim, omitting the proposed amendments which sought to incorporate LPL as a plaintiff in this action, within ten (10) days of this Order. Leave is granted for the Defendant to serve and file an amended statement of defence within two weeks after the receipt of the clean statement of claim.
The parties shall serve and file their submissions on costs as follows: the Plaintiff shall serve and file its submissions within seven days of this Order and the Defendant to serve and file its submissions within seven days after receipt of the Plaintiff's submissions. There will be no reply material.
"E. Heneghan"
J.F.C.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2012-01
STYLE OF CAUSE: South Yukon Forest Corporation v. HMQ
PLACE OF HEARING: Whitehorse, Yukon Territory
DATE OF HEARING: November 1, 2004
REASONS FOR ORDER AND
ORDER : Heneghan J.
DATED: November 23, 2004
APPEARANCES:
Mr. Timothy S. Preston, Q.C. FOR PLAINTIFF
Mr. Gary W. Whittle FOR DEFENDANT
SOLICITORS OF RECORD:
Lackowicz Shier and Hoffman FOR PLAINTIFF
Whittle and Company FOR DEFENDANT
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