Maruha Corp. v. Asl Sanderling (The), docket T-1785-98

Date: 19991215

Docket: T-1785-98

BETWEEN:

     MARUHA CORPORATION

     DALEY BROTHERS LTD.

     Plaintiffs

     - and -

     OCEANEX INC.

OCEANEX (1997) INC.

THE SHIP "ASL SANDERLING", HER OWNERS AND

ALL OTHERS INTERESTED IN THE "ASL SANDERLING" and

ROBERT HERRING, MASTER of the "ASL SANDERLING"

ZIM ISRAEL NAVIGATION COMPANY LIMITED

         Defendants

     REASONS FOR ORDER AND ORDER

BLAIS J.

[1]      These are two motions by the plaintiffs for orders that the defendants Oceanex Inc. and Oceanex (1997) Inc. produce for inspection and copying certain documents.

[2]      Pursuant to the first motion dated September 23, 1999, the plaintiffs request as follows:

-      Standing orders and documents relating to cargo handling procedures for leading and carriage of refrigeration containers after September 15, 1997;

-      All documents relating to specification, tender, purchase and supply of marine-compatible portable generators purchased after September 15, 1997;

-      Documents concerning operation of the new marine compatible portable generators.

[3]      Pursuant to the motion dated November 25, 1999, the plaintiffs request that the defendants Oceanex Inc. and Oceanex (1997) Inc. produce for inspection and copying all relevant documents and information concerning the following categories:

1.      Manual for Securing Containers;

2.      Safe Stowage Cargo Manuel;

3.      Cargo Handling Procedures Manual;

4.      Procedures in Place within Oceanex dealing with Placement of Portable Generators on board Oceanex Vessels after the accident September 15, 1997;

5.      New Generator Purchase Documents;

6.      Instructions by Oceanex to its Masters or Engineers concerning Fuel Containers for Portable Generators, after the accident September 15, 1997;

7.      Cargo Open Policy;

8.      Investigation Reports prepared by Earl Barrett of Oceanex;

9.      Distribution List of Investigation Reports prepared by Earl Barrett;

10.      Statements of Oceanex Employees prepared for, or obtained by Earl Barrett;

11.      Statements of Mr. Walsh given to Earl Barrett.

PLAINTIFF"S ARGUMENTS

[4]      The plaintiff is arguing that Oceanex is obliged by the Rules of the Court to list all relevant documents in its affidavit of documents and not wait for them to come out in the discovery process.

[5]      The plaintiff submits that the case law has held that every document relating to a matter in question which is reasonable to suppose contains information which may directly or indirectly enable the party requiring the affidavit to either advance his own case or damage the case of the adversary, is relevant.

[6]      The request for production relating to new management cargo handling procedures and supply of marine-compatible portable generators arise from pages 7 and 8 of the Transportation Safety Report.

[7]      The plaintiffs submit that it is relevant to the claim to determine if the defendant Oceanex instituted new management procedures immediately following the accident and if the defendant purchased new "marine-compatible" portable diesel generator after the diesel generator in this case was destroyed in the fire of September 15, 1997.

[8]      On the second motion, the plaintiffs suggest that the documents in categories 1-6 deal with an operation manual prepared by Oceanex prior to the accident and completed after the accident. The plaintiffs submit that these documents are relevant based on the pleadings in paragraphs 12-16 of the amended statement of claim.

[9]      The plaintiffs submit that on an application for production of relevant documents within the discovery process, the proper course is to determine if the documents are relevant. The issue of admissibility should be left to the trial judge. Furthermore, there is no rule of policy in the Federal Court of Canada that prevents production of relevant documents which have come into effect after the accident.

[10]      The documents in categories 8-11 relate to an investigation undertaken by Earl Barrett. The defendant claimed privilege during discovery. No where in the affidavit of documents prepared by Oceanex, are these documents claimed as privileged. The plaintiffs submit that Oceanex having failed to claim privilege for the reports and statements which are now known to exist, cannot now claim privilege for the documents.

[11]      The Shipboard Policy & Procedure Manual show that there is a company requirement by Oceanex that reports of accidents be prepared. Earl Barrett in his capacity as Vice-President, wanted to determine the cause of the accident. The plaintiffs submit that it is not ground for a claim of privilege.

[12]      The plaintiffs rely on Rules 222, 223, 225 and 227.

DEFENDANTS" ARGUMENTS

[13]      The defendant take issue with all reference made to the Transportation Safety Report.

[14]      The defendants submit that none of the Federal Court Rules relied upon by the plaintiffs allow the production of further documents at this stage.

[15]      It is submitted that the plaintiffs" motion is premature in that it raises matters which would more appropriately be left to the discovery process which is presently ongoing. It is submitted that the appropriate modus operandi is for the discovery process to unfold, as it will, and which will almost invariably give rise to certain undertakings and request for further documents.

[16]      Furthermore, documents No. 2, 3 and 4 are irrelevant in the present instances as they relate to steps which would have been taken after the subject fire which broke out on board the "ASL Sanderling".

[17]      The defendants submit that it is recognized in the jurisprudence that subsequent preventive actions are neither admissible nor evidence of negligence. This principle also applies to discovery, as well as at trial, and to documentary evidence, as well as oral testimony.

[18]      The defendants are ready to undertake to serve and file a new affidavit of documents in which all documents for which privilege is claimed will be detailed, no later than December 31, 1999.

[19]      Relating to the second motion, the Oceanex defendants reiterate their previous general submission that the above documents or information are:

-      Manual for Securing Containers;

-      Safe Stowage Cargo Manual;

-      Procedures in Place within Oceanex dealing with Placement of Portable Generators on board Oceanex Vessels after the accident September 15, 1997;

-      New Generator Purchase Documents;

-      Instructions by Oceanex to its Masters or Engineers concerning Fuel Containers for Portable Generators, after the accident September 15, 1997.

[20]      Those documents are irrelevant in the present instance as they relate to steps which would have been taken after the subject fire which broke out on board the "ASL Sanderling".

[21]      With respect to documents No. 8, 9, 10 and 11 listed in the supplementary motion,

-      Investigation Reports prepared by Earl Barrett of Oceanex;

-      Distribution List of Investigation Reports prepared by Earl Barrett;

-      Statements of Oceanex Employees prepared for, or obtained by Earl Barrett;

-      Statements of Mr. Walsh given to Earl Barrett.

[22]      The Oceanex defendants submit that they are entitled to claim that these documents are the subject of solicitor/client privilege given that they were clearly prepared in preparation for an upcoming litigation and at the request of either their solicitors at the time (namely, Mr. Pierre Côté of Ogilvy Renault) or the undersigned solicitors.

[23]      Concerning investigation reports prepared by Earl Barrett on Oceanex, the defendants suggest pursuant to the affidavit signed by J. Kenrick Sproule, counsel for the defendants, that Mr. Pierre Côté former counsel for the defendants, advised Mr. Barrett to make a written statement so that he would not forget anything 2-3 years down the road and that Mr. Côté has informed Mr. Barrett that he requested this to be done because litigation was contemplated.

[24]      The defendants submit that the report prepared by Mr. Barrett was only directed to Mr. Pierre Côté but it was also stipulated by Mr. Côté when the said report was distributed internally to persons at Oceanex that the report could not be released to anyone outside of Oceanex without the permission of Mr. Côté.

[25]      The defendants also suggest that pursuant to the affidavit of Mr. Sproule, all documents and reports produced by Oceanex were necessarily in contemplation of litigation and specifically with respect to the report prepared by Mr. Barrett.

[26]      The defendants suggest that statements of Oceanex employees prepared for or obtained by Mr. Earl Barrett are also privileged because the statements referred to in this section of the transcript of the examination for discovery referred to statements taken by members of Mr. Sproule"s firm.

ANALYSIS

[27]      Rule 222 explains that a document of a party is relevant if the party intends to rely on it or if the document tends to adversely affect the party"s case or to support another party"s case.

[28]      The test of relevancy for purposes of discovery was propounded by McEachern C.J. in the case of Boxer and Boxer Holdings ltd. v. Reesor, et al. (1983), 43 B.C.L.R. 352 (B.C.S.C.) when, at page 359, he said:

It seems to me that the clear right of the plaintiffs to have access to documents which may fairly lead them to a train of inquiry which may directly or indirectly advance their case or damage the defendant"s case particularly on the crucial question of one party"s version of the agreement being more probably correct than the other, entitles the plaintiffs to succeed on some parts of this application.

When produced the documents in the file may assist the appellant in its defence. On the other hand, they may not and may, as the respondent says, be totally irrelevant. In either event, the matter in issue may be more readily resolved at trial although their ultimate relevance and the weight to be attached to them will be matters for the Trial Judge.

[29]      Furthermore in Reading & Bates Construction Co. v. Baker Energy Resources Corp. (1988), 25 F.T.R. 226 at 230, the Federal Court held that:

The test as to what documents are required to be produced is simply relevance. The test of relevance is not a matter for the exercise of the discretion. What documents parties are entitled to is a matter of law, not a matter of discretion.

[30]      In T.O. Forest Products Inc. v. Fednav Ltd. (1994), 72 F.T.R. 39, Mr. Justice Teitelbaum reviewed the basic cases, including Boxer Holdings Ltd. and Reading & Bates (referred to above) and concluded:

Clearly, the principle to be taken from all of the above cases is that all documents that can be of assistance to either party to support a claim or to defend a claim are relevant and must be made available. I am of the view that a document or documents should be produced unless it is clear that the document is of no relevance to the issues being litigated.

[31]      Rue 223 specifically categorizes the documents that ought to be listed in the affidavit of documents. The parties have an obligation to include in the affidavit of documents all relevant documents produced, or not produced, and stating the reasons why the document may not be produced. Furthermore, a party has a continuing obligation to disclose newly discovered documents under Rule 226.

[32]      As to the defendants" argument that some documents requested are not admissible, I refer you to Rule 231:

Rule 231. Disclosure or production not admission The disclosure of a document or its production for inspection does not constitute an admission of its authenticity or admissibility in the action.

Règle 231. Effet de la communication ou de la production d"un document La communication d"un document ou sa production pour examen ne constitue pas une reconnaissance de son authenticité ou de son admissibilité dans le cadre de l"action.

[33]      The admission of evidence is something for the trial judge to determine. See Cominco Ltd. v. Westinghouse Canada Limited et al (1979) 11 B.C.L.R. 142 at 144:

Questions relating to post-fire conduct were also proper. There was no fear that a jury would use such evidence improperly, for there would not be a jury in this case, and the judge could be trusted to use the evidence properly. Moreover, even if there had been a jury and there had been evidence that ought to have been kept from it because it might have used it improperly, that was not a matter to influence the scope of the examination for discovery. The scope of discovery and admissibility at trial are substantially similar but not identical. That a question is required to be answered on discovery does not mean the trial judge is bound to admit it as evidence. Similarly, an exclusionary rule regarding questions relating to post-accident conduct based on policy would not be introduced. A defendant would not expose other persons to injury and himself to further lawsuits in order to avoid the rather tenuous argument that because he had changed something, he had admitted fault. Moreover, post-fire conduct was relevant, that is, "regarding any matter ... relating to a matter in question in the action". Such evidence bore on the capacity to produce fire-retardant cable and the capacity to test cables and know their flammability; on the fitness of the cable produced for the purpose for which it was required; and on what ought to have been known before the fire.

[34]      For those reasons, the first motion is granted and the defendants Oceanex are ordered to provide the documents as requested.

[35]      On the second motion relating to client/solicitor privilege, the Court has adopted the dominant purpose rule described in Waugh v. British Railway Board, [1980] A.C. 521, where it was held that a document produced in contemplation of a litigation is privileged.

[36]      In T.O. Forest Products, Inc. v. Fednav Ltd., [1993] F.C.J.., Justice Teitelbaum explained:

When privilege is claimed by a party, the onus is on the party claiming privilege. What that party must clearly show is that the dominant purpose of the preparation of the survey report was in respect of litigation or where there was a "reasonable expectation of litigation".

[37]      Commercial Union Assurance Co. PLC v. M.T. Fishing Co., [1999] F.C.J. No. 123, Justice Dubé held:

The "dominant purpose" of a communication can exist in the mind of either the author of the document or the person ordering the document"s production, but it needs not exist in both. [...] The point in time at which the dominant purpose of communications becomes that of furthering the course of litigation must be determined by the particular facts of each case. [...] Thus, litigation privilege can apply to communication made by a party before counsel has been retained. [...] It has also been held that where an insurer has completed its initial investigation and begun to pay the assured"s claim, and where new information subsequently received by the insurer suggested that the initial claim had been fraudulent, litigation became "imminent" in the mind of the insurer upon receipt of the new information and all derivative communications made after that time were therefore privileged.

[38]      Pursuant to the affidavit of Mr. Sproule, I am not convinced that the defendants have met their burden to demonstrate that the documents for which they claim solicitor/client privileges.

[39]      Pursuant to Exhibit "M" attached to the affidavit of Mr. Simon Barker, the plaintiffs have also demonstrated that pursuant to the Shipboard Policy and Procedural Manual of the defendants, and particularly section 1.5 and 1.6 of this document reports on damages are part of the regular practice of the defendants and that reports are made as soon as there are damages and are not related necessarily because a litigation is completed.

1.5 DAMAGES

1.5.1      Damage reports and full written reports must be sent to the office for any damage to vessel, equipment, cargo berths, other vessels, etc. The Master will normally complete reports pertaining to hull/superstructure and cargo damage. The Chief Engineer will normally complete reports pertaining to machinery damage.

...

1.6 PROTESTS

1.6.1      When operating, the Master is to note a protest when:

a)      During the voyage the ship has encountered conditions of wind and sea which results in extensive or severe damage to cargo.

b)      From any cause the ship is damaged, or there is reason to fear that damage may be sustained. This is particularly important when third parties are involved or there is likely to be a claim against the ship.

[40]      I am of the opinion that the defendants should provide the documents requested to the Court and the Court will decide whether those documents are the subject of solicitor/client privilege and whether they were clearly prepared in preparation for an upcoming litigation, and at the request of either their solicitors at the time or their actual solicitors.

[41]      For those reasons, THIS COURT ORDERS THAT:

-      The defendants Oceanex Inc. and Oceanex (1997) Inc. produce for inspection and copying the following documents:

1.      Standing orders and documents relating to cargo handling procedures for loading and carriage of refrigeration containers after September 15, 1997, no later than January 31, 2001;

2.      All documents relating to specification, tender, purchase and supply of marine-compatible portable generators purchased after September 15, 1997, no later than January 31, 2001;

3.      Document concerning operation of the new marine compatible portable generators, no later than January 31, 2001;

    

4.      The Manual for securing containers, no later than January 31, 2001;

5.      The procedures in place within Oceanex dealing with Placement of Portable Generators on board Oceanex Vessels after the accident, no later than January 31, 2001;

6.      New Generator Purchased Documents, no later than January 31, 2001;

7.      Instruction of Oceanex to its Masters and Engineers concerning Fuel Containers for Portable Generators after the accident, no later than January 31, 2001;

     THIS COURT ORDERS THAT:

-      The defendants shall file in a sealed envelope to the attention of Mr. Justice Pierre Blais, the following documents:

1.      All other questions or subjects to undertaking and the defendants shall provide documents that are subject to undertaking, no later than January 31, 2000;

2.      Investigation Reports prepared by Earl Barrett of Oceanex, no later than January 31, 2000;

3.      Distribution List of Investigation Reports prepared by Earl Barrett, no later than January 31, 2000;

4.      Statements of Oceanex Employees prepared for, or obtained by Earl Barrett, no later than January 31, 2000;

5.      Statements of Mr. Walsh given to Earl Barrett, no later than January 31, 2000.

-      The parties shall be prepared to address all outstanding issues at the next conference that will be held through a telephone conference after February 28, 2000;

-      Those outstanding issues should include a schedule for completion of discoveries;

-      Cost of those two motions are in the cause.

                        

                         Judge

OTTAWA, ONTARIO

DATE