Court of Queen ’ s Bench of Alberta Citation: Jabneel Construction Inc. v. Lamont (Town), 2013 ABQB 648 Date: 20131202 Docket: 1003 11076 Registry: Edmonton Between: Jabneel Construction Inc. and Construction Jabneel Inc. Plaintiffs - and - The Town of Lamont and Tom Miller Defendants _ ________________________________________ ______________ Reasons for Judgment of the Honourable Mr.

Justice Donald Lee _________________________________________ ______________ Background [ 1 ] Jabneel Development Inc. and Construction Jabneel Inc. (“Jabneel”) commenced this action for damages to recover losses allegedly resulting from failed development agreements made with the Town of Lamont (“Lamont”) in 2006. [ 2 ] The Defendant Tom Miller (“Miller”) was Chief Administrative Officer of Lamont (“COA”) until 2011. [ 3 ] On December 12, 2006, Jabneel and Lamont entered into three separate Memorandums of Agreement (“Development Agreements”) for development of three subdivisions.

Jabneel and Lamont also entered into three Master Sale Agreements with respect to those three subdivisions, effective December 1, 2006. Between June 2, 2009 and March 2, 2010, Lamont terminated the Development Agreements and the Master Sale Agreements with Jabneel.

[ 4 ] Jabneel filed a Statement of Claim in this action on June 29, 2010, alleging that Lamont’s termination of the Agreements was wrongful and that Miller acted in bad faith in relation to delays experienced in getting development underway. [ 5 ] Jabneel filed an Application on August 15, 2013 seeking to amend its Statement of Claim, seeking the return of funds held by Lamont pursuant to a letter of credit provided by Jabneel in connection with the proposed development, and seeking production of the Crown’s Disclosure from Miller in relation to recent charges he is facing under the Criminal Code .

Issue [ 6 ] The issue before me is whether the Court should order the Crown Disclosure regarding Miller’s current criminal charges be disclosed to counsel for the Plaintiffs. The Law [ 7 ] The Rules of Court applicable to this application are Rule 5.2(1) and 5.6 (1): 5.2(1) For the purposes of this Part, a question, record or information is relevant and material only if the answer to the question, or the record or information could reasonably be expected (

a) to significantly help determine one or more of the issues raised in the pleadings, or (

b) to ascertain evidence that could reasonably be expected to significantly help determine one or more of the issues raised in the pleadings. 5.6(1) An affidavit of records must (

b) disclose all records that (

i) are relevant and material to the issues in the action , and (ii) are or have been under the party’s control. [underlining added] Argument [ 8 ] The Applicant submits that the reason Miller has been charged with these offences date back to an investigation that commenced in 2008 when he was the CAO of the town and in sole control of this development with Jabneel.

The bribes demanded of the Plaintiffs were allegedly made at that time of his employment with Lamont, and were allegedly made again in the fall of 2012, which resulted in criminal charges. [ 9 ] It is the Applicant’s submission that these charges and the on-going investigation since 2008 go to the heart of the allegations of bad faith against the Town of Lamont and Miller, and that this Court should order Miller to deliver up the full Disclosure to his civil Defence counsel in the public interest or in the interest of the administration of justice. [ 10 ] It is submitted also that Miller’s argument that the granting of such an Order is contingent on the Amended Statement of Claim being filed is disputed since the original Statement of Claim contains provisions wherein Miller asked for kick-backs.

It is submitted that Miller’s further attempts to continue on with this alleged activity have resulted in criminal charges and even if none of the proposed amendments to the Amended Statement of Claim are ultimately accepted by the Courts, there is still ample basis in the original Statement of Claim to allow for this Order. [ 11 ] Miller argues that there is no real connection between the allegations made in the pleadings, and the requested Crown Disclosure records pertaining to subsequent events involving Miller in his personal capacity approximately 3 years later.

It is submitted that the Crown Disclosure sought does not relate to any of the transactions or events as between Lamont and Jabneel alleged by Jabneel to have resulted in financial loss. [ 12 ] Miller submits that the tests of relevance and materiality cannot be ignored or substituted for by considering whether a record might uncover evidence potentially meeting the similar fact test criteria at trial, and the fact an individual is charged with an offence is evidence of very little.

It is submitted that the Applicants seek the Disclosure purely as evidence of bad character in order to prejudice the credibility of the Defendant Miller. [ 13 ] Moreover, and as a determinative factor, it is submitted that the Applicants will suffer no prejudice by an adjournment of this issue until their application to amend the Statement of Claim is heard in February 2014.

Miller argues that the issue of production of Crown Disclosure related to charges against Miller, arising out of incidents alleged to have occurred in 2012, has been brought before the Court prematurely, as such records are not relevant or material to the issues raised in the pleadings. The potential prejudice to Miller at this time outweighs the Plaintiff’s interest in unrelated character evidence. Analysis

[ 14 ] The relevant portions of the Statement of Claim in this matter reads as follows: ……… 10. Since entering into the Development Agreements and the Master Sales Agreements, Jabneel has expended all or most of its financial resources in excess of 3.6 million dollars in efforts to attempt to develop the Edna, Westerly and Northerly Subdivisions in good faith and on a timely basis. 11.

However, as a result of undue delay, negligence and the high-handed and improper conduct of Lamont (through its employees and agents) and in particular the conduct of Tom Miller which constitutes bad faith, Jabneel has been deprived of its opportunity to bring what was anticipated to be a 1200 unit, phased residential development project with anticipated net profits of approximately $120,000,000.00 to fruition. 12. Jabneel's valuation of the Edna, Westerly and Northerly Subdivision's lands alone as at March 2008 was $35,000,000.00. 13.

The conduct of Lamont and/or Miller as the case may be amounts to a substantial breach of legal and contractual duties to act in good faith and in timely manner with respect to matters within their control and discretion. 14. Particulars of negligence and breaches of the Agreements on the part of Lamont and/or Miller include but are not limited to:

a) failing to transfer land to Jabneel as required under the Agreements;

b) excessive delay in transferring land as required under the Agreements;

c) failing to take necessary steps in order to obtain Third Party approvals necessary to give Jabneel approvals as required under the Agreements;

d) issuing "Stop Work Orders" and levying excessive penalties for frivolous and unnecessary reasons;

e) failing and refusing to pay invoicing submitted to it by Jabneel for valuable services rendered to Lamont and pursuant to Lamont's obligation to do so under the Agreements;

f) repeatedly and arbitrarily refusing approvals for conceptual plans and subdivision plans without providing any valid reason or sufficient reasons whatsoever;

g) granting approvals immediately before pending deadlines under the Agreements when it knew or ought to have known that Jabneel would be unable to take necessary steps to meet its obligations under the Agreements thereafter;

h) deliberately sending important notices to incorrect addresses and addresses not contemplated or agreed upon under the Agreements;

i) wrongfully obtaining and withholding Jabneel's $406,500.00 construction bond thereby causing Jabneel to be unable to meet certain Third Party liabilities on the Edna, Westerly and Northerly Subdivisions;

j) falsely and improperly accusing Jabneel of being in breach of the Agreements;

k) refusing to submit to or attend to mediation or arbitration when requested to do so under the Agreements;

l) failing to give necessary extensions to Jabneel as required under the Agreements;

m) failing to take steps to have Miller removed from handling Jabneel's project;

n) wrongfully attempting to terminate the Agreements;

o) failing to fund advertising budgets as agreed upon;

p) interfering in third party contractual relations;

q) making racist comments to the Director(

s) of Jabneel;

r) using intimidation tactics against the Director(

s) of Jabneel;

s) such other breaches of contract or negligence as will be proven at trial. 15. Jabneel states that at a material time, Miller approached the President of Jabneel and asked for a 5% cash commission ("kickback") which he called fees on all sales that he would personally refer to Jabneel. 16. Miller stated at that time that payment of a kickback would "ensure the proper functioning" of Jabneel's projects in Lamont. 17.

After having caused its legal counsel to perform research on the legality of such a kickback as proposed by Miller, Jabneel determined that this request was contrary to and in violation of sections 121 and 123 of the Criminal Code of Canada . Accordingly Jabneel communicated to Miller that it would not entertain this notion. 18. Miller assured Jabneel thereafter that he would personally see to it that their projects would be delayed to the point of failure in the Town of Lamont.

19. In conducting himself in this manner, Miller acted outside of the scope of his employment duties and exposed himself to personal liability for attempting to obtain kickbacks from Jabneel and for acting in bad faith thereafter. 20. Further improper conduct constituting bad faith on Miller's part which exposes him to personal liability include but are not limited to:

a) unilaterally and wrongfully altering important contractual documents to have them then signed by Jabneel's Director(s);

b) threatening Jabneel, it's officers and agents both verbally and in writing;

c) voluntarily delaying and refusing to sign transfers of land sent to him by Lamont's solicitors as required;

d) directly contacting actual buyers and potential buyers of Jabneel in order to discourage them from investing in its projects which conduct amounts to tortuous interference with contracts;

e) interfering with Jabneel's contractual relations with other Third Party service providers and professionals;

f) influencing, controlling and or directing Lamont's conduct as described in the within Statement of Claim;

g) making racist comments toward the Director(

s) of Jabneel;

h) such other improper conduct or elements of bad faith as will be proven at trial. ……… [ 15 ] The Statement of Claim then in this case refers to contractual and land development matters occurring between December 2006 and 2009. With regard to Miller, the Statement of Claim alleges bad faith during that time period, prior to Lamont’s termination of the agreements with Jabneel and while Miller was employed as Town Manager. Miller’s Statement of Defence, denies these claims being made against him.

With respect to the allegations contained in paragraph 5 of the Statement of Claim, Miller states that they are frivolous, vexatious and false; and seeks increased costs as a result. Miller also states in his Statement of Defence that he conducted himself appropriately, and acted in good faith at all material terms while Lamont’s CAO. [ 16 ] The Affidavit of Gilles Filiatreault [“Filiatreault”] in support of this application sworn on June 17th, 2013, filed in this action on August 15 2013 deposes to the following: a. Mr.

Miller stated in front of two other witnesses and Filiatreault that he would never admit under oath asking for a 5% commission (paragraph 14) but it happened; b. Dennis Durand, a former Town Counsellor arranged to get in touch with Filiatreault stating that Miller had important information for him (paragraph 38); c. Miller advised a witness Mr. Trudeau that in exchange for Miller’s testimony he wanted 50% of any settlement proceeds of this lawsuit (paragraph 51); d. Miller had prepared a Letter of Direction and Power of Attorney and gave them to Mr. Trudeau before Miller met with Filiatreault (paragraph 60); e.

That Mr. Trudeau, Miller and Filiatreault all met at a Boston Pizza on October 4, 2012 and the meeting was recorded (paragraph 63); [ 17 ] The recording transcript of that meeting is attached to Filiatreault’s affidavit sworn on June 17th, 2013 as Exhibit “I”. Exhibit “I” alleges that Miller stated the following: a. What do I get? Or give you? You get a letter, okay, that states that the town would renew all of your (development) contracts for one year…and that you didn’t have to put up more letter-another letter of credit. Okay? Plus, you get my testimony that the meeting actually happened. (p.6); b.

It’s a letter that I have made, but I will testify that it’s true. We know that it’s all bullshit. (p.7); c. You sign this; I’ll give you the letter (p.8); d. The lawyer says, what do you know about the meetings? And I’ll say, well, I know about that meeting…so you get the letter and you get my testimony and the town’s only got one witness, and that’s me. You’re going to get millions. (p.9); e. All of us. Well, we can go. We can go to prison for that. But if it goes through we can all be very well off. (p.11); f. You’re going to get a $4 million dollar cheque (p.13); g.

As soon as your lawyer presents that letter, all hell’s going to break loose, and they are going to know that they are screwed (the Town) (p. 16); h. But there is no need for Foisy to know anything about this right now (p. 29); i. I can get rid of 50(%). My son works on Wall Street; He can trade it on Wall Street. He deals in such big numbers. I could get – you know nobody would know (p.35);

j. Nobody knows about that letter, but us three (p.43); k. When I make up the Town budget, there will be enough money in there to do that work…Okay? Because if somebody else getsin, they’ll say, oh, we don’t have any money. Fuck you…and that is why it is beneficial for you to have me on the inside too (p.51); l. But I can take care of the town council.

Because I got document—this is only one of them (p.52). [18] Jabneel now seeks the production of the Crown’s Disclosure with respect to criminal charges presently pending against Millerfor fraud, forgery, uttering a forged document, and counseling an offence allegedly having to do with Miller’s bribe requests ofFiliatreault in late 2012 as described in his Affidavit, three years after the development agreements were terminated. [19] The Applicant requests this Court make an Order directing that Miller either deliver up full Crown Disclosure to theApplicant’s counsel or alternatively have his Criminal Defence lawyer deliver up the full Crown Disclosure to his lawyer who willprovide a full copy to counsel for the Applicants, because Miller or his criminal defence counsel is in possession of the Disclosure of thismaterial and relevant record which has not been included into the Defence’s Affidavit of Records. [20] A similar application was made successfully in this Court in Bourgeois v Bolen, 2004 ABQB 35, in which a civil defendantinvolved in a fatal motor vehicle accident had been charged but not yet convicted of drinking and driving.

There was even an outstandingconstitutional issue as to whether the blood samples taken had been in violation of the Defendant/Accused’s Charter rights. TheApplicant seeks a similar Order to that described in Bourgeois at paragraphs 85 to 88: 85 I conclude that the records pertaining to the Defendant's blood alcohol content must be produced by the Defendant's criminalcounsel to the Defendant's civil counsel. Since the Plaintiffs seek production of records revealing blood alcohol content derived from aCriminal Code demand, a claim for privilege or public interest immunity may arise.

On receipt of the records from his criminal counsel,the Defendant will assess whether to advance or maintain such a claim. It may be that there is some further information contained in thatdisclosure to assist with that determination, as ordinarily the Defendant would be in a position to advance its objections during thisapplication brought under Rule 213.

However, the Defendant requested a screening process akin to that used in Wagg, and because of thenovelty of this application, I am prepared to give the Defendant's counsel an opportunity to adduce evidence and make argumentconcerning the blood samples on the basis of Charter interests or other grounds. 86 The Defendant is required to disclose the existence of the records pursuant to s. 187.1(2)(

a) and must identify whether it objects tothe production of the documents and the grounds for the objection, pursuant to Rule 187.1(2)(b). The court hearing any applicationarising from that claim, whether on a pre-trial motion or during the trial, will be charged with balancing the public interest in non-disclosure of the information procured by Criminal Code compulsion against the public interest in making all relevant evidence availablein the interests of the administration of justice.

Undoubtedly, the court will consider whether there was a Charter violation in theprocurement of this evidence and its decision as to further production will be informed by Charter values. If a claim of public interestprivilege is not raised, it is possible that the Defendant may still object to the admission of the records in evidence at trial on the basis ofCharter values. 87 Since the records must be produced by the Defendant's criminal counsel to the Defendant's civil counsel, and disclosed to thePlaintiff, the second issue is the appropriate method of disclosure. (

a) The Defendant's criminal lawyer is released from any implied undertaking with respect to the contents of the Crown disclosure in sofar as it relates to blood samples and analysis of those samples. (

b) The Defendant's criminal lawyer is granted leave to release the requested documents to the Defendant's solicitors. (

c) The Defendant will disclose the existence of any documents concerning analysis of blood samples pursuant to Rule 187.1(2)(

a) andidentify whether he objects to the production of the documents and the grounds for the objection, pursuant to Rule 187.1(2)(b). (

d) The parties will attempt to agree as to whether an objection pursuant to Rule 187.1(2)(

b) will be advanced in a pre-trial motion as atrial of an issue, or at trial. If there is no agreement, the parties will be governed by the Rules of Court. 88 Counsel may make representations concerning costs if they are unable to agree. [21] Ordering the release of Crown Disclosure in civil cases has also been argued successfully to be in the public interest and forthe better administration of justice in the Ontario Court of Appeal in D.P. v. Wagg, (ON CA), 2004 O.J. No. 2053where the Plaintiff sued Dr.

Wagg for sexual assault during a medical examination, and then applied for the criminal disclosure in thecriminal sex assault charge against Dr. Wagg. As pointed out by counsel for the Applicant, Rosenberg J.A. for the Court stated asfollows at paragraph 53: [53] In considering a request for production, the police and Crown will bear in mind the comments by Vertes J. in Fullowka v. RoyalOak Mines Inc., (NWT SC), [1998] N.W.T.J. No. 11, that the Crown does not have a simple proprietary interest inthe Crown disclosure.

As he said at para. 15, "the 'fruits of the investigation' in the possession of the Crown 'are not the property of theCrown [page248] for use in securing a conviction but the property of the public to be used to ensure that justice is done'." Society has aninterest in seeing that justice is done in civil cases as well as criminal cases and, generally speaking, that will occur when the parties havethe opportunity to put all relevant evidence before the court.

The Crown disclosure may be helpful to the parties in ensuring that theysecure all relevant evidence. [22] However Applicant’s counsel did not mention paragraphs 38, 39 and 40 of Wagg where the Ontario Court of Appeal takesissue with some parts of Justice Vertes decision: [38] Also, as the courts have recognized, there is an important distinction between discovery in a civil context and disclosure in thecriminal context. In the civil context, the party is, generally speaking, forced to disclose his or her own documents. Thus, as explained in

Goodman v. Rossi, the primary rationale for the implied undertaking rule is founded on the general right of privacy that a person has inhis or her own documents. The documents disclosed by the Crown as part of the criminal disclosure process are of a different character.Vertes J. explained the different rationale in Fullowka v. Royal Oak Mines Inc., (NWT SC), [1998] N.W.T.J. No. 11,[1998] N.W.T.R. 42 (S.C.).

In that case, counsel for the defendants in the criminal trials resisted disclosure of the Crown brief in relatedcivil proceedings on the basis of a condition attached by the Crown at the time of the criminal disclosure. Vertes J. disagreed that theCrown could unilaterally attach such conditions. He wrote the following, at paras. 15-16: The Supreme Court of Canada, in R. v. Stinchcombe, (SCC), [1991] 3 S.C.R. 326, set out the Crown's duty to disclose tothe defence all material evidence.

But the court noted (at page 331) that the "fruits of the investigation" in the possession of the Crown"are not the property of the Crown for use in securing a conviction but the property of the public to be used to ensure that justice isdone." This approach changes the nature of the Crown's interest in disclosure materials from one of a simple proprietary right, with thecorollary [page243] right to control how the document is used, to that of a more complex nature with the predominant purpose being thefurtherance of the public interest in the pursuit of justice.

According to Stinchcombe, the duty of the Crown to provide full disclosure is an absolute duty subject only to the reviewable discretionregarding the withholding of certain types of information and the timing of disclosure. If the Crown could impose conditions on therecipient of the disclosure materials then can it be the case that the Crown could withhold disclosure should the recipient refuse toacknowledge those conditions? I think not.

A refusal to make disclosure would violate the accused's constitutional right to a fair trial.The logical extension of the Crown's position is untenable. [39] Vertes J. went on to hold that there was no statutory bar to production under the Criminal Code, R.S.C. 1985, c. C-46 or the PrivacyAct, R.S.C. 1985, c. P-21. In a subsequent decision by Vertes J. in the same matter, Fullowka v.

Royal Oak Mines Inc., [1998] N.W.T.J.No. 45 (S.C.), at para. 5, he held: The point here, however, is not how or why a document may have been generated in the first place, but its relevance to this litigation.Absent some identifiable privilege, if relevant documents exist, and if they are in Legge's possession or he has power to obtain them, thenthey must be produced. At this stage of the proceedings there is no question of whether a document may be ultimately probative or evenadmissible at trial; it may not be. But that does not preclude production on pre-trial discovery.

The requirement at this stage is to produceany document which may relate either directly or indirectly to any matter in question in the action. [40] I agree with the Divisional Court in this case that this statement is too broad and does not give "sufficient recognition to thebalancing of public versus private interests that is necessary in such circumstances" (para. 38).

While the Crown's interest in thedisclosure materials is different from the interest of a party to civil litigation, and while that interest is not a simple proprietary right, itdoes not follow that the courts should not be concerned about the use of such materials in other proceedings. [underlining added] [23] At the time of this Application before me Questioning has not yet occurred. There is also a pending opposed Application bythe Plaintiffs to amend its Statement of Claim scheduled to be heard in February 2014.

As such, I am concerned at this very early stageof the process whether a direct connection has been shown between Miller’s criminal charges and the unproven claims the Plaintiffsmake against Miller.

The Crown Disclosure pertains to Miller apparently is outside his Town of Lamont functions that occurred duringthe 2006 and 2009 period of allegations referred to in the Statement of Claim concerning the contractual and land development matters. [24] Accordingly disclosure of the Crown’s file in the unproven criminal matters against Miller at this point of the proceedingsseems to be primarily useful only for the purpose of eliciting character evidence that would tend to show that Miller is more likely tocommit improper acts because of the criminal charges.

This is problematic given that criminal charges have not resulted in anyconvictions. Even particulars concerning unproven criminal charges supporting directly related but unproven civil allegations are stillmore prejudicial than probative at this point. [25] The applicability of the criminal Disclosure would at this stage only be relevant by virtue of the application of the similar factrules of evidence, which are complex in themselves, and have been untested in the present forum.

The similar fact evidence may not evenbe applicable at this point, or admissible at any point. [26] In any event, it is not at this stage of the proceedings Miller’s responsibility to provide evidence to prove the Plaintiff’s caseagainst him.

It’s generally always the Plaintiff’s burden in civil claims to prove its claims against Miller. [27] If convictions result against Miller, then the record of those convictions can be disclosed at that time, as I ruled in House vWawanesa Mutual Insurance Co, 2006 ABQB 450 at paras 27 and 28: [27] It should be noted however that the test for what is proper at Discoveries is "relevance and materiality" as set out in Rule 186.1,and that issues of prejudice, credibility, weight, and admissibility are to be determined at trial.

Simply because questions may be"relevant and material" at Discoveries does not make the answers relevant and material, or even admissible, at trial.

Even if the evidenceis admitted at trial, the use the Defendant may make of the criminal record, and the weight that the trial judge may give to it, are issuesthat have to be dealt with at the trial. [28] The problem here however is that if the criminal record is never produced in the first place during Examinations for Discovery,the Defendant will probably not be in a position to prove the Plaintiff’s criminal record at trial given that the contents of a criminalrecord are confidential; nor will the Defendant be in a position to know if the criminal record is of any relevance at trial. [28] Ultimately there is no prejudice to the Applicant if their application is not granted at this time because it can be brought againin February 2014.

Conclusion

[ 29 ] I conclude that the Plaintiff’s Application to obtain Miller’s criminal disclosure is premature at this stage of the proceedings as the Disclosure is not directly relevant and material to Miller’s liability in the civil proceedings. The relevance and materiality of the sought after Disclosure may become apparent after Questioning, or after the Statement of Claim is amended, but it is not apparent now. [ 30 ] The Plaintiff’s Disclosure Application can be heard as part of its February 2014 application. Heard on the 23 rd day of September, 2013. Written Briefs filed October 7 th and 15 th , 2013.

Dated at the City of Edmonton, Alberta this 2 nd day of December, 2013 Donald Lee J.C.Q.B.A. Appearances: Paul R. Foisy Nickerson Roberts Holinski & Mercer for the Plaintiffs Jonathan W. McCully Sharek Logan for the Defendants