Stabilized Water of Canada Inc v Better Business Bureau of Southern Alberta, 2016 ABQB 543

Court of Queen’s Bench of Alberta Citation: Stabilized Water of Canada Inc v Better Business Bureau of Southern Alberta, 2016 ABQB 543 Date: 20160929 Docket: 0201 18472 Registry: Calgary Between: Stabilized Water of Canada Inc. and Envirosoft Water Inc. Plaintiffs - and - Better Business Bureau of Southern Alberta Defendant _______________________________________________________ Reasons for Judgment of J.T.

Prowse , Master in Chambers _______________________________________________________ [ 1 ] The defendant Better Business Bureau of Southern Alberta (“BBB”) applies to dismiss this defamation action for delay, both pursuant to Rule 4.31 (long delay) and Rule 4.33 (the three year drop dead rule). [ 2 ] The plaintiffs are Stabilized Water Inc (“Stabilized”) and Envirosoft Water Inc (“Envirosoft”).

I will refer to them collectively as the plaintiffs. [ 3 ] The plaintiffs allege that they were defamed by BBB in 1999 and 2000 when BBB repeatedly published the following remarks about the water softener equipment being sold and rented to the public by the plaintiffs: The most common water softener fraud is called the "no-salt softener." Sellers of this product claim to condition the water so it "acts" soft . But does it work? The answer is no. [ 4 ] The statement of claim was filed in October, 2002.

[ 5 ] BBB’s statement of defence was filed in August of 2003 and pleads, amongst other things: (

i) justification (ii) fair comment (iii) qualified privilege and (iv) responsible reporting. [ 6 ] BBB alleges that the plaintiffs’ efforts to prosecute the claim have been dilatory.

BBB says that the plaintiffs have shown a pattern of attempting to do just enough to try and save this action from impending long delay applications over the last 14 years. [ 7 ] The plaintiffs respond that, notwithstanding that 14 years have passed since the commencement of the action, the recent delays in moving this matter forward are attributable to BBB. [ 8 ] The plaintiffs say that it is inappropriate for BBB to lay in the weeds, ignore its obligations as a party in the action, abandon responsibility for preserving relevant and material evidence and rely on its own delinquencies to create the prejudice now relied on to seek dismissal for delay. [ 9 ] For the reasons which follow I dismiss the action for delay pursuant to Rule 4.31 but decline to dismiss it for delay pursuant to Rule 4.33.

Steps taken in the proceedings [ 10 ] A timeline of events in this lawsuit is as follows: - October 31, 2002, the plaintiffs filed their statement of claim arising out of alleged publications in 2000. - January 9, 2003, BBB filed a notice of motion seeking to strike the claim. - July 18, 2003, the statement of claim was amended pursuant to an order of July 17, 2003. - August 5, 2003, BBB filed its statement of defence. - October 22, 2003, BBB filed a third party notice on the Canadian Water Quality Association. - October 24, 2003, BBB swore its affidavit of records. - November 24, 2003, the plaintiffs swore their affidavits of records. - February 19, 2004, the third party, the Canadian Water Quality Association filed its statement of defence. - May 27, 2004, the Canadian Water Quality Association swore its affidavit of records. - June 17, 2008, and again on October 27, 2008, BBB’s counsel informed the plaintiffs’ counsel that BBB was not prepared to question the plaintiffs until the plaintiffs remedied their deficient affidavit of records.

In particular, the affidavit of records of the plaintiffs did not disclose any financial information and there was no specification data or water samples provided for the water softener equipment. - February 5, 2009, the plaintiffs’ counsel sent fax correspondence enclosing financial information on Stabilized to counsel for BBB and the third party. BBB notes that no financial records were provided for Envirosoft and no specification data was provided for the water softener equipment. - April 15 and 16, 2009, BBB’s representative at the time, Ms.Wright, was questioned in this matter. Ms.

Wright became president of BBB in 2003 and remained until 2010. This questioning occurred on the eve of a ‘drop​dead’ date. - April 23, 2009, BBB’s counsel wrote to the plaintiffs’ counsel requesting that the written interrogatories which the plaintiffs were going to ask of BBB be provided to BBB so that they could be completed along with BBB’s outstanding undertaking responses. - October 7, 2009, BBB provided to the plaintiffs answers to undertakings arising out of Ms. Wright’s examination. - April 8, 2010, BBB delivered two final straggling undertaking responses and a proposed litigation plan.

There was no substantive response to this proposed litigation plan from the plaintiffs. The plaintiffs say that the proposed

schedule contemplated that BBB would conduct an examination for discovery of the plaintiffs. At that time BBB did not express further concern about the plaintiffs’ production . - June 14, 2010, BBB’s counsel followed up with the plaintiffs’ counsel regarding BBB's proposed litigation plan, set out in the April 8, 2010 letter. BBB also attempted to ascertain the plaintiffs’ position regarding any further questioning in this matter.

The plaintiffs say that, once again, BBB did not express further concern about the plaintiffs’ production. - July 29, 2010, the plaintiffs’ counsel sent BBB’s counsel an email advising that the plaintiffs’ representative was not available for discoveries in August but would be available in September 2010. BBB’s counsel never responded to this. - March 23, 2012, the plaintiffs’ counsel served written interrogatories to be answered by BBB. These were the written interrogatories requested by BBB almost 3 years earlier, on April 23, 2009.

The plaintiffs’ counsel noted an interest in potentially undertaking more questioning of Ms. Wright on her undertakings, and suggested that this step could be taken in conjunction with BBB counsel’s questioning the plaintiffs’ representative Mr. Ward. - March 30, 2012, BBB’s counsel wrote to the plaintiffs’ counsel indicating that Ms. Wright was no longer with the BBB and a new corporate officer would have to be appointed to answer the recent interrogatories.

The plaintiffs say that, once again, BBB’s counsel expressed no concerns about the plaintiffs’ production in relation to the proposal for conducting the questioning of the plaintiffs’ representative.

- June 1, 2012, counsel exchanged email communications concerning questioning. At that time BBB’s counsel indicated that he was prepared to proceed with questioning in August of 2012. He was silent on being unable to proceed due to issues with the plaintiffs’ lack of document production. - Due to difficulties that the plaintiffs’ counsel had in communicating with his client representative Mr. Ward, the plaintiffs’ counsel was unable to co-ordinate the questioning with BBB’s counsel. Having subsequently reconnected with Mr. Ward, on June 21, 2013, plaintiffs’ counsel sent an email to BBB’s counsel expressing a desire to receive answers to interrogatories and

schedule questioning. - August 21, 2013, having received no response from BBB’s counsel in June of 2013, the plaintiffs’ counsel sent BBB’s counsel a follow up email. - September 30, 2013, the BBB again wrote the plaintiffs indicating BBB was continuing to work to complete the answers to written interrogatories of the plaintiffs. The letter asserted that BBB was having difficulty locating potential past employees and directors who had left some time ago. - December 19, 2013, BBB provided full answers to the interrogatories to the plaintiffs.

The vast majority of the answers indicated that BBB had not been able to locate the information needed to answer the interrogatories. - In late June and late August, 2014, the plaintiffs’ counsel wrote to BBB’s counsel requesting that the BBB question the plaintiffs’ representative Mr.

Ward, and indicated some interest in potential follow​up questioning of a BBB representative. - December 2, 2014, BBB’s counsel wrote the plaintiffs’ counsel re-iterating that BBB was not prepared to conduct questioning until the plaintiffs remedied their deficient affidavit of records and provided full financial information and technical data regarding the water softener equipment. No response was ever provided to this December 2, 2014 letter. – February 29, 2016, BBB commenced this application to dismiss for delay.

Dismissal for long delay – Rule 4.31 [ 11 ] BBB seeks dismissal of this action for long delay under Rule 4.31 which states:

(1) If delay occurs in an action, on application the Court may (

a) dismiss all or any part of a claim if the Court determines that the delay has resulted in significant prejudice to a party, or (

b) make a procedural order or any other order provided for by these rules.

(2) Where, in determining an application under this rule, the Court finds that the delay in an action is inordinate and inexcusable, that delay is presumed to have resulted in significant prejudice to the party that brought the application. Inordinate and inexcusable delay [ 12 ] In my view: (

a) there has clearly been inordinate delay. The action has been underway for almost 14 years, and questioning of the plaintiffs’ representative has not taken place. (

b) the delay is inexcusable.

A large part of that delay has been caused by the plaintiffs, who did not advance the action between May 28, 2004, and June 17, 2008 (four years); between June 29, 2010, and March 23, 2012 (1 years and 8 months); between June 1, 2012, and June 21, 2013 (one year); and between December 2014 and February 2016 (one year and two months). [ 13 ] Dealing with excusability, the plaintiffs say that delay, particularly in the period between 2009 and 2014, resulted from BBB’s refusal to proceed with questioning absent document production from the plaintiffs dealing with the functioning of the plaintiffs’ water softener equipment and with the plaintiffs’ financial losses. [ 14 ] In my view these are two areas of document production which were clearly very relevant from the outset.

If the plaintiffs were serious about their claims, they would have realized the obligation on them to include these relevant and material documents in their affidavit of records.

Other than some perfunctory financial information regarding one of the plaintiffs, those records have not been produced to date, almost 14 years later, yet the plaintiffs acknowledge that the technical specification data does exist and that financial records for Envirosoft are also available. [ 15 ] The plaintiffs respond by arguing that the onus was on BBB to establish the truth of the assertion that the plaintiffs’ equipment was ineffective.

However, this issue of onus does not excuse the plaintiffs from producing their technical documents relevant to the functioning of their water softener equipment. [ 16 ] The plaintiffs say that the five years of little activity between the questioning of the BBB representative in 2009 and 2014 (presumably excluding the period between June 2012 and June of 2013 where plaintiffs’ counsel was unable to raise a response from the

plaintiffs’ representative Mr. Ward) resulted from BBB’s failure to move forward with its questioning of a representative of the plaintiffs, which was the next step in the litigation. [ 17 ] The plaintiffs assert that they did not have the power to set an appointment for BBB (as defendant) to question the plaintiffs, nor did they have the ability to force BBB to bring an application to establish the adequacy of the plaintiffs’ affidavit of records. [ 18 ] While the foundational rules direct both plaintiffs and defendants to move actions forward, the ultimate burden still lies with the plaintiffs.

See XS Technologies Inc. v Veritas DGC Land Ltd. , 2016 CarswellAlta 956, 2016 ABCA 165 , at para. 7 . [ 19 ] The plaintiffs could have moved to set the matter down for trial, taking the position that, as BBB had not proceeded with its questioning of the plaintiffs, the action should proceed to trial. At a minimum this would have resulted in a procedural order dealing with the scheduling of questioning of the plaintiffs.

Significant prejudice [ 20 ] Having found the delay to be inordinate and inexcusable, I am therefore left to rule on the third part of the test, that is, significant prejudice to the defendant. [ 21 ] The question is whether the evidence as a whole raises a legitimate doubt about the existence of prejudice and, if it does, whether BBB’s evidence establishes prejudice without the benefit of the presumption.

See Ravvin Holdings Ltd. v Ghitter , 2008 CarswellAlta 1270, 2008 ABCA 208 at para. 38 . [ 22 ] The plaintiffs point to the following facts as supporting the view that BBB has not suffered prejudice as a result of the delay: - Mr. Bonar Irving, was the President of the BBB between 2000-2003, Ms. Wright, who was the officer of BBB presented at questioning, Mr. Keith Davis, Vice Chairman of the BBB, and Ms.

Lorettta Richens, former Vice President are all alive and available to the BBB. - BBB retained legal counsel from the beginning of the lawsuit and it is not aware of any production received from the plaintiffs that has gone missing or been destroyed, and BBB has done everything it can to produce all of its documentation. [ 23 ] BBB on the other hand, points to the following evidence of significant prejudice: (

i) the death of witnesses, and, (ii) the fact that this is not ‘document based’ litigation. Prejudice – the death of witnesses [ 24 ] BBB says that while a few individuals who worked at the BBB at the relevant times between 1999 and 2001 were tracked down, as listed above, the vast majority of potential witnesses are now dead or have moved on from the BBB. [ 25 ] To support this assertion, BBB refers to its board minutes from 1999 to 2001.

These were the board meetings held in and around when this matter first arose. [ 26 ] BBB says that numerous individuals listed in these meeting minutes are now gone or deceased. Furthermore, it says essentially every support staff or lower level manager who was employed by the BBB, who would have been involved in vetting the articles in question, are also gone.

Prejudice – whether this is a ‘document’ case [ 27 ] BBB notes that the issues in this action involve more than the technical capabilities of the plaintiffs’ water softener equipment and the financial loss to the plaintiffs. [ 28 ] The issues raised include the defences of responsible communication, fair comment and qualified privilege, which depend on the testimony of those involved in the publication of the statements in issue. [ 29 ] BBB notes that malice is a fact driven analysis based on witnesses and motives, and that the vast majority of the BBB's board members or directors who might have held these alleged motives are now dead or gone from BBB. [ 30 ] BBB also notes that the plaintiffs also asked numerous questions regarding BBB's investigative process in the interrogatories, and that these interrogatories were only provided to BBB approximately ten years into the litigation.

It says its inability to answer these interrogatories results from the delay. Inability to answer undertakings [ 31 ] BBB illustrates the prejudice it says it has suffered by including in its written argument a

schedule of 17 undertakings which it gave on various topics, where it was compelled to respond that it was unable to answer due to an inability to contact the people who were involved at the time of the publication. Conclusion regarding the dismissal for long delay – Rule 4.31 [ 32 ] The delay in this action has been inordinate and inexcusable, and the evidence before me does not raise a legitimate doubt

about the existence of prejudice. [ 33 ] Even if the evidence had raised a legitimate doubt about the existence of prejudice, in the end, considering all the evidence, I am satisfied that BBB has suffered significant prejudice due to the plaintiffs’ delay in advancing the action. [ 34 ] As indicated, essentially every support staff or lower level manager who was employed by BBB who would have been involved in vetting the articles in question, are gone, and the vast majority of BBB's board members or directors who were involved are now dead or gone from BBB. [ 35 ] As a result I dismiss the action pursuant to Rule 4.31.

Dismissal under the three year drop dead rule – Rule 4.33 [ 36 ] BBB makes an alternative application to dismiss pursuant to Rule 4.33, which states as follows: If 3 or more years have passed without a significant advance in an action, the Court, on application, must dismiss the action as against the applicant, unless … [ 37 ] BBB submits that the only step that could qualify as a significant advance in the three prior to filing its application to dismiss, is the interrogatories provided to it by the plaintiffs in March of 2012, and BBB’s answers to these undertakings. [ 38 ] BBB notes that it requested these further interrogatories almost three years earlier, in April of 2009. [ 39 ] In my view, the answers provided by BBB to the interrogatories did significantly advance the action.

The plaintiffs learned, through these answers, the many areas in which BBB had no evidence, and knowing that helped advance the action on behalf of the plaintiffs. [ 40 ] As a result, three years did not elapse in which there was no significant advance in the action. Consequently I decline to dismiss the action pursuant to Rule 4.33. Costs [ 41 ] Having succeeded in having the action struck for delay, BBB is entitled to the costs of the application and the action. If the parties cannot agree on the amount of costs they may seek a ruling from me in that regard. Heard on the 30 th day of August, 2016.

Dated at the City of Calgary, Alberta this 29 th day of September, 2016. J.T. Prowse M.C.C.Q.B.A. Appearances: Shane Sackman Jensen Shawa Solomon Duguid Hawkes LLP for the Defendant Peter J. Major, Q.C. McMillan LLP for the Plaintiffs