Chief Construction Company Ltd v Royal Bank of Canada, 2017 ABQB 704

Court of Queen’s Bench of Alberta Citation: Chief Construction Company Ltd v Royal Bank of Canada, 2017 ABQB 704 Date: 20171120 Docket: 1401 07130 Registry: Calgary Between: Chief Construction Company Ltd. Plaintiff - and - Royal Bank of Canada Defendant _______________________________________________________ Reasons for Judgment of J.T.

Prowse , Q.C., Master in Chambers _______________________________________________________ [ 1 ] I issued previous reasons in this action, reported at 2017 ABQB 589 . [ 2 ] In those previous reasons I omitted to rule on an application of the plaintiff Chief Construction Company Ltd. (“Chief Construction”) for an order compelling the defendant Royal Bank of Canada (“RBC”) to answer refused undertakings. My ruling regarding the undertakings is set out below. [ 3 ] I will not repeat the facts, which are contained in my prior reasons.

The contested undertakings [ 4 ] Chief Construction seeks an order compelling RBC’s witness to answer undertakings 3, 13 and 14. Undertaking 3 [ 5 ] Undertaking 3 asked RBC’s witness to produce any and all communications notifying the bank of the flood which occurred in April of 2012, prior to Chief Construction offering to purchase the property in question. [ 6 ] Chief Construction’s amended statement of claim asserts that:

• There was a previous flood in the property which had occurred after RBC had obtained an order (

i) allowing RBC to enter the property (ii) requiring RBC to do any and all things necessary to inspect, preserve and maintain the property, and (iii) requiring that the property’s utilities be transferred from the name of the mortgagor to RBC. • When Chief construction took possession of the property there were 4 inches of water in the basement of the main residence, which was equipped with an automatic sump pump. • The sump pump was not activated because RBC had shut-off the electrical power to the property. • RBC has been negligent in not preserving the property. [ 7 ] To be clear, Chief Construction is not claiming damages for the first flood.

Chief Construction’s position is that RBC’s knowledge of the prior flood should have caused RBC to be more cautious and careful to prevent future flooding, such as subsequent flood which damaged the property and for which Chief Construction is now claiming damages from RBC. [ 8 ] RBC responds that Chief Construction’s claim has nothing to do with the first flood. RBC notes that Chief Construction found the property to be “acceptable” after the first flood.

RBC asserts that undertaking 3 is irrelevant. [ 9 ] In my view, Chief Construction is entitled to have RBC produce documents relevant not only to RBC’S theory of the case, but also relevant to Chief Construction’s theory of the case. The occurrence of the first flood, and what RBC knew about it, is relevant in ascertaining whether there is any merit to Chief Construction’s assertion that RBC was negligent in not preventing the second flood. Undertakings 13 and 14 [ 10 ] Undertaking 13 asked RBC’s witness to review RBC’s files to determine and advise whether or not the property was insured by the bank.

Undertaking 14 asked RBC to produce a copy of any insurance policy it held over the property. [ 11 ] In Chief Construction’s amended statement of claim it asserts that one term of its contract of purchase, approved by the Court, was as follows: The risk of loss or damage to the property will lie with the seller until the purchase price is paid according to the terms of this contract.

If loss or damage to the property occurs before the seller is paid the purchase price then any insurance proceeds will be held in trust for the buyer and the seller according to their interests in the property. [ 12 ] Accordingly, in my view, the questions asked in undertaking 13 and 14 are relevant and material and should be answered. Conclusion [ 13 ] RBC is directed to answer undertakings 3, 13 and 14. If counsel cannot agree on costs they may approach me for a ruling in that regard. Heard on the 29 th day of August, 2017. Dated at the City of Calgary, Alberta this 20 th day of November, 2017. J.T.

Prowse, Q.C. M.C.C.Q.B.A. Appearances: Emmett Scrimshaw Peacock Linder Halt & Mack LLP for the Plaintiff John Cassell and Meghan Parker Norton Rose Fulbright Canada LLP

for the Defendant