Richard Rose First Plaintiff And: Lorne Rose Second Plaintiff And: Fishery Products International LIMITED Defendant, 2019 NLSC 114

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Rose v. Fishery Products International Limited , 2019 NLSC 114 Date : June 5, 2019 Docket : 200801T1113 Between: Richard Rose First Plaintiff And: Lorne Rose Second Plaintiff And: Fishery Products International LIMITED Defendant Before: Justice Gillian D. Butler Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: May 8, 2019

Summary: Application for production of documents pursuant to Rule 32, granted. Appearances: John R. Sinnott, Q.C. Appearing on behalf of the Plaintiffs Sheri H. Wicks Appearing on behalf of the Defendant

Authorities Cited: CASES CONSIDERED: Carter v. Municipal Construction Ltd., 2001 NFCA 58; Morrissey v. Quinlan, 2002 NFCA 58; Szeto v.Dwyer, 2010 NLCA 36; Talisman Energy Inc. v. Flo-Dynamics Systems Inc., 2015 ABQB 100; Janhevich v. Thomas (1977), (ON SC), 3 C.P.C. 303, 76 D.L.R. (3d) 656 (Ont. H.C.J.) RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch.

D REASONS FOR JUDGMENT Butler, J.: Introduction [1] By Interlocutory Application filed February 18, 2019, the Defendant seeks an order for production of documents pursuant toRules 32.02 and 32.07 of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D. [2] The procedural history relevant to this Application is set out in paragraph 2 of the Interlocutory Application and need not berepeated. [3] In essence, on December 17, 2014, following

summary trial, Justice Faour granted judgment to the Plaintiffs and leave forthem to obtain an assessment of damages associated with their claim against the Defendant for the loss of a purse seine. [4] In relation to this assessment of damages, (which will be heard before the

Summary Trial Judge at a later date), it is importantto note that the Plaintiffs seek not only the value of the purse seine itself, but also economic loss for their inability to pursue a mackerelfishery using the purse seine in the relevant period. The Defendant’s Position [5] In support of the Application, the Defendant filed an affidavit of Graham Roome, former Director and Vice President ofFishery Products International Limited (FPI) and a Memorandum of Fact and Law with authorities. The Plaintiffs filed an affidavit ofLorne Rose dated April 18, 2019, and a duplicate copy of an affidavit sworn by Mr.

Rose on January 25, 2019, filed previously. Counselalso prepared a Memorandum and a Book of Authorities. [6] The documents the Defendant seeks are identified in sub-paragraphs 8(

a) to (

e) of the Application as follows:

a) The income tax returns for Cape Cordell Limited for 2003-2007;

b) The financial statements for Cape Cordell Limited for 2003-2007;

c) T4 and T4A documentation for the Cape Cordell Limited for 2003-2007;

d) The income tax returns for Richard Thomas Rose for 2003-2007;

e) The income tax returns for Lorne Rose for 2003-2007. [7] Defendant’s counsel suggests that these records are related to the issues in dispute on the assessment of damages and reliesprimarily on three decisions from our Court of Appeal: Carter v. Municipal Construction Ltd., 2001 NFCA 58; Morrissey v. Quinlan,2002 NFCA 58; and Szeto v. Dwyer, 2010 NLCA 36.

Defence counsel argues that these authorities speak in favour of full robustdisclosure as a requirement and also clearly establish that the rules for pre-trial production in this jurisdiction differ from otherjurisdictions in a significant manner. [8] Defence counsel asserts (and I agree) that the test for production under Rule 32 is that the documents sought “relate to” anissue in the proceeding. This has been interpreted to mean they would shed some light upon the issue in dispute.

In contrast, tests forproduction in other jurisdictions (notably Alberta) have a higher threshold and require a test of “relevance” interpreted as “tending toprove or disprove a matter in issue” or “being persuasive” (see Talisman Energy Inc. v. Flo-Dynamics Systems Inc., 2015 ABQB 100);and Janhevich v. Thomas (1977), (ON SC), 3 C.P.C. 303, 76 D.L.R. (3d) 656 (Ont. H.C.J.), at para. 10) [9] Defence counsel acknowledges that the onus is upon them to establish the test for production. [10] The Defendant is interested in assessing the validity of the Plaintiff’s claim for economic loss.

In this respect, it wishes topursue enquiries such as whether the boat utilized historically by the Plaintiffs (the Cape Cordell) would have been utilized in themackerel fishery had the purse seine not been lost, whether the Cape Cordell would require retrofitting and, if so, how long that wouldtake and what it would cost. It questions the profitability of the fishery that was being pursued by the Plaintiffs using the vessel CapeCordell (shrimp, crab and ground fish) versus the profitability of the mackerel fishery the Plaintiffs say they intended to pursue using thepurse seine.

The Defendant questions whether the Plaintiffs have mitigated their losses.

[ 11 ] On their face these would appear to be legitimate enquires into documents that may shed some light upon the Plaintiffs’ claim for economic loss. The Plaintiffs’ Position [ 12 ] The Plaintiffs’ affidavits (and to some degree, the brief filed by their counsel), address the differences between the fishery pursued by the Plaintiffs without the purse seine and the fishery they would have pursued utilizing the purse seine.

These records explain that harvesting crab, shrimp, and ground fish involves multi-day trips offshore whereas casting a purse seine in local waters is a harvest that can be completed in three hours with the likelihood of multiple sailings in one day. [ 13 ] The affidavits also outline how the shrimp, crab, and ground fish harvest was pursued by the Plaintiffs. Mr. Rose explained that the Plaintiffs utilized the vessel, Cape Cordell, which vessel was owned by the Plaintiffs directly. The licence was held by Mr.

Rose, Sr., but the vessel was chartered to a company that was primarily owned by the Plaintiffs and known as Cape Cordell Limited. [ 14 ] Counsel for the Plaintiffs asserts that there was no evidence before the Court to suggest that the vessel Cape Cordell would be utilized for the mackerel fishery or that it would be chartered to their company, Cape Cordell Limited.

Counsel for the Plaintiffs suggests that the Court cannot assume these facts in assessing the need to produce the records sought by Defendant’s counsel. [ 15 ] As to the specific income tax returns of the individual Plaintiffs, Plaintiffs’ counsel explained how they intend to present their case on the assessment of damages. Instead of relying upon income tax returns, Plaintiffs’ counsel has secured and filed for consideration by Justice Faour at a later date, statistics for the top ten mackerel harvesters in the jurisdiction for the relevant period.

They have also disclosed to Defence counsel the Plaintiffs’ fisher profile reports for the period 1998-2008 and vessel reports for 1994- 1997. [ 16 ] Plaintiffs’ counsel suggests that the income tax returns of the individual Plaintiffs and Cape Cordell Limited will not shed any light on the assessment of damages. Conclusion [ 17 ] As the Morrissey decision establishes at paragraph 15, the three threshold steps to be met on a Rule 32 Application are satisfaction that:

a) the records relate to a matter in question in the proceeding;

b) the records are necessary for disposing fairly of the proceeding; and

c) the records are not privileged from production. [ 18 ] While it is impossible at this stage to appreciate the relevance of each of the items requested, I am entirely satisfied on the broad

interpretation required of Rule 32, that the Defendant has met the onus of establishing that the items requested “relate to” the issues in dispute. [ 19 ] While the Plaintiffs intend to present their evidence on the assessment of damages in a manner that would not rely upon income tax records or financial statements for either the individual Plaintiffs or the company in which they hold shares, the Defendant is not required to address the assessment of damages in the same manner. [ 20 ] The Defendant proposes instead to rely upon a comparison of incomes of the Plaintiffs (and if proven to be appropriate, those of Cape Cordell Limited) associated with the fish species harvested by the Plaintiffs against the fishery that could have been harvested using the purse seine in the relevant period.

As our Court of Appeal in Carter confirmed “[w] hether the material contained in the documents is of aid to the other party, must be determined by that party” (at para. 9) [ 21 ] The Defendant has established that on its approach to the assessment of damages the income tax records and financial statements (including all Schedules) may shed some light on the issues to be determined and will enable the Defendant to meet the case presented ( Carter , at paras. 7-9 ). [ 22 ] As to the second element, there is no other means by which the Defendant could have access to the Plaintiffs’ income tax information or to Cape Cordell Limited’s financial records.

While counsel acknowledges that the Defendant had access to some T4As for an earlier period, it was established as a fact that FPI sold its assets in 2007 and no longer has full access to records that might be pertinent. I am satisfied therefore that the records requested are necessary for disposing fairly of the proceeding. [ 23 ] As to the third threshold step for production under Rule 32, no argument was made that the records are privileged from production.

Order [ 24 ] It is therefore ordered that the items requested by Plaintiffs’ counsel in the Interlocutory Application be disclosed to Defence counsel by July 31 , 2019. [ 25 ] Social insurance numbers of the individual Plaintiffs and the CRA n umber of Cape Cordell Limited must be redacted before the records are disclosed. [ 26 ] Defence counsel and the Defendant itself shall respect the confidential nature of the individual income tax returns and the corporate records in the following manner:

a) They shall not be permitted to make copies of the information provided except to take instructions from advisors;

b) If copies are made, they must be destroyed and confirmation given to Plaintiffs’ counsel. [ 27 ] Both parties seek costs on the Application, and I acknowledge that this requires the exercise of discretion to be addressed at any stage of the proceeding pursuant to Rule 55. However, in this instance I see no reason to depart from the general rule that the costs of a

proceeding shall follow the event. The Defendant has been successful and is entitled to its costs on a party-and-party basis to be taxed on Column 3. _____________________________ Gillian D. Butler Justice