TOWN OF GANDER PLAINTIFF And: MCCURDY ENTERPRISES LIMITED DEFENDANT, 2019 NLSC 150

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Gander (Town) v. McCurdy Enterprises Limited , 2019 NLSC 150 Date : August 6, 2019 Docket : 201505G0201 Between: TOWN OF GANDER PLAINTIFF And: MCCURDY ENTERPRISES LIMITED DEFENDANT Before: Justice Glen L.C. Noel Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: July 3, 2019

Summary: The Town’s Application pursuant to Rule 11.03(

d) was allowed excluding most of the Counterclaim. McCurdy was given leave to file a separate statement of claim concerning the excluded paragraphs and claims. The Court also gave leave to the parties, following close of pleadings and production of documents, to apply under Rule 18.01 for the matters to be heard together or one after the other, and under Rule 18A for case management of the proceedings. Costs were ordered in the cause. Appearances:

Jonathan D. Dale Appearing on behalf of the Plaintiff Kevin F. Stamp, Q.C. Appearing on behalf of the Defendant Authorities Cited: CASES CONSIDERED: Loder v. Loder , 2016 NLTD(G) 172; Moulton v. Roberts , 2015 NLTD(G) 109; Burgeo (Town) v. Atlantic Engineering Consultants Ltd., 2006 NLTD 168 ; Bank of Montreal v. H.O. House Ltd ., 1978 CarswellNfld 186 , (1978) 15 Nfld. & P.E.I.R. 33 (Nfld. (C.A.)); Hryniak v. Mauldin , 2014 SCC 7 ; Lockhart v. New Minas (Village) , 2005 NSSC 93 ; Trimart Investments Ltd. v. Gander (Town) , 2015 NLCA 32 ; Szeto v.

Dwyer , 2010 NLCA 36 STATUTES CONSIDERED: Judicature Act , R.S.N.L. 1990, c. J-4 ; Limitations Act , S.N.L 1995, c. L-16.1 ; Urban and Rural Planning Act, 2000 , S.N.L. 2000, c. U-8 RULES CONSIDERED: Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sched. D REASONS FOR JUDGMENT Noel, J. : OVERVIEW [ 1 ] The Town of Gander (the “Town”) brought an action against a local property development company, McCurdy Enterprises Limited (“McCurdy”) for a permanent injunction to enforce a stop work order (“Stop Work Order”).

It also sought removal of all infrastructure and other works, in connection with what the Town alleges to be an unauthorized development of a proposed subdivision, known as Spruce Court Phase 13 in and around Penwell Avenue in the Town (the “Property”). [ 2 ] McCurdy denies any wrongful conduct in connection with development of the Property.

It pleads unfair and inconsistent treatment by the Town, and filed a Counterclaim raising several claims for unpaid holdbacks, improperly charged and retained levies in relation to other properties, and loss of revenue and profits for both the Property and other properties. [ 3 ] The Town seeks an order under Rules 11.03 (d), 29.14 , and 40.13 of the Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sched.

D , that most of the Counterclaim be excluded, with leave for McCurdy to issue a separate statement of claim respecting the excluded paragraphs, and any such new action to be tried separately from the original proceeding. [ 4 ] The basis of the Application is that the allegations and claims for relief in the offending paragraphs of the Counterclaim cannot be conveniently disposed of within the original proceeding, do not relate to the subject matter, and would unduly delay and complicate the trial in the original proceeding. [ 5 ] McCurdy opposes the Application submitting that the claims for relief in the Defence and Counterclaim can only be disposed of conveniently and fairly within the original proceeding.

McCurdy further asserts the matters as laid out in the Defence and Counterclaim are inextricably interwoven and must be heard together to understand the longstanding pervasiveness of the treatment of McCurdy by the Town. [ 6 ] The broad issue to be determined is whether this is an appropriate circumstance for the Court to exercise its discretion and order certain paragraphs of the Counterclaim be excluded, with leave for McCurdy to issue a separate statement of claim pleading those claims, or to make such other order as the Court considers appropriate. [ 7 ] The sub-issues arising are:

(1) What are the factors to be considered from the guiding authorities in the exercise of the Court’s discretion?

(2) How are the factors to be applied in the circumstances before the Court? [ 8 ] I grant the relief the Town seeks at this time. The parties will have leave to apply, following the close of pleadings and production of documents, on whether proceedings can be later tried together or one after the other, and made subject to an order for case management. procedural history [ 9 ] The pertinent procedural history consists of:

• A Consent Injunction Order was filed with the consent of counsel for both parties on November 30, 2015, which restrained McCurdy from carrying out any further work or development on the Property until the earlier of the determination of the action or the issuance of the necessary Town permits. [1] The Consent Injunction Order remains in force. • The last step before the filing of the Town’s Application [2] was McCurdy’s reply to the Demand for Particulars on November 7, 2018. • No lists of documents have been exchanged or discoveries conducted. analysis 1.

Guiding Authorities – Factors to be Considered [ 10 ] Both counsel rely upon Loder v. Loder , 2016 NLTD(G) 172, as the leading and most recent case from our Court on the application and

interpretation of Rule 11.03(d). [ 11 ] Handrigan, J., in Loder, set out the following principles: 20.

From my earlier review of the law, I discern that the following principles of law are relevant to applications to exclude counterclaims: • The defendant may raise any cause of action in a counterclaim that can be conveniently disposed of within the original proceeding. • A counterclaim need not necessarily have any connection with the claim itself. • A Court may exclude a counterclaim if it is embarrassing or prejudicial or may cause undue delay. • A counterclaim may be embarrassing if it does not relate to the specific subject-matter of the claim but will not be embarrassing if it relates. • Trial judges have broad discretion to maintain or exclude counterclaims and appellate courts will not interfere with how they exercise that discretion unless the result is likely to cause an injustice to one of the parties. [ 12 ] Loder involved a dispute over title to land.

Although the Court denied the application to exclude the counterclaim, Handrigan, J. restricted the proceedings to issues of title to the properties claimed. He gave leave to the parties to apply subsequently to deal with damages. [ 13 ] Counsel for McCurdy relies upon Moulton v. Roberts , 2015 NLTD(G) 109, as establishing that this Court should only order a separate trial in exceptional circumstances where: the issues are not interwoven, there would be no serious prejudice to the parties, and there would be a substantial savings of time and costs.

Moulton involved an application under Rules 18.02 and 40.13 for severance by one of the plaintiffs who was ready to proceed to trial, while the other plaintiff was not, in respect to a motor vehicle accident for which a single action was commenced. Stack, J. in denying the application held it would duplicate time and cost to conduct two trials in respect of the same accident. He was concerned such an approach could result in different findings of fact in each of the trials. [ 14 ] Additionally, counsel for McCurdy relies on Burgeo (Town) v.

Atlantic Engineering Consultants Ltd. , 2006 NLTD 168 , a decision on severance of a third party action under Rule 7.03. He argues the party making the request for a separate trial has the evidentiary onus of establishing, that hearing the claims together would unduly complicate and/or delay the hearing, or otherwise be inconvenient.

Goulding, J. held (at para. 34) that the applicant had “not met the onus on a preponderance of the evidence that it would be just and convenient to order separate trials of the original proceeding and the third party action.” It is submitted if the Town has not met this threshold or onus, the Court need not go further and the application should be dismissed. [ 15 ] The analysis required for counterclaims under Rule 11.03(

d) is not the same as the law pertaining to severance of liability and damages, and severance of a third party claim from the main action. First of all, the Rule makes clear: “a counterclaim is a separate proceeding.” That is not so when we are dealing with a single action where liability and damages are in issue. It is also not so with third party actions, where Rule 12.01 defines “proceeding” to include the third party action. [ 16 ] I interpret

Section 99 of the Judicature Act , R.S.N.L. 1990, c. J-4 , as the language specifically states, to avoid the multiplicity of proceedings: “in a proceeding.” Hence, statutorily it is for good reason the authorities recognize severance to be the exception in single actions or same proceedings. [ 17 ] There is no presumption one way or the other on the trying of a counterclaim with the original proceeding. I reject the argument it has to be exceptional circumstances to exclude the Counterclaim or certain parts thereof. In the words of Furlong, C.J.N from Bank of Montreal v. H.O. House Ltd ., 1978 CarswellNfld 186 , (1978) 15 Nfld. & P.E.I.R. 33 (Nfld. (C.A.)) (at para. 19) : “The Rule

equally provides for an application by the plaintiff to separate the claim and the Counter-claim if reason dictates that they should moreproperly be dealt with separately.” [18] While I accept there is an evidentiary onus on the Town to sufficiently ground its Application to support the relief it seeks, thefocus for now is on the pleadings, as the evidentiary foundation for the material facts pleaded in the Counterclaim is not before theCourt. [19] I am guided by the comments expressed by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7. AlthoughHryniak dealt with the appropriateness of

summary judgment motions and the

interpretation of

summary judgment rules in Ontario, thedecision (at para. 23) had much broader implications for “the values and choices underlying our civil justice system.” [20] Karakatsanis, J., for the unanimous Court, stated judges in the conduct of civil proceedings must be guided by the principle ofproportionality.

The process must be (at para. 28) “proportionate, timely and affordable.” It was noted: 31 Even where proportionality is not specifically codified, applying rules of court that involve discretion “includes . . . an underlyingprinciple of proportionality which means taking account of the appropriateness of the procedure, its cost and impact on the litigation, andits timeliness, given the nature and complexity of the litigation”: Szeto v.

Dwyer, 2010 NLCA 36 , 297 Nfld. & P.E.I.R. 311, atpara. 53. [21] I identify the following factors for the Court’s consideration in the exercise of discretion on excluding and trying separately anypart of the Counterclaim from the original proceeding: (

i) Subject-Matter Connection; (ii) Prejudice; (iii) Delay; (iv) Efficiency and Affordability; and (

v) Proportionality. [22] As noted in Lockhart v. New Minas (Village), 2005 NSSC 93 (at para. 11), the obligation of the Court is to balance all of thesefactors and determine a course of action that constitutes the least injustice to the parties. It must be “consistent with the efficient andexpeditious resolution of the matters in issue.” [23] The factors are not mutually exclusive and there is certainly some overlap among them. They are guidelines for the analysis ofessentially answering the inquiry Rule 11.03(

d) requires: how to approach the determination of what can be “conveniently disposed of inthe original proceeding.” 2. Application of the Factors - How are they to be applied? (

i) Subject-Matter Connection [24] The inquiry into whether a counterclaim is “embarrassing” is simply a determination of whether there is a sufficient subject-matter connection between the Counterclaim and the original proceeding. [25] Counsel for the Town submits that only paragraphs 25, 27, 29, and 43 of the Counterclaim are in anyway connected to thesubject matter of the action. [26] The Town contends all other paragraphs of the Counterclaim would require consideration of matters not related to the Property. Specifically, the Town asserts: (

a) Paragraphs 30 – 32 require evidence on claims for 11 different development projects. The claims are alleged to have beenassigned to McCurdy from B & M Paving Limited (“B & M”) the day before the filing of the Counterclaim. (

b) Paragraphs 26, 28, and 33 involve claims for other development decisions and land. (

c) Paragraphs 34 and 42 relate to litigation before the Court in Trimart Investments Ltd. v. Gander (Town), 2015 NLCA 32, and aprior dismissal of a claim by B & M in the Provincial Court, Small Claims Division. [27] On the other hand, Counsel for McCurdy maintains the Statement of Claim is not a discrete matter relating solely to theProperty.

The Statement of Claim is much broader and deals with the consistency of the Town in its dealings with McCurdy and otherdevelopments and developers. [28] In particular, Counsel points to the specific paragraphs in the Statement of Claim that confirm this assertion: • At paragraph 5, the Town may require a developer to enter into a subdivision agreement as a condition for approval of asubdivision development. • At paragraph 9, McCurdy has previously constructed approximately eleven (11) different subdivisions within the Town, all ofwhich were completed (counsel emphasizes “completed” not started) further to executed subdivision agreements between the Town andMcCurdy. • At paragraph 12, whether it was consistent with the Town’s practice.

[ 29 ] Counsel further submits on its face the Statement of Claim raises the doctrine of latches and unfair treatment, as pleaded (at para. 14) in the Defence. The Statement of Claim states (at para. 15) in or around September 2014, McCurdy began carrying out certain development work on the Property. The work continued for more than a year until November 2015. The Statement of Claim pleads (at para. 20) Town employees in or around November 2015 witnessed paving and road work being completed on the Property.

Other work had been completed or was ongoing, including curb formwork, manholes, and basins having been installed and/or set down to grade . [ 30 ] Further, McCurdy relies on the wording of Rule 11.01(1) itself that “any cause of action, whenever and however arising” may be brought by counterclaim, and judicial authority confirming a counterclaim need not necessarily have any connection with the claim itself. [ 31 ] I agree with the Town’s position that that a Trial of the 11 distinct and assigned contractual claims would require evidence from B & M and the Town.

It would also involve other unrelated litigation and property disputes. [ 32 ] The paragraphs the Town seeks to have excluded appear from the pleadings not to be sufficiently connected to the subject matter of the original proceeding.

However, I am not prepared to make such a finding at this stage, without McCurdy having the opportunity to advance the evidentiary foundation of its claims by way of separate statement of claim. (ii) Prejudice [ 33 ] The Court must prevent prejudice to each party as much as is reasonable. [ 34 ] McCurdy submits it would give a real and unfair advantage to the Town in having separate trials for the Statement of Claim and Counterclaim. It would limit McCurdy’s opportunity to present all of its evidence of unfair treatment by the Town in a consolidated manner.

McCurdy says prejudice would result from separate and compartmentalized proceedings where the overall effect of the conduct would be eliminated. [ 35 ] Any relevant evidence going to the manner in which the Town has dealt with McCurdy and other developers is engaged by the pleadings. The trial judge will determine what evidence is admissible within the parameters of the pleadings. Excluding the paragraphs requested will not prejudice McCurdy’s defence of the Town’s action. [ 36 ] It would serve to confuse and complicate the original proceeding to include all the claims for the relief that McCurdy seeks.

As in Loder, the claims for damages were ordered to be tried separately from the proceedings relating to title to the properties. [ 37 ] McCurdy is concerned the Town may be seeking to obtain possible advantage under the Limitations Act , S.N.L 1995, c. L-16.1 . McCurdy wants the ability to avail of Section 11(1) (

a) of the Limitations Act . To do so, McCurdy would have to prove each claim relates to or is connected with the subject matter of the original action.

Counsel for the Town conceded at the hearing the Town has no intention of seeking to be in a better legal position for any limitation defence the Town may have to the claims than it would otherwise have. [ 38 ] Under the Appropriate Relief to be granted, I will ensure no advantage is gained by the Town in McCurdy having to file a separate statement of claim. (iii) Delay [ 39 ] The Court is to determine if there is any necessity in having the Town’s action heard on a timely basis and separate from the Counterclaim. [ 40 ] Counsel for McCurdy submits there is no continuing harm to the Town and urgency for the Property matter to be heard, since the Consent Injunction Order remains in force. [ 41 ] I accept McCurdy’s position.

The Town was in no hurry to pursue its other relief, at paragraph 25(

c) of the Statement of Claim, for an order requiring McCurdy to remove all alleged unauthorized development on the Property. [ 42 ] The Town has not attempted to justify the need for expeditious hearing of its action, separate from the Counterclaim. (iv) Efficiency and Affordability [ 43 ] The Court will decide upon a process that best ensures the efficient and effective resolution of the matters in issue. [ 44 ] I accept the unchallenged Affidavit evidence of Gary Brown, Director of Finance / Town Clark, (at paras. 10 & 11) on behalf of the Town and the submissions of its counsel, on the procedural steps necessary to defend the Counterclaim.

This would involve adding B & M as a defendant and issuing a third party notice against B & M. [ 45 ] There is no efficiency or affordability to the existing parties and proposed party, B & M, to have all matters heard in one proceeding at this time. The result would be to unnecessarily complicate the proceedings and increase costs for the parties. [ 46 ] The Town contends McCurdy has no legal ability to defend or advance any counterclaim in respect to the Property, based on Sections 5 and 42(1) (

a) of the Urban and Rural Planning Act, 2000 , S.N.L. 2000, c. U-8 (the “ URPA ”) (the “Threshold Issues”). There is no efficiency in having all matters advance as one proceeding while the Threshold Issues are in contention. The Threshold Issues should be either determined as a preliminary issue of fact and law or resolved between the parties as no longer in issue. (

v) Proportionality [ 47 ] As mandated by our Court of Appeal in Szeto v. Dwyer , 2010 NLCA 36 , and elaborated upon by the Supreme Court of Canada, judges are to manage the legal process in line with the principle of proportionality.

[ 48 ] I fail to see how it is practical and proportional for all McCurdy’s claims to be conveniently disposed of with the original proceeding. [ 49 ] Proportionality means both parties, in consultation with their counsel, give careful consideration to the nature and aims of the relief sought. Drawing all claims between the Town and McCurdy, or the related company, B & M, into the original proceeding will further delay a resolution of the Property dispute.

The Town must seriously consider whether its claim for the removal of all existing infrastructure on the Property is a justified and proportional response to resolving the dispute. The continual delay in development of the Property, without mutually agreed upon terms, is not good for the Town, its citizens, and McCurdy, who must maintain an ongoing relationship with the Town and its officials. [ 50 ] Proportionality also requires the parties exhaust all reasonable efforts at resolution.

When affordability is not in issue for the parties, there is a requirement to consider whether private mediation will assist in a resolution. Even the Threshold Issues warrant a hard look by the parties and their counsel. The parties must take into account what the end result will be in terms of costs, potential for appellate review, and practicality of the outcome. [ 51 ] The parties have not exhausted or made all reasonable efforts at settlement resolution.

The parties, through counsel, need to start engaging in ways to achieve a resolution of the issues in dispute, particularly since the Property has been sitting idle, now approaching four years. 3. Appropriate Relief [ 52 ] My goal is to strike the proper balance to achieve the most practical, efficient, and manageable proceedings without doing any injustice to either party.

As per the direction in Hryniak (at para. 28 ), the Court must ensure there is a fair process that results in a just adjudication of the disputes between the parties. [ 53 ] That goal is best achieved by granting the relief sought at this stage of the proceedings. I find the least injustice to the parties, consistent with the efficient and expeditious resolution of the matters in issue, is to exclude the paragraphs requested from the Counterclaim.

I give leave to McCurdy to issue a separate statement of claim in respect to the excluded paragraphs within the next 30 days (unless a longer period is agreed between the parties). [ 54 ] Rule 11.03(

d) allows the Court to “make such other order as is just.” The filing date of the new statement of claim will be deemed the date the Counterclaim was initially filed on January 17, 2018. McCurdy’s separate statement of claim shall still be considered “a counterclaim” for the purpose of

Section 11 of the Limitations Act . Neither party is therefore placed in a better nor more disadvantageous legal position . The trial judge will make the necessary findings under the Limitations Act after hearing all the evidence . [ 55 ] In keeping with the Court’s obligation to actively manage its process, having the Counterclaim separate from the original proceeding does not mean the two cannot be later “tried together, or one immediately after another” in combined proceedings under Rule 18.01.

The proceedings may further be made subject to a case management order under Rule 18A. [ 56 ] When the pleadings are closed and documents produced, I direct the parties to give consideration to applying under Rule 18.01 on having the proceedings, or certain of the claims arising from the separate proceedings, tried together or one after the other. Accordingly, the evidence in one proceeding, under a Rule 18.01 order, may be the evidence in the other. I also direct the parties to consider whether to seek an order under Rule 18A for case management of the proceedings.

Costs [ 57 ] In Loder , Handrigan, J. ordered costs in the cause. The trial judge in H.O. House Ltd. awarded costs in striking out the counterclaim, which was upheld on appeal. [ 58 ] I find this is the appropriate case for costs in the cause. The Town achieved the relief it sought. So too did McCurdy in not losing the ability to have evidence connected to its alleged unfair treatment by the Town heard in the original proceeding. As matters proceed, there is the opportunity for McCurdy to have its own claims for relief, in whole or in part, determined within or contemporaneously with the Town’s action against it.

McCurdy was also successful in not losing any benefit it may have under section 11(1) (

a) of the Limitations Act by having to file a separate action for the claims and damages it seeks. [ 59 ] Costs of this Application will therefore be in the cause. [ 60 ] I thank both counsel for their written briefs and valuable submissions. DIsposition [ 61 ] It is ordered: 1. All paragraphs of the Counterclaim, except Paragraphs 25, 27, 29, and 43, are excluded from the Counterclaim, and leave is granted to file a separate statement of claim respecting the excluded paragraphs within 30 days (unless a longer period is agreed upon between the parties). 2.

The filing date for determining any limitation defenses shall be the date the Counterclaim was filed on January 17, 2018; and the new statement of claim shall be considered a counterclaim for the purpose of

Section 11 of the Limitations Act . 3. Following the close of pleadings and Rule 32 production, the parties have leave to apply under Rule 18.01 on having the proceedings, or certain of the claims arising from the proceedings, tried together or one after the other; and to apply pursuant to Rule 18A for case management of the proceedings.

4. Costs are in the cause. _____________________________ Glen L. C. Noel Justice