Hynes v. Pro Dive Marine Services Ltd., 2015 NLCA 22

Date: 20150 430 Docket: 14/63 Citation: Hynes v. Pro Dive Marine Services Ltd. , 2015 NLCA 22 IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL BETWEEN: JAMES HYNES INTENDED FIRST APPELLANT AND: BARRY HYNES INTENDED SECOND APPELLANT AND: SEAFORCE TECHNOLOGIES INC. INTENDED THIRD APPELLANT AND: SEAFORCE DIVING LIMITED INTENDED FOURTH APPELLANT AND: PRO DIVE MARINE SERVICES LTD. INTENDED FIRST RESPONDENT AND: DAVID SQUIRES INTENDED SECOND RESPONDENT

Coram: Green C.J.N.L., Welsh and Harrington JJ.A. Court Appealed From: Supreme Court of Newfoundland and Labrador Trial Division (G) 201201G3477 (2014 NLTD(G) 81) Application Heard: January 12, 2015 Decision Rendered: April 30, 2015 Reasons for Decision by Harrington J.A. Concurred in by Green C.J.N.L. and Welsh J.A. Counsel for the Intended Appellants: M. John Mate Counsel for the Intended Respondents: Kevin F. Stamp Q.C. Harrington J.A.: [1] The intended appellants seek leave to appeal an order striking out portions of their statement of claim.

The statement of claimalleges that the intended respondents defamed and intentionally interfered with the intended appellants’ reputations as well as economicand contractual relations. For reasons which follow, I would grant leave to appeal. IS LEAVE TO APPEAL REQUIRED? [2] The first issue is whether the applications judge’s order is interlocutory or final. [3] In Newfoundland Government Fund Ltd. v. Hickman, 2008 NLCA 56, 287 Nfld. & P.E.I.R. 13, Hickman sought leave toappeal an order dismissing an application to strike out a statement of claim.

Hickman claimed that the decision on the application wasfinal and leave to appeal was thus not required. Welsh J.A. disagreed and wrote: [7] Mr. Hickman submitted that the applications judge’s decision resulted in a final not an interlocutory order, and that, therefore, it wasunnecessary to obtain leave to appeal. I do not accept this proposition. Whether an order is final or interlocutory will depend on the effectof the order. The principle is discussed in United Food and Commercial Workers, Local 1252 Fishermen Union v. Cashin (1994), (NL CA), 124 Nfld. & P.E.I.R. 201; 384 A.P.R. 201 (Nfld. C.A.).

Speaking for the Court, Marshall J.A. wrote: [30] In

summary, therefore, the issue whether an order or judgment is to be treated as interlocutory or final depends upon the nature andeffect of the disposition. If it brought the proceedings at first instance to an end, regardless of whether it actually disposes of the rightsbetween the parties, it is final. However, if the disposition’s effect is such that the real matter in dispute between the parties remains tobe determined in the very proceeding from which it issued, the disposition is interlocutory. [8] As applied to this application, it is clear that the decision under appeal is interlocutory in nature.

Because the applications judgerefused to strike the statement of claim, the matter in dispute between the parties remains to be determined in the proceeding from whichit issued. By contrast, had the statement of claim been struck out, an appeal of that decision would be final in nature (Dobbin v.

Canada(Minister of Fisheries and Oceans) (2003), 2003 NLCA 74 , 232 Nfld. & P.E.I.R. 301; 690 A.P.R. 301 (N.L.C.A.), at paragraph12). [9] In this case, because the decision under appeal is interlocutory in nature, leave to appeal is required pursuant to rule 57.04 of theRules of the Supreme Court, 1986. … (Emphasis added.) [4] In this proceeding, Goodridge J. struck portions of the third (amended) statement of claim. The various causes of actionalleged in the pleadings remain alive, thus indicating that the order here is interlocutory and leave to appeal is required.

The essence ofthe intended appellants’ claims are in defamation and intentional interference with economic and contractual relations. Viewed from aglobal perspective, the real issues in dispute between the parties remain to be determined. [5] Based on the foregoing analysis, I conclude that the current application is interlocutory in nature. [6] Accordingly, it is necessary to consider whether there are grounds for granting leave.

BACKGROUND [7] The proceeding commenced in 2012 when the statement of claim was filed alleging that the intended appellants, James andBarry Hynes, and a related corporate intended appellant, SeaForce Diving Limited (SeaForce) were defamed by the intendedrespondents, competitors in the commercial diving business which supports offshore petroleum exploration and production operations.

The intended individual appellants together with the intended second respondent, David Squires, had been partners for approximately 20years before Squires established his own diving company and competed for business with his former partners. The fracturing of thisrelationship appears to be the root cause of discord and ultimately this litigation. [8] An initial application to strike the claim was filed by the intended respondents before a statement of defence was filed. Italleged that the alleged defamatory words or acts of interference were not pleaded with the necessary specificity.

The application wasadjourned to permit the intended appellants to file an amended statement of claim. Before the end of 2012, the intended appellantssought an order to serve interrogatories upon Technip Canada Limited (Technip), a subsidiary of a large international company servingexploration and production operations including the contracting of offshore diving services in this province’s offshore petroleumindustry. [9] In February 2013, the intended appellants filed a second amended statement of claim which attached a

schedule consisting ofmore than 400 pages of documentation produced by Technip. The documentation contained copies of a substantial number of e-mailsbetween the intended defendants and various entities, including Technip, certain oil companies and the oil industry regulator allegingmisconduct on the part of the intended appellants.

This data was obtained by the intended appellants as the result of a prior productionorder obtained during an initial procedural skirmish involving interrogatories. [10] Upon being served with the second amended statement of claim, the intended appellants renewed their adjourned application tostrike on the same grounds alleging a failure to plead “necessary material facts”.

The intended appellants also submitted that simplyattaching 400 pages of documents to the statement of claim effectively buried the required material facts in unnecessary verbiage makingit difficult if not impossible to determine what was specifically alleged to have constituted the defamation or intentional interference withbusiness relations. [11] Goodridge J. held that in a defamation pleading “[t]he statement of claim must set out the material facts on which the Plaintiffsrely, but not the evidence by which the facts are to be proved, and not argument” (at paragraph 10).

While Hurley J. considered the“modern rule” applicable to defamation pleadings, he found it was restricted to proceedings in slander (see paragraph 21). [12] Hurley J. struck 16 paragraphs from the second amended statement of claim as “scandalous, frivolous and vexatious”. He alsostruck the 400 pages of attached documents which he found it to be inappropriate pleading.

The statement of claim was not struckentirely and Hurley J. gave leave to make amendments but ordered deletion of a considerable number of remaining paragraphs. [13] The intended appellants did not seek leave to appeal Hurley J.’s order but filed a third amended statement of claim. Thispleading came before Goodridge J. on a further application to strike. It is the order of Goodridge J. which is the subject of the currentapplication for leave to appeal. [14] Goodridge J. raised concerns that the intended appellants had not properly responded to Hurley J.’s directions.

He ordered thatmany of the paragraphs in the third statement of claim be struck on the basis that they did not comply with Hurley J.’s order. Nevertheless, when Goodridge J. finished his analysis of the third statement of claim, 26 paragraphs of the original 48 remained. [15] Goodridge J. described his general concerns with the pleading before him as follows: [79] Paragraph 38 is essentially the same as paragraph 22 of the 2013 statement of claim.

That prior paragraph was struck by Hurley, J.because it lacked material facts, was prolix and argumentative, and referred to evidence not material to the cause of action. I recognizethat paragraph 38 is not identical to paragraph 22 of the 2013 statement of claim, because it has added new details. However, it does notadd the details required by Hurley, J. The actual words or their essence have not been included and the dates referenced are … toobroad. The paragraph refers to e-mails generated over a 12-month period.

If there are e-mails that the Plaintiffs believe are defamatory,then the words must be reproduced, and the dates must be provided. This sort of detail was required by the prior ruling. It should not beleft to the Defendants to guess what aspects of the e-mails were defamatory or to guess what specific e-mails contained the defamatorycomments. The Defendants have the right to know the case they have to meet, especially so when the alleged defamatory commentsexist in a written or electronic form.

The amendment to cross-reference to the defamatory communications words “outlined above”, onlypartially addresses the deficiencies identified by Hurley, J. That cross-reference only picks up one e-mail issued by Mr. Squires. Thepleading implies multiple emails, letters and other communications. For example, the pleading refers to complaints made by theDefendants of improper dealings by the Plaintiffs but does not provide the specifics. The pleading fails to provide the detail required byHurley, J.

In particular, it fails to indicate the essence of what was communicated or when the communication occurred. (Emphasis added.) [16] Goodridge J. struck portions of other paragraphs in the third statement of claim that appeared to have been pleaded to identifythe innuendo arising from many of the alleged defamatory statements. Comments like the following are typical in Goodridge J.’sreasons: [40] … the last sentence of this paragraph is struck because it states the Plaintiffs’ inferences and conclusions. It is defamatory words,or the essence of those words, which are to be pleaded.

The inferences and conclusions are for the trier of fact. Including theseinferences and conclusions in the statement of claim is frivolous and vexatious. [17] Goodridge J. cited the “modern rule” for defamation pleadings discussed in Raymond E. Brown’s The Law of Defamation inCanada, looseleaf (Toronto: Carswell, 1999) at 19.3(2)(a)(

i) for the principle that “[t]o establish a cause of action in defamation, theactual words or their essence must be pleaded with sufficient particularity to enable the defendants to understand whether the words havethe meaning alleged” (at paragraph 22). See also the comments of Rosenberg J.A. in Lysko v. Braley (2006), (ON

CA) , 79 O.R. (3d) 721, [2006] O.J. No. 1137 (C.A.). The intended appellants wish to argue that the modern rule applies and that the requirements of the modern rule were satisfied in pleadings struck by Goodridge J. [ 18 ] Counsel for the intended appellants seeks to argue that a less rigorous degree of precision ought also to be required in pleading defamation claims arising from oral and electronic communication which allegedly took place between the parties to this proceeding or with various third party companies such as Technip.

SHOULD LEAVE BE GRANTED? [ 19 ] Leave to appeal is required to be sought pursuant to rule 57.02 of the Rules of the Supreme Court, 1986 . The relevant provisions of the rule state:

(4) Leave to appeal an interlocutory order may be granted where (

a) there is a conflicting decision by another judge or court upon a question involved in the proposed appeal and, in the opinion of the Court, it is desirable that leave to appeal be granted, (

b) the Court doubts the correctness of the order in question, (

c) the Court considers that the appeal involves matters of such importance that leave to appeal should be granted, (

d) the Court considers that the nature of the issue is such that any appeal on that issue following final judgment would be of no practical effect, or (

e) the Court is of the view that the interests of justice require that leave be granted. [ 20 ] In striking paragraphs, or portions thereof, from the amended statement of claim, Goodridge J. dealt with four categories: (1) those struck for non-compliance with the earlier decision of Hurley J.; (2) those which failed to state the necessary material facts; (3) those considered to be frivolous and vexatious; and (4) those pleading inferences, conclusions and innuendo. [ 21 ] Applying the criteria set out in rule 57.02(4), there is no basis on which to grant leave to appeal regarding the first two categories.

The decision of Hurley J. was not appealed and cannot be subjected to collateral attack through an appeal of Goodridge J.’s decision. Regarding the second category, where the paragraph could be corrected by amendment, Goodridge J. granted leave to do so. [ 22 ] Leave to appeal in this case turns primarily on the application of clause (

b) of rule 57.02(4) to the third and fourth categories. Clause (b), “the Court doubts the correctness of the order in question”, does not mean that the intended appellant must demonstrate a clear and obvious error or that the decision is necessarily wrong ( Snow v. Brace , 2009 NLCA 30 , at paragraph 25 ). The standard to be applied may be described as “a want of clarity” or “uncertainty” in the applicable law ( Hudson v. Philpott , 2007 NLCA 27 , at paragraph 7 ; General Hospital Health Sciences Centre v.

Vardy , 2007 NLCA 61 , 270 Nfld. & P.E.I.R. 71, at paragraph 10 ), or the presence of a reasonably arguable point apparent from the record that, if decided differently, might materially affect the result ( Barnes v. Barnes , 2010 NLCA 17 , 295 Nfld. & P.E.I.R. 213, at paragraph 22 ; Snow v.

Brace , at paragraph 25 ). [ 23 ] In this case, consideration of the “modern rule” referenced above regarding sufficiency of pleadings, and the possibility of a more flexible approach in pleading a cause of action in defamation, would be engaged by the fourth category, pleading inferences, conclusions and innuendo, and by implication, the third category, frivolous and vexatious pleadings. This appeal provides an opportunity to clarify the law. However, I reiterate that granting leave to appeal by referring to clause (

b) of rule 57.02(4) does not indicate that the decision of the applications judge is wrong. The purpose of granting leave, thereby permitting the appeal to be heard, is to enable consideration and clarification of relevant principles of law as they apply in these circumstances. [ 24 ] Reference may also be made to clause (

d) of rule 57.02(4) insofar as an appeal as to the contents of the statement of claim following final judgment would be of no practical effect. [ 25 ] I would grant leave to appeal with the issue of costs deferred to the disposition of the appeal. ______________________________ M. F. Harrington J.A. I Concur: ______________________________ J. D. Green C.J.N.L. I Concur: ______________________________ B. G. Welsh J.A.