Docket: 1886 Helen Roussy Appellant (Prospective Plaintiff) - v. -, 2011 SKCA 116

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2011 SKCA 116 Date: 20111018 Between: Docket: 1886 Helen Roussy Appellant (Prospective Plaintiff) - and - Red Seal Vacations Inc. Respondent (Defendant) Coram: Vancise, Richards and Caldwell JJ.A. Counsel: E.F. Anthony Merchant, Q.C. and Casey R. Churko for the Appellant Mirilyn Sharp for the Respondent

Appeal: From: 2009 SKQB 518 Heard: November 8, 2010 Disposition: Appeal dismissed Written Reasons: October 18, 2011 By: The Honourable Mr. Justice Richards In Concurrence: The Honourable Mr. Justice Vancise The Honourable Mr. Justice Caldwell Richards J.A. I. Introduction [ 1 ] This is an appeal from a ruling refusing to allow an amendment to a statement of claim. The amendment would have added the appellant Helen Roussy as a plaintiff in a Queen’s Bench action aimed at commencing a class proceeding against a number of tour companies. [ 2 ] Rosa Alves et al filed a Statement of Claim in Q.B.G.

No. 153 (the “Alves Action”) seeking damages from five tour companies, including the respondent Red Seal Vacations Inc. (“Red Seal”). Ms. Alves et al alleged they had been sold travel packages to water- starved Cuban resorts and, as a result, had suffered much unpleasantness during their vacations. Red Seal sought to extricate itself from the proceedings on the basis that no named plaintiff had purchased a vacation package from it. [ 3 ] Ms. Roussy had travelled to Cuba with Red Seal and, in view of that fact, Merchant Law Group, counsel for Ms. Alves et al , brought an application to add Ms.

Roussy as a plaintiff. Red Seal contested the application on the central basis that it had already settled Ms. Roussy’s complaint. The certification judge agreed and therefore refused to allow the amendment because, if it were made, the resulting pleadings could be struck pursuant to Queen’s Bench Rule 173 as being an abuse of process. [ 4 ] I conclude, for the reasons set out below, that the certification judge acted correctly in denying the application to add Ms. Roussy as a plaintiff.

I would dismiss her appeal. [ 5 ] Also by way of introduction, I note that this case arises from the same factual platform which underpins Rosa Alves v. First Choice Canada Inc. ( 2011 SKCA 118 ) and Red Seal Vacations Inc. v. Rosa Alves ( 2011 SKCA 117 ). Our decisions in those matters are being released concurrently with this one. II.

Procedural Background [ 6 ] The relevant procedural background is somewhat involved but it provides a useful context for resolving the points in issue between the parties. [ 7 ] The story begins in September of 2005 when Red Seal was served with the Statement of Claim in the Alves Action.

No steps were taken to move the proceedings forward until November of 2008 when an Amended Statement of Claim was served on Red Seal and the other defendant tour companies, together with a motion and related materials seeking to certify the Alves Action as a class action. [ 8 ] Neither the Statement of Claim, nor the various amended versions of it that followed, named a plaintiff who had purchased a vacation from Red Seal. In light of this, Red Seal brought a motion to dismiss the Alves Action, as against it, on the basis that the pleadings failed to disclose a reasonable cause of action.

[ 9 ] In the eleven or so months following the service of Red Seal’s motion to dismiss, Merchant Law Group made numerous attempts to identify and locate an individual with a claim against Red Seal who could be included in the Alves Action as a plaintiff. The complicated history of these efforts is summarized below: (

i) In February of 2009, various additional affidavits were filed in support of the certification motion. These included an affidavit sworn by a computer technician in the offices of Merchant Law Group (the affidavit of Brendon Ralfe sworn January 28, 2009) in which he deposed that he had been maintaining a database of persons who had contacted his firm with respect to the Alves Action. The database, according to Mr.

Ralfe, included three unnamed people who had travelled with Red Seal to Holguin. (ii) In March of 2009, the affidavit of a legal assistant in the offices of Merchant Law Group was filed (the affidavit of Liesa Spottek sworn March 12, 2009). It asserted that two of the aforementioned Red Seal travellers were Red Seal class members.

However, in fact, both had travelled to a different destination (Santa Lucia rather than Holguin) in a different year (2007 rather than 2005). (iii) The following day, the affidavit of another legal assistant in the offices of Merchant Law Group (the affidavit of Susan Frank sworn March 13, 2009) was filed.

It asserted that members of the Roussy family, including Helen Roussy, were class members. (iv) Counsel for Red Seal sought to cross examine members of the Roussy family, including Helen Roussy, in order to demonstrate that they had already settled with Red Seal and thus were not in a position to assert a claim against Red Seal. This application was opposed on the basis, inter alia , that the members of the Roussy party were non-parties to the Alves Action and that, in any event, Red Seal had no right to examine them at the pre-certification stage of the Action. (

v) In a decision dated June 16, 2009, Justice Ottenbreit (as he then was) refused to grant Red Seal leave to cross examine Ms. Roussy or members of her travelling party, but he did allow Red Seal to file an affidavit dealing with the settlement between Red Seal and members of that group, provided this was done within seven days. Justice Ottenbreit gave Merchant Law Group a further three days to file an affidavit in response to the affidavit from Red Seal. (vi) Red Seal filed the affidavit of Sarah Moore sworn June 24, 2009.

She deposed as to her personal knowledge of a full and final settlement entered into between the members of the Roussy party and Red Seal. She attached some settlement documentation as exhibits to her affidavit. (vii) No affidavit was filed in response to the affidavit of Sarah Moore. (viii) In August of 2009, Merchant Law Group served a Notice of Motion in the Alves Action. It sought leave to cross examine Sarah Moore on her affidavit. This was done despite its earlier objection to the proposed cross examination of Ms.

Roussy and despite the June 16, 2009 decision of Justice Ottenbreit. (ix) In September of 2009, Merchant Law Group served a Notice of Motion seeking an order forcing Red Seal to deliver pre- certification notices to potential class members advising them, inter alia , that if they were willing to be a representative plaintiff in the Alves Action, they should contact Merchant Law Group forthwith “failing which [their] right to bring court proceedings arising from this matter may be forever extinguished without further notice.” (

x) In the same Notice of Motion, a request was made, in the alternative, for an order that Red Seal provide a list of the names and addresses of potential Red Seal class members so that Merchant Law Group could send out pre-certification notices to them and thereby find a Red Seal plaintiff or class member. (xi) The two Motions brought by Merchant Law Group were argued on September 17, 2009 and a decision was rendered on September 29, 2009.

In his decision, Justice Keene refused to allow cross examination of Sarah Moore, stating, among other things, that the actual purpose of examining her was not to challenge her version of the circumstances leading up to the signing of the settlement, but rather was to find potential Red Seal class members or plaintiffs. Justice Keene also refused the request for an order forcing Red Seal to deliver pre-certification notices, or names and addresses of potential Red Seal plaintiffs.

He stated that the “usual approach to civil litigation does not allow for a plaintiff to demand a defendant produce a plaintiff.” (xii) In October of 2009, a further motion was filed. In it, Merchant Law Group asserted that the Rule 82(7) affidavits filed by the

defendants failed to comply with the Rule and that, as such, further and better affidavits ought to be filed. In a decision datedNovember 19, 2009, Justice Keene dismissed the motion and held that the affidavits did comply with Rule 82(7). III. The Decision Under Appeal [10] A notice of motion seeking to add Ms. Roussy as a plaintiff to the Alves Action was filed by Merchant Law Group on November20, 2009.

It was brought pursuant to Queen’s Bench Rule 165, which provides as follows: 165 The court may, at any stage of the proceedings, grant leave to a party to amend his pleadings, in such manner and on suchterms as may seem just, and all such amendments shall be made as may be necessary to determine the real questions in issuebetween the parties. [11] The Chambers judge characterized the essence of the issue before him as being whether naming Ms. Roussy as a plaintiff waswarranted in light of Rule 165.

He reviewed Saskatchewan case law to the effect that a motion seeking leave to amend a statement ofclaim should not be granted if the proposed amendment could be struck pursuant to Rule 173 as being, inter alia, frivolous, vexatious oran abuse of process. Given the affidavit material on file, the judge concluded Ms. Roussy had signed a full and complete settlement ofher claim against Red Seal. As a result, he decided her claim against Red Seal could be struck pursuant to Rule 173 and, therefore,refused to allow the amendment adding her as a plaintiff. IV. Analysis [12] Merchant Law Group says, on behalf of Ms.

Roussy, that the Chambers judge’s decision involves three major errors: (

a) hewrongly concluded that Ms. Roussy had fully and completely settled her claim against Red Seal, (

b) he erred in finding thatMs. Roussy’s claim against Red Seal could be struck pursuant to Rule 173 if the proposed amendment was allowed, and (

c) he relied oncertain affidavit material in a fashion giving rise to fatal procedural-type problems. I will deal with each of these matters in turn. First,however, it is necessary to confirm the legal principles governing the operation of Rule 165. A. The Operation of Rule 165 [13] It is common ground that the proper approach to a Rule 165 application is reflected in the line of decisions including Duke v. Puts, (SK KB), [1998] 6 W.W.R. 510 (Sask. Q.B.) at paras. 8 and 9; Aquino v. First Choice Capital Fund Ltd. (1999), (SK KB), 179 Sask. R. 221 (Sask. Q.B.) at para. 21; Judith River Farm and Water Ltd. v.

Saskatchewan, 2003SKQB 443, 243 Sask. R. 74 at paras. 11 and 12; Sheppard v. Sheppard, 2003 SKQB 461, 243 Sask. R. 79 at paras. 23-26. [14] These cases say an amendment under Rule 165 should not be allowed if the result would be a pleading that could be struck pursuantto Rule 173. Rule 173 reads as follows: 173 The Court may at any stage of an action order any pleading or any part thereof to be struck out, with or without leave toamend, on the ground that: (

a) it discloses no reasonable cause of action or defence, as the case may be; (

b) it is immaterial, redundant or unnecessarily prolix; (

c) it is scandalous, frivolous or vexatious; (

d) it may prejudice, embarrass or delay the fair trial of the action; (

e) it is otherwise an abuse of the process of the Court; and may order the action to be stayed or dismissed or judgment to be entered accordingly or may grant such order as may be just.Unless otherwise directed, the offending party shall pay double the costs to which the other party would otherwise be entitled.R. 173. [15] The leading Saskatchewan authority with respect to the application of Rule 173 is this Court’s decision in Sagon v. Royal Bank ofCanada (1992), (SK CA), 105 Sask. R. 133 (C.A.). It confirms that a motion made pursuant to Rule 173(

a) is basedon the pleadings, with the operative inquiry being whether it is plain and obvious that (assuming everything alleged in the statement ofclaim is proved) there is no reasonable cause of action. See also: Hunt v. Carey Canada Inc., (SCC), [1990] 2 S.C.R.959 at p. 980. The approach in relation to Rule 173(

c) and (

e) is different. There, instead of merely examining the adequacy of thepleadings, it is possible to assess the merits of the claim and the motives of the plaintiff in bringing it.

B. The Scope or Sufficiency of the Roussy Settlement [ 16 ] As indicated, the Chambers judge concluded that Ms. Roussy had “signed a full and complete settlement regarding her claim against the defendant Red Seal regarding the cause of action the plaintiffs were bringing forth in the application to certify.” The evidence relied on by the Chambers judge concerning Ms. Roussy’s involvement with Red Seal is found in two places. The first is a series of emails between Ms. Roussy and employees of Merchant Law Group, as exhibited to the affidavit of Susan Frank.

The second is the affidavit of Sarah Moore, a travel agent who dealt with Ms. Roussy and her family. [ 17 ] The emails in question indicate that, by way of an online communication in October of 2006, Ms. Roussy provided Merchant Law Group with some very basic information concerning her Holguin vacation. This is said by Ms. Frank to have constituted a “submission to join” a class action involving travel to the Holguin area. However, the emails also reveal that some years later, on March 13, 2009, Ms.

Roussy responded to a Merchant Law Group email saying “…since that submission to you [ i.e. the online communication in October of 2006] we have received a refund for our tickets less taxes from Sun Wing Vacations [Red Seal]. We contacted them directly ourselves.” [ 18 ] Ms. Moore, the travel agent, deposed in her affidavit that, in February of 2005, Red Seal sent her a full and final settlement offer to convey to Ms. Roussy and her travelling party.

The offer letter concluded in these terms: As compensation, we’d like to offer your clients a future travel voucher in the amount of $743 CAD per person for the passengers Annette Roussy, Matthew Muir, Ryan Slute and Justin Roussy. For passengers Halina Roussy, Gilles Roussy and Chantelle Roussy, they will receive a voucher for $725 CAD per person. This represents the total amount paid for their Holguin Vacation, excluding taxes. This voucher will be valid for 18 months from this date.

The voucher can be used towards any program offered by Sunwing/Red Seal Vacations… We’d like to take this opportunity to offer our most sincere apologies to your clients. We hope they will utilize this voucher in an effort to allow us a chance to restore their confidence in our services. Sincerely, Sunwing Customer Service We agree to the above offer as full and final settlement regarding our claim. Signed……………………………………….Date………………………… Ms. Annette Roussy, $743 voucher … [emphasis added] [ 19 ] Ms. Moore said Ms.

Roussy (and the other members of her party) signed the offer letter on February 16, 2005 and utilized their travel vouchers in February of 2006 to return to Cuba. The signed final page of the offer letter, quoted above, was exhibited to Ms. Moore’s affidavit. [ 20 ] Merchant Law Group says the Chambers judge erred by ruling on the effect of Ms. Roussy’s settlement with Red Seal before considering the causes of action advanced in the pleadings in the Alves Action. In other words, it asks how the judge could have properly compared the terms of the release provided by Ms.

Roussy with the scope of the claims now advanced against Red Seal. I do not find this argument to be persuasive. The Chambers judge had before him the Statement of Claim and the various amendments to it. They clearly set out the nature of the causes of action being asserted against Red Seal. I see no room for confusion in any of this and see no evidence of oversight on the part of the Chambers judge. [ 21 ] It is also contended on behalf of Ms. Roussy that the settlement was too vague to enforce and was incomplete. Specifically, counsel stresses that Ms.

Roussy received only a refund of the purchase price of her vacation but that the claim now advanced against Red Seal seeks punitive and other damages over and above the purchase price. This argument is misplaced. The question is not whether the proceedings advance a claim more substantial than the amount of the settlement received by Ms. Roussy. It is whether the settlement signed by Ms. Roussy was broad enough to cover these new and larger claims. In my view, it was.

[22] Ms. Roussy’s complaint against Red Seal was not complex and Red Seal responded with a simple and straightforward offer ofsettlement. The words of the agreement, “full and final settlement regarding our claim,” are clear and admit of no ambiguity in thecircumstances at hand. Significantly, Ms. Roussy herself took no issue with the statements in Ms. Moore’s affidavit to the effect that hercomplaint against Red Seal had been fully and finally resolved. She was expressly authorized by Justice Ottenbreit to tender an affidavitsetting out a contrary view but she did not do so.

Presumably, this was because she could not honestly depose that the settlement had anydifferent effect than the one suggested by Ms. Moore. C. The Application of Rule 173 [23] In an effort to advance Ms. Roussy’s position, Merchant Law Group also says there was insufficient information in the record toallow the Chambers judge to conclude that her addition as a plaintiff would result in a situation where the relevant pleadings could bestruck as being frivolous, vexatious or an abuse of process. I cannot accept this argument. [24] The Chambers judge correctly found that Rule 173 could be invoked if Ms.

Roussy, having settled her claim against Red Seal, thenacted as a plaintiff in an action against Red Seal in relation to the very same subject matter covered by the settlement. This result seemsespecially apt when it is considered in the full context of Merchant Law Group’s efforts to find an individual with a claim against RedSeal, all as detailed above at para. 8. [25] Marble (Litigation Guardian of) v. Saskatchewan, 2003 SKQB 282, [2004] 7 W.W.R. 580, is helpful in this regard.

In that case,Justice Baynton struck out a pleading on a Rule 173 application because the plaintiff had settled her claim but was seeking to bring asecond action in order to supplement her settlement proceeds. At para. 34 of his decision, Justice Baynton quoted as follows from Craikv.

Little Pine First Nation, 2000 SKQB 147: … [8] It is trite law that a pleading should be struck under Rule 173 as disclosing no cause of action only in plain and obvious cases, inother words, where the court is satisfied that the case is beyond doubt. … [9] A Rule 173 applicant faces a high threshold in that a litigant is not to be deprived of his or her day in court except in plain andobvious cases.

On the other hand the court has the inherent jurisdiction and an obligation… "to ensure that its process is not used simplyto harass parties through the initiation of actions that are obviously without merit." Justice is not served by permitting an action that hasno reasonable chance of success or that is an abuse of process to proceed to trial.

The failure of the court to strike out such an action isnot only detrimental to the interests of the defendants but to those of the plaintiff as well. … 75 For the reasons previously given, I conclude that the terms of Marble's release given in the first action bars her from bringing asecond action against anyone who could claim contribution indemnity from KUH respecting the claims advanced against it in the firstaction.

I also conclude that the Government is entitled to claim such contribution indemnity from KUH and to claim the protectiongranted to it by the release despite the fact it is a third party with no privity of contract with Marble or KUH. Having made thesedeterminations, I conclude that it is plain and obvious that the second action constitutes an abuse of process and should be struck. [emphasis added] [26] It is also submitted on behalf of Ms. Roussy that the Marble case is different than this one because it involved a formal concessionor agreement concerning the fact of settlement.

This contention, I think, involves a misappreciation of Marble. The parties in Marbledid file an agreed statement of facts but the agreement did no more than put the terms of Ms. Marble’s release before the court. It was upto Justice Baynton to determine the scope, meaning and effect of the release. This is, in substance, the same situation as the one here. Marble cannot be distinguished on the basis suggested. [27] Merchant Law Group further argues that the effect of any settlement reached by Ms.

Roussy ought to be pleaded by Red Seal as adefence to the action and should not be allowed to serve as the basis of a Rule 173 application. I am unable to accept this line ofargument either. The root purpose of Rule 173 is to avoid the unseemly circumstance of defendants being obliged to expend energy andresources to ward off meritless litigation.

While the Rule must be engaged carefully, and only in the clearest of situations, I see no basisfor finding that the existence of a settlement agreement must somehow, as a matter of general principle, be excluded from the roster ofmatters which can render a claim vexatious or an abuse of process. Indeed, in addition to Marble, there are a number of cases whereclaims have been struck pursuant to the Rule because of a pre-existing settlement agreement between the plaintiff and defendant. See: Elfenbaum v. Saskatchewan Crop Insurance Corporation, [1995] S.J. No. 352 (Sask. Q.B.) (QL); Morgan v.

Saskatchewan (1984), (SK KB), 36 Sask. R. 240 (Sask. Q.B.). See also: Orlandello v. Nova Scotia (Attorney General), 2005 NSCA 98, 256D.L.R. (4th) 21 at para. 22. D. The Procedural-Type Issues

[ 28 ] Merchant Law Group raises, on behalf of Ms. Roussy, a number of issues which, in effect, go to the procedural propriety of the approach taken by the Chambers judge. These points were not pressed in oral argument but their main features warrant brief comment. [ 29 ] First, it is suggested that the judge acted unfairly by relying on the contents of Sarah Moore’s affidavit without allowing Ms. Roussy to “discover” the documents referred to in it. The documents in issue are presumably the complaint letter written by Ms.

Roussy to Red Seal (referred to at paras. 2 and 3 of the affidavit) and the full text of the settlement letter provided to Ms. Roussy (Ms. Moore exhibited only the last page of the offer). I see no merit in this argument. The documents in question were ones that Ms. Roussy either had authored or had signed. There is nothing to suggest she was in any way unfamiliar with their contents or prejudiced by Ms. Moore’s failure to exhibit them to her affidavit. In any event, it appears that, when counsel for Red Seal offered at the Queen’s Bench hearing to file a further affidavit annexing the letters, counsel for Ms.

Roussy objected. [ 30 ] Second, it is argued that Ms. Moore’s affidavit was filed for the purpose of replying to the certification application and that, if Ms. Roussy had known it would be used in the context of the Rule 165 application, she would have responded to it. There is no substance to this argument either. Paragraph 16 of Ms. Moore’s affidavit says it was made “ in response to the Certification motion brought by the Plaintiffs….” The “response” referred to by Ms. Moore is obviously Red Seal’s clearly stated position that Ms.

Roussy could not be a representative plaintiff because her claim had been settled. This very issue was squarely before Justice Ottenbreit. The first paragraph of his June 16, 2009 decision refers expressly to Red Seal’s position that Ms. Roussy and the other members of her travelling party “have already entered into full and final settlement with it and are not entitled to be part of the action against Red Seal.” In his ruling, Justice Ottenbreit specifically authorized Red Seal to file an affidavit (ultimately Ms. Moore’s affidavit) speaking to the settlement of Ms. Roussy’s claim.

He also specifically authorized Merchant Law Group to file an affidavit in response to the Red Seal affidavit. No such response was filed. As indicated, presumably this was because Ms. Roussy could not honestly depose that her settlement was anything other than full and final. [ 31 ] Third, it is argued that Ms. Moore’s affidavit should not have been relied on by the Chambers judge because it was sworn on the basis of her “information and belief” and thus violated Rule 319. This Rule says that, except on interlocutory motions, an affidavit must be confined to facts of which the affiant has personal knowledge.

Assuming without deciding that the motion to add Ms. Roussy as a plaintiff in the Alves Action can be seen as “final” in nature, rather than “interlocutory,” there is no merit in this submission. Ms. Moore had received a copy of the Roussy complaint letter to Red Seal and had personal knowledge of its contents. She had also received the settlement letter written by Red Seal to Ms. Roussy and her group and had personal knowledge of it and its contents. She had a signed copy of the settlement agreement in her possession.

In other words, none of the aspects of her affidavit directly relevant to the decision of the Chambers judge were based on information and belief. [ 32 ] In the end, I am not prepared to give effect to the various procedural-type arguments raised on behalf of Ms. Roussy. V. Conclusion [ 33 ] I conclude that this appeal must be dismissed. The Chambers judge made no error in declining to add Ms. Roussy as a plaintiff to the Alves Action. [ 34 ]

Section 40 of The Class Actions Act , S.S. 2001, c. C-12.01 does not preclude an award of costs in the circumstances here. As a result, Red Seal is entitled to its costs in this Court. They are to be assessed on column 2. DATED at the City of Regina, in the Province of Saskatchewan, this 18th day of October, A.D. 2011. “Richards J.A.” Richards J.A. I concur “Vancise J.A.” Vancise J.A. I concur “Caldwell J.A.” Caldwell J.A.