REGINA SEXUAL ASSAULT CENTRE INC. RESPONDENT/PLAINTIFF - v. –, 2023 SKKB 269

KING ’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 269 Date: 20 23 09 13 Docket: QBG-RG-01783-2018 Judicial Centre: Regina BETWEEN: REGINA SEXUAL ASSAULT CENTRE INC. RESPONDENT/PLAINTIFF - and – COGENT CHARTERED PROFESSIONAL ACCOUNTANTS LLP APPLICANT/DEFENDANT CORRECTED FIAT: The text of the original fiat has been changed per the corrigendum released December 14, 2023. (A copy of the corrigendum is appended to this corrected fiat.) Counsel: Eric L. R. Dulle for the applicant/defendant Sean P. Watson for the respondent/plaintiff FIAT KLATT J.

SEPTEMBER 13, 2023 INTRODUCTION [ 1 ] Cogent Chartered Professional Accountants LLP [applicant] seeks an order pursuant to Rule 4-44 of The Queen's Bench Rules dismissing the claim commenced by Regina Sexual Assault Centre Inc. [respondent] for delay. FACTS [ 2 ] The respondent’s claim relates to the fraudulent activities of its former employee during the time in which the applicant had been the respondent’s auditor. [ 3 ] The respondent discovered the former employee’s fraud on June 19, 2016.

Subsequently, the former employee was convicted of theft of $772,899, sentenced to jail and is subject to a restitution order for the amount of the theft. [ 4 ] On June 18, 2018, the respondent filed a statement of claim against the applicant grounded in negligence, breach of contract and breach of fiduciary duty. [ 5 ] On December 20, 2018, the applicant served a request for particulars on the respondent.

The applicant asked numerous times between January 11, 2019, and January 25, 2021, for a response to the request and the respondent replied with promises of a timeline for its response. [ 6 ] The applicant received no response to the request for particulars and there was no further communication between the parties from January 25, 2021, to April 2023. [ 7 ] The applicant did not provide the respondent with notice of its intent to bring the application to strike for delay before filing it on April 3, 2023. [ 8 ] The respondent responded to the application to strike by providing a reply to the request for particulars after

the application was filed. [9] The applicant has not yet filed a statement of defence. DISCUSSION [10] Rule 4-44 of The Queen’s Bench Rules provides for the court's authority to dismiss a claim where delay isinordinate and inexcusable and is not in the interests of justice the claim proceed. An application to dismiss a claim for delay under Rule4-44 requires the analysis set out by the Saskatchewan Court of Appeal in International Capital Corporation v Robinson Twigg & Ketilson, 2010 SKCA 48, 319 DLR (4th) 155 [ICC]. The framework for the analysis is as follows: [43] The first step, as set out in Carey v.

Twohig [(1973) (SK KB), 37 DLR (3d) 718], is an inquiry about whetherthe defendant has established that the delay in moving a case ahead has been inordinate. This will involve considering the time theplaintiff has taken to get the litigation to the point where the application to strike is brought and comparing that lapse of time to whatmight typically be expected in a case of similar complexity. This is necessarily a matter of informed judgment grounded in the overallexperience of the court and the particulars of the file in question. [44] The second step in the analysis, again as per Carey v.

Twohig itself, is an examination of the reasons for the delay aimed atdetermining whether it is excusable. This inquiry will entail consideration of the nature of the claim, the diligence with which the claimhas been pressed by the plaintiff, and the specific reasons offered as to why the matter has not moved more quickly. A wide variety offactors might be expected to factor into this assessment. [45] The third step of the approach is where the refinement of the Carey v. Twohig approach arises. It is this.

If the court finds delayto have been both inordinate and inexcusable, it should not consider the issue of “serious prejudice” as a discreet question. Rather, itshould move directly to the issue of whether it is in the interests of justice that the case proceed to trial notwithstanding the delay andshould consider the issue of prejudice in that context. In dealing with this third and final part of the analysis, the court should have regardto all of the relevant circumstances including: (

a) The prejudice the defendant will suffer in mounting its case if the matter goes to trial – As indicated, this is an importantconsideration. Relevant matters here would include failing memories on the part of witnesses, the disappearance or death of witnessesover the course of time and the loss or destruction of physical evidence. It will be to a defendant’s advantage to file affidavit materialdetailing the anticipated prejudice. However, a court can infer that the passage of time will typically have at least some effect on thememories of witnesses.

The more serious the prejudice a defendant will face at trial, the more likely it is that the interests of justice willtip in favour of striking the claim in question. (

b) The length of the inexcusable delay – Obviously, the longer the unjustifiable delay, the more likely it is that letting a matter go totrial will not be appropriate. An unjustifiable delay of a few months is something quite different than an unjustifiable delay of manyyears. (

c) The stage of the litigation – In general terms, a court should be less inclined to strike an action which is well advanced than onewhich is in its early stages. The interests of justice will normally weigh in favour of getting a case to trial if it has somehow stalled justshort of that mark. On the other hand, by way of illustration, an action which has never progressed beyond the pleadings stage, and inwhich the parties have invested little time or resources, might be easier to strike. (

d) The impact of the inexcusable delay on the defendant – The court should be sensitive to the impact of claims which put inquestion the professional, business or personal reputation of the defendant, which put the livelihood of the defendant at risk or whichinvolve significant or ongoing negative publicity for the defendant. In circumstances of those sorts, the court should be alert to thedamage that can be caused by a plaintiff’s failure to proceed with reasonable dispatch and, at least in general terms, should be lessinclined to tolerate inexcusable delay. (

e) The context in which the delay occurred – Defendants are generally understood to have no positive obligation to move litigationforward. Nonetheless, a court entertaining an application to strike for want of prosecution should note whether the inexcusable delaytook place in the face of pressure from the defendant to move the file ahead. Delay in the shadow of repeated requests from a defendantto get on with things is generally more serious than delay where the defendant has not pressed the plaintiff.

Similarly, if the plaintiffdelays unjustifiably in the wake of a failed motion to strike for want of prosecution, such delay would typically be more serious than ifthe application to strike had not been made. On the other hand, if it can be shown that, for his or her own reasons, a defendant wascontent to let a file sit in abeyance, that would weigh in favour of letting a claim proceed.

(

f) The reasons offered for the delay – In considering the justice of allowing a claim to move forward to trial, a court should revisitthe reasons offered by the plaintiff for the delay. Not all explanations for delay which fall short of establishing an “excuse” will be thesame. For example, a claim which is launched and then allowed to sit entirely dormant for years for no reason is not the same thing as asuit where a plaintiff makes progress but takes too long to make it. (

g) The role of counsel in causing the delay – There is a comment in Carey v. Twohig to the effect it might be unjust to deprive aplaintiff of the chance of recovering damages in circumstances where the plaintiff himself or herself is blameless in relation to the delayand his or her lawyer is fully responsible for it. See: Carey v. Twohig, supra, at p. 388; Humboldt Flour Mills Co. Ltd. v. Ewen [(1984), (SK CA), 36 Sask R 81], supra, at para. 4. This is a legitimate consideration when assessing the justice of allowinglitigation to continue after inexcusable delay.

Depending on the circumstances, there might well be a measure of unfairness in visitingthe consequences of a lawyer’s lack of diligence on his or her client. However, this consideration should not be overstated or givenundue weight. The reason for this is straightforward. Plaintiffs select and instruct their counsel. If a litigant engages a lawyer and thelawyer then fails to move matters forward expeditiously, the litigant should bear the burden of his or her choice of counsel and shouldnot expect to have that burden shifted wholly to a defendant who played no role in retaining or instructing the lawyer.

This is perhapsparticularly so in the case of sophisticated clients familiar with the ins and outs of litigation. Care must be taken to ensure that plaintiffs’lawyers are not allowed to defeat applications to strike for want of prosecution by the simple expedient of assuming the blame for notmoving the file forward. (

h) The public interest – There may be a narrow category of actions in relation to which a court should think especially carefullybefore granting an order to strike for want of prosecution. It is not possible to describe this class of matters with great particularity but, inbroad terms, it could be expected to include cases of genuine public importance. Normally, they will have implications and significancereaching beyond the specific interests of the litigants themselves. This is not to say that a different set of rules applies to such cases.

It ismerely an acknowledgment that, in some limited circumstances, the larger public interest can properly be put on the scales whenbalancing the pros and cons of striking a claim. [46] This list of factors is not necessarily exhaustive of the matters which might properly be taken into account when decidingwhether litigation characterized by inordinate and inexcusable delay on the part of a plaintiff should be struck for want of prosecution.Depending on the case, there might be other matters which also warrant consideration. [47] I would underline as well that the assessment of the relevant factors cannot be a mechanical exercise.

The likely prejudicesuffered by a defendant if a matter goes to trial is always a significant factor but the relative weights and importance of the otherconsiderations might be expected to vary from case to case. No single consideration represents a prerequisite for striking a claim.

All ofthe factors should be weighed collectively in a fashion which is sensitive to the on-the-ground realities of litigation and with the aim ofachieving a result which is just. [11] In considering the interests of justice branch of the analysis, the court is to examine the ICC factors and decidewhether they, individually, favour striking the action (or not) and to what extent.

Then, the court must decide whether the overall weightof its conclusions tips the balance in favour of preserving the action (Harding v Harding, 2014 SKCA 74 at para 17, 442 Sask R 8[Harding]; Morsky Construction Ltd. v Nickle Lake Regional Park Authority, 2016 SKCA 110, 485 Sask R 32 [Morsky]). 1. Is the delay inordinate? [12] The respondent concedes that there has been an inordinate delay.

Approximately four and one-half years havepassed between the request for particulars and the application to strike the claim (which was followed shortly thereafter by the responseto the request for particulars). [13] I accept that there has been inordinate delay. 2. Is the delay inexcusable? [14] The respondent also concedes that the delay is inexcusable. The respondent has been completely unresponsive tothe numerous correspondence from the applicant’s counsel seeking a reply to the request for particulars.

No reasons were offered at allfor the lack of responsiveness. [15] I accept that the delay is inexcusable. 3. Despite the inordinate and inexcusable delay, is it in the interests of justice that the case proceed to trial? [16] Under this heading, I consider the following non-exhaustive factors as set out in ICC. (

a) The prejudice the defendant will suffer in mounting its case if the matter goes to trial [17] When any delay occurs, the court may infer that some prejudice to the defendant will result. Don Hillstead onbehalf of the applicant, deposed that in November 2019, the applicant was sold to Grant Thornton LLP, an accounting and business

advisory firm operating across Canada. Mr. Hillstead deposed that although the applicant is still operational in Canada, it no longer operates in Saskatchewan. [ 18 ] Mr. Hillstead was the partner overseeing the respondent’s audits and only he and Charles Tooke, one of its accountants, had any dealings with the respondent’s business. Mr. Hillstead said that only he and Mr. Tooke had any personal knowledge of the issues. [ 19 ] Mr. Hillstead deposed that he retired in 2020; Mr. Tooke left the applicant’s employ when it was sold to Grant Thornton LLP in 2019. As far as he knew, Mr.

Tooke had started his own business and was no longer working as an accountant. [ 20 ] The respondent counters that the delay will not be detrimental to the applicant’s ability to mount its defence because the two witnesses can easily be found. [ 21 ] The only two employees of the applicant who could offer evidence in this matter have left its employ for some years now. While there is no evidence before me that Mr. Hillstead and Mr.

Tooke cannot be located, memories do fail, particularly in light of the fact that the fraud was discovered over seven years ago and the claim was filed over five years ago. [ 22 ] However, the respondent asserts that the footing of the claim is breach of contract, negligence and breach of fiduciary duty. The respondent claims that the success of the action will rise or fall on experts reviewing the documentary evidence that has been preserved. [ 23 ] There has been little done to preserve the anticipated evidence of the witnesses like Mr. Hillstead and Mr. Tooke.

Examinations for discovery have not occurred and there is no indication that the evidence can be provided by any other source. [ 24 ] I infer that prejudice is apt to occur given the delay and this factor weighs slightly in favour of striking the claim. But in all the circumstances I cannot conclude that the prejudice is serious enough that the applicant cannot defend against the claim. (

b) The length of the inexcusable delay [ 25 ] It appears that as early as August 24, 2018, the respondent’s lawyer emailed the applicant’s lawyer and acknowledged that as the statement of claim did not contain a lot of detail, the applicant “may be inclined to ask for particulars” (Affidavit of Cassandra Biblow, Exhibit “B”). [ 26 ] The applicant sent the respondent’s counsel a request for particulars [Request] in December 2018.

About a month later, the respondent’s lawyer wrote to the applicant’s lawyer saying that the response would be provided “in the near future”. [ 27 ] Hearing nothing further from the respondent, the applicant’s lawyer wrote to the respondent’s lawyer on April 16, 2019, asking for a timeline as to when the response to the Request would be sent. The respondent’s lawyer did not respond. [ 28 ] On June 13, 2019, the applicant’s lawyer wrote to the respondent’s lawyer again asking for a response to the Request.

This time, the respondent’s lawyer replied within a few days saying one of his students was reviewing the documents and that he hoped to have the response prepared in early July 2019. [ 29 ] The response to the Request did not come. [ 30 ] In December 2019, in an attempt to urge the matter forward, the applicant’s lawyer sent another letter to the respondent’s lawyer. Still, no response came from the respondent or its lawyer. [ 31 ] On May 14, 2020, the applicant’s lawyer emailed the respondent’s lawyer again asking for the response to the Request.

On June 2, 2020, the respondent’s lawyer apologized for the delay without giving any explanation for it. He said he would “get the filing moving”. [ 32 ] Again, there was no further correspondence from the respondent or its lawyer. [ 33 ] On December 18, 2020, the applicant’s lawyer emailed the respondent’s lawyer asking for the response to the Request. [ 34 ] There was no response from the respondent or its lawyer until January 25, 2021 when its lawyer emailed the applicant’s lawyer saying he was waiting for further information from the respondent.

The email is not clearly worded but the respondent’s lawyer said “by the end of the week” he would have a reply of some sort, either providing the reply to the request or a timeline for it. Whatever the case, nothing came from the respondent or its lawyer at all. [ 35 ] More than four years elapsed from the date the Request was sent to the date of the application to strike. Most of the follow-up correspondence from the applicant’s lawyer have gone unanswered completely.

There were a few promises to provide a “timeline” by which the respondent would reply but nothing ever came from them. [ 36 ] The delay in this case is not as significant as in others (i.e., Morsky ) but it is still lengthy. I find that it weighs slightly in favour of striking the claim. (

c) The stage of the litigation [ 37 ] The litigation has barely commenced. The statement of defence has not yet been filed because of the lack of responsiveness of the respondent. Although the respondent has now filed its response to the Request, there is no indication when the affidavits of documents will be filed or when questioning could occur. Very few resources have been expended in the litigation weighing

in favour of dismissal. I find that this weighs moderately in favour of dismissal. (

d) The impact of the inexcusable delay on the defendant (applicant) [ 38 ] Although the claim has been alive for several years, there was no evidence that it had any effect on the professional, business or personal reputation of the applicant or any of its employees. Nor is there evidence that there has been negative publicity aimed at the applicant. Thus, this is a neutral factor (see Morsky , at para 38 ; Harding , at para 26 ). (

e) The context in which the delay occurred [ 39 ] There is no obligation on defendants to urge the litigation forward. However, where there is evidence that the defendant has made repeated requests that have gone ignored, the delay is much more serious. [ 40 ] Here, there is no question that the applicant attempted to move the matter forward. Its numerous correspondence for a response to the Request went largely ignored.

In the circumstances of this case, it does not matter that the applicant did not warn the respondent that an application to strike for delay was imminent. [ 41 ] The respondent argues that the applicant was content to sit idly by and let the delay accumulate. It is true that after a while, some months would pass before the applicant would send a reminder email or letter. It is also true that there was no communication between the parties from January 25, 2021 to April 2023.

However, the numerous reminders and queries sent by the applicant’s counsel went largely unanswered. [ 42 ] That said, it is important to note there is no evidence as to why the applicant waited over two years before applying to have the action dismissed. I do not attribute any ill will or ulterior motive to this inactivity, however, it does factor into the analysis. The length of the delay would obviously have been abridged had the applicant brought its application to strike in 2021. [ 43 ] In considering all the circumstances, I find this factor weighs only somewhat in favour of striking the claim. (

f) The reasons offered for the delay [ 44 ] The only reason for the delay offered by the respondent’s executive director, Lisa Miller, was that she was waiting to hear back from their lawyer regarding next steps in the lawsuit. She said she was not aware that it was up to the plaintiff to take the next step. No explanation was offered by the respondent’s lawyer. [ 45 ] Ms. Miller’s explanation is insufficient and weighs only slightly in favour of striking the claim. (

g) The role of counsel in causing the delay [ 46 ] There is no evidence from the respondent’s lawyer himself as to whether he should assume some of the responsibility for the delay. Accepting Ms. Miller’s explanation on its face, I can infer that there no communication from the lawyer after June 2019. I also have uncontroverted evidence that Ms. Miller understood that an affidavit of documents had been prepared (although if it was, it was never served or filed). She was waiting for their lawyer to tell them what was next. [ 47 ] I accept that the respondent is neither a sophisticated nor frequent litigant.

I am satisfied that it was unfamiliar with the steps of a litigation. When Ms. Miller heard nothing after the student spent time at the respondent’s office in 2019 going through documents, it might have been reasonable for her to contact the lawyer to see what was happening. [ 48 ] However, the respondent is a small entity, employing five to seven people. During the relevant time period, only two of those employees were involved in administrative duties and the others were counsellors or involved in public education.

Put plainly, the respondent did not know the ball was in their court and did not have staff dedicated to keeping tabs on the litigation; indeed, that was its lawyer’s job. [ 49 ] While counsel’s inaction cannot defeat a striking application, it does form part of the analysis. Given the circumstances, particularly the unfamiliar ground the respondent found itself in, I find that this factor weighs significantly in favour of permitting the action to continue. (

h) The public interest [ 50 ] The applicant acknowledges that if there is public interest allowing this claim to continue, it is that the respondent is a non-profit corporation funded mostly by the government but also by public donations. Thus, there is a public interest in the respondent getting its money back.

The applicant says, however, that because the former employee was ordered by the criminal court to make restitution in the amount of the theft, the public interest is attenuated. [ 51 ] The respondent argues that there are policy considerations at play here because it is a non-profit corporation that provides valuable services to sexual assault victims.

It puts itself on the same footing as the plaintiff in Crescent Point Resources Partnership v Husky Oil Operations Limited , 2020 SKQB 128 and argues that because the outcome of this case could substantially impact the law relating to the role of auditors of non-profit corporations, it has genuine public importance. [ 52 ] The respondent also points out that the public interest mitigates in favour of allowing the claim to continue because it receives its funding from the government and through donations. According to Ms.

Miller, the respondent’s annual budget is $640,000; the loss it suffered was in excess of $700,000.

[ 53 ] The question here is whether there will be implications and significance reaching beyond the specific interests of the litigants themselves to the extent that this action be saved? [ 54 ] Small non-profit organizations such as the respondent are often at the mercy of an employee who has complete control over its finances. When a fraud or theft occurs, a conviction and restitution order often result.

However, this brings no comfort if the offender has no ability to pay the restitution. [ 55 ] The respondent alleges a private contractual relationship between itself and the applicant and this does not appear to engage the public interest. However, the public has an interest in seeing the claim of negligence disposed of on its merits if the theft was undetected because of missteps of an auditor the respondent was statutorily obliged to retain. That in addition to the very public sources of funding, a large part of which is the public purse, weighs slightly in favour of allowing the claim to continue. (

i) Other factors [ 56 ] The list of ICC factors is not exhaustive. It appears that the respondent had provided its reply to the Request. The respondent also says it has prepared a draft affidavit of documents. There is no reason now that the matter cannot proceed more expeditiously. [ 57 ] Having considered all the factors that inform the interests of justice branch of the analysis, I find that it is close to the line.

The lack of responsiveness of the respondent’s lawyer is unacceptable, particularly because the respondent placed a considerable reliance on him to see the action through. [ 58 ] Having balanced on the factors, I am satisfied that despite the inordinate and inexcusable delay, it is in the interests of justice that the action be permitted to proceed. CONCLUSION [ 59 ] The application is denied. [ 60 ] The respondent provided its response to the Request for Particulars only after the application to dismiss was filed.

Accordingly, the applicant shall have the costs of preparing and attending on the application in the amount of $500, payable forthwith. J. B.L. KLATT KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 269 Date: 2023 12 13 Docket: QBG-RG-01783-2018 Judicial Centre: Regina BETWEEN: REGINA SEXUAL ASSAULT CENTRE INC. RESPONDENT/PLAINTIFF - and - COGENT CHARTERED PROFESSIONAL ACCOUNTANTS LLP APPLICANT/DEFENDANT

Counsel: Eric L. R. Dulle for the applicant/defendant Sean P. Watson for the respondent/plaintiff December 14, 2023 KLATT J. CORRIGENDUM to FIAT of September 13, 2023 [ 61 ] The date at the top of the page is changed to reflect 2023 09 13. [ 62 ] Paragraph 10 should read as follows: Rule 4-44 of The Queen’s Bench Rules provides for the court's authority to dismiss a claim where delay is inordinate and inexcusable and is not in the interests of justice the claim proceed.

An application to dismiss a claim for delay under Rule 4-44 requires the analysis set out by the Saskatchewan Court of Appeal in International Capital Corporation v Robinson Twigg & Ketilson , 2010 SKCA 48 , 319 DLR (4th) 155 [ ICC ].

The framework for the analysis is as follows: [ 63 ] In para. 15 the spelling of Don Hillstead’s name is corrected. [ 64 ] In para. 42 the first sentence should read as follows: The only reason for the delay offered by the respondent’s executive director, Lisa Miller, was that she was waiting to hear back from their lawyer regarding next steps in the lawsuit. [ 65 ] The paragraph numbering has been changed in this fiat due to a previous error. J. B. L. KLATT