BUDGET STEEL LIMITED Plaintiff v. SEASPAN INTERNATIONAL LTD., 2003 FCT 390

Date: 20030401 Docket: T-168-01 Neutral citation: 2003 FCT 390 BETWEEN: BUDGET STEEL LIMITED Plaintiff and SEASPAN INTERNATIONAL LTD. and The Owners and All Others Interested in the Ship "SEASPAN 175" Defendants REASONS FOR ORDER HARGRAVE P.

BACKGROUND [ 1 ] This action arises out of a loss the Plaintiff's cargo of scrap steel, on 31 January 2000, from the barge Seaspan 175 , off Victoria, British Columbia. [ 2 ] The Plaintiff, whom I shall also refer to as Budget Steel, claims for $316,470.00, the Statement of Claim being served pursuant to an Order of 7 May 2001, for a time extension for service, service occurring between then and 21 May 2001.

The Defendant, Seaspan International Ltd. ("Seaspan") served and filed the defence and counterclaim on 14 June 2001, seeking $18,630.00 in freight and $504,070.50 for a constructive total loss of the barge. [ 3 ] Counsel for the Plaintiff was unable to obtain instructions to defend the counterclaim and requested by letter of 18 June 2001 that the Defendant not take default judgment without prior notice. There is no evidence of any response to that letter. Nothing further occurred until over a year later, 10 July 2002, when counsel for the Plaintiff received instructions to defend the counterclaim.

On 11 July 2002 the Plaintiff brought the present motion, on short leave, for an extension of time within which to serve and file a defence to the counterclaim. [ 4 ] At the conclusion of the hearing of the motion I asked counsel to provide written argument as to the effect of the doctrine of res judicata , in the event that the Plaintiff received no extension of time within which to file a defence to counterclaim.

This request for argument was in response to the Plaintiff's concern that were judgment on the counterclaim to go by default, that might prejudice the Plaintiff's claim, for both the claim and counterclaim, to a substantial degree, involved the same general facts. [ 5 ] Counsel for the Plaintiff took this direction to include the liberty to file material to re-open his initial case, both as to additional affidavits and new argument as to the applicable test for the extension of time within which to file the defence to counterclaim. The direction was quite specific.

It did not include the liberty to bolster existing evidence with the material which was readily available when the Plaintiff initially filed the material for a time extension. I will deal first with the additional affidavits tendered and then with the new case presented by the Plaintiff, before considering the merits of the application for the time extension. CONSIDERATION [ 6 ] The oral hearing of this motion concluded, leaving outstanding only a request that counsel provide written submissions on a point which they raised but were not prepared to argue fully.

That narrow point was whether a judgment in default of defence of a counterclaim for loss and damage to barge itself and for freight, could constitute res judicata in the context of the Plaintiff's claim for loss of cargo. That narrow request was misinterpreted by counsel for the Plaintiff, who did file submissions on the res judicata point, but also filed additional affidavits and new argument on the time extension point itself, seeking to have the hearing of the motion re-opened. I turn first to the additional affidavits.

Additional Affidavits [ 7 ] The Plaintiff did not seek relief to file additional affidavits, but presented them as a matter of course, under the guise of re- opening the motion so that all the relevant evidence might be before the Court.

The two affidavits contain nothing which was not readily available when the Plaintiff filed its initial material on the motion, but rather go to bolstering the Plaintiff's existing affidavit evidence. [ 8 ] The Plaintiff submits that judges and prothonotaries have a wide discretion to hear additional evidence and argument, after a hearing has been concluded, but before judgment has been formerly entered. Here counsel relies substantially on British Columbia cases

involving trials and the inherent jurisdiction of those courts: see for example Clayton v. British American Securities Ltd. , [1935) 1934 CanLII 229 (BC CA) , 1 D.L.R. 432 (BCCA) and Morison v. Hicks, (1991) 1991 CanLII 5721 (BC CA) , 80 D.L.R. (4 th ) 659 (BCCA). The principle in those cases is that all relevant evidence should be admitted in order to avoid possible miscarriage of justice. Indeed, this concept leads to Vance v. Vance (1981), 34 B.C.L.R. (209) (BCSC) in which the applicant applied without success for leave to re-open the trial and called new evidence.

As I read the case, the evidence was within the control of the applicant and thus could easily have been presented initially and thus the applicant was unable to satisfy the judge that there would be a miscarriage of justice. However, the case does stand for the proposition that the discretion to hear additional evidence or argument be exercised where, on the balance of probabilities, a miscarriage of justice would probably otherwise occur, without the re-hearing and the evidence or argument would probably change the result of the trial (page 211). Here counsel refers to a passage from Griffin v.

Corcoran (2001), 2001 NSCA 73 (CanLII) , 193 N.S.R. (2d) 279, a decision of the Nova Scotia Court of Appeal. In Griffin the court was concerned with, among other things, re-opening of the trial to introduce so-called new evidence. The trial judge had refused to re-open the trial in that the evidence either was or could have been available at trial, but was not brought forward (page 292).

The Nova Scotia Court of Appeal looked the principles, guiding the re-opening of a case after the hearing, but before the entry of the formal judgment, as a balancing, on the one hand, between the requirement that parties put forward their whole case and, on the other hand, that there must be finality in litigation, with the need to reach result that is just, or as the court put it, an accounting between the "competing goals of employing fair procedure and achieving right results" (pages 294 - 295).

The court went on to emphasize the re-opening of a trail was an extraordinary and rare step, to be undertaken with great caution, a prudent course being to permit the trial judge to exercise untrammelled discretion to prevent any miscarriage of justice (page 295 and following). The Court of Appeal in Griffin went on to deplore the practice of splitting a case by holding back evidence known to be relevant from the outset, pointing to the danger of allowing re-opening routinely or too readily, for such might provide an incentive to ignore proper principles in order to gain tactical advantage (page 296).

This leads to a passage at 296 which is particularly pertinent in that it deals with new evidence in the context of re-opening a case after trial: 68] While fair and orderly procedure is essential, so is reaching a correct result on the merits. Genuine mistakes, oversights or even poor judgment should rarely defeat a just cause. If key evidence has been overlooked or an untruth only lately detected, there are strong arguments of justice in favour of allowing the court to reopen its consideration of the matter.

The more important the evidence would be to the outcome of the case, the stronger the argument in favour of its reception. To rephrase a familiar adage, justice must not only appear to be done; it must in fact be done. [ 69] In my opinion, the decision to reopen must consider and weigh the aspects of both procedural and substantial justice to which such a decision inevitably relates. Here, the trial judge based her decision not to reopen solely on the fact that the evidence could have been presented at trial.

She was right to conclude that the "new" evidence advanced by the plaintiffs was evidence "... that was or could have been available at trial and was not brought forward." However, and with respect, I do not think that, on its own, is a sufficient basis for the refusal to reopen. Both procedural and substantial justice have to be considered. Here, it appears the judge acted on the basis of the risk of procedural injustice to Mr. Corcoran if the case were reopened and did not consider the risk of substantial injustice to the plaintiffs if it were not.

Here the court would have the hearing judge balance orderly procedure with the importance of the evidence, taking into account whether the so-called new evidence either was available or could have been available at the trial, but was not brought forward. [ 9 ] All of the cases relied upon by the Plaintiff are in the context of a trial.

While in interrogatory matters justice must be done, there is an additional premium placed upon parties putting their best case forward immediately, for otherwise, were the causal approval of additional affidavit evidence on motions to become the norm, with a notion that weak evidence could always be patched up after the fact with supplemental affidavits, or that a motion might be split in order to obtain some advantage, interrogatory motions could go on almost indefinitely. [ 10 ] In the present instance I look upon the affidavits as though they were supplementary affidavits and here, for the purpose of dealing with them expediently, I ignore the fact that leave was not sought to file the supplementary affidavits.

There are five elements which the Federal Court has considered in the case of a supplementary affidavit: (

i) whether the affidavit will serve the interest of justice; (ii) whether the supplementary affidavit will assist the court; (iii) whether there will be substantial or serious prejudice to other party; (iv) a party seeking to file the additional material must show that it was not available at an earlier date or could not have been available had proper diligence been exercised; and (

v) the party seeking to file the material must show that it will not unduly delay proceedings. These principles appeared in Eli-Lily & Co. v. Apotex Inc. (1997), 1997 CanLII 5475 (FC) , 137 F.T.R. 226, amended 144 F.T.R. 189 and in Wayzhushk Onigun Nation v. Kakeway (2001), 2000 CanLII 14835 (FC) , 182 F.T.R. 100. [ 11 ] To the same effect, Mr Justice Binnie of the Supreme Court of Canada recently considered and denied, on the basis of well- established case law, an application to enter new evidence by affidavit: Applying the usual tests, it is evident that the underlying data is reliable and, being recently issued, could not have been made available

Applying the usual tests, it is evident that the underlying data is reliable and, being recently issued, could not have been made available at trial by the exercise of due diligence. However, the federal Crown wishes to file the entire report, including commentary as well as data, but does not indicate with any specificity what aspect of the constitutional issue the Analysis relates to, nor why it could be expected to affect the result of the cross appeal, Palmer v. The Queen , 1979 CanLII 8 (SCC) , [1980] 1 S.C.R. 759 at 775; Danson v.

Ontario (AG) , 1990 CanLII 93 (SCC) , [1990] 2 S.C.R. 1086, at p. 1099; Public School Boards' Assn. of Alberta v. Alberta (AG) , 2000 SCC 2 (CanLII) , [2000] 1 S.C.R. 44 at para 17 . (The Queen v. Steven Powley, No. 28533, 14 March 2003) The cases to which Mr Justice Binnie refers are well worth reading on the point of additional affidavit material. The reference in the Alberta case, paragraph 17, should refer paragraph 6 and following. [ 12 ] In the present instance the two newly tendered affidavits provide merely a bolstering of a weak initial affidavit.

They add nothing by way of a valid excuse for the delay in filing the defence to counterclaim. Thus the affidavits will not assist the Court. They would certainly delay the conclusion of the motion, for the Defendant, Seaspan, would probably feel both obliged to cross-examine and to respond.

Finally, while the affidavits would be unlikely to prejudice anyone, to the extend that the prejudice might not be alleviated through costs, the affidavits contain only material which was readily available when the motion was brought, if the Plaintiff had worked diligently to prepare the material in support of the motion, rather than proceed on short notice, after a 14-month hiatus, with very weak affidavit material. [ 13 ] The two new affidavits will not be allowed into the proceedings of this motion. However, the Plaintiff's cases on fresh evidence, also bears on the re-opening of a hearing.

Re-opening of the Hearing of the Motion [ 14 ] The Plaintiff submits that, aside from new evidence, which is no longer an issue in this instance, a motion ought to be re- opened if there has been a misapplication of applicable law, here relying upon Sykes v. Sykes (1995), 1995 CanLII 2387 (BC CA) , 6 B.C.L.R. (3d) 296 (BCCA) at 300 - 301 and Cheema v. Cheema (2001), 2001 BCSC 298 (CanLII) , 89 B.C.L.R. (3d) 179 at 181 (BCSC). This is so even where at issue was an inadequate dealing with the law by counsel, as in Constantinescu v.

Barriault , an unreported BC Supreme Court decision of 30 October 1996 in action B920192, Kelowna Registry (BCSC), [1996] B.C.J. No. 2105 . However, in that instance the court pointed to the danger of re-opening a case, to argue something which was not argued at trial, for there must, at some point, be an end to litigation. But in the result the court was reluctant to penalize a plaintiff merely because plaintiff's counsel had not brought the relevant authorities to the attention of the court. [ 15 ] I will also refer to one of several additional cases, upon which the Plaintiff relies, being Lubrizol Corp. v.

Imperial Oil Ltd. , 1996 CanLII 4042 (FCA) , [1996] 3 F.C. 40 (F.C.A.), but keeping in mind that at stake in Lubrizol was whether the appellant might re- open the trial in order to avoid the severe censure of an award of exemplary damages (page 59). In Lubrizol the Court of Appeal referred to the concept that a court is there to decide the rights of the parties in litigation, but not to punish them for mistakes made in the conduct of the case, saved in exceptional circumstances. In Lubrizol , to fail to re-open a case, would have resulted in the loss of an opportunity to defend against the various serious claims.

The Court decided that fairness and justice required that the case be re-opened at the trial level. [ 16 ] Counsel for the Plaintiff acknowledges that all of his authorities deal with the re-opening of trial for the admission of new evidence and new authorities. Counsel also submits that the standard of re-opening a motion should be lower than that prevailing after a trial.

This I do not necessarily accept, for otherwise motions could go on almost indefinitely, with counsel trying new legal arguments. [ 17 ] In this instance I ought to consider both whether a substantial injustice might be done to the Plaintiff, if the motion were not re-opened for further argument and whether an injustice might be done to the Defendant if it were re-opened. [ 18 ] At issue is the appropriate test to apply in order to consider an application for the late filing of the defence to counterclaim. Both sides proceeded on the basis of Canada (Attorney General) v.

Hennelly (1999), 1999 CanLII 8190 (FCA) , 244 N.R. 399, a decision of the Federal Court of Appeal, counsel for the Plaintiff even tendering new written argument to that effect. The test in Hennelly , a continuing intention to pursue the application, that the application has some merit, that there are no prejudice to the respondent as a result of the delay and that there is a reasonable explanation for the delay (page 400), a test which is not exhaustive, but rather open-ended, contains a good deal of flexibility.

Counsel for the Plaintiff submits that the test in Hennelly is too severe, for even the test for an extension of time for service of a statement of claim sets a lower standard, referring to Gross v. Canada (Minister of National Revenue ) (1998) 1998 CanLII 8783 (FC) , 155 F.T.R. 91 (F.C.T.D.), followed by Mr Justice MacKay in Registered Public Accountants Association of Alberta v. Society of Professional Accountants of Canada , 2000 CanLII 14820 (FC) , [2000] 5 C.P.R. (4 th ) 527 (F.C.T.D.) at 534.

However, the test used there, a continuing intention to pursue the case, an arguable case on the merits and an absence of substantial prejudice to the other party, not only arises in a different context, but also contains a collateral consideration of the delay in the context of a continuing intention to pursue the case. [ 19 ] The Plaintiff refers to a number of cases, in various courts, dealing with applications for default judgment and setting aside default judgments and several cases in this Court dealing peripherally with extensions of time for filing a defence.

None of these cases set out a clear test for late filing of a defence. Certainly, in Muller v. Canada , 1988 CanLII 9349 (FC) , [1989] 2 F.C. 303 (F.C.T.D.) Mr Justice Strayer, as he then was, allowed an extension of time within which to file a defence. However that was on the basis of a former Federal Court Rule which allowed a defence to be filed at any time before an application was made for default judgment. Technically no such application had been made. However Mr Justice Strayer then went on to set out his own view that while no explanation for the

delay had been given, that shortcoming should sound in costs. [ 20 ] As I understand the Plaintiff's argument, it is that a late defence ought to be accepted so long as the case is arguable on its merits and there is no demonstrable prejudice, to the other side, which cannot be compensated for in costs. To accede to the Plaintiff's view would be to acknowledge that time limits in the Federal Court Rules mean little or nothing.

The Plaintiff submits that the test set out in Hennelly ( supra ) is too severe. [ 21 ] As interesting as all of these submissions may be, I do not need to decide whether there are some other test or tests that ought to be applied, or to decide to re-open this motion for further argument at the behest of the Plaintiff, for on the basis of Hennelly ( supra ) and Grewal v. Canada (MCI) , 1985 CanLII 5550 (FCA) , [1985] 2 F.C. 263 (F.C.A.) and given the facts, I am of the view that the Plaintiff may in fact have an extension. However I would note in passing that in BellefeuilLe v.

Canada (Canadian Human Rights Commission) (1993), 66 F.T.R. 1 (F.C.T.D.), at 4, Madam Justice Reed allowed an extension of time for the filing of a judicial review record, on the basis of a four-part test identical to that set out half a dozen years later by the Court of Appeal in Hennelly . I now turn to a consideration of the extension arising out of the motion as initially argued by counsel for the parties. The Time Extension [ 22 ] At the commencement of the hearing of the motion counsel for the Plaintiff tendered an extended and revised written argument.

Both sides then proceeded with the motion for a time extension on the basis of the four-part test in Hennelly (supra). However it became apparent during argument that in order to do justice between the parties, on the time extension motion, I should consider whether a default judgment on the counterclaim would render the Plaintiff's claim res judicata , thus resulting in a serious deprivation of justice to the Plaintiff, which might be contrary to the principle in Grewal ( supra ) at 272, that justice must be done between the parties.

Alternately, counsel for the Plaintiff submitted that denial of the extension of time within which to file a defence to counterclaim could result in an inconsistent outcome, with the counterclaim going to the defendant on default, but the claim itself going to the Plaintiff, after full argument. [ 23 ] Elements to consider in granting a time extension are set out in Hennelly ( supra ). At the trial level in Hennelly (1995), 91 F.T.R. 313 (F.C.T.D.) , Mr Justice Muldoon did not accept inadvertence as a reason for misfiling time.

In very brief reasons in Hennelly , at page 400, the Federal Court of Appeal sets out the test for a time extension: [3] The proper test is whether the applicant has demonstrated 1. a continuing intention to pursue his or her application; 2. that the application has some merit; 3. that no prejudice to the respondent arises from the delay; and 4. that a reasonable explanation for the delay exists. [ 24 ] The Court of Appeal went on to observe that justification for granting an extension would turn on the facts of each particular case. [ 25 ] The test in Hennelly is completely consistent with that of an earlier Federal Court of Appeal case, being the lengthy decision in Grewal ( supra ).

Indeed, Hennelly perhaps provides a gloss on Grewal , for in Grewal the elements bearing on a time extension were open-ended, but did include the requirements of a satisfactory explanation for the delay, that there be an arguable case and that there be no prejudice to the respondent resulting from the granting of an extension. In Grewal both the Chief Justice and Mr Justice of Appeal Marceau pointed to the need, in any time extension, to do justice between the parties: see pages 272, 280 and 282.

At page 282 Mr Justice Marceau observes that the various factors going to justifying extension must be balanced one against the other. Thus it is in order to balance the applicable factors set out as the test in Hennelly , with the overall view of doing justice between the parties. I now turn to consideration of the various factors in the present context. Continuing Intent to Pursue the Claim [ 26 ] An apparent continuing intent to pursue the present claim is a weakness in the Plaintiff's argument. The main claim was not pursued.

It took over a year to obtain instructions to defend a clearly delineated counterclaim for freight and barge damage. However, Plaintiff's counsel did by letter at an early stage seek a time concession from the Defendant: that letter was apparently not commented upon by the Defendant. [ 27 ] That the Defendant, in the face of a request for time within which to obtain instructions, did nothing, is a real factor, because it is for any claimant to pursue his or her claim or counterclaim with diligence. [ 28 ] The Plaintiff submits that the present motion is evidence of intent.

However the test is not so much that of present intention, but of a continuing intention to pursue the case. [ 29 ] The Plaintiff also submits that there was continuing intention in that the present motion for a time extension came about on the Plaintiff's own initiative and that I might assume a continuing of the intent, both from that fact and because the main action was never discontinued.

[ 30 ] Where all of this misses the mark is that there must be a display of due diligence and that includes a demonstration of a positive intention to pursue the action, not merely a possibility that favourable assumptions arise out of the fact that the action was not discontinued and that, after over a year of inaction, the Plaintiff was able to file a defence to the counterclaim. [ 31 ] The Plaintiff also submits that there were length discussions with its underwriters during the year.

However I do not believe that discussions between Plaintiff and underwriter, as to coverage, have any bearing on a continuing intent to defend the counterclaim. [ 32 ] Finally, the sworn evidence of counsel for the Plaintiff is that the defence to counterclaim was, at some point, drafted, but not served, for counsel did not have instructions to deliver the defence to counterclaim. Here I would be slightly more comfortable if dates and discussions were documented.

It may have been sensible to defend and one is surprised why there was no defence to counterclaim filed, so as to save the Plaintiff and its underwriters from embarrassment, with payment for the work and responsibility for any liability sorted out later. [ 33 ] Where Budget Steel does make headway is with their request that default not be taken without notice. This is an indication that there was no intention to abandon any defence to the counterclaim.

It is my view that it would be inequitable and that it would not do justice between the parties to allow the Plaintiff by counterclaim, who has an obligation to press the counterclaim and, having received a request for time within which to obtain instructions to file a defence to counterclaim, to lull the defendant by counterclaim and now oppose the filing of the defence.

That the Claim Has Some Merit [ 34 ] The requirement of merit, to go toward a time extension, may also be phrased in terms of demonstrating an arguable case. [ 35 ] The Plaintiff's material sets out that the Plaintiff's investigations have revealed that the Seaspan 175 , on several occasions over the months before the capsize, had a starboard list; that the barge needed pumping to remove list; that tug and barge left Victoria harbour not withstanding severely deteriorating weather condition; and that shortly after leaving the harbour the barge listed to starboard and capsized.

Plaintiff's counsel concludes that the Plaintiff, as a result of the investigation, has a good defence to the counterclaim. The Defendant says little weigh should be afforded to such bare statements. [ 36 ] A better view here is that the four elements arising out of the investigation, or even some of them which could form a defence to the counterclaim, are more that a mere statement. Further, they need not be proven at this stage, but demonstrate or point to an arguable case.

The strength of the arguable case is then for the court to weigh. [ 37 ] In the present instance, taking the evidence at face value, the case for merit is substantial. Prejudice to the Defendant [ 38 ] The Defendant relies upon Valyenegro v. Canada (Secretary of State) (1994), 88 F.T.R. 196 (F.C.T.D.) at 199 - 200 for the concept that delays be equated to prejudice. The Valyenegro decision relied upon a passage from University of Saskatchewan v. QUPE, 1978 CanLII 204 (SCC) , [1978] 2 S.C.R. 830 (S.C.C.) at 831 in which there was in fact no delay and therefore no prejudice.

It would seem, on the facts in the University of Saskatchewan case, it was the applicant who established that there was no prejudice. From this the Court, in Valyenegro , took it that it was for the applicant, on a time extension, to establish that it would not be any prejudice. I referred to this concept from Valyenegro in Global Enterprises International Inc. v. The Aquarius , an unreported 6 June 2001 decision, 2002 FCT 193 , in file T-16-01, although in the Aquarius those opposing the motion for time extension provided substantial evidence of very real prejudice. [ 39 ] In Abbott v.

Canada , 2000 CanLII 17126 (FC) , [2000] 3 F.C. 493 (F.C.T.D.), which involved an extension of time within which to file a reply, there was no evidence of prejudice which could not be compensated through costs. In Abbott , there being no real evidence of prejudice, I had the opportunity to consider University of Saskatchewan ( supra ) at length and to consider both Canada v. Aqua-Gem Investments Ltd. , 1993 CanLII 2939 (FCA) , [1993] 2 F.C. 425 (F.C.A.) and Ferguson v. Arctic Transportation Ltd. , [1993] 2 F.C. 425 (F.C.A.) and Ferguson v.

Arctic Transportation Ltd. (1996), 118 F.T.R. 154 (F.C.T.D.) , those cases touching upon delay and prejudice. In Aqua-Gem Mr Justice of Appeal McGuigan rejected the "intuitive notion that inordinate delay necessarily entails serious prejudice" (page 506), the Court of Appeal approving the approach of the trial judge (1991), 91 D.T.C. 5641 , that one ought to look at the fact for equating delay with prejudice. This was the approach which Mr Justice Teitelbaum took in the Ferguson case ( supra ) at pages 159 - 160.

From those cases I concluded that delay in and of itself did not necessarily cause prejudice. [ 40 ] The Valyenegro case ( supra ) has now been clearly overtaken by Apv Canada v. Canada (Minister of National Revenue) (2001), 2001 FCT 737 (CanLII) , 208 F.T.R. 81 (F.C.T.D.), a decision of Mr Justice Pelletier as he then was. In Apv Canada , at issue was extension of time within which to commence judicial review. Counsel for the applicant had relied upon Valyenegro .

Mr Justice Pelletier said that he had difficulty with the proposition requiring an applicant for a time extension to lead evidence about prejudice to the respondent, a subject uniquely within the knowledge of the respondent: [12] With respect to the last point, counsel relies upon the decision of Giles A.S.P. in Valyenegro v. Canada (Secretary of State),

[12] With respect to the last point, counsel relies upon the decision of Giles A.S.P. in Valyenegro v. Canada (Secretary of State), [1994] F.C.J. No. 1917 , (1994), 88 F.T.R. 196 , in which the learned Associate Senior Prothonotary held that "where there is delay, prejudice must be assumed to exist unless there is some evidence that it does not". The difficulty with this proposition is that it requires an applicant to lead evidence about a subject uniquely within the knowledge of the respondent, prejudice which it may suffer in the event that leave is granted.

Furthermore, in such a situation, an applicant is apparently asked to prove a negative, that is, to lead evidence that there will be no prejudice. In practical terms, the most an applicant can usually do is to assert that the respondent will suffer no prejudice. The respondent is the one who knows if its documents or its witnesses have disappeared. The bare denial of prejudice does nothing more than call on the respondent to put forward its evidence of prejudice. It is only then that the applicant can lead evidence to minimize or contradict the respondent's claim of prejudice.

In this case, the applicant has done all it can do, insofar as its original motion is concerned. (Page 89) Mr Justice Pelletier concluded with the concept that the applicant might put forward a denial of prejudice, leaving it for the respondent to then call evidence of prejudice. At that point the applicant might lead evidence to minimize or contradict any claim of prejudice. [ 41 ] In the present instance the Defendant Seaspan raises the presumption of prejudice.

Counsel for Budget Steel not only submits that there is no evidence of actual prejudice resulting from the delay, but also points out that the facts underlying the counterclaim are the same as those at issue in the main action and that in order to defend the main action Seaspan would necessarily have investigated in the same manner as would be necessary in pursuing the counterclaim. From this counsel for Budget Steel submits that if there is any prejudice it would be compensable in costs.

Counsel for Budget Steel also submits that any facts peculiar to the counterclaim itself, here thinking of the quantum of damage to the barge, would have been fully investigated and documented before the counterclaim was brought or completely unrelated to the delay and with a complete absence of prejudice. [ 42 ] In the present instance I am not convinced that the delay has resulted in any prejudice, in the real sense. I am also hard pressed to find prejudice of the sort which would need to be compensated for in costs.

Reason for the Delay [ 43 ] An applicant for extension of time must account for the whole of the delay: see Mr Justice Strayer, as he then was, in Beilin v. Canada (MEI) (1994), 88 F.T.R. 132 (F.C.T.D.) at 154 . What one is looking for is an explanation of the failure to act in a timely manner and here I would refer to the decision of Mr Justice of Appeal Hugessen in Council of Canadians ( supra ) at page 255.

There he went on to refer to Grewal ( supra ) at page 277 - 278 for the concept that "... whether or not the explanation justifies a necessary extension must depend on the facts of the particular case and it would, in my opinion, be wrong to attempt to lay down rules which would fetter a discretionary power which Parliament has not fettered.". [ 44 ] The excuse of Budget Steel for the delay seems to have been uncertainty as to whether or not Budget Steel was insured for Seaspan's counterclaim.

The result, although this is a submission not evidence, was discussion between Budget Steel and its brokers and underwriters, the issue of insurance having taken over a year to resolve. [ 45 ] I would observe that there is no delay attributable to Plaintiff's counsel, who had no instructions to defend the counterclaim when it was received in June of 2001, but immediately brought the present motion when instructions to defend were received. [ 46 ] Counsel for Budget Steel asked, at an early stage, that counsel for Seaspan not take default judgment without notice.

This was certainly prudent, and does to some degree explain why there was no immediate urgency in defending the counterclaim, for Seaspan did not press the issue of a defence. [ 47 ] All of this, Budget Steel admits, "is not the strongest reason for justifying the delay", but proposes deadlines and case management. Counsel for Budget Steel also points out that once his firm had instructions to defend the counterclaim, there was no further delay, here referring to a salutary passage in Garbo Group v.

Harriet Brown & Co. (1998), 1998 CanLII 8123 (FC) , 82 C.P.R. (3d) 423 (F.C.T.D.) at 428: In the circumstances of this case it cannot, in fairness, be said that Garbo delayed in applying once it was clear that its desired evidence would not be filed without an order of the Court.

However, that delay was procedural, under the Rules and beyond the control of the applicant and thus delay was not a real factor. [ 48 ] Delay may bar a discretionary remedy, however one also usually looks to any resulting prejudice in order to waive the importance of the delay: see for example the application of this principle in Friends of The Oldman River Society v. Canada (Minister of Transport) , 1992 CanLII 110 (SCC) , [1992] 1 S.C.R. 3 (S.C.C.) at 77 for an application of this principle.

As I have said, there would be no real prejudice in granting the time extension. [ 49 ] Any failure or laxity in pursuing a matter diligently as might reasonably be expected militate strongly against a time extension: see for example Grewal ( supra) at page 277.

By the same token, the plaintiff by counterclaim which has sat on its rights for over a year may also run into, to its detriment, the concept that a time extension must do justice between the parties. [ 50 ] On balance, taking into account the letter from counsel for Budget Steel requesting time within which to obtain instructions and the absence of reactions by Seaspan, until the present indication, there is some excuse for the delay. Application Res Judicata

[ 51 ] While the Court of Appeal in Hennelly ( supra ) set out in a brief and concise decision a four-part test, the Court of Appeal has, in other instances, made it clear that in order to satisfy the test in Grewal ( supra at 272) of doing justice between the parties, that the elements which may be considered are open-ended. Here I would refer to Independent Contractors and Business Association v. Canada (Minister of Labour) (1998), 225 N.R. 19 (F.C.A.) at 25 - 26 . In Independent Contractors the Court of Appeal set out the overall objective of Grewal and then referred to Nelson v.

Commissioner of Corrections (1996), 206 N.R. 180 (F.C.A.) at 181 for the proposition that intention, an arguable case, the delay and prejudice are only included among the elements for consideration. The court in Independent Contractors then went on to make the point that there is no fixed checklist of matters to be reviewed on a time extension: As Hugessen J.A. stated for the Court in Council of Canadians et al. v.

Director of Investigation and Research, Competition Act et al. (1997), 212 N.R. 254 (F.C.A.), at page 255, while "[t]here is no immutable check list of matters that must be reviewed whenever the grant of an extension of time is being considered", the Court will generally look at whether the applicant has an arguable case and has adequately explained the failure to act in a timely fashion. At the conclusion of argument both counsel speculated whether, if Seaspan proceeded to a default judgment on its counterclaim, the facts underlying the main action would be deemed to be admitted.

The speculation here was whether the main claim might be rendered res judicata , by default judgment on the counterclaim, resulting in a somewhat arbitrary determination. If that were the case the Plaintiff would suffer a serious injustice. In the result I asked counsel to provide written argument on the res judicata aspect.

Estoppel [ 52 ] The question here is whether the concept of issue estoppel could apply so that, following the default judgment on the counterclaim for barge damage, Budget Steel would be unable to proceed with its claim for cargo loss. [ 53 ] The elements necessary for issue estoppel require, depending upon the authorities, either three conditions and a caveat as to the nature of the enquiry to be undertaken, or four conditions, the nature of the enquiry being added as a condition. In Angle v.

Canada (MNR) , 1974 CanLII 168 (SCC) , [1975] 2 S.C.R. 248 at 254 the Supreme Court of Canada adopted the requirements of issue estoppel as set out in Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2) , [1967] 1 A.C. 853 at 935 : The requirements of issue estoppel still remain (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.

The Supreme Court of Canada, in Angle , at page 255, then went on to point out that "the question out of which the estoppel is said to arise must have been 'fundamental to the decision arrived at' in the earlier proceedings: ...". In short, the question must be fundamental and not collateral to the decision arrived at. [ 54 ] Counsel for Budget Steel refers to various cases in which issue estoppel has been founded upon a default judgment: T & D Roofing Ltd. v. C.I.B.C. , an unreported 29 June 1993 Saskatchewan Court of Queen's Bench decision in action no. 112/1992 (Yorkton), [1993] Sask. D. 3711-01, Harland v.

Williams , an unreported BC Supreme Court decision of 11 May 1993, Vancouver Registry C896028, [1993] B.C.J. No. 1047 , Brass Tacks Concrete and Drilling Ltd. v. Gateway Construction and Engineering Ltd. (2000), 2000 MBQB 194 (CanLII) , 151 Man.R. (2d) 284 (MBQB), Chackowsky v. Precision Toyota Ltd. (1990), 1990 CanLII 11187 (MB KB) , 64 Man.R. (2d) 156 (MBQB) and Wawanesa Mutual Insurance Co. v. Carson , an unreported 16 June 2000 decision in action 9703-17288 (Edmonton), [2000] Alta. D. 770.69.60.20-01. However these cases are to a degree fact-specific.

In most instance the case contains a caveat to the effect that while a default judgment can be a foundation for res judicata , caution ought to be exercised. Indeed, Lange on The Doctrine of Res Judicata in Canada , Butterworth, at 191 and following, concedes that default judgments will support both issue estoppel and cause of action estoppel "however the full vigour of these doctrines may not apply. One reasons is that it is not a judgment actually determined or pronounced by the courts.". (Pages 191 and 192). Thus Lange espouses a conservative application of estoppel in the case of default judgments.

Quite correctly counsel for Budget Steel goes on to refer to other cases in which default judgment has not supported a res judicata . [ 55 ] The better analysis, in the present instance, is that while claim and counterclaim arise of out the same incident, on the pleadings they involve very different questions. The claim is for the negligence and breach of contract of Seaspan as a carrier, while the counterclaim is for a failure on the part of Budget Steel to maintain and repair the barge including being liable for damage caused to the barge during transit.

The issues of fact in the claim and counterclaim are incidental and collateral. [ 56 ] Counsel for Seaspan takes the point that default judgment is not a final judgment, for the Court has the power and discretion to re-open such at any time, referring Birkdale Realty v. McLean (1984), 1984 CanLII 5548 (NS SC) , 64 N.S.R. (2d) 409, a Nova Scotia County Court decision, which hinged at least in part on the rules of the rules governing procedure in that court. In Birkdal default judgment was ex parte .

Certainly the Federal Court may set aside ex parte judgments, however setting aside default judgment, where both sides are involved, may be somewhat more difficult for there must not only be a serious defence, but also a substantial reason for failing to file the defence: see for example Taylor Made Golf Co. v. 1110314 Ontario Inc. (1998), 1998 CanLII 7916 (FC) , 148 F.T.R. 212 (F.C.T.D.) and Reano v. The Jennie W (1997), 221 N.R. 223 (F.C.A.) . Perhaps the better overall view is that set out in Montres Rolex S.A. v.

MNR (1987), 1987 CanLII 8925 (FC) , 17 C.P.R. (3d) 507, in which Mr Justice McNair considered the nature of a judgment in default of defence and noted that: Generally speaking, orders in the nature of

summary procedural judgments where there has been no trial of the issues are interlocutory at

Generally speaking, orders in the nature of

summary procedural judgments where there has been no trial of the issues are interlocutory at best, and should not be accorded the finality and conclusiveness of a judgment on the merits of such issues: ... (Page 517) [ 57 ] Certainly the parties are the same, however a facts which Budget Steel would need to prove its claim are not fundamental to the default judgment. [ 58 ] In its Statement of Claim, as I have said, Budget Steel alleges a breach of an oral contract of carriage, subject to a 12 December 1996 letter, together with various aspects of negligence.

Seaspan, on its counterclaim, relies upon breach of additional letters of 24 October 1997 and through December 1999, apparently dealing with maintenance and repair of the barge, including damage caused by loading and by the cargo during transit. These sets of elements, the Plaintiff's claim elements and the Defendant's counterclaim elements are different in fundamental ways. Were Seaspan to obtain a default judgment for freight and barge damage, that is by no means conclusive of the question of safe and proper carriage.

While no litigation is certain, the chances of a default judgment, on the counterclaim, prejudicing the claim of Budget Steel, is quite remote.

CONCLUSION [ 59 ] The important aspect to consider a time extension is to do justice between the parties: to achieve that end I should balance the factors for and against the time extension: both of these propositions arise out of Grewal ( supra ). [ 60 ] In the present instance, on balance, there was and is a continuing intention of defend the counterclaim, although that intention, all considered and on the evidence presented, is not a strong intention. [ 61 ] The matter has some merit in the sense that the possible defences of Budget Steel, to the counterclaim, appears substantial. [ 62 ] There is no prejudice to Seaspan in the granting of a time extension.

The reasons for the delay are weak. [ 63 ] As an additional consideration, the chances of an overarching prejudice to Budget Steel, which arguably might arise in connection with its claim, were there default judgment of the counterclaim, is remote. [ 64 ] While all of this might perhaps be close to a mutual balance, what tips the scale in favour of a time extension for Budget Steel is the forethought of counsel in writing an initial letter explaining the need for time in order to obtain instructions.

This is coupled with the lack of any apparent response from Seaspan until the present application by Budget Steel for a time extension. It would be an injustice if, having taken no position for over a year, in the face of a duty to move the counterclaim along, Seaspan were to prevail in the present instance. Budget Steel shall have its time extension. Costs in the cause. (Sgd.) "John A. Hargrave" Prothonotary Vancouver, British Columbia 1 April 2003 FEDERAL COURT OF CANADA TRIAL DIVISION NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: T-168-01 STYLE OF CAUSE: Budget Steel Limited v.

Seaspan International Ltd. et al. PLACE OF HEARING: Vancouver, British Columbia DATE OF HEARING: 15 July 2002 REASONS FOR ORDER OF: Hargrave P. DATED: 1 April 2003 APPEARANCES : Roger S Watts FOR PLAINTIFF With additional, subsequent written submissions by John W Bromley (BROMLEY CHAPELSKI) Christopher M Elsner FOR DEFENDANTS

SOLICITORS ON THE RECORD : McEwen, Schmitt & Co. FOR PLAINTIFF Barristers & Solicitors Vancouver, British Columbia BULL, HOUSSER & TUPPER FOR DEFENDANTS Barristers & Solicitors Vancouver, British Columbia