AVIC CATIC BEIJING CL. LTD. v. HUMBOLDT WEDAG INCORPORATED, 2018 FC 774

Date: 201807 26 Docket: T-49-15 Citation: 2018 FC 774 Ottawa, Ontario, July 2 6 , 2018 PRESENT: The Honourable Mr. Justice Annis ADMIRALTY ACTION IN REM AGAINST THE VESSEL HONG XING AND IN PERSONAM AGAINST THE OWNERS, CHARTERERS AND ALL OTHERS INTERESTED IN THE VESSEL HONG XING ET AL. BETWEEN: AVIC CATIC BEIJING CL. LTD. AND HUMBOLDT WEDAG INCORPORATED AND LAFARGE CANADA INC.

AND HUMBOLDT WEDAG GMBH Plaintiffs and THE VESSEL HONG XING OF CHINESE REGISTRY, REGISTERED IN SHANGHAI, CHINA AND THE OWNERS, CHARTERERS AND ALL OTHERS INTERESTED IN THE VESSEL HONG XING AND CHIPOLBROK CHINESE-POLISH JOINT STOCK COMPANY AND AIRPORT CLEARANCE SERVICES INC., DOING BUSINESS AS ACS LINES AND UTC OVERSEAS INC. Defendants and THE VESSEL HONG XING AND THE OWNERS, CHARTERERS AND ALL OTHERS INTERESTED IN THE VESSEL HONG XING AND CHIPOLBROK CHINESE- POLISH JOINT STOCK COMPANY Third Parties AMENDED ORDER AND REASONS (pursuant to Rule 397(2) I.

Introduction [ 1 ] The third parties [Chipolbrok Chinese-Polish Joint Stock Company, thereafter referred to as the Defendants] bring this motion in writing pursuant to Rule 369, and Rules 59, 97, 222-4, 226-7, 240-1, 258, 265, 369, 385 (1) and 401 of the Federal Court’s Rules [the Rules], for an order dismissing the Statement of Claim of the Plaintiffs, Avic Catic Beijing CL.

Ltd., Humboldt Wedag Incorporated, Lafarge Canada Inc., and Humboldt Wedag GMBH, for their failure to comply with orders of this Court and delay in the prosecution of their claim, and in the alternative, orders for the expeditious hearing of the matter. [ 2 ] For the reasons that follow, the motion is dismissed, with costs nevertheless awarded to the Defendants. II. Facts [ 3 ] This action was commenced by Statement of Claim issued on January 15, 2015.

Chipolbrok filed its Statement of Defence on April 20, 2015 and the Co-Defendants, Airport Clearance Services Inc. (doing business as ACS Lines) and UTC Overseas Inc.] together, ACS/UTC] filed their Statement of Defence on April 24, 2015. [ 4 ] ACS/UTC filed a Third Party Claim against The Vessel “Hong Xing” and the Owners, Charterers and all others interested in the vessel “Hong Xing”, and Chipolbrok on April 24, 2015.

Chipolbrok filed its Third Party Defence on May 25, 2015. [ 5 ] On February 18, 2016, following a status review, the Court issued an Order ordering that the proceeding continue as a specially managed proceeding and requiring that the Plaintiffs, within 20 days of the order, serve and file a proposed timetable for the completion of the steps necessary to advance the proceeding in an expeditious manner and assigned Prothonotary Morneau as Case Management Judge in this matter.

[ 6 ] The Plaintiffs proposed a draft

schedule by letter to the Federal Court on March 9, 2016, but advised the Court that it was subject to amendment. The scheduled proposed contemplated as follows: The First

Schedule Step Deadline Affidavit of Documents exchanged May 15, 2016 Examinations for Discovery take place June 30, 2016 Answers to undertakings from Examinations for Discovery September 1, 2016 Resolution of objections from Examinations for Discovery September 30, 2016 [ 7 ] This

schedule was never reduced to a direction of the Court for reasons which are unknown to Chipolbrok, but may be related to the draft nature of the

schedule proposed and the Plaintiffs’ request for leave to finalize a timetable later. Based on the Federal Court Registry’s records, it appears that the Registry contacted the Plaintiffs’ counsel on April 27, 2016 and was told that there were delays and that he would provide the Court with a follow-up status in approximately three weeks’ time. There is no record of this having been done. [ 8 ] By e-mail dated May 13, 2016, Chipolbrok followed up with the Plaintiffs’ counsel regarding the status of this matter and the lack of Court-ordered deadlines.

In a number of e-mails between May 13, 2016 to December 13, 2016, counsel for Chipolbrok and ACS/UTC followed up with the Plaintiffs’ counsel regarding document production, and the Plaintiffs’ counsel repeatedly advised that there were delays and he did not have the required documents from his client. [ 9 ] On January 16, 2017, the Court issued an Order for the parties to provide a reasonable

schedule for the completion of the remaining steps in this file. [ 10 ] On January 25, 2017, the Defendants were served with a Notice of Change of Solicitor on behalf of the Plaintiffs. Counsel for Chipolbrok brought the Court’s January 16, 2017 Order to the attention of Plaintiffs’ new counsel. [ 11 ] On February 10, 2017, the Plaintiffs submitted a letter to the Court with a suggested

schedule after agreement was obtained from the other parties. On February 21, 2017, the Court issued an Order setting the

schedule proposed in the letter of February 10, 2017, which required: The Second

Schedule Step Deadline Affidavit of Documents exchanged March 31, 2017 Examinations for Discovery completed September 30, 2017 Settlement discussed October 30, 2017 Plaintiffs to file Pre-Trial Conference Requisition and Memorandum November 30, 2017 [ 12 ] ACS/UTC had already served its Affidavit of Documents in May 2016. [ 13 ] Chipolbrok served its Affidavit of Documents on February 14, 2017. [ 14 ] The Plaintiffs served a draft unsworn Affidavit of Documents on March 30, 2017.

On June 22, 2017, the Plaintiffs served a sworn Affidavit of Documents. [ 15 ] On June 22, 2017, counsel for the Plaintiffs requested dates for examinations for discovery. [ 16 ] Given the widespread locations of the parties, on July 13, 2017, counsel for Chipolbrok proposed that the examinations for discovery of all parties be conducted in writing. [ 17 ] On July 14 and 19, 2017, Counsel for ACS/UTC and the Plaintiffs, respectively, confirmed their agreement to conduct written examinations as proposed on the scheduled, which would meet the ultimate deadline for discoveries set in the Second Schedule. The

schedule was as follows: The Discovery

Schedule Step Deadline Questions exchanged July 30, 2017 Responses provided August 30, 2017 Follow up questions exchanged September 15, 2017 Responses to follow up questions provided September 30, 2017 [ 18 ] On July 19, 2017, counsel for Chipolbrok requested copies of certain documents listed in the Plaintiffs’ Affidavit of Documents

which were not initially provided. One of these documents was provided August 29, 2017. There has been no response regarding the other request. [ 19 ] On Monday, July 31, 2017, all parties exchanged their written examination for discovery questions. [ 20 ] On August 29, 2017, Plaintiffs’ counsel advised that they would not meet the deadline for providing responses by August 30 as set out in the Discovery

Schedule and suggested that requested an extension of two more weeks. A revised

schedule which would modify both the Discovery

Schedule and the Second

Schedule was proposed, as follows: The Third

Schedule Step Deadline Questions exchanged July 30, 2017 Responses provided September 30, 2017 Follow up questions exchanged October 15, 2017 Responses to follow up questions provided October 30, 2017 [ 21 ] Plaintiffs filed their answers to the written examination for discovery of Co-Defendants ACS Lines and UTC Overseas Inc. and of Defendant Chipolbrok on September 22, 2017. [ 22 ] The Third

Schedule contemplated that the deadline for completing discoveries set out in the Second

Schedule would not be met, but that the Plaintiffs might still be in a position to file their requisition for pre-trial conference and memorandum by November 30, 2017. Plaintiffs’ counsel advised that his intention was to write to the Court by the end of September to seek its agreement to modification of the Second

Schedule to accommodate the delays caused by the Third Schedule. Counsel for the Defendants consented to the Third Schedule. Plaintiffs’ counsel did not submit the Third

Schedule to the Court or seek approval of any relief from compliance with the Second

Schedule from the Court until February 5, 2018 (as discussed below) and as such the Third

Schedule was never reduced to an order of the Court. [ 23 ] On September 29, 2017, Chipolbrok served an affidavit with responses to the examination for discovery questions as well as a further list of documents, and the Plaintiffs served their responses to the written examination for discovery questions. ACS/UTC provided its sworn affidavit in response to the written examination for discovery questions on October 6, 2017. [ 24 ] On October 12, 2017, Plaintiffs’ counsel sent follow up questions to ACS/UTC.

On Monday, October 16, 2017, Chipolbrok served its follow up discovery questions. [ 25 ] Pursuant to the Third Schedule, responses to these questions were due on October 30, 2017.

On each of November 2, 8 and 17, 2017, Chipolbrok followed up with the Plaintiffs regarding the outstanding responses and did not receive a response. [ 26 ] By letter dated December 6, 2017, Chipolbrok wrote to the Federal Court requesting a Case Management Conference concerning the progress of this matter and to bring a motion seeking relief regarding the failure of the other parties to respond to the further questions by the deadline agreed upon in the Third Schedule. [ 27 ] The parties provided their available dates in December to the Court. A Case Management Conference was not scheduled.

Instead, by voice-mail message left December 14, 2017, the Federal Court Registry contacted Chipolbrok’s counsel and left a message encouraging the parties to discuss among themselves new updated deadlines which could be proposed to the Court for approval if submitted on consent. The message advised that similar messages had been left for counsel for the other parties. Despite this invitation from the Court, the Plaintiffs did not contact Chipolbrok to propose a new schedule. [ 28 ] On January 19, 2018, Chipolbrok wrote to invite the Plaintiffs to propose a revised

schedule resetting the missed deadlines in order to move this matter forward. [ 29 ] By letter dated February 5, 2018, the Plaintiffs sought consent for an amended proposed

schedule to accommodate when they anticipated having responses to the follow up questions. The Defendants consented to same, the proposed

schedule was submitted to the Court by letter dated February 9, 2018, and in an Order dated February 23, 2018 the Court endorsed the proposed

schedule as follows: The Fourth

Schedule Step Deadline Examinations for Discoveries to be completed February 28, 2018 Settlement discussions take place March 30, 2018 Plaintiffs file and serve their Pre-Trial Conference Requisition and Memorandum April 30, 2018 [ 30 ] Outstanding responses to follow up questions were provided by ACS/UTC on February 15, 2018. [ 31 ] Outstanding responses to follow up questions were provided by the Plaintiffs on February 16, 2018, together with considerable further documents.

[32] By letter dated March 16, 2018, Chipolbrok followed up on an incomplete or unresponsive answer by the Plaintiffs, and requested aresponse by March 29, 2018. The Plaintiffs have not objected to answering this question: “We note that Plaintiffs answer to question 4.3 in the Further Written Examination is incomplete.

In particular, question 4.3asked not only for the names of other vessels that carried equipment for this project and the dates of shipments, which Mr.Casco did provide, but also for all available pre and post shipment documents evidencing the condition of that equipment onthose occasions (the “Condition Documents”). The Condition Documents have not been provided.

The ConditionDocuments are relevant to this claim, and we expect that they are in the possession and control of the Plaintiffs”. [33] The Plaintiffs explanation for failing to respond to the Defendant’s letter is set out at paragraphs 24 to 30. [34] The Plaintiffs request that a further extension of two months be granted to provide answers to the request letter of March 16, 2018given the summer holidays. In addition, they seek an order modifying the Court’s order of February 23, 2018 such that their pretrialconference requisition memorandum is filed by October 30, 2018 with the Rules to be adhered to thereafter.

III. Issues [35] The issue on this motion is whether the Plaintiff should be granted extensions of time to comply with the Federal Court Rules and tomodify a Court-ordered consent

schedule for proceeding? IV. Law [36] The Defendants argue that an application to dismiss a matter for failure to meet a court order is different from the generic test of anextension of time, which is being cited in its implicit request to amend the case management schedule. They cite the decision ofFerrostaal Metals Limited v. Evdomon Corp., [2000] F.C.J. No. 972 (Prothonotary), [2000] F.C.J. No. 972 (FCT), aff’d [2001] F.C.J.No. 1552 (FCA) for the proposition that prejudice to the parties is not the governing concern.

Rather it is the prejudice to the Court andthose of its users who comply with the rules and orders that should be taken into consideration. [37] The essence of the decision at paragraphs 7 to 9, which was affirmed by the Court of Appeal without reasons, is set out below withthis Court’s numbering in square brackets to assist in highlighting the principles that applied in its determination: "7 The Supreme Court has long held [1] "that a party must not be deprived of his rights on account of an error of counselwhere it is possible to rectify the consequences of such error without injustice to the opposing party"; (citing Bowen v.

Cityof Montréal, " (SCC), "[1979] 1 S.C.R. 511"", at 519""; see also Construction Paquette v. Entreprises Végo," (SCC), "[1997] 2 S.C.R. 299"", at 311)"" [2] but the party must not itself be largely responsible for thedelay. [3] In the case at bar, it clearly is not "beyond reproach, as it did not provide its counsel with the documents to supportan action brought in 1995 until the summer of 1999, whereas a

schedule set by the Court gave the parties until May 10, 1999to serve their affidavits of documents. 8 The Court considers that in the case at bar the [4] plaintiffs not only failed to explain the reasons for the delay inproceeding with the action but [5] flagrantly and recklessly neglected to observe the entirely reasonable

schedule set by theCourt on the basis of their submissions, and without even trying to alter the terms of the schedule. 9 Additionally, as the Prothonotary Morneau noted, referring to the judgment of McGillis J. in Multibond Inc. v. DuracoatPowder Manufacturing Inc., ([1999] F.C.J. No. 1698, (FCT)) where the Court was hearing a [5] status review notice - inactual fact, a second review - assessing the harm to a party is not part of the equation. I concur in this view.

However, evenif I am wrong about this I still feel that in the case at bar the plaintiffs' unjustified delay in proceeding with the case and thelong lapse of time since the proceedings began are such as to cause harm to the defendants at the hearing. [38] In the Court’s view, the overriding principle continues to be that based on the interests of justice that a party must not be deprivedof its rights involving serious matter for reasons of delay caused by its lawyers, unless attributable to its own actions.

The failure toprovide reasons for the delay meets this requirement. [39] The cases cited also involve long periods of delay and unusual circumstances.

Moreover, it would appear that the prejudice of theCourt arises from non-compliance with the statutory provisions regarding status reviews, although prejudice to the users should alwaysbe taken into consideration, particularly where the delay is long and compromises the ability to properly defend one’s case. [40] This said, the Court acknowledges that it is highly unimpressed with the prosecution of this action, such that the Defendants cannotbe faulted for bringing this motion.

It is a borderline decision not to dismiss the matter for delay. [41] The case was more or less on track, in the sense that the Defendants were tolerating the situation with small extensions (convertedinto Court orders) to the agreed upon schedules until their request of March 16, 2018 for better responses to questions outstanding fromprevious demands for documents dating back to October 2017. In addition to the failure to respond, and apparently to requests for thedocuments in question, the Plaintiffs’ counsel ignored the intervening queries.

He only sprang to life when faced with this motion fordismissal filed on June 6, 2018. [42] The Court also agrees with the Defendants that the Plaintiffs’ counsel is attempting to minimize the delay incurred by suggestingthat it only amounts to some three months. Based on the initial request made in October 2017, the delay is now approaching ninemonths, compounded by the apparently continuing failure to request information from the clients. [43] All this said however, a reputable trial lawyer has carriage of the file, which he took over from another law firm, which is often a

complicating factor. He has sworn that his lassitude can be attributed to his numerous trial commitments and the departure of two lawyers who were assisting him, such that the matter apparently did not receive the attention that it merited. He also indicates that the reporting is somewhat complicated, passing as it does through a law firm in Germany, and then on to underwriters for action and decisions. [ 44 ] The Defendants question this information for lack of corroboration and details.

But coming from an officer of the Court who could always have been cross-examined on his affidavit, it is reasonably sufficient for the Court’s purposes to explain the delay, to some extent.

That is to say that the consequences facing a senior litigation lawyer who finds himself without two assisting lawyers, even in a relatively large firm, is usually highly problematic, sufficient to constitute a somewhat reasonable explanation for an inability to appropriately respond to a deteriorating workplace situation. [ 45 ] Always an important factor, considering the overriding concerns expressed by the Supreme Court, there are no statements from the Defendants that their cases are prejudiced by the delay.

In such circumstances, the costs thrown away in bringing these motions appear to be the only prejudice, where no procedural consequences arise, and perhaps bearing somewhat in mind that delay is more often more favourable than not to defendants in the overall outcome of litigation. The Court will compensate the Defendants with an order granting its costs as requested, even though the motion for dismissal is rejected. [ 46 ] Obviously, the Court does not like to have its consent orders continually extended.

Nevertheless when they are really a formality by being obtained on consent, particularly when the Parties show a history of generally being prepared to work out a

schedule for the proceedings involving international clients, it is not a matter that garners the same degree of the Court’s opprobrium, as the failure to adhere to mandatory status proceedings pursuant to the Rules.

The Prothonotary appeared to share this view, inasmuch as when requested to hold a trial management conference, he declined on the basis that the parties appeared to be moving forward and would eventually work out the procedural problems themselves. [ 47 ] The Defendants have indicated that if the motion for dismissal is rejected, the Plaintiff should be given very short rein to comply with its obligations. The Court agrees. It will grant the alternative orders requested pursuant to Rules 97 (

b) and 227 (c), with some slight variation as a requirement to respond within seven days of this order is probably not feasible. THIS COURT ORDERS that the motion for dismissal of the Plaintiffs’ claim is dismissed, but nevertheless costs are awarded to the Defendants in the amount of $2500 as requested, payable in any event of the cause, within 30 days.

In addition, the matter is to proceed in accordance with the following mandatory scheduling orders: The Plaintiffs are required: 1 . to respond to outstanding questions from the examination for discovery by August 9, 2018 , including producing a complete and accurate Affidavit of Documents listing all documents relevant to this proceeding, including, but not limited to pre and post shipment documents evidencing the condition of the equipment shipped on other vessels that carried equipment for this project, which shipments are identified on “(PDF) Vessels CHINA SHIPMENTS (C11164-14324 & 14181)”; and 2 . to file their requisition for pre-trial conference and memorandum by August 16, 2018 , accompanied by all documents required under Rule 258(4) including all affidavits and statements of expert witnesses. 3 .

Further, if the Plaintiffs fail to comply with the Order made by the Court, their claim will be dismissed without further order and costs of the action are payable to Chipolbrok. 4 . If the action is not dismissed the following

schedule will apply: (

a) The written examination for discovery, as the case may be, shall be completed by August 9 , 2018; (

b) the settlement discussions pursuant to Rule 207 of the Rules shall be completed by September 10 , 2018; and (

c) Plaintiffs shall file and serve their pre-trial conference requisition memorandum by October 10 , 2018 and thereafter, the Defendants shall serve and file their pre-trial conference memorandum in accordance with the Rules. "Peter Annis" Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: T-49-15 STYLE OF CAUSE: AVIC CATIC BEIJING CL. LTD. v. THE SHIP “HONG XING” ET AL MOTION IN WRITING CONSIDERED AT MONTREAL, QUÉBEC PURSUANT TO RULES 369, AND RULES 59, 97, 222-4, 226-7, 240-1, 258, 265, 369, 385(1) AND 401 OF THE FEDERAL COURTS RULES Amended ORDER AND REASONS: ANNIS J.

DATED: JULY 2 6 , 2018 WRITTEN REPRESENTATIONS BY: Patricia Atallah FOR THE PLAINTIFFS Shelley Chapelski Kaitlin Smiley For third party (CHIPOLBROK CHINESE-POLISH JOINT STOCK COMPANY) SOLICITORS OF RECORD : Robinson Sheppard Shapiro Montreal, Québec FOR THE PLAINTIFFS De Man, Pillet Montreal, Québec FOR THE DEFENDANTS, (AIRPORT CLEARANCE SERVICES INC. DOING BUSINESS AS ASC LINES , AND UTC OVERSEAS INC. Norton Rose Fulbright Canada LLP Vancouver, British Columbia For The third parties (CHIPOLBROK CHINESE-POLISH JOINT STOCK COMPANY)