WikmaQ Autoparts v. Equipment Corp., 2019 NLSC 220

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Wikmaq Autoparts and Equipment Corp. v. B & T Battery and Autoparts Limited , 2019 NLSC 220 Date : December 11, 2019 Docket : 201901G5715 Between: WikmaQ Autoparts and Equipment Corp. Applicant And: B & T BatterY & Auto Parts Limited First Respondent And: J.A.P. Holdings Inc. Second Respondent And: Newfoundland and Labrador Credit Union Third Respondent Before: Justice Garrett A. Handrigan Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: November 27, 2019

Summary: Wikmaq Autoparts issued an originating application against B & T Battery, J.A.P. Holdings, and the NL Credit Union. The parties appeared before Court, and a judge set the application down for hearing on a fixed date. In the meantime, Wikmaq filed a notice discontinuing the originating application but did not obtain leave of the Court to do so. The Court found that Wikmaq could not discontinue the proceeding without leave because a judge had set it down for hearing. The Court also found that J.A.P. Holdings, which asked for its costs, was entitled to them. It ordered that Wikmaq pay the costs on a party- and-party basis to be taxed under Column 3 of the Scale of Costs.

Appearances: Alexander T. Wells Appearing on behalf of the Applicant Adam G. Baker Appearing on behalf of the First Respondent Patrick B. Power Appearing on behalf of the Second and Third Respondents Authorities Cited: CASES CONSIDERED: Mushuau Innu Construction Inc. v. Mushuau Innu Band Council , 2010 NLTD(G) 203; Cougar Helicopters Inc. v. Sikorsky Aircraft Corp. , 2010 NLTD(G) 185; Cougar Helicopters Inc. v.

Sikorsky Aircraft Corp. , 2010 NLTD(G) 161 RULES CONSIDERED: Rules of Court Rules of the Supreme Court, 1986, S.N.L. 1986, c 42, Sch D REASONS FOR JUDGMENT Ruling on Costs Handrigan, J. : INTRODUCTION [ 1 ] Wikmaq Autoparts and Equipment Corporation (Wikmaq) sells auto parts to consumers and businesses from a retail store in Stephenville, NL. On September 4, 2019, Wikmaq issued an originating application, naming B & T Battery and Autoparts Limited (B & T Battery), J.A.P. Holdings Inc. (J.A.P.

Holdings) and Newfoundland and Labrador Credit Union (Credit Union) as first, second and third respondents, respectively. [ 2 ] On October 3, 2019, the parties appeared before Hurley, J. of this Court and the learned justice set the originating application down for a one-day hearing on April 2, 2020. At the same time, counsel for J.A.P. Holdings indicated he had instructions from his client to seek an order to convert the originating application into a statement of claim. Hurley, J. directed J.A.P. Holdings to file its application within 30 days; and on November 1, 2019, J.A.P.

Holdings filed its interlocutory application to convert the originating application to a statement of claim. [ 3 ] The parties appeared before me on November 27, 2019, either to hear or to set a date to hear J.A.P. Holdings’ interlocutory application; except that Wikmaq filed a notice discontinuing its originating application on November 25, 2019. J.A.P. Holdings claimed that Wikmaq could not file a notice of discontinuance without leave and it requested an order for its costs, including for its appearance on November 27, 2019. The Issue [ 4 ] Three issues arise from the preceding: 1.

Does Wikmaq Autoparts require leave to discontinue its originating application? 2. If so, should Wikmaq Autoparts have leave to discontinue? 3. Is J.A.P. Holdings entitled to its costs, including the costs for November 27, 2019? The Law Rules of the Supreme Court, 1986 , S.N.L. 1986, c 42, Sch D [ 5 ] Rule 19.01(

a) of the Rules of Court provides, in part: “Any time before a proceeding is entered for trial or its hearing is commenced in chambers, (

a) a plaintiff may discontinue the proceeding or withdraw any cause of action therein against any defendant … by filing and serving a notice of discontinuation … on any party concerned” [Underlining mine]. [ 6 ] Rule 19.02(1)(

a) of the Rules of Court provides, in part: “

(1) At any time after a proceeding is entered for trial or its hearing is

commenced in chambers, (

a) a plaintiff may discontinue the proceeding or withdraw any cause of action therein against any defendant … by filing a notice of discontinuance or withdrawal on which is endorsed the consent of all parties of record, or by leave of the Court” [Underlining mine]. [ 7 ] Rule 19.02(2) provides, in part: “

(2) An order of the Court under Rule 19.02(1) may contain such terms as to costs … or otherwise, as are just.” [ 8 ] Rule 19.03 of the Rules of Court provides: “

(1) Subject to Rule 19.02, a party discontinuing a proceeding or withdrawing any cause of action therein … or any part thereof shall pay the costs of any opposing party to the date of giving notice of discontinuance or withdrawal to the party….” [ 9 ] These are the parts of the Rule 19 that relate to the issues in this matter. Case Law [ 10 ] Orsborn, C.J. (as he then was) of this Court interpreted the phrases “a proceeding is entered for trial” and “its hearing is commenced in chambers” from Rule 19.01 (1), at paragraph 20 in Mushuau Innu Construction Inc. v.

Mushuau Innu Band Council , 2010 NLTD(G) 203: To summarize: 1. The phrase 'hearing is commenced in chambers' in Rule 19 should be interpreted to refer only to a hearing the date for which has been set by the administrative staff of the court without a judicial order. 2.

Where the date for the adjudicative hearing of an application, whether originating or interlocutory, is set by order of a judge, the application in question can be withdrawn (discontinued), whether there is consent or not, only by leave of the court. [ 11 ] Orsborn, C.J. explained the rationale for requiring leave to discontinue after a matter is “entered for trial” or the “hearing is commenced in chambers” this way, at paragraph 58 of Cougar Helicopters Inc. v.

Sikorsky Aircraft Corp. , 2010 NLTD(G) 185: The rule establishes two events following which the plaintiff loses the right to unilaterally bring a matter to a halt. These events are, in the case of a trial, the proceeding being ‘entered for trial’, and in the case of a matter proceeding by way of originating application, the commencement of the hearing in chambers. It is not necessary to discuss at what point a matter is ‘entered for trial’. But the two events both reflect circumstances in which all parties are now bound to the litigation - the entry for trial or the actual commencement of a hearing in chambers.

All of the preliminary matters have been dealt with, the court

schedule and trial docket has become engaged, and indeed, in the case of an application, a judge has actually commenced the hearing in chambers.

In other words, the adjudicative function of the court has now been brought to bear on the litigation. [ 12 ] Lest there be any doubt about what Orsborn, C.J.’s position on what the words “entered for trial” or “the commencement of the hearing in chambers” mean, let me quote further from what he said about them in Mushuau Innu Construction : 14 Once a matter has been scheduled by a judge to be heard on a specific date, it is not within the power of the parties to unilaterally decide that they will not proceed on the date set but rather will proceed on another date.

It may well be that the judge will grant an adjournment when all parties consent, but the decision not to proceed with the hearing properly belongs to the judge and not to the parties. (I make no comment on adjournments when a judge has not been involved in setting the hearing date.) 15 I do not think that many would strongly argue against the proposition that, once a judge has set a date for the hearing of an application, the application will in fact be heard on that date unless a judge orders otherwise. 16 Similarly, once a judge has set a date for the hearing of an application, that hearing cannot be avoided by the simple withdrawal of the application unless a judge, in effect, cancels the scheduled hearing by giving leave to withdraw the application. 17 For the purpose of the application of Rule 19 to the withdrawal or discontinuance of an interlocutory or originating application, I would interpret "its hearing commenced in chambers" to refer only to a hearing the date for which has been set by counsel in consultation with the administrative staff of the court with no judicial order being involved in setting the date for the hearing. [ 13 ] In Cougar Helicopters Inc. v.

Sikorsky Aircraft Corp. , 2010 NLTD(G) 161, Orsborn, C.J. allowed Cougar Helicopters party- and-party costs after Cougar discontinued an action it had started against Sikorsky Aircraft and Helicopter Support, Inc. (Helicopter Support). Cougar discontinued the action because it served its statement of claim on Sikorsky Aircraft and Helicopter Support outside the jurisdiction of the court, without obtaining leave of the Court to do so, when it required leave. [ 14 ] Meanwhile, Sikorsky Aircraft and Helicopter Support filed an interlocutory application to set aside Cougar’s notice of discontinuance.

The applicants claimed that Cougar needed leave to discontinue its action against Helicopter Support and that Cougar should only get leave if it took no further action against Helicopter Support in this jurisdiction. Sikorsky Aircraft and Helicopter Support relied on their interlocutory application to support their claim that Cougar required leave to file its notice of discontinuance.

[ 15 ] Orsborn, C.J. disagreed and found that Cougar “… did not require either leave of the Court or the consent of the parties before filing the Notice of Discontinuance as against HSI [Helicopter Support, Inc.] …:” Cougar Helicopters , 2010 NLTD(G) 161, paragraph 10. [ 16 ] He explained his ruling in supplementary reasons he filed in Cougar Helicopters Inc. v.

Sikorsky Aircraft Corp. , 2010 NLTD(G) 185, at paragraph 62: The rules are clear - to repeat, there is no reason to read in a restriction that the mere filing or hearing of an interlocutory application, in and of itself, takes away the plaintiff's right to discontinue the whole action without consent. This point is reinforced by the circumstances of the present case in which it was the defendants who brought the interlocutory application; the defendants now seek to rely on the bringing of their own application to take away the plaintiff's right to discontinue the proceeding.

To graft on to the rules a provision that leave is required subsequent to the bringing or hearing of any interlocutory application would be contrary to the clear wording of the rules and to the principle that the plaintiff retains 'ownership' of the decision to litigate until the action or claim sought to be adjudicated is actually scheduled for adjudication or, in the case of a chambers proceeding, its hearing commenced. [ 17 ] This is the case law I will apply to the issues I stated above. I turn now to analyze those issues, starting with the background to them.

Analysis Background [ 18 ] B & T Battery owns property at 149-151 Main Street, Stephenville, Newfoundland and Labrador. In September 2018, B & T Battery sold an auto parts business that it operated from the location to Wikmaq, but not the land and building. Wikmaq leased the land and building from which the business operated from B & T Battery; and Wikmaq claims that B & T Battery included 60 feet of sidewalk in front of the building as part of the assets it sold to Wikmaq. [ 19 ] In June 2019, Wikmaq learned that B & T Battery intended to sell the land and building from which it operates its business, to J.A.P.

Holdings Inc., including the 60 feet of sidewalk, but subject, of course, to the lease to Wikmaq. B & T Battery engaged a land surveyor to provide a real property report. Wikmaq believed that the surveyor’s report did not reflect its claim over the sidewalk, and it filed an originating application on September 4, 2019, for an order directing B & T Battery to modify the report to acknowledge Wikmaq’s interest in the sidewalk. Ultimately, B & T Battery sold the property to J.A.P.

Holdings on August 23, 2019, by deed of conveyance of the same date. [ 20 ] Wikmaq also filed a lis pendens dated July 30, 2019, in the Registry of Deeds for this Province claiming an interest in the property. Finally, J.A.P. Holdings and Newfoundland and Labrador Credit Union Limited registered a notice of mortgage on the same property in the Registry of Deeds on August 23, 2019, subsequent to the lis pendens , and subject to it, of course. [ 21 ] The originating application came before the Court on October 3, 2019, and was set down for hearing on April 2, 2020. On October 3, 2019, counsel for J.A.P.

Holdings said his client might apply for an order converting the originating application to a statement of claim. The Court advised counsel that an application for that relief should be done within 30 days. On November 1, 2019, J.A.P.

Holdings filed an interlocutory application to transfer the originating application from chambers into Court and to treat it as a statement of claim. [ 22 ] Then, on November 25, 2019, Wikmaq filed a notice discontinuing its originating application in which it noted that “… the Applicant WIKMAQ AUTOPARTS AND EQUIPMENT CORP. wholly discontinues the within action against the Second Respondent J.A.P. HOLDINGS INC. and the Third Respondent NEWFOUNDLAND AND LABRADOR CREDIT UNION LIMITED” (See Notice of Discontinuance dated and filed November 25, 2019). [ 23 ] J.A.P.

Holdings’ interlocutory application to convert the originating application to a statement of claim came before the Court on November 27, 2019, two days after Wikmaq filed its notice discontinuing the originating application. Counsel for J.A.P. Holdings advised the Court the parties were working toward resolving all matters between them and asked to adjourn the proceedings sine die , pending a resolution. However, he also advised that J.A.P. Holdings is seeking its costs, including the costs of the day. Counsel for Wikmaq claimed his client had the right to discontinue under Rule 19.01, without paying costs.

Discussion 1. Does Wikmaq Autoparts require leave to discontinue its originating application? [ 24 ] Wikmaq filed its notice discontinuing its originating application on November 25, 2019, two days before the parties appeared before me on J.A.P. Holdings’ interlocutory application to convert Wikmaq’s originating application to a statement of claim. Counsel for J.A.P.

Holdings advised me there were ongoing discussions between him and counsel for Wikmaq directed to resolving all issues outstanding between their clients. [ 25 ] Counsel suggested that it might be appropriate to adjourn his application sine die until they completed their discussions, when they would decide from one of three options of how to proceed: with the interlocutory application; accept Wikmaq’s notice of discontinuance; or apply to have the notice of discontinuance set aside and deal with the originating application on its merits.

Regardless of how we proceeded, he noted his client was seeking costs. [ 26 ] Counsel for B & T Battery was adamant that the cause of action set out in the originating application had been fully resolved

between his client and Wikmaq and he urged me to accept Wikmaq’s notice of discontinuance. He also advised that his client was not seeking costs. [ 27 ] I find that Wikmaq did not have authority to file a notice discontinuing its originating application on November 25, 2019. Quite clearly, Wikmaq’s originating application falls squarely within Rule 19.01(1) in that it is “… a proceeding … entered for trial …,” which the applicant cannot discontinue without leave of the Court. Hurley, J., to paraphrase the Rule, entered the proceeding for trial on October 3, 2019, when he set it for hearing at 10:00 a.m. on April 2, 2020. [ 28 ] I refer back to the second point of his

summary that Orsborn, C.J. provided in Mushuau Innu Construction . I quoted it earlier in these reasons, but I repeat it here for ease of reference: 2. Where the date for the adjudicative hearing of an application, whether originating or interlocutory, is set by order of a judge , the application in question can be withdrawn (discontinued), whether there is consent or not, only by leave of the court . [Underlining mine] [ 29 ] Quite simply, Wikmaq required leave to discontinue its originating application, and its notice of discontinuance is not effective without it. 2.

If so, should Wikmaq Autoparts have leave to discontinue? [ 30 ] As I noted, counsel for B & T Battery was adamant that his client and Wikmaq have resolved all matters between them arising from the originating application, and he said they simply needed a little time to document the settlement. While counsel for J.A.P. Holdings was more guarded about the issues being resolved, even he acknowledged the matter appeared to be settled.

Thus, he felt it would be more appropriate to adjourn the matter sine die and give Wikmaq leave to file a notice discontinuing the originating application. [ 31 ] I agree with counsel for J.A.P. Holdings. The main dispute in the originating application is between Wikmaq and B & T Battery; and J.A.P. Holdings and the Credit Union are only tangentially involved in the proceedings. I understand the ambivalence that counsel for J.A.P.

Holdings and the Credit Union displays about how likely it is the matter has been fully resolved. [ 32 ] In the result, I order that Wikmaq’s originating application and J.A.P.’s interlocutory application be adjourned sine die with leave to file notices of discontinuance for both. I note that while Wikmaq has already filed its notice of discontinuance, it will not take effect until all parties to the originating application confirm for the Court, they will be taking no further steps in the cause. 3. Is J.A.P. Holdings entitled to its costs, including the costs for November 27, 2019? [ 33 ] Rule 19.02(1)(

a) requires an applicant to obtain leave of the Court to file a notice of discontinuance after the proceeding is entered for trial or its hearing is commenced in chambers. Rule 19.02(2) gives the Court discretion over costs when it grants leave to file a notice of discontinuance.

If the Court does not exercise the discretion Rule 19.02(2) confers, it is clear by Rule 19.03 a party discontinuing a proceeding, as Wikmaq is endeavouring to do here, shall pay the costs of any opposing party to the date of giving notice of discontinuance. [ 34 ] I find there is no reason to depart from the default position stated in Rule 19.03 and I order Wikmaq to pay J.A.P. Holdings’ costs of the originating application, including the costs for November 27, 2019. While the parties appeared on that date to respond to J.A.P.

Holdings’ interlocutory application, Wikmaq and the other parties would have had to appear in Court for Wikmaq to seek leave to file its notice of discontinuance. [ 35 ] That said, J.A.P. Holdings will not have its costs of preparing, serving, and filing the interlocutory application. J.A.P. Holdings brought that application of its own initiative. It sought relief that it felt was appropriate, but the relief it claimed in its interlocutory application was not necessarily warranted. [ 36 ] In the result, I order that Wikmaq Autoparts pay J.A.P.

Holdings’ costs of the originating application up to and including the appearance in Court on November 27, 2019, but not including the costs of preparing, serving, and filing the interlocutory application. Costs will be taxed on a party-and-party basis under Column 3 of the Scale of Costs.

Summary and Disposition [ 37 ] Wikmaq Autoparts issued an originating application against B & T Battery, J.A.P. Holdings, and the Newfoundland and Labrador Credit Union. The parties appeared before Court and a judge set the application down for hearing on a fixed date. In the meantime, Wikmaq filed a notice discontinuing the originating application but did not obtain leave of the Court to do so. [ 38 ] The Court found that Wikmaq could not discontinue the proceeding without leave because a judge had set it down for hearing. The Court also found that J.A.P.

Holdings, which asked for its costs, was entitled to them. It ordered that Wikmaq pay the costs on a party-and-party basis to be taxed under Column 3 of the Scale of Costs. Order [ 39 ] In the result, I order that: 1. Wikmaq Autoparts did not have authority to discontinue its originating application without leave of the Court. 2. Wikmaq Autoparts’ originating application is adjourned sine die with leave to file a notice of discontinuance.

3. Wikmaq Autoparts’ notice discontinuing its originating application not take effect until all parties to the application confirm for the Court that they will be taking no further steps in the cause. 4. Wikmaq Autoparts pay J.A.P. Holdings’ costs of the originating application up to and including the appearance in Court on November 27, 2019, but not including J.A.P. Holdings’ costs of preparing, serving, and filing its interlocutory application. 5. Costs will be taxed on a party-and-party basis under Column 3 of the Scale of Costs. _____________________________ Garrett A. Handrigan Justice