National Concrete Accessories Canada Inc v AAA-Zaid Date:, 2017 MBCA 28

Citation: National Concrete Accessories Canada Inc v AAA-Zaid Date: 20170227 Concrete & Excavating Ltd, 2017 MBCA 28 Docket: AI16-30-08558 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Diana M. Cameron Mr. Justice Christopher J. Mainella Madam Justice Jennifer A. Pfuetzner BETWEEN : NATIONAL CONCRETE ACCESSORIES ) G. S. Stern CANADA INC. ) for the Appellant ) (Plaintiff) Respondent ) S. R.

McEachern ) for the Respondent - and - ) ) Appeal heard: AAA-ZAID CONCRETE & EXCAVATING ) November 30, 2016 LTD. ) ) Judgment delivered: (Defendant) Appellant ) February 27, 2017 CAMERON JA [ 1 ] This appeal concerns Manitoba, Court of Queen’s Bench Rules , Man Reg 553/88 (the Queen’s Bench Rules ), r 20A, a rule designed to efficiently advance actions where the relief claimed is a liquidated or unliquidated amount not exceeding $100,000, exclusive of interest and costs.

At issue is the striking of pleadings pursuant to r 20A(52) in a situation where one party fails to abide by an order or direction of a case conference judge. [ 2 ] A review of the history of r 20A, the nature of the order in question and the jurisprudence regarding the striking of pleadings in actions to which r 20A does not apply, leads to the conclusion that the appeal by the defendant from an order striking its statement of defence and counterclaim must be dismissed. Facts [ 3 ] The facts in this matter are simple.

The plaintiff filed a statement of claim against the defendant pursuant to r 20A alleging nonpayment for the delivery of construction material (the material). The total claimed was $21,288.30, plus interest. The defendant filed a statement of defence and counterclaim alleging that the plaintiff failed to wrap the material in plastic and that, as a result, the material sustained water damage to such an extent that it was rendered useless. The defendant claimed that the plaintiff then sent replacement material to it and billed it an additional sum of $15,628.34. The defendant claimed set-off for that amount.

In addition, it claimed damages occasioned by the delay of the plaintiff in supplying the replacement material. The amount of the counterclaim was $9,245.47. [ 4 ] The action proceeded in the usual course pursuant to r 20A, with each party respecting the mandatory deadlines. After the first case conference, the case conference judge issued a memorandum ordering, among other things, the parties to complete the following: 1. the [plaintiff] was to file a reply to the statement of defence and counterclaim; 2. each party was to serve their affidavit of documents and

Schedule A disclosure; 3. each party was to obtain letters and photos from a person with knowledge about the industry in question who would comment about the proper manufacturing, transport, storage and installation of the material;

4. each party was to complete can say/will say statements of witnesses and abide by all other provisions of r 20A(43). [ 5 ] The memorandum set a date for a second case conference that was slightly more than three months in the future. All of the above orders were to have been complied with in advance of the second case conference. [ 6 ] Counsel for the respective parties attended the second case conference as required. At that time, the plaintiff had complied with all of the orders while the defendant had complied with none of them.

Moreover, counsel for the defendant advised that he had not been in contact with his client in the weeks leading up to the second case conference. [ 7 ] As a result of the non-compliance, the case conference judge struck the defendant’s pleadings. In his case conference memorandum, he wrote: Given the total and complete lack of compliance with my previous orders and no reasonable explanation as to why no steps towards compliance were made in any way, shape or form, I made an order that the pleading of the defendant and plaintiff by counterclaim be struck with costs of $1,000.00.

Issue and Positions of the Parties [ 8 ] The defendant maintains that, in striking the pleadings, the case conference judge erred in principle by failing to apply judicially-developed considerations that are applicable to regular civil actions in situations where there has been non-compliance with the Queen’s Bench Rules and/or judicial orders. This jurisprudence suggests, among other things, that the striking of pleadings should be reserved for the most extreme cases, typically after repeated non-compliance with the rules.

See Cobbe’s Plumbing & Heating Ltd v Westfair Properties Ltd , 2004 MBQB 31 at para 25 , 182 ManR (2d) 65 . [ 9 ] The defendant states that it committed an isolated incident of non-compliance and that its actions did not constitute one of the extreme cases contemplated by the jurisprudence.

It also maintains that any prejudice to the plaintiff occasioned by its non- compliance could have been remedied by an order of costs, a less extreme remedy. [ 10 ] The plaintiff asserts that the unique considerations required by r 20A, such as the principle of proportionality, were not contemplated in the authorities cited by the defendant and therefore the jurisprudence on which the defendant relies is distinguishable. It contends that the discretionary decision of the case conference judge is subject to review on the standard of deference.

Further, it states that, given the nature and amounts of the claims involved, the decision to strike the pleadings did not amount to an injustice, especially in light of the fact that the defendant has offered no excuse for its failure to comply. It argues that it has suffered prejudicial delay and increased costs as a result of the actions of the defendant. Standard of Review [ 11 ] The rule in issue in this case is r 20A(52), which provides: Sanctions 20A(52) The case conference judge must (

a) make an order for costs against a party; or (

b) strike out the claim or defence of a party; when the party, without reasonable excuse , . . . (

e) fails to abide by an order or direction of the case conference judge . [emphasis added]

[12] There is no issue that the defendant failed to comply with an order of the case conference judge, thereby making theimposition of a sanction mandatory.

However, the decision as to which sanction to apply is discretionary and subject to appellate reviewon the standard stated by Steel JA in Rochelle et al v The Rural Municipality of St Clements et al, 2014 MBCA 102, 310 ManR (2d) 202(at para 2): If there has been no error in principle (to be reviewed on the correctness standard) or an error on a question of fact (to be reviewed on thepalpable and overriding error standard), this court will not interfere with the discretionary decision of the motion judge unless it is soclearly wrong as to amount to an injustice. See Towers Ltd. v.

Quinton’s Cleaners Ltd. et al. 2009 MBCA 81 at paras. 24-28,245 Man.R. (2d) 70; and Olfman v. RBC Life Insurance Company, 2011 MBCA 86 . Discussion Sanctions for Non-Compliance in Regular Civil Actions [13] As stated, the defendant argues that the case conference judge erred in failing to apply judicially-developed principles indetermining whether pleadings should be struck. A comprehensive review of these principles is found in Cobbe’s Plumbing. In thatcase, the defendant failed to attend an examination for discovery, as it was required to do by a previous order of a Master.

At issue was r34.14(1) of the Queen’s Bench Rules, which provides: Order 34.14(1) Where a person fails to attend at the time and place fixed for an examination in the notice of examination or subpoena towitness or at the time and place agreed on by the parties, or refuses to take an oath, to make an affirmation, to answer any properquestion, to produce a document or thing that the person is required to produce or to comply with an order under rule 34.13, the courtmay, (

a) where an objection to a question is held to be improper, order or permit the person being examined to reattend at the person’s ownexpense and answer the question, in which case the person shall also answer any proper questions arising from the answer; (

b) where the person is a party or, on an examination for discovery, a person examined on behalf of a party, dismiss the party’sproceeding or strike out the party’s defence; (

c) strike out all or part of the person’s evidence, including any affidavit made by the person; and (

d) make such other order as is just. [14] In declining to strike the pleadings of the non-compliant party, Greenberg J summarized the principles applicable whendetermining an appropriate sanction under r 34.14. She stated (at para 25): 1. The application of Rule 34.14 must be consistent with the general principles of

interpretation set out in the Rules, in particular Rule1.04 which mandates that the Rules be interpreted “to secure the just, most expeditious and least expensive determination of every civilproceeding on its merits.” 2. The overarching consideration for the court is to strike an appropriate balance between the right of the respondent to have its actiondetermined on the merits and the right of the applicant to insist on compliance with the Rules and court orders with a view to facilitatingthe “flow” of the case. 3.

Striking a pleading is an exceptional remedy which should be reserved for the most extreme cases of non-compliance with theRules. A review of the cases suggests that the sanction would rarely be used for an isolated incident of non-compliance but is morelikely where there has been a course of conduct which indicates that a court order giving the respondent a “second chance” is unlikely tobe complied with. 4. The court should look at the explanation of the respondent for non-compliance.

That explanation may indicate not only theseriousness of the default (for example, whether it was deliberate as opposed to inadvertent) but also whether the respondent is likely tocomply with further court orders. 5. The court should look at the prejudice which the non-compliance has caused the applicant and whether that prejudice can beremedied in some other way, for example, through an award of costs.

6. There is some suggestion in the cases that the merit of the respondent’s case is also a relevant factor.

Although not relied on as a deciding factor in any case, there is a suggestion in some cases, where the court refused to strike a pleading, that the result might have been different if the respondent’s case were completely without merit. [emphasis added] [ 15 ] Cobbe’s Plumbing has been applied in Manitoba Crop Insurance Corporation v Wiebe et al , 2007 MBQB 158 at paras 15-20 , 217 ManR (2d) 228 ; Schultz v Schultz, 2012 MBQB 140 at para 10 , 278 ManR (2d) 261 ; and Estate of Brown; McNeilly v Hines , 2008 MBQB 270 at para 11 .

None of these cases involved expedited actions under r 20A. [ 16 ] In order to examine to what extent the principles enunciated in Cobbe’s Plumbing should apply to expedited actions under r 20A, a contextual examination of the rule, including a review of its history, is necessary. It is also helpful to compare and contrast some of its provisions with those related to regular civil proceedings. Rule 20A Context [ 17 ] There is a broad spectrum of legislation governing procedure and rights in civil actions in Manitoba. The applicable regime is determined by the value of the claim.

Each regime strikes a different balance between fairness and expediency. Custom and process of the highest form apply to actions over $100,000 (see the Queen’s Bench Rules ). Actions under $10,000 are subject to lesser, more expedient forms of process (see The Court of Queen’s Bench Small Claims Practices Act , CCSM c C285). Between the two, are claims governed by r 20A. These are actions in which the amount claimed is less than $100,000.

They are termed expedited actions because they do not enjoy the same degree of process as those that fall into the regular civil rules, yet at the same time, are still afforded more process than those classified as small claims. [ 18 ] Rule 20A was originally developed in the context of Canada-wide reforms to the civil justice system, beginning roughly 20 years ago. In 1996, the Canadian Bar Association issued the Report of the Canadian Bar Association: Task Force on Systems of Civil Justice (Ottawa: Canadian Bar Association, August 1996).

That report identified the “speed with which disputes are resolved in the civil courts” as the highest priority for reform among its members and emphasized “the fact that the majority of Canadians cannot afford to seek justice through the current system” [emphasis omitted] (at p 12). [ 19 ] It was in the context of the above that r 20A was introduced in 1996 (see Court of Queen’s Bench Rules , amendment , Man Reg 184/96).

Notably, the original rule did not include r 20A(52), or any provision providing for sanctions for non-compliance with the expedited process or procedures. [ 20 ] In 2006, the Court of Queen’s Bench issued a notice (see Manitoba, Court of Queen’s Bench, Notice to the Profession (May 2006), online: < http://www.manitobacourts.mb.ca/site/assets/files/1152/notice_to_profession_rule_20a.pdf >), announcing that a review of r 20A was to be undertaken which would include significant consultation by members of the bench with members of the bar. [ 21 ] In 2009, as a result of the review, the Court released a proposed draft for a revised r 20A (see Manitoba, Court of Queen’s Bench, Proposed Draft: Court of Queen’s Bench Rule 20A (May 2009), online: < http://www.manitobacourts.mb.ca/site/assets/files/1152/proposed_draft_qbrule20a.pdf >) (the Proposed Draft) .

In his introductory remarks (online: < http://www.manitobacourts.mb.ca/site/assets/files/1152/introductory_remarks_monnin_rule20a.pdf >), Monnin CJQB (as he then was) stated: Over 10 years ago, the Court of Queen’s Bench introduced Queen’s Bench Rule 20A, which was designed to establish a simplified trial process for civil matters where the amount in issue was less than $50,000. One of its goals was to create a streamlined process that would encourage the settlement of those cases that should be settled and permit the adjudication of the remaining cases at a reasonable cost.

In recent years, there have been very few civil trials in Manitoba where the amount at issue has been less than $100,000.00. Comments from counsel and litigants during pre-trials and mediations suggest certain claims or defences are not proceeding to trial because parties cannot afford the cost of the trial. They often point to the pre-trial process as being lengthy and cumbersome with the result that they are driven to settle their cases regardless of merit, the cost of the pre-trial process being a major factor . . . .

The proposed revisions to Queen’s Bench Rule 20A are intended to address the problems raised above. They are based on the concept of proportionality, with the object being to institute a process that will facilitate the “expeditious and less expensive determinations of actions.” It is proposed to adopt pre-trial procedures that are proportional in cost to the amount at issue in the action.

The changes are intended to make it possible for litigants to have their modest claims adjudicated by the Court quickly and at reasonable cost. [emphasis added] [ 22 ] The Proposed Draft included a rule which provided for the imposition of sanctions for failing to comply with an order of a case conference judge (see r 20A(37) of the Proposed Draft) .

[ 23 ] On April 1, 2012 the current version of Rule 20A was enacted by Court of Queen’s Bench Rules , amendment, Man Reg 215/2011. This new version of r 20A included the current r 20A(52). In the accompanying notice, the Queen’s Bench Statutory Rules Committee summarized key provisions of the new r 20A. (See Manitoba, Court of Queen’s Bench Statutory Rules Committee, Notice: Court of Queen’s Bench of Manitoba: Re: Amendment to Court of Queen’s Bench Rules (22 December 2011), online: < http://www.manitobacourts.mb.ca/site/assets/files/1152/qb_notice_rule20a.pdf >).

This notice included the following statement regarding the sanctions imposed under r 20A (at p 4): Subrules (52) and (53) provide that a case conference judge must make an order for costs or strike out a claim or defence when a party, without reasonable excuse, fails to obtain a case conference date from the trial coordinator, comply with a time limit imposed by the rule or abide by an order or direction of the case conference judge.

Under subrule (53), such costs are to be fixed by the case conference judge and are payable immediately. [ 24 ] Rule 20A(52) makes the imposition of a sanction for non-compliance with certain rules, or an order or direction of a case conference judge, mandatory. [ 25 ] Recently, Joyal CJQB issued a practice direction reminding parties about the enforcement of r 20A(52) (see Manitoba, Court of Queen’s Bench, Practice Direction: Court of Queen’s Bench of Manitoba : Re: Compliance with Timelines, Orders and Directions of a Case Conference Judge in a Rule 20A Action (17 November 2015), online: <http://www.manitobacourts.mb.ca/site/assets/files/1152/practice_direction_- _compliance_direction.pdf.) That direction states: In order to best achieve consistency and to properly respect Rule 20A(52), parties are reminded that judges must enforce the sanction provisions set out in Rule 20A(52).

That is, when a party, without reasonable excuse, fails to comply with a time limit imposed by Rule 20A or fails to abide by an order or direction of the case conference judge, it should be expected that the case conference judge will impose one of the prescribed sanctions.

Where all parties are in agreement that an otherwise applicable time limit will be extended by consent, they are still required to obtain leave of the case conference judge to extend this time limit. [ 26 ] Further, in keeping with the original comment of Monnin CJQB (as he then was) that r 20A be based in the concept of proportionality, r 20A(5) states: Proportionality Principle 20A(5) Consistent with the principle of securing the just, most expeditious and least expensive determination of a proceeding, a judge is to make orders and give directions with respect to an expedited action that are proportionate to (

a) the nature of the action; (

b) the amount that is probably at issue in the action; (

c) the complexity of the issues involved in the action; and (

d) the likely expense of the action to the parties [ 27 ] In Rochelle , Steel JA considered an appeal of an order providing that an action be managed under r 20A. When discussing the issue of proportionality, she stated (at para 5): [W] e agree with the motion judge that this action is exactly the kind of action that should be placed under Rule 20A. Proportionality is the overarching concern here. The proportionality principle means that the best forum for resolving a dispute is not always the one with the most painstaking procedure. The courtroom is not the private preserve of any single litigant to be used as they see fit. The appropriate

utilization of judicial resources is a public concern and one which courts should consider in reaching their decisions (Hryniak v. Mauldin,2014 SCC 7 ). [28] The mandatory nature of the sanctions address the increased cost, both to the parties and to the public, associated withthe complexity and delay caused by the parties or their counsel not complying with the time limits or other orders or directions of thecase conference judge.

That is, r 20A(52) reinforces that, where there is non-compliance, the underlying proportionality principle is notrespected. [29] Thus, a review of the history and context of r 20A supports the position that the imposition of sanctions for non-compliance under r 20A(52) need not involve the exact same balancing and consideration of the principles applicable to regular civilactions. Rather, proportionality should be the primary consideration.

Rule 20A Compared to Regular Civil Rules [30] A brief review of r 20A compared to rules applicable to regular civil actions also supports the conclusion that it isintended to be a uniquely expeditious process. For example, within 30 days of the close of pleadings, a case conference must bescheduled to be heard within 90 days (r 20A(9)); the case conference judge is to hear all motions on the expedited action, to the extentpossible (r 20A(21)); and a trial date must be set by the third case conference (r 20A(17)).

The case conference judge must explore thepossibility of settlement (r 20A(22)) and he or she has the power to make extensive orders on his or her own motion, or at the motion ofone of the parties, without materials being filed (rr 20A(23)-(24)). [31] In contrast, in respect of an action under the regular civil rules, less power is conferred on pre-trial conference judges(see r 50). For example, a judge at a pre-trial conference may only make consent orders or hear or dispose of matters that are notcontested (r 50.01(2)).

The only sanction provided for failing to attend a pre-trial conference is costs (r 50.01(6)). It is not mandated thatthe pre-trial conference judge explore settlement. [32] There are also differences in the disclosure required under r 20A as compared to regular actions. Relevant documentsfor discovery in a regular action are broadly construed to include any document which relates to any matter in issue in an action (r30.01(1)(c)).

Rule 20A(29) narrows documentary disclosure to documents referred to in pleadings, documents which the parties intendto refer to at trial, and documents that could prove or disprove a material fact; that are or were in a party’s possession or control. Further,documents can be requested in writing, without discovery (r 20A(35)). [33] Finally, traditional examinations for discovery entail few restrictions on time, and allow the parties to give undertakingsand deliver interrogatories (rr 21, 34). Under r 20A(40), the parties have no right to discovery for claims valued at less than $50,000.

For claims valued at $50,000 or more, the parties are limited to three hours of discovery (r 20A(41)). There are no mandatoryundertakings (r 20A(42)), and leave from the case conference judge is required to obtain interrogatories (rr 20A(40)-(41)). Disclosure ofwitnesses and will-say statements is also more limited under rr 20A(43)-(47) than in regular actions (r 31.06(2)).

Clearer limits areplaced on the use of expert witnesses (rr 20A(48)-(51)), as compared to regular actions (rr 31.06(3), 53.03). [34] Thus, the difference in the degree of process reinforces that the same considerations do not necessarily apply toexpedited actions as to regular ones. Conclusion and Decision [35] As can be seen from the above, recent revisions to r 20A were intended to promote a more accessible and efficientexpedited system for the parties and the public. Proportionality is the guiding principle.

Aiding the enforcement of the proportionalityprinciple is the certainty that failure to follow court orders or other deadlines will result in an immediate sanction, including the strikingof pleadings. [36] To strictly analogize r 20A to principles applicable to regular actions, as the defendant urges, would undermine the intentof r 20A’s drafters.

They clearly sought to develop a distinct and proportionate means of resolving disputes, including resolution by wayof striking pleadings, if a party fails to comply with what is required of them. [37] In my view, while the principles enunciated in Cobbe’s Plumbing are helpful and useful considerations, they need not beslavishly followed in decisions regarding sanctions pursuant to r 20A(52).

Thus, the case conference judge did not err when he did notstrictly apply the principle in Cobbe’s Plumbing that “Striking a pleading is an exceptional remedy which should be reserved for themost extreme cases of non-compliance with the Rules” (at para 25). Rather, similar to principle 4 in Cobbe’s Plumbing, r 20A(52)requires the court to consider whether there was a reasonable excuse for the non-compliance. [38] The plaintiff has argued that this appeal, and the potential expanded litigation of this matter, is threatening to extend thisaction in a manner that is disproportionate to the amounts at issue.

That argument is not without merit in the circumstances of this case. [39] As I stated, the case conference judge struck the statement of defence and counterclaim on the basis that none of hisorders had been complied with and no explanation had been provided. Further, counsel for the defendant had not been in contact withhis client for weeks prior to the case conference. Another judge might have ordered costs against the defendant and adjourned the matterin order to allow the defendant time to comply, failing which the pleading would be struck.

However, in this case, it cannot be said that,in light of the overarching principle of proportionality, the case conference judge committed an error in principle, nor have I beenpersuaded that the decision is so clearly wrong as to amount to an injustice. [40] Therefore, I would dismiss the appeal with costs. JA

I agree: JA I agree: JA