2017 MBCA 99, 2017 MBCA 99

Citation: Hanson v Hildi Warkentin Tax Ltd et al, Date: 20171002 2017 MBCA 99 Docket: AI17-30-08800 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Holly C. Beard Mr. Justice Christopher J. Mainella Madam Justice Jennifer A. Pfuetzner BETWEEN : KATHRYN HANSON ) W. M. Onchulenko ) for the Appellant (Plaintiff) Appellant ) ) K. M. Coutts - and - ) for the Respondents ) HILDI WARKENTIN TAX LTD. and ) 5301815 MANITOBA LTD. ) Appeal heard and ) Decision pronounced: (Defendants) Respondents ) October 2, 2017 BEARD JA (for the Court): I.

BACKGROUND [ 1 ] The plaintiff, Kathryn Hanson, has appealed an order granted under r 20A(52) of the Manitoba, Court of Queen’s Bench Rules , Man Reg 553/88 (the Rules ), whereby the case conference judge struck out her statement of claim in its entirety. The sole ground of appeal is that the case conference judge erred in law by failing to properly consider and apply the remedies under r 20A. At the appeal hearing, we dismissed the appeal with reasons to follow.

These are those reasons. [ 2 ] Ms Hanson filed a statement of claim in April 2014 against her employer, Hildi Warkentin Tax Ltd., and the owner of the premises at which she worked, 5301815 Manitoba Ltd., for injuries that she says she suffered while working on those premises which have left her unable to work. She limited her damages to no more than $100,000 in order to bring her claim within r 20A. [ 3 ] The matter was assigned to the case conference judge to manage the pre-trial proceedings and to set the matter for trial, as required under r 20A.

There were problems getting Ms Hanson to voluntarily provide the medical and financial disclosure requested by the defendants, so, during the course of several case conferences, the case conference judge gave a number of directions and orders setting specific time limits for disclosure and discoveries, however, compliance was either lacking or incomplete. A trial date was set and then adjourned due to Ms Hanson’s non-compliance. Finally, the defendants applied under r 20A(52) to have the claim struck.

The motion was heard on December 21, 2016, and the endorsement sheet striking the claim was issued on January 16, 2017. II. THE JUDGE’S DECISION [ 4 ] The case conference judge stated that Ms Hanson’s position in opposing the defendants’ motion was that her conduct was “in the nature of “imperfect” compliance with the timelines” and that striking the claim was disproportionate to the seriousness of the non-compliance.

Ms Hanson argued that, in accordance with the jurisprudence under r 24, the defendants had to show that their case had been prejudiced by the delay in order for the claim to be struck. [ 5 ] The case conference judge rejected that argument. She found that r 20A(52), by its wording, differed from r 24 in several respects and concluded that, while prejudice remains a consideration under r 20A(52), it plays a much less prominent role than under r 24.

She stated that, under r 20A(52), prejudice was not the focus of the inquiry, which ought, instead, to be on the conduct of the non-compliant party and any explanation offered for that non-compliance. [ 6 ] Finally, the case conference judge noted that Ms Hanson had not seriously disputed the allegations of non- compliance and she rejected her submissions that there had been miscommunication or misunderstanding as regards the directions and orders. She found that Ms Hanson’s conduct had been egregious—occurring on numerous occasions and without reasonable excuse.

She concluded that, on the facts of this case, striking out the claim would not be a disproportionate sanction.

III. THE PARTIES’ POSITIONS [ 7 ] Ms Hanson argues that striking her statement of claim was a disproportionate sanction, when considered in light of the facts of this case, and resulted in an unjust outcome. Her position, relying on Cobbe’s Plumbing & Heating Ltd v Westfair Properties Ltd , 2004 MBQB 31 , is that, while a case conference judge has much discretion under r 20A, the decision to strike a pleading should still be reserved for exceptional cases, of which this is not one.

She also argues that the case conference judge erred by rejecting the relevance of prejudice in determining the appropriate sanction and that, in this case, the less serious penalty of costs would have adequately compensated the defendants for any inconvenience that they sustained. [ 8 ] Ms Hanson acknowledges this Court’s decision in National Concrete Accessories Canada Inc v AAA-Zaid Concrete & Excavating Ltd , 2017 MBCA 28 , released after the decision now under appeal, which explains the application of r 20A, including r 20A(52), but she argues that her situation is different from that in National Concrete , and should lead to a different outcome. [ 9 ] In oral argument, counsel for Ms Hanson argued that this Court should provide further directions regarding the application of r 20A(52).

In particular, he argued that, to avoid the injustice of having its pleading struck without fair warning, the case conference judge should be required to provide a warning that a failure to comply with an order or direction will lead to that result without further notice. He also invited this Court to set a range of circumstances that would lead to the striking of a pleading. He argued that the facts of this case, where there had been partial compliance and where full compliance occurred before the pleading was struck, would be outside of that range.

He also argued that this is a money case that called for a money solution in the form of very significant costs, not the nuclear option of the plaintiff losing her right to proceed in court. [ 10 ] The defendants argue that the decision in Cobbe’s Plumbing has to be read in the context of this Court’s decision in National Concrete . They argue that National Concrete places the emphasis for determining whether to strike a claim under r 20A(52) on whether the non-compliant party has offered a reasonable excuse for its non-compliance.

Their position is that Ms Hanson has provided no such explanation, that she was given numerous opportunities to provide the required disclosure, and that she failed to comply on each occasion. Thus, they argue that the decision to strike her claim was not unjust. IV. ANALYSIS AND CONCLUSION [ 11 ] Rule 20A(52) states as follows: 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, (

c) fails to obtain a case conference date from the trial coordinator, as required by this Rule; (

d) fails to comply with a time limit imposed by this Rule; or (

e) fails to abide by an order or direction of the case conference judge. [ 12 ] The standard of review was explained in National Concrete at para 12. In

summary, an error in principle or in the

interpretation of the law is reviewed on the correctness standard, while an error on a question of fact is reviewed on the standard of palpable and overriding error. The decision as to which sanction to apply is discretionary and, provided there is no error of law or fact, it will not be overturned on appeal unless it is so clearly wrong as to amount to an injustice.

Ms Hanson acknowledged that her appeal is based on an allegation that the decision was unjust, with the result that the case conference judge erred in exercising her discretion. [ 13 ] In National Concrete , which is clearly applicable in this case, this Court reviewed the history and purpose of the 2012 amendments to the Rules that included r 20A(52). The defendant, whose pleadings had been struck for a failure to abide by a case conference judge’s order or direction, argued, as is Ms Hanson in this case, that the case conference judge erred by not applying the principles in Cobbe’s Plumbing .

[ 14 ] Cameron JA, in a unanimous decision, rejected that argument. She found, firstly, that r 20A was enacted to provide “a distinct and proportionate means of resolving disputes” from that applicable to actions not brought under r 20A (at para 36). She stated (at para 37): In my view, while the principles enunciated in Cobbe’s Plumbing are helpful and useful considerations, they need not be slavishly followed in decisions regarding sanctions pursuant to r 20A(52).

Thus, the case conference judge did not err when he did not strictly apply the principle in Cobbe’s Plumbing that “Striking a pleading is an exceptional remedy which should be reserved for the most 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. [ 15 ] It is clear that, while the question of whether the failure to comply has resulted in prejudice that cannot be remedied by an order for costs remains relevant, the emphasis has shifted to whether there is a reasonable excuse for the non-compliance. [ 16 ] Ms Hanson argues that her situation is different from that in National Concrete , such that a different outcome should result.

In fact, the facts in this case are, if anything, much more serious than those in National Concrete . Whereas the defendant in National Concrete failed to comply with the directions given at only one case conference, Ms Hanson failed to meet several of her disclosure obligations and to comply with many directions and orders, including directions and/or orders for the production of documents made at case conferences on November 21, 2014, June 2, 2015, December 3, 2015 and at a motion hearing on March 3, 2016.

This resulted in the adjournment of discoveries set for July 8, 2015, July 23, 2015, August 13, 2015 and the adjournment of the trial set for March 29-April 1, 2016. At a case conference on February 19, 2016, counsel for Ms Hanson undertook to provide the documents “forthwith”, however those documents were only provided on the eve of the motion to strike the pleadings, being December 21, 2016. At the time of that motion, it was anticipated that the second trial, scheduled for March 6-9, 2017, would have to be adjourned.

Counsel for the defendants were pressing, throughout, for the documents and for the matter to proceed on an expedited basis, consistent with the procedure chosen by Ms Hanson when she initiated the claim. [ 17 ] Finally, as found by the case conference judge, Ms Hanson has not provided any reasonable excuse or explanation for her repeated failure to comply with the directions and orders. [ 18 ] In our view, it would not be appropriate for us to either require case conference judges to give a warning before striking a pleading or to set a range of circumstances that would result in a pleading being struck.

As regards the provision of a judicial warning, the Rules do not require a warning, and it would not be appropriate for us to effectively amend the Rule s by requiring that a warning be given. [ 19 ] It would also not be either appropriate or even reasonably possible to define a range of circumstances that would result in a pleading being struck.

The type of circumstances that could lead to this result will depend on many factors that are not possible to anticipate and quantify or define in any comprehensive way, such as the complexity of the case and of the evidence, the nature of the relief sought, the amount at issue in a money case, the nature of the failure to comply, the reason given for the non-compliance and the prior conduct of both parties, just to name a few.

This is not a list to be considered by a case conference judge when determining the appropriate remedy but is, rather, a demonstration of the complexity of the issues that make it inappropriate to attempt to set a range of non-compliant behaviour that will lead to a pleading being struck. It is for this reason that the decision is left to the discretion of a case conference judge. [ 20 ] In

summary, we are of the view that it would be inappropriate to fetter the discretion of a case conference judge by either requiring a warning or setting out a range of circumstances required before striking a pleading. Both counsel and litigants have to understand that the litigation landscape is changing in all areas of the law. If litigation is allowed to drag on, the resolution of the case is delayed, wasting the resources of the parties and of the courts. This leads to a denial of access to justice for the parties to the specific litigation and for other parties waiting to have their matters heard.

Counsel have been on notice for some time, both as a result of changes in court rules and practices and from the jurisprudence on this issue, that unnecessary and unexplained delays will not be tolerated. [ 21 ] The case conference judge did not err either in her

interpretation and application of r 20A(52) or in her determination that striking out the plaintiff’s claim would not be a disproportionate sanction in this case, where the non-compliance was repeated on several occasions and unexplained. As a result, her decision to strike Ms Hanson’s claim was not unjust and she did not err in the exercise of her discretion. V. DECISION [ 22 ] For these reasons, the appeal was dismissed. There will be one set of costs to the defendants. ______________________________ JA ______________________________ JA

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