Group Savoie Inc. v. Eastbound Forestry Ventures Inc., 2020 NSSC 322

SUPREME COURT OF Nova Scotia Citation: Group Savoie Inc. v. Eastbound Forestry Ventures Inc. , 2020 NSSC 322 Date: 20201106 Docket: Pic No. 497027 Registry: Pictou Between: Group Savoie Inc. Applicant v. Eastbound Forestry Ventures Inc. and Theodore Blake Greene Respondent DECISION Judge: The Honourable Justice Scott C.

Norton Heard: November 5, 2020, in Pictou, Nova Scotia Counsel: Natasha Schigas, for the Applicant Daniel Boyle, for the Respondent By the Court: Introduction [ 1 ] The Applicant, Group Savoie Inc. (“Savoie”), engaged the Respondent Eastbound Forestry Ventures Ltd. (“Eastbound”) to harvest wood on lands over which the Applicant had logging rights. The Respondent Theodore Blake Greene is the controlling officer, director and shareholder of Eastbound. [ 2 ] The Applicant agreed they would advance funds prior to delivery of the wood to customers to assist Eastbound with cash flow.

The amount advanced was based on the reported volume of wood harvested. The amount advanced would be deducted from the amount ultimately determined to be owing based on the consumer’s weighing of the product. The Applicant alleges that the Respondents misrepresented the quantity of product harvested and claims for damages for breach of contract, misrepresentation, breach of trust and seek equitable remedies of accounting and/or tracing. [ 3 ] In advance of the motion for directions, the Respondents filed a motion for an Order converting the Application in Court filed by the Applicants to an Action.

At the conclusion of the hearing of the motion, I dismissed the motion with reasons to follow. These are those reasons. LAW [ 4 ] Civil Procedure Rule 6 governs the choice between an application and an action: Choice of proceeding 6.01 A person may choose to start an action or an application as the person is satisfied would be appropriate, unless legislation under which the proceeding is started requires only one kind of proceeding. Converting action or application 6.02

(1) A judge may order that a proceeding started as an action be converted to an application or that a proceeding started as an application be converted to an action.

(2) A party who proposes that a claim be determined by an action, rather than an application, has the burden of satisfying the judge that an application should be converted to an action, or an action should not be converted to an application.

(3) An application is presumed to be preferable to an action if either of the following is established: (

a) substantive rights asserted by a party will be eroded in the time it will take to bring an action to trial, the party expeditiously brought a proceeding asserting these rights, and the erosion will be significantly lessened if the dispute is resolved by application; (

b) the court is requested to hold several hearings in one proceeding, such as with some proceedings for corporate reorganization.

(4) An action is presumed to be preferable to an application, if the presumption in favour of an application does not apply and either of the following is established: (

a) a party has, and wishes to exercise, a right to trial by jury and it is unreasonable to deprive the party of that right; (

b) it is unreasonable to require a party to disclose information about witnesses early in the proceeding, such as information about a witness that may be withheld if the witness is to be called only to impeach credibility.

(5) On a motion to convert a proceeding, factors in favour of an application include each of the following: (

a) the parties can quickly ascertain who their important witnesses will be; (

b) the parties can be ready to be heard in months, rather than years; (

c) the hearing is of predictable length and content; (

d) the evidence is such that credibility can satisfactorily be assessed by considering the whole of the evidence to be presented at the hearing, including affidavit evidence, permitted direct testimony, and cross-examination.

(6) The relative cost and delay of an action or an application are circumstances to be considered by a judge who determines a motion to convert a proceeding. Evidence for converting an application 6.03

(1) A party who makes a motion to convert an application to an action must, by affidavit, provide all of the following: (

a) a description of the evidence the party would seek to introduce; (

b) the party’s position on all issues raised by the application; (

c) disclosure of all further issues the party would raise by way of either a notice of contest, if the proceeding remains an application, or a statement of defence, if the proceeding is converted to an action.

(2) Despite Rule 6.03(1), a party who wishes to withhold disclosure of evidence the party will produce only to impeach a witness need not describe the evidence, or the investigations to be undertaken to obtain the evidence. [ 5 ] The court’s approach to applications to convert an application to an action was first stated by Justice Pickup in Jeffrie v Hendriksen , 2011 NSSC 292 , at para. 13 : [13] Under Rule 6.02 there are three stages to the court’s analysis as to whether a matter proceeds by application or action:

a) first, the court must assess whether any of the presumptions in favour of an application are applicable under Rule 6.02(3);

b) second, if the court determines that no presumptions apply in favour of an application, it must assess whether any presumptions in favour of an action apply under Rule 6.02(4);

c) third, the court must determine the extent to which each of the four factors favouring an application are present under Rule 6.02(5) and determine the relative cost and delay as between an action and an application under Rule 6.02(6). [14] A review of Rule 6.02 would suggest there is an emphasis on the use of the application process to achieve lower costs and greater speed in the resolution of disputes. [15] In Brodie v.

Jentronics Ltd ., 2009 NSSC 399 , Moir J. commented at paras, 5 - 6: 5 Rule 6 -- Choosing Between Action and Application provides general guidance for determining whether an application should be converted to an action, or vice versa. In either case, the proponent of the action bears the onus: Rule 6.02(2). This statement of the onus shows a strong policy in favour of the use of applications. 6 Rule 6.02(6) makes it clear that proportionality is a factor in choosing between the two kinds of proceedings.

When read with Rule 5.01(4), it becomes clear that the Rules invite the bar and the bench to make use of the application route to achieve lower cost and greater speed. [16] This emphasis on the use of the application process to reduce costs and achieve greater speed echoes the object and purpose of the new Rules which is set out in Rule 1.01: 1.01 These Rules are for the just, speedy and inexpensive determination of every proceeding. [17] Mr. Jeffrie has chosen to proceed by way of application.

The question is whether the circumstances are such that his application should be converted into an action in order to achieve justice between the parties.

[ 6 ] The parties agree that the presumptions in favour of an application in Rule 6.02(3) or in favour of an action in Rule 6.02(4) do not apply on the facts of this case. The court is therefore concerned with the third part of the test and must determine the extent to which each of the four factors favouring an application under Rule 6.02(5) are present and must determine the relative cost and delay as between an action and an application under Rule 6.02(6). [ 7 ] The burden is on the Respondent to establish that it is appropriate to convert the proceeding to an action.

The case law instructs that the Respondent must address each of the four requirements in Rule 6.02(5) and must provide more than a pro forma statement that they will introduce evidence relevant to the proceedings. Hong v Lavy , 2018 NSSC 54 , at paras. 22-25 . [ 8 ] However, the Respondent does not need to provide the actual evidence, only a description of evidence it wishes to provide at the hearing – enough that the court can appreciate the flavour of the evidence to be brought at the actual hearing.

Fana (DCD) Holdings Inc. v Dartmouth Cove Developments , 2017 NSSC 157 . [ 9 ] In Fana Holdings , Justice Chipman conducted an extensive review of the case law considering conversion motions and found that matters that either remained as applications or are converted to applications have most of the following characteristics: • fewer parties • discreet [ sic ], clearly detailed issues, sometimes narrowed by agreement • reasonable hearing estimates of relatively short duration (often five days or less) • readily available key documents and the like, central to the dispute • the parties being (realistically) ready for a hearing within a short timeline (usually within months, not years) • situations involving comparatively little time to conduct investigative work • agreement on admissible extrinsic evidence • limited, if any, discovery required • time being of the essence in bringing the matter forward to a hearing • identifiable (typically party) witnesses with evidence conducive to affidavit form • an absence of “unfriendly” witnesses, who might well be disinclined to swear affidavits • generally, an uncomplicated proceeding [ 10 ] As with many such applications, these features are somewhat balanced as between the parties.

I am instructed by the comments of Chief Justice MacDonald in Nova Scotia v. Roué , 2013 NSCA 94 , at para. 47 : [47] I acknowledge that, if time and cost were only incidental factors, then what the appellants characterize as these procedural safeguards for trial fairness might occupy their fullest scope. But time and cost clearly do pertain to the overall objective of access to justice.

The motions judge’s job under Rule 6.02 is to achieve a balance that shortens time and lessens cost, while ensuring that the proceeding at hand maintains the essential attributes of a fair fact-finding process. [48] There are some proceedings where the classic trial procedures will be essential. For instance, it may be important that the judge hear the witnesses tell their stories in person, as direct evidence, instead of just reading the ink on the lawyer-assisted affidavits.

Or it may be that important evidence rests with unfriendly witnesses, who will not sign affidavits, and must be required to testify by subpoena. These are just examples, not an all-inclusive list.

It is for the motions judge, in weighing the criteria under Rule 6.02, to assess whether fairness steps to the fore on such matters, whether the application in court under Rule 5.07 can accommodate the concern with an adjustment to the procedure, or whether it is preferable, in the interests of fairness, that the matter be tried in the traditional manner. [49] It would also be of assistance, in motions for conversion under Rule 6.02, for the court to have, in an affidavit, the projected time line to a hearing date, and projected length of hearing and costs of hearing, under both of the alternative scenarios.

I note that neither party provided the projected timeline and costs by affidavit. [ 11 ] As an aside, I am concerned by the apparent use of the Application in Court process to seek an earlier hearing time than might be available for an Action. Often, at the motion for directions counsel advise that the matter can be heard in three days and later, as the hearing dates approach, they seek to add additional time to the scheduled hearing or seek to reschedule the hearing. That is not the purpose of the Application in Court process.

That is not a just, speedy and inexpensive determination of the proceeding. [ 12 ] In my view, if, after conducting the discoveries and preparing the affidavits for the application, counsel do not consider that the matter can be properly concluded within a four-day window, they have an obligation to advise the court and a further motion for directions should be held to consider converting the matter to an action at that time. [ 13 ] I now turn to an analysis of the factors in favour of an application under Rule 6.02(5). Rule 6.02(5)

(

a) The parties can quickly ascertain important witnesses [ 14 ] This is an action primarily based on a verbal contract and alleged misrepresentation. I am satisfied that the “important” witnesses have been identified in the affidavits of counsel supporting the Application in Court and the Notice of Contest or otherwise can be quickly ascertained. For example, the Applicant’s brief names the trucking companies and drivers whose identity was of concern to the Respondent. The Rules provide a myriad of options for a party to require another party to disclose such information.

Those non- party witnesses can be interviewed and if they refuse, they can be discovered by subpoena. They can be compelled by subpoena to give evidence at the hearing of the application if they refuse to cooperate to provide an affidavit. If they are “hostile”, the Evidence Act, R.S.N.S., c. 154, permits cross-examination – be it at a trial or on an application. There is nothing about the quality of their evidence that distinguishes the required mode of hearing for this matter. [ 15 ] The Respondents say Mr.

Greene ought to be allowed to defend his character by giving direct evidence and not be confined to giving it by way of affidavit. This is again an issue that can be accommodated within the application in court process. The judge giving directions or the judge hearing the application can permit that any witness be permitted to give part or all of their evidence by viva voce testimony. [ Rule 5.13(2)]. (

b) The parties can be ready to be heard in months, rather than years [ 16 ] The Applicant estimates that the production of documents and discovery examinations can be completed within seven months from the motion for directions. The Respondent has not evidenced any particular reason why such a timeline is not reasonable and achievable. [ 17 ] The Respondents say that given the allegation of fraud, a more fulsome discovery process may be required.

No specific differences between discovery in an action and discovery in an application in court were cited. [ 18 ] There is no suggestion of any third-party claims which could cause delay. Any issues with disclosure can be dealt with quickly and efficiently by correspondence to the court to

schedule a hearing for further directions or by a chambers motion for production. I note that Rule 5 allows the court broad powers to deal with a party who does not comply with the directions given, including, dismissal of the application or, in the proper circumstances, a conversion to an action. (

c) The hearing is of predictable length and content [ 19 ] The Applicant estimates that the hearing of the application could take up to three days. The Respondents say at this juncture they cannot state how long the hearing would require.

In the decision of the Supreme Court in Roué v Nova Scotia, 2013 NSSC 45 , Justice Rosinski had the following comment on the predictability of the length of hearing, at paragraph 67: The length of the hearing cannot be predicted with great certainty at this juncture, but its content is predictable since the controversies (i.e. the nature of the legal issues and expected evidence) are well defined in the pleadings/information filed to date and, at the Motion for Directions yet to be heard, the parties will not doubt assist the Court in more precisely estimating the expected length of the hearing. [ 20 ] I agree and adopt this approach.

Further, as the matter proceeds through the processes of production of documents and discovery of the parties, the scope and complexity of the proceeding can be evidenced by either party to show that hearing the proceeding as an action would be preferable to continuing as an application in court. It is open to them to seek that determination by a further motion for directions. I repeat my caution to counsel that they are obliged to advise the court if there is a real and sincere concern that the time scheduled will not be sufficient to conclude the hearing of the matter within the time scheduled. (

d) Credibility can be satisfactorily assessed [ 21 ] I am satisfied that the application in court process will provide ample opportunity for the court to assess the reliability and credibility of witnesses. It is mostly through cross-examination, not examination-in-chief, that credibility and reliability are challenged.

As stated by Justice Rosinski in Roué , supra , at para. 67: credibility can be assessed satisfactorily by considering the whole of the evidence to be presented at the hearing (which by leave of the court could exceptionally include viva voce direct evidence, e.g. for experts whose evidence would best be understood explaining their opinions using demonstrative evidence). The weight to be given to the expert opinion evidence will likely be fundamental to the determination of most, if not all, of the identified issues in the proceeding, and cross-examination is a potent tool to test the strength of their opinions.

See also Kings (County) v Berwick (Town), 2009 NSSC 398 , where Justice Warner stated at paras. 36-41: [36] Rule 6.02(5)(d) .

The fourth factor favouring an application exists when the evidence is such that credibility can satisfactorily be assessed by considering the whole of the evidence to be presented at the hearing including affidavit material, permitted direct evidence and cross-examination. [37] While there is no formal concession by the Three Towns that credibility will not be an issue, this is not a case that rises or falls on credibility, but maybe on reliability. [38] The difference between an application in court and a full, traditional trial, is that direct evidence in an application is primarily given by way of affidavit.

An affidavit is usually formulated by counsel, or with the assistance of counsel, and is usually a fairly articulate and focussed presentation by a witness of what facts he or she wants the court to receive. It is usually far more focussed and helpful to the court, than rambling oral evidence that sometimes is sidetracked into matters unrelated or less directly related to the real issues.

[39] Seldom is credibility decided by direct examination and probably less in the context of this kind of proceeding where the factual evidence is of context. Cross-examination is the real tool for discovery of truth.

Sidney Lederman, AlanBryant, and Michelle Fuerst, in The Law of Evidence in Canada , (called Sopinka), Third Edition (Markham: LexisNexis, 2009), at p. 1133 under the heading of cross-examination ¶ 16.112 states: The oft quoted words of Wigmore that cross-examination is “beyond any doubt the greatest legal engine ever invented for the discovery of truth” indicate its great value in the conduct of litigation.

Three purposes of generally attributed to cross-examination: (1) to weaken, qualify or destroy the opponent’s case; (2) to support the party’s own case through the testimony of the opponent’s witnesses; (3) to discredit the witness. . . . The Supreme Court of Canada, in R. v. Lyttle , reaffirmed the principle . . . The Court emphasized the importance of cross-examination.

Cross-examination, the Court said, is a “faithful friend in the pursuit of justice and an indispensable ally in the search for truth; and should be “jealously protected and broadly construed.” [40] Applications in court permit cross-examination, which can be unlimited. Cross-examination is the tool to test credibility in a trial and it is preserved in an application in court.

Whether I suspect that direct examination in trials is overrated or not, it is my sense that the issues of facts in this proceeding relate more to reliability than credibility; in either event, the opportunity to cross-examine in the hearing of an application in court is more than enough to satisfactorily assess credibility. [41] There is no identification in the three affidavits of the Three Towns of a particular issue of credibility (as opposed to reliability) that could become so significant that it could not be satisfactorily dealt with by way of cross-examination.

The issues in this case are focussed enough that the use of affidavits to present direct evidence will probably assist everyone in focussing on the relevant factual context and avoiding the irrelevant. [ 22 ] The Respondents say Mr. Greene ought to be allowed to defend his character against the allegations of fraud by giving direct evidence and not be confined to giving it by way of affidavit. This is again an issue that can be accommodated within the application in court process.

The judge giving directions or the judge hearing the application can permit that any witness be permitted to give part or all of their evidence by viva voce testimony. [Rule 5.13(2)]. Rule 6.02(6) Proportionality – The relative cost and delay [ 23 ] The Respondents have failed to identify a specific procedural safeguard that will be lost or any specific unfairness to them if this matter proceeds as an application in court. On the face of the record to date, the matter appears to be one that can be fairly and justly heard and determined according to the application in court process selected by the Applicant.

It is more likely that the proceeding would take longer and be costlier to the parties as an action. [ 24 ] I am not persuaded by the arguments advanced by the Respondents that the proceeding should be converted to an action at this time. [ 25 ] The motion is dismissed. The Respondents shall pay to the Applicant costs in the amount of $750 inclusive of disbursements forthwith and in any event of the cause. [ 26 ] Following my oral dismissal of the motion at the conclusion of the hearing, I conducted the Motion for Directions.

Deadlines were set for production of affidavits disclosing documents, discovery of the parties, discovery of other witnesses, expert reports and affidavits. I scheduled another hearing for directions following the conclusion of the discovery examinations at which time the court can address any issues identified at that time and

schedule an informed amount of time for the hearing of the merits. Norton, J.