Docket: CACV2264 Thomas Fox, Dave Hoffman v. Hoffman & Associates Ltd., 2012 SKCA 93

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2012 SKCA 93 Date: 2012-10-11 Between: Docket: CACV2264 Thomas Fox, Dave Hoffman and Hoffman & Associates Ltd. Applicants (Prospective Appellants) - and - P.W. Lorch & Associates Ltd. Respondent (Prospective Respondent) - and - The Government of Saskatchewan Respondent

Between: Docket: CACV226 1 The Government of Saskatchewan Applicant (Prospective Appellant) - and - P.W. Lorch & Associates Ltd. Respondent (Prospective Respondent) - and - Thomas Fox, Dave Hoffman and Hoffman & Associates Ltd. Respondents Before: Ottenbreit J.A. (in Chambers) Counsel: Peter Bergbusch for Thomas Fox, Dave Hoffman and Hoffman & Associates Ltd. James Ehmann, Q.C., for P.W. Lorch & Associates Ltd. Michael J. Morris for The Government of Saskatchewan

Application: From: 2012 SKQB 170 Heard: July 25, 2012 Disposition: Leave Denied Written Reasons: October 11, 2012 By: The Honourable Mr. Justice Ottenbreit Ottenbreit J.A. I. Introduction [ 1 ] The Government of Saskatchewan (“Government”) and Thomas Fox, Dave Hoffman and Hoffman & Associates Ltd. (the “Appraisers”) each seek leave to appeal the decision of the Queen’s Bench Chambers judge dated April 24, 2012 wherein she dismissed an application to have the statement of claim of P.W. Lorch & Associates Ltd. (“Lorch”) struck under Rule 173(

a) and (e). The Appraisers also seek an extension of time to appeal because their application for leave to appeal was served one day beyond the 15 day period prescribed in the Court of Appeal Rules . For the reasons set forth below the applications for leave and extension of time are dismissed. II. Background and Facts [ 2 ] Lorch brought action QBG 446 of 2011 against the Government for damages arising out of the expropriation by the Government of certain land (the “land”) owned by Lorch.

The Appraisers had conducted a number of appraisals of the land and provided the Government with values per acre for the land. Based on those appraisals the Government later served Lorch with notice of compulsory acquisition of the land. Lorch was dissatisfied with the compensation offered for the acquisition and commenced the action against the Government pursuant to The Expropriation Procedure Act , R.S.S. 1978, c.

E-16 (the “ EPA ”) claiming that the Government had not provided due compensation as required by s. 49(1) of the EPA . [ 3 ] After the commencement of QBG 446 of 2011, Lorch commenced QBG 1234 of 2011 against the Government and the Appraisers alleging that there was a conspiracy among the Appraisers and the Government to suppress the price to be offered to Lorch for the expropriated land. Lorch also alleges negligence by the Appraisers and misfeasance in public office in relation to the Government. Lorch claims damages, punitive damages and costs.

It is the amended statement of claim in this action (the “statement of claim”) that

the Government and Appraisers sought to strike in the court below. III. The Chambers Judge’s Decision [ 4 ] In dismissing the application to strike, the Chambers judge determined that it was not plain and obvious that Lorch’s claim in conspiracy to commit the unlawful act of circumventing the duty to pay due compensation and/or the claim in negligence would fail. She stated at paras. 22, 37 and 38 respectively: 22 The plaintiff relies on an alleged agreement to exclude information from appraisals, the consequences that flowed from the exclusion and the costs incurred by it as a result. The plaintiff claims the agreement(

s) between the Ministry and the appraisers to exclude the information is an unlawful act. While the obligations of the Ministry are different from the obligations of the appraisers, the EPA imposes duties on the Ministry but not on the appraisers, I cannot say that it is plain and obvious the claim of conspiracy to commit the unlawful act of circumventing the duty to pay due compensation will fail. 37 The plaintiff does not rely on a recognized duty of care. Thus, my task is to consider whether it is plain and obvious the plaintiff's attempt to establish a new duty of care will fail.

I cannot say that it will. 38 With respect to the appraisers' remaining complaints, the plaintiff has alleged facts material to reliance on the appraisers, breach by the appraisers of the standard of care expected of an appraiser and damages suffered by the plaintiff. Consequently, I cannot say that it is plain and obvious the plaintiff's claim in negligence will fail. [ 5 ] The Chambers judge also found that the action was not an abuse of process. Her reasons for her decision in this respect are found in paras. 41 and 42: 41 The plaintiff responds that the two actions deal with different issues.

There is a factual overlap, however, the parties are not the same and the causes of action are different. In addition, the relief available in QBG 446 is narrowly focused on s. 49 of the EPA and what might be considered "due compensation" for expropriated land. On the other hand, this action seeks relief relating to conspiracy and negligence which allows for a broader array of damages, including punitive damages. 42 I do not find that the plaintiff is pursuing the applicants in two actions over the same dispute or matter.

The plaintiff cannot pursue the appraisers in QBG 446, nor is it clear that its right to relief is similar in both actions. IV. The Proposed Notices of Appeal [ 6 ] The proposed grounds of appeal by the Government are as follows: (

a) The Learned Chambers Judge erred in finding that facts sufficient to allege the tort of conspiracy have been pled; (

b) The Learned Chambers Judge erred in her

interpretation and application of the doctrines of merger and abuse of process with respect to the claims against the Appellant in QB 446/11 and QB 1234/11; (

c) The Learned Chambers Judge erred by failing to consider the case law which prohibits collateral attacks on a party’s witnesses; (

d) The Learned Chambers Judge erred in failing to consider the prejudice to the Appellant, inter alia the loss of litigation privilege, in permitting QB 446/11 and QB 1234/11 to proceed concurrently; (

e) The Learned Chambers Judge erred in failing to consider the alternate requested relief of a stay of QB 1234/11 pending resolution of QB 446/11. [ 7 ] The proposed grounds of appeal by the Appraisers are as follows: (

a) The learned chambers judge erred in law in failing to strike the statement of claim as against the Appellants, pursuant to Rule 173(

a) of The Queen’s Bench Rules , on the basis that it fails to disclose a cause of action against them;

(

b) The learned chambers judge erred in law in failing to strike the statement of claim as against the Appellants, pursuant to Rule173(

e) of The Queen’s Bench Rules, on the basis that it is an abuse of the Court’s process since it is duplicative of the action commencedby the same Plaintiff in Q.B.G. No. 446 of 2011, Judicial Centre of Regina, and since the Plaintiff’s right to compensation forexpropriation, including its right of action, is provided in The Expropriation Procedure Act, which operates as a comprehensive code; (

c) In the alternative, the learned chambers judge erred in failing to make an Order pursuant to Rule 173(

e) staying the Plaintiff’sclaim pending the resolution of the action in Q.B.G. No. 446 of 2011, Judicial Centre of Regina. V. Analysis [8] The relevant criteria for granting leave to appeal are well known and are succinctly articulated by Cameron J.A. of this Court inRothmans, Benson & Hedges Inc. v. Saskatchewan, 2002 SKCA 119, 227 Sask. R. 121 at para. 6: 6 The power to grant leave has been taken to be a discretionary power exercisable upon a set of criteria which, on balance, must beshown by the applicant to weigh decisively in favour of leave being granted: Steier v.

University Hospital, (SK CA),[1988] 4 W.W.R. 303 (Sask. C.A., per Tallis J.A. in chambers). The governing criteria may be reduced to two-each of which features asubset of considerations-provided it be understood that they constitute conventional considerations rather than fixed rules, that they arecase sensitive, and that their point by point reduction is not exhaustive.

Generally, leave is granted or withheld on considerations of meritand importance, as follows: First: Is the proposed appeal of sufficient merit to warrant the attention of the Court of Appeal? - Is it prima facie frivolous or vexations? - Is it prima facie destined to fail in any event, having regard to the nature of the issue and the scope of the right of appeal, for instance,or the nature of the adjudicative framework, such as that pertaining to the exercise of discretionary power? - Is it apt to unduly delay the proceedings or be overcome by them and rendered moot? - Is it apt to add unduly or disproportionately to the cost of the proceedings?

Second: Is the proposed appeal of sufficient importance to the proceedings before the court, or to the field of practice or the state of thelaw, or to the administration of justice generally, to warrant determination by the Court of Appeal? - does the decision bear heavily and potentially prejudicially upon the course or outcome of the particular proceedings? - does it raise a new or controversial or unusual issue of practice? - does it raise a new or uncertain or unsettled point of law? - does it transcend the particular in its implications? [9] For the purposes of the leave applications, whether the proposed grounds of appeal have merit is informed by the standard of reviewto be employed on the prospective appeal.

Additionally, although the question of whether a claim is sufficiently pleaded is a question oflaw, the determination of whether a claim or a portion thereof should be struck on a

summary basis involves, in part, an exercise ofdiscretion of the Chambers judge (Saskatchewan Government Employees’ Union, (SGEU) v. Saskatchewan, (SKCA), [1999] 7 W.W.R. 318 (C.A.)). In Stomp Pork Farm Ltd. v.

Lombard General Insurance Co. of Canada, 2008 SKCA 146, [2009] 4W.W.R. 505 Hunter J.A. confirmed at para. 3 that the questions of merit and importance on leave to appeal applications must beevaluated keeping in mind the limited basis that the Court of Appeal has to review discretionary decisions of a Queen’s Bench judge. [10] Because of the possibility that a litigant may be denied their day in court as a result of a successful motion to strike, the courts havegenerally taken a generous reading of pleadings when faced with such an application cognizant, nevertheless, that the claim must disclose a cause of action.

In Tottrup v. Alberta (Minister of Environment), 2000 ABCA 121, 186 D.L.R. (4th) 226: 8 The principles governing an application to strike a statement of claim for failure to disclose a cause of action are relatively settled.In brief, the Court must assume that the allegations of fact made by the plaintiff are true. The Court then determines whether those factsdisclose a cause of action in law. The test set out by the Supreme Court in Hunt v.

Carey Canada Inc., (SCC), [1990] 2S.C.R. 959 at 980 is whether it is " . . . plain and obvious' that the plaintiff's statement of claim discloses no reasonable cause of action."Caution is required before concluding that the plaintiff has no chance of success. The plaintiff is entitled to a broad reading of thepleadings. In my view, this is particularly important where a question arises as to the expiry of a limitation period. Subject to limitationquestions, the Court may grant leave to include further facts if an application is made.

In addition, a determination that there is no causeof action on one set of pleadings is generally no bar to framing a new action on different facts.

9 Although the pleadings should be liberally interpreted, the Court has a duty to apply the Rule as it is intended. If the alleged facts,examined in light of the existing law, do not disclose a cause of action the claim should be struck. Needless litigation should be avoided. (

a) Merit [11] The first proposed ground of appeal of the Government is that the statement of claim failed to sufficiently plead the tort ofconspiracy. The Appraisers argue likewise with respect to the tort of conspiracy and negligence. [12] The essential elements of the tort of conspiracy are set out in Canada Cement LaFarge Ltd. v. British Columbia LightweightAggregate Ltd., (SCC), [1983] 1 S.C.R. 452.

The court at page 471-472 stated the following: Although the law concerning the scope of the tort of conspiracy is far from clear, I am of the opinion that whereas the law of tort does notpermit an action against an individual defendant who has caused injury to the plaintiff, the law of torts does recognize a claim againstthem in combination as the tort of conspiracy if: (1) whether the means used by the defendants are lawful or unlawful, the predominant purpose of the defendants' conduct is to causeinjury to the plaintiff; or, (2) where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others), and thedefendants should know in the circumstances that injury to the plaintiff is likely to and does result.

In situation (2) it is not necessary that the predominant purpose of the defendants' conduct be to cause injury to the plaintiff but, in theprevailing circumstances, it must be a constructive intent derived from the fact that the defendants should have known that injury to theplaintiff would ensue.

In both situations, however, there must be actual damage suffered by the plaintiff. [13] Lorch appears to plead in paragraphs 23 and 25 of the claim that the parties agreed to do an unlawful act and that this act wascarried out, in paragraphs 23, 25 and 25.2 that the defendants knew or ought to have known that their action would injure the plaintiff,and in paragraph 29.1 that the plaintiff has suffered actual damage and provides the details of that damage.

Although the Governmentargues that no damages have been suffered by Lorch because there can only be damage once a court determines that the offer ofcompensation was unreasonably low, this argument overlooks that the facts in the statement of claim must be assumed to be true on aRule 173(

a) application. The Chambers judge appeared to be alive to the criteria in Canada Cement LaFarge Ltd. In light of theforegoing excerpt from Canada Cement LaFarge Ltd. and giving a generous reading to the pleadings, the Government and theAppraisers will have a difficult time arguing that Lorch’s statement of claim does not disclose a cause of action based on conspiracy. [14] With respect to the plea of negligence, the Chambers judge’s decision is at paras. 37 and 38: 37 The plaintiff does not rely on a recognized duty of care.

Thus, my task is to consider whether it is plain and obvious the plaintiff'sattempt to establish a new duty of care will fail. I cannot say that it will. 38 With respect to the appraisers' remaining complaints, the plaintiff has alleged facts material to reliance on the appraisers, breach bythe appraisers of the standard of care expected of an appraiser and damages suffered by the plaintiff. Consequently, I cannot say that it isplain and obvious the plaintiff's claim in negligence will fail.

In this respect Lorch alleges that the Appraisers owed a duty of care and were negligent in failing to include certain comparableproperties in their appraisal to the Government. At paras. 31 and 34, Lorch pleads that the Appraisers knew the intended use of theappraisals and that, as a result, they have a duty to ensure the appraisals were competent and appropriate.

Lorch has pleaded that itsuffered damage caused by the Appraisers failing to provide competent appraisals to the Government in paras 32 and 35 of the statementof claim and refers to para. 29.1 for particulars of that damage. [15] The Government and the Appraisers’ argument that the negligence pleading is deficient is not a strong one given the generousreading to be applied to the pleadings. Although the negligence pleading is normally framed differently and is somewhat novel, noveltyis not a sufficient reason to strike a pleading.

It was open to the Chambers judge to determine that a novel negligence pleading shouldnot be struck at this stage. Whether Lorch will succeed on a novel negligence pleading is best left to the trial judge. It is unlikely the

Government and Appraisers can successfully argue that it is plain and obvious that the pleading discloses no reasonable cause of action at this stage. [ 16 ] The next proposed grounds of appeal relate to the duplicity of actions and raise issues of merger and abuse of process. The Chambers judge’s determination on duplicity and abuse is set forth in paras. 41 and 42 quoted above. The Government and Appraisers argue that the current action is an abuse because all elements of the within action can be determined and adjudicated as part of the expropriation action.

Related to this issue is the Government’s ground of appeal that the conspiracy claim has been merged with Lorch’s claim of bad faith, misfeasance in public office and therefore the negligence pleading should be struck. However, given that Rule 173(

e) is permissive rather than mandatory i.e. the “court may … order any pleading … be struck out” if it is an abuse of process, it is doubtful that this ground of appeal will succeed in the face of the discretionary nature of this aspect of the decision. Given that it must be plainly and obviously an abuse and given the Chambers judge’s reasons for not finding an abuse, this ground of appeal in my view is destined to fail.

Likewise, the Government’s grounds of appeal related to the issue of merger will have an uphill battle given the standard of review and governing principles in light of the finding by the Chamber’s judge that the conspiracy claim as pleaded adds to the remaining claims. [ 17 ] The Government also seeks to appeal on the basis that the Chambers judge erred by failing to consider case law prohibiting collateral attacks on a party’s witnesses and prejudice to the appellant because of loss of litigation privilege in permitting QB 446/11 and QB 1234/11 to proceed concurrently.

The Government suggests that suing the Appraisers is an improper practice due to the fact that they are the intended expert witnesses for the Government in the expropriation action. These two grounds are destined to fail as well. [ 18 ] These issues were summarily addressed at para. 25 of the judgment by the Chambers judge: 25 I agree also with the plaintiff that the fact it is suing the Ministry's expert witnesses in QBG 446 is not sufficient to strike the claim in the circumstances of this case as the action against the appraisers is not as a result of their participation in the proceedings as witnesses.

As stated by the plaintiff, the allegations of conspiracy survive regardless of whether the appraisers provide testimony in the QBG 446 action. [ 19 ] These findings that the Appraisers are not being sued qua witness will be difficult to challenge on appeal. [ 20 ] The last ground of appeal of both the Government and Appraisers deals with the request for a stay because of alleged duplication between the two actions. However, whether to grant a stay is a discretionary decision and is subject to a high level of appellate deference.

It is unlikely that the Government and the Appraisers will succeed on this ground either. (

b) Importance [ 21 ] I am not satisfied that the Government and Appraisers have demonstrated that the issues involved in this case are of sufficient importance to grant leave. In my view, no new, controversial or unusual issues of practice or points of law are raised. VI. Conclusion [ 22 ] Given the high level of deference accorded to decisions to strike pleadings, the generous reading given to pleadings and the high threshold that the case be plain and obvious, the Government and the Appraisers’ grounds of appeal are, in my view, destined to fail.

They have not satisfied me that leave should be granted taking into account all of the relevant factors. Leave is denied with costs to Lorch. However, there shall be only one set of costs. DATED at the City of Regina, in the Province of Saskatchewan, this 11 th day of October, 2012. “Ottenbreit J.A.” Ottenbreit J.A.