Docket: CACV2232 Saskatoon Trading Company Limited, Ricly Holdings Inc., Patly Holdings Inc., Thomly Holdings Inc., Gerly Holdings Inc., Richard Hughes Pinder, Patricia Nancy Pinder, Thomas Duncan Pinder v. Allan Gerald Pinder, 2013 SKCA 42

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2013 SKCA 42 Date: 2013-04-23 Between: Docket: CACV2232 Saskatoon Trading Company Limited, Ricly Holdings Inc., Patly Holdings Inc., Thomly Holdings Inc., Gerly Holdings Inc., Richard Hughes Pinder, Patricia Nancy Pinder, Thomas Duncan Pinder and Allan Gerald Pinder Appellants - and - Hergott, Duval, Stack and Partners, McKercher, McKercher and Whitmore, and Farris, Vaughan, Wills & Murphy Respondents Coram: Lane, Jackson & Richards JJ.A.

Counsel: Karen Prisciak, Q.C. for the Appellants Gary Zabos, Q.C. for the Respondent, Hergott, Duval, Stack & Partners Robert Kennedy, Q.C. for the Respondent, McKercher LLP Janet Stevens for the Respondent, Farris, Vaughan, Wills & Murphy Appeal: From: 2012 SKQB 31 Heard: October 16, 2012 Disposition: Appeal Allowed Written Reasons: April 23, 2013 By: The Honourable Madam Justice Jackson

In Concurrence: The Honourable Mr. Justice Lane The Honourable Mr. Justice Richards Jackson J.A. I. Introduction [ 1 ] This is an appeal from a Queen’s Bench decision striking the Appellants’ statement of claim against the Respondents on the basis of delay (see: 2012 SKQB 31 , 395 Sask. R. 21). The Appellants are five Saskatchewan corporations and their principals.

The Respondents were at one time professional advisors to the Appellants in connection with the sale of all the shares of a wholly owned subsidiary belonging to one or more of the Appellants. [ 2 ] The Appellants’ claim against the Respondents arose as a result of an income tax reassessment by the Canada Revenue Agency requiring the Appellants to pay additional income tax in connection with the share sale.

The Appellants allege that the Respondents are partly or wholly responsible in the amount of approximately $900,000 arising from the Canada Revenue Agency’s decision to reassess the income tax owed in connection with the share sale. [ 3 ] The Appellants issued their claim against the Respondents in 2002—when the Canada Revenue Agency had not yet quantified the amount of the reassessment. It took four years for the Appellants and the Canada Revenue Agency to reach an agreement as to liability and quantum.

Another part of the delay came from the Appellants’ decision to obtain an expert opinion before obtaining a date for the examination for discovery. [ 4 ] The Chambers judge found that a delay of approximately nine years was both inordinate and inexcusable. He concluded as well that the public interest did not compel the action to move forward in spite of the delay. [ 5 ] I have concluded that the Chambers judge erred when he struck the statement of claim for delay and his decision must be set aside. II.

Overview of the Evidence and Decision of the Chambers Judge [ 6 ] The Chambers judge provided the following chronology of events (at para. 9): • November 12, 2002―Statement of claim issued and served shortly thereafter. • January 21, 2003―Hergott, Duval, Stack and Partners asked for information on the claim. The response indicates that on-going discussions are occurring with the CRA [Canada Revenue Agency] by plaintiffs’ counsel in Alberta in an effort to negotiate a settlement. The correspondence during this time to the defendants’ counsel is informational.

It must be remembered that no quantification of the claim had yet been made by the plaintiffs as no damages have yet been sustained. • November 23, 2003 ―Plaintiffs’ counsel raises the issue of the matter moving to mediation although the nature of the mediation is not that indicated in The Queen’s Bench Rules but, rather, a suggestion by plaintiffs’ counsel that a telephone conference call be held between all parties to discuss the progress of the damage assessment, which will take the place of a traditional mandatory mediation.

The defendants do not positively respond to this proposal and, instead, seek more information and documentation to determine the nature of the claim and the extent of the loss. • December 1, 2004―The plaintiffs prepare and serve a statement as to documents on the defendants’ counsel. • March 29, 2005―The plaintiffs provide the defendants with a copy of the plaintiffs’ proposal to the CRA for settlement.

From this point until October 2006, letters were exchanged between plaintiffs’ counsel and defendants’ counsel regarding the progress of the CRA settlement and the provision of further information and quantification of the claim. Plaintiffs’ counsel in Saskatchewan was responsive to the letters but provide little information as to what was occurring with the CRA. • April 28, 2006―Saskatoon Trading pays $909,011.11 to the CRA as settlement. • October 2006―The defendants’ counsel were advised that a settlement with the CRA had been achieved.

• March 2007―Plaintiffs ask for mediation to occur and waive the requirement of a statement of defence until after the mediation process. From this time until May 2007, the correspondence from the defendants relates to disclosure of a tax opinion and an analysis and quantification of damages. • May 2007―Statements of defence were provided by all defendants. • June 2007―An amended statement of defence was filed by McKercher.

The defendants generally inquire as to the value of mediation without the initial quantification of damages. • July 20, 2007―The plaintiffs correspond with the defendants, advising that the individual plaintiffs were not responsible for payment to the CRA and suggesting a consent amendment to the statement of claim removing them as parties. At the same time, the plaintiffs’ counsel has instructed the plaintiffs’ new accountants KPMG to obtain additional documents from the CRA.

The plaintiffs advise the defendants that, if they wish, mediation could be postponed in favour of proceeding directly to examinations for discovery, which would assist the defendants in their quantification of the claim. In July 2007, the defendant DHS advises that examinations for discovery would not be available to him until late 2007. In the interim, all parties continue to await KPMG’s documents from the CRA.

The defendants continue to inquire about the provision of CRA documents. • January/February 2008―CRA documents are received by the plaintiffs. • March 24, 2008―The plaintiffs advise the defendants that the CRA and KPMG documents are available and that they will be providing a revised statement as to documents.

Plaintiffs’ counsel becomes focussed on a separate file, and little activity is undertaken on the claim. • April 29, 2008―Some of the defendants wish to move to mediation instead of discovery and continue to raise the issue of the amount of the loss and to have that available before mediation commences. • June 2008―Supplemental statement as to documents provided by the plaintiffs. • July 2008―The plaintiffs quantify their damage claim. • August 2008―The plaintiffs wish mandatory mediation, pursuant to The Queen’s Bench Rules , to proceed in September 2008 and want the defendants’ responses. • September 10, 2008―The plaintiffs repeat requests for mediation dates. • September 23, 2008―The plaintiffs repeat requests for mediation dates.

The defendants want their own expert reports before mediation to move forward. • November 10, 2008―Mediation commences and is adjourned. Exchange of further documents and responses to issues arising at the first mediation continue until the second mediation. • January 6, 2009―Second mediation proceeds and concludes. • February 2009―The plaintiffs hire KPMG to do a damage analysis. The plaintiffs deal directly with KPMG in providing information for the analysis, discussing the analysis with KPMG and agreeing on a final draft. The defendants are advised that the plaintiffs and

KPMG are working on the damage analysis. Apparently, a number of reports from KPMG are received, reviewed and amended by the plaintiffs. Defendants’ counsel are advised from time to time of the situation. • August 19, 2010―No KPMG analysis has been received. Plaintiffs’ counsel suggest that the defendants provide possible dates for examinations for discovery. The plaintiffs and KPMG continue to work on the claim analysis. • February 16, 2011―An expert report from KPMG is provided.

The plaintiffs request examinations for discovery. • March 14, 2011―The plaintiffs provide notice of intention to proceed. • March 14, 2011 to October 5, 2011―The plaintiffs attempt to get examinations for discovery from the defendants, and the defendants advise that they will be bringing an application to strike the action for delay. • December 15, 2011―Applications for delay heard. [ 7 ] The Chambers judge applied the new three-part test established by International Capital Corporation v.

Robinson Twigg & Ketilson , 2010 SKCA 48 , 319 D.L.R. (4 th ) 155 to determine whether the Appellants’ claim should be struck. The three-part test requires the resolution of the following questions: (

i) whether the Respondents established that the delay in moving the case forward was inordinate; (ii) whether, in light of the reasons for the delay, the delay is excusable; and (iii) notwithstanding a finding of inordinate and inexcusable delay, whether it is nonetheless in the interests of justice that the case proceed to trial. [ 8 ] With respect to the first step, the Chambers judge found that a delay of almost nine years before examinations for discovery was inordinate (para. 12). [ 9 ] With respect to whether the delay was excusable, the Appellants made these submissions to the Chambers judge: (

i) with respect to the period from 2002 until 2006, it was reasonable to commence the action before damages had been assessed to forestall any limitations of actions defence, but it was also reasonable not to waste resources by pressing forward with the action until damages had been suffered by way of payment to the Canada Revenue Agency; (ii) with respect to the period from 2006 until 2009, the Respondents’ different positions on matters and their numerous demands for documentation made progress difficult; and (iii) with respect to the period from 2009 until 2011, the Appellants’ efforts in obtaining an expert opinion from KPMG, which was essential for settlement purposes, took longer than expected. [ 10 ] The Chambers judge appeared to accept the Appellants’ reasons regarding the period from 2006 to 2009, but he found that they had not satisfactorily explained the delay represented by the two remaining periods.

In that regard, the Chambers judge appears to have been dissatisfied with the quality of the Appellants’ evidence. The Appellants’ lawyer—who had been their lawyer throughout—swore an affidavit and the Appellants engaged outside counsel to plead the matter in the Court of Queen’s Bench. Mr. Pinder, as the officer for the principal plaintiff, provided an affidavit addressing part of the delay. [ 11 ] Having found the delay both inordinate and inexcusable, the Chambers judge considered whether it was nonetheless in the interests of justice that the case proceed to trial.

To that end, he considered the non-exhaustive list of factors suggested by International Capital at para. 45: 1) the prejudice the defendant will suffer in mounting its case if the matter goes to trial; 2) the length of the inexcusable delay; 3) the stage of the litigation; 4) the impact of the inexcusable delay on the defendant; 5) the context in which the delay occurred; 6) the reasons offered for the delay; 7) the role of counsel in causing the delay; and 8) the public interest. [ 12 ] The Chambers judge found that the defendants had suffered little prejudice in mounting their case (at para. 20). [ 13 ] When the Chambers judge turned to quantify the length of the inexcusable delay, he created three distinct periods, which were

different from the three categories that he had considered when describing whether the delay was inexcusable. This time the Chambers judge found the length of the inexcusable delay to be five and one-half years, as follows: (

i) from December 2003 to March 2007 [1] ; (ii) from July 2007 when the Appellants had received the Respondents’ statement of defence to June 2008 when they began to look at the question of quantum of damages; and (iii) from February 2009 to February 2011, while the Appellants worked with their accountants to provide a damage analysis to the Respondents.

The Chambers judge again criticized the quality of the evidence before him, saying he had no evidence to explain the delay (paras. 21-23). [ 14 ] With respect to the stage of the litigation, the Chambers judge found that the Appellants had obtained significant documentation and analyses supporting their claim and that they had also kept the Respondents informed.

Nonetheless, he concluded that they had not advanced their claim through the court system, “resulting in the first 8.5 years of this action going only to mandatory mediation and exchange of documents” (para. 27). [ 15 ] Regarding the impact of the inexcusable delay, the Chambers judge found that the delay does not put the livelihood of the Respondents at risk or provide on-going negative publicity for them as none was alleged in their affidavit material in support of the application (para. 28). [ 16 ] The Chambers judge found that the reasons offered for the delay were understandable but that they took “far too long” to advance their case (para. 30). [ 17 ] The Chambers judge then found that counsel played no real role in causing the delay (para. 31) and the case was not a matter of genuine public importance (para. 32).

He concluded his analysis by making specific reference to the absence of prejudice but that “this case is not one in which the interests of justice require it to proceed to trial” (para. 39). III. Standard of Review [ 18 ] The Court in International Capital applied the standard of review stated in B.(D.) v. C.(M.) , 2001 SKCA 9 , [2001] 5 W.W.R. 617 as follows: [5] ... The standard of review applicable to an appellate court’s consideration of an appeal from a decision involving a judge’s exercise of discretion is decidedly narrow.

Before an appellate Court will intervene in such a case, it must conclude that the judge of first instance: a. acted upon some wrong principle of law; b. took into consideration irrelevant factors; c. overlooked or misapprehended some material evidence; d. failed to act judicially; or e. was so clearly wrong that the decision will result in an injustice. See also Potash Corp. of Saskatchewan Inc. v. Barton , 2009 SKCA 7 , [2009] 3 W.W.R. 1 at para. 18 . IV. Analysis [ 19 ] Applying the stringent standard of review taken from B.(D.) v.

C.(M.) , I have nonetheless concluded with much respect to the learned Chambers judge that he acted upon a wrong principle of law, overlooked some material evidence and misapprehended other material evidence. [ 20 ] In my respectful view, the genesis of the error stems from the Chambers judge’s mistaken conclusion that the Appellants’ officers were required to personally supply evidence as to the reasons for the delay.

At five points in his reasons, the Chambers judge criticized the lack of direct evidence from the Appellants (paras. 11, 13, 16, 21 and 23). [ 21 ] The Chambers judge began his analysis with these comments criticizing the Appellants’ decision to provide their lawyers’ evidence rather than their own: [11] … The plaintiffs did not provide affidavits from any of its officers or other employees or from its counsel dealing with the CRA [Canada Revenue Agency] assessment or its accountants dealing with the CRA assessment to explain the reasons for the lengthy negotiations associated with the settlement of the file and the nature of those negotiations and, generally, its efforts to have the matters with the CRA resolved.

The plaintiffs did not, through its officers, provide affidavit evidence indicating the reasons for the delay in having KPMG provide CRA documents and delay from January 2009 to February 2011 while waiting for the KPMG analysis. (emphasis added) [ 22 ] When further assessing the Appellants’ reasons for delay for the periods from 2002 until 2006 and from 2009 until 2011, the Chambers judge stressed the lack of evidence from the Appellants: [13] The plaintiffs commenced the claim when it [ sic ] did to protect against the expiration of the limitation period.

At the time of commencement, it did not have any notion of whether, in fact, the claim would proceed as it was not yet ascertained whether any damages had been sustained. From the plaintiffs’ point of view, this was a useful tactical approach as to expend resources on a court action without a notion of what amount, if any, had been lost makes little economic sense. Vis-à-vis the defendants, however, this simply

left them in a position where a claim remained outstanding, leaving the potential liability hanging over their head without any notion of when it would be resolved. The plaintiffs’ practical approach not to effectively pursue the claim until settlement with the CRA [Canada Revenue Agency] had been achieved is reasonable from their perspective. However, no affidavit evidence regarding these negotiations and why the matter took some four years after the claim was issued to resolve weighs against the plaintiffs.

I know why the claim was not pressed until 2006, when the CRA settlement occurred, but I do not know if the plaintiffs took all reasonable steps in a timely fashion with the CRA to conclude what was a process that was out of the hands of the defendants and their counsel on this action . . . . [16] Although the plaintiffs’ approach in commencing the claim when it did without knowledge of actual loss and in waiting for the CRA resolution to establish that a loss had occurred can be seen as reasonable from their perspective does not mean that it is excusable in relation to the advancement of the claim.

There are occasions when third party activity in relation to either a plaintiff or a defendant in an action can result in a delay that is not of the party’s doing, but it does not make it automatically excusable. Some third party actions, such as related Criminal Code prosecutions of necessity result in a delay that is excusable. Absent some explanation related to the CRA activity from the plaintiffs directly, I cannot find that the delay to June 2006 is excusable.

Absent evidence from the plaintiffs regarding the two-year delay from February 2009 to February 2011 while it worked with its experts, I cannot find that excusable. In the result, I find that the delay is inexcusable and will move on with the further assessment . (emphasis added) [ 23 ] When fixing the actual period of inexcusable delay, the Chambers judge wrote: … Without any evidence on the plaintiffs’ effort , it is not possible to get an accurate reflection of what would be reasonable.

Even though no evidence was led , I am prepared to accept one year as a period that will not be held against the plaintiffs in this area. (para. 21, emphasis added) When commenting on the period during which the Appellants were seeking an expert evaluation of the loss, the Chambers judge wrote: … No explanation is given as to why it took the plaintiffs two years to obtain the analysis.

This period falls at the feet of the plaintiffs. (para. 23, emphasis added) [ 24 ] Any judge, hearing any matter, can of course hold that the evidence is insufficient to discharge the burden of proof, but I know of no principle that precludes an applicant for relief from submitting evidence by way of an affidavit from a legal advisor.

Civil Practice Directive No. 1 of The Court of Appeal Rules circumscribes a lawyer’s ability to appear before the Court, having sworn an affidavit, but no principle prevents a lawyer from attesting to any fact in issue, as long as he or she does not then act as counsel on the matter for which the evidence is given.

In the within matter, the Appellants chose to provide their evidence via their counsel and then to engage outside counsel to oppose the application to strike. [ 25 ] The lawyer who swore the affidavit in this case has had overall carriage of this file from the beginning until the application to strike for want of prosecution. He swore a lengthy affidavit to which he appended some 130 pages of exhibits.

The Appellants had other advisors, notably the lawyer who negotiated the resolution of the claim with the Canada Revenue Agency and the accounting firm that analysed the data and provided an expert opinion, regarding the Respondents’ potential liability, but only one person had overall knowledge of the matter, and that was the counsel who swore the main affidavit on behalf of the Appellants. [ 26 ] I do not take the Chambers judge as saying that the Appellants’ lawyer’s evidence was insufficient or unpersuasive.

Indeed, with respect to the period of delay from 2002 to 2006, it seems uncontroverted that the delay during that period stemmed from difficulties with the Canada Revenue Agency of one sort or another.

The Appellants’ lawyer appended seven messages to the Respondents wherein he explained, in varying levels of detail, those difficulties (letter dated February 18, 2003, Appeal Book, pp. 285-86; letter dated April 22, 2003, Appeal Book, pp. 290-92; letter dated November 24, 2003, Appeal Book, pp. 294-95; letter dated March 29, 2005, Appeal Book, pp. 301-02; letter dated July 5, 2005, Appeal Book, pp. 308-09; letter dated November 28, 2005, Appeal Book, p. 313; and email message dated April 13, 2006, Appeal Book, p. 318).

At no point did the Respondents question the assertion that the delay was with the Canada Revenue Agency. [ 27 ] To gain some idea of the flavour of these explanations, I will quote from the letter of April 22, 2003.

After explaining that a series of documents had been exchanged between the Appellants and the Canada Revenue Agency, the Appellants’ lawyer wrote: Since the receipt of those documents, the Appeals Officer has indicated the CCRA’s [Canada Revenue Agency] final consideration and resolution of the objections is being held in abeyance pending final resolution of the Courts of certain appeals by other taxpayers . These appeals deal with the issue of whether payments for seismic data constitute a Canadian exploration expense for the purposes of the Act .

Depending on the resolution of that matter, a decision will be made as to the appropriate manner in which to proceed . To date, matters have lain with CCRA . Our clients continue to await contact from the Appeals Officer to determine whether CCRA is in a position to discuss a final settlement and resolution in respect to the outstanding obligations. In the event you are interested in further information with respect to the thoughts or opinions of Tax Counsel in Calgary, we would be pleased to go back to them, and seek that information.

Please advise in due course. (Appeal Book, p. 292a; emphasis added) Significantly, the Respondents did not take the Appellants up on this offer. [ 28 ] Then on November 24, 2003, the Appellants’ lawyer wrote again to the Respondents, saying: I recently had an opportunity to discuss this matter at length with my instructing principal, Dick Pinder, and with his tax counsel in Calgary, Ken Skingle at Felesky Flynn. As a number of you had inquired about progress with CCRA [Canada Revenue Agency], that was our first point of discussion.

Ken advises that there are presently no further developments in the tax litigation involving CCRA, but that he has been monitoring developments on the underlying tax issues with Saskatoon Trading, and with the issue of the

section 160 assessments made against our clients . Based upon that review, Mr. Skingle has suggested we consider approaching CCRA, with a view to effecting a settlement. The reasons for so doing are twofold: 1. The seismic data/Canadian exploration expense case law developing with respect to the underlying reassessment against Saskatoon Trading Company is not developing satisfactorily, and any arguments we might advance against that underlying reassessment are most likely to fail; and 2. There is presently no case law supportive of our clients’ position in resisting the

section 160 assessment. Accordingly, any favourable decision in Tax Court will be, to put it charitably, “making new law”. Based on past experience, Felesky Flynn is of the view that CCRA may (although not necessarily will ) be amenable to foregoing interest on the

section 160 assessment, and upon the underlying Saskatoon Trading Company reassessment, in return for obtaining relatively prompt payment of the original reassessed tax levied against Saskatoon Trading Company. As you will realize, elimination of the accrued interest would (if attainable) constitute a significant reduction. Given the low chance of success in appealing the

section 160 assessment, we consider it prudent and appropriate to pursue this settlement option. Nevertheless, given the potential liability your clients face arising from any settlement, we want to give you an opportunity for input into this decision, prior to an approach being made to CCRA. I would ask you to review this issue with your clients, and to get back to me at your first opportunity with respect to your respective positions.

If there is sufficient interest in discussing the matter further, it may be that we can seek to convene a conference call to discuss the matter further, on the basis that such conference call would constitute our mediation session, pursuant to The Queen’s Bench Act . I look forward to receiving your comments at your early convenience. (Appeal Book, pp. 294-95; italics in original, underlining mine) [ 29 ] The following year was then taken up with discussions regarding this proposal.

At some point in the process, counsel for the Respondents was given direct access to counsel who was negotiating with the Canada Revenue Agency (Appeal Book, p. 314). Another letter explains that a change of personnel at the Canada Revenue Agency has further set back negotiations (letter dated March 29, 2005, Appeal Book, p. 301). An exchange of correspondence towards the end of November 2005 explains and reports on the ultimate failure

of negotiations with the Canada Revenue Agency, regarding liability, and the need to move to a discussion, regarding quantum (Appeal Book, p. 313). [ 30 ] A final relevant communication from trial counsel to counsel for the Respondents is the email message dated April 13, 2006: As you know, Felesky Flynn has been working with our clients to attempt to settle this matter with CRA [Canada Revenue Agency]. The process has been inordinately long, with the delay emanating from CRA .

I am now informed that, after some effort on the part of Felesky Flynn, a meeting was again held on March 29, with a view to attempting to settle the matter, following which a revised proposal is being forwarded to CRA. (Appeal Book, p. 318; emphasis added) [ 31 ] Against this backdrop, it is difficult to understand the Chambers judge’s reference to a lack of evidence regarding the delay emanating from the discussions with the Canada Revenue Agency. [ 32 ] With respect to the period from November 2007 to 2009, the Appellants’ officer did provide a detailed personal affidavit as he appears to have been directly involved in obtaining the expert opinion.

He wrote as follows: 2. This matter relates to a tax reassessment levied against the Plaintiffs and a number of other related companies and individuals on April 4, 2001. Upon that reassessment, all of the parties reassessed filed appeals with the Canada Revenue Agency (“CRA”). Nevertheless, out of abundant caution, we thought [it] appropriate to issue a Statement of Claim so as to put the Defendants on notice with respect to their potential liability. 3. The tax appeal was handled by the Calgary law firm of Felesky Flynn.

After negotiations with CRA, the matter was ultimately settled by way of payment by the Plaintiff to CRA in the fall of 2006. Counsel for the Plaintiff advises that this fact was communicated to each of the Defendants’ counsel, and thereafter, the subject of mediation was raised in late 2006 and early 2007. 4.

Plaintiff’s counsel advises that efforts to move the matter to mediation began following the close of proceedings, but that the setting of a mediation date was suspended to permit inquiries from the Defendants to be answered, and to permit additional documentation to be supplied in response to requests from the Defendants. In the fall of 2008, however, I directed that mediation should proceed and instructed counsel to refuse to permit further delay. As a result, a mediation session was held on November 10, 2008 . 5. Because of a number of issues under discussion, the mediation session resumed on January 6, 2009 .

The matter did not settle. 6. As a result of the mediation session and disputes which had arisen with respect to the Plaintiff’s quantum of loss, I determined that it was appropriate to review the Defendant’s position on the quantum of loss and to undertake a complete analysis with a view to preparing a report which could be provided to the Defendants and advanced at trial . 7. After consulting with the other Directors of the Plaintiff Corporation in February 2009, I engaged the accounting firm of KPMG in Saskatoon to undertake that analysis. I hired Mr. Zurowski of KPMG. 8.

From February through August 2009, I was involved in a number of discussions with Mr. Zurowski with a view to assisting with the analysis. In August I received a preliminary analysis dated August 24, and reviewed it thereafter with Mr. Zurowski and Plaintiffs’ counsel . 9. I encouraged Mr. Zurowski to move the matter forward, and I received another analysis in early October. I undertook a review and offered my comments. I expressed my hopes that the analysis would be finalized quickly with a view to moving the legal action forward . 10. I periodically followed up with Mr.

Zurowski during the remainder of 2009 and early 2010. I expressed my disappointment that the analysis was taking as long as it had . 11. A draft of the analysis was provided for review in March 2010. I encouraged Plaintiffs’ counsel to complete his review quickly and provided my comments as quickly as possible.

12. I continued to be in touch with Mr. Zurowski urging him to move forward. In late September, I was advised that the analysis had been simplified and reframed. I ultimately received a new draft in mid-October. A few questions were raised. I sent a number of emails and made telephone calls to encourage quick turn-around. The intended final version was not however received until December 8, 2010 . 13. My recollection is that one small change was requested after which the analysis was expected to be in final form. I was in touch a number of times to encourage Mr. Zurowski to finalize the analysis.

It was finally received in early February 2011 . 14. Throughout this litigation I have been requesting Plaintiffs’ counsel to move this matter forward to Examinations for Discovery . I understand it is helpful to cooperate with the Defendants’ numerous requests and I believe the Plaintiffs and our counsel have been very accommodating to the Defendants. (Appeal Book, pp. 403-405; emphasis added) [ 33 ] It is difficult to reconcile the Chambers’ judge’s statement that “[n]o explanation is given as to why it took the plaintiffs two years to obtain the analysis” (at para. 23) in light of this affidavit.

The Chambers judge appears to have overlooked Mr. Pinder’s evidence to the effect that (

i) the parties convened two mediation sessions during this period; and (ii) he made repeated attempts to move the matter along and to obtain the expert opinion. [ 34 ] Thus, I find that the Chambers judge erred in principle by demanding evidence directly from the principal officer of the Appellants with respect to the period of delay from 2002 to 2006 and he overlooked evidence from that same officer with respect to the period from 2007 to 2009.

When one takes this evidence into account, it becomes readily apparent that the delay is excusable. [ 35 ] As Richards J.A. stated in International Capital , a wide variety of factors might be expected to affect the assessment of whether delay is excusable (at para. 44). In this case, I find the following factors relevant: (

i) the reasons and evidence offered for the delay; and (ii) the comportment of the Respondents. These factors are linked in this case. [ 36 ] With respect to the reasons and evidence regarding the delay, I will divide the period into those which the Chambers judge considered when he found the delay to be inexcusable: (

i) the period from 2002 to 2006; and (ii) the period from 2007 to 2009. With respect to the period of delay until 2006, the Appellants made efforts to move the matter along, but difficulties were encountered with the Canada Revenue Agency and that body, in turn, was waiting for the resolution of other actions before reaching a conclusion in relation to the Appellants. Early on in the period from 2002 to 2006, the Respondents pressed for information and documentation.

Once they had the explanation for the delay, they stopped pressing—and indeed did not file their statement of defence until 2007. [ 37 ] With respect to the remaining period of delay—from 2007 to 2009—the Appellants attempted to obtain an opinion that might lead to settlement or abandonment of the claim. Admittedly, the Respondents’ affidavits attest to their dissatisfaction with the slow progress, but nothing in the lawyers’ correspondence would have led the Appellants to press on to trial—without their expert’s opinion.

From time to time, polite letters were exchanged wherein the Respondents’ counsel asked for information, but at no point would the Appellants have known that they were in jeopardy. [ 38 ] As Richards J.A. stated in International Capital (at para. 44), a Court must be careful not to impose a plaintiff’s obligation to move litigation forward on a defendant. Having said that, however, it would be completely unrealistic not to take into account the defendant’s actions in determining whether delay is excusable where it is appropriate to do so.

In this case, it is relevant that the Respondents allowed five years to pass before filing a statement of defence and it was the Respondents who continued to ask for the Appellants’ expert opinion before proceeding to examinations for discovery. [ 39 ] My conclusion regarding excusable delay means that it is not strictly necessary to consider the third step of the International Capital analysis, which requires the weighing of all relevant factors to determine whether it is in the interests of justice that the matter proceed.

I must say, however, that I question the Chambers judge’s analysis on this point for three reasons. [ 40 ] First, the Chambers judge characterized this case as one that has “hardly progressed” (para. 27) and one where “the plaintiffs did not advance their claim through the court system, resulting in the first 8.5 years of this action going only to mandatory mediation and exchange of documents” (para. 27). These statements can only be considered accurate if one discounts completely the pre-trial settlement process and the need to conduct effective examinations for discovery.

This is simply not a case where a plaintiff filed a statement of claim and then waited eight and one-half years before moving to the examination for discovery stage. Considerable time and effort was expended to make the settlement process meaningful. If anything, the Appellants—and indeed the Respondents— behaved responsibly in trying to give effect to the possibility of settlement or abandonment based on expert advice.

Indeed, the civility demonstrated by the lawyers in the letters appended to the various affidavits is to be commended. [ 41 ] Second, the Chambers judge placed an absolute obligation on the Appellants to move the action forward even though the Respondents were asking for the very information and opinions that gave rise to the delay—and did not want to proceed to the examination for discovery stage until that information was obtained.

He wrote, on this point: [29] The Court of Appeal has said that a factor in favour of the application is whether the defendants were pressuring the plaintiffs to move the file forward. The defendants were pressing the plaintiffs for information . The defendants did not, however, promote the court action moving forward and, instead, suggested that it should not move forward until such time as damages had been quantified and properly established. The plaintiffs agreed with this approach. Again, tactically and financially, it made sense that the plaintiffs do not move forward if they suffered no damages.

By October 2006, however, they had paid [a] substantial amount to settle the CRA [Canada Revenue Agency] claim and, surely by then, should have been in the position to follow the court process whether acquiesced by the defendants or not . The plaintiffs however, chose to obtain an expert analysis which delayed the matter for a further two years without an adequate explanation for the reasons for the delay other than to indicate that their accounting advisors were moving slowly. From a

factual basis, this is simply not acceptable. The defendants are not responsible for the lack of plaintiffs’ inaction. The defendants did notsit idly by but were, in fact, proactive in attempting to get information from the plaintiffs as it relates to the viability of the claim.(emphasis added) [42] The Court in International Capital addressed the question of who bears the responsibility for delay in moving an action forward. While the Court recognized that defendants have no positive obligation to move litigation forward, this is a general principle.

AsRichards J.A. made clear, a Chambers judge, assessing the context in which delay arises, must consider not only the plaintiff’s actionsbut those of the defendant: [45] (

e) The context in which the delay occurred – Defendants are generally understood to have no positive obligation to movelitigation forward. Nonetheless, a court entertaining an application to strike for want of prosecution should note whether the inexcusabledelay took place in the face of pressure from the defendant to move the file ahead. Delay in the shadow of repeated requests from adefendant to get on with things is generally more serious than delay where the defendant has not pressed the plaintiff.

Similarly, if theplaintiff delays unjustifiably in the wake of a failed motion to strike for want of prosecution, such delay would typically be more seriousthan if the application to strike had not been made.

On the other hand, if it can be shown that, for his or her own reasons, a defendantwas content to let a file sit in abeyance, that would weigh in favour of letting a claim proceed. (italics in original; underlining mine) The Respondents did not file their statements of defence until 2007, and thereafter pressed not for the file to proceed with examinationsfor discovery, but to obtain information and to obtain or gain access to an expert opinion regarding their liability. They received exactlywhat they had pressured the Appellants to produce.

The only reasonable conclusion is that the Respondents were content to await thereceipt of further information and the expert’s opinion—in other words, to allow the court process to wait until the issues were clearlyjoined between the parties. [43] Third, the Chambers judge was required to consider the effect of the timing of this Court’s decision in International Capital. It isquite clear that International Capital effected a major change in the law in this jurisdiction. The Court issued that decision on April 6,2010.

Prior to that date, applications to strike were considered according to the framework established by Carey v. Twohig, (SK KB), [1973] 4 W.W.R. 378 (Sask. Q.B.), as affirmed in Humboldt Flour Mills Co. Ltd. v. Ewen (1984), (SKCA), 36 Sask. R. 81 (C.A.) at para. 4. The Carey v. Twohig analysis required a consideration of whether the defendant would sufferserious prejudice arising from the delay if the claim were not struck. Many stale-dated actions were saved on the basis that the defendantcould not establish serious prejudice with such a stringent test.

In International Capital, the Court stressed the importance of seriousprejudice but reduced its status to that of one factor, among many, which must be considered. [44] It is significant that the Court in International Capital was called upon to assess a delay of 15 years according to the analysis inCarey v. Twohig. Applying that analysis, the Court concluded that the claim could not be struck for want of prosecution—and that theplaintiffs in that case could not be subjected to the new regime because the parties’ expectations were based on the more leisurely pacefor the practice of law sanctioned by Carey v.

Twohig. [45] If one examines the record of events in the within appeal, and compares what happened before April 6, 2010 with what happenedafter, the effect of International Capital is evident. After April 6, 2010, Mr. Pinder took a direct hand in moving the matter along toobtain the expert’s opinion, which was obtained on December 8, 2010, approximately eight months later.

Once in receipt of that opinion,the Appellants’ counsel demanded dates for discovery and, when they were not forthcoming, served a Notice of Intention to proceed andfix dates. [46] These three factors, taken together with the lack of prejudice to the Respondents, should have resulted in the dismissal of theapplication to strike. This is particularly so in light of the finding that the Respondents’ reputations were not affected by the delay. Inshort, even if the delay were inexcusable, the action should have survived the balancing required at the third stage of the analysis.

Anyother conclusion simply would not be consistent with the weighing of the equities and would be unjust—particularly in light of the resultin International Capital. V. Conclusion [47] I would allow the appeal with costs in this Court on column 3 and in the Court below on the appropriate tariff. DATED at the City of Regina, in the Province of Saskatchewan, this 23rd day of April, A.D. 2013. __ “Jackson J.A.”______________________ Jackson J.A. I concur __“Lane J.A.” ________________________ Lane J.A.

I concur ___ “Richards J.A.” _____________________ Richards J.A.