Docket: CACV2420 MFI AG Services Ltd. Prospective Appellant - v. -, 2013 SKCA 67

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2013 SKCA 67 Date: 2013-06-19 Between: Docket: CACV2420 MFI AG Services Ltd. Prospective Appellant - and - Lyndon Joseph Sotkowy and Warren James Sotkowy Prospective Respondents - and – Nicholas P. Robinson, Merchant Law Group LLP (Prospective Respondents) Before: Jackson J.A. (in Chambers) Counsel: Khurrum Awan for the Prospective Appellant Kevin Clarke for the Prospective Respondents Stephen McLellan for Saskatchewan Lawyers’ Insurance Association Application: From: 2013 SKQB 161 Heard: June 12, 2013 Disposition: Application dismissed Written Reasons: June 19, 2013

By: The Honourable Madam Justice Jackson Jackson J.A. [1] MFI Ag Services Ltd. applies for leave to appeal paras. 2, 3(

c) and 3(b)(ii)-(vi) of the Order of Chicoine J. dated May 13, 2013and related portions of his Fiats dated April 29, 2013 (the “Fiat”) (indexed as 2013 SKQB 161) and May 13, 2013 (the “SupplementaryFiat”). In support of this application, MFI has filed an affidavit exhibiting one of the lease agreements marked with handwrittennotations. [2] The background facts are fully set out in the Fiat. It should be noted, in particular, that the action was commenced February 29,2012 and examinations for discovery were held on September 4, 2012.

The application to amend was brought in March of 2013, after apre-trial settlement conference date had been fixed for April 19, 2013. In light of the application to amend, the scheduled pre-trialsettlement conference had to be postponed. [3] MFI applies for leave to appeal the Order and Fiats to the extent that they: (

a) dismissed its application to add Nicholas P. Robinson and Merchant Law Group LLP (“Previous Counsel”) to its action against theSotkowys; (

b) denied leave to amend the First Amended Statement of Claim, (the “Previous Claim”) as sought in paragraphs 42(d)-(

g) of theproposed Second Amended Statement of Claim, which is Exhibit “1” to the Affidavit of Joseph Melnick on the Queen’s Bench file, (the“Proposed Claim”); (

c) denied related amendments in paragraphs 7, 43 and 56 of the Proposed Claim; and (

d) ordered related changes in paragraphs 35, 44, 49, and 57 of the Proposed Claim. [4] At the outset of hearing this application for leave to appeal, I raised with counsel for MFI whether the refusal to add a party is aninterlocutory matter, having regard for Norsask Forest Products Inc. v. Iron (1993), (SK CA), 109 Sask. R. 49(C.A.). He indicated that he was content to have the determination of whether leave to appeal should be granted governed by the testestablished for interlocutory matters in Rothmans, Benson & Hedges Inc. v. Saskatchewan, 2002 SKCA 119, 227 Sask.

R. 121. [5] The crux of MFI’s application for leave to appeal to the Court of Appeal is the dismissal of its application by Chicoine J. to addPrevious Counsel and his denial of the amendments sought in paragraphs 42(d)-(

g) of the Proposed Claim. Paragraphs 42 and 43 fromthe Proposed Claim are reproduced in Appendix “A.” These paragraphs were struck in their entirety. MFI appeals the refusal not toamend the First Amended Claim by adding 42(d)-(

g) only. The other paragraphs of the Proposed Claim, mentioned in paragraph (

c) and(

d) above, originate from the denial of those amendments. MFI is not seeking to appeal any other aspects of the Order and Fiats. [6] MFI summarizes its position in the action as follows: (

a) it held an option to purchase the Pilipchok Lands, which was exercisable within a reasonable period of the expiry of the applicablelease (being the Pilipchok Lease or, alternatively, the Replacement Lease) on or around April 30, 2012 (see: Proposed Claim, at paras.38-39; and the Second Amended Claim, which is on the Queen’s Bench file, at paras. 36-37); (

b) it held an option to purchase the Sotkowy Land, which was exercisable within a reasonable period of the expiry of the SotkowyLease on or around April 30, 2012 (see: Proposed Claim at para. 40; Second Amended Claim at para. 38). (

c) MFI exercised the applicable options as a result of the substantial performance of its obligations under the applicable leases (see:Proposed Claim at para. 41; Second Amended Claim at para. 39). (

d) in the alternative (to subparagraph(c)), if MFI did not strictly comply with the terms of the applicable options, any deficiencies incompliance were caused by the conduct of Sotkowys so that equitable grounds for relieving from strict compliance exist (see: ProposedClaim at para. 42). (

e) in the further alternative (to subparagraphs (

c) and (d)), if MFI did not exercise the applicable options and equitable grounds forrelieving from strict compliance do not exist, the failure to do so was due to the professional negligence of Previous Counsel (see:Proposed Claim at para. 43). [7] MFI asserts that the denial of leave to add paragraphs 42(d)-(

g) and the refusal to add Previous Counsel are interwovenquestions. I agree, but the fact that they are interwoven is not, in my view, of assistance to MFI. In my view, paragraphs 42(d)-(g)would be essential for MFI to add if Chicoine J. had decided to add Previous Counsel, but do not have the same status if his decision notto add Previous Counsel is sustained.

Thus, the first issue that I must decide is whether Chicoine J.’s decision not to add PreviousCounsel satisfies the twin tests of sufficient merit and sufficient importance established by Rothmans. [8] I have concluded that the issue of whether Chicoine J. erred by refusing to add Previous Counsel is not of sufficient merit towarrant consideration by a panel of the Court and is not of sufficient importance to the litigation or to the practice of law. As often is thecase, these principles are linked, and it is convenient to start with the question of merit.

[ 9 ] At bottom, as Chicoine J. amply demonstrated, whether to add a party is essentially a discretionary decision. After thoroughly analyzing the case law and facts, he decided that “the expense and delay that would be caused by compelling the plaintiff to bring a separate action against the proposed defendants, Mr. Robinson and Merchant Law Group LLP would be greatly out of proportion to the inconvenience, expense or embarrassment which Mr. Robinson and Merchant Law Group LLP would be put if the actions were tried together” (para. 44).

He also took into consideration “the substantial delay that would be caused by adding the plaintiff’s previous counsel given that these parties have already completed mediation, discovery of documents, examinations for discovery and reply to undertakings” (para. 44). Given these reasons, it is unlikely that the Court would intervene, having regard for the standard of review with respect to such a decision.

I also agree with the Sotkowys’ counsel that the addition of Previous Counsel as a party will fundamentally change the nature of the action as MFI is alleging not just failure to exercise the option but also conduct in the litigation. This shift in focus will add significantly to the delay. [ 10 ] The parties that MFI seeks to add are not essential to its litigation against the Sotkowys and the reason that MFI seeks to join them is to forestall a defence of res judicata .

In my view, any concern that MFI has in that regard, which may in and of itself be questionable, is unlikely to overcome Chicoine J.’s conclusions regarding the balance of convenience. [ 11 ] Leave can be granted even if the grounds of appeal are not strong, particularly where the issue is novel or has not yet been considered by the Court. In this case, however, I note, as did Chicoine J., that this litigation concerns the sale of farm land.

In such circumstances, the litigation should not be held in abeyance while the Court considers a novel point, which is unlikely to succeed given the discretionary nature of the decision and the reasons given for denying relief. [ 12 ] I now turn to the refusal to add para. 42(d)-(g). I have also concluded that leave should not be granted in relation to this issue for similar reasons. [ 13 ] The provisions of the Proposed Claim that Chicoine J. refused to add read as follows: 42.

In the alternative, if the Plaintiff did not strictly comply with the terms of the Option, or alternatively the Replacement Option, and the Additional Option, any deficiencies in compliance were caused by the conduct of the Sotkowy Defendants, the particulars of which include: … d. attempting to secure the Plaintiff’s execution of the Replacement Lease; e. unilaterally inserting handwritings into the back of the Pilipchok Lease, the Replacement Lease and the Sotkowy Lease; f. breaching the Pilipchok Lease and the Option, or alternatively the Replacement Lease and the Replacement Option, and breaching the Sotkowy Lease and the Additional Option, including the expiry dates of these leases and the options; and g. asserting, in response to correspondence sent by Previous Counsel, and in their pleadings and evidence filed in this action, that the Plaintiff had no rights to exercise the Option, or, alternative the Replacement Option, and the Additional Option. [ 14 ] MFI submits that the additional clauses would allow it to assert that any deficiencies in compliance with respect to the option were caused by the conduct of the Sotkowys such that equitable grounds for relieving from strict compliance exist. [ 15 ] Chicoine J. gave these reasons for refusing to amend the Statement of Claim: [50] The plaintiff has filed a draft second amended statement of claim which includes a number of amendments which it argues are necessary to determine the real questions in issue between the parties.

The defendants suggest that the plaintiff is seeking to effectively amend the entirety of its claim by adding new remedies and resurrecting remedies which were originally claimed and then abandoned. I have decided that the plaintiff should be allowed to amend those portions of the claim which relate to the farm leases and the options to purchase. No amendments will be permitted which related to the addition of Valley View Wreckers Ltd. or the plaintiff’s previous counsel .

I am further of the opinion that no amendments will be allowed with regard to the manner in which the titles to the land in question came to be registered in the name of the defendants.

The issue in this action relates principally to the terms of the option to purchase included in the farm leases, including issues regarding the date by which and the manner in which the option was to be exercised . [emphasis added] When addressing specifically the amendments to s. 42, Chicoine J. wrote: [51] Given the large number of amendments proposed, I will refer to the draft Second Amended Statement of Claim paragraph by paragraph in order to clearly indicate which amendments will be allowed and which amendments will not. My determinations are as follows: … M.

The proposed amendment indicated as para. 42 will not be allowed for the reason that the defendants’ motive for transferring the land into their own names is not relevant to the real issue in question, namely, were the options in the lease agreements exercised by the plaintiff within the time provided. As counsel for MFI points out, the amendments to para. 42(d)-(

g) relate solely to whether the Sotkowys’ actions, taken after the lands

had already been transferred to them, provide equitable grounds for relief from strict compliance with the option. [ 16 ] Insofar as Chicoine J. may not have stated all of the issues that divide the parties, I agree with counsel for the Sotkowys that the determination of the issues in this litigation will be made by the trial judge and he or she will not be bound by any comments made in the reasons under appeal. Further, nothing precludes MFI from leading relevant evidence. Indeed, as counsel for the Sotkowys point out, all but one of the statements mentioned in para. 42(d)-(

g) are mentioned elsewhere in the Second Amended Claim (see paras. 15, 33-35 and 45) and serve to support the cause of action for a breach of trust in para. 45. Para. 42(

e) will form part of the evidence of the Sotkowys. [ 17 ] I also agree with Sotkowys’ counsel that much of what is said in para. 42(d)-(

g) has the character of evidence and may very well not need to be pled in any event (see: Rule 139(1) of the Queen’s Bench Rules). [ 18 ] Finally, I note that following receipt of Chicoine J.’s decision, counsel noted that one of the amendments allowed at para. 51 of the Fiat resulted in a reference at para. 49 of the Second Amended Claim to para. 42, which had not been allowed. Counsel for MFI took the opportunity to invite Chicoine J. to accept the proposed amendments indicated at para. 42(d)-(g).

Chicoine J. corrected the reference in para. 49 but declined the invitation to reverse his decision regarding para. 42(d)-(g). Thus, not only is this decision clearly interlocutory, it is the product of reasoned re-consideration. [ 19 ] In reviewing this matter, I am reminded of the prevailing jurisprudence in this Court, to the effect that “the power to grant leave has been taken to be a discretionary power exercisable upon a set of criteria which, on balance, must be shown by the applicant to weigh decisively in favour of leave being granted” ( Rothmans, supra at para. 6).

In short, I am not persuaded that the criteria of merit and importance weigh decisively in favour of leave being granted with respect to adding Previous Counsel or amending the First Amended Claim. [ 20 ] The application is dismissed with costs in the usual way. DATED at the City of Regina, in the Province of Saskatchewan, this 19th day of June, A.D. 2013. __ “Jackson J.A.” __________________ Jackson J.A. Appendix A 42.

In the alternative, if the Plaintiff did not strictly comply with the terms of the Option, or alternatively the Replacement Option, and the Additional Option, any deficiencies in compliance were caused by the conduct of the Sotkowy Defendants, the particulars of which include: a. transferring the Pilipchok Lands on the basis of the Transfer Documents, which had been modified from documents executed by Mr. Pilipchok in order to transfer lands other than the Pilipchok Lands to the Sotkowy Defendants; b. in the alternative, securing Mr.

Pilipchok’s execution of the Transfer Document on the date of his death as a result of undue influence or duress; c. transferring the Pilipchok Lands to themselves in contravention of the terms of Mr.

Pilipchok’s will and the implied and express terms of the Pilipchok Lease; d. attempting to secure the Plaintiff’s execution of the Replacement Lease; e. unilaterally inserting handwritings into the back of the Pilipchok Lease, the Replacement Lease and the Sotkowy Lease; f. breaching the Pilipchok Lease and the Option, or alternatively the Replacement Lease and the Replacement Option, and breaching the Sotkowy Lease and the Additional Option, including the expiry dates of these leases and the options; and g. asserting, in response to correspondence sent by Previous Counsel, and in their pleadings and evidence filed in this action, that the Plaintiff had no rights to exercise the Option, or, alternatively the Replacement Option, and the Additional Option. 43.

In the further alternative, if the Option, or alternatively the Replacement Option, and the Additional Option, are found not to have been exercised due to a failure to take any necessary steps on, around or subsequent to April 1, 2012, and the Plaintiff has suffered

damages as a result, the Plaintiff says that such failure is the result of the breach of contract and negligence of Previous Counsel, the particulars of which include, inter alia : (

a) Previous Counsel owed the Plaintiff a duty of care, at law and pursuant to the retainer (the “Retainer”) between Previous Counsel and the Plaintiff, to take all steps necessary for the exercise of the applicable options or, alternatively, to advise the Plaintiff of all the steps necessary to exercise the applicable options; (

b) In breach of the duties owed to the Plaintiff, pursuant to the Retainer and at law, Previous Counsel: i. advised the Plaintiff that no further steps were required or were possible, in order to exercise the applicable options due to the sale of the Pilipchok Lands and the Sotkowy Land; and ii. in the alternative, failed to advise the Plaintiff of steps required to exercise the applicable options.