1215972 Alberta Ltd., 1432416 Alberta Ltd., Nargis Abdulhussein, Allaudin Abdulhussein v. Sameer Abdulhussein, 2015 SKCA 115

Court of Appeal for Saskatchewan Docket: CACV2786 Citation: 1215972 Alberta Ltd. v Rezz Investments Ltd. , 2015 SKCA 115 Date: 2015-11-04 Between: 1215972 Alberta Ltd., 1432416 Alberta Ltd., Nargis Abdulhussein, Allaudin Abdulhussein and Sameer Abdulhussein Prospective Appellants (Defendants) And Rezz Investments Ltd.

Prospective Respondent (Plaintiff) Before: Richards C.J.S. (in Chambers) Disposition: Application dismissed Written reasons by: The Honourable Chief Justice Richards Application: QBG 925 of 2013, J.C. of Saskatoon Heard: 28 October 2015 Counsel: Michael Russell for the Prospective Appellants George Green for the Prospective Respondent Richards C.J.S. I. Introduction [ 1 ] The applicants 1215972 Alberta Ltd. et al are defendants in an action commenced by the respondent, Rezz Investments Ltd. They seek leave to appeal from a decision rendered in Queen’s Bench Chambers on October 2, 2015.

In material part, that decision concerns an application by Rezz Investments Ltd. to strike the applicants’ statement of defence and counterclaim because they failed to provide adequate disclosure. The Chambers judge gave the applicants 60 days to provide additional disclosure and provided that, if the applicants and Rezz Investments Ltd. could not agree this had been done, either of them could return to Chambers. The decision also awarded solicitor-client costs against the applicants. II. background [ 2 ] The factual underpinnings of this application are somewhat complex.

However, it is not necessary to lay them out. Suffice it to say that Rezz Investments has sued the applicants in relation to dealings between the parties in 2007 and 2008 concerning the purchase and sale of land. [ 3 ] Rezz Investments Ltd. was not satisfied with the document disclosure provided by the applicants. As a result, it brought an application to compel further and better document production pursuant to Rules 5-12 and 5-14 of The Queen’s Bench Rules . On April 22, 2015 Currie J. released a fiat granting the relief sought by Rezz Investments.

He wrote as follows at paras. 18–23: [18] In fact, though, the application for

summary judgment has not been decided, or even argued. In considering the application for production, I must consider the pleadings as they stand at present. At present, the pleadings identify issues that make the documents identified by the plaintiff relevant for production, as outlined in the June 18, 2014 letter (exhibit EE to the affidavit of Salima Dhalla) and in the brief of law filed on behalf of the plaintiff. The principle of proportionality does not change this circumstance.

The principle itself is applied in the context of the pleadings. [19] Second, the defendants say that they are trying to get some of the documents from other parties. If so, the defendants do not have much to show for their efforts. Since receipt of the June 18, 2014 letter the defendants will have been aware of the likelihood – if not the certainty – that they must seek and produce such documents.

It is evident that unless they are motivated by the court to do better, years from now this action could still be awaiting the defendants’ document production. [20] The plaintiff’s application with respect to document production is well-founded. The defendants have not put any evidence before me indicating that the plaintiff’s request for further production is inappropriate or unduly onerous. Nor have the defendants put evidence before me indicating that they have made much of an effort to attempt to locate documents that they are obliged to locate.

The plaintiff is entitled to the relief that it seeks in that regard. [21] As I set out below, the plaintiff will have an order much in the form of the draft that it has submitted. One modification to the draft order is that I am not providing for the automatic striking out of pleadings in the event of default.

It is preferable to require further direction from the court in the event of the defendants defaulting on their obligations under the order. [22] In that regard, I observe that if the defendants default, and if they do not have a good explanation for the default, the judge hearing the plaintiff’s subsequent application is likely to be receptive to the suggestion of striking out the defendants’ pleadings.

[23] As to the timing of the defendants’ compliance with the order, I am using the time frame proposed by the plaintiff, slightly enlarged. This is a reasonable time frame given the defendants’ knowledge of their production obligations since at least June 2014. [ 4 ] The formal order embodying Currie J.’s decision required that 13 further categories of documents were to be produced by the applicants to Rezz Investments by June 4, 2015.

Some further production took place but Rezz Investments was of the view that disclosure remained incomplete and that Currie J.’s order had not been satisfied by the applicants. [ 5 ] Rezz Investments then brought a motion to strike the applicants’ statement of defence and counterclaim pursuant to Rule 5- 14 on the basis that the applicants had not complied with Currie J.’s order.

The Chambers judge found that the applicants’ attempts to provide disclosure had been “half-hearted to say the least” and that they had failed to provide important portions of the documents they were obliged to disclose. [ 6 ] However, the Chambers judge did not strike the applicants’ pleadings as had been requested by Rezz Investments. Rather, in light of the drastic effect of an order striking a statement of defence, he gave the applicants additional time to comply with what he saw as their disclosure obligations. He ordered as follows: (

a) The defendants shall have 60 additional days from the date hereof to comply with the order of Mr. Justice Currie of April 22, 2015. If the parties cannot agree that full compliance and disclosure has been provided to the plaintiff, either party may apply to have the matter returned to this court, at the expiration of the 60-day time period. (

b) I shall remain seized with this application to ensure compliance. (

c) The defendants shall pay the plaintiff’s solicitor/client costs of this application to date within 30 days. III. the application [ 7 ] The test for deciding whether to grant leave to appeal is well known. It was summarized by Cameron J.A. in Rothmans, Benson & Hedges Inc. v Saskatchewan , 2002 SKCA 119 at para 6 , 227 Sask R 121 and involves consideration of both the merit and importance of the proposed appeal. [ 8 ] The applicants submit their proposed appeal has merit because: (

a) The Chambers judge made determinations of fact in the face of conflicting affidavit evidence and, further, did so on the basis of findings of credibility when no such findings were proper or possible; (

b) The Chambers judge erred in principle by turning the document disclosure and production process into a “fishing expedition”; (

c) The Chambers judge ordered further disclosure when such disclosure was impossible; (

d) The Chambers judge fundamentally misapprehended the record in several respects and made unreasonable findings of fact; and (

e) The Chambers judge awarded solicitor-client costs without explanation and with no proper basis. [ 9 ] The applicants also suggest the proposed appeal is important because it will, among other things, allow this Court to examine and clarify the proper method of proceeding when a Chambers judge is faced with conflicting affidavits and to ensure that the document disclosure and production exercise does not assume an improper role in the litigation process. [ 10 ] A preliminary review of the decision of the Chambers judge seems to suggest there is merit in a number of the applicants’ specific criticisms of how he handled the record. (I will not recite these points

chapter and verse.) However, in my view, there is nonetheless a major stumbling block in the way of granting the applicants leave to appeal. [ 11 ] The reality here is that the Chambers judge has given the applicants additional time to make further disclosure.

The reality as well, as I understand it, is that a good deal of his concern (as was the case with Currie J.) is not so much the specific fact that the applicants have not disclosed various categories of documents but rather that they have failed to adequately explain the steps they have taken to determine if they might be in possession or control of those documents.

Put in very simplistic terms, it is one thing to say “I do not have any documents” and another to say “I have made inquiries of A and B, investigated B and C, and examined D and E but cannot locate any documents”. (I appreciate, of course, that the affidavit of Sameer Abdulhussein dated June 23, 2015 does do some of this.) [ 12 ] At the end of the day, I am reluctant to grant the applicants leave to appeal with respect to the substance of the Chambers judge’s order concerning disclosure. First, taking those issues on appeal will obviously delay the resolution of the litigation and add extra cost.

Second, and much more importantly, although the Chambers judge expressed his views relatively clearly, he has not yet made any decision on Rezz Investments’ application. It may be that, by adding some additional depth to their affidavits in relation to the efforts they have made to locate documents, and by pointing out some of the errors that the Chambers judge may have made in his treatment of the record, the applicants will avoid having their pleadings struck and be able to move forward with the litigation.

In short, this application seems premature in an important way. [ 13 ] The Chambers judge’s order granting solicitor-client costs is troubling in that it appears to ignore what this Court said recently in Hope v Gourlay , 2015 SKCA 27 at paras 47–48 , 384 DLR (4th) 235 about another order for solicitor-client costs made by the judge. Nonetheless, it seems to me that this is an issue which can be pursued by the applicants, on appeal if necessary, once Rezz Investments’ claim is finally resolved.

IV. conclusion [ 14 ] The application for leave to appeal is dismissed. Rezz Investments is entitled to costs. I fix them at $1,200. “Richards C.J.S.” Richards C.J.S.