Ashton Service Group Inc. v. Vaughan

2021 BCSC 2656 Ashton Service Group Inc. v. Vaughan IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Ashton Service Group Inc. v. Vaughan, 2021 BCSC 2656 Date: 20211216 Docket: S-2013159 Registry: Vancouver Between: Ashton Service Group Inc. Plaintiff/Appellant And: Keith Vaughan, Vaughan Ventures Ltd., Gavin Allan Vaughan, Nick Vaughan, Eddie Vaughan, 538112 Alberta Ltd., and ABC Company Defendants/Respondents Before: The Honourable Mr. Justice G.R.J. Gaul (appearing by videoconference) On appeal from: Decision of Master, Supreme Court of British Columbia, June 23, 2021 (Ashton Service Group Inc. v. Vaughan, 2021 BCSC 1228) Oral Reasons for Judgment (In Chambers) Counsel for the Plaintiff/Appellant, appearing by videoconference: R. Islam Counsel for the Defendants/Respondents Keith Vaughan and 538112 Alberta Ltd., appearing by videoconference: D. Jonson Place and Date of Trial/Hearing: New Westminster, B.C. October 6, 2021 December 3, 2021 Place and Date of Judgment: Vancouver, B.C. December 16, 2021 [1] THE COURT: These reasons address the appeal by the plaintiff Ashton Service Group ("Ashton"), from the interlocutory order of Master Taylor dated 23 June 2021. Background [2] Ashton is in the business of installing and repairing plumbing and HVAC systems in commercial and residential properties. [3] In February 2015, Ashton and the defendant Keith Vaughan appear to have entered into a contractual agreement whereby Mr. Vaughan became Ashton's senior project manager and estimator. I say "appear to have", because the extent and terms of that agreement appear to be in dispute. [4] Over time, the professional relationship between Ashton and Mr. Vaughan soured, with Ashton alleging Mr. Vaughan was improperly diverting business away from it for his own benefit and that of the other defendants. [5] In its notice of civil claim filed in December 2020, Ashton alleges, amongst other things: a) breach of contract, b) breach of duty of good faith in contract, c) breach of fiduciary duty, d) breach of confidence, e) unjust enrichment, f) conspiracy, g) unlawful interference in contractual relationships, h) unlawful inducement to breach contract, and i) conversion. [6] On 10 February 2021, counsel for the defendants Mr. Vaughan and 538112 Alberta Ltd. ("538"), wrote to counsel for Ashton seeking particulars. [7] On 1 March 2021, counsel for Ashton, not counsel before me, responded to the request for particulars. The further reply from counsel for Mr. Vaughan and 538 noted that the response letter from Ashton's counsel was insufficient and did not provide all of the particulars being sought. Ashton's counsel took the position that the necessary particulars had been provided and that the issue could be revisited after examination for discoveries had been completed. [8] Ashton's position prompted the application by Mr. Vaughan and 538 that was brought before Master Taylor. The application sought to have certain portions of Ashton's notice of civil claim struck. In the alternative, it sought an order that Ashton provide particulars relating to specific portions of the claims being made against the defendants. The latter relief was the one the defendants focused upon before Master Taylor. The Master's Decision [9] Master Taylor began his analysis by referencing Supreme Court Civil Rule 3‑7. This Rule addresses the requirements for particulars and the procedure for obtaining orders compelling the provision of particulars. Master Taylor also noted the purpose and function of particulars, referencing some of the jurisprudence in this area, including Cansulex Limited v. Perry, [1982] B.C.J. No. 369 (C.A.) and Goriuk v. Turton, 2011 BCSC 659. He then concluded: [16] Particulars are required where they are necessary to inform a party of the case it has to meet and to assist it to properly prepare for trial. [17] "Material facts are distinct from particulars. A material fact is one that is essential in order to formulate a complete cause of action. Particulars are information which allow a party to understand the case he or she must meet.": Sidhu v. Hiebert, 2018 BCSC 401 at para. 36. [19] The applicant's demand for particulars should not be refused on the basis that what is sought is best known to the party demanding it: G.W.L. Properties Ltd. v. W.R. Grace & Co. of Canada Ltd. (1993), 79 B.C.L.R. (2d) 126 (S.C.). [20] Rule 3-7(18) requires that particulars be pleaded where a party "relies on misrepresentation, fraud, breach of trust, wilful default or undue influence, or if particulars may be necessary, full particulars, with dates and items if applicable, must be stated in the pleading". [21] Formal particulars form part of the pleadings. Letters from counsel which contain alleged particulars are not so because the letters do not form part of the pleadings. [22] Serious allegations of misconduct need to be properly laid out in the pleadings so that the defendant knows what case it has to meet. [27] I believe the decision of Master Baker [in Sutherland v. Banman, 2008 BCSC 1194] to be correct in the circumstances of that case. The defendants were merely seeking an answer to what damages the plaintiff was seeking for loss of earnings, past and prospective, loss of income earning capacity, and loss of opportunity to earn income. The particulars were being sought after the defence had conducted an examination for discovery of the plaintiff and then adjourned it after asking the plaintiff over 1300 questions. [28] In my view, the particulars sought in the instant case are distinguishable. Particulars are sought where the torts of unlawful interference with contractual relations between Ashton and its employees, contractors, and customers, and unlawful inducement of the plaintiff's employees to breach their contracts are alleged. In both cases the plaintiff simply states a conclusion of law without providing the material facts of the allegations. Thus, the requested particulars in para. 2(a)-(c) of the notice of application seeking the identity of the employees, the contractors, and customers should be particularized, and those particulars should be provided within 14 days of the date of these reasons. Issues on Appeal [10] Ashton appeals from the order of Master Taylor. The defendants Mr. Vaughan and 538 are the respondents. [11] In his statement of argument, counsel for Ashton alleges that the master erred by: (1) finding the plaintiff could not provide particulars by way of a letter from counsel; (2) ordering particulars without considering the particulars already provided by the plaintiff by way of a letter from counsel and contained in the pleadings; (3) incorrectly setting out the legal test for particulars; (4) failing to apply the correct legal test; (5) finding that particulars provided by letter could not form part of the Trial Record; (6) ordering particulars without any basis in law or application of the law to the facts; and (7) by effectively ordering the plaintiff to amend its pleading on an application under Rule 3-7 by refusing to consider particulars by way of a letter from counsel. Discussion Standard of review [12] The leading case on the applicable standard of review of interlocutory orders made by masters, continues to be Abermin Corp. v. Granges Exploration Ltd., (1990), 45 B.C.L.R. (2d) 188 (S.C.) where Mr. Justice Macdonald concluded: An appeal from a Master's order in a purely interlocutory matter should not be entertained unless the order was clearly wrong. However, where the ruling of the Master raises questions which are vital to the final issue in the case, or results in one of those final orders which a Master is permitted to make, a rehearing is the appropriate form of appeal. Unless an order for the production of fresh evidence is made, that rehearing will proceed on the basis of the material which was before the Master. In those latter situations, even where the exercise of discretion is involved, the judge appealed to may quite properly substitute his own view for that of the Master. [13] Ashton submits that the standard of review on the present appeal is "correctness" and therefore this appeal should proceed by way of a de novo rehearing. In support of this argument, it relies upon the decision in Camfrey Resources Ltd. v. Werbes, [1993] B.C.J. No. 632 (S.C.). In particular, counsel for Ashton points to the following portions of Mr. Justice Errico's reasons: [3] In the Abermin decision the matter was clearly interlocutory, being an appeal from a decision of a Master granting an adjournment of application to fix security for costs on certain conditions. In this case, counsel differ on the characterization of the order appealed from. I am persuaded that an order on a motion for particulars raises questions vital to the final issues in the case, because whether or not particulars are ordered defines what the final issues in the case will be. [4] Accordingly, although no fresh material has been tendered on this appeal, this appeal should be considered a rehearing and it is not necessary, for the appellant to be successful, for me to find that the learned Master made an error in principle or which was clearly wrong, but rather I should review the matter and exercise my own discretion. [14] The respondents submit that the applicable standard of review in this case, given its specific circumstances, is the "clearly wrong" standard. In other words, an appeal from an interlocutory order of a master should not be granted unless the reviewing court is convinced the master was clearly wrong. [15] Pointing to more recent jurisprudence, counsel for the respondents submits that the legal principles regarding the applicable standard of review of a master's decision have evolved since Camfrey. In particular, counsel maintains that the features or characteristics of a "purely interlocutory decision" or one that is "vital to the final issue" are not rigid and are dependent on the specific circumstances of the particular case. In this regard, counsel for the respondent cites Martell v. Ewos Canada Ltd. et al., 2003 BCSC 1376, where Mr. Justice Ralph concluded: [25] ... a purely interlocutory matter is one in which the Master's decision does not limit a judge's discretion in determining or disposing of an issue at trial. It is not a question of whether the exploration of helpful or valuable potential evidence might be limited as a consequence of the Master's order. It has more to do with whether issues in an action are precluded by a Master's ruling from being decided at a trial. [16] More recently in Kalafchi v. Yao, 2015 BCCA 524, Mr. Justice Harris explained: [16] Whether an order of a master raises questions which are vital to the final issue in the case will often depend on the factual consequences of the order in the context of the case as pleaded. Those questions cannot properly be answered by adopting rigid categories. There can be no absolute rule that masters' decisions are purely interlocutory or are always temporary or merely effective means to preserve the status quo. Whether they should be seen as interlocutory and subject to the "clearly wrong" test requires case-by-case analysis. [17] Although these remarks were made in the context of a family law case where the master's order related to custody and access, I find the legal principles articulated by Justice Harris are equally applicable to civil law cases such as the one before me. [18] In my opinion, the position advanced by the respondents is the correct one. The order in question is not one that effectively results in a final order nor is it one that is vital to the final issues in the case. In my opinion, the particular circumstances of this case and the factual consequences of the order in question, make it one that falls comfortably into the class of orders that can be fairly and accurately described as "purely interlocutory". [19] Accordingly, I am persuaded that the "clearly wrong" standard of review is the proper one to use on this appeal. [20] The application of this standard brings with it a high degree of deference to the master's decision. As Mr. Justice Mayer noted in Jagpal v. Jagpal, 2018 BCSC 1698: [19] ... A Master's decision can only be found to be clearly wrong where the appellant can demonstrate, with necessary reference to the Master's reasons, that the Master did not consider relevant facts, issues and relevant law - which resulted in a flawed legal analysis ... [21] Let me now address the errors that Ashton alleges Master Taylor committed, keeping in mind the standard of review I have just identified. Did the master err by finding the plaintiff could not provide particulars by way of a letter from counsel? [22] Ashton alleges that Master Taylor erred in concluding that it could not respond to the defendants' demand for particulars by way of a letter from counsel. In my view, Ashton is misconstruing the master's reasons and the principles of law he endeavoured to articulate. [23] In my opinion, it was the master's assessment of the specific correspondence, that being the letter of 1 March 2021 from Ashton's counsel, that led him to conclude that the letter was an improper means of providing particulars. [24] Pursuant to Rule 12‑3(1), the trial record filed with the court must contain "particulars served under a demand, together with the demand made". In my opinion, the master was not clearly wrong when he concluded that a letter like Ashton's counsel letter of 1 March 2021 could not form part of the pleadings and was therefore not a proper means of disclosing the sought‑after particulars. [25] Counsel for the respondents Mr. Vaughan and 538 is correct when he submits that what is needed for the purposes of Rule 12‑3(1) is a clean and clear statement of the particulars that are being provided in response to a demand, and nothing more. In the present case, the letter from Ashton's counsel contains both particulars that are appropriately responsive to some of the defendants' demand, as well as other material that would not properly be included in the trial record. In other words, the particulars contained in the letter of 1 March 2021 need to be lifted from the letter and inserted into a new document that deals exclusively with the demand for particulars and is suitable for inclusion in the trial record. I also agree that counsel should be able to reach an agreement on how this can be done and what the document would look like. I will leave that to counsel. Did the master err by ordering particulars without considering the particulars that had already been provided by way of a letter from counsel and contained in the pleadings? [26] In my respectful view, this ground of appeal has little merit. At paragraph 10 of his reasons, Master Taylor specifically references that Ashton had provided some particulars. Those particulars are no longer disputed, except for the manner in which they will be included in the trial record and presented to the court. [27] What remains are the other classes of particulars or types of particulars that Ashton has refused or failed to provide. In my view, the master was aware of and considered the particulars that Ashton had already provided to the defendants by means of the letter from its counsel. Master Taylor was critical of the manner in which the particulars were provided; he was not critical of the particulars themselves. What he ordered was for Ashton to provide the additional particulars that it had failed or refused to provide. I do not find that the master was clearly wrong in his decision on this point. Did the master incorrectly set out the legal test relating to particulars? [28] In my view, this ground of appeal is markedly similar to the first ground. That is, Ashton's complaint that the master rejected the use of the 1 March 2021 letter as a means of providing particulars. [29] Having carefully read the reasons of Master Taylor, I find no error with respect to the identification of the appropriate legal test. The master referred to the appropriate Rule and addressed the relevant jurisprudence that counsel had drawn to his attention. I am informed on this appeal that the Camfrey decision was not provided to the master. That decision is, I accept, a relevant authority and it would have been best if it had been cited to the master. However, a failure to do so does not automatically mean the master incorrectly identified the relevant legal principles. I am satisfied that Master Taylor was aware of the principles of law that were properly applicable to the particular circumstances of the case before him. In other words, I do not find that he was clearly wrong when he identified the legal test regarding particulars. Did the master incorrectly apply the law relating to particulars? [30] Ashton claims that Master Taylor erred by ordering it to identify for the respondents which terms of the agreement it alleges it had with Mr. Vaughan were expressed and which were implied. Ashton maintains this position because it says the order was made arbitrarily and without reference the facts of the case or the relevant case authorities. I am not persuaded by this argument. [31] The business relationship between Ashton and Mr. Vaughan lasted for approximately five years. In its notice of civil claim, Ashton asserts at part 1, paragraph 3 that "the defendant Keith Vaughan's role with Ashton Service Group Inc. was governed by a contract that included the following express and implied terms". The paragraph continues by providing a list of six terms. [32] The allegations levied against Mr. Vaughan and the other defendants are serious. This is not a simple case involving alleged breach of contract. The plaintiff is in essence alleging malfeasance on the part of Mr. Vaughan and the other defendants. The jurisprudence indicates that the determination of whether particulars ought to be ordered involves a finely contextualized analysis. Given the state of Ashton's pleadings, including what counsel for Mr. Vaughan and 538 accurately describes as the "skeletal contractual pleading", I cannot say that Master Taylor was clearly wrong to order the plaintiff to particularize which terms of the alleged agreement were implied and which were expressed. In my view, this will allow the defendants to respond to the case that is being presented against them. In other words, it will allow them to defend themselves. [33] The plaintiff's claim also includes allegations that Mr. Vaughan misappropriated and diverted tools, materials, and equipment belonging to Ashton for the benefit of the defendants. In his letter of 1 March 2021 responding to the defendants' demand that Ashton particularize its claim by identifying the tools, materials, and equipment that it alleges were wrongfully converted by Mr. Vaughan, counsel for Ashton explained: This is a discovery request rather than a demand for particulars as it pertains to evidence rather then identifying material facts. However, and insofar as it pertains to the plaintiff's claim for special damages, Ashton tools that have not yet been returned by the defendants include: (a) 32mm drill bit; (b) ½" & ¾" drill bits; (c) Milwaukee M12/M18; (d) Ridgid oiler; (e) A14 Air/Acet torch tip; (f) Rigid 24" pipe wrench; (g) Milwaukee M18 bandsaw kit; (h) Ritmo R63 TFE socket fusion welder in case; and (i) Such further and other tools, equipment or materials as the plaintiff may advise. [34] Ashton asserts that this information sufficiently addressed the defendants' demand for particulars and that the master was clearly wrong to have discounted it and order the provision of further particulars. I am not persuaded that the master erred in the manner alleged. In my opinion, the master was correct to order that Ashton identify and particularize the evidence it alleges Mr. Vaughan improperly converted for the defendants' benefits. It is not sufficient, in my view, to list some of the items if it knows there are more. This is particularly so given the allegation against Mr. Vaughan is essentially that he committed civil theft. In such a case, I find no error in the master's decision that Ashton must particularize what items Mr. Vaughan is alleged to have stolen. [35] Ashton alleges that Mr. Vaughan unlawfully interfered with contractual relations between it and its employees, contractors, and customers. Beyond this assertion, there are no details in the pleadings identifying who these employees, contractors, or customers were. The master ordered that Ashton provide particulars relating to the identity of those individuals. In my opinion, he was not clearly wrong to do so. [36] Finally, Ashton claims that Mr. Vaughan unlawfully induced third parties who had entered into contracts with Ashton to breach those contracts. In the demand for particulars, the defendants sought to have Ashton identify the breaches of contract that Mr. Vaughan allegedly induced, as well as the identity of the person or persons, other than Ashton and the defendants, who were involved in those contracts. [37] In his letter of 1 March 2021, counsel for Ashton responded to this demand for particulars, as follows: This demand is unclear. To the extent that it refers to the defendants inducing Ashton employees to breach their contracts the breach(s) would include breach of the duties of loyalty, good faith, and fidelity in addition to such further particulars as the plaintiff may advise. [38] In the notice of civil claim, Ashton identifies three individuals who it alleges received misrepresentations and falsehoods from the defendants concerning Ashton's operations and capabilities. In response to the defendants' demand for particulars of this facet of Ashton's claim, its counsel noted in his letter of 1 March 2021: This demand is unclear. To the extent that it is understood it is answered in the notice of civil claim or above. [39] In my opinion, it was not unreasonable or incorrect for the master to accede to the defendants' request and order Ashton to provide the particulars that the defendants need in order to understand the claims being made against them and to prepare their defences. [40] I cannot say, having considered the materials that were before the master and having reviewed his reasons, that he was clearly wrong in his application of the law to the facts before him or the conclusions that he reached. Did the master err by finding that the particulars provided by letter could not form part of the trial record? [41] This ground of appeal is comparable to the first one raised by Ashton and it suffers from the same misinterpretation of the master's order. Master Taylor did not conclude that as a general proposition of law a letter from counsel can never be a proper means of providing particulars and can never form part of a trial record. A proper reading of his reasons shows that the master concluded that in the circumstances of the present case, the letter dated 1 March 2021 from Ashton's counsel could not form part of the trial record and this was because it contained more than just the sought-after particulars. [42] As I have previously noted in these reasons, the particulars that were contained in the letter can be lifted from it and reformatted so as to ensure that only those portions of the letter properly form part of the trial record. [43] Given the contents of the letter in question, I cannot fault the master or conclude that he was clearly wrong when he decided that it did not constitute a proper means of providing particulars. Did the master err by ordering particulars without any basis in law or application of the law to the facts? [44] This ground of appeal, I say respectfully, is simply a reformulation and repetition of earlier grounds that I have already addressed. [45] I am quite satisfied that the master identified the appropriate legal principles that were applicable to the issues before him. Moreover, I find he applied those principles to the facts as he found them. Nothing in this points to him being clearly wrong in how he approached the analysis or the conclusions he reached. Did the master err by effectively ordering the plaintiff to amend its notice of civil claim? [46] Ashton argues that the master's conclusion that its counsel's letter of 1 March 2021 was not an acceptable means of providing particulars, essentially leaves it with no other option but to amend its notice of civil claim. This, says Ashton's counsel, leaves the plaintiff in an untenable position. However, as counsel for Ashton correctly points out, Master Taylor did not order that the plaintiff's pleadings be amended. [47] At the risk of repeating myself, I find that Ashton has mischaracterized the master's decision and the issue at hand. The particulars provided in the 1 March 2021 letter are appropriate responses to some of the demands for particulars the defendants delivered. That is, they can be used as proper particulars. What is defective is the particular means or vehicle by which they were provided to the defendants. The particulars can, for lack of a better term, be repackaged into a proper format that counsel for the defendants quite rightly submits should be something counsel for both sides should be able to agree upon. [48] The balance of the sought-after particulars that have been ordered to be provided, do not, in my view, compel the plaintiff to amend its notice of civil claim. I am satisfied that Ashton can comply with Master Taylor's order without having to amend its pleadings. It can do so by providing the remaining particulars in a document similar to the one to be used for the particulars that will be lifted from counsel's letter of 1 March 2021. Conclusion [49] Having considered the submissions of counsel and the legal principles articulated in the jurisprudence, I am not convinced that Master Taylor's legal analysis was flawed in any material way. I find he considered the appropriate principles and applied them to the facts as he found them, based on the evidence before him. Having done so, he concluded it was appropriate in the circumstances of this particular case to order Ashton to provide the particulars sought by the defendants. [50] Interlocutory orders of this nature are due significant deference and should only be interfered with on review if the appellant can show the master was clearly wrong. I am not persuaded the master committed the errors Ashton alleges or that he was clearly wrong in his analysis or conclusions. In my opinion, the defendants need the particulars they seek, in order to properly prepare their defence. In other words, I find the master was correct to make the order that he did. [51] I will add, before concluding these reasons, that I agree with the submission of counsel for Mr. Vaughan and 538 that the plaintiff ought to be able to provide additional particulars that they presently do not know but come to their attention after examination for discoveries have been completed. [52] For all these reasons, Ashton's appeal from the order of Master Taylor is dismissed with the court's gratitude for the submissions that counsel presented. [53] Mr. Islam, you are counsel for the appellant. You were able to hear my reasons? [54] CNSL R. ISLAM: Yes, Justice. [55] THE COURT: Mr. Jonson, were you able to hear my reasons? [56] CNSL D. JONSON: Yes, Justice, pardon me, I muted my microphone. [57] THE COURT: Very good. Anything arising, Mr. Islam? [58] CNSL R. ISLAM: I hesitate, but I think I should, which is the matter of costs. [59] THE COURT: Is that something you and your friend discussed? [60] CNSL R. ISLAM: We have not. [61] THE COURT: Mr. Jonson, is that something you and your friend wish to discuss or do you want to address it now? [62] CNSL. D. JONSON: I had sought costs in any event of the cause to Keith Vaughan and 538. Normally costs - the standard order is that it will be in the cause, but in this case where there was an appeal, in my submission it is appropriate to say in any event of the cause. This has been an expensive and long process to get this order for particulars. [63] THE COURT: Mr. Islam? [64] CNSL R. ISLAM: My submission is that it should be in the event of the cause. [65] THE COURT: Sorry, I could not hear you on that one. [66] CNSL R. ISLAM: My submissions are the same as those in my appeal submissions, which are that they should be in the event of the cause. [67] THE COURT: All right. I agree with Mr. Islam. The costs of this appeal will be costs in the cause. "G.R.J. Gaul J."