Andersen Enterprises Ltd. v. Kerrisdale Plaza Projects Ltd.

2009 BCSC 570 Andersen Enterprises Ltd. v Kerrisdale Plaza Projects Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Andersen Enterprises Ltd. v. Kerrisdale Plaza Projects Ltd., 2009 BCSC 570 Date: 20090429 Docket: S063280 Registry: Vancouver Between: Andersen Enterprises Ltd. Plaintiff And: Kerrisdale Plaza Projects Ltd. and The Owners, Strata Plan LMS 3731 Defendants Before: The Honourable Mr. Justice Preston Reasons for Judgment Counsel for the Plaintiff William E. Knutson Counsel for the Defendant, The Owners, Strata Plan LMS 3731 D.K. Plunkett Date and Place of Hearing: February 11, 2009 Vancouver, B.C. [1] In n this action, the plaintiff Andersen Enterprises Ltd. ("Andersen Enterprises") claims damages arising from the subsidence of a building. In April 1999, Andersen Enterprises purchased a property at 2031 West 41st Avenue in Vancouver (the "Premises"). It rented the building to a tenant, Daniadown Quilts Ltd. ("Daniadown"). In 1997, the defendant, Kerrisdale Plaza Projects Ltd. ("Kerrisdale"), had constructed a retail and office building (the "Neighbouring Building") adjacent to the Premises. The individual strata units in the Neighbouring Building were subsequently sold to the defendant Owners, Strata Plan LMS 3731 (the "Strata Owners"). [2] Andersen Enterprises claims that as a result of the excavation and construction of the Neighbouring Building, the soil on the Premises subsided, causing damages to its building. The subsidence

did not become evident until 2001. [3] On this application, the defendant Strata Owners seek a declaration that they may retain Mr. David Smith, P. Eng, a geotechnical engineer, to prepare a report in connection with the subsidence issue. Mr. Smith was previously retained by counsel for Andersen Enterprises to prepare a report on that issue. [4] Daniadown and Andersen Enterprises are related companies owned by members of the Andersen family. Andersen Enterprises is a shareholder in Daniadown which carries on business at 15 separate stores. Andersen Enterprises conducts virtually no business other than owning the Premises. [5] In 2003, Ms. Katherine Andersen, a director of Daniadown and shareholder in both Daniadown and Andersen Enterprises, retained Fasken Martineau DuMoulin ("Faskens"), with respect to subsidence damage to the Premises. Faskens wrote to Mr. Smith's engineering firm on October 22, 2003 retaining them to conduct an investigation with respect to the geotechnical aspects of the subsidence problem on the Premises. [6] Attached to Faskens' letter of instruction to Mr. Smith's firm was a summary, prepared by the plaintiff, outlining the subsidence problem together with a project report addressing the question of remediation. [7] Mr. Smith prepared a report (the "Report") and provided it to Faskens on April 12, 2004. The Report expresses an opinion about whether an

action with respect to subsidence was likely to succeed. [8] Nothing turns on the fact that the Report and Faskens' letter of instruction to Mr. Smith's firm references Daniadown and not Andersen Enterprises as the client. The Report was clearly prepared for plaintiff's counsel. [9] Andersen Enterprises later sought other counsel and this action was commenced. [10] The Strata Owners wish to retain Mr. Smith to prepare a report for them on terms that he be enjoined from providing them with confidential information obtained in the course of his earlier retainer by the plaintiff. [11] Mr. Smith's expertise is not unique. There are a number of experts who could conveniently provide an opinion on the subsidence problem involved in this litigation. However, Mr. Smith did have an opportunity, because of his timely retainer by the plaintiff, to view the Premises and the Neighbouring Property at an earlier time than is now possible five years later. Mr. Smith has told counsel for the Strata Owners that he did not discuss strategy with counsel for the plaintiff. [12] This application brings into conflict two established principles: (1) the proposition that there is no property in a witness, and (2) where an expert has provided advice to a party that may guide a party's strategy in the litigation, the courts are reluctant to permit another party to the litigation to retain that expert to

provide an opinion in the litigation. [13] In Pasco v. Bouchard (1987), 8 B.C.L.R. (2d) (S.C.), Chief Justice McEachern dealt with the question of the limits on the right of a party to retain experts who had been previously retained by a party adverse in interest in the litigation. The application before him related to the continuation of an injunction preventing the defendants in that case from retaining experts previously retained by the plaintiffs. His comments concisely define the tension between the two principles. He referred to the earlier case of Harmony Shipping Co. S.A. v. Saudi Europe Line Ltd.; Harmony Shipping Co. S.A. v. Orri; Harmony Shipping Co. S.A. v. Davis, [1979] 1 W.L.R. 1380, [1979] 3 All E.R. 177 (C.A.) where a handwriting expert had inadvertently accepted a retainer from a defendant when he had previously been retained to provide an opinion for the plaintiff in the same litigation. The expert, when apprised of the conflict, refused to take further instructions from the defendant, who then subpoenaed him to give evidence at trial. McEachern C.J.B.C. said at p. 269: The case stands for three propositions: (1) The subpoena was not set aside as the court was entitled to have the expert's evidence; (2) No term could be implied into the contract between the plaintiff and the witness not to assist the defendant; and (3) In any event, a covenant not to give

evidence would be contrary to public policy. I have no doubt about Nos. 1 and 3 in the Harmony Shipping case because it seems to me that, subject only to solicitor's privilege and the risk of calling a witness who maintains confidentiality, there is no reason why any expert retained by the other side may not be subpoenaed to give evidence. If the side retaining an expert does not call him, there may be very good reason for the other side to do so. This was mentioned by Davey J.A. (as he then was) in reference to medical witnesses in Barker v. McQuahe (1964), 49 W.W.R. 685 at 689 (B.C.C.A.), although in that case the expert was not consulted for the purpose of litigation. Nevertheless I see no difficulty, if this unpleasantness had not arisen, in the C.N.R. calling these witnesses blind at the trial of the C.N.R. action if the plaintiff fails to do so. The court is entitled to have their evidence: McDonald Const. Co. v. Bestway Lath & Plastering Co. (1972), 27 D.L.R. (3d) 253 (N.S.T.D.), and R. v. King, [1983] 1 W.L.R. 411, 77 Cr. App. R. 1, [1983] 1 All E.R. 929 (C.A.). [14] Regarding the implication of a term into a contract of retainer that the expert was not to assist the other party, McEachern C.J.B.C. commented (at p. 271): As Ms. McGrady asks, would a party in such litigation give his brief to an expert if he thought for a moment that the expert were free to also work for

the other side? To state the question is almost to furnish the answer. [15] He then went on to comment on the danger of applying too high a standard to cases in which the complexity of the issues did not justify a strict standard of privilege. He said at p. 271: We must always be careful about applying procedural principles established in simple cases to complex litigation. In this case the issues are broad and far-reaching, including the proof of history of which there may be only a partially written record. The defendants have apparently scoured several archival sources on behalf of the plaintiffs and they have collected and commented upon documents and facts that may be relevant to the plaintiff's strategic approach to the case. I am not satisfied, at this stage, that the defendants can function in this area on behalf of the defendants in the C.N.R. action without abusing the plaintiff's confidence, and this in no way depends upon questions of honour or honesty. For example, if the defendants have uncovered or given significance to a document or a historical fact on which they have expressed an opinion to the plaintiffs, perhaps just by including it in a collection of documents or facts, what are they to do if their retainer by the C.N.R. requires them to research again documents or facts of the same class? They learned about it, and possibly its relevance to the plaintiff's

strategy, during the course of their retainer by the plaintiffs, but they cannot disregard their knowledge of such documents or facts if the areas of investigation requested by the C.N.R. overlap, as they may, with the work performed for the plaintiffs. [16] Two recent cases in this jurisdiction have dealt with conflicts between the principles of untrammelled availability of witnesses to assist the court to deal with questions arising in litigation and the maintenance of confidentiality in the process of retaining experts to provide opinions to guide the conduct of litigation. In both of these cases, the expert was permitted to accept instructions and provide an opinion even though he or she had previously been instructed by the other party to the litigation. [17] In Rumley v. British Columbia (2002), 99 B.C.L.R. (3d) 386 (S.C.), Madam Justice Humphries permitted the plaintiffs to retain an expert to provide an opinion on the same issue upon which she had provided an opinion to the defendants in earlier litigation on identical subject matter. On the instructions of the defendants, the expert, Dr. Sullivan, developed a standard model illustrating standards of care utilized in institutional settings in the period 1975-1991 to address problems of sexual abuse. She also reviewed the care provided by Jericho Hill School from 1975-1991 and expressed an opinion on whether that care

met the appropriate standard and how it compared to similar institutions in the same period. She provided a report to the defendant. She did not express an opinion on liability. Humphries J. was not of the view that she received information that would not otherwise be the subject of discovery in the litigation. She observed that there was no indication that Dr. Sullivan was in receipt of the defendant's litigation brief. It was common ground that Dr. Sullivan was one of the leading experts in the field of the maltreatment of individuals with disabilities who are placed in residential schools. [18] Humphries J. characterized the issue before her as whether Dr. Sullivan was an independent expert or an expert consultant who was part of a litigation team. In the case before me, Mr. Smith provided an opinion for counsel for Andersen Enterprises concerning whether an action against the defendants would likely succeed. [19] In Strata Plan LMS 1725 v. Pacific Place Holdings Ltd., 2007 BCSC 1047, Curtis J. dealt with an application to enjoin a firm of engineers who had been retained by the project developer to provide consulting services in connection with water ingress problems in a condominium development when it appeared that litigation might ensue. The engineers provided two reports to the developer and were present when litigation was discussed. Later, but before the matter came to

trial, the strata owners sought to retain a firm of engineers that had subsequently been established by one of the originally-retained engineers. [20] In determining that the developer's application for an injunction should be dismissed, Curtis J. observed (paras. 18-19): Even if the full rigour of the test set forth in the MacDonald Estate case [Macdonald Estate v. Martin, [1990] 3 S.C.R. 1235] is applicable to this case, which I do not think the law requires, this application fails upon the standards set forth. Firstly, having heard the evidence, I am satisfied that no use of confidential information would occur because I am not aware of any confidential information of Pacific that is known to RDH or that would be useful to the Owners, and secondly, that being the case, "there is no risk that it will be used to the prejudice of Pacific" for the same reason. Even if there was some confidential information given to RDH that was relevant to the dispute, I would not be inclined to grant the order sought in this case for a number of reasons. Firstly, RDH is not involved in the litigation process and will not be giving an opinion on liability, therefore the risk of unknowingly using confidential information is significantly reduced. RDH's evidence will be based upon observations made upon the building and the repair process itself. Secondly, my impression of this application was

not that it was brought to ensure the fairness of a trial, but rather that it was brought for tactical advantage to increase the difficulties of the Owners. Thirdly, the order sought would significantly prejudice the Owners while accomplishing little, if anything, concerning matters of confidence. Ordering RDH's removal would make repair more costly and further delayed and would very likely result in a delay of the trial at very considerable expense to both parties. [21] Unlike the engineers in Strata Plan LMS 1725 before Curtis J., Mr. Smith will be involved in the litigation process on behalf of the Strata Owners if he were to be retained by them to provide the report sought. [22] Additionally, there will be little, if any, prejudice to the Strata Owners if they have to retain someone other than Mr. Smith to provide them with an opinion. Result [23] I understand the test to be applied in circumstances such as those before me to be as follows. An expert opinion obtained by a party on the basis of confidential information and obtained to guide that party in the conduct of litigation is entitled to substantial, but not absolute, protection. The factors to be considered when deciding on the level of protection to be afforded such an opinion in a given set of circumstances include the following: prejudice to the other party if denied access to an opinion from that particular

expert; the nature of the confidential information including whether the information will be available though the discovery process; and the effect that preventing the party from seeking access to the expert will have on its ability to fairly conduct the litigation. [24] In this case, I am satisfied that the Strata Owners should not be permitted to retain Mr. Smith to provide them with an opinion concerning liability for the subsidence problem underlying the litigation. I base this decision on a balancing of the interests of the parties - on one hand, the interest of the plaintiff in maintaining the confidentiality inherent in consulting an expert for an opinion to guide it in the conduct of the litigation and, on the other, the interest of the Strata Owners in access to the opinion of this witness. [25] I consider it significant that Mr. Smith was provided with a written summary of the subsidence problem prepared by the plaintiff. [26] The dangers inherent in permitting Mr. Smith to now receive instructions from the Strata Owners when he has received confidential factual knowledge from the plaintiff, perhaps relevant to the task he must perform for the Strata Owners, creates the confidentiality difficulties alluded to by McEachern C.J.B.C. in Pasco. [27] The only potential prejudice suffered by the defendant Strata Owners by not permitting them to retain Mr. Smith is that there may be some benefit in having the view of someone who investigated the subsidence at an earlier date. I am satisfied that this possible benefit is not enough to overcome the plaintiff's claim to confidentiality of Mr. Smith's opinion. [28] Costs will follow the event on Scale B. "B.M. Preston J." _________ The Honourable Mr. Justice Preston