Kovacevic Consult Inc. v. Coastal Contacts Inc.

2015 BCSC 569 Kovacevic Consult Inc. v. Coastal Contacts Inc. IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Kovacevic Consult Inc. v. Coastal Contacts Inc., 2015 BCSC 569 Date: 20150414 Docket: S145944 Registry: Vancouver Between: Kovacevic Consult Inc., John Gianni Kovacevic, Paolo Venturi and Tommaso Ferrari Plaintiffs And Coastal Contacts Inc. Defendant Before: Master MacNaughton Reasons for Judgment Counsel for the Plaintiffs: S.M. Hirji Counsel for the Defendant: T.M. Cohen Place and Date of Hearing: Vancouver, B.C. March 27, 2015 Place and Date of Judgment: Vancouver, B.C. April 14, 2015 The Nature of the Action [1] In this action, the plaintiffs seek payment of a transaction fee in relation to an acquisition agreement entered into between the defendant and Essilor International (Compagnie Generate d'Optique), S.A. ("Essilor"). The plaintiffs seek the transaction fee pursuant to a mandate agreement entered into in November 2012 and subsequently amended. Each of the plaintiffs signed the mandate agreement either in their individual capacities or, in the case of John Kovacevic, on behalf of Kovacevic Consult Inc. [2] The plaintiffs allege breach of the mandate agreement and, alternatively, seek payment of a fee on the basis of quantum meruit or unjust enrichment. [3] The defendant denies breach of the mandate agreement and says that the mandate agreement had terminated long before it entered into the Essilor acquisition agreement. The defendant also denies that the plaintiffs are entitled to any fee on the basis of quantum meruit or unjust enrichment. [4] The court will be required to interpret the mandate agreement in this proceeding. [5] The parties attended a case planning conference before Justice Sharma on January 20, 2015. Counsel had earlier discussed scheduling examinations for discovery and the defendant made it clear that it wished to examine each of the individual plaintiffs. [6] Justice Sharma directed the parties to make best efforts to complete all examinations for discovery by April 30, 2015. Following the case planning conference, plaintiffs' counsel took the position that the defendant was only entitled to examine one of the plaintiffs for discovery as a representative for all of them. [7] Dates for examinations for discovery of a representative of the defendant and of Paolo Venturi are scheduled to occur in Dallas on April 29 and 30, 2015. [8] The defendant acknowledged that it seeks to examine Mr. Kovacevic in his personal capacity and as a representative of Kovacevic Consult Inc. Further, the defendant has agreed that it will, for the time being, not seek to examine Tommaso Ferrari. [9] The plaintiffs have taken the position that, due to their "commonality of interest", the defendant is not entitled, as of right, to examine more than one person on behalf of the plaintiffs without leave. [10] At the hearing, I advised counsel that I had concluded that the defendant is not limited to examination of only one of the plaintiffs and that my reasons would follow. These are those reasons. The Applicable Rules [11] Rule 7-2 of the Supreme Court Civil Rules, B.C. Reg. 168/2009, is the rule which governs examinations for discovery. The relevant subrules provide: (1) Subject to subrule (2), each party of record to an action must (a) make himself or herself available, or (b) if any of subrules (5) to (10) apply, make a person referred to in that subrule available, for examinations for discovery by the parties of record to the action who are adverse in interest to the party subject to examination. (5) Unless the court otherwise orders, if a party to be examined is not an individual, (a) the examining party may examine one representative of the party to be examines, (b) the party to be examined must nominate as its representative an individual, who is knowledgeable concerning the matters in question in the action, to be examined on behalf of that party, and (c) the examining party may examine (i) the representative nominated under paragraph (b), or (ii) any other person the examining party considers appropriate and who is or has been a director, officer, employee, agent or external auditor of the party to be examined. [12] The plaintiffs submit that the law is now settled that where a group of plaintiffs or defendants share a common interest in the issues raised in a proceeding and the outcome of the litigation, the group will be treated as a single party for the purposes of conducting examinations for discovery and for being examined. As a result, in this case the plaintiffs say that, without leave, the defendant is only entitled to examine one representative of the group of plaintiffs. [13] A number of cases have dealt with the right to examine representatives of multiple plaintiffs or defendants in cases involving groups of plaintiffs and groups of defendants. These cases were all recently reviewed by this court in Soprema Inc. v. Wolrige Mahon LLP, 2014 BCSC 1013. There were three corporate plaintiffs with a common CEO and one defendant. The defendant sought to conduct multiple examinations of the plaintiff group. The plaintiffs argued, and the court accepted, that because there was a commonality of interest between them, the defendant should be limited to one examination as of right. [14] In denying the defendant's leave to appeal, the Court of Appeal said in its reasons that it is "well settled" that co-plaintiffs or co-defendants with a commonality of interest will not be entitled to, or subject to, multiple examination for discoveries as of right." Soprema Inc. v. Wolrige Mahon LLP, 2014 BCCA 366, at paras. 19-25. While it is true that the Court of Appeal focused on the commonality of interest and did not appear to distinguish between groups of co-plaintiffs and co-defendants or between individual and corporate entities, the cases to which it referred all arise in what could be described as a corporate context. [15] The genesis of the cases starts with Nesbitt v. Midland Walwyn Capital Inc., [1994] B.C.J. No. 880. In that case, the four plaintiffs were a husband and wife, the husband's corporation and a family trust. They were all represented by the same counsel and each plaintiff sought to examine four different representatives of the defendant corporation. The court dismissed the application on the basis that the plaintiffs had a commonality of interest and were therefore only entitled, as of right, to conduct a single examination of a representative of the defendant (para. 20). The court was not asked to consider whether the defendant would have been limited to an examination of one representative of the plaintiffs. The court did say, at para. 16, that if the defendant was a natural person, all four plaintiffs would have an opportunity to examine that one person on issues relevant to the action. [16] Nesbitt involved an application that was the inverse of this. Here a single corporate defendant wishes to examine a number of the individual plaintiffs. [17] In Westfair Foods Ltd. v. Coopers & Lybrand, [1997] B.C.J. No. 1560, a group of defendants with a commonality of interest sought to conduct multiple examinations of a representative of the plaintiff company. Applying the Nesbitt reasoning, the court limited the defendant group to a single examination of the plaintiff's representative (para. 11). [18] Next in the series of applicable cases are two decisions of Justice Wedge: Blue Line Hockey v. Orca Bay Hockey, 2007 BCSC 443 ("Blue Line 1") and Blue Line Hockey v. Orca Bay Hockey, 2007 BCSC 577 ("Blue Line 2"). [19] In Blue Line 1, five plaintiffs consisting of three corporations and two individuals who were the corporate principals, applied to examine a representative of one of the Orca Bay companies despite having previously examined a representative of one of the other Orca Bay companies. Justice Wedge noted that counsel for the corporate defendants had agreed that the evidence of the representative discovered would be treated as evidence against all the related corporate defendants (para. 43). Justice Wedge dismissed the application on the basis that the Orca Bay companies shared a commonality of interest and said that the "rights of the parties on discovery, must, as a matter of common sense and fairness, be congruent rights" (paras. 38-39). She concluded that the evidence of the representative who was discovered would be evidence against all four of the related corporate defendants. [20] In Blue Line 2, the defendants had conducted an examination of one of the individual plaintiffs. They sought to examine a representative of one of the corporate plaintiffs even though the individual plaintiff they had already examined was a director of the corporate plaintiff. Again, Justice Wedge dismissed the application on the basis that there was a commonality of interest between the individual plaintiff already examined and the representative sought to be examined on behalf of the corporate plaintiff (paras. 38-39). Justice Wedge's reasons, in paras. 36 and 41 make it clear that both Blue Line cases address circumstances of individual parties. [21] A review of these cases indicates that they all arose in the context of applications to examine a party who is not an individual under Rule 7-2(5) (or its predecessor). The wording in Rule 7-2(1) is mandatory and each party must make himself or herself available for examinations for discovery. The inclusion of the words "[u]nless the court otherwise orders" in subrule 7-2(5) confers discretion on the court to vary the default right in Rule 7-2(5), which is that if a party to be examined for discovery is not an individual, the examining party may only examine one representative of that party. Rule 7-2(1) does not include a similar discretion where the party to be examined is an individual. [22] Where the evolving cases did involve individuals sought to be examined, such as Blue Line 1 and 2, the individuals involved were principals or directing minds of another corporate party and had the authority to bind that corporate party. [23] In this case, I conclude that, with the exception of Mr. Kovacevic and his consulting company, one of the individual plaintiffs does not have the authority to bind another of the individual plaintiffs and the evidence of one plaintiff cannot be read in as evidence or admissions against another or all of the individual plaintiffs: Rule 12-5(46) and Donaldson v. John Doe, 2009 BCCA 38, paras. 46 and 47. [24] Finally, the plaintiff's alternative claims for damages on a quantum meruit or unjust enrichment basis requires the court to consider, for each individual plaintiff, the value, if any, of the work each plaintiff performed for the defendant and/or the benefit conferred on the defendant by each individual plaintiff's efforts. In that respect, the plaintiffs cannot be said to have a commonality of interest. [25] The plaintiffs' application to limit the defendant to one representative of the plaintiffs is dismissed and the defendant is entitled to its costs. "Master MacNaughton"