More Marine Ltd. v. Shearwater Marine Ltd.

2011 BCSC 166 More Marine Ltd. v. Shearwater Marine Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: More Marine Ltd. v. Shearwater Marine Ltd., 2011 BCSC 166 Date: 20110210 Docket: S087492 Registry: Vancouver In the Supreme Court of British Columbia Admiralty Action In Rem Against the Ships "Arctic Kapvik" and "Pacific Lure" and In Personam Between: More Marine Ltd. and More Management Ltd. Plaintiffs And Shearwater Marine Ltd., AXA Pacific Insurance Company, Continental Casualty Company (CNA Canada), M/V Arctic Kapvik, and the M/V Pacific Lure. Defendants Before: The Honourable Mr. Justice N. Smith Reasons for Judgment In Chambers Appearing on behalf of the Plaintiffs: K. Morris and K. Kermore Counsel for the Respondents AXA Pacific Insurance Company and Continental Casualty Company: K.A. Wigmore Counsel for Island Tug & Barge Ltd.: F.C. Gaerdes Place and Date of Hearing: Vancouver, B.C. December 16, 2010 Place and Date of Judgment: Vancouver, B.C. February 10, 2011 [1] The plaintiff seeks an order requiring the continuation of an examination for discovery and compelling answers to certain questions. This action involves alleged breaches of certain marine insurance policies. The plaintiff company does not have counsel and is represented by its president, Kerry Morris. [2] On December 7, 2010, Mr. Morris conducted an examination for discovery of William Bonar, a claims adjuster employed by the defendant Continental Casualty

Company ("CNA Canada"). During that examination, counsel for the defendant objected to a number of questions that Mr. Morris asked. Some of those questions were answered or taken under advisement after Mr. Morris rephrased them. There were also a number of questions that Mr. Bonar could not immediately answer and, at the conclusion of the examination, there were 27 outstanding requests for Mr. Bonar to inform himself or to produce further documents. However, there remain a number of questions that were objected to and not answered. [3] The scope of proper questioning on an examination for discovery is set out in Rule 7-2 (18) of the Supreme Court Civil Rules, B.C. Reg. 168/2009 [Rules]: Unless the court otherwise orders, a person being examined for discovery (a) must answer any question within his or her knowledge or means of knowledge regarding any matter, not privileged, relating to a matter in question in the action, and (b) is compellable to give the names and addresses of all persons who reasonably might be expected to have knowledge relating to any matter in question in the action. [4] The new Rules came into effect on July 1, 2010, but the language in rule 7-2 (18) is identical to the former rule 27 (22). As Griffin J. said in Kendall v. Sun Life Assurance Company of Canada, 2010 BCSC 1556 [Kendall] at para. 7 "the scope of examination for discovery has remained

unchanged and is very broad." In Cominco Ltd. v. Westinghouse Can Ltd. (1979), 11 B.C.L.R. 142 (C.A.) [Cominco], an early and leading case under the former rule, the Court of Appeal said at 151 that "rigid limitations rigidly applied can destroy the right to a proper examination for discovery." The court in Cominco also adopted the following statement from Hopper v. Dunsmuir No. 2 (1903), 10 B.C.R. 23 (C.A.) at 29: It is also obvious that useful or effective cross-examination would be impossible if counsel could only ask such questions as plainly revealed their purpose, and it is needless to labour the proposition that in many cases much preliminary skirmishing is necessary to make possible a successful assault upon the citadel, especially where the adversary is the chief repository of the information required. [5] In Day v. Hume, 2009 BCSC 587 this court said at para. 20: The principles emerging from the authorities are clear. An examination for discovery is in the nature of cross-examination and counsel for the party being examined should not interfere except where it is clearly necessary to resolve ambiguity in a question or to prevent injustice. [6] While Rule 7-2 (18) is the same as its predecessor, the new Rules create a distinction that did not previously exist between oral examination for discovery and discovery of documents. The former rule 26 (1) required a party to

list all documents "relating to every matter in question in the action." Although disclosure in those terms may still be ordered by the court under Rule 7-1 (14), the initial disclosure obligation is set out more narrowly in Rule 7-1(1): (1) Unless all parties of record consent or the court otherwise orders, each party of record to an action must, within 35 days after the end of the pleading period, (a) prepare a list of documents in Form 22 that lists (i) all documents that are or have been in the party's possession or control and that could, if available, be used by any party of record at trial to prove or disprove a material fact, and (ii) all other documents to which the party intends to refer at trial, and (b) serve the list on all parties of record. [7] Under the former rules, the duty to disclose documents and the duty to answer questions on oral examination were therefore controlled by the same test for relevance. Under the new Rules, different tests apply, with the duty to answer questions on discovery being apparently broader than the duty to disclose documents. [8] Although that may appear to be an anomaly, there are at least two good reasons for the difference. One reason is that if the court is to be persuaded that the broader document discovery made possible by rule 7-1(14) is appropriate in a particular case, some evidence of the existence and potential relevance

of those additional documents will be required. The examination for discovery is the most likely source of such evidence. [9] The second reason relates to the introduction of proportionality as a governing concept in the new Rules. Rule 1-3 (2) states: (2) Securing the just, speedy and inexpensive determination of a proceeding on its merits includes, so far as is practicable, conducting the proceeding in ways that are proportionate to (a) the amount involved in the proceeding, (b) the importance of the issues in dispute, and (c) the complexity of the proceeding. [10] The former rule governing discovery of documents was interpreted according to the long-established test in Compagnie Financière du Pacifique v. Peruvian Guano Company (1882), 11 Q.B.D. 55 at 63 (C.A.): It seems to me that every document relates to the matters in question in the action, which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may -- not which must -- either directly or indirectly enable the party ... either to advance his own case or to damage the case of his adversary. I have put in the words "either directly or indirectly," because, as it seems to me, a document can properly be said to contain information which may enable the party ... either to advance his own case or to damage the case of his adversary, if it is a document which may

fairly lead him to a train of inquiry, which may have either of these two consequences... [11] The new Rules recognize that application of a 19th century test to the vast quantity of paper and electronic documents produced and stored by 21st century technology had made document discovery an unduly onerous and costly task in many cases. Some reasonable limitations had become necessary and Rule 7-1 (1) is intended to provide them. [12] The new Rules also impose limitations on oral examination for discovery, but do so through a different mechanism. Rule 7-2 (2) now limits an examination for discovery to seven hours or to any longer period to which the person being examined consents. Although the test for relevance of a particular question or group of questions remains very broad, examining parties who ask too many questions about marginally relevant matters, who spend too much time pursuing unproductive trains of inquiry or who elicit too much evidence that will not be admissible at trial risk leaving themselves with insufficient time for obtaining more important evidence and admissions. [13] As Griffin J. said in Kendall, the time limit imposes a "self-policing incentive" on the party conducting the examination: at para.

14. At the same time, the existence of the time limit creates a greater obligation on counsel for the party being examined to avoid unduly objecting or interfering in a way that wastes the time available. This interplay was described in Kendall at para. 18: A largely "hands off" approach to examinations for discovery, except in the clearest of circumstances, is in accord with the object of the Rules of Court, particularly the newly stated object of proportionality, effective July 1, 2010. Allowing wide-ranging cross-examination on examination for discovery is far more cost-effective than a practice that encourages objections, which will undoubtedly result in subsequent chambers applications to require judges or masters to rule on the objections. It is far more efficient for counsel for the examinee to raise objections to the admissibility of evidence at trial, rather than on examination for discovery. [14] I do not intend to individually review and rule on each question that was objected to. It is apparent on reading the transcript that many of Mr. Morris' questions could have been more appropriately phrased, but many of the objections are examples of what the court in Cominco called at 151 "rigid limitations rigidly applied." It is also apparent that objections often gave rise to arguments between Mr. Morris and counsel that occupied a significant portion of the time. [15]

Some of the questions objected to relate to general practices in the insurance industry or within the defendant insurance company. I consider those questions to be proper and relevant for the same reason similar questions were found to be relevant in Kendall−they permit the plaintiff to probe into the issue of whether the defendants' handling of the plaintiff's claim was reasonable and fair. [16] There were also a number of questions objected to because they called for interpretation of the insurance policies at issue. I agree that the questions were not properly stated in that they simply asked the witness to state the meaning of certain words in the policy or other document. However, all of them can be easily restated (and may have been if a less obstructive approach had been taken) as questions asking how the provisions are normally applied in certain situations or how they were applied in relation to the plaintiff's claims. [17] There are some questions that require specific comment. Questions 62 through 70 relate to Mr. Bonar's knowledge of and communication with a former employee. At one point, counsel stated that Mr. Bonar "isn't here to help you locate another witness." In fact, that is one of the explicit purposes of the examination for discovery, as set out in Rule 7-2 (18) (b): (18) Unless the court otherwise orders, a person being examined for discovery ... (b) is

compellable to give the names and addresses of all persons who reasonably might be expected to have knowledge relating to any matter in question in the action. [18] In a similar vein, Mr. Bonar was asked for the names of individuals within the company to whom he reported or who approved claims above the amount he was authorized to approve. The pleadings allege various failures to pay claims as required by the policies. The reasons for the defendants' decisions, the facts on which those decisions were based and the process by which the decisions were arrived at are all potentially relevant and the plaintiff is entitled to know the names of individuals who might have been involved in those decisions. [19] Following a brief recess, Mr. Moore asked if Mr. Bonar discussed his testimony with counsel during the break. That question was objected to. Clearly, Mr. Moore is not entitled to ask about the content of any conversation between the witness and counsel. But, in Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd. (1992), 72 B.C.L.R. (2d) 240 the court said counsel should refrain from discussion with the witness on such occasions. The question of whether any such discussion took place is therefore a proper one, although solicitor-client privilege will prevent any further exploration of the topic. [20] There are some questions that Mr. Bonar is not required to answer, at

least not in the form they were asked. For example, at one point Mr. Moore summarizes what he understood the preceding evidence to be. While he can quite properly ask if the summary is accurate, the form in which he posed the question ("and you expect me to believe that, is that correct?") is clearly improper. [21] As said above, I have not attempted to list and rule on all of the questions objected to. Some of them may effectively be answered, notwithstanding the objection, in documents the defendant was asked to produce or in the context of matters on which Mr. Bonar was asked to inform himself. I have attempted to give the parties some guidance in how a resumed examination should proceed−with a minimum of interference by counsel for the defendant. The plaintiff will bear the adverse consequences if the allowable time is not used efficiently to elicit evidence that will be relevant and admissible at trial. However, if further assistance is needed in regard to specific questions, the parties will be at liberty to apply. [22] The transcript indicates that the discovery of Mr. Bonar lasted approximately four and a half hours, including over an hour in breaks. Mr. Moore has therefore used half of the seven hours permitted by Rule 7-2 (2). Even in the absence of a dispute over questions, he would have the right to resume the examination because of the number of matters on which

Mr. Bonar was asked to inform himself. Rule 7-2 (22) says: (22) In order to comply with subrule (18) or (19), a person being examined for discovery may be required to inform himself or herself and the examination may be adjourned for that purpose. [23] In view of the time that was taken by objections and arguments arising from those objections, I find that the time remaining for a continued examination should be extended to four hours and I order that the examination resume on that basis. The plaintiff will have costs of this application in any event of the cause. "N. Smith J."