NSC Corporation Ltd. v. ABN Amro Bank Canada

NSC Corporation Ltd. v. ABN Amro Bank Canada Court Court of Appeal Date 1993-04-05 Citation 1993 NSCA 78 Docket SCA 02749 Judge/Registrar/Adjudicator Freeman, Gerald B. (Honourable Justice) (CA); Jones, Malachi C. (Honourable Justice) (CA); Pugsley, Ronald N. (Honourable Justice) Document Type Decision Decision Content S.C.A. No. 02749 NOVA SCOTIA COURT OF APPEAL Jones, Freeman and Pugsley, JJ.A. Cite as: NSC Corporation Ltd. v. ABN Amro Bank Canada, 1993 NSCA 78 BETWEEN: ) ) NSC CORPORATION LIMITED and ) Frederick W. L. Black FREDERICK W. L. BLACK ) Appellant in Person ) Appellants ) ) - and - ) ) ABN AMRO BANK CANADA, BOYNE ) David G. Coles CLARKE and BLAKE, CASSELS & GRAYDON ) for the Respondents ) Respondents ) ) ) ) Appeal Heard: ) March 11, 1993 ) ) ) Judgment Delivered: ) April 5, 1993 THE COURT: Leave to appeal is granted, but the appeal is dismissed as per reasons for judgment of Pugsley, J.A.; Jones and Freeman, JJ.A., concurring. PUGSLEY, J.A.: This is an application for leave to appeal, and if leave be granted, an appeal from two decisions of the Chambers Judge, wherein he denied the Appellants' application to consolidate two actions (S.H. No. 81815, and S.H. No. 82515), but allowed the Respondents' application to strike out counterclaims advanced by the Appellants, against two law firms (Blake, Cassels & Graydon, and Boyne Clarke). These two firms act for the Respondent ABM Amro Bank Canada (hereinafter referred to as the Bank). The Chambers Judge refused, however, to strike a counterclaim advanced by the Appellants against the Bank. BACKGROUND Throughout these applications, the Appellants NsC Corporation Limited (hereinafter referred to as NsC) and Frederick W. L. Black, have been represented by Mr. Black. Mr. Black is the Chief Executive Officer of NsC and previously held that position with NsC Diesel Power Inc. (hereinafter referred to as NsC Diesel). Mr. Black is not a lawyer. He has however been directly and intimately involved with the present litigation and predecessor litigation, arising out of allied matters. We were advised on the hearing that Mr. Black has prepared in excess of 30 applications to the Supreme Court in this litigation. He has, as well, appeared in Court to advance his submissions on behalf of the Appellants, on a number of occasions, including these applications. These matters were heard before the Chambers Judge on September 9, 1992. The Notice of Appeal filed by Mr. Black sets out seven grounds of appeal. On the argument, however, Mr. Black confined his submissions to two grounds: (1) Mr. Black had earlier given notice of an application to be heard on September 10 to remove Boyne Clarke as solicitors for the Bank on the ground of conflict of interest. He submitted that the Chambers Judge should have adjourned the present applications until after September 10, 1992. There are, in my opinion, no grounds to interfere with the discretion exercised by the Chambers Judge in refusing to adjourn the September 9th, applications. (2) Mr. Black advised the Chambers Judge that he had filed five affidavits on August 31 in support of the two motions to be heard on September 9. The Chambers Judge did not read any of this material. A review of the file at the Prothonotary's office by this Court's law clerk did not disclose any affidavits in proceedings numbered S.H. 82515 and S.H. 81815. However, in the file S.H. 81815, there are a number of affidavits bearing file number S.H. 80055 which is apparently the proceeding relating to the bankruptcy of NsC Diesel. Presumably these are the affidavits to which Mr. Black referred in his submissions to the Chambers Judge. A brief description of the actions for which Mr. Black sought consolidation is germane. (1) On May 1, 1992 NsC, sole shareholder of the bankrupt NsC Diesel, filed a Statement of Claim against the Bank, Ernst & Young (court appointed custodians, receivers and trustees in bankruptcy for NsC Diesel), Peter Cleveland, C.A., Thomas Boyne, Q.C. (Nova Scotian solicitor) Boyne Clarke (solicitors for the petitioning creditor) and NsC Diesel. The suit, S.H. 81815, claimed damages for negligence, fraud, breach of fiduciary duties, inducing breach of contract, conspiracy, breach of contract, etc. (2) By consent Order dated May 15, 1992 signed both by Mr. Black and counsel for the other parties, it was recited that Thomas Boyne, Q.C., Peter Cleveland, and Ernst and Young were not "proper or necessary parties to the proceeding pursuant to Civil Procedure Rule 5.04(2)(a)". The operative part of the Order provided that these three parties "ceased to be parties to the proceedings". (3) On June 10, the Bank commenced action (S.H. No. 82515) against NsC claiming a liquidated sum arising out of a breach of its guarantee to the Bank, and as well, against Mr. Black for inducing breach of contract. (4) On July 2, 1992 Mr. Black, on his own behalf as well as NsC, filed a defence to S.H. No. 82515, and counterclaimed against the Bank, Boyne Clarke, and Blake, Cassels & Graydon. The counterclaims were based on negligence, breach of contract, breach of fiduciary duty and trust, willful and knowing participation in a conspiratorial fraud, mischievous and injurious falsehoods, etc. (5) On July 16, 1992, the Bank's solicitors filed an application, to be heard on September 9, 1992, for an order setting aside, or striking out the claims against the Bank, Boyne Clarke, and Blake, Cassels & Graydon. (6) Mr. Black gave notice that he was applying in Chambers on September 10 and 11 to have Boyne Clarke removed as solicitor on the record for the Bank, on the grounds of conflict of interest. (7) On August 31, 1992 Mr. Black gave further notice that he intended to apply for an order consolidating S.H. No. 81815 with S.H. No. 82515. In support of the application Mr. Black apparently delivered to the Bank's solicitors five affidavits which Mr. Black maintains were in support of both his application for consolidation, and also in response to the Bank's application to strike the counterclaims. In the material placed before us, there is a Notice of Application for Consolidation dated August 31, 1992. It provides in part: " . . . on the hearing of the application will be read the affidavits of Frederick W. L. Black and those other parties having status, which affidavits will be filed with the court in compliance with Rule 37 . . ." No affidavit in support of either application was contained in the material submitted to us. Counsel for the Bank assumed that Mr. Black would endeavour to use the affidavits on both Chambers applications. (8) By letter dated September 4, 1992, addressed to the Chambers Judge, Counsel for the Bank stated in part: "In reviewing the materials supplied and supported by the application by Mr. Black, ABN Amro Bank Canada is concerned that the affidavits are not proper, and that they repeat argument, attach exhibits not within the personal knowledge of the deponent, and to a large extent, constitute merely a repetition of pleadings. Hitherto accommodation has been made throughout a number of proceedings on the basis that the corporation's case is being presented by a layman; however, the bank is not prepared to surrender its rights under the Rules of Evidence or Procedure and challenges the advisability of the documents in their present form. The bank reserves the right to cross-examination." CHAMBERS APPLICATION At the commencement of the Chambers application on the afternoon of September 9, Counsel for the Bank stated, in part: "A secondary preliminary matter I think arises in response to the affidavit material that Mr. Black has submitted, which I understand to be largely in support of his motion. As best as we have been able to determine, I believe there are four volumes of affidavits that he wishes to place before you this afternoon. That is something you may wish to check with him. That is best that we determine and you have in my second supplemental pre-hearing memorandum notification that we object in large measure to the propriety of the affidavits he wishes to place in front of you, and again, its something you may wish to hear counsel on at the outset, it's how to deal with this affidavit material and the particulars of exactly our complaint in relation to that material. In that regard, before returning the floor to Your Lordship with respect to those preliminary matters, I would advise that Mr. Ross Landers, who's with Ernst and Young, and the trustee in bankruptcy, is in the courtroom. His presence here today is at my request, in that should Your Lordship determine that these affidavits are before you or will have to be dealt with in the proceeding today. Mr. Landers is here for the sole purpose of providing rebuttal evidence in reference to one paragraph contained in one of the affidavits, which I understand Mr. Black wishes to place before you. In that regard, should Your Lordship determine that you do wish to proceed with these affidavits in some form, I would request the opportunity to call him as early as possible so that his attendance today could be dispensed with." The following discussion took place: "The Court: Mr. Black, you have affidavits? Mr. Black: I beg your pardon, My Lord? The Court: You say you have affidavits? Mr. Black: Yes, I have affidavits which I submitted to the file. The Court: I have not received them. Mr. Black: Well, I have submitted five affidavits for this hearing today. They were entered on the 31st of August. The Court: Um. They are not in my file. As there are so many files in these proceedings, they're probably in another file. I haven't read them." Counsel for the Bank concluded his submissions on the two motions by stating: "Now having said that's our response to the cross-motion, I must reserve one thing and to myself, and that is, there are these series of affidavits which we take serious issue with, and we reserve the right to cross-examine or address those, depending on what Your Lordship . . . The Court: Well, they are not before me. Mr. Coles: They are not before you. The Court: I haven't read them." Notwithstanding this advice, Mr. Black proceeded with his submissions before the Chambers Judge without reference to the affidavits. ISSUE The question for determination is whether the Chambers Judge applied any wrong principles of law, or whether patent injustice would follow, from the exercise of his discretion, in proceeding with the application without the benefit of reading and hearing argument advanced with respect to the contents of the five affidavits. ARGUMENT Counsel for the Bank submits that Mr. Black, over the last three years has become fully familiar with "court procedures", that he has abused the process of the Court by directing and participating in many applications which clearly have no merit, that having decided to conduct his own case, Mr. Black cannot expect the Court and/or opposing counsel to make submissions helpful to him. Counsel further submits that Mr. Black was left with several options: (1) he could have requested an adjournment, (2) he could have tendered the affidavits to the Chambers Judge, (3) he could have tendered the affidavits before this Court. Further, Counsel submits that the affidavits contained matters that were "not proper". In any event, evidence, either viva voce, or by way of affidavit, is not permitted in support of applications brought under Civil Procedure Rule 14.25. Mr. Black responds that, in all the previous applications in which he has been involved, affidavits were used by both parties in support of their submissions. Mr. Black points out that in the present application, counsel for the Bank, had submitted an affidavit in support of the motion to have Mr. Black's counterclaim struck. This affidavit was in the file and viewed by the Chambers Judge. It is pertinent to point out that the affidavit simply attached as exhibits, copies of pleadings in the two actions, as well as several decisions of the Court in earlier applications in these two actions. Mr. Black further contends that he should be extended special consideration in view of the fact that he is not a trained lawyer. THE MOTION TO STRIKE The Court is not able to consider Counsel's submission that the affidavits contained improper material, as the affidavits were not before us. Civil Procedure Rule 14.25 reads: "Striking out pleadings, etc. 14.25 (1) The court may at any stage of a proceeding order any pleading, affidavit or statement of facts, or anything therein, to be struck out or amended on the ground that, (a) it discloses no reasonable cause of action or defence; (b) it is false, scandalous, frivolous or vexatious; (c) it may prejudice, embarrass or delay the fair trial of the proceeding; (d) it is otherwise an abuse of the process of the court; and may order the proceeding to be stayed or dismissed or judgment to be entered accordingly. (2) Unless the court otherwise orders, no evidence shall be admissible by affidavit or otherwise on an application under paragraph (1)(a)." (emphasis added) It is of interest that the English Rule Supreme Court Practice, (Order 18 Rule 19) provides that "no evidence shall be admissible" (emphasis added) on an application to strike a pleading on the ground that it discloses no reasonable cause of action. In the case of Teale v. The United Church of Canada (1980), 34 N.S.R. (2d) Chief Justice MacKeigan on behalf of the Appeal Division (as it then was) stated at p. 313: "Whether a statement of claim discloses a cause of action is ordinarily to be determined solely by perusing its contents and any relevant statutes. Affidavit evidence may be admitted at the discretion of the chambers judge but should not relate to proof or disproof of the facts alleged in the claim. On an application to dismiss, it is assumed that the facts alleged in the statement of claim can be proved. The question is whether a claim in law is shown, assuming the facts to be true." In the later case of Seacoast Towers Services Ltd. v. MacLean (1987), 75 N.S.R. (2d) 70, Mr. Justice Matthews on behalf of the Court, concluded that on an application under Rule 14.25(1)(a), the Chambers Judge should not consider affidavit evidence. It is important to recognize that the decision of the Chambers Judge was based solely on the claims advanced against the two law firms on the pleadings as constituted. The Chambers Judge made it clear that he was not making any adjudication of a substantive nature, with respect to the rights of Mr. Black and NsC against the law firms. I conclude on the basis of the foregoing authorities, that the affidavits filed by Mr. Black could not have been considered by the Chambers Judge on the application under Civil Procedure Rule 14.25, even if they were available in the Chambers file. I find further that no patent injustice follows as a consequence. MR. BLACK'S MOTION FOR CONSOLIDATION The motion for consolidation raises different issues. As indicated earlier in these reasons, the only affidavits that were filed in S.H. 81815, were entitled S.H. 80055. This may explain the failure of the Prothonotary's office to deliver the affidavits to the Chambers Judge. An application of this kind is often assisted by the introduction of affidavit evidence. Mr. Black argues that: "Had the Chambers Judge had the benefit of the missing affidavits he would have seen that the same common questions of fact were present in both proceedings." The Bank's counsel submits that S.H. 82515 is a simple action on a guarantee. The Bank wishes to bring its action to trial as expeditiously as possible. On the other hand, he states, S.H. 81815, is a complex action based on negligence, fraud, breach of fiduciary duty and conspiracy. The two actions, therefore, should be tried separately. Counsel further submits that faced with the clear advice from the Chambers Judge, that he had not read the affidavits, Mr. Black decided to take his chance and proceed with argument in the absence of the affidavits. It is an abuse of the Court process, counsel argues, for Mr. Black to keep the affidavits in "his back pocket" and then subsequently to attempt to produce them in the event that he loses the Chambers application. DECISION In Exco Corp. Ltd. v. Nova Scotia Savings and Loan (1983) 59 N.S.R. (2d) it was stated at p. 333: "This court is an Appeal Court which will not interfere with a discretionary order, especially an interlocutory one such as this that is now before us, unless wrong principles of law have been applied, or patent injustice would result." To the same effect, are statements in Coughlan v. Westminer Canada Holdings Ltd. (1989) 91 N.S.R. (2d) 214 where Matthews, J.A. stated at p. 225: "We should only interfere if serious or substantial injustice, material injury, or very great prejudice would result if we did not." See also Minister of Housing (N.S.) v. Langille (1992), 108 N.S.R. (2d) at 352. Have the Appellants suffered "substantial injustice, material injury or very great prejudice" as a consequence of the failure of the Chambers Judge to adjourn the proceedings until he had read the affidavits? In my opinion, they have not. I arrive at this conclusion for the following reasons: (1) The Counterclaim advanced by Mr. Black and NsC, in S.H. 82515, was preserved by the Chambers Judge. A comparison of this Counterclaim with the claim advanced in S.H. 81815, reveals a remarkable similarity. It would appear that Mr. Black will be entitled to call evidence at trial in support of the Counterclaim, on most, if not all, of the issues raised in S.H. 81815. (2) Mr. Black is not barred from bringing a subsequent application for consolidation. Notwithstanding the multitude of applications that have been brought in these actions, both are in their infancy. No exchange of documents has occurred. No oral examinations for discovery have been conducted. After these steps have been taken, cogent reasons may exist for consolidation, if need there be. If Mr. Black were legally trained, I would have no hesitation in concluding that the appeal should fail. When the Chambers Judge advised that he had not read the affidavits, Mr. Black elected to proceed with his submissions without the support, if any, the affidavits might provide to his case. Should different considerations be applied because Mr. Black is not legally trained? In this case, I am impressed with the level of Mr. Black's knowledge of the issues and Civil Procedure Rules. It is appropriate to consider Mr. Black's understanding of procedures and tactics through the written materials submitted and the oral submissions he has advanced. I conclude, on the issue before us, that Mr. Black's lack of formal legal training should not cause this Court to dispose of this appeal in any manner different from that proposed. I would grant leave to appeal, but dismiss the appeal. I would grant costs in the amount of $750.00 to the Respondents. J.A. Concurred in: Jones, J.A. Freeman, J.A.