Schaper v. Sears Canada

2000 BCSC 1575 Citation: Schaper v Sears Canada Date:20001026 2000 BCSC 1575 Docket: 18705 Registry: Vernon

IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: THOMAS G. SCHAPER

PLAINTIFF AND: SEARS CANADA, INC.

DEFENDANT AND: WHITE CONSOLIDATED INDUSTRIES CANADA INC. CARRYING ON BUSINESS AS FRIGIDAIRE HOME PRODUCTS OUTDOOR/SEASONAL AND THE SAID-FRIGIDAIRE HOME PRODUCTS OUTDOOR/SEASONAL

THIRD PARTY

REASONS FOR JUDGMENT

OF

MASTER GROVES Counsel for Plaintiff G. P. Weatherill Counsel for Defendant D. R. Lewthwaite Counsel for Third Party O.G. Jones Date and Place of Hearing: October 11, 2000 Vernon, BC [1] The issues posed in this application are both novel and interesting. [2] This litigation centres around the purchase by the plaintiff in May 1995 of a Craftsman lawn tractor from the defendant. The plaintiff alleges that the tractor was not of merchantable quality or fit for its intended purpose. Specifically, the plaintiff states that he first began to have problems with the lawn tractor in November 1995 when the back wheels fell off. In January 1996 the plaintiff was experiencing transmission and brake problems on the tractor and the tractor was returned to the defendant who conducted repairs on the transmission and brake system. It is alleged that these repairs were performed negligently and during the course of these repairs or later repairs the defendant did not install a brake return spring. The effect of such action was, it is alleged, that with only limited continued use, the brakes eventually failed. It was on the 13th of December 1996, that the plaintiff was operating the tractor when he alleges that suddenly and without warning the brakes failed, causing the plaintiff to lose control of the tractor and causing the tractor to roll down an embankment. The accident resulted in injuries

to the plaintiff. [3] The history of this litigation is important. The writ was issued on May 9, 1997. An appearance was filed in June 1997. A statement of defence was filed in January 1998 and at that time there was no mention of any third party. [4] It is further deposed on behalf of the plaintiff that two examinations of discovery of the plaintiff occurred in both May of 1998 and November of 1999. The plaintiff's counsel states discussion then ensued about resolving the dispute by way of Rule 18A application. In an effort to settle matters, a settlement conference was scheduled in March 2000. When the settlement conference was scheduled to be heard, the plaintiff alleges that the defendant "backed out" and shortly thereafter, on the 20th of April 2000, issued a third party notice to the third parties, White Consolidated Industries Canada Inc. ("W.C.I."), and Frigidaire Home Products Outdoor/Seasonal ("Frigidaire"). It is in this third party notice that it is first raised by the defendant that the Craftsman tractor in question was actually manufactured by the third party Frigidaire, which is a wholly owned subsidiary of the third party W.C.I. I note this action by the defendant to be taken close to three years after it first filed an appearance. [5] As not above, plaintiff's counsel had communicated to defendant's counsel that it was his wish to resolve this issue by a Rule

18A trial, which they attempted to schedule as of August 23, 2000. [6] That being the history, the motion which was before me on the 11th of October was a motion filed by the plaintiff requesting, pursuant to Rules 5(6), 5(7), and 22(18) of the Rules of Court, an order that the third party proceedings be disposed of by a separate proceeding, or in the alternative that the determination of the issues outstanding between the plaintiff and the defendant, Sears Canada Inc., be heard separately from the issues between the defendant Sears Canada Inc. and the third parties. [7] The rules to be considered on this application are as follows: Rule 5: (6) Where a joinder of several claims or parties in a proceeding may unduly complicate or delay the trial or hearing of the proceeding or is otherwise inconvenient, the court may order separate trials or hearings or make any other order it thinks just. (7) Where a counterclaim or a third party proceeding ought to be disposed of by a separate proceeding, the court may so order. Rule 22: (18) The court may impose terms on any third party procedure to limit or avoid any prejudice or unnecessary delay that might otherwise be suffered by the plaintiff as a result of that third party procedure. [8] I would add, that as in all issues of consideration under the Rules, it is important to keep in mind Rule 1(5) which states: Rule 1: (5) The object of

these rules is to secure the just, speedy and inexpensive determination of every proceeding on its merits. The Law [9] The novel and interesting aspect of this application is what first appeared on first blush to be lack of judicial determination as to the test which should be applied in the application of Rules 5(6) and 5(7). [10] Through the course of submissions, counsel directed me to a number of cases. The first decision was by plaintiff's counsel, a decision of Kirkpatrick v. Budget Rent-A-Car of Victoria Ltd. et al (18 March 1998), Victoria Registry, 97/1950 (B.C.S.C.) a decision of Justice Bouck. The facts in that case are that the plaintiff rented a scooter in April, 1994 from the defendant. While operating the scooter, she was involved in an accident and injuries occurred. The plaintiff alleges that the defendant Budget had failed to maintain the scooter in an appropriate fashion. Budget had a motor vehicle insurance liability policy with ICBC, a third party in this proceeding. It also had excess insurance with another third party Chubb Insurance Company of Canada ("Chubb"). Apparently, ICBC refused to cover Budget and Budget issued a third party notice under Rule 22 claiming indemnity from ICBC and Chubb as its insurers. In its defence to the notice, ICBC pleaded it had no obligation to indemnify or defend Budget in the Kirkpatrick action. [11] The application before

Justice Bouck was an 18A application brought on by Budget in an attempt to determine whether or not ICBC had an obligation to defend Budget. The court in this case decided that it was not possible to employ Rule 18A to determine such a dispute for reasons which are not relevant to this proceeding. However, in the course of the decision the court opined about the implication of Rule 22(18) and Rule 5(7). The court found in para. 12: ...the resolution of an issue between a defendant and a third party should not prejudice the progress of the plaintiff's action against the defendant. Even if I were to decide the Rule 18A application in favour of one side or the other, there is a good chance the losing party would appeal. That would further delay the progress of Ms. Kirkpatrick's claim while she is forced to wait while Budget and ICBC find out who will defend her action. The court finds further in para. 15: In this instance, the dispute between Budget and ICBC as to who should defend the claim made by Ms. Kirkpatrick is and may cause unnecessary delay and prejudice to her. Hence, it should be resolved in a separate proceeding. ... [12] The court goes on to opine that in either Rule 33 -Special Case, or Rule 10 - Originating Application, can be a means to resolve the dispute between Budget and ICBC. The court further concludes that the plaintiff is free to pursue her claim against

Budget in accordance with the Rules of Court and, that pending a resolution of the issue as to who should defend the action, Budget will have to decide whether or not to do so itself or let the action proceed to default. [13] It is argued that this case concludes that if it can be shown that the resolution of an issue between a defendant and a third party would unduly delay the plaintiff's progress in litigation, and as a result prejudice the plaintiff, it would be appropriate to sever the proceedings. I note in this case, however, that the issue between the defendant Budget and the third party ICBC was simply one of indemnity, it was not an issue which related to liability or apportionment of liability between defendants and third parties. The third party in this case, ICBC, was not being pointed to as a party potential liable to the plaintiff directly. The dispute between the defendant and the third party ICBC was strictly one of indemnity. [14] I was also directed to the decision of Module Resources Incorporated v. Sookochoff et al (25 June 1997), New Westminster Registry (B.C.S.C.). In this case, the plaintiff is a reporting company and the defendant is a former director. In the initial litigation, the plaintiff alleged it suffered financial loss as a result of the actions of the defendant which included misrepresenting certain information about the values of property,

making secret profits to the detriment of the plaintiff, falsely claiming to have completed certain assignments which were not in fact completed, having an economic interest in conflict with the plaintiff, misappropriating information of the plaintiff and deceitfully and wrongly withholding necessary information and using that information for his own profit. The plaintiff sought damages for the above claims, which essentially related to a breach of the defendant's duty as a director of the plaintiff. [15] The third party, Anderson, was a director and president of the plaintiff. In the third party notice the defendant alleges that the third party was directing the actions of the plaintiff and that the claim of the plaintiff against the defendant had no merit. The defendant further states that the third party Anderson used the litigation to intimidate him, to distract him from claiming monies owed to him by both the third party and the plaintiff and also alleges defamation. [16] The decision in this case turns on whether or not it is appropriate for the issuance of a third party notice and the decision analyses primarily Rule 22(1). However, in this case there is a discussion of the import of Rule 22(18) which I must consider. The court finds in para. 16: If third party proceedings will lengthen the trial significantly, the plaintiff will suffer prejudice and delay. The

appropriate terms to order pursuant to Rule 22(18) are that third party issues are to be tried separately and that the third parties would not be bound by the determination of issues between the plaintiffs and defendants. Essentially the test is set out by Justice Bouck in the above referred to Kirkpatrick case. The court concludes, and severs the proceedings, finding that the claim of the defendant against the third party, though related, has a different factual basis and the legal questions to be considered are substantially different, one being the duties of a director and the other being claims in defamation and intimidation. [17] The Module Resources Incorporated case also considers the decision of Lui v. West Granville Manor (1985), 61 B.C.L.R. 315 (C.A.). This case presents an interesting consideration of the discretion under Rule 22 and sets out some broad principles that should govern the exercise of that discretion. Though Rule 22 itself is not directly before me, and the issue of the appropriateness of a third party proceeding itself was not raised, I have found some of the language used by Lambert J. in this decision to be useful in terms of the consideration I have to ultimately make in applying Rules 5(6) and 5(7). Speaking in a general way, Lambert J. opines in the first full para. on p. 328 of this decision as follows: ...there are a number of factors that

should always be considered in the exercise of a discretion. What is the fair thing to do? Who suffers prejudice if the discretion is exercised? How much prejudice? Who suffers prejudice if the discretion is not exercised? How much prejudice? Have the parties acted properly and reasonably in their own interests? If a party has not acted properly and reasonably, should he be relieved from the consequences of his own behaviour? Is there another course available to one or other of the parties? Where does the balance of convenience lie? This list is illustrative, but not exhaustive, of the questions that should be asked with respect to the parties before the court. But part of the purpose of the rule is avoid a multiplicity of proceedings for the benefit of other litigants, so that congestion in the court is avoided. So it is proper to ask questions in that area as well. [18] As indicated, this case really considers the exercise of discretion under Rule 22 but I find a number of the factors set out in the decision of Lambert J. noted above to be useful in formulating the ultimate test which I must consider in this application under Rule 5(6) and 5(7). Test to be Applied [19] Rule 5(6) states, and these are my words, that in a proceeding involving several claims or parties if the hearing of these claims and the parties together would unduly complicate or delay the trial or it is

otherwise inconvenient, the court may order separate trials or hearings. While not intending to create an exclusive test, the case law that I have reviewed suggests that the following factors should be considered: 1. Is there prejudice as set out in Rule 5(6), to the parties applying to sever matters if the court does not exercise its discretion to sever? Clearly, to satisfy this test, the party making the request must show that hearing the claims together would unduly complicate, delay the hearing, or otherwise be inconvenient. If a party applying does not meet this threshold, the court need not go further in any analysis and the application should be dismissed.

2. Have the actions of any party in the proceeding been unreasonable and have they contributed to the complication, the delay, or the inconvenience alleged by the party applying? If this found, that would strengthen the argument to sever.

3. Are the issues between the plaintiff and defendant and the issues between the defendant and the third party sufficiently distinct so as to allow them to be tried separately? If so, that strengthens the argument to sever off third party proceeding.

4. Is the relief claimed by, or the potential obligation of, any party best determined by hearing the evidence of all parties at one hearing? If so, that weakens an application to sever.

5. Does the prejudice to the party applying, prejudice based on undue complication, delay or inconvenience, outweigh any benefit of matters being heard together, or outweigh any considerations related to the overall objective of the rules to ensure a just, speedy and inexpensive determination of every proceeding on its merits, including the avoidance of a multiplicity of proceedings for the benefits of litigants and having concern to congestion in the courts generally? [20] On these facts, in answer to factor 1, I find that the plaintiff does have a case to argue that the continuation of this action in the fashion which it currently stands, namely with a defendant and two third parties, does complicate the litigation and does delay the trial or hearing of the proceeding. I further find in answer to factor 2, that the actions of the defendant, Sears Canada Inc., in not raising the issue of the third parties involvement until very late in the litigation has further accentuated the delay and inconvenience caused the plaintiff. [21] However, considering factors 3 to 5 above, I reluctantly conclude that in order for this action and this dispute to be resolved on its merits, it is still appropriate that these matters be heard together. This is not a case, as in Kirkpatrick, (supra) or Module Resources Incorporated, (supra) where the issues raised between the defendant and the third

parties are issues which do not directly relate to the claim of the plaintiff. Here they do. It is not merely a question of indemnity as in Kirkpatrick and it is not a question of essentially separate causes of action between parties as in the Module Resources Incorporated case. Both counsel for the defendant and counsel for the third party argued that in the absence of having all parties represented at the ultimate determination of this issue, there would be no way to realistically determine, assuming that the plaintiff establishes their case, who is responsible for the alleged negligent construction or maintenance of the lawn tractor in question. Both the defendant and the third parties must have an opportunity to examine the evidence and question the plaintiff in these proceedings in order for the issues to be effectively resolved. Separate trials would result in a duplication of evidence. The issue in both trials would be what caused the accident. The potential for inconsistent findings of fact at the end of the day does exist, if two separate trials are ordered. The third party claim in this proceeding really does not raise any new issues. It does, however, have the unfortunate effect of complicating the resolution of the issues already raised. [22] For these reasons, the application of the plaintiff to sever proceedings under Rule 5(6) and 5(7) is dismissed. Rule 22(18)

Considerations [23] I briefly heard from plaintiff's counsel about the suggestion that I impose deadlines in regards to discovery, inspection and exchange of experts' reports in this matter in the event I did not sever off the third party proceeding. There was also a suggestion that this matter be recommended for or be placed for case management. If counsel are unable to set realistic deadlines to ensure that this matter is resolved as quickly as possible, I will hear further from counsel with any specific proposals in this regard. I will leave it initially to counsel to try to develop an effective schedule for this litigation. [24] I wish to thank counsel for their submissions and their effective presentation of all sides of arguments in this matter. Though the plaintiff has not been successful in this application I am going to direct that each party bear their own costs in this application. "Master J.R. Groves"