Schwartz et al. v. Riverside Forest Products Limited et al.

2004 BCSC 1548 Schwartz et al v. Riverside Forest Products Limited et al

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Schwartz et al. v. Riverside Forest Products Limited et al., 2004 BCSC 1548 Date: 20041124 Docket: S033275 Registry: Vancouver Between: Ken Schwartz and Marie Paxton Plaintiffs And Riverside Forest Products Limited, International Wood & Allied Workers of Canada, International Wood & Allied Workers of Canada Local 1‑425 and Wade Fisher Defendants And International Wood & Allied Workers of Canada Local 1‑425, Wade Fisher, Brian Dyck, Ken Schwartz and Marion Stewart Third Parties Before: The Honourable Madam Justice Kirkpatrick Reasons for Judgment Counsel for the Plaintiffs: J.G. McQueen Counsel for the Defendant, Riverside Forest Products Limited: S.B. Margolis Counsel for the Defendant, Industrial Wood & Allied Workers of Canada Local 1‑425: I.A. Prkacin Date and Place of Hearing: November 16, 2004 Vancouver, B.C. [1] The plaintiffs, Ken Schwartz ("Schwartz") and Marie Paxton ("Paxton") apply for an order under Rule 36(2) for leave to discontinue their action against the defendant, Riverside Forest Products Limited ("Riverside"). Riverside supports the motion. The defendants, International Wood & Allied Workers of Canada (the "Union") and Wade Fisher ("Fisher") are no longer parties to the action. The third party proceedings have been discontinued. The remaining defendant, International Wood & Allied Workers of Canada Local

1‑425 (the "Local"), opposes the motion. [2] The action was commenced on November 19, 1999. There have been three amendments to the statement of claim. Reduced to its essence, the statement of claim alleges breach by Riverside of alleged contracts for the hauling of logs by Schwartz and Paxton. The claim against the Local is for breach of contract and breach of fiduciary duty in that it is alleged to have negotiated away the plaintiffs' log‑hauling status and rights under their alleged contracts with Riverside. [3] The plaintiffs say that they authorized the Local and Fisher to act as their agents in negotiations with Riverside. The plaintiffs say that they granted the Local and Fisher a limited authority to act on their behalf in respect of rate negotiations. They also say that the Local and Fisher acted beyond their warrant of authority and in breach of fiduciary duty. [4] On December 17, 2003, Riverside delivered a Notice to Mediate to the parties to the action. The mediation was held in April 2004. The plaintiffs settled their claims against Riverside. The Local asserts that the settlement was reached without their knowledge. Subsequently, in May 2004, the parties then remaining (the Local, the Union and Fisher) refused to consent to the amendment of the statement of claim to reflect the rule laid down in British Columbia Ferry Corp. v. T&N plc (1995), 16 B.C.L.R. (3d) 115

(C.A.), and to the discontinuance of the action against Riverside. Hence this application. [5] The Local opposes the application. I first observe the long‑established principle that a plaintiff, as dominus litis, is the master of the litigation: Young v. Valcourt, [1982] 1 W.W.R. 575 (B.C.S.C.). A plaintiff's motion to discontinue should normally be allowed unless very unusual circumstances exist: Niccoli v. Canadian Home Assurance Company and London Assurance Corporation (1966), 57 W.W.R. 113 (B.C.S.C.) and First City Investments Inc. v. Shrum, Liddle & Hebenton, [1988] B.C.J. No. 1933 (S.C.) (Q.L.). [6] The grounds of opposition to the discontinuance of the action against Riverside are set out in the Local's outline. The Local argues that if Riverside is not a party, the Local will be prejudiced as follows: (a) inability to use transcripts from the plaintiffs' examination for discovery of Riverside; (b) inability to use transcripts from Riverside's examination for discovery of the plaintiffs; (c) inability to avail itself of discovery procedures regarding Riverside; (d) if the proposed further amended statement of claim is permitted to be entered in its present form and a discontinuance is allowed against Riverside, greater complexity and expense will be created as the Local will be required to commence third party proceedings in order to ensure that its right to a fair trial

is protected; (e) the Local will require amendments to its statement of defence which would mirror the defence already provided by Riverside; (f) while asking to discontinue their claim against Riverside, the plaintiffs seek to amend their statement of claim while leaving in it claims pertaining to Riverside, which Riverside has denied, that the Local is not in a position to defend; (g) the plaintiffs' delay in settling with Riverside and their proposed further amended claim leaves the remaining defendant with less than four months to ensure that it is fully prepared to present not only its case, but Riverside's "would be" case as well, in a 25-day trial commencing on January 10, 2005. [7] In answer to the Local's asserted prejudice, I note the following with respect to each item of alleged prejudice: (a) Rule 40(27)(a) provides that: If otherwise admissible, the evidence given on an examination for discovery by a party or by a person examined under Rule 27(4) to (12) may be given in evidence at trial, unless the court otherwise orders, but the evidence is admissible only against (i) the adverse party who was examined, (ii) the adverse party whose status as a party entitled the examining party to conduct the examination under Rule 27(4) to (12), or (iii) if the person was examined under section 17 of the Class Proceedings Act as a member of a class, the members of that class. I

am unable to see that the Local would, in any event, be permitted to use the plaintiffs' examination for discovery of Riverside if the trial proceeded with Riverside as a party. Rule 40(27)(a) establishes that testimony given on examination for discovery is only admissible against the party examined or the party whose representative was examined. Further, only the opposite party conducting the examination may tender evidence taken on discovery at trial: Anderson v. Cox (1978), 7 B.C.L.R. 159 (S.C.); Cartwright v. Toronto (1914), 50 S.C.R. 215. (b) The Local has not conducted examinations for discovery. The trial is scheduled to begin on January 10, 2005. The Local was added as a defendant to the action in October 2002, at which time the trial was scheduled for February 17, 2003. I do not think that the failure by the Local to conduct its own examinations for discovery of the plaintiffs can justify keeping Riverside in the action. The discontinuance of the action against Riverside will mean that the Local cannot employ Riverside's examination for discovery of the plaintiffs at trial. That may create some modest prejudice. However, I think that it is doubtful that Riverside's examination for discovery of the plaintiffs would be of much assistance to the Local. The issue in respect of Riverside concerned breach of contract. The claim against the Local is for breach of fiduciary

duty. Furthermore, the evidence that the Local needs could be obtained on its own examination for discovery of the plaintiffs. The scope of the plaintiffs' statement of claim will continue to include the matters concerning Riverside. The Local will thus be unfettered in the scope of questions it may ask the plaintiffs. (c) The Local may employ Rule 28 or Rule 40(35) to examine Riverside. (d) The discontinuance against Riverside will simplify, not complicate, the proceedings. (e) It is true that the discontinuance against Riverside will require the Local to amend its statement of defence to include defences which had been pleaded by Riverside. However, this is not prejudicial to the Local. There is ample time before trial to finalize the pleadings. (f) As the plaintiffs seek an order of discontinuance and an amendment of the statement of claim conforming to the rule in the British Columbia Ferry Corp. case, it is necessary that the claims pertaining to Riverside remain in the statement of claim. The court must be apprised of all sources of potential liability other than the Local. As I have noted, this will enhance the Local's examination for discovery of the plaintiffs should it elect to conduct such examination. (g) The Local has known since April 2004 that the plaintiffs had settled their claims against Riverside. The Local chose not to conduct its own examinations in the

knowledge that Riverside wanted to be released from the action. [8] In addition to the above, the Local argues that Riverside's continued participation in the action is necessary to establish that there were no contracts between the plaintiffs and Riverside. If there were no contracts, then there would be no "negotiating away" of the plaintiffs' alleged contract rights by the Local. The Local is concerned that Riverside's absence from the action will enhance the plaintiffs' ability to prove the existence of the alleged contracts. [9] The Local therefore argues that the court should not grant the discontinuance because to do so would prevent the Local from seeking declaratory relief that no contract existed between the plaintiffs and Riverside. In support of that submission, the Local relies on the decision in British Columbia Ferry Corp. at ¶ 26 and 31: 26. ... The law in this province supports the existence of a broad discretion to grant declaratory relief, unfettered by any such limitation. In Sara v. Sara (1962), 40 W.W.R. 257, this court adopted such an approach to declaratory relief by giving effect to the majority decision of the English Court of Appeal in Guaranty Trust Company of New York v. Hannay & Company, [1915] K.B.

536. In the latter case it was argued that a right to a declaration could only arise in those cases where the person seeking such relief had a cause of action apart from Order XXV., r.5, the equivalent to our sub‑Rule 5(22). After reviewing a number of authorities, Pickford L.J. noted: I think therefore that the effect of the rule is to give a general power to make a declaration whether there be a cause of action or not, and at the instance of any party who is interested in the subject-matter of the decision.(p. 562) 31. ... It would, in my view, be manifestly wrong if a private accord between plaintiff and third party could work to deprive a defendant of the ability to establish an element of proof essential to a just resolution of the action on which all parties had joined issue. But that is precisely what will occur here if the defendants are denied the declaratory relief they seek under Rule 5(22). In those circumstances, I am of the view that the third party claims for declaratory relief should be allowed to proceed. [10] I think this argument must fail. First, the Local has not commenced third party proceedings against Riverside and no declaratory relief has been claimed by the Local. Second, the burden of establishing the existence of the contracts with Riverside rests on the plaintiffs. The Local is free to subpoena witnesses to support its contention that no contracts

existed between the plaintiffs and Riverside, including members of the Local who were in similar, if not identical, circumstances to the plaintiffs. Third, a factual finding that no contracts were formed between the plaintiffs and Riverside would be sufficient to displace the claim of damages against the Local. [11] The Local further argues that Riverside's participation in the action is required to establish the status of the plaintiffs' employment with Riverside prior to the Local's involvement in 1997. The Local argues that only Riverside has knowledge as to whether the Local's involvement altered the plaintiffs' position as a result of the implementation of the Hauling Rate Agreement negotiated with Riverside by the Local, on behalf of the plaintiffs and others. [12] In my view, this argument must also fail. The plaintiffs have the burden of proving that there was a change of status in their employment with Riverside. They must prove the circumstances that existed before and after the Local's involvement. If need be, the Local may examine a representative of Riverside to testify as to those circumstances under Rule 28, or the Local may subpoena a representative of Riverside to testify at trial. [13] The same applies to the Local's contention that Riverside has at its disposal the best evidence of any loss suffered by the plaintiffs as a result of the alleged breach by the

Local. [14] I conclude that the Local has not established the "very unusual circumstances" that would justify the denial of the plaintiffs' application to discontinue against Riverside and amend their pleadings to conform to the British Columbia Ferry Corp. decision. The overwhelming impression left by the Local's opposition to this motion is that it decided early on in the litigation to ride Riverside's coattails with respect to trial preparation. When the plaintiffs' claims against Riverside were settled, the Local was obliged to bridge the trial preparation gap. The failure to do so cannot now be visited upon Riverside, which only wants out of the litigation. In my view, it is just and reasonable that the discontinuance be granted. [15] Order accordingly. "P.A. Kirkpatrick, J." The Honourable Madam Justice P.A. Kirkpatrick