Court grants injunction preventing the Barrett Commission leaky condo inquiry from issuing summons for the purpose of providing information concerning the financial history and internal affairs of New Home Warranty

                                                Date:  19990927
Docket: A992476
Registry: Vancouver




IN THE SUPREME COURT OF BRITISH COLUMBIA


IN THE MATTER OF THE BARRETT COMMISSION, A FURTHER INQUIRY INTO
THE QUALITY OF CONDOMINIUM CONSTRUCTION IN BRITISH COLUMBIA


REASONS FOR JUDGMENT

OF THE

HONOURABLE MR. JUSTICE WARREN
(IN CHAMBERS)



Counsel for New Home Warranty of
British Columbia Inc.: K.E. Clark
M. Sims

Counsel for the Barrett Commission: P. Leask, Q.C.

Counsel for the Attorney General
of British Columbia: G.H. Copley, Q.C.

Place and Date of Hearing: Vancouver, B.C.
September 24, 1999


[1] The petitioner, New Home Warranty of British Columbia
Inc., [NHW or the company] seeks an interim order prohibiting
the Barrett Commission from issuing summons to the present and
former employees, representatives, shareholders and consultants
of NHW to attend before the Commission for the purpose of
providing information concerning the financial history and
internal affairs of NHW. There is also specific interim relief
and that concerns one Moore who has already been served with a
summons: the petitioner asks for an order that Moore not be
obliged to attend pursuant to the summons.

[2] The petitioner argues that the Terms of Reference set
out in an Order in Council 1055 made August 11, 1999 under sec.
8 of the Inquiry Act, R.S.B.C. Ch. 224 [the Act] are ultra
vires, invalid and not authorized under the Act. Further,
para. 2.1 of the Terms of Reference set out in OIC No. 1238
which were approved and ordered September 10, 1999 under sec. 8
of the Act are ultra vires and not authorized under the Act
insofar as they authorize the Commission to inquire into the
financial history of and matters relating to the insolvency of
a private company. The petitioner submits these are matters
relating to bankruptcy and insolvency which are federal
concerns under the Constitution Act 1982, R.S.C. 1985,
Chap. 11.

[3] The respondent, the Barrett Commission and the
Attorney General of British Columbia are opposed to the relief
sought, arguing that as a matter of statutory interpretation
the actions are intra vires, particularly as they relate to
matters of property and civil rights, municipal affairs and the
administration of justice in the province.

[4] A very brief history of the affairs of NHW and the
Commission will be sufficient at this interlocutory hearing.
NHW is a private company which was incorporated in 1976 to
provide limited warranty coverage for new homes in this
province, but only for those homes built by builders who had
coverage under the policies issued by NHW. NHW has always been
a private corporation and never connected with any government
body. The Barrett Commission was set up to inquire further
into the quality of condominium construction in the province.

[5] With the tremendous rise in claims, NHW was unable to
meet its obligations and on March 30, 1999 it filed a Notice of
Intention to Make a Proposal under the Bankruptcy Act. A
"Final" Draft Proposal was filed with the creditors and the
Trustee on September 8, 1999 but this was amended and refiled
on September 16, 1999. The Trustee has set a meeting of
creditors for October 7, 1999. By the process set out in the
Bankruptcy and Insolvency Act, if the proposal is accepted by
the necessary number of creditors, the assets of the company
will vest in the Trustee under the terms of the proposal and
Inspectors will be appointed by the creditors to help the
Trustee in carrying out the terms of the proposal. If the
creditors reject the proposal, then the company will a bankrupt
and the assets will vest in the Trustee and again Inspectors
will be appointed to help the Trustee carry out its duties. In
any event, on October 7, 1999 effective control of the company
will pass to the Trustee and the Inspectors. One of the terms
of the Proposal is that the Trustee and Inspectors are to carry
out such investigations into the financial affairs of the
company as are considered appropriate. If the Proposal is
rejected, then under the Bankruptcy and Insolvency Act the
Official Receiver and the Trustee, as well as the Inspectors,
are empowered by the provisions of the Bankruptcy and
Insolvency Act to conduct investigations into the financial
affairs of the company. By sec. 163 of that Act the trustee is
empowered to examine any person thought to have knowledge of
the affairs of the bankrupt.

[6] By its original Terms of Reference, the Barrett
Commission was to conduct a further inquiry into the quality of
condominium construction in this province and the adequacy of
protection for and accountability to consumers for faulty condo
construction; inquire into the impact on homeowners, mortgage
insurers and the economy of the financial failure of the
company; inquire into the extent of foreclosures, bankruptcies
and related matters arising from faulty condo construction; and
submit its report and recommendations to the Lieutenant
Governor by October 29, 1999. As a result of NHW declining a
request to provide information because the Terms of Reference
made no specific reference to NHW, another OIC was granted on
September 10, 1999. This OIC extended the time for submitting
the report and made specific reference to NHW in these terms:

To inquire into the history of home owner warranties
in British Columbia and the causes of the failure of
New Home Warranty of British Columbia Inc.[emphasis
mine]

[7] Three days later the Commission sent a letter to NHW
requesting information and documentation which were to be used
to inquire into the cause of the failure of NHW. NHW replied
through its solicitor expressing concern with the request, in
part because of the demands it would impose upon the company
which was preparing for the meeting with its creditors, but
more importantly for the purposes of this application, stating
that the authority of the Commission flowed from the Inquiry
Act and there was nothing in that Act which permitted an
inquiry into the affairs of a private corporation.

[8] The company suggested a compromise: that the matter
be deferred until October 7, 1999 when the Trustee would be in
place. This suggestion apparently did not meet with the
approval of the Commission for a summons was issued requiring
the general manager to attend before the Commission on
September 28, 1999. Other summons have been issued directed at
other employees or officers of the company. As a result, NHW
filed its petition and on short notice with leave applied for
this interlocutory relief until the hearing of the petition or
until further order of the Court. The petitioner says that
there is a serious question to be tried; if the injunction is
not granted there will be irreparable harm; and the balance of
convenience favours the granting of the interim relief.

[9] Section 8(b) of the Inquiry Act reads as follows:


Whenever the Lieutenant Governor in Council thinks it
expedient, the Lieutenant Governor in Council may by
commission titled in the manner of this Act, and
issued under the Great Seal, appoint commissioners to
inquire into the following:

(b) any matter connected with the good
government of British Columbia, or the conduct of any
part of the public business of it, including all
matters municipal, or the administration of justice
in British Columbia. [emphasis mine]

[10] It is agreed between counsel that this is the only
section of the Act which is applicable and petitioner's counsel
submits that it clearly demonstrates that the terms of
reference under the OIC cannot be authorized.

[11] Mr. Clark submits that there is a serious question to
be tried under this portion of the Act. He submits that a
plain reading of the section cannot attach any authority to the
Commission to enquire into the affairs of a private
corporation. In R. v. Clements (1919), 44 D.L.R. 623
(B.C.S.C.) 623 Hunter, C.J.B.C. held that the term "good
government" is not to be taken in a wide sense and that it was
meant to generally refer to the administration of the
government and the exercise of executive and ministerial
functions and in this way the interpretation would be brought
within the scope of provincial powers under the B.N.A. Act.
Mr. Clark says that this interpretation was not dealt with by
the Court of Appeal when it reversed the Chief Justice on
appeal [[1919] 3 W.W.R. 115]. He submits that because NHW is a
private company without any connection, involvement or
relationship with the Provincial government the terms of
reference to inquire into its history and causes of failure is
wholly and entirely outside the administration of the
government, the exercise of executive and ministerial function
and the management and conduct of official business. Further,
it cannot be said to fall within the administration of justice.

[12] Petitioner's counsel also submits that the Orders in
Council authorizing the Commission to inquire into "the causes
of the failure of NHW..." are ultra vires the province as being
an inquiry into matters related to bankruptcy and insolvency,
which under sec. 91 of the Constitution Act is within federal
jurisdiction.

[13] The petitioner submits that because there are similar
powers given to a Trustee in bankruptcy to inquire into the
causes of the failure of the bankrupt the federal government
has occupied the field. Further, under the Bankruptcy and
Insolvency Act any other person on leave of the court can
pursue the very issues that the Barrett Commission wishes to
pursue and, of course, the trustee may very well choose to
provide the very information being sought by the Commission.

[14] In Moore v. B.C. (Securities Commission), [1996]
B.C.J. No. 651 Rowles J.A., in considering irreparable harm,
expressed the view that as the appeals involved the
constitutionality of the legislation under which the
investigatory order was issued, she was prepared to assume the
applicants would suffer damage that could not be remedied if
the stay were not granted. Here the petitioners argue there
will be irreparable harm and for the same reason.

[15] In summary, then the petitioner argues that there is
a serious question to be tried, there will be irreparable harm
if the summons process proceeds and the balance of convenience
favours the granting of the interim relief.

[16] Counsel for the Commissioner focused on the
interpretation of sec. 9 of the Act and the issue whether there
was a serious question to be tried. He submitted that the
affairs of NHW are inextricably intertwined with the good
government and the administration of justice in the province.
He submits that the government does have an interest in the
affairs of the company because the failure of the largest home
warranty company in the province raises a legitimate concern
for the government: does the government have the right home
warranty policy and if not, what type of policy should there be
to provide as much protection for homeowners in the province as
possible. Thus, so long as the Commission keeps within the
four walls of its mandate it has jurisdiction under sec. 8 of
the Act. Further, there are significant financial consequences
flowing from the failure of NHW and this, too, is a legitimate
concern of the government.

[17] Mr. Leask, for the Commission, says that on a balance
of convenience test any delay will not permit the Commission to
conclude its work and hand in the report. A trial of the issue
therefor would work a significant prejudice to the Commission.
Mr. Leask also conceded that if the Commission does not have
the power to summons individuals with knowledge of the affairs
of NHW then those individuals will have suffered a harm.

[18] Mr. Copley argued the case for the Attorney General
that there was no serious constitutional question to be tried.
He provided a large number of cases dealing with the division
of powers and sec. 91 and sec. 92 as well as cases where the
work of other commissions of inquiry were held to be intra
vires the enabling legislation. With reference to the decision
of the Court of Appeal of this province in R. v. Clements,
supra, he said that implicitly the full Court disagreed with
the Chief Justice on his narrow interpretation of the words
"good government." Mr. Copley also argued that simply because
the inquiry authorized by this OIC ventured into the area of
bankruptcy and insolvency was not sufficient to strike it down
as ultra vires the province. So long as the terms of reference
work in tandem with the powers under the Bankruptcy and
Insolvency Act, and not in substitution for it, there is no
excess of jurisdiction.

Decision

[19] As the Chambers judge hearing this interlocutory
application, I ought not generally to make a prolonged
examination of the merits of the case unless my decision will
amount to a final determination of the case or the question of
constitutionality presents itself as a simple question of law
alone [R.J.R. Macdonald v. Canada (Attorney General) (1984),
111 D.L.R. (4th) 385 (S.C.C.)]. In my view, neither of those
exceptions applies here. Nevertheless, I am of the view that
there is indeed a serious risk of harm to the various
individuals who have been or are to be summonsed as a result of
the perceived exercise of power by the Commission. There is a
serious question whether the Commission has the jurisdiction to
inquire into the affairs of a private company or whether the
words in sec. 8 of the Inquiry Act should be given a broader
meaning than that of Chief Justice Hunter in Clements, supra.
The balance of convenience favours the applicants here. There
has already been one extension to permit the Commission to work
under amended terms and it has until January 2000 to conclude
its deliberations and report. The Commission is quite capable
of proceeding with its inquiry and await the outcome of the
hearing of this petition. Should the claims of the petitioner
be dismissed, then the Commission may proceed with the inquiry.
Should the petition succeed, then no individual will have
suffered the harm and inconvenience of obeying the summons. In
short, I am satisfied that this application is not a frivolous
one and that there is a fair issue to be tried. The threshold
for this test is not high [R.J.R. Macdonald, supra] and the
petitioner has crossed it. The petitioner has also
demonstrated to my satisfaction the likelihood of irreparable
harm which the petitioner argues in this case is not capable of
being quantified in monetary terms because it involves the
rights of an individual under the Charter of Rights and
Freedoms. If the various individuals do attend as summonsed
and provide the information and documents, then NHW would be
deprived of any real benefit if it is successful on the hearing
of its petition: Global Securities Corp. v. B.C. (Securities
Commission), [1997] B.C.J. No. 1875 (B.C.C.A.). Lastly, the
petitioner has demonstrated that on a balance of convenience
the petitioner would suffer the greater harm if the order is
not granted.

[20] The application is allowed but on terms. At the
conclusion of submissions on Friday I was informed that both
the Federal and Provincial Attorneys General waived the time
for giving notice under the Constitutional Question Act and,
accordingly, the petitioner is in a position to set this matter
down for hearing promptly. The Attorney General for British
Columbia and Mr. Barrett are at liberty to apply to set aside
this order on two days' notice if the petitioner does not
comply with my direction that it take all steps necessary to
have this matter set down for hearing within seven days.



"Warren, J."
_________________________________
The Honourable Mr. Justice Warren

 

 

Court grants injunction preventing the Barrett Commission leaky condo inquiry from issuing summons for the purpose of providing information concerning the financial history and internal affairs of New Home Warranty

                                                Date:  19990927
Docket: A992476
Registry: Vancouver




IN THE SUPREME COURT OF BRITISH COLUMBIA


IN THE MATTER OF THE BARRETT COMMISSION, A FURTHER INQUIRY INTO
THE QUALITY OF CONDOMINIUM CONSTRUCTION IN BRITISH COLUMBIA


REASONS FOR JUDGMENT

OF THE

HONOURABLE MR. JUSTICE WARREN
(IN CHAMBERS)



Counsel for New Home Warranty of
British Columbia Inc.: K.E. Clark
M. Sims

Counsel for the Barrett Commission: P. Leask, Q.C.

Counsel for the Attorney General
of British Columbia: G.H. Copley, Q.C.

Place and Date of Hearing: Vancouver, B.C.
September 24, 1999


[1] The petitioner, New Home Warranty of British Columbia
Inc., [NHW or the company] seeks an interim order prohibiting
the Barrett Commission from issuing summons to the present and
former employees, representatives, shareholders and consultants
of NHW to attend before the Commission for the purpose of
providing information concerning the financial history and
internal affairs of NHW. There is also specific interim relief
and that concerns one Moore who has already been served with a
summons: the petitioner asks for an order that Moore not be
obliged to attend pursuant to the summons.

[2] The petitioner argues that the Terms of Reference set
out in an Order in Council 1055 made August 11, 1999 under sec.
8 of the Inquiry Act, R.S.B.C. Ch. 224 [the Act] are ultra
vires, invalid and not authorized under the Act. Further,
para. 2.1 of the Terms of Reference set out in OIC No. 1238
which were approved and ordered September 10, 1999 under sec. 8
of the Act are ultra vires and not authorized under the Act
insofar as they authorize the Commission to inquire into the
financial history of and matters relating to the insolvency of
a private company. The petitioner submits these are matters
relating to bankruptcy and insolvency which are federal
concerns under the Constitution Act 1982, R.S.C. 1985,
Chap. 11.

[3] The respondent, the Barrett Commission and the
Attorney General of British Columbia are opposed to the relief
sought, arguing that as a matter of statutory interpretation
the actions are intra vires, particularly as they relate to
matters of property and civil rights, municipal affairs and the
administration of justice in the province.

[4] A very brief history of the affairs of NHW and the
Commission will be sufficient at this interlocutory hearing.
NHW is a private company which was incorporated in 1976 to
provide limited warranty coverage for new homes in this
province, but only for those homes built by builders who had
coverage under the policies issued by NHW. NHW has always been
a private corporation and never connected with any government
body. The Barrett Commission was set up to inquire further
into the quality of condominium construction in the province.

[5] With the tremendous rise in claims, NHW was unable to
meet its obligations and on March 30, 1999 it filed a Notice of
Intention to Make a Proposal under the Bankruptcy Act. A
"Final" Draft Proposal was filed with the creditors and the
Trustee on September 8, 1999 but this was amended and refiled
on September 16, 1999. The Trustee has set a meeting of
creditors for October 7, 1999. By the process set out in the
Bankruptcy and Insolvency Act, if the proposal is accepted by
the necessary number of creditors, the assets of the company
will vest in the Trustee under the terms of the proposal and
Inspectors will be appointed by the creditors to help the
Trustee in carrying out the terms of the proposal. If the
creditors reject the proposal, then the company will a bankrupt
and the assets will vest in the Trustee and again Inspectors
will be appointed to help the Trustee carry out its duties. In
any event, on October 7, 1999 effective control of the company
will pass to the Trustee and the Inspectors. One of the terms
of the Proposal is that the Trustee and Inspectors are to carry
out such investigations into the financial affairs of the
company as are considered appropriate. If the Proposal is
rejected, then under the Bankruptcy and Insolvency Act the
Official Receiver and the Trustee, as well as the Inspectors,
are empowered by the provisions of the Bankruptcy and
Insolvency Act to conduct investigations into the financial
affairs of the company. By sec. 163 of that Act the trustee is
empowered to examine any person thought to have knowledge of
the affairs of the bankrupt.

[6] By its original Terms of Reference, the Barrett
Commission was to conduct a further inquiry into the quality of
condominium construction in this province and the adequacy of
protection for and accountability to consumers for faulty condo
construction; inquire into the impact on homeowners, mortgage
insurers and the economy of the financial failure of the
company; inquire into the extent of foreclosures, bankruptcies
and related matters arising from faulty condo construction; and
submit its report and recommendations to the Lieutenant
Governor by October 29, 1999. As a result of NHW declining a
request to provide information because the Terms of Reference
made no specific reference to NHW, another OIC was granted on
September 10, 1999. This OIC extended the time for submitting
the report and made specific reference to NHW in these terms:

To inquire into the history of home owner warranties
in British Columbia and the causes of the failure of
New Home Warranty of British Columbia Inc.[emphasis
mine]

[7] Three days later the Commission sent a letter to NHW
requesting information and documentation which were to be used
to inquire into the cause of the failure of NHW. NHW replied
through its solicitor expressing concern with the request, in
part because of the demands it would impose upon the company
which was preparing for the meeting with its creditors, but
more importantly for the purposes of this application, stating
that the authority of the Commission flowed from the Inquiry
Act and there was nothing in that Act which permitted an
inquiry into the affairs of a private corporation.

[8] The company suggested a compromise: that the matter
be deferred until October 7, 1999 when the Trustee would be in
place. This suggestion apparently did not meet with the
approval of the Commission for a summons was issued requiring
the general manager to attend before the Commission on
September 28, 1999. Other summons have been issued directed at
other employees or officers of the company. As a result, NHW
filed its petition and on short notice with leave applied for
this interlocutory relief until the hearing of the petition or
until further order of the Court. The petitioner says that
there is a serious question to be tried; if the injunction is
not granted there will be irreparable harm; and the balance of
convenience favours the granting of the interim relief.

[9] Section 8(b) of the Inquiry Act reads as follows:


Whenever the Lieutenant Governor in Council thinks it
expedient, the Lieutenant Governor in Council may by
commission titled in the manner of this Act, and
issued under the Great Seal, appoint commissioners to
inquire into the following:

(b) any matter connected with the good
government of British Columbia, or the conduct of any
part of the public business of it, including all
matters municipal, or the administration of justice
in British Columbia. [emphasis mine]

[10] It is agreed between counsel that this is the only
section of the Act which is applicable and petitioner's counsel
submits that it clearly demonstrates that the terms of
reference under the OIC cannot be authorized.

[11] Mr. Clark submits that there is a serious question to
be tried under this portion of the Act. He submits that a
plain reading of the section cannot attach any authority to the
Commission to enquire into the affairs of a private
corporation. In R. v. Clements (1919), 44 D.L.R. 623
(B.C.S.C.) 623 Hunter, C.J.B.C. held that the term "good
government" is not to be taken in a wide sense and that it was
meant to generally refer to the administration of the
government and the exercise of executive and ministerial
functions and in this way the interpretation would be brought
within the scope of provincial powers under the B.N.A. Act.
Mr. Clark says that this interpretation was not dealt with by
the Court of Appeal when it reversed the Chief Justice on
appeal [[1919] 3 W.W.R. 115]. He submits that because NHW is a
private company without any connection, involvement or
relationship with the Provincial government the terms of
reference to inquire into its history and causes of failure is
wholly and entirely outside the administration of the
government, the exercise of executive and ministerial function
and the management and conduct of official business. Further,
it cannot be said to fall within the administration of justice.

[12] Petitioner's counsel also submits that the Orders in
Council authorizing the Commission to inquire into "the causes
of the failure of NHW..." are ultra vires the province as being
an inquiry into matters related to bankruptcy and insolvency,
which under sec. 91 of the Constitution Act is within federal
jurisdiction.

[13] The petitioner submits that because there are similar
powers given to a Trustee in bankruptcy to inquire into the
causes of the failure of the bankrupt the federal government
has occupied the field. Further, under the Bankruptcy and
Insolvency Act any other person on leave of the court can
pursue the very issues that the Barrett Commission wishes to
pursue and, of course, the trustee may very well choose to
provide the very information being sought by the Commission.

[14] In Moore v. B.C. (Securities Commission), [1996]
B.C.J. No. 651 Rowles J.A., in considering irreparable harm,
expressed the view that as the appeals involved the
constitutionality of the legislation under which the
investigatory order was issued, she was prepared to assume the
applicants would suffer damage that could not be remedied if
the stay were not granted. Here the petitioners argue there
will be irreparable harm and for the same reason.

[15] In summary, then the petitioner argues that there is
a serious question to be tried, there will be irreparable harm
if the summons process proceeds and the balance of convenience
favours the granting of the interim relief.

[16] Counsel for the Commissioner focused on the
interpretation of sec. 9 of the Act and the issue whether there
was a serious question to be tried. He submitted that the
affairs of NHW are inextricably intertwined with the good
government and the administration of justice in the province.
He submits that the government does have an interest in the
affairs of the company because the failure of the largest home
warranty company in the province raises a legitimate concern
for the government: does the government have the right home
warranty policy and if not, what type of policy should there be
to provide as much protection for homeowners in the province as
possible. Thus, so long as the Commission keeps within the
four walls of its mandate it has jurisdiction under sec. 8 of
the Act. Further, there are significant financial consequences
flowing from the failure of NHW and this, too, is a legitimate
concern of the government.

[17] Mr. Leask, for the Commission, says that on a balance
of convenience test any delay will not permit the Commission to
conclude its work and hand in the report. A trial of the issue
therefor would work a significant prejudice to the Commission.
Mr. Leask also conceded that if the Commission does not have
the power to summons individuals with knowledge of the affairs
of NHW then those individuals will have suffered a harm.

[18] Mr. Copley argued the case for the Attorney General
that there was no serious constitutional question to be tried.
He provided a large number of cases dealing with the division
of powers and sec. 91 and sec. 92 as well as cases where the
work of other commissions of inquiry were held to be intra
vires the enabling legislation. With reference to the decision
of the Court of Appeal of this province in R. v. Clements,
supra, he said that implicitly the full Court disagreed with
the Chief Justice on his narrow interpretation of the words
"good government." Mr. Copley also argued that simply because
the inquiry authorized by this OIC ventured into the area of
bankruptcy and insolvency was not sufficient to strike it down
as ultra vires the province. So long as the terms of reference
work in tandem with the powers under the Bankruptcy and
Insolvency Act, and not in substitution for it, there is no
excess of jurisdiction.

Decision

[19] As the Chambers judge hearing this interlocutory
application, I ought not generally to make a prolonged
examination of the merits of the case unless my decision will
amount to a final determination of the case or the question of
constitutionality presents itself as a simple question of law
alone [R.J.R. Macdonald v. Canada (Attorney General) (1984),
111 D.L.R. (4th) 385 (S.C.C.)]. In my view, neither of those
exceptions applies here. Nevertheless, I am of the view that
there is indeed a serious risk of harm to the various
individuals who have been or are to be summonsed as a result of
the perceived exercise of power by the Commission. There is a
serious question whether the Commission has the jurisdiction to
inquire into the affairs of a private company or whether the
words in sec. 8 of the Inquiry Act should be given a broader
meaning than that of Chief Justice Hunter in Clements, supra.
The balance of convenience favours the applicants here. There
has already been one extension to permit the Commission to work
under amended terms and it has until January 2000 to conclude
its deliberations and report. The Commission is quite capable
of proceeding with its inquiry and await the outcome of the
hearing of this petition. Should the claims of the petitioner
be dismissed, then the Commission may proceed with the inquiry.
Should the petition succeed, then no individual will have
suffered the harm and inconvenience of obeying the summons. In
short, I am satisfied that this application is not a frivolous
one and that there is a fair issue to be tried. The threshold
for this test is not high [R.J.R. Macdonald, supra] and the
petitioner has crossed it. The petitioner has also
demonstrated to my satisfaction the likelihood of irreparable
harm which the petitioner argues in this case is not capable of
being quantified in monetary terms because it involves the
rights of an individual under the Charter of Rights and
Freedoms. If the various individuals do attend as summonsed
and provide the information and documents, then NHW would be
deprived of any real benefit if it is successful on the hearing
of its petition: Global Securities Corp. v. B.C. (Securities
Commission), [1997] B.C.J. No. 1875 (B.C.C.A.). Lastly, the
petitioner has demonstrated that on a balance of convenience
the petitioner would suffer the greater harm if the order is
not granted.

[20] The application is allowed but on terms. At the
conclusion of submissions on Friday I was informed that both
the Federal and Provincial Attorneys General waived the time
for giving notice under the Constitutional Question Act and,
accordingly, the petitioner is in a position to set this matter
down for hearing promptly. The Attorney General for British
Columbia and Mr. Barrett are at liberty to apply to set aside
this order on two days' notice if the petitioner does not
comply with my direction that it take all steps necessary to
have this matter set down for hearing within seven days.



"Warren, J."
_________________________________
The Honourable Mr. Justice Warren

 

 

The Palladain/Palladium (Vancouver): New Home Warranty Program collapses after settling, but before paying leaky condo owners

 

                                               Date: 19990616
Docket: C946094
Registry: Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

THE OWNERS, STRATA PLAN VR 2000


PLAINTIFF
AND:

STEPHEN DOUGLAS SHAW, ERIC CAMPBELL,
GEORGE REIFEL, 1705 NELSON HOLDINGS LTD.,
ALLAN MILLIGAN ENGINEERING LTD., SARANGI
AND RODGER CONSULTANTS LTD., THADDEUS YOUNG
carrying on business as SPACEWORKS ARCHITECTS,
and the said SPACEWORKS ARCHITECTS, MIERAU
CONSTRUCTION LTD., WESTCOAST STUCCO INC., GORDON
SPRATT & ASSOCIATES LTD., and
PACIFIC NEW HOME SERVICES, INC. carrying on
business as NEW HOME WARRANTY PROGRAM OF BRITISH
COLUMBIA AND THE YUKON, and the said NEW HOME
WARRANTY PROGRAM OF BRITISH COLUMBIA
AND THE YUKON

DEFENDANTS
AND:

JONET CONSTRUCTION LTD., JEM SUNDECKS LTD.
LEVELTON ENGINEERING LTD.

THIRD PARTIES

REASONS FOR JUDGMENT

OF THE

HONOURABLE MR. JUSTICE VICKERS
(IN CHAMBERS)

Counsel for the Plaintiff: D.F. Sutherland

Counsel for the Defendants,
Allan Milligan Engineering Ltd.,
Sarangi and Rodger Consultants
Ltd., Thaddeus Young carrying on
business as Spaceworks Architects,
and Gordon Spratt & Associates
Ltd.: J.R. Singleton, Q.C. and
S. Robertson

Place and Date of Hearing: Vancouver, B.C.
June 2 & 3, 1999[1] This is an application by the plaintiff pursuant to
s. 10 of the Law and Equity Act, R.S.B.C. 1996, c. 253 seeking
an order:
i) amending the statement of claim to allege a
settlement of the proceedings;
ii) declaring a binding settlement between the
plaintiff and certain defendants;
iii) declaring that the liability of certain
defendants under the terms of the settlement
agreement is joint;
iv) judgment against certain defendants in the
amount of $1,600,000; and
v) costs.

[2] In this action the plaintiff seeks to recover damages
arising out of the construction of a condominium. The
plaintiff alleges construction deficiencies resulting in
extensive water damage. The trial of the action was scheduled
to commence in March of this year. Settlement discussion
between counsel began in or about January 1999.

[3] A mediation, assisted by Mr. Gary Fitzpatrick,
mediator, took place on January 26 and 27, 1999. Prior to
mediation, the plaintiff offered to settle for the sum of $4
million inclusive of costs. In the course of mediation, the
plaintiff offered to settle for the sum of $2.5 million plus
costs estimated at $300,000. In response, certain defendants
offered the plaintiff the sum of $1.5 million. As between
these defendants, contribution to the settlement was to be as
follows:

New Home Warranty $500,000
Spaceworks Architects $510,000
Milligan $210,000
Sarangi and Rodger $100,000
Mierau and West Coast $180,000

[4] Counsel for the plaintiff was aware the total amount
offered was the result of contributions from these defendants.
He was not given the precise breakdown of the offer as noted
above. In addition, he understood the offer was for the sum of
$1,500,000 by all above-noted defendants or, $1.4 million
without the participation of Sarangi and Rodger Consultants
("Rodger and Sarangi").

[5] Prior to mediation, counsel for the defendant Allan
Milligan Engineering Ltd. ("Milligan") delivered a formal offer
to settle in the amount of $4,227.54 to counsel for the
plaintiff.

[6] In the course of mediation, counsel for the plaintiff
was advised that the limits of liability under a policy of
insurance owned by Spaceworks Architects ("Spaceworks") was
$500,000 and that those funds had been committed to the
settlement offer. In addition, during mediation, counsel for
the plaintiff was advised that the limits of Milligan's
insurance policy had also been committed to the settlement and
little, if any, additional funds were available from Milligan
or its insurer. At the same time, counsel for the plaintiff
was also advised that New Home Warranty was making a
substantial contribution in the settlement offer.

[7] I have no difficulty in concluding that at all
material times it was the intent of these defendants that the
obligation to pay was several. Each of them would not have
participated in this offer to settle except upon the
understanding that their contribution was limited to the
amounts set out above.

[8] After the offer of $1.5 million was made, counsel for
the plaintiff advised that a settlement might be achieved at
the level of $1.5 million if costs of $250,000 were paid in
addition. This offer was not acceptable to all of these
defendants.

[9] On January 29, 1999 counsel for the plaintiff and
counsel for Spaceworks had a further discussion in which
plaintiff's counsel disclosed that he was not sure that he
could prove the plaintiff's claim against Milligan and,
accordingly, consideration was being given to accepting
approximately $4,000 earlier offered by Milligan. At this
time, counsel for Spaceworks was not aware that counsel for the
plaintiff had been advised that Milligan's contribution was
near its policy limits.

[10] The parties attended a settlement conference before
Lowry J., on March 1 and 2, 1999. Lowry J. expressed the view
that damages might be assessed at approximately $2.5 million.
He said that for settlement purposes that figure ought to be
discounted by the plaintiff because of the many legal issues
which had to be addressed relating to liability. In the course
of the settlement conference, Lowry J. was provided a list of
the contributors to the offer of $1.5 million as set out in
paragraph 3. Lowry J. advised that the parties who faced the
most exposure had limited resources and that "smaller players"
should not be asked for more than the contribution already
tendered. He referred to the fact that the contractors had no
insurance available to them.

[11] After the settlement conference concluded, counsel
and clients remained in the court house and continued in their
efforts to resolve the matter. At some point in time,
representatives of Mierau and Westcoast Stucco left the court
house and negotiations continued with the representatives of
New Home Warranty, Milligan, Sarangi, Rodger and Spaceworks.
Counsel on behalf of these remaining defendants then made an
offer to settle to plaintiff's counsel in the amount of
$1,405,000. Again, plaintiff's counsel understood that
contributions were to be made by the remaining defendants but
was unaware of the precise amounts which were as follows:

Spaceworks Architects $540,000
Sarangi and Rodger $100,000
Milligan Engineering $210,000
Jonet Construction $15,000
New Home Warranty $540,000

[12] Jonet Construction Ltd. was a third party in the
action, having been joined in the proceedings by New Home
Warranty.

[13] Counsel for the plaintiff then made another offer on
behalf of his client in the amount of $1,600,000, inclusive of
costs. The remaining defendants discussed the offer and
revised the contributions they were each prepared to make
towards the settlement. This final list of contributors was as
follows:

Spaceworks Architects $580,000
Sarangi and Rodger $140,000
Milligan Engineering $250,000
Jonet Construction $50,000
New Home Warranty $580,000

[14] Counsel for the plaintiff was then told the counter
offer was accepted. At that time other terms of the settlement
requiring documentation were discussed. Representatives of the
parties discussed the need to protect settling defendants from
the claims of remaining defendants, the need for a covenant not
to sue, co-operation with the plaintiff in its continuing case
against the contractors and the need for a suitable indemnity.
There was specific reference to a "B.C Ferries" agreement,
preserving the rights of the plaintiff in the continuing action
against the remaining contractors.

[15] The following day, March 3, 1999, plaintiff's counsel
wrote to defendants' counsel who had participated in the
settlement on the preceding day. In that letter, plaintiff's
counsel advised the defendants to forward their "cheque or
cheques" to his firm in trust. Throughout the month of March
letters were exchanged, telephone conversations were held and
the documentation was being settled in an orderly way.

[16] Before the trial was set to commence, the plaintiff
reached a settlement with the remaining defendants, namely,
Mierau and Westcoast Stucco. In his letter to counsel acting
for Mierau Construction Ltd. and the principles of that
company, the plaintiff listed a term of the settlement to
include the joint and several commitment of the company and Mr.
and Mrs. Mierau to pay a sum of money.

[17] During the month of March 1999, several drafts of the
covenant not to sue were exchanged. An issue arose as to the
inclusion of Jonet in the document, counsel for the plaintiff
preferring to exclude that firm and have the settling
defendants document separately their private arrangements with
that firm. In all of the drafts exchanged there was no written
covenant calling on the settling defendants to pay $1.6 million
or any amount of money.

[18] On or about March 30, 1999, New Home Warranty advised
of its intention to seek protection from its creditors. When
it became apparent that New Home Warranty was insolvent, this
dispute arose. Counsel for the plaintiff says the promise to
pay $1.6 million was a joint promise. Counsel for the
defendants entering into the settlement arrangement, except New
Home Warranty, state that the promise to pay was several. In
the alternative, he says the court should imply a term in the
contract of settlement that the promise to pay was several and
in the further alternative, he says no agreement was reached.
Counsel agree that there is no need to set the issue on the
trial list and that on the material before the court, the
matter is capable of resolution. I agree with them in that
regard as there is no conflict on the material portions of the
evidence. The issues for the court to determine are whether
there was an agreement and if so, was the promise to pay $1.6
million joint or several.

 

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The Palladain/Palladium (Vancouver): Court refuses to adjourn scheduled trial; leaky condo owners will not pusue toxic mould claims

 

                                                Date:  19990108
Docket: C946094
Registry: Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA


BETWEEN:

THE OWNERS, STRATA PLAN VR 2000

PLAINTIFF

AND:

STEPHEN DOUGLAS SHAW, ERIC CAMPBELL, GEORGE REIFEL, 1705
NELSON HOLDINGS LTD., ALLAN MILLIGAN ENGINEERING LTD.,
SARANGI AND RODGER CONSULTANTS LTD., THADDEUS YOUNG
carrying on business as SPACEWORKS ARCHITECTS, and the said
SPACEWORKS ARCHITECTS, MIERAU CONSTRUCTION LTD.,
WESTCOST STUCCO INC., GORDON SPRATT & ASSOCIATES LTD., and
PACIFIC NEW HOME SERVICES, INC. carrying on business as
NEW HOME WARRANTY PROGRAM OF BRITISH COLUMBIA AND THE YUKON,
and the said NEW HOME WARRANTY PROGRAM OF BRITISH COLUMBIA
AND THE YUKON

DEFENDANTS

AND:

JONET CONSTRUCTION LTD., JEM SUNDECKS LTD., and
LEVELTON ENGINEERING LTD.

THIRD PARTIES


REASONS FOR DECISION

OF THE

HONOURABLE MADAM JUSTICE LEVINE


Counsel for the Plaintiff: D. Sutherland
K. Singer

Counsel for the Defendants, Sarangi & Rodger D. Garner
Consultants Ltd. and Gordon Spratt & Associates Ltd.: C. Hirst

Counsel for the Defendant, Mierau Construction Ltd: R. Wattie

Counsel for the Defendant, New Home Warranty Program: R. Kuhn
M. Prohl

Counsel for the Defendant, Westcoast Stucco Inc.: J. Beggs
Counsel for the Defendants, K. Short
Thaddeus Young and Spaceworks Architects:

Counsel for the Defendant, Milligan Engineering Ltd.: S. Coyle


Place and Date of Hearing: January 5, 1999
Vancouver, B.C.



I. INTRODUCTION

[1] The trial of this action, which concerns a "leaky
condominium", is set to commence March 1, 1999 for 80 days. The
litigation is subject to the case management process for long
trials. The first case management conference was held on
September 10, 1997, when the trial date was set with the
agreement of all parties.

[2] The defendants, Sarangi and Rodger Consultants Ltd. and
Gordon Spratt & Associates Ltd., supported by the other
defendants, apply for adjournment of the trial. They raise the
following issues in support of their application:
(a) There are outstanding appeals of rulings made in
response to interlocutory applications and it is
unlikely the appeals will be heard and
determined before March 1, 1999.
(b) There is no urgency to hear this case.
(c) The defendants are uncertain about the
plaintiff's position concerning claims relating
to toxic mould in the building.

[3] The defendant, New Home Warranty Program, claims that the
case is not ready to proceed to trial because of the issues
identified by Sarangi and Spratt, and raises as a further issue
that a "Scott Schedule" requested by the defendants has not
been completed by the plaintiff in the form agreed to by the
parties.

[4] The plaintiff opposes the application to adjourn. Counsel
says that the case is ready for trial. He argues that it is not
necessary that the appeals be resolved before the trial
proceeds; there is urgency to have the case heard as scheduled;
and the Scott Schedule is moving towards completion. Further,
in his outline for this application, plaintiff's counsel
states:


Provided the action proceeds as scheduled, the
plaintiff will not claim for any damages due to the
health risks associated with mould, nor for damages
associated with precautions in respect of those
risks.


At the hearing of this application, plaintiff's counsel advised
that the plaintiff and owners of strata units would not be
seeking any damages arising from the presence of toxic mould
and he would not rely at trial on any experts' reports relating
to toxic mould. He advised further that at the close of
evidence, the plaintiff and owners will consent to dismissal of
all claims for personal injury relating to toxic mould.

II. PRINCIPLES OF LAW

[5] All counsel are in agreement with the principles
applicable to an application for adjournment. These are stated
in Sidoroff v. Joe (1992), 76 B.C.L.R. (2d) 82 at 84 (C.A.):


...the question of granting an adjournment is a
matter of discretion, it is a discretion that has to
be exercised in accordance with settled principle.
The settled principle is that the interests of
justice must govern whether to grant an adjournment.
The interests of justice always require a balancing
of interests of the plaintiff and the defendant.

[6] The Court of Appeal went on to say that one of the
elements to be considered in balancing the interests of justice
is the expeditious and speedy bringing to a conclusion of
matters. This factor reflects Rule 1(5) of the Rules of Court
which provides that:


The object of these rules is to secure the just,
speedy and inexpensive determination of every
proceeding on its merits.

[7] In Novak v. Bond, [1998] B.C.J. No. 2034 (S.C.) (QL),
Martinson J. said at para 11:


The paramount consideration that must be maintained
in the exercise of that discretion is to ensure that
there will remain a fair trial on the merits of the
action: Cal-Wood Door v. Olma, [1984] B.C.J. No. 1953
(C.A.).

III. DECISION

[8] I have reviewed and considered the submissions of counsel
and the authorities cited and have concluded that the interests
of justice in this case will be served by dismissing the
application for an adjournment of the trial.

IV. ANALYSIS

[9] I will deal in turn with each of the defendants' concerns.

 

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