Tuesday, September 19, 2006

Place Fontainebleau (Coquitlam): Owners successful in adding defendants on second try

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

The Owners, Strata Plan LMS 343 v. Haseman Canada Corp.,

 

2006 BCSC 1457

Date: 20060919
Docket: L051694
Registry: Vancouver

Between:

The Owners, Strata Plan LMS 343

Plaintiff

And:

Haseman Canada Corporation, Kenji Hasegawa, Katsuo Ono, Allan Lee,
Gauvin Construction Ltd., Interplan Architecture & Planning Inc., John W. Scott,
Columbia Waterproofing Ltd., Indalex Limited, Starline Windows Ltd.,
F.E.I. Construction Ltd,. JEM Sundecks Ltd., John Doe formerly known as D & G
Decking Installations Ltd., John Doe formerly known as Pacific Engineered Concrete
Waterproofing Ltd. and John Doe formerly known as Precision Plastering Ltd.

Defendants

Before: The Honourable Mr. Justice Tysoe

Oral Reasons for Judgment

In Chambers
September 19, 2006

Counsel for the Plaintiff:

A.L. Baker

Counsel for Haseman Canada Corporation:

S.G. Cordell

Counsel for Gauvin Construction Ltd.:

J.D. Morin

 

 

Counsel for Interplan Architecture & Planning Inc.

and John W. Scott:

 

H.B. Borlack

 

Place of Hearing:

Vancouver, B.C.

 

[1]                THE COURT:  The Defendants, Haseman Canada Corporation, Gauvin Construction Ltd., Interplan Architecture & Planning Inc. and John W. Scott, (“the Applicants”) each apply for the dismissal or stay of this action on the basis that it is abuse of process.

[2]                This action relates to the design and construction of a 130-unit complex within nine buildings located in Coquitlam, B.C.  Occupancy permits for the three phases of construction were issued between 1992 and 1996.  Water leakage and cracking of stucco was noticed by 1996.  In October 1996, a maintenance contractor recommended to the Plaintiff’s property manager that a building envelope consultant or specialist be retained.  Some repairs were effected later in that decade and extensive remediation work took place in 2004 and 2005.

[3]                On June 30, 2000, the Plaintiff commenced Action No. L001792 asserting claims against the City of Coquitlam, John Doe, and others (the "First Action”).  There was not a lot of activity in the First Action until 2005 when the Plaintiff made an application to substitute the Applicants and another party for John Doe and others.  The application was subsequently amended to alternatively seek the addition of the Applicants and the other party as defendants in the First Action, and the request for substitution was abandoned at the hearing of the application.

[4]                The application was heard by Mr. Justice Pitfield over the course of three days.  On the last day of the hearing, counsel for the Plaintiff advised the Court that it had commenced this action against the Applicants and others on the preceding day, July 7, 2005.

[5]                One of the arguments made by the Plaintiff to Mr. Justice Pitfield was that joinder of the Applicants to the First Action should be preferred to the alternative of commencing a separate action against them and applying for consolidation of the separate actions.  However, there was a very substantial difference between these two alternatives.  If the Applicants were joined to the First Action, they would have lost the right to assert a limitation defence under the Limitation Act, R.S.B.C. 1996, c. 266, as a result of the provisions of s. 4(1) of the Act.  Conversely, if the Applicants were not joined to the First Action, any limitation defence that may have accrued to their benefit would have been preserved.

[6]                There were differing positions before Mr. Justice Pitfield as to whether the limitation period had expired as against the Applicants at the time of the hearing.  It was the position of the Plaintiff that it had not expired as a result of the postponement provisions of s. 6(3) of the Limitation Act.  The Applicants maintained that the limitation period had expired.  Mr. Justice Pitfield took the approach endorsed by numerous authorities that he should consider the application on the assumption that the limitation period had expired.  The positions of each of the parties remain the same at this hearing, and it is common ground that I am not to make a determination on this application whether the limitation period expired prior to the commencement of this action.

[7]                By Reasons for Judgment issued on August 8, 2005, and cited as The Owners, Strata Plan LMS 343 v. City of Coquitlam, 2005 BCSC 1150, Mr. Justice Pitfield dismissed the Plaintiff’s application to join the Applicants as defendants in the First Action.  Mr. Justice Pitfield reviewed the extent of the connection between the existing claims and the claim against the proposed defendants, the delay of the Plaintiff, the reasons given for the delay, and the prejudice to the parties.  The essence of his reasoning was that the prejudice to the Applicants in the event they were added as Defendants in the First Action outweighed the prejudice to the Plaintiff in the event that they were not added.

[8]                On September 2, 2005, the Plaintiff filed a notice of application for leave to appeal in respect to the decision of Mr. Justice Pitfield.  A hearing of the leave application has not been scheduled and no other steps have been taken in the appeal.  On the other hand, the Plaintiff has taken numerous steps in the furtherance of this action, as well as the First Action and a third action which has been commenced to bring in additional parties, since the issuance of Mr. Justice Pitfield’s decision, including the setting of a trial date next fall.  Counsel for the Plaintiff advised me at the hearing of this application that the Plaintiff will abandon the appeal if I dismiss these applications.

[9]                The Applicants say that there are the following two bases to dismiss or stay this action as an abuse of process:


(a)        the appeal of Mr. Justice Pitfield’s decision is extant, and

(b)        allowing this action to continue, when the Court has already determined that the Applicants’ ability to defend themselves has been prejudiced by the Plaintiff’s unexplained delay in bringing proceedings, would result in unfairness between the parties and bring the administration of justice into disrepute.

[10]            The first ground relied upon by the Applicants in based on the principle that the courts will not allow parties to litigate the same dispute twice.  Not only will the courts not allow an unsuccessful litigant to sue the same party in respect to the same cause of action in a second proceeding, but the courts will not allow two proceedings dealing with the same matter to exist concurrently.

[11]            The Applicants particularly rely on the decision in Acme Masonry Ltd. v. Bird Construction Co., [1985] B.C.J. No. 732 (S.C.).  In that case, the plaintiff had previously sued the defendant claiming the unpaid balance of monies owing under a construction contract on the basis of extras performed under the contract.  During submissions at the trial, counsel for the plaintiff argued that his client was also entitled to damages as a result of delays caused by the defendant.  The judge held that the plaintiff could not make a claim for damages at that stage of the trial.  The plaintiff appealed the holding and then commenced a second action against the defendant claiming damages for the delay.  His Honour Judge Campbell held that the grounds of appeal in the first action sought the same relief as that sought in the second action and dismissed the second action as an abuse of process.

[12]            The Applicants say that the present situation is analogous to the circumstances in Acme Masonry; namely, there is an extant appeal in the same matter that is the subject of this action. 

[13]            The Plaintiff relies on a more recent and factually similar decision.  In Strata Plan LMS 2262 v. Ericson Window Corp., 2005 BCSC 835 the plaintiff had unsuccessfully applied to join a party and appealed the decision refusing the application.  The plaintiff had commenced a parallel proceeding against that party shortly before the hearing of the unsuccessful application, and the defendant in the parallel proceeding applied to have it dismissed as an abuse of process.  Madam Justice Garson dismissed the abuse of process application on the basis that there were not two extant actions against the defendant.

[14]            Counsel for the Plaintiff submits that the decision in Ericson Window is indistinguishable and ought to be followed by me.  Counsel for the Applicants say that it is Acme Masonry which is the binding authority and that the decision in Ericson Window should be discounted because Acme Masonry does not appear to have been referred to Madam Justice Garson.

[15]            It is my opinion that the decision in Ericson Window is not distinguishable and is binding on me, and that the decision in Acme Masonry is distinguishable and is not binding on me.  Quite apart from the binding effect of these two decisions and assuming that Acme Masonry was correctly decided, I agree with the conclusion of Madam Justice Garson in Ericson Window that an appeal of an unsuccessful joinder application does not constitute an extant action against the defendant in the parallel action.

[16]            Unless the appeal of Mr. Justice Pitfield’s decision is successful, the Applicants are not defendants in the First Action and no claim is being pursued against them by the Plaintiff in the First Action.  If the appeal were to succeed, it would be a different situation but, at the present time, there is only one outstanding action against the Applicants.

[17]            On the other hand, the plaintiff in Acme Masonry was pursuing the same relief against the same defendant in two actions.  Although the judge had held that the claim for damages could not be pursued in the first action, the plaintiff was appealing the holding on the basis that it was entitled to claim damages in that action.  That is a different situation than in the present case where the applicants are parties to only one action.

[18]            I conclude that there are not two concurrent actions against the Applicants and that the existence of the pending appeal in the First Action does not render the continuation of this action an abuse of process.  Even if I had concluded that this action does constitute an abuse of process, I would be inclined to simply stay the action until the appeal in the First Action is abandoned.

[19]            I turn now to the second basis for the Applicants’ applications.  The Applicants say that the Plaintiff’s delay caused Mr. Justice Pitfield to conclude that the prejudice to them outweighed the prejudice which would accrue to the Plaintiff as a result of the claims being statute-barred, and it would bring the administration of justice into disrepute to allow this action to continue.

[20]            Abuse of process applications have been brought in somewhat similar circumstances in several other B.C. cases.  In Strata Plan KAS 1691 v. Kamloops (City), 2004 BCSC 1231, Mr. Justice Rice held that the commencement of a second action following a failed joinder application was not a device to avoid Rule 15 of the Rules of Court, because the joinder of a party and the commencement of a separate action against that party are permissible alternatives under the Rules

[21]            The Kamloops decision was followed in Strata Plan LMS 2532 v. Oakvale Homes, 2005 BCSC 142.  It was also followed in Ericson Window which, like the present case, involved two grounds for the action to be dismissed as an abuse of process.

[22]            The commencement of a second action was held to be an abuse of process in The Owners, Strata Plan LMS 908 v. Polygon Town Centre Development Ltd., March 15, 2002, Vancouver Docket No. C983598 (B.C.S.C.), where a second action was commenced against the parent of two corporate defendants after amendments to the pleading were not permitted.  Relying on the fact that the trial date would be lost and the fact that the plaintiff had deliberately chosen to start the new action, rather than to add the parent to the existing action, in order to circumvent the ruling rejecting amendments to the pleadings, Madam Justice Boyd struck the second action as an abuse of process.

[23]            Counsel for the Applicants say that the first three of these decisions are distinguishable for two reasons.  First, they say that none of the cases considered the decision of the Supreme Court of Canada in Toronto (City) v. Canadian Union of Public Employees (C.U.P.E.) Local 79, 2003 SCC 63, which contained an exhaustive review of the doctrine of abuse of process.  Second, they say that none of these decisions involved the finding of prejudice, while Mr. Justice Pitfield did find on the joinder application that the Applicants were prejudiced by the Plaintiff’s delay.

[24]            I was referred by counsel to numerous passages in the Toronto decision, which involved a finding at a labour arbitration which was inconsistent with an earlier guilty verdict in criminal proceedings.  The Supreme Court of Canada reviewed the development of the doctrine of abuse of process and said the following about it at paragraphs 36 and 37:

The doctrine of abuse of process is used in a variety of legal contexts. The unfair or oppressive treatment of an accused may disentitle the Crown to carry on with the prosecution of a charge: Conway, supra, at p. 1667. In Blencoe v. British Columbia (Human Rights Commission), [2000] 2 S.C.R. 307, 2000 SCC 44, this Court held that unreasonable delay causing serious prejudice could amount to an abuse of process...

In the context that interests us here, the doctrine of abuse of process engages "the inherent power of the court to prevent the misuse of its procedure, in a way that would ... bring the administration of justice into disrepute" (Canam Enterprises Inc. v. Coles (2000), 51 O.R. (3d) 481 (C.A.), at para. 55, per Goudge J.A., dissenting (approved [2002] 3 S.C.R. 307, 2002 SCC 63)).

[25]            The Court subsequently stated that there was no reason to constrain the doctrine of abuse of process to cases where the plaintiff had initiated relitigation, and emphasized that the doctrine of abuse of process concentrates on the integrity of the adjudicative process, not the motives or status of the parties.

[26]            Relying on the Toronto decision, the Applicants argue that no reasonable observer or right-thinking person would understand how this action could be allowed to go forward as against them when Mr. Justice Pitfield would not allow the First Action, which was commenced five years earlier, to proceed against them in view of the prejudice caused by the Plaintiff’s delay.

[27]            In considering this argument, it is important to analyze the exact nature of the ruling made by Mr. Justice Pitfield.  I do not agree with the characterization of the Applicants that he concluded that the prejudice to the Applicants outweighed the prejudice to the Plaintiff as a result of its claims against them being statute-barred.

[28]            The issue before Mr. Justice Pitfield was whether it was just and convenient to join the Applicants as defendants to the First Action and, as a result of the operation of s. 4 of the Limitation Act, to thereby deprive them of a potential limitation defence they would have if new proceedings were commenced against them at that point in time.  He concluded that the prejudice to the Applicants in the event they were added as parties to the First Action outweighed the prejudice to the Plaintiff in the event they were not added.

[29]            Implicit in the reasoning of Mr. Justice Pitfield was that if the Applicants were added as defendants to the First Action, they would have been deprived of the opportunity to assert a limitation defence but that, if they were not added, the Plaintiff would have to prosecute a separate action against them, in which case they would be entitled to assert a limitation defence.  Mr. Justice Pitfield balanced the interests of the parties and concluded that the actual prejudice to the Applicants would have made it unjust to have prevented them from relying on a limitation defence on the assumption he made that the limitation period had, in fact, expired at the time.  He did not find that the limitation period had expired and he left that issue to be determined.

[30]            As was pointed out by Mr. Justice Rice in the Kamloops decision, the joinder of a party pursuant to Rule 15 of the Rules and the commencement of a separate action are permissible alternatives.  In the absence of special circumstances such as those which existed in Polygon Town Centre, it is not an abuse of process to commence or prosecute a separate action after an unsuccessful joinder application.  Indeed, the commencement or prosecution of a separate action has been acknowledged as an alternative available to a plaintiff who was not successful in joining the party as a defendant in an action where that party would not have been able to assert a limitation defence: see Brito v. Wooley, [1997] B.C.J. No. 2487 (S.C.), and Strata Plan LMS 1212 v. Coquitlam (City), 2004 BCCA 500.

[31]            Does the finding of prejudice by Mr. Justice Pitfield affect the right of the Plaintiff to prosecute this action?  In my view, it does not.  All Mr. Justice Pitfield held was that the prejudice to the Applicants was sufficient to make it unjust to deprive the Applicants of a limitation defence if the limitation period had expired.  His ruling cannot reasonably be construed as a holding that it would be unjust to allow the Plaintiff to continue with this action and attempt to prove that the limitation period as against the Applicants has not expired as a result of the postponement provisions of s. 6(3) of the Limitation Act.

[32]            The courts routinely make the assumption that the passage of time causes prejudice to a person against whom a claim is made.  Memories fade with the passage of time and documents are destroyed or lost.  The Legislature has taken this into account when enacting the Limitation Act, and it has set periods following which actions may not be brought.  The fact that a defendant may have suffered actual prejudice does not serve to abridge the limitation period prescribed under the Act.  To allow a defendant to have an action dismissed as an abuse of process on the basis of actual prejudice caused by delay would undermine the operation of the Limitation Act.

[33]            In addition to the Limitation Act, the Rules of Court address the effects of delay by a plaintiff after an action has been commenced.  For example, the Rules enable a defendant to apply to have an action dismissed for want of prosecution and prejudice caused by the plaintiff’s delay is one of the factors considered by the courts on such an application.

[34]            If the Plaintiff had not applied to join the Applicants to the First Action and had simply commenced this action, I cannot conceive how the continuation of this action could be regarded as an abuse of process, bearing in mind that the Applicants are entitled to assert a limitation defence in this action as a remedy for the prejudice they suffered.  As a joinder application is a permissible alternative under the Rules, there is no principled reason why the unsuccessful attempt of the Plaintiff to join the Applicants to the First Action would produce a different conclusion.  The Applicants received a favourable ruling in the First Action to the effect that they could not be joined to the First Action and be unable to plead a limitation defence.  They are now able to plead a limitation defence in this action, and it is not an abuse of process to allow the Plaintiff to continue with this action and obtain a determination as to whether or not the limitation period has expired as against the Applicants.

[35]            The Applicants also rely on the decision Minter v. Reeves (1979), 98 D.L.R. (3d) 90 (B.C.C.A.).  In that case, the Court of Appeal allowed an appeal of a decision not to set aside an order renewing a writ of summons after a lengthy delay.  In my view, this decision is simply another example of the jurisprudence interpreting the Rules addressing the situation where the plaintiff’s delay has caused presumed or actual prejudice to the defendant.

[36]            In Toronto, the Supreme Court stated that the focus of the doctrine of abuse of process concentrates on the integrity of the adjudicative process and approved the statement that the doctrine is intended to prevent the administration of justice being brought into disrepute as a result of a misuse of the court’s procedure.  In my view, the continuation of this action is not a misuse of the court’s procedure and will not bring the administration of justice into disrepute. 

[37]            The continuation of this action is a natural consequence of the ruling by Mr. Justice Pitfield not to permit the Applicants to be joined to the First Action.  The prejudice suffered by the Applicants as a result of the Plaintiff’s delay produced a ruling in favour of the Applicants that had the effect of preserving their entitlement to plead a limitation defence.  The validity of that defence will now be adjudicated upon in this action.

[38]            I conclude that the continuation of this action will not constitute an abuse of process, and I dismiss the applications.  Subject to the hearing of submissions of counsel, my inclination is to order that costs of these applications be granted to the Plaintiff in the cause.

(SUBMISSIONS BY COUNSEL ON COSTS)

[39]            The submissions have not persuaded me that my initial inclination is incorrect.  I grant the costs of these applications to the Plaintiff in the cause.

“D.F. Tysoe, J.”
The Honourable Mr. Justice D.F. Tysoe