Q.B. A.D. 1991 No. 4189 J.C.S. IN THE COURT OF QUEEN'S BENCH JUDICIAL CENTRE OF SASKATOON BETWEEN: FIRST CITY TRUST COMPANY, and LOUIS DION, AND: Q.B. A.D. 1992 No. 2691 J.C.S. IN THE COURT OF QUEEN'S BENCH JUDICIAL CENTRE OF SASKATOON BETWEEN: FIRST CITY TRUST COMPANY, and GREAT CANADIAN BINGO CORP., DEFENDANT D. Richardson and S. Schnell for the plaintiff S. Hansen for the defendants JUDGMENT BAYNTON J. December 14, 1993 Nature of the Applications The plaintiff applies to strike the statement of defence of the corporate defendant, Great Canadian Bingo Corp. The ground is that Leo Dion, the designated officer of the corporation pursuant to an agreement between the parties, failed to appear at an examination for discovery on November 23, 1993. The plaintiff applies to strike the statement of defence of the individual defendant, Louis Dion, on the same grounds. Scheduling of the Examinations In each case the plaintiff's solicitors had on several occasions telephoned the defendants' solicitor to schedule examinations for discovery and to obtain statements as to documents. None of the calls were returned. Finally the plaintiff's solicitors wrote to the defendants' solicitor proposing range of dates for the examinations for discovery and requesting the defendants' statements as to documents. The letter indicated that if no reply was made by October 25, 1993, the examinations would be unilaterally scheduled. No reply was made and accordingly appointments were taken out for the examinations in Saskatoon on November 23, 1993. The appointments were served on the defendants' solicitor at Prince Albert along with conduct money to cover travel from Prince Albert to Saskatoon and return. This step prompted brief letter from the defendants' solicitor to the effect that he had "difficulty" with the appointments. He stated that "Leo Dion is not in fact an Officer or Director of the Company [the defendant corporation] at the present time" and that he would have to seek instructions as to the proper officer to be examined. He also stated that Louis Dion "is presently residing in Vancouver" and that he would need the "appropriate" conduct money. He also stated he had "some difficulty" with the appointed date. He suggested no alternative date nor did he indicate that the conduct money tendered respecting Leo Dion was unacceptable. In view of the appearance defaults by the Dions on numerous previous occasions, the plaintiff's solicitors responded that despite the letter they would be attending at the examination and would hold the defendants' to their obligations to attend as well. Their further telephone calls to the defendants' solicitor were not returned. The statements as to documents were not provided as requested, and as yet have not been provided. The plaintiff's solicitor appeared at the scheduled examinations but neither Leo nor Louis Dion appeared, nor did anyone else appear on behalf of the corporate defendant, nor did the defendants' counsel appear. Events Leading Up to the Applications review of the history of events that have taken place respecting these two actions and the content of the numerous affidavits that have been filed, clearly indicates that the defendants or the Dions have little or no regard for the administration of justice. Their conduct can be characterized as contemptuous. Undoubtedly the solicitor for the defendants, in accordance with his duty to his clients, has carried out his clients' instructions. But as solicitor, he has duty to more than just his clients. He is also an officer of the court and as well, has duty of courtesy and professionalism to his fellow solicitors. Regrettably, as his conduct demonstrates, he has not maintained the level of courtesy and professionalism to his fellow solicitors that is to be expected of member of the legal profession. To put the applications before me in perspective, it is essential to review in some detail the relevant events and depositions over the last year. The plaintiff initially obtained default judgment against the corporate defendant and arranged for an examination in aid of execution. By agreement between the solicitors for the parties, Louis Dion was considered as the proper officer to be examined. Despite proper appointments being taken out and served, he failed to attend three of the four examinations scheduled in November and December of 1992. Late in December of 1992 the defendants' solicitor advised the plaintiff's solicitor that as of January 1, 1993, Leo Dion would be the proper officer to be examined on behalf of the defendant corporation. Another examination in aid of execution was scheduled for February 26, 1993, but Leo Dion, presumably taking his cue from Louis Dion, failed to appear. By this time, of the five examinations scheduled, only one had been attended and even it had to be adjourned to obtain certain undertakings. In April of 1993, Judge Wedge ordered that Louis and Leo Dion attend on May 20 to be examined on behalf of the corporation. Louis Dion appeared, testifying that he had resigned as director and officer of the corporation effective January 1, 1993, and that he knew nothing about any of its affairs. His statements "I have seen nothing, know nothing, don't talk to them. have no knowledge of their business, don't know no knowledge of anything" summarizes his testimony. Leo Dion, the officer who by that time was held out by the defendant corporation as its designated officer, failed to appear at the examination. corporations branch search subsequently conducted on May 27, 1993, indicated that the sole directors of the defendant corporation were shown to be Louis and Leo Dion. The address of Louis was shown as 43 Scenic Park Crescent, Calgary, Alta., while that of Leo was shown as Emma Lake, Sask. The plaintiff, faced with these events and information, understandably commenced contempt proceedings. The then solicitor for the defendants withdrew and the defendants became represented by their current solicitor. Despite the non-attendance of the defendants (or any counsel representing them at that time), on the return date of the contempt proceedings, an adjournment was granted by the court to permit the defendants or their counsel to appear and make representations. Those pending contempt proceedings presumably prompted an application by the defendants to set aside the default judgments against them. They were successful and were given leave to defend. The contempt proceedings were adjourned sine die. Leo Dion, on behalf of the defendant corporation's application to set aside the default judgment, swore an affidavit on June 1, 1993, (the date he was to have been in Chambers on the contempt applications), claiming that he was not aware that judgment had been entered against the corporation. His address was shown in the affidavit as "the City of South Surrey, in the Province of British Columbia". He swore that he was director of the defendant corporation and he set out details of his substantial personal involvement with it and its business operations. In second affidavit of the same date, filed in response to the contempt proceedings, he swore that he was "fully prepared to attend at further Examination for Discovery upon reasonable notice being provided to me". Louis Dion swore an affidavit on June 3, 1993, in support of his application to set aside the default judgment against him personally, claiming that he was not aware that judgment had been entered against him, or that any legal action had ever been commenced against him by the plaintiff, until he was so advised by his current lawyer on April 20, 1993. His address was shown as "the City of Vancouver". In second affidavit of the same date, filed in response to the contempt proceedings, he swore that he had resigned as director and officer of the defendant corporation in December of 1992, that he was former director and officer of it, and that "from January 1st, 1993 have not been involved in the business operations of Dion Entertainment Corp., nor the Defendant, Great Canadian Bingo Corp.". He also swore "as was no longer an Officer or Director of such company, [the defendant corporation], was not prepared nor able to respond to questions as to the business operations of the said Defendant after January 1st, 1993, as do not have any personal knowledge of such business operations". After the defendants were granted leave to defend on June 14, 1993, they filed defences to the actions. The current applications before the court arose out of unsuccessful attempts by the plaintiff to examine the defendants respecting their statements of defence. On the return dates of the motions, counsel for the defendants appeared. He was granted leave to file two affidavits of Louis Dion even though they were tendered for filing on the eve of the hearing of the motions even though they had not been previously served on the plaintiffs' solicitors. No affidavit or other material was filed on behalf of Leo Dion. In two affidavits dated November 30, 1993, Louis Dion swears that both he and his brother Leo Dion have been residing in British Columbia for the past year. What is significant about the affidavits is that Louis Dion swears he has personal knowledge that "Leo Dion is no longer an Officer nor Director of the Defendant company, as there has been number of recent management changes with the Company". He also swears that Leo Dion "has not been designated as the proper officer for such examination by the Defendant Company as of this date". This alleged detailed knowledge by Louis Dion of the affairs of the defendant corporation flies in the face of his earlier sworn testimony denying any knowledge whatsoever about anything to do with the defendant corporation or its affairs. As well, it is interesting that Louis Dion purports to give hearsay evidence about matters on which Leo Dion should be capable of giving direct evidence. It is also interesting that the defendant corporation who risks having its defence struck, is totally silent as to whom its proper officer might now be. This kind of inconsistent conduct and testimony throughout these proceedings causes me to seriously question the credibility of the defendants and their representatives and conclude that their evidence is unreliable. This conclusion on credibility is consistent with the comments and conclusions reached respecting the credibility and conduct of Louis Dion in Madison Development Group Inc. v. Phoenix Enterprises Ltd. et al. and Louis Dion and Dion Development Corp., (unreported Q.B. J.C.P.A. June 6, 1991). In that case contempt proceedings were also taken against him for failing to attend an examination for discovery and for falsely swearing as to his whereabouts on the date of the examination. He was at that time represented by his current counsel. Position Taken by the Defendants The position taken on these applications by the defendants is basically that their defences cannot be struck under Rule 231 because the examinations for discovery were not properly scheduled in accordance with the Rules. Both Dions are now presumably residents of British Columbia. Non- residents cannot be compelled to attend an examination for discovery by means of an appointment under Rule 228. They can only be compelled to attend by means of court order under Rule 229. The defendants and their counsel also maintain that there are two other reasons why Leo Dion cannot be compelled to attend. First there is no court order designating Leo Dion as the proper officer of the defendant corporation. Secondly, he is no longer an officer or a director of the corporation. The Requirements under the Rules Whether or not person is proper officer of the corporation, (whether designated as such by court order or by agreement under Rule 223(3)), and whether or not person is still an officer of the corporation, are facts relevant only to the issue as to whether or not that person's examination for discovery can be used as evidence. Such facts are not relevant to the issue of that person's compellability to attend an examination for discovery. Under Rule 222, any party, or any person who is or has been an officer or employee of corporation, is compellable to attend an examination for discovery. Under Rules 227 to 229, the residence of such person is relevant to the manner in which such person can be compelled to attend. If he is resident of Saskatchewan, an appointment can be utilized to compel his attendance. If however he is non-resident, court order must be obtained before he can be compelled to attend. Conduct money must also accompany the appointment or the order. As the Dions now apparently reside out of province, (assuming in their favour that this aspect of their evidence is true), they were not compellable to attend the scheduled examinations for discovery on the basis of an appointment. It is inherent in Rule 231 that person must be legally compellable to attend the time and place appointed for his examination before he can be found to be "refusing or neglecting" to attend and thereby guilty of contempt of court and liable to have his defence struck out. Accordingly, agree with the submissions of the defendants' counsel that the non-attendances of the Dions on November 23, 1993, do not constitute "refusing or neglecting to attend" within the meaning of Rule 231. It cannot be utilized respecting these particular non- attendances to strike their statements of defence. I am satisfied however, on the basis of their conduct exhibited throughout the whole of these proceedings, that Louis Dion, Leo Dion, and the defendant corporation, are guilty of contempt of court. The contempt proceedings instituted last spring are still before the court even though they were adjourned sine die at the time the defendants were permitted to file statements of defence. The defendants have abused the discretion of the court that was exercised in their favour to set aside the judgments obtained against them and to permit them to file defences. It is clear from the terms of the order, that this discretionary relief was not granted to enable the defendants to stall the action or to frustrate the determination of the plaintiff's claim. The defendants were expected to promptly file their defences and to proceed with reasonable dispatch through the various stages of the lawsuit until it is eventually determined. The conduct of the defendants and their solicitor, however, clearly indicates that, in the same fashion as before the contempt proceedings were adjourned, they have continued to duck and weave, and have effectively stalled all reasonable attempts on the part of the plaintiff to proceed with the lawsuit. The complaints of the defendants about the unilateral scheduling by the plaintiff's solicitors is without merit. The date was unilaterally set as a last resort because of the complete lack of courtesy and co- operation on the part of the defendants\' counsel. The plaintiff's solicitors were lead to believe, from previous statements made and positions taken by the Dions and their counsel, that the defendant corporation had now agreed that Leo Dion was the proper officer of the defendant corporation. The plaintiff's counsel were also lead to believe from numerous previous attempts at examinations, that the conduct money submitted was the proper amount. Until it was too late for the plaintiff to do anything about it, the defendants' counsel did nothing to dispel those reasonable assumptions. In my view he either deliberately or unwittingly was used by his clients to further frustrate the proper examination of them in these proceedings. Decision It would be inappropriate in the circumstances to strike the defendants' statements of defence. But the court has an obligation to supervise its process and see that contemptuous conduct is not rewarded or permitted to continue. This is particularly so when litigant abuses discretionary relief granted by the court in his favour. Here the defendants have consistently attempted to improperly thwart at every turn the efforts of the plaintiff to determine the matters raised in these lawsuits. accordingly order as follows: (1)The corporate defendant shall, within days of the date of this order, provide the plaintiff's solicitors with written notice of the person who it proposes is the proper officer to be examined on its behalf. If such person is not acceptable to the plaintiff, the plaintiff may make court application for the designation of the proper officer. (2)Failing agreement between the solicitors for the parties as to acceptable dates for the examinations for discovery of the individual defendant and the proper officer of the corporate defendant, the plaintiff\'s solicitors shall be entitled to unilaterally set the dates. Provided at least 14 days advance written notice of the dates is given to the defendants' solicitor, and unless otherwise ordered by the court, the individual defendant shall attend his scheduled examination, and the corporate defendant shall secure the attendance of its proper officer at its scheduled examination. In view of the past abuses, the defendants shall not be entitled to any conduct money for the initial attendances at the examinations for discovery or for any subsequent attendances required for the completion of the examinations. (3)The defendants shall serve and file their statements as to documents within 14 days of the date of this order. (4)The plaintiff shall have its costs of these applications in any event of the cause. fix these costs at $1,000.00 against the corporate defendant and $500.00 against the individual defendant. The costs shall be paid by the defendants to the plaintiff within 14 days of the date of this order. (5) If defendant fails to comply with the terms of this order, the plaintiff may apply to this Court to have that defaulting defendant's defence struck out.
The plaintiff applied under Queen's Bench Rule 231 to strike the statements of defence of a corporate and individual defendant for failure to attend scheduled examinations despite service of an appointment and payment of conduct money to their solicitor. The defendants had previously been permitted to re-open judgments obtained against them and had filed defences. Prior to that they had consistently failed to attend examinations in aid of execution. Contempt proceedings had been commenced against them but were adjourned sine die at the time the defendants were permitted to defend. The defendants resisted the application on the basis that they were now non-residents and not compellable by an appointment, and that the designated officer of the defendant corporation was no longer an officer. This information had not been communicated to the plaintiff's solicitor who had acted in good faith on information given to him previously by the solicitors for the defendants. The examinations had been scheduled unilaterally because the defendants' solicitor consistently refused or neglected to return phone calls or correspondence from the plaintiff's solicitors. HELD: The judge refused to strike the defences holding that in the circumstances Queen's Bench Rule 231 did not apply. He also held that the defendants, considering their conduct throughout the whole course of the lawsuit, were in contempt and ordered them to attend without conduct money any examinations unilaterally scheduled by the plaintiff failing agreement between counsel as to dates. Costs were fixed at $1,500 in any event of the cause and were ordered to be paid within two weeks.