D. P. BALL QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2013 SKQB 394 Date: 2013 11 01 Docket: Q.B.G. No. 732 of 2009 Judicial Centre: Saskatoon BETWEEN: CANADIAN NATIONAL RAILWAY COMPANY, and CLARKE TRANSPORT and CLARKE TRANSPORT INC., Counsel: Naheed Bardai for the plaintiff Gary A. Zabos, Q.C. for defendants FIAT SCHERMAN J. November 1, 2013 INTRODUCTION [1] The plaintiff, Canadian National Railway Company (“CN”), has applied to the court seeking orders that the defendants, Clarke Transport and Clarke Transport Inc. (“Clarke”): i. Answer certain questions which they refused to answer on discovery; ii. Provide answers now, based upon their present knowledge, to questions that the defendants say are best left to be answered on completion of their discovery of the plaintiff when they will have better information; and iii. Provide proper answers responsive to certain questions asked. [2] The application raises interesting issues with respect to the proper scope of questioning or examination for discovery, which will be addressed in the analysis below. Background Facts [3] On or about October 31, 2007 Clarke loaded CN railcar CNIS413529 with steel coils at its Kitchener, Ontario loading facilities. On November 8, 2007 train, including this railcar, derailed near Kindersley, Saskatchewan. CN says the derailment occurred because Clarke failed to properly block, brace and/or secure the steel coils within the railcar, which permitted the coils to move and the car to become unbalanced and cause the derailment. [4] CN claims that it suffered damages in excess of $2.5 million and that Clarke is liable in both contract and in negligence. Clarke denies any breach of contract or negligence, but says that if there was any breach of contract or negligence, this was not the cause of the derailment. In the alternative Clarke pleads contributory negligence and in any event puts CN to strict proof of the damages allegedly suffered. [5] In the context of these facts, the CN discovery or questions included attempts: i. To determine how the steel coils were positioned and secured within the railcar and what evidence there exists on this topic; and ii. Who was involved in the loading and what recollections they have. [6] In addition to these topics, counsel for CN sought to use the questioning process to obtain admissions from Clarke that: i. Other railcars loaded by Clarke prior to the car in question were improperly loaded; and ii. detailed compilation of invoices and other evidence of expenditures by CN all relate to damages it suffered from the derailment. [7] Questioning of the proper officer of Clarke occurred in April of 2011 followed by questioning of the proper officer of CN in April and November of 2011. Both proper officers gave numerous undertakings to provide answers to questions they were not able to answer at the time. [8] Clarke provided the bulk of its responses by January of 2012. CN provided its responses by April of 2012. There then followed an exchange of correspondence in which each side identified deficiencies in the other’s responses and/or sought clarification or additional information. follow-up examination of the proper officer of CN is scheduled for November. The Matters in Dispute [9] By its application of August 22, 2013 CN asks the court to rule regarding three distinct categories of questions asked, but designated as undertakings. The Refusals to Undertakings 18, 32, 33 and 38 [10] CN seeks an order that Clarke answer questions it refused to answer, being: i. requested undertaking (18) for Clarke to search its own records and advise whether or not each of some 445 railcars identified by CN as previously loaded by Clarke had in fact been loaded by Clarke; ii. Requested undertakings (32 and 33) to review binder containing several hundred pages of invoices and other documents assembled by CN that CN says are expenditures it incurred as result of the derailment and advise which invoices Clarke says are not related to the derailment or which Clarke is currently aware do not relate to the derailment; and iii. requested undertaking (38), with respect to sketch or drawing prepared by an insurance adjuster for Clarke depicting the loaded railcar, to provide any background documents, information or factual information that went into the preparation of the sketch. The Deferral of Answers (Undertakings 28, 39 and 53) [11] The subject questions in this category were: i. Whether Clarke has any facts or information that suggests the derailment was not caused by the movement of the coils in the car (28); ii. To advise, following its conclusion of discovery of CN’s representative, if there is any change in Clarke’s position as to the facts it relies on to say the load was improperly handled by CN and to provide the facts relating to that (39); and iii. Should particulars beyond those provided in the answers at the time of questioning become available that Clarke will rely on in support of its allegations of contributory negligence in paragraph 10 of its statement of defence, to advise (53). [12] In its responses to undertakings 28 and 39 Clarke replied that answers to these undertakings cannot be provided until completion of its own questioning of CN and takes the position that CN’s application in respect of these undertakings is premature and unnecessary. In respect of undertaking 53 it replied that it “will do so”. The Adequacy of Responses to Undertakings 34 and 35 [13] Undertaking 34 asked detailed questions of Clarke’s proper officer regarding what one Dave Swainson meant by certain statements contained in written statement prepared by him. Dave Swainson had inspected the car after loading and, after CN informed Clarke of its claim, he prepared memo or note outlining his position to John Thompson, to whom he reported at the time. response was provided that CN views as unresponsive in that it reads as John Thompson advising what Dave Swainson meant or did. CN says the undertaking calls for Mr. Swainson himself to say what he meant or did, as opposed to Mr. Thompson saying what Mr. Swainson meant or did. [14] Undertaking 35 was to make inquiries of John Thompson and Dave Swainson whether either had inspected the car after loading and, if so, what they recall of the inspection. The response given stated that, “It is believed that Dave Swainson is the person who inspected and sealed the car” and goes on to provide conclusionary statements. CN says this is unresponsive since the undertaking called for Clarke to make inquiries of Thompson and Swainson and to advise what their personal responses to the questions were. ANALYSIS The Scope of Questioning under the “new” Rules Materiality and Relevance [15] The refusals to answer, particularly as regards undertaking 18, raise issues relating to the proper scope of production and questioning under The Queen’s Bench Rules, effective July 1, 2013. The questions were asked while the former Queen’s Bench Rules were in effect. Has the scope of the production and questioning obligations changed from the broad relevance test applied under the former Queen’s Bench Rules? [16] Former Rule 212 required the production of documents “relating to any matter in question” while former Rule 222 permitted examination for discovery “touching the matters in issue in the action” [emphasis added]. The broad scope of the words “relating” and “touching” resulted in the court adopting broad relevance test to both the production and discovery obligations. [17] The Queen’s Bench Rules now provide that:i. The production obligation is to “disclose all documents relevant to any matter in issue in the action”, Rule 5-6; andii. The questioning obligation is about information or documents“relevant to any matter in issue”, Rules 5-18 and 5-25. [18] I am satisfied that when this Court moved from the words of touching and relating to any matter in issue, it intended to move away from the broad relevance test that existed under the former Queen’s Bench Rules. Concerns existed in Saskatchewan, as in other jurisdictions, that the broad relevance test did not strike proper balance between the considerations of efficiency, timeliness in the conduct of litigation and cost control on the one hand with the counterbalancing interests of litigants and counsel in ensuring that all potentially relevant information was known. [19] This conclusion is reinforced by foundational Rule 1-3 which expressly provides that the purpose of the rules is to provide means by which claims can be justly resolved in court process in timely and cost effective manner and that the rules are intended to be used to identify the real issues in dispute, to facilitate the quickest means of resolving claim at the least expense and to provide an effective, efficient and credible system of remedies and sanctions to enforce the rules. Proportionality and striking an appropriate balance are now essential considerations in all aspects of the Rules. [20] commonly stated approach to the concept of relevance asks the question Does the evidence offered, as matter of logic and human experience, tend to prove or disprove fact in issue? It needs to be noted that this iteration of relevance melds the distinct concepts of relevance and materiality into one omnibus concept of relevance that defines relevance by specific reference to matter in issue. [21] There are two components to this melded concept: i. The component of logical relevance. Does the proffered evidence tend as matter of logic and human experience to prove or disprove the fact or matter for which it is offered; and ii. The component of whether the fact or matter is in issue in the action. This is the distinct realm of materiality. [22] What determines whether fact or matter is material are the elements of the cause(s) of action and what the parties have pled as being the facts or their positions. Only if the matter is in issue in the action is the matter material, in jurisprudential sense. If the matter qualifies as being material to the action, the next question is whether the evidence being proffered tends to prove or disprove the matter in issue. If the question does not relate to matter in issue as particularized by the pleadings, then the matter is not relevant to any matter in issue. Proportionality [23] Materiality and relevance are concepts that do not have rigid boundaries. The debate about whether broad or narrow relevance test should be applied demonstrates that the concept of relevance can be applied narrowly and rigidly or broadly and with some flexibility. While delineating the boundaries of whether or not matter is material can often be done with greater precision that delineating what is relevant, nonetheless materiality is not always clear cut. matter may fall outside the mark of clear materiality but remain debatable. [24] Where materiality or whether matter is in issue and relevance fall into ranges where the matter is debatable, the decision whether question or production demand is proper may need to address the proportionality considerations that flow from the principles outlined in the foundational rules. [25] If matter is of only debatable, potential or marginal materiality or relevance then it is appropriate for the court, in making its decision and exercising its discretion, to do cost/benefit analysis taking into account the considerations outlined in the foundational rules. Where the materiality or relevance is uncertain, the cost imposed in time, expense or burden is significant or the benefit limited or unknown then proportionality considerations may well be the deciding factors. The Refusals to Undertakings 18, 32, 33 and 38 [26] Requested undertaking18 is for Clarke to search its own records and advise whether or not each of some 445 railcars identified by CN as previously loaded by Clarke had in fact been loaded by Clarke. Based on a review of the claim as pled, matters relating to railcars previously loaded by Clarke are not an issue in the action. The pleadings allege negligence or breach of contract in respect of the car in question and resulting damages from the ensuing derailment. [27] In paragraph 19 of its claim CN also seeks damages in relation to “all costs incurred for the inspection of all trains carrying Coils loaded by Clarke”. This pleading can logically only relate to the inspection of trains carrying coils loaded by Clarke after the derailment in question. The history of some 445 cars previously loaded by Clarke is not pled as an issue in the action. [28] CN says it has its own records that show cars previously loaded by Clarke were not balanced and thus the topic is relevant to its allegation of negligence. It is open to CN to attempt to convince the trial judge, based upon its own evidence, that previous Clarke loaded cars were unbalanced and that such evidence is relevant to the decision of whether or not there was negligence or breach of contract in loading the car in question. Such an attempt may raise issues relating to the collateral fact rule or the law with respect to similar fact evidence. These are matters for the trial judge to decide at the time. The question for the moment is whether the request is proper for pre-trial questioning. [29] conclude that the matter of railcars previously loaded by Clarke is not within the proper scope of questioning. This topic is not an issue in the action, either as matter expressly pled or by virtue of being an essential element of the cause of action alleged. [30] To the extent to which it can be argued that the history of these 445 cars may be relevant to the issue of negligence in loading the subject car, find such relevance to be limited. I am also of the opinion that for proportionality reasons Clarke should not be required to answer the question. Putting Clarke to the time, effort and expense of requiring it to search its records to determine whether it loaded some 445 specific cars over the course of 3 ½ years is not justified by the benefits it provides to the conduct of this action. Beyond the immediate burden associated with the request, it is apparent that this line of questioning has the potential to expand into an investigation of the facts relating to the loading of some or all of these previous cars. [31] The requested undertakings 32 and 33 are to review a binder containing several hundred pages of invoices and other documents assembled by CN that it says are expenditures incurred as a result of the derailment, and to advise which invoices Clarke says are not related to the derailment or which Clarke is currently aware do not relate to the derailment. I find Clarke’s refusal to accept this requested undertaking to be appropriate. [32] There may be many situations where it is entirely appropriate and an efficient approach to ask defendant whether they accept that certain costs or expenses were incurred as result of the action or incident in question. Agreeing on such matters, where appropriate, is consistent with the efficiency objectives of the foundational rules. However, it is ultimately a plaintiff’s burden to prove its damages, and a defendant is not required to assist plaintiffs to do so. [33] The fact that defendant is not obliged to assist plaintiff to prove their damages aside, the approach taken here of presenting several hundred pages of invoices and other documents and asking the defendant to advise which they say relate and do not relate to the derailment is of such nature and scale that it is not appropriate. [34] Clarke cannot, without significant work that would essentially involve auditing CN’s entire claimed expense records, possibly know whether or not the items claimed flowed from the derailment. All of the relevant knowledge is in the possession of CN, and Clarke would have had no basis on which to make informed decisions. The request can be made, but it is entirely up to Clarke to decide whether or not to accommodate CN. There was nothing in Clarke’s refusal to answer that was inappropriate. [35] Requested undertaking 38 was to provide any background documents, information or factual information that went into the preparation of the sketch by Clarke’s insurance adjuster. Clarke refused to answer on the basis that the information sought was within the scope of its litigation privilege. CN argues that Clarke having waived its litigation privilege in respect of the sketch itself, it must follow it was waiving any claim of privilege as regards the sources of information leading to the sketch. [36] It is clear that the insurance adjuster’s file would be subject to a litigation privilege. For discussion of the law and parameters relating to the litigation privilege see the Supreme Court of Canada’s decision in Blank v. Canada (Minister of Justice), 2006 SCC 39 (CanLII), [2006] S.C.R. 319. The adjuster’s involvement was clearly the result of CN having informed Clarke of its claim or potential claim against Clarke arising from the derailment. Clarke’s third party liability insurer and its adjuster were involved because of the obligation of Clarke’s liability insurer to provide either defence to the claim or an indemnity. Thus the requirements of pending or apprehended litigation and the insurer and the adjuster’s involvement as an agent of Clark are satisfied. The issue is whether production by Clarke of document in respect of which it could have claimed litigation privilege waives any claim of such privilege as regards background information to the document. [37] The most current and comprehensive discussion of the topic of loss or waiver of litigation privilege is found in John Sopinka, Sidney N. Lederman Alan W. Bryant, The Law of Evidence in Canada, 3d ed. (Markham: LexisNexis Canada Inc., 2009) at 14.202 to 14.218. review of these paragraphs shows that the judicial decisions on waiver of the litigation privilege have been in the context of the question whether disclosure of an expert’s report results in waiver of any claim of privilege to information in the expert’s file to which the litigation privilege would otherwise attach. [38] While there is not unanimity of opinion, the prevailing view is that when an expert takes the witness stand or the expert’s report is tendered into evidence there is an implied waiver of the information in the expert’s file which is foundational to the opinion. However, it is generally held that the implied waiver should be narrowly construed and the privilege should be maintained where it is fair to do so, and any implied waiver should be restricted to material relating to the formulation of the expressed opinion. (See: para. 14.208.) [39] At this point, the sketch is simply representation of Clarke’s position as to the configuration of the coils and the bracing or blocking for such coils as loaded by Clarke. Unless and until the sketch is tendered as evidence at trial, I am of the opinion that there is no implied waiver of the litigation privilege that otherwise attaches to the foundational information leading to the preparation of this sketch. There is, in my opinion, no unfairness to CN in maintaining the litigation privilege relating to the adjuster’s file generally. It is open to CN to ask Clarke to identify the employees who were involved in the loading of the car and its inspection before release to CN for transportation and to pursue the same or similar factual information without intruding on the litigation privilege. [40] As the Supreme Court of Canada said in Blank, the litigation privilege is intended to create “zone of privacy” in relation to pending or apprehended litigation. Once this zone of privacy is found to exist, it should not be lightly intruded upon. Should CN seek to tender this sketch as evidence at trial, then the trial judge may well have to rule on whether there is then an implied waiver of litigation privilege in relation to the foundational information for the sketch. But, for the present and in the context of pre-trial questioning, I conclude that Clarke’s refusal to provide a response to requested undertaking 38 was appropriate. The Deferral of Answers (Undertakings 28, 39 and 53) [41] Clarke’s position is that CN’s application in respect of these undertakings is premature and unnecessary since it had undertaken to provide answers in the future upon conclusion of its questioning of CN or upon additional particulars becoming available to it. [42] CN argues that Clarke is obliged to answer based upon its current knowledge. It says that if future questioning or other information obtained requires an additional response or correction, the undertakings and the law contemplates that CN can then correct or provide additional information, but that there is current obligation to provide such facts or information as it has. Thus it says its application is not premature. [43] CN cites in support of this position International Minerals Chemical Corp. (Canada) Ltd. v. Commonwealth Insurance Co., [1991] S.J. No. 516 (QL) (Q.B.), where Halvorson J. said at para 6: Respecting another group of undertakings, the defendants replied that they needed further examinations for discovery before supplying answers. This is not [an] appropriate response. The defendants are obliged to indicate their present positions and facts now known or believed to exist. [44] The report of this decision does not provide the undertakings, the context of the questions nor sufficient information regarding the nature of the claim and the information sought to be able to appreciate the reasons for the ruling Halvorson J. made. Further, this decision was made in the context of the former Queen’s Bench Rules, absent the emphasis now in the foundational rules on the quickest means of resolving claims at the least expense. Accordingly, am unable to find much to assist me in Justice Halvorson’s decision. [45] Prior to undertaking 28 being taken under advisement, Clarke, through its counsel, advised in respect of undertaking 28 that they did not have a position on what caused the derailment and if they developed a position they would advise. Prior to undertaking 38 they stated they had provided all of the facts they were then aware of. Thus Clarke provided to the date of their questioning their position and the facts they were aware of. They say that while they are prepared to answer the undertakings, both having been taken under advisement, that answers cannot be provided until completion of now scheduled continuation of discovery. [46] Given the answers provided at the time of questioning, can see no justification for me to do anything other than accept Clarke’s stated position that answers to undertakings 28 and 39 cannot be provided until completion of their questioning of CN. Indeed, in the context, completion of discovery of CN appears to me to be necessary step in the process of Clarke formulating position as to what caused the derailment and what facts they rely upon in support of that position. Further, find this to be the quickest means of dealing with the questions asked at the least expense. Accordingly, decline to order Clarke to answer now based upon its current knowledge. [47] With respect to undertaking 53, Clarke agreed at the time of questioning that, should particulars, beyond those provided at the time of questioning, become available, it would advise. That remained its position on this application. Inherent in this is that no additional particulars have yet become available. [48] Rule 5-31 imposes continuing obligation to correct, as soon as practicable, an answer that becomes incorrect or misleading as result of new information. There is no evidence before me that this obligation under the rules has not been complied with. The Adequacy of Responses to Undertakings 34 and 35 [49] I agree with the position taken by counsel for CN that:i. Undertaking 34 calls for Mr. Swainson himself to say what he meant or did, as opposed to Mr. Thompson saying what Mr. Swainson meant or did; and thatii. Undertaking 35 calls for Clarke to make inquiries of Thompson and Swainson and to advise what their personal responses to the questions were. Accordingly, I order Clarke to provide proper responses to CN. [50] In light of the foregoing order that Clarke shall within 10 days of this order provide proper responses to undertakings 34 and 35. The balance of CN’s application is dismissed. [51] have for the most part dismissed the application by CN for relief. While have ordered proper responses be provided in respect of undertakings 34 and 35, this was minor part of the relief sought and was matter that normally would have been dealt with on an informal basis between counsel or by follow-up examination. [52] In my award of costs balance the limited success of CN against their failure on what see as the significant issues of the application. The matter must be treated as complex motion for costs purposes. Significant briefs of fact and law were filed. The matter was moved to the bottom of the chambers list and when reached occupied more than one hour in argument. In the result award net costs of $1,500.00 to Clarke in any event of the cause.
HELD: The Court held that the replacement of former Queen’s Bench rule 212 requiring the production of documents “relating” to any matter in question and rule 222 permitting examination for discovery “touching” the matter in issue in the action by new rules 5-6, 5-18 and 5-25, which use the phrase: “relevant to any matter in issue”, showed the intention that the broad relevance test was no longer applicable. The test under the new Rules was whether the matter qualifies as being material to the action based upon the matter as pled and whether the evidence tends to prove or disprove the matter in issue. This inquiry must be balanced against the notion of proportionality set out in the foundational rules. The Court dismissed the application, excepting the requested order under 3) wherein the defendant would fulfill its undertaking to have certain employees provide responses. With respect to the rest of the relief requested under 1), which involved the undertaking that the defendant would search its records regarding the loading of railcars, the Court held that the as matter was not an issue in the action, based upon a review of the claim as pled. Having regard to proportionality under the new rules, the defendant should not be required to answer the question in light of the effort and expense required versus the possible benefits. The Court held that the plaintiffs were not entitled to ask the defendants to review a binder containing hundreds of pages of invoices assembled by the plaintiff regarding its expenditures incurred as a result of the derailment in order for it to advise the plaintiff which invoices the defendant believed were not related to it. It was the plaintiff’s burden to prove its damages and the defendant was not required to assist the plaintiff to do so. The plaintiff’s requested undertaking for the defendant to provide any background documents and information that went into the preparation of sketch of the railcar in question by the defendant’s adjuster was also denied. The adjuster’s file was subject to litigation privilege and unless it was tendered as evidence at trial, there was no implied waiver of that privilege. Regarding the plaintiff’s request in 2), the Court agreed with the defendants that that plaintiff’s request that the defendant answer questions now, rather than after it had completed questioning of the plaintiff, was premature. The defendant had not yet taken a position on the cause of the derailment and they would advise the plaintiff when they had developed one. Rule 5-31 makes it an ongoing obligation to correct answers and there was no evidence in this application that the rules had not been complied with. The Court awarded costs in the amount of $1,500 to the defendants due to the complexity of the application, requiring the submission of briefs of law and the amount of time taken to argue them matters in Chambers.