Q.B. A.D. 1993 No. 3294 J.C.S. IN THE COURT OF QUEEN'S BENCH JUDICIAL CENTRE OF SASKATOON BETWEEN: DONRIC ENTERPRISES LTD., DONALD CLARK and RICHARD CLARK PLAINTIFFS (DEFENDANTS BY COUNTERCLAIM) and NORTHCO FOODS LIMITED and SUNBAY FOODS INC. DEFENDANTS (PLAINTIFFS BY COUNTERCLAIM) L. G. Greenhorn for the plaintiffs M. A. Dynna for the defendants FIAT GEREIN J. September 30, 1994 In this matter must deal with three interlocutory applications. The first is brought by the plaintiffs who seekan order for production of documents by the defendants. Thesecond and third are brought by the defendants who seek a likeorder in respect to the plaintiffs\' documents and in addition,an order that the plaintiffs provide further and betterparticulars. BACKGROUND FACTS The plaintiffs, Donald Clark and Richard Clark, are the sole shareholders and directors of the plaintiff corporation, Donric Enterprises Ltd. The defendant, Sunbay Foods Inc., is wholly owned subsidiary of the defendant, Northco Foods Limited. In 1984 Donric Enterprises Ltd. and the defendant, Sunbay Foods Inc., entered into franchise agreement in respect to operating Robin's Donuts outlet in Prince Albert, Saskatchewan. The personal plaintiffs guaranteed performance of that agreement. In 1989 Donric Enterprises Ltd. decided to sell the franchise and so advised the defendants. Thereafter Donric Enterprises Ltd. entered into negotiations with several parties, but in the end was never able to sell the franchise and has suffered the loss of its initial investment. The plaintiffs allege, in statement of claim issued on October 27, 1993, and amended in March, 1994, that the defendants wrongfully interfered with the various negotiations and wrongfully withheld approval of the sale or transfer of the franchise agreement. In consequence the plaintiffs claim to be entitled to damages from the defendants on the basis of breach of contract, intentional interference with contractual relations and breach of fiduciary relationship. Upon being served with the statement of claim, the defendants demanded particulars and they were provided in reply dated March 30, 1994, and amended April 21, 1994. statement of defence and counterclaim were served and filed. While it is of some length, the defence essentially denies any wrongdoing. In the counterclaim the defendants claim $31,800.12 by way of royalties, advertising fees, repairs to leased premises and loss of rent. There also is claim for damages arising from an alleged defamation of the defendants. In their defence to the counterclaim the plaintiffs deny owing any monies and alternatively claim set-off of certain monies allegedly owing by the defendants. They further assert that any dispute in respect to the lease was settled. Finally, they admit letter was written to newspaper in Prince Albert, but deny responsibility for its publication; assert that the claim is statute barred; and, in any event, allege that no damages were sustained by the defendants. In the defence to counterclaim, para. way. 3.The Plaintiffs (Defendants by Counterclaim) put the Defendants (Plaintiffs by Counterclaim) on notice in late 1991, and early July, 1992, of number of shortfalls and deficiencies relating to the franchise agreement, lease, advertising, signage, etc., all of which exceed three folios in length, and advised the Defendants (Plaintiffs by Counterclaim) that no further payments would be made until such time as these deficiencies were rectified. That paragraph gave rise to this demand for particulars: 1.Particulars of the shortfalls and deficiencies relating to the Franchise Agreement, Lease, advertising, signage, etc. referred to in paragraph of the Statement of Defence and Counter-Claim including description of the deficiency and dollar value relating to the deficiency. The reply to that demand for particulars is dated July 4, 1994, and is as follows. 1.Queen's Bench Rule 14 has no application as the Statement of Defence and Counterclaim are not documents prepared or filed by the Plaintiffs (Defendants by Counterclaim) and as such the demand is not made to "any other party". 2.That insofar as the Statement of Defence and Counterclaim were served and filed by the Defendants (Plaintiff by Counterclaim), they have full knowledge of all particulars. subsequent reply to demand for particulars states this. 1.Particulars of the shortfalls and deficiencies relating to the franchise agreement, lease, advertising, signage, etc. referred to in paragraph of the Statement of Defence to Counterclaim do exceed three folios in length, which are matters of evidence and not matters of pleadings. The Plaintiffs (Defendants by Counterclaim) have provided disclosure of their documents as outlined in the Statement as to Documents filed on June 2, 1994, with this Honourable Court, which documents outline the details sought. The defendants are not content with either reply and hence the one part of their application seeking further and better particulars. The final matter is that of documents. Each party has served and filed statement as to documents. Each party has sought production of certain documents and the other has refused to comply. As result, there are respective applications for production of documents. PRODUCTION OF DOCUMENTS Rule 212 of the Queen's Bench Rules of Saskatchewan (1) defendant or party in the position of defendant shall, before the expiration of ten days after the time when his defence shall have been delivered, and plaintiff or other party in the position of plaintiff shall, before the expiration of two days after the time when his reply shall have been delivered or if there is no reply within ten days after the defence or the last of the defences shall have been delivered, without notice file statement as to the documents which are or have been in his possession or power relating to any matter in question in the action. The use of the phrase "relating to any matter in question" strongly and clearly indicates that the rule is broad and extensive in its application. As well, the rule should be read as being part of the disclosure and discovery process and in recent years the Saskatchewan Court of Appeal has clearly stated that discovery "has wide scope". See: Cominco Ltd. v. Phillips Cables Ltd., 1987 CanLII 200 (SK CA), [1987] W.W.R. 562; Wasylyshen v. C.B.C., (1989) 1989 CanLII 4472 (SK CA), 73 Sask. R. 295; Soke Farm Equipment Ltd. and Soke v. New Holland of Canada Limited et al., 1990 CanLII 7811 (SK CA), [1990] W.W.R. 762. There is an underlying test which governs the production of documents and it was set out in Newbery Energy Ltd. v. Amok Ltd., 1987 CanLII 4935 (SK QB), [1988] W.W.R. 424 (Sask. Q.B.) at p. 437. As observed by Lord Justice Brett inPeruvian Guano, the test to be applied is"may", not "must", in relation todocuments which may contain informationwhich either directly or indirectlyenables the party requiring the affidavit(here production) either to advance hisown case or to damage the case of hisadversary. The learned justice then goes on at p. 438 and says this. The general rule respecting discoveries is that defendant is bound to produce all documents in his possession, and to disclose all facts within his knowledge which are material to plaintiff's case. One object of the rule is to permit plaintiff access to documents and information by which relevant facts might be manifested. It does not follow that because plaintiff is, upon discovery, given access to documents or information that they will, of themselves, constitute admissible evidence. More recently the courts have spoken of relevancy as being the criteria whereby one determines whether production must be made. Yet it is broad relevance as opposed to narrow or strict relevance which is the applicable test. See: Steier v. University Hospital, 1988 CanLII 215 (SK CA), [1988] W.W.R. 303 (Sask. C.A.); Potash Corporation of Saskatchewan Mining Ltd. v. Saskatchewan Government Insurance, (1990) 1990 CanLII 7499 (SK QB), 83 Sask. R. 19 (Sask. Q.B.); Abbas-Hasani v. City of Regina, (1991) 89 Sask. R. 196 (Sask. Q.B.); and Viczko v. Saskatchewan Power Corporation, (1991) 1991 CanLII 7572 (SK QB), 90 Sask. R. 128 (Sask. Q.B.). In the instant case the plaintiffs seek production of numerous documents which are described in 13 paragraphs. will deal with each in turn. (1)A variety of documents relating to prospective purchasers of Robin's Donuts franchises. Robert Keeper, the secretary-treasurer of the defendants, swears in his affidavit that the defendants have no such records. There is nothing to contradict this assertion. It would be inappropriate to order production of something that does not exist and therefore decline to do so. (2)Original contracts with suppliers of various products to the Prince Albert franchise. In the franchise agreement it is stipulated that the defendants will provide products to the plaintiffs and are entitled to earn commissions from the suppliers of the products. The plaintiffs claim that the defendants represented that they would obtain discount prices, but in fact they did not. It is then alleged that the defendants obtained secret commissions. The defendants say that as the commissions were expressly provided for in the agreement, there could be no "secret commissions" and the contracts are not relevant. The use of the description "secret commissions" is inaccurate and unfortunate. When read the pleadings have no difficulty in understanding the plaintiffs to be making the allegation that the defendants paid excessive and therefore improper prices for product and this in turn resulted in excessive and improper commissions. It should also be mentioned that clause 6.1 of the agreement stipulates that the defendants "shall not charge more than reasonable amounts for the products and materials." Accordingly, the plaintiffs may have valid claim and the requested documents, insofar as they pertain to the Prince Albert outlet, are relevant and should be produced. (3)Originals of certain documents. In their statement as to documents the defendants disclose and are prepared to produce copies of four documents. The plaintiffs want the originals. The originals of two of the documents have been located and will be produced. The originals of the other two documents cannot be located. In these circumstances decline to order production of the originals. (4)All original contracts with respect to advertising as it relates to the Prince Albert franchise. The franchise agreement stipulates that the operator will pay certain fees for advertising and the defendants have claimed the same. Mr. Keeper suggests the requested documents are not relevant because the plaintiffs have alleged money was in the advertising fund and alternatively the plaintiffs are estopped from claiming such fees. It may well be that in the end the defendants have no accountability for the advertising fees collected. They may simply be source of income for the defendants based on mathematical calculation with sales as its base. However, the question of advertising has been raised and at this stage of the proceedings any documents pertaining to advertising are relevant and must be produced. (5)Original contracts between the defendants and present operators of franchise outlets in Prince Albert. These documents pertain to matters subsequent to the dealings between the parties herein. At this juncture am not persuaded that they are relevant and therefore they need not be produced. (6)Business records of an extensive variety as they pertain to the franchise in Prince Albert as well as all other franchises. It is not clear whether the request pertains to the period when the plaintiffs were operating the franchise or whether it pertains to the period prior to that. In any event, the request is so broad and general that it would require the defendants to literally produce every piece of paper in their possession. Much of that would be irrelevant. Accordingly, refuse to order production of these documents; but this refusal is without prejudice to the plaintiffs to renew their application for specific documents should they be so advised. (7)All agreements between the two defendants as they relate to the franchises in Canada and Saskatchewan. The defendants have undertaken to produce these documents so need say no more. (8)Income tax returns of the defendants. The plaintiffs have abandoned this request for the present time. (9)Corporate minute books of the defendants. The plaintiffs have also abandoned this request for the present time. (10)Original documents relating to leasehold improvements and fixtures installed since July, 1992. The defendants have agreed to produce these documents and that ends the matter. (11)Original letters, memoranda or other correspondence as it relates to the seeking of another franchise operator in the City of Prince Albert. Mr. Keeper views this request as being the same as (1) above and suggests it be treated in the same way. find myself in disagreement for view this request as being focused on particular types of documents, which presumably would not ordinarily be destroyed, and documents which relate to specific franchise operators, either potential or actual. Central to the law suit is the allegation that the defendants breached fiduciary duty and interfered with contractual relations. Documents which pertain to dealings with other persons who were potential operators in the Prince Albert area or who actually became such operators are relevant and must be produced. (12)Original records, including accounts, vouchers, receipts and bank records of commissions received by the defendants from the sale of products. Here again am confronted with the allegation of improper charges. As earlier stated, in respect of (2), documents which pertain to this allegation are relevant. Accordingly, the requested documents should be produced. (13)Any price lists or quotes provided to the defendants by supplier, manufacturer or distributor of commodities required to be purchased by the plaintiffs. Mr. Keeper attests that they have no such documents and accordingly no order will be made in respect of them. That concludes the matter of production of documents by the plaintiffs. turn now to the like application by the defendants. They seek production of these documents which are set forth in the plaintiffs' statement as to documents. 4.Videotape of CKBI News re: closing of Robin's Donuts. 5.Copies of invoices from KHK Foods Inc. (Marks Foods), namely: invoice nos. 293765, dated October 25, 1991; 307925, dated April 3, 1992; and 315072, dated June 2, 1992. 6.Copy of Thomas C. Rowe's SaskTel phone bill, page of 2. 7.Letter from Patrick Boland to whom it may concern, dated May 6, 1992. 8.Copy of Patrick Boland's SaskTel phone bill, page of 2. 9.Memo from Alain R. Verville, dated May 6, 1992. 10.Copy of Alain Verville's SaskTel phone bill, page of 2. 11.Affidavit of Alain R. Verville, dated May 20, 1992. 12.Affidavit of Patrick Boland, undated. 13.Affidavit of Tom C. Rowe, dated May 19, 1992. 14.Index as to audiotape of memo listing president Harvey Cardwell, the vice presidents, etc. 15.Audiotape of Pat Boland, Al Verville, Norm Tarsoff, and friend of Don Clark talking to Ron Whitehead. 1.Ten pictures of the Robin's Donuts premises in Prince Albert. While the documents are disclosed, the plaintiffs object to producing them on the ground that they are privileged, although such is not stated in the statement as to documents. Rather, the plaintiff, Donald Clark, in his affidavit swears that the documents above listed were either made or obtained for the purpose of litigation. It is necessary to digress and discuss the admissibility of certain letter. The position of the defendants is that the documents were not prepared in anticipation of litigation. In support of this there has been filed an affidavit of Robert Keeper to which is annexed two- page letter dated July 9, 1992, addressed to him by the plaintiff, Richard Clark. Both pages of the letter bear the endorsement "without prejudice" and the letter contains an offer of settlement. It then concludes with this paragraph. If reply is not forecoming within two weeks, we will assume that our interests are of no matter to you. If this is the case, we will take the affidavits, tapes, licensee agreement, and our books to the public for their scrutiny and judgement. This includes going to the press not only in Saskatchewan but also across Canada. Even though no illegal act or breach of contract has been committed, we feel that it will be of great interest to those who may have been considering the purchase of Robins and those also trying to sell. It is submitted on behalf of the defendants that this paragraph conclusively proves that as of July 9, 1992, the plaintiffs had no intention of initiating litigation and therefore all of the subject documents are not privileged because they precede the letter. Counsel for the plaintiffs took the position that the letter was privileged and therefore inadmissible. Counsel for the defendants submitted that the letter was not privileged because it contained threat and cited the decisions of Underwood v. Cox, (1912) 1912 CanLII 582 (ON SCDC), 26 O.L.R. 303 (Ont. Div. Ct.) and Greenwood v. Fitts, (1961) 1961 CanLII 368 (BC CA), 29 D.L.R. (2d) 260 (B.C.C.A.). have read the decisions and understand their application to be limited. They do not stand for the proposition that threat destroys all privilege. Rather, it is only the threat itself which loses the protection of privilege and can become admissible evidence. In the instant case, consider the quoted paragraph to be something of threat and as such it may be considered on this application. However, do not read the paragraph as saying the writer has not, is not and will not contemplate or embark on course of litigation. Furthermore, on this application, absent something further, am not prepared to hold the other parties bound by the letter. As understand the law, if privilege is to be sustained two things must be demonstrated. They are: (a) the document must be brought into existence with the dominant purpose of using it in order to obtain legal advice or to conduct or aid in the conduct of litigation, and (b) there must be reasonable prospect of litigation. Saskatoon Drug and Stationery Company Limited v. Anderson, 1990 CanLII 7807 (SK QB), [1990] W.W.R. 144 at p. 146 (Sask. Q.B.). See also Laxton Holdings Ltd. et al. v. Lloyd's Non-Marine Underwriters et al., (1989) 1988 CanLII 5250 (SK CA), 72 Sask. R. 313 (Sask. C.A.). note that in his affidavit the plaintiff, Donald Clark, speaks of documents being "obtained" for the purpose of litigation. have been unable to find any authority which suggests that document not prepared, but simply obtained, in respect to litigation is privileged. do not think it wise to extend privilege to such document in the circumstances of this case and decline to do so. When look at the list of the subject documents, it is clear that most of them were prepared by third parties for their own purposes and without any thought of litigation. The best example is the videotape of CKBI News re: closing of Robin's Donuts. Equally obvious are the phone bills of SaskTel. Accordingly, hold that privilege does not attach to the documents described as 4, 5, 6, 8, 10, and 16 and they must be produced. Next notice that copies of the documents numbered 11, 12 and 13 are listed in the plaintiffs' statement as to documents as being in their possession. This being so, they are not privileged and must be produced. As to the remaining four documents, considering the material filed, am unable to say that they are not privileged and therefore decline to order their production; but without prejudice to the defendants to bring further application if the circumstances so warrant. REPLY TO DEMAND FOR PARTICULARS Rule 14(1) of the Queen's Bench Rules of Saskatchewan provides: (1) party may at any time before the action is set down for trial deliver notice in writing, requiring from any other party further and better statement of the nature of the claim or defence or further and better particulars of any matter of which particulars should properly be given and such notice shall clearly state the particulars required. It is obvious that the rule contemplates demand being made "from any other party". The plaintiffs' original reply that it was not bound by the rule has no merit. Equally, there is no merit to the other statement that because the plaintiffs filed defence and counterclaim they have full knowledge of all particulars. The one proposition does not necessarily follow upon the other. The second reply speaks of evidence as opposed to matters of pleadings. This assertion warrants closer scrutiny and one starts with the proposition that pleadings must be brief and confined to allegations of fact. See Queen's Bench Rule 139 and Meyers and Lee v. Freeholders Oil Company Limited et al., (1956) 1956 CanLII 220 (SK CA), 19 W.W.R. (N.S.) 546 (Sask. C.A.). Bearing that in mind, particulars are appropriate only to enable party to properly plead in response and to eliminate surprise. See: Mathews and Lemon v. Cameron et al., (1964) 48 W.W.R. (N.S.) 12 (Sask. Q.B.) and Levesque Beaubien Geoffrion Inc. v. Vista Mines Inc. et al., (1992) 1991 CanLII 7775 (SK QB), 95 Sask. R. 174 (Sask. Q.B.). As the impugned pleading is contained in the defense to the counterclaim, there is no requirement that the defendants reply to it. That being so, it cannot be said that the defendants require particulars in order to respond to the pleading. On the other hand, the plaintiffs merely plead ". shortfalls and deficiencies relating to the franchise agreement, lease, advertising, signage etc., all of which exceed three folios in length ". In my opinion, it is impossible to know with any certainty what is being claimed, particularly when "etc." is used. The words "shortfalls" and "deficiencies" do not add much more. do not believe that all the details of the claim must be set out. However, the plaintiffs should be able to describe with some clarity the nature and source of the shortfalls and deficiencies along with the dollar value of same. This limited information will likely do much to avoid surprise and should therefore be provided. COSTS Each party has brought an application and has been successful at least in part. This being so, any costs awarded would be off-setting. Therefore, make no order as to costs of the application. On an earlier occasion counsel appeared to speak to an opposed adjournment. In the end the adjournment was granted. The matter of costs was reserved to me. Taking into account the circumstances of the earlier appearance, order that the defendants will have the costs of that adjournment in any event of the cause and fix those costs at $200.00. CONCLUSION It is hereby ordered as follows:(1)that the defendants shall produce to the plaintiffs thedocuments described in paras. 2, 4, 11 and 12 of theplaintiffs\' notice to produce documents;(2)that the plaintiffs shall produce to the defendants thedocuments described as 4, 5, 6, 8, 10, 11, 12, 13 and 16 of thesecond part of the plaintiffs\' statement as to documents;(3)that the plaintiffs shall provide further and betterparticulars in respect of para. 3 of their statement ofdefence to counterclaim by setting forth the nature and sourceof the alleged shortfalls and deficiencies along with themonetary value of same; (4)that the defendants shall have costs in the amount of $200.00 in any event of the cause.
FIAT The Plaintiffs purchased a Robin's Donuts franchise from the Defendants. They later tried to sell the franchise without success. Eventually they turned the franchise back and sued for damages alleging that the Defendants had interfered in their attempts to sell the franchise and had wrongfully refused to consent to a sale negotiated by the Plaintiffs. The Defendants counterclaimed for unpaid royalties and rent. The parties each prepared and served their Statements as to Documents. Both parties then applied for production of additional documents under Rule 212. The Defendant also sought further particulars of certain matters referred to in the Plaintiff's Defence to Counterclaim under Rule 164. HELD: Applications allowed. Both of the parties were ordered to produce some of the documents requested. 1)A party must disclose all documents which may contain information which either directly or indirectly enables the other party to advance his case or to damage the case of his adversary.  2)The test of relevance on discovery is wider than that of admissibility at trial. 3)Documents brought into existence with the dominant purpose of using them in order to obtain legal advice or to conduct or aid in the conduct of litigation which is in reasonable prospect at the time of their creation are privileged. 4)Particulars are appropriate only (i)to enable a party to properly plead in response or (ii)to eliminate surprise. 5)The Court found that further particulars were appropriate in this case on the second ground, given the vague nature of the impugned paragraph in the Plaintiff's Defence to Counterclaim.