QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2012 SKQB 372 Date: 2012 09 12 Docket: Q.B.G. No. 469 of 2007 Judicial Centre: Saskatoon BETWEEN: MICHAEL JOHN KOZAK, and ERNEST HOEPPNER, Counsel: Jennifer D. Pereria for the defendant applicant W. Timothy Stodalka for the plaintiff respondent FIAT KONKIN J. September 12, 2012 [1] The applicant, Ernest Hoeppner, brings an application for relief in the alternative as follows:(a) that the plaintiff’s action be dismissed for want of prosecution; or(b) that the plaintiff be required to disclose the amount recovered from its lawsuit with Wawanesa Insurance, Q.B. No. 1074 of 2001. [2] The plaintiff, Michael Kozak, purchased insurance from the defendant, Ernest Hoeppner. On March 7, 2000, Mr. Kozak suffered a fire at his farm. On May 7, 2001, Mr. Kozak issued a statement of claim against one James Neigum, his tenant, and Wawanesa Mutual Insurance Company under Q.B. No. 1074 of 2001 in the Judicial Centre of Saskatoon. [3] On May 5, 2006, Mr. Kozak commenced an action against Mr. Hoeppner alleging that Mr. Hoeppner was in breach of contract or negligent for failing to obtain full replacement value insurance coverage for Mr. Kozak and for failing to accurately assist Mr. Kozak in filling out his proof of loss forms. statement of defence was filed by Mr. Hoeppner on April 5, 2007. Mediation took place September 11, 2010 and examinations for discovery were held on May 9, 2011. During those examinations for discovery Mr. Kozak refused to respond to the undertaking now requested in this action. Mr. Hoeppner sold his insurance services on October 1, 2010. [4] The Court of Appeal in Saskatchewan has set out the principles for determining whether or not matter should be struck for want of prosecution in the case of International Capital Corp. v. Robinson Twigg Ketilson, 2010 SKCA 48 (CanLII), 350 Sask. R. 160. The guiding principles from that case were summarized by Zarzeczny J. in Anderson v. Wascana Wood Components Ltd., 2010 SKQB 357 (CanLII), 361 Sask. R. 219, where at paras. 10 and 11, he stated: 10 At paras. 43-45, the court sets out the three step approach for dealing with an application to strike with its modification to step 3: 1. Step one an inquiry about whether the defendant has established that the delay in moving case ahead has been inordinate. 2. Step two an examination of the reasons for the delay aimed at determining whether it is excusable. 3. Step three if the delay is found to be both inordinate and excusable, determine whether it is in the interests of justice that the case proceed to trial notwithstanding the delay. 11 The third step should involve consideration of the issue of prejudice (previously the focus of step 3) as one, albeit an import, aspect of step but having regard to eight factors (para. 45). They include the following: 1) the prejudice the defendant will suffer in mounting its case if the matter goes to trial; 2) the length of the inexcusable delay; 3) the stage of the litigation; 4) the impact of the inexcusable delay on the defendant; 5) the context in which the delay occurred; 6) the reasons offered for the delay; 7) the role of counsel in causing the delay; and 8) the public interest. The Period May 2000 to June 2010 [5] The incident leading to the claim happened in May of 2000. The plaintiff issued its statement of claim against Mr. Hoeppner in May of 2006, shortly before the limitation period would have expired. That it had right to do. The statement of claim in this matter was issued on May 5, 2006 at the Judicial Centre in Regina and served sometime thereafter. The statement of defence was filed on April 11, 2007 and at that time an application was made to transfer the file from Regina to Saskatoon. Mediation took place on September 11, 2010 and examinations for discovery were held on May 9, 2011. The plaintiff argues that the delay of roughly four years from the filing of the statement of defence to the date of examination for discovery is not an inordinate as they were heavily involved in the matter dealing with the other file, the suit against Wawanesa. That, is not full answer in this matter. There is nothing to have stopped the plaintiff from conducting examinations for discovery on Mr. Hoeppner within the same time frame as it was dealing with the Wawanesa matter. Had the Wawanesa matter taken an additional three or four years to resolve through trial and appeal for instance would the plaintiff be arguing that it need not have proceeded with any action on Mr. Hoeppner’s file. The plaintiff also argues that the defendant acquiesced in this delay by not pushing the plaintiff to proceed with the matter. In her affidavit sworn July 10, 2012, Ms. Pereira sets out number of correspondences which she attempted to receive updates on this file and push to have it moved forward. cannot accept the plaintiff’s position that the defendant did nothing during that period and therefore acquiesced in the delay. I find that the delay was inordinate. This takes us to the second step in the test in which the court needs to look at the reasons for delay to determine whether or not the delay is excusable. Here the plaintiff has raised some arguments which are beneficial to its cause. The plaintiff argues that it was understood between the parties that the action against Mr. Hoeppner would only proceed depending on the outcome of the claim against Wawanesa. This is partially confirmed by the affidavit of Ms. Pereira sworn July 10, 2012. Of course it would be to the defendant’s advantage to allow matters to play out in the suit against Wawanesa in hopes that complete resolution could be had. This appears not to have been the case and after the resolution with Wawanesa matters have progressed on bit of tighter time line. Mediation was held in November of 2010, thereafter statement of documents was produced and examinations for discovery were held in May of 2011. It took plaintiff’s counsel from that time until May 29, 2012 to file its reply to undertakings. This was approximately two weeks after the application for this motion had been filed. The Period June 2010 to Application [6] Assuming for the moment that the delay from the period of June 2010 to May of 2012 could be considered inordinate and inexcusable, we would then have to look at the step (3) from the Court of Appeal decision to determine on factor‑by‑factor basis whether or not remedy of dismissing the claim would be available. Under that category we must consider factors like prejudice to the defendant. Here the defendant while having sold his business in 2010 admits that he still has the file and has reviewed it on regular basis. No issue was raised about witnesses not being available or evidence having been lost or destroyed. That factor does not favour the defendant. The length of the inexcusable delay [7] The delay here would simply be the one-year period that it took the plaintiff’s counsel to respond to the undertakings. Here, some time would be expended in determining what undertakings could be responded to and what should be resisted. While one year is an excessive period of time it is not such as to lead me to the position that this claim should be struck on that basis. Stage of litigation [8] As examinations for discovery are completed this matter is at a point where it could well go to pre-trial conference. Therefore it is not at such an early stage that it would lead the court on its own to strike. Impact of inexcusable delay on defendant [9] As the defendant is retired from active business, this delay is not causing him any professional embarrassment or damage to reputation. In addition, this is not matter that is in the public’s eye and therefore very few people would even know that it is currently in existence. The context in which the delay occurred. [10] The delay from June 2010 to May 2012 really is a delay from May 2011 until May 2012 and solely on the head of counsel for the plaintiff for not responding in a timely fashion to the undertakings. There were requests for answers to the undertakings culminating in the application. Reasons offered for delay [11] The only reason offered by counsel for the plaintiff for the delay in responding to the undertakings was a busy schedule and determination was to be made about which undertakings could be answered and which were not answerable pursuant to the Rules. This delay tips the balance towards the defendant. The role of counsel in causing the delay [12] The delay from June 2010 to May 2012 is almost entirely on the head of the counsel for the plaintiff and it is not for the court to deprive the plaintiff of his claim for actions beyond his control There is nothing to suggest that the delay in response to the undertakings was caused to any great extent by the plaintiff. [13] On the whole, in speaking to the delay from June 2010 to May 2012 even if it is inordinate and inexcusable when one considers the factors as set out by the Court of Appeal cannot find that this claim should be struck. Some of the considerations are in favour of the defendant and others are not. Clearly counsel for the plaintiff did not diligently respond to the undertakings. He is advised not to repeat such conduct. Second issue application to produce settlement amounts [14] The applicant/defendant also applies to the court for an order to force the plaintiff to disclose the settlement amounts from its settlement in the Wawanesa claim. Counsel for the plaintiff argues that the parties entered into minutes of settlement on confidential basis and that it cannot disclose those amounts without breaching that confidence. In this matter counsel for the plaintiff asserts that as the settlement documents were negotiated and meant to remain private that blanket privilege attaches to them and they are not disclosable. Counsel relies on cases such as Middelkamp v. Fraser Valley Real Estate Board (1992), 1992 CanLII 4039 (BC CA), 96 D.L.R. (4th) 227, 71 B.C.L.R. (2d) 276 (B.C.C.A.). In that case McEachern C.J. (as he then was) states in part at paras. 18 ... find myself in agreement with the House of Lords that the public interest in the settlement of disputes generally requires “without prejudice” documents or communications created for, or communicated in the course of, settlement negotiations to be privileged. would classify this as “blanket”, prima facie, common law, or “class” privilege because it arises from settlement negotiations and protects the class of communications exchanged in the course of that worthwhile endeavour. 19 In my judgment this privilege protects documents and communications created for such purposes both from production to other parties to the negotiations and to strangers, and extends as well to admissibility, and whether or not settlement is reached. This is because, as have said, party communicating proposal related to settlement, or responding to one, usually has no control over what the other side may do with such documents. Without such protection, the public interest in encouraging settlements will not be served. [15] McEachern C.J. did allow in his judgment for exceptions to this blanket privilege. This notion was discussed by the British Columbia Court of Appeal in Dos Santos (Committee of) v. Sun Life Assurance Co. of Canada, 2005 BCCA (CanLII), 249 D.L.R. (4th) 416, where the court stated at paras. 17 through 20: 17 In Middelkamp, supra, Chief Justice McEachern said there must be exceptions to the blanket privilege for settlement communications. Notably, he referred to the proper disposition of litigation (para. 20). 18 In my view Middelkamp did not close the door on what might constitute valid exception to the blanket privilege (see reviews of types of exceptions to the rule in Berry v. Cypost Corp. (2003), 2003 BCSC 1827 (CanLII), 43 C.P.C. (5th) 275, 203 BCSC 1827, and Unilever plc v. The Proctor Gamble Co., [2000] W.L.R. 2436 (C.A.)). 19 However, the test for discharging the burden to establish an exception should not be set too low. The public policy behind settlement privilege is compelling one. It is so compelling that even threats arising in the context of settlement negotiations may not justify an exception: Unilever, supra, at page 2449-2450. 20 To establish an exception in this case, the defendant must show that compelling public interest outweighs the public interest in encouraging settlement. An exception should only be found where the documents sought are both relevant, and necessary in the circumstances of the case to achieve either the agreement of the parties to the settlement, or another compelling or overriding interest of justice. [16] In Brown v. Cape Breton (Regional Municipality), 2011 NSCA 32 (CanLII), 331 D.L.R. (4th) 307, Justice Bryson adopted the Dos Santos language with regard to exceptions to the blanket rule and went on to say at para. 63, even those cases that most strongly endorse the policy reasons for protecting settlement communications from disclosure recognize that there are exceptions. In Middlecamp, Chief Justice McEachern listed several possible exceptions (fraud, or to rebut defences of laches, want of notice, or limitation period) without explicitly endorsing them, or providing an analytical foundation for them (para. 20). In Dos Santos the court recognized an exception for double recovery but more broadly was prepared to grant an exception if party could show compelling public interest that outweighed the public interest of encouraging settlement. An exception would only be found where the disclosure was both relevant and necessary in the circumstances of the case to support another compelling or overriding interest of justice. In Dos Santos, the plaintiff put the subrogation rights of his insurer in issue. The defendant insurer had contractual right to know what recovery the plaintiff had received in earlier litigation, which affected the insurer’s obligation to pay the plaintiff. To avoid double recovery, disclosure was ordered. And at para. 74: The double recovery rule is widely acknowledged exception permitting disclosure of documents otherwise protected by settlement privilege. It could form the basis of a disclosure order in this case should the trial judge ultimately determine that the communications sought here were relevant and necessary to avoid double recovery in this case. [17] In the case at bar, look at the tests of relevance and necessity. [18] Clearly in the trying and/or settlement of the case against Mr. Hoeppner the amounts already paid are relevant. Cases such as Dos Santos and Brown v. Cape Breton speak to the notion of the court protecting against double recovery. Also in that vein, find that the settlement amounts in the Wawanesa case are necessary to protect against that notion of double recovery. [19] therefore order that the settlement amounts arrived at in the minutes of settlement be disclosed. If those settlement amounts relate to structure by structure then those amounts will individually be disclosed. SUMMARY [20] Regarding the application to strike the plaintiff’s claim for want of prosecution, I find that for the initial period of May 2006 to May 2010 the delay was inordinate but excusable. With regard to the period of time June 2010 to May 2012 I find the period of delay not to be inordinate but even if inordinate and inexcusable, I would find that having regard to the principles set down by the Court of Appeal in International Capital Corp. v. Robinson Twigg & Ketilson that I would not strike the plaintiff’s claim. [21] With regard to the disclosure of settlement amounts I find that the defendant has made its case and order those specific amounts for each structure for which Wawanesa settled its claim to be disclosed. J. D.B. KONKIN
The plaintiff purchased insurance from the defendant. In 2000, the plaintiff's farm was damaged by a fire. He commenced an action against Wawanesa Insurance Company in 2001. In 2006, the plaintiff commenced an action against the defendant, alleging that the defendant was in breach of contract or negligent for failing to obtain full replacement value insurance coverage for the plaintiff. The defendant filed his defence in April 2007. Mediation took place in September 2010 and examinations for discovery were held in May 2011. At that time, the defendant asked the plaintiff to disclose the amount recovered in the Wawanesa lawsuit and the plaintiff refused. The defendant brought this application for relief that: 1) The plaintiff's action be dismissed for want of prosecution; or 2) The plaintiff be required to disclose the amount recovered in the other lawsuit. The defendant argued that the delays between the issuance of the statement of claim to the examination for discovery and then the delay between the time of mediation to May 2012 when the plaintiff's counsel filed the reply to undertakings were both inordinate.HELD: The Court applied the test established in International Capitol Corp. v. Robinson Twigg &amp; Ketilson to determine whether or not a matter should be struck for want of prosecution. The Court found that the first delay was inordinate but because the plaintiff and defendant both acknowledged that the action against the defendant would only proceed depending on the outcome of the claim against Wawanesa, the delay was excusable. The Court found that the second delay was excessive, but was not sufficient to strike the claim on that basis. Applying the factors provided in Capitol, the Court found:1. Stage of litigation: It did not occur at an early stage of the litigation as the matter could well go to pre-trial conference. 2. Impact of delay: The delay was not causing any problems for the defendant. 3. The context in which the delay occurred: the delay in question was actually only one year during which the plaintiff's counsel did not respond in a timely fashion to undertakings. 4. Reasons offered for delay: Counsel was busy and it had to determine which undertaking could or could not be answered. 5. The role of counsel in causing the delay: The Court held that the delay caused by the plaintiff's counsel should not be a reason to deprive the plaintiff of his claim for actions beyond his control. The Court denied the application to strike the plaintiff's claim but ordered that the plaintiff disclose the amount obtained in the Wawanesa action on the basis that this case fell into the exception to the policy which protects settlement communications. Here, the communications sought by the defendant were relevant and necessary to avoid double recovery.