QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2007 SKQB 296 Date: 2007 08 14 Docket: Q.B.G. 959/99 Judicial Centre: Regina BETWEEN: DUN-RITE PLUMBING HEATING LTD. and ALEC KEITH MORRISON and DWAYNE WALBAUM, ALL-RITE PLUMBING HEATING LTD., TAMWAL INVESTMENTS LTD., TAMMY WALBAUM, ROBERT SIM, ROSEMARY TURNER, GABRIEL CONSTRUCTION LTD., ALBERTA FAZAKAS, ROBERT DUMUR and 593340 SASKATCHEWAN LTD., carrying on business under the name DUMUR INDUSTRIES Counsel: Diana K. Lee Marc D. Kelly for the plaintiffs David J. Bishop for the Walbaum Group of defendants Patrick N. McDonald, Q.C. for Robert Sim Rosemary Turner Louis A. Browne for Gabriel Construction Ltd. Kenneth J. Karwandy for Robert Dumur Dumur Industries FIAT BALL J. August 14, 2007 [1] The plaintiff brings this action against nine defendants (the claim against the defendant Albert Fazakas has been discontinued) who can be separated into four groups: (a) Dwayne Walbaum All-Rite Plumbing Heating Ltd. Tamwal Investments Ltd. Tammy Walbaum (herein “the Walbaum Group”) (b) Robert Sim Rosemary (Turner) Sim (herein “the Sims”) (c) Gabriel Construction Ltd. (herein “Gabriel”) (d) Robert Dumur 593340 Saskatchewan Ltd., carrying on business as Dumur Industries (herein “the Dumurs”) [2] The Sims, Gabriel and the Dumurs bring separate motions, pursuant to Queen’s Bench Rule 41(a) for severance of the claims against them or for orders staying the claims until the plaintiffs’ claims against the Walbaum Group have been heard and decided. [3] The plaintiff, Alex Keith Morrison, and the defendant, Dwayne Walbaum, were equal partners in Dun-Rite Plumbing Heating Ltd. The relationship between the two shareholders broke down and in November of 1997, on the application of Mr. Morrison, Dun-Rite was ordered liquidated. Thereafter, Mr. Walbaum carried on business as the sole shareholder of All-Rite Plumbing Heating Ltd. [4] The main defendant in the action is Dwayne Walbaum. The principal allegation against him is that during 1996 and 1997 while he was solely in charge of Dun-Rite Plumbing Heating Ltd. he diverted virtually all of its assets to himself, his companies (All-Rite Plumbing Heating Ltd. and Tamwal Investments Ltd.) and his wife, Tammy Walbaum. The claims against the Walbaum Group constitute the majority of the claims in the 45 paragraph statement of claim. [5] The plaintiffs claim that the other defendants were “involved” in the divestiture of assets by the Walbaum Group. Specifically with respect to the Sims, the plaintiffs claim: 29. The Defendants, Robert Sims and Rosemary Turner, own Condominium unit number 5, Condominium Plan 96R47845, located on that property civically described as 1150 Rose Street, Regina, Saskatchewan (the “Condominium”). 30. At the direction of Walbaum, Dun-Rite renovated the Condominium and in so doing supplied and paid for labour and materials at the request of and/or for the benefit of Robert Sim and Rosemary Turner. Dun-Rite has not yet been paid for the renovations. 31. Dun-Rite states that Robert Sim and Rosemary Turner are liable to Dun-Rite for breach of contact and failure to pay for the renovations. Alternatively, Dun-Rite states that Robert Sim and Rosemary Turner are liable to pay Dun-Rite on quantum meruit basis for the renovations done by Dun-Rite to the Condominium. 32. At the direction of Walbaum, Dun-Rite renovated property in Toronto for the for the[sic] direct or indirect benefit of and at the request of Robert Sim, and in so doing supplied and paid for labour and materials. Dun-Rite has not yet been paid for the renovations. 33. As result of the failure by Robert Sim and Rosemary Turner to pay for the condominium renovations and as result of the failure of Robert Sim to pay for the Toronto renovations, Dun-Rite has suffered pecuniary losses and claims general and special damages. [6] Specifically with respect to Gabriel, the plaintiffs claim: 34. Dun-Rite, at the direction of Walbaum, and Gabriel entered into contract valued at approximately $73,571 in relation to the Gordon First Nation Band Office project (hereinafter the “Gordon project”). 35. Dun-Rite performed services and supplied materials to the Gordon project and rendered an account to Gabriel for $58,000, which sum remains unpaid. Approximately $15,571.00 of work remained to be done. Gabriel has claimed set-off in the amount of $68,858 against Dun-Rite for costs to complete the Gordon project, which set-off is without foundation. All-Rite, at the direction of Walbaum, allegedly performed further services and supplied further materials and rendered an account to Gabriel for $40,900.75 and was paid for the same by Gabriel. 36. Dun-Rite states that Gabriel acted in concert with All-Right and Walbaum to deprive Dun-Rite of payment for the work done by Dun-Rite on the Gordon project by claiming for set-off with respect to unsubstantiated costs and by paying All-Rite for work done and materials supplied by Dun-Rite. Accordingly, Gabriel is liable for breach of contract between it and Dun-Rite in relation to the said contract, and failure to pay money owing to Dun-Rite pursuant to that contract. 37. As result of the aforementioned breach of contract and failure to pay by Gabriel, Dun-Rite has suffered pecuniary losses. Dun-Rite makes claim against Gabriel for general and special damages. [7] Specifically with respect to the Dumurs, the plaintiffs claim: 20. With respect to the loan by Dun-Rite to Dumur Industries, on or about December 22, 1995, Dun-Rite, at the direction of Walbaum, loaned $120,000 to Dumur Industries to assist it in purchasing turret punch. Dumur Industries agreed to repay the loan to Dun-Rite, with interest at 12% per annum payable monthly, by June 30, 1996 (the “Loan”). 21. Because there was shareholder dispute between Morrison and Walbaum, it was agreed, in writing in June of 1997, between Morrison, Walbaum and Dumur for Dumur Industries, that the Loan proceeds would be paid into trust with the law firm of Gerrand Mulatz, solicitors for Walbaum. 22. At the direction of Walbaum, contrary to the said agreement to pay the Loan proceeds into trust, Robert Dumur did wrongfully cause Dumur Industries to pay $26,600 of the $120,000 Loan to Walbaum or to Tamwal and the balance of $93,400, directly to Dun-Rite. Walbaum was the sole director and person in control of Dun-Rite at that time. [8] The Sims, Gabriel and the Dumurs deny any involvement in the divestiture of Dun-Rite assets or in the dispute between Morrison and the Walbaum Group. Each applies for an order severing or staying the plaintiffs’ claims against them until the main action against the Walbaum Group is resolved. SUBMISSIONS OF THE PARTIES [9] All of the applicants make the following submissions: (a) the claims against them play small part in the larger action against the Walbaum Group; (b) the facts supporting the plaintiffs’ claim against the Walbaum Group are different from the facts supporting the claims against the Sims, Gabriel and the Dumurs; (c) the legal issues surrounding the plaintiffs’ claim against the Walbaum Group are different from the legal issues supporting the individual claims against the Sims, Gabriel and the Dumurs; (d) if the plaintiffs fail in the action against the Walbaum Group, it is unlikely that the Plaintiffs can or will continue to pursue the Sims, Gabriel and the Dumurs; (e) to sever the action against the Sims from the action against the Walbaum Group would reduce the length of the Walbaum Group trial by the same amount of time it wold take to hold separate trials of the claims against Sims, Gabriel or the Dumurs; (f) the action is now ready for trial. Courts have been more amenable to severing claims in these circumstances. [10] The plaintiffs oppose the applications on the basis that the applicants have not met the onus of establishing that they will suffer “undue prejudice” if the claims against them are not severed. The plaintiffs further submit that although severance would be convenient for the applicants and save them time and money, those are only secondary considerations. [11] The plaintiffs assert that the facts surrounding the dealings between the defendant, Dwayne Walbaum, and the remaining defendants will be explored during the trial. They say that the Sims, Gabriel and the Dumurs were each “involved in the divesting of some of the Dun-Rite assets” and that the circumstances of their involvement are part of the bigger picture supporting their claims against the Walbaum Group. Expressed another way, the plaintiffs intend to adduce evidence in respect of the Walbaum Group’s dealings with the applicants in order to support their claims against the Walbaum Group. This raises the likelihood that the applicants will be required to attend at least portions of the trial as witnesses subpoenaed by the plaintiffs or the Walbaum Group whether or not the claims are severed. [12] The applications are brought pursuant to Queen’s Bench Rule 41 which states: 41(1) Where the joinder of multiple claims or parties in the same action may unduly complicate or delay the trial, or cause undue prejudice to party, the court may: (a) order separate trials; (b) require one or more of the claims to be asserted, if at all, in another action; (c) order that party be compensated for being required to attend, or be relieved from attending, any part of trial in which he has no interest; (d) stay the action against defendant pending the hearing against another defendant, on condition that the party against whom the action is stayed is bound by the findings made at the hearing against the other defendant; or (e) make such other order as may seem just. [13] In Potash Corp. of Saskatchewan Mining v. Allendale Mutual Insurance Co. (1989), 1989 CanLII 5140 (SK CA), 80 Sask. R. 184 the Saskatchewan Court of Appeal confirmed that the paramount consideration on any application to sever is that no party will be unduly prejudiced by the result. Convenience, the saving of time, and the saving of costs for the litigants, while important, are secondary considerations. [14] These principles were applied in Chieftain Industrial Contractors and Consultants Ltd. v. Man-Ore Industrial Contractors Ltd.(1990), 1990 CanLII 7438 (SK QB), 81 Sask. R. 223 (Sask. Q.B.), case which also confirmed that applications by defendant (particularly when made at the conclusion of the discovery process) will receive more favourable consideration than an application by plaintiff. [15] useful summary of relevant principles is also set forth in Investors Syndicate Ltd. v. Pro Fund Distributors Ltd. et al. (1980), 1980 CanLII 3138 (MB QB), 12 Man. R. (2d) 104 (Man. Q.B.) affirmed (1980), 1981 CanLII 3537 (MB CA), 12 Man. R. (2d) 101 (Man. C.A.), which states as follows: 1. One party ought not to be harassed at the instance of another by an unnecessary series of trials. 2. There must be some reasonable basis for concluding that the trial of the issue or issues sought to be severed, will put an end to the action. 3. An order for severance should hold the prospect that there will be significant saving of time and expense. 4. Conversely, severance should not give rise to the necessity of duplication in substantial way in the presentation of the facts and law involved in later questions. 5. Nothing should be done which might confuse rather than help the final solution of the problem. 6. plaintiff who forms an action to suit his convenience will seldom be granted the right to sever, if the defendant objects. The objection of plaintiff to defendant’s application does not bear such heavy significance. [16] The court will look at all of the circumstances in deciding whether the grant an application for severance. In this case the plaintiffs should not be precluded from adducing evidence related to the Walbaum Group’s dealings with each of the applicants or required to segregate the evidence into two, three or four separate trials. Given the likelihood that the applicants will be required to attend portions of the trial in respect of the Walbaum Group in any event, severance would not necessarily result in a significant saving of time and expense. [17] Orders under Rule 41(a) are not confined to severance or stays of proceedings. Other options are available to ensure that all of the issues are tried in manner that minimizes unnecessary prejudice and expense to all parties. [18] Although counsel for the plaintiffs asserts that the evidence against all of the defendants can be adduced in no more than two and one-half days, given the number and complexity of the claims against the Walbaum Group this estimate seems very unrealistic. If evidence is to be adduced to support even portion of the various claims against the Walbaum Group, the trial will likely require many days of court time. [19] The plaintiffs acknowledge that only relatively small portion of trial time (perhaps less than one day) will pertain to the claims against any one of the Sims, Gabriel or the Dumurs. It would be unfair to require all of the applicants to participate in all of the trial when very little of it will be relevant to them. Specific dates and times should be set aside for the plaintiff to call evidence with respect to its claims against each applicant group. The applicants should be relieved from attending the trial at any other time. [20] Accordingly, at least 21 days prior to the scheduled commencement of the trial counsel for the plaintiff shall designate no more than two days during which the plaintiffs will adduce evidence in respect of the claims against the Sims; designate no more than two days in which the plaintiffs will adduce evidence in respect of their claims against Gabriel; and designate no more than two days in which the plaintiffs will adduce evidence in respect of their claims against the Dumurs. The days to be designated by the plaintiffs may pertain to the evidence to be called against one, two or all three of the applicants. The plaintiffs shall not call evidence in respect of those claims on any other date without leave of the court. Because control over the trial process and ultimate discretion with respect to costs should properly remain with the trial judge, the dates to be designated by counsel for the plaintiffs for calling evidence shall be subject to the approval of the trial judge. [21] It will also be left to the trial judge (or the pre-trial management judge) to designate specific days on which defence evidence may be adduced during the trial and argument presented with respect to each claim. All defendants other than those comprising the Walbaum Group shall be relieved from attending the trial on any date not designated by counsel for the plaintiffs or designated by the trial judge for adducing defence evidence and presenting argument. [22] Costs will be in the cause.
FIAT: The defendants, Sims, Garbriel and Dumurs, bring separate motions, pursuant to Queen's Bench Rule 41(a), for severance of the claims against them or for an order staying the claims against them until the plaintiffs' claim against the primary defendant, Walbaum have been heard and decided. HELD: 1) The Court will look at all of the circumstances in deciding whether to grant an application for severance.  In this case the plaintiffs should not be precluded from adducing evidence related to Walbaum's dealings with each of the applicants or required to segregate the evidence into two, three or four separate trials. Given the likelihood that the applicants will be required to attend portions of the trial in respect of the Walbaum Group in any event, severance would not necessarily result in a significant saving of time and expense.  2) The plaintiffs acknowledge that only relatively small portion of trial time (perhaps less than 1 day) will pertain to the claims against any one of the Sims, Gabriel or Dumurs. It would be unfair to require all of the applicants to participate in all of the trial when very little of it will be relevant to them. Specific dates and times should be set aside for the plaintiff to call evidence with respect to its claims against each applicant group. The applicants should be relieved from attending the trial at any other time.