Our first case this month demonstrates how failing to attend an examination for discovery can be fatal to a defence.
Our second case deals with a third party’s refusal to answer discovery questions regarding an adjuster’s claim notes prepared prior to a denial of coverage. The case documents the importance of having evidence to establish that claim notes were not just prepared in the ordinary course but for the dominant purpose of defending litigation.
Foster & Company is pleased to announce that Jennifer Nolan has joined Foster & Company as a litigation associate.
Originally from St. John’s, Newfoundland, Jennifer completed her Bachelor of Business Administration degree focusing on Small Business and Entrepreneurship through Memorial University of Newfoundland. She received her Bachelor of Laws degree in 2008 from the University of New Brunswick. Jennifer was admitted to the New Brunswick Bar in 2009 and practices primarily in civil litigation and insurance law. She is a member of the Law Society of New Brunswick, the York Sunbury Law Society, and the Canadian Bar Association.
Jennifer is looking forward to working with you and can be reached by:
Telephone: (506) 462-4012 Fax: (506) 462-4001
Carfinco Ltd. Partnership v. Gestion Paradis Inc., 2009 Carswell NB 361
The New Brunswick Court of Queen’s Bench held that the defendants’ persistent and flagrant violations of Rule 33 of the New Brunswick Rules of Court and the outright and deliberate defiance of a Court Order to attend an examination for discovery within 60 days and provide an Affidavit of Documents with Schedule “A” documents warranted that their Statement of Defence be struck.
The plaintiff, Carfinco, provided financing for automotive purchases. The defendant, Gestion. (Gestion), an automobile dealership, concluded a dealer agreement with Carfinco. Carfinco claimed that it sustained losses as a result of a default by purchasers under the contracts. An action was started and pleadings were filed. Daniel Paradis, President of Gestion, was to be examined at the examination for discovery on behalf of the defendants.
The plaintiff’s solicitor attempted to obtain the defendants’ Affidavit of Documents and Schedule “A” documents as well as arrange an examination for discovery on multiple occasions. Having not received a response from the defendants’ solicitor, plaintiff’s counsel arranged discovery unilaterally and served a Notice of Examination on the defendants’ solicitor. The plaintiff’s solicitor was later advised that the defendants were seeking new legal counsel. The plaintiff’s solicitor then corresponded with Daniel Paradis directly on multiple occasions to arrange the discovery and to obtain copies of Schedule “A” documents. Multiple attempts to organize the examination for discovery were unsuccessful. Having again received no response from the defendants, the plaintiff’s lawyer scheduled an examination for discovery and attended with his client. The defendants did not appear at this discovery.
The plaintiff filed a Motion requiring that the Statement of Defence to struck out. The defendants did not appear at the Motion. The Court granted an Order requiring the defendants to attend a discovery within 60 days and to bring copies of their Schedule “A” documents.
A Notice of Examination was served on the defendants and the plaintiff’s representative attended discovery. The defendants did not appear.
The Court held that the purpose of discovery is to effect disclosure of all relevant information prior to trial. It could find no justifiable reason for the defendants’ refusal or neglect to attend the dscoveries. The Court exercised its inherent jurisdiction to control its process against abuse which includes the power to strike a Statement of Defence. Rule 33.12 provides authority to strike a pleading if a party refuses or neglects to attend discovery. The Court however indicated that it will only impose such a drastic sanction as a measure of last resort in the event of a persistent and flagrant violation of the Rules of Court. In this matter, the defendants did not comply with the Rules of Court and persistently and flagrantly violated Rule 33. They also outrightly and deliberately defied a Court Order. The Court held that this was an appropriate case to exercise its authority to strike the defendants’ Statement of Defence.
The plaintiff was also awarded costs in relation to the two aborted discoveries and costs on the Motion.
McInnis v. Personal Insurance, 2009 Carswell ONT 669
A Motion was brought by the defendant for an Order compelling the third party, the Economical Insurance Group, to answer refusals at the examination for discovery regarding the production of claim notes prior to the denial of coverage. Economical refused to answer discovery questions on two grounds; first, that the claim notes were protected by litigation privilege; and, secondly, that the issue of denial of coverage had not been raised by the pleadings.
The Ontario Superior Court of Justice held that in regards to the litigation privilege claim, the onus falls on Economical to establish that the productions in question were created for the dominant purpose of defending litigation, either pending or reasonably anticipated. The third party failed to meet the onus having not filed evidence to establish that the notes were made for a purpose other than as part of the investigation between itself and its insured when it was yet undetermined whether the parties were in an adversarial position.
On the issue of the denial of coverage not being raised in the pleadings, the Court held that by joining the third party to the action, coverage and liability became live issues. Once added to the action, the third party is in the same position as all others with respect to adducing and evaluating the evidence. Therefore, they should be in no better position than any other party and evidence could be adduced from them.
The Court took into consideration that a casualty claims specialist had been questioned at the discovery at length on the issue of denial of coverage. The Court also pointed to the fact that it was not until the defendant brought the refusal’s Motion that the third party took the position that its denial of coverage was not a live issue and that the Amended Statement of Defence of the third party pleaded facts which dealt with the issue of coverage and denial of coverage.
The Court ordered that the third party answer the discovery questions regarding the claim notes made by the third party’s claim adjuster.