IN THE SUPREME COURT OF BRITISH COLUMBIA
Citation: | Hendrix v. Handa Travel Student Trip Ltd., |
| 2016 BCSC 620 |
Date: 20160408
Docket: S98543
Registry:
Kelowna
Between:
Brandon Hendrix
Plaintiff
And
Handa Travel
Student Trip Ltd., S-Trip!, John Doe and
John Doe Ltd.
Defendants
And
WestJet Vacations
Inc., Palladium Vallarta Resort & Spa formerly
known as Palladium
Vallarta Resort & Spa, Punta Mita Servicios S.C.,
Desarrollos Dine,
S.A. de C.V. dba Hotel Palladium Vallarta,
Fiesta Hotel Group
Resorts of Spain, Fiesta Bavaro Hotels S.A.,
Fiesta Hotels
& Resort SL, Promintur BV, Dominican
Entertainment
S.A.R.L., Palladium Hotel Group, Dominican
Entertainment
(Luxembourg), Dominican Entertainment S.A.
Third
Parties
Before:
Master Muir
Reasons for Judgment
Counsel for the Defendants, Handa Travel Student Trip Ltd. | M.L. Colwell |
Counsel for proposed third party, WestJet Vacations Inc.: | K.A. McGoldrick |
Place and Date of Hearing: | Vancouver, B.C. March 18, 2016 |
Place and Date of Judgment: | Vancouver, B.C. April 8, 2016 |
I.
introduction
[1]
This is an application by the defendants, Handa Travel Student Trip Ltd.
and S-Trip! (collectively the Handa defendants) for leave to file a third
party notice and for an extension of the time within which to serve that third
party notice for a period of one year
[2]
The third party notice in question was actually filed in this matter on March 20,
2015. It was filed well past the 42-day deadline set out in Rule 3-5(4)(b) of
the Supreme Court Civil Rules, B.C. Reg. 168/2009, and it was not filed
with leave of the court.
[3]
The Handa defendants were previously granted leave to have this
application heard in Vancouver, B.C.
II.
Background
[4]
The plaintiff commenced this action as a result of injuries he allegedly
sustained on March 22, 2011 when he fell from a hotel balcony in Puerto
Vallarta, Mexico. The plaintiff was a minor at the time, but prior to the
filing of the notice of civil claim in this matter on March 7, 2013, he
attained the age of majority.
[5]
The plaintiff claims numerous injuries including traumatic brain injury,
and alleges loss of income and loss of future income earning capacity.
[6]
The Handa defendants organize travel for Canadian students in Mexico and
elsewhere.
[7]
The proposed third party, WestJet Vacations Inc. (WestJet), is a tour
operator that sells vacation packages to various destinations, including Mexico.
[8]
The rest of the proposed third parties are alleged to be owners,
operators or agents of the Palladium Vallarta Resort in Puerto Vallarta, and
I will refer to them collectively as the Resort parties.
[9]
The plaintiff arranged a trip to Mexico through the Handa defendants,
which booked the package with WestJet. The package included accommodation at
the Palladium Vallarta Resort.
[10]
The plaintiff alleges that the Handa defendants misrepresented that the
trip would be fully and adequately supervised, safe and alcohol free.
[11]
The plaintiff alleges that, while on the trip, there was minimal
supervision. He says that he was permitted to consume alcohol, and as a result
of the inadequate or total absence of supervision, the plaintiff fell off a
balcony and landed two storeys below on his head on bare concrete.
[12]
The plaintiff did not file a response to this application, despite being
served, and does not appear to have taken any steps to advance this litigation
since the service of the notice of civil claim.
[13]
According to an email between counsel for the Handa defendants and counsel
for WestJet, the Handa defendants were served with the notice of civil claim on
March 12, 2013. Although it is not in their material, counsel for the Handa
defendants advised me that they were not retained until December 2014.
[14]
There is no evidence regarding the delay from March 12, 2013 to December 2014.
[15]
Again, although it is not in their material, counsel for the Handa defendants
advised me that, after they were retained, extensive investigations were
required to penetrate the complex contractual interrelationships between the
proposed third parties.
[16]
The Handa defendants did not file their response to civil claim until March 20,
2015, the same day the purported third party notice was filed.
[17]
In their response to civil claim, the Handa defendants plead, amongst
other things, a waiver of liability by and contributory negligence of the
plaintiff as well as breaches of direct obligations owed by WestJet and the
Resort parties to the plaintiff. These are said to be founded in contract,
negligence and occupiers liability.
[18]
In the third party notice, the Handa defendants seek contribution and
indemnity from WestJet and the Resort parties based on their alleged duty to
and contractual relationships with the Handa defendants.
[19]
Further in the third party notice, the Handa defendants plead that the proposed
third parties owed direct obligations to the plaintiff and that those were
breached. As noted, those claims are included in the response to civil claim.
[20]
The evidence for the Handa defendants discloses that they have been
attempting to serve the third party notice on two Mexican entities, Punta Mita
Servicios S.C. and Desarrollos Dine, S.A. de C.V., in accordance with the Convention
On The Service Abroad Of Judicial And Extrajudicial Documents In Civil Or
Commercial Matters (Concluded 15 November 1965) (the Hague
Convention).
[21]
The Handa defendants have run into difficulties with the Mexican
authorities in their attempts to serve the third party notice. It appears that,
as of November 2015, the Hague Convention documents had been rejected
several times. The Mexican authorities returned the documents in November 2015
to the attention of the Registrar of the court in Kelowna, requesting they be
officially signed by the court.
[22]
The Department of Foreign Affairs and International Trade (DFAIT) was
contacted and confirmed that this is not a requirement under the Hague
Convention, but suggested that the documents be signed by the Registrar of the
court to expedite matters. DFAIT would then handle the return of the documents
to Mexico and would register a diplomatic protest regarding the Mexican
governments interpretation of the Hague Convention.
[23]
The Handa defendants have no idea where things stand, and cannot say
whether or how quickly the proposed third parties will be served.
[24]
Counsel for the Handa defendants submitted, again without any basis in
the evidence, that the balance of the Resort parties are so closely inter-connected
that it is anticipated they will all appear without being formally served and that
they will be represented by the same counsel as the two Mexican entities, Punta
Mita Servicios S.C. and Desarrollos Dine, S.A. de C.V.
[25]
Other than this, there was no explanation advanced by the Handa
defendants for the delay in bringing this leave application.
[26]
In addition to the fact that the third party notice was not lawfully
issued, the 60-day time for service of the third party notice under Rule
3-5(7)(a) has expired and, hence, the Handa defendants seek to have the time
for service of the third party notice extended for one year.
[27]
This application was brought on an urgent basis, and I gather
WestJet agreed to an abridgment of time based on the assertion by counsel for
the Handa defendants that the application was necessary to deal with the
problems serving the Mexican entities. Counsel for WestJet also filed his
clients response to the third party notice as a result.
[28]
It was only when unfiled copies of the application materials were
reviewed that WestJets counsel appreciated that the third party notice had
been filed out of time and without leave, and that such substantial relief was
being sought against WestJet in this application.
[29]
When confronted with the position that the third party notice may be a
nullity, the Handa defendants relied on Rule 22-7(1) and submitted that the
failure to comply with the Supreme Court Civil Rules should be
treated as an irregularity and should not nullify the third party notice. As
well, I gather they seek the additional relief that leave to file the
third party notice should be granted nunc pro tunc.
[30]
When confronted with the position that Rule 3-5(6)(a) requires service
of this leave application on all of the third parties affected, the Handa defendants
sought additional relief under Rule 8-5(6) that the order be made without
notice to the other third parties due to the urgency of resolving this issue.
III.
Legal Basis
[31]
Issuance of a third party notice is governed by Rule 3-5 of the Supreme
Court Civil Rules. For the purposes of this application, the relevant
sections are as follows:
(1) A party against whom relief is sought in an action may,
if that party is not a plaintiff in the action, pursue a third party claim
against any person if the party alleges that
(a) the party is entitled
to contribution or indemnity from the person in relation to any relief that is
being sought against the party in the action,
(b) the party is entitled
to relief against the person and that relief relates to or is connected with
the subject matter of the action, or
(c) a question or issue
between the party and the person
(i)
is substantially the same as a question or issue that relates to or is
connected with
(A) relief
claimed in the action, or
(B) the
subject matter of the action, and
(ii)
should properly be determined in the action.
(4) A party may file a third party notice
(a) at any time with leave
of the court, or
(b) without leave of the
court, within 42 days after being served with the notice of civil claim or
counterclaim in which the relief referred to in subrule (1) is claimed.
(6) Notice of an application for leave under subrule (4) (a)
must be served on
(7)Unless the court otherwise orders, a party who files a
third party notice must,
(a) within 60 days after
the date on which the third party notice is filed, serve on the third party
(i)
a copy of the filed third party notice, and
(ii)
if the third party is not a party of record at the time of service, a
copy of any filed pleading that has previously been served by any party to the
action, and
(b) promptly after the
date on which the third party notice is filed, serve a copy of the filed third
party notice on all parties of record.
[32]
The object of third party proceedings is to avoid a multiplicity of
proceedings and the dangers of inconsistent findings inherent therein. The Handa
defendants referred me to Lui v. West Granville Manor Ltd. (1985), 61
B.C.L.R. 315 (C.A.) and McNaughton v. Baker (1988), 25 B.C.L.R. (2d) 17
(C.A.).
[33]
In Tyson Creek Hydro Corporation v. Kerr Wood Leidal Associates
Limited, 2013 BCSC 1741 (approved on appeal, 2014 BCCA 17), the court set
out the factors to be considered in the exercise of discretion required to
grant leave to file a third party notice:
[42] In Clayton Systems 2001 Ltd. v. Quiznos Canada
Corp., 2003 BCSC 1573 (CanLII)
at para. 9 , 27 B.C.L.R. (4th) 247 [Clayton Systems],
which was decided under the Amended Rule, Allan J. held that in
determining the application the court should consider the following factors in
determining whether or not to exercise its discretion to grant leave:
(a) prejudice to the
parties;
(b) expiration of
limitation period;
(c) the merits of the
proposed claim;
(d) any delay in
proceedings; and
(e) the timeliness of the
application.
[43] In Scott Management at para. 90, the
court framed the question on an application for leave to file a third notice in
this fashion:
[90] The fundamental question on the applications
should have been whether greater injustice and inconvenience would arise from
allowing the contribution claim to continue as a third party proceeding, or
from striking it and leaving it to be pursued in a separate future action. The
chambers judge erred in failing to address that question. Had he done so, in my
view he would have been compelled to exercise his discretion in favour of the
former course, as the better of two unpalatable options.
IV.
Analysis
A.
Lack of Service/Nullity
[34]
WestJet submits that this application cannot proceed as the Resort
parties have not had any notice of this application. WestJet strenuously
resists the suggestion that the lack of notice be cured by an order that this
application can proceed without notice.
[35]
WestJet relies on decisions that emphasize the fundamental importance of
notice in our justice system.
[36]
In Faulkner v. The City of Duncan, 2015 BCSC 825, a judge in a
case planning conference had granted leave for third party notices to be filed
after the 42- day deadline. In an application to set aside those third party
notices, Mr. Justice Thompson held:
[19] The case planning judges attention was not drawn
to Rule 3-5(6), which expressly provides for notice to the third party of a
leave application. I cannot accede to the defendants submission that a
case plan order may properly override this notice requirement. When, as in this
case, the Rules require a leave application, much clearer and more
specific language than is found in R. 5-3(1)(i) or (v) would be necessary for
me to conclude that it was intended by the rule-makers that a case planning
judge have the authority to take away the express right of a third party to
notice.
[20] At the time of the case planning conference in March 2014,
it had been more than 42 days since the defendants were served with the notice
of civil claim. Leave was therefore required to file the third party notices.
Ryzuk and any other intended third parties were entitled to notice of the
application for leave, and, of course, to be heard on the application. The case
plan order, while undoubtedly made with the intention of streamlining and
expediting this litigation, had the effect of granting leave to the defendants
on an ex parte basis vis-à-vis the third parties. In my
respectful opinion, this order was a nullity.
[21] I have considered the defendants submission that
R. 22-7(2)(e) might be invoked to cure the error which has occurred. I acknowledge
that R. 22-7(1) provides that unless the court otherwise orders, a failure to
comply with the Rules must be treated as an irregularity and not a
nullity. I also acknowledge that this is not really a matter of the defendants
failing to comply with the Rules: Mr. Martin told me and I accept
that the defendants did not seek this case plan order I gather the idea
came from the case planning judge as one way to help move the case along; and
once the case plan order was made, the defendants complied with its terms.
However, the right to notice and the right to be heard are thoroughly
fundamental and in my view justify the conclusion in this case that the failure
to observe those rights results in a nullity. In any event, I would not
exercise my discretion under R. 22-7(2)(e) so as to invoke a cure that would
result in the abrogation of the third parties right to be heard on the
question of leave.
[Emphasis in original]
[37]
In Alexis v. Duncan, 2015 BCCA 135, the Court of Appeal commented
on the right to notice in the context of joining a party to the proceeding, as
follows:
[24] An application to join a party should only take
place after all parties who may have an interest, including the existing
parties to the proceedings and the proposed new party, have notice. Notice
gives the parties the opportunity to make submissions and the submissions, in
turn, provide context to the chambers judge to determine whether or not joinder
of the party is just and convenient. To the extent that the decision in Hartoft
v. Bell et al., 2006 BCSC 413 (CanLII)
suggests otherwise, that decision was, with respect, wrongfully decided and
should not be followed.
[25] The process followed by the plaintiffs in this case
was not one authorized by the Rules. If the
plaintiffs wish to add Mr. Duncan as a party they must apply to do so
under R. 6–2(7).
[26] I agree with the
chambers judge that the failure to comply with the Rules is an
irregularity, not a nullity. I do not agree that the irregularity should
be cured by allowing the action to proceed as amended. To do so would be to ignore
the Rules and condone
their breach. In the circumstances of this case the proper remedy is to set
aside the amended notice of civil claim: R. 22–7(2)(b).
[38]
Alexis is also authority for the proposition that the
availability of a remedy by means of an application to set aside the third
party notice is not an answer to a failure to serve the potential third
parties.
[39]
I have no way of knowing what the Resort parties may be able to prove or
would wish to argue if they were before me.
[40]
In the unusual circumstances here, I must also consider WestJets
position that the third party notice, having been issued out of time and
without leave, is a nullity and that it would be unjust in the circumstances to
accede to the Handa defendants request to cure that by granting leave nunc
pro tunc.
B.
Multiplicity of Proceedings
[41]
This factor was considered in Tyson Creek in light of the changes
in the rules and the resultant restriction of the ability to bring a third
party claim as of right. Justice Goepel, as he then was, concluded:
[53] In Lui and MacNaughton,
the court emphasized that one of the main purposes of third party proceedings
was to avoid a multiplicity of proceedings. Nonetheless, the Amended Rule and
the New Rule have, I would suggest, diluted the overriding importance of
that consideration. By limiting the time in which a third party notice can be
issued without leave, the rule makers have clearly signalled that other factors
must be considered when the court is asked to exercise its discretion to allow
a third party notice to be issued.
[42]
WestJet submits that the addition of these third party claims will
unduly complicate the present action, and that any prejudice occasioned by the
duplication of process is overcome by the prejudice to the third parties in
having to participate in an action and trial for potentially no reason. They
note that the Handa defendants are actively defending the action and it is
quite possible that they will succeed in defeating the plaintiffs claim.
[43]
WestJet points out that the Resort parties have yet to be served, there
is no evidence of when they will be served and, obviously, once they are served,
there is a potential for jurisdictional arguments being advanced. As counsel
for WestJet submitted, this could easily become a delayed mess of litigation.
[44]
The Handa defendants submit that, regardless of the status of service on
the Resort parties, they are anxious to proceed with examinations for discovery
of a representative of WestJet. Of course, if WestJet is not a party to this
action, there are still avenues via which the evidence of its representative
can be obtained.
[45]
That the plaintiff has taken no position on this application could
signal that he is of the view that the addition of the third parties will not
negatively impact these proceedings. It could equally stem from the fact that
the plaintiff is not actively pursuing this litigation, at least at present.
[46]
Although it was not presented to me by counsel, I must also consider
that some of the claims in the third party notice involving the Resort parties
are defences and are advanced in the Handa defendants response to civil claim.
These are thus issues that will be canvassed regardless of whether the third
party claim is allowed. They do not necessarily, however, require the
participation of WestJet and the Resort parties.
[47]
WestJet submits that the third party claims, resting as they do on
contractual relationships between the third parties and the Handa defendants,
are not sufficiently closely tied to the plaintiffs action and will unduly
complicate the underlying action.
[48]
These issues will obviously require pre-trial and trial process to be
devoted to them that would not otherwise be necessary.
[49]
If heard separately, the trial of these claims will potentially involve
a duplication of evidence and a duplication of witnesses from the underlying
action, with the consequent potential of inconsistent findings of fact.
C.
Expiration of Limitation Period
[50]
This issue is complicated by the new Limitation Act, S.B.C. 2012,
c. 13, which came into force on June 1, 2013 (the new Act).
[51]
The parties were unable to provide any case authorities that had
considered the issues raised here. Counsel had quite divergent positions on
the limitation issue.
[52]
The new Act provides as follows regarding third party claims:
Counterclaim or other claim or
proceeding
22 (1) If a court proceeding
has been commenced in relation to a claim within the basic limitation period
and ultimate limitation period applicable to the claim and there is another
claim (the related claim) relating to or connected with the first mentioned
claim, the following may, in the court proceeding, be done with respect to the
related claim even though a limitation period applicable to either or both of
the claims has expired:
(a) proceedings
by counterclaim may be brought, including the addition of a new party as a
defendant by counterclaim;
(b) third
party proceedings may be brought;
(c) claims
by way of set off may be advanced;
(d) new
parties may be added or substituted as plaintiffs or defendants.
(2) Nothing in subsection (1) gives a
person a right to commence a court proceeding under subsection (1) (a) or (b)
in relation to a claim for contribution or indemnity after the expiry of a
limitation period applicable to that claim.
[53]
Under the new Act, the basic limitation period is two years:
6 (1)
Subject to this Act, a court proceeding in respect of a claim must not be commenced
more than 2 years after the day on which the claim is discovered.
[54]
Discovery of a claim for contribution or indemnity is governed by a
special rule:
Discovery rule for claims for
contribution or indemnity
16 A
claim for contribution or indemnity is discovered on the later of the
following:
(a) the
day on which the claimant for contribution or indemnity is served with a
pleading in respect of a claim on which the claim for contribution or indemnity
is based;
(b) the first day on which
the claimant knew or reasonably ought to have known that a claim for
contribution or indemnity may be made.
[55]
Thus, on my interpretation of the new Act, a claim for
contribution or indemnity by the Handa defendants cannot be brought more than
two years after the later of:
a) The day on which
the Handa defendants were served with the notice of civil claim. In other
words, the limitation period expired March 12, 2015, or
b) The first day on
which the Handa defendants knew or ought to have known that a claim for
contribution or indemnity could be made.
[56]
We have no evidence from the Handa defendants on this issue. We know
when they were served but we do not know when they knew or reasonably should
have known that a claim for contribution or indemnity could have been made.
I would expect, however, that if the Handa defendants were seeking to rely
on a later date, they would have provided evidence in support.
[57]
I conclude, therefore, that the date of discovery of the contribution
and indemnity claim was the date they were served with the notice of civil
claim, March 12, 2013. Under the new Act, the limitation period would
have expired prior to the Handa defendants filing the third party claim, and
there would be no right to bring the claim.
[58]
That assumes, however, that the new Act applies. It must be
determined which Limitation Act, the new Act or the former Limitation
Act, R.S.B.C. 1996, c. 266 (the former Act) applies to this
case.
[59]
The new Act sets out how to determine which of it and the former Act
apply to a claim:
pre-existing claim means a claim
(a) that is based on an
act or omission that took place before the effective date, and
(b) with respect to which
no court proceeding has been commenced before the effective date.
(2) A court
proceeding must not be commenced with respect to a pre-existing claim if
(a) a former limitation
period applied to that claim before the effective date, and
(b) that former limitation
period expired before the effective date.
(3) Subject to
subsection (2), if a pre-existing claim was discovered before the effective
date, the former Act applies to the pre-existing claim as if the right to bring
an action occurred at the time of the discovery of the pre-existing claim.
(4) Subject to
subsection (2), if a pre-existing claim was not discovered before the effective
date,
(a) in the case of a
pre-existing claim referred to in section 3 of this Act, that section applies
to the pre-existing claim,
(b) subject to paragraph
(a) of this subsection, in the case of a pre-existing claim referred to in
section 8 (1) (a) or (b) of the former Act, Part 2 of this Act and section 8 of
the former Act apply to the pre-existing claim, or
(c) in the case of any
other pre-existing claim,
(i)
subject to subparagraph (ii) of this paragraph, this Act applies to the
pre-existing claim, and
(ii)
Part 3 of this Act applies to the pre-existing claim as if the act or
omission on which the pre-existing claim is based occurred on the later of
(B) the day the
act or omission takes place under section 21 (2) of this Act.
[60]
Regarding the third party claim, the act or omission took place before
the effective date, that is, before June 1, 2013, but no court proceeding
had been commenced with respect to that contribution and indemnity claim prior
to the effective date. I conclude, therefore, that it is a pre-existing
claim as defined in the new Act.
[61]
Turning to s. 30(3) of the new Act, I have found that the
contribution and indemnity claim was discovered on March 12, 2013, and the
former Act therefore applies.
[62]
Under the former Act, the limitation period is less of a
consideration on an application for leave to file a third party notice. Section
4(1) of the former Act provided:
4 (1)
If an action to which this or any other Act applies has been commenced, the
lapse of time limited for bringing an action is no bar to
(a) proceedings by
counterclaim, including the adding of a new party as a defendant by
counterclaim,
(b) third party
proceedings,
(c) claims by way of set
off, or
(d) adding or substituting
a new party as plaintiff or defendant,
(e)
under any applicable law, with respect to any claims relating to or
connected with the subject matter of the original action.
[63]
Thus, although the two year limitation period for the personal injury
claim under the former Act has expired, that is not a bar to bringing
third party proceedings.
[64]
Further, under the former Act as noted in Tyson Creek at para. 62:
the cause of action for
contribution did not accrue, and the limitation period did not begin to run,
until the defendant tortfeasor had been found liable.
[65]
Therefore, no limitation period has expired under the former Act
with respect to the contribution and indemnity claim. The cause of action has
yet to accrue.
[66]
Of course, as the cause of action for contribution and indemnity does
not accrue until after a determination that the Handa defendants are liable to
the plaintiff, there could be considerable delay if the claim is not allowed to
proceed by third party notice.
D.
Merits of the Proposed Claim
[67]
Counsel for the Handa defendants submitted, and I accept, that for
purposes of the leave application, I must assume that the pleaded facts
are true.
[68]
The authorities relied on by the Handa defendants include McNaughton,
in which the court held:
[29] As a general
proposition, a third party should not be required to adduce evidence in support
of a pleading before trial. (Trial includes, of course, a proceeding under R.
18A.) It is sufficient that his pleading discloses reasonable cause of action
or defence. The courts take a liberal approach to pleadings. Before the courts
will strike out a pleading or refuse an amendment on the ground that it
discloses no reasonable cause of action or defence the case must be perfectly
clear. In Minnes v. Minnes, supra, it was stated that the power to
strike out a pleading on the ground that it discloses no reasonable cause of action
should be exercised only where the case is absolutely beyond doubt. This view
is supported by the decisions in Pilkington Glass Ltd. v. Bumaby Sch. Dist. (1961),
36 W.W.R. 34 (B.C.S.C.); Masse v. N. Hoolsema & Sons Ltd. (1977), 2
B.C.L.R. 345 (S.C.); and Alcan Smelters & Chemical Ltd. v. Can. Assn. of
Smelter & Allied Wkr., Loc. No. 1 (1977), 3 B.C.L.R. 163 (S.C.).
[69]
Thus, all that the Handa defendants need to show is that there is a
reasonable cause of action framed in the third party notice.
[70]
There is an issue as to whether the allegations of the Handa defendants
against the third parties can stand, given that WestJet and the Resort parties are
said to have owed duties and contractual obligations directly to the plaintiff.
[71]
Counsel for WestJet referred me to Steveston Seafood Auction Inc. v.
Bahi, 2013 BCSC 1072, which in turn refers to Adams v. Thompson,
Berwick, Pratt & Partners (1987), 15 B.C.L.R. (2d) 51 (C.A.) on this
point. In Adams, the court stated the principle as follows:
[12 The
authorities establish that where a plaintiff contracts with two separate
parties, such as a contractor and an engineer, and later sues one of them, the
one sued cannot claim contribution or indemnity from the other on the ground
that the other failed to properly execute his duties, where the substance of
the third party claim can be raised against the plaintiff by way of
defence.
[72]
Here, the Handa defendants plead in their response to civil claim that
the plaintiff contracted with WestJet and the Resort parties such that, amongst
other things, he would be properly supervised on his trip. The Handa defendants
say it was the fault of WestJet and the Resort parties, as the plaintiffs
agents, that he was unsupervised. The Handa defendants can, and do, raise that
as a defence against the plaintiff.
[73]
WestJet therefore submits that the third party notice claiming
contribution and indemnity is improper, as the allegations are properly
defences to the plaintiffs claim.
[74]
Here, however, as in Steveston Seafood Auction, the Handa defendants
also allege there were independent obligations owed by WestJet and the Resort parties
to the Handa defendants and, in my view, those allegations do disclose a
possible third party claim.
E.
Delay and Timeliness
[75]
I agree with the submission of counsel for WestJet that the distinction
between delay and timeliness is captured by Master Baker in Shvalian v.
Seafresh Products Distributors, Inc., 2014 BCSC 964:
[18] Delay and timeliness
seem, naturally, related. I take delay to refer to the application
itself i.e. Has the applicant delayed in bringing it and, if so, why?
I take timeliness to refer to other factors e.g. Will the order affect
other aspects of the case as, for example, examinations or more importantly the
trial date?
[76]
Thus, the delay relevant here is the delay between the service of the
notice of civil claim on the Handa defendants and their filing of this
application.
[77]
There is no evidence regarding, and hence no explanation for, the delay
from the service of the notice of civil claim to retaining counsel, a period of
21 months.
[78]
The only reasons advanced for the delay after counsel was retained was
the initial investigation required into the contractual relationships of the Resort
parties and then, following the improper filing of the third party notice, the
delay in serving the Resort parties.
[79]
When faced with the question of why this application was not brought in
advance of filing the third party notice, with proper notice to the proposed
third parties, counsel for the Handa defendants submitted that the Hague
Convention required there to be an existing claim against a party before the
authorities would allow service.
[80]
I see no such restriction in the Hague Convention, and no reason why
service of this application could not have been made in accordance with the
Convention.
[81]
WestJet brings no evidence of actual prejudice, but argues that the
inordinate and inexcusable delay here results in presumed prejudice that should
militate in favour of not granting the application.
[82]
While I agree that there has been inordinate and inexcusable delay
here, I do not agree that the delay leads to the conclusion that the
application should be denied.
[83]
The impact of delay in the circumstances of an application to strike a
third party notice for a claim for contribution and indemnity was considered by
the Court of Appeal in Strata Plan LMS 1751 v. Scott Management Ltd.,
2010 BCCA 192:
[86] The chambers judge considered this issue at paras.
15 and 16 of his first reasons, citing Krusel No. 1 and Canadian
Mortgage and Housing Corp. In Krusel No. 1, Shaw J.
concluded that the discretion to strike a third party notice should not be
exercised where the claim was limited to contribution and the limitation period
had not begun to run. Both he and Lambert J.A. in Lui No. 1 drew
an analogy to dismissing claims for want of prosecution when the limitation
period has not expired, and cited Birkett v. James, [1978] A.C. 297,
[1977] 2 All E.R. 801, which held that dismissal in such circumstances is
pointless. Further, Lord Diplock, speaking for the majority, observed that to
dismiss an action for inordinate delay when the limitation period has not
expired is an error in principle in the exercise of judicial discretion.
[87] Similar considerations informed Mr. Justice
Pitfields decision in Canadian Mortgage and Housing Corp. While he
considered the Lui principles, he emphasized that they had not been
developed in the context of a claim for contribution, and declined to strike
the third party notice despite the fact ten years had passed between the date
the cause of action arose and the issuance of that notice.
[88] While the chambers judge acknowledged these decisions,
he reached an opposite result. He concluded that prejudice is always a factor
to consider in deciding whether to set aside a third party claim even if the
limitation period has not expired, and found that the delay and prejudice to
the respondents in this case justified striking the third party notices.
I am satisfied that in doing so he erred in failing to recognize that, if
the plaintiff succeeded at trial, the defendants could then bring their claim
for contribution as judgment debtors, a consequence exacerbating the delay and
its prejudicial effect.
[89] The chambers judge was dismayed by the defendants
lengthy and unexplained delay in pursuing their third party claim. His findings
of fact as to the prejudice to the respondents due to that delay are
indisputable. Witnesses have died or cannot be located; documents have been
destroyed. However, he failed to recognize that striking the third party
notices would only exacerbate these problems, since it did not extinguish the
claim but postponed it.
[90] The fundamental
question on the applications should have been whether greater injustice and
inconvenience would arise from allowing the contribution claim to continue as a
third party proceeding, or from striking it and leaving it to be pursued in a
separate future action. The chambers judge erred in failing to address that
question. Had he done so, in my view he would have been compelled to exercise
his discretion in favour of the former course, as the better of two unpalatable
options.
[84]
Thus, even if I were of the view that the delay to date had been prejudicial
to the third parties I would be forced to conclude that to refuse the
application would result in yet greater delay and hence greater prejudice.
[85]
As to timeliness, as the plaintiff has not advanced this case beyond the
service of the notice of civil claim, the application is not untimely despite
the delay.
V.
Conclusion
[86]
I am persuaded that what the Handa defendants seek would work a
fundamental injustice.
[87]
I cannot agree with the Handa defendants submission that the procedural
defects here should be swept aside with curative orders under Rule 8-5(6) and
by granting leave nunc pro tunc.
[88]
The importance of notice in our judicial system cannot be overstated. The
fundamental right to be heard cannot be allowed to be undermined to remedy
procedural defect without compelling reason. The Resort parties are entitled to
notice that leave is being sought to join them as third parties in this action.
[89]
I have considered the respective positions of the parties as set out
above. As the limitation period has not expired for the claim to contribution
and indemnity, the Handa defendants will not suffer any substantial prejudice
if they are required to accord all of the third parties the rights to which
they are due. I do not accept that the Handa defendants are unable to
serve the Resort parties with a leave application under the Hague Convention.
[90]
I cannot conclude that any of the factors warrant the imposition of the
third party notice without giving the Resort parties an opportunity to be heard.
To do so will not impact the underlying litigation in any fundamental way,
given its lack of progress.
[91]
Curiously, the only factor that would weigh in favour of granting the
application is the very inordinate and inexcusable delay of the Handa
defendants. I do not believe that is sufficient reason to forego notice to
the Resort parties.
[92]
There is nothing else that suggests an urgency that would override the
rights of the proposed third parties. Thus, the application is dismissed.
[93]
I am of the view that the third party notice in this matter, filed out
of time and without leave, is a nullity. In case that view is wrong, however,
and to ensure that the circumstances are clear to all, I am guided by the
decision of the Court of Appeal in Alexis to conclude that the proper
remedy is to order the third party notice be set aside, and I so order.
[94]
The Handa defendants will have leave to apply for leave to file new
third party proceedings. That application must be made on proper notice to all
potential third parties.
[95]
WestJet will have its costs of this application in any event of the
cause, payable forthwith.
Master Muir