Date: 20030515
Docket: T-168-01
Neutral citation: 2003 FCT 610
BETWEEN:
BUDGET STEEL LIMITED
Plaintiff (Respondent)
- and -
SEASPAN INTERNATIONAL LTD., AND
THE OWNERS AND ALL OTHERS INTERESTED
IN THE SHIP "SEASPAN 175"
Defendants (Appellants)
INTRODUCTION
[1] These reasons following the hearing at Vancouver on Monday, the 12th of May 2003, of an appeal by way of motion under Rule 51 of the Federal Court Rules, 1998[1] (the "Rules"), of a decision of Prothonotary Hargrave wherein he granted an extension of time to Budget Steel Limited ("Budget") to file a statement of defence to counterclaim, which counterclaim was instituted by the Defendants ("Seaspan"). Prothonotary Hargrave's decision is dated the 1st of April 2003.
[2] On its appeal by way of motion, Seaspan seeks an order reversing Prothonotary Hargrave's order and dismissing Budget's application for an extension of time to file its statement of defence to counterclaim. Seaspan also seeks costs of its appeal, payable in any event of the cause.
[3] Budget seeks dismissal of Seaspan's appeal with costs of the appeal in Budget's favour, once again in any event of the cause.
BACKGROUND
[4] This action concerns the capsizing of the vessel "Seaspan 175", a dumb-barge owned by Seaspan which, at the time of her capsizing, was carrying and lost a cargo of scrap steel owned by Budget.
[5] Budget filed its statement of claim on the 29th of January 2001, seeking damages for the value of its lost cargo. Budget sought an extension of time to serve its statement of claim. An extension of time was granted and Seaspan admitted service of the statement of claim on the 16th of May 2001.
[6] Seaspan filed its statement of defence and counterclaim on the 14th of June 2001. Seaspan's counterclaim repeats the allegations set out in its statement of defence and seeks recovery of freight charges and slightly more than $500,000.00 for the constructive total loss of the Seaspan 175.
[7] By letter dated the 18th of June 2001, counsel for Budget acknowledged receipt of Seaspan's statement of defence and counterclaim and noted:
At present, we have no instructions to defend the counterclaim against Budget Steel Limited, but are currently seeking same, and will revert to you once we have received instructions. In the meantime, we would ask that you take no steps in default in respect of the counterclaim without giving prior notice to ourselves.[2]
[8] Budget took no steps to prosecute its claim against Seaspan, or to defend the counterclaim between the 18th of June 2001 and the 11th of July 2002, when it brought its motion for an extension of time to file its defence to counterclaim.
THE DECISION UNDER REVIEW
[9] Prothonotary Hargrave provided extensive reasons in support of his decision to grant an extension of time to Budget to file its defence to counterclaim.
[10] In his reasons, before turning to the substance of the issue of an extension of time, Prothonotary Hargrave considered two preliminary issues: first, whether he should take into consideration supplementary evidence filed on behalf of Budget following the closing of the hearing before Prothonotary Hargrave; and secondly, whether he should respond positively to a request on behalf of Budget to reopen the hearing before him. Following extensive and thoughtful analysis with regard to these two issues, Prothonotary Hargrave determined not to take into account the fresh evidence tendered by Budget, concluding that, while it was fresh evidence, it was not new evidence. He further determined not to reopen the hearing before him, particularly in light of his determination to grant the extension of time sought by Budget.
[11] Prothonotary Hargrave then turned to the issue of extension of time. He introduced his analysis on that issue in paragraph [22] of his reasons where he wrote:
At the commencement of the hearing of the motion counsel for the Plaintiff tendered an extended and revised written argument. Both sides then proceeded with the motion for a time extension on the basis of the four-part test in Hennelly.... However it became apparent during argument that in order to do justice between the parties, on the time extension motion, I should consider whether a default judgment on the counterclaim would render the Plaintiff's [Budget's] claim res judicata, thus resulting in a serious deprivation of justice to the Plaintiff, which might be contrary to the principle in Grewal..., that justice must be done between the parties. Alternately, counsel for the Plaintiff submitted that denial of the extension of time within which to file a defence to counterclaim could result in an inconsistent outcome, with the counterclaim going to the defendant on default, but the claim itself going to the Plaintiff, after full argument.[3] [Citations omitted]
[12] Prothonotary Hargrave concluded his reasons in the following terms:
The important aspect to consider [in relation to] a time extension is to do justice between the parties: to achieve that end I should balance the factors for and against the time extension: both of these propositions arise out of Grewal....
In the present instance, on balance, there was and is a continuing intention [to] defend the counterclaim, although that intention, all considered and on the evidence presented, is not a strong intention.
The matter has some merit in the sense that the possible defences of Budget Steel, to the counterclaim, appears [sic] substantial.
There is no prejudice to Seaspan in the granting of a time extension. The reasons for the delay are weak.
As an additional consideration, the chances of an overarching prejudice to Budget Steel, which arguably might arise in connection with its claim, were there default judgment of the counterclaim, is remote.
While all of this might perhaps be close to a mutual balance, what tips the scale in favour of a time extension for Budget Steel is the forethought of counsel in writing an initial letter explaining the need for time in order to obtain instruction. This is coupled with the lack of any apparent response from Seaspan until the present application by Budget Steel for a time extension. It would be an injustice if, having taken no position for over a year, in the face of a duty to move the counterclaim along, Seaspan were to prevail in the present instance. Budget Steel shall have its time extension. Costs in the cause.[4]
THE ISSUES
[13] I am satisfied that only two issues arise on this appeal by way of motion, those being:
first, the appropriate standard of review; and secondly, against the appropriate standard of review, whether Prothonotary Hargrave's conclusion is sustainable, or if the standard of review be by hearing de novo, whether on the evidence properly before me, I would have granted the extension of time. The second of the two issues involves a series of sub-issues which I will deal with in turn.
ANALYSIS
(a) Standard of Review
[14] The standard of review applicable to discretionary decisions of prothonotaries was enunciated by Justice MacGuigan for the majority of a panel of the Federal Court of Appeal in Canada v. Aqua-Gem Investments Ltd.[5], where he wrote at pages 462-3:
I also agree with the Chief Justice in part as to the standard of review to be applied by a motions judge to a discretionary decision of a prothonotary. Following in particular Lord Wright in Evans v. Bartlam..., and Lacourcière J.A. in Stoicevski v. Casement..., discretionary orders of prothonotaries ought not to be distrubed on appeal to a judge unless:
(a) they are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts, or
(b) they raise questions vital to the final issue of the case.
Where such discretionary orders are clearly wrong in that the prothonotary has fallen into error of law (a concept in which I include a discretion based upon a wrong principle or upon a misapprehension of the facts), or where they raise questions vital to the final issue of the case, a judge ought to exercise his own discretion de novo. [Citations omitted]
[15] The foregoing statement of the appropriate test was very recently confirmed by the Supreme Court of Canada in Z.I. Pompey Industrie v. ECU-Line N.V.[6]
[16] Counsel for Seaspan urged that, against the foregoing, Prothonotary Hargrave was clearly wrong in that his exercise of discretion was based upon a wrong principle or upon a misapprehension of the facts, and that his decision raised an issue vital to the final issue of the case in that, if the extension of time had not been granted, Seaspan would have been entitled to apply for default judgment on its counterclaim.
[17] By contrast, counsel for Budget urged that Prothonotary Hargrave's exercise of discretion was not clearly wrong in that it was not based upon a wrong principle or upon a misapprehension of the facts and, further, that his decision did not raise a question vital to the final issue of the case in that he determined to allow the extension of time. Counsel urged that, even if Prothonotary Hargrave had not granted an extension of time, that decision of itself would not amount to a decision vital to the final issue of the case because there would remain the outstanding question of whether or not this Court would, on a further application, grant default judgment.
[18] I prefer the position of counsel for Budget. Despite the able argument on behalf of Seaspan, I find no basis on which to conclude that Prothonotary Hargrave's decision that is under appeal was "clearly wrong" in the sense of that term adopted by Justice MacGuigan. Further, I find no basis on which to conclude that Prothonotary Hargrave's decision under appeal was, in itself, vital to the final issue of the case. In reaching this latter conclusion, I note that Justice MacGuigan footnoted his use of the phrase "vital to the final issue of the case" with the following reference:
It should be noted that Lord Wright's phrase "the final issue of the case" is quite different from "the final issue in the case." Lord Wright means "vital to the result of the case" rather than "vital to the ultimate issue on the merits of the case." [Emphasis in original]
[19] Based upon the foregoing, I am satisfied that the discretionary order of Prothonotary Hargrave that is here under review is not one that should easily be disturbed on appeal, but rather is a discretionary decision in relation to which substantial deference should be shown. That being said, I will go on to briefly review the range of issues that were before Prothonotary Hargrave relating to the extension of time to demonstrate why I am satisfied that Prothonotary Hargrave's decision to grant a time extension was in no sense "clearly wrong".
(b) Extension of Time
(i) General principles
[20] Rule 8 provides that this Court may extend or abridge a period of time provided by the Rules, or fixed by an order, and that a motion to extend time may be brought before or after the expiration of the period of time sought to be extended. Rule 3 provides that the Rules should be interpreted and applied so as to secure the just, most expeditious and least expensive determination of every proceeding on its merits. Arguably at least, there is some internal conflict within Rule 3: securing a just determination on the merits is not necessarily consistent with achieving the most expeditious and least expensive determination, and that concern surely extends to circumstances where an extension of time might well contribute to a just determination on the merits while it might not contribute to the most expeditious and cost-effective determination.
[21] Consistent with Rule 3 is the conclusion reached by Prothonotary Hargrave, quoted earlier in these reasons, to the effect that an important consideration in considering a motion for a time extension is to do justice between the parties and that to achieve that end various relevant factors should be balanced in determining whether or not to grant the extension. For these principles, Prothonotary Hargrave cites Grewal v. Canada (Minister of Employment and Immigration)[7].
[22] Against the foregoing broad principles, Prothonotary Hargrave applied the test for an extension of time as enunciated in Canada (Attorney General) v. Hennelly[8]. At paragraph 3 of Hennelly, Justice McDonald wrote:
The proper test is whether the applicant has demonstrated
1. A continuing intention to pursue his or her application;
2. That the application has some merit;
3. That no prejudice to the respondent arises from the delay; and
4. That a reasonable explanation for the delay exists.
It was not in dispute before me that the four-part test enunciated in Hennelly is nonetheless to be read in conjunction with the broader general principles to be drawn from Grewal, supra, and the Rules themselves.
(ii) Prothonotary Hargrave's determination not to take into account fresh evidence presented to him after the close of hearing on the motion to extend time
[23] Prothonotary Hargrave spent a number of paragraphs in his reasons analysing whether or not he should take into account evidence presented to him on behalf of Budget, after the close of the hearing of the motion for an extension of time, which was evidence that clearly was available to Budget at the time it first sought the extension of time. Prothonotary Hargrave cited five elements to be considered when supplementary affidavits are presented, as follows: first, whether taking into account the supplementary affidavit or affidavits will serve the interests of justice; secondly, whether the supplementary affidavit or affidavits will assist the Court; thirdly, whether there will be substantial or serious prejudice to the other party; fourthly, that a party seeking to file additional material must show that it was not available at an earlier date or could not have become available had proper diligence been exercised; and, finally, that the party tendering the material must show that it will not unduly delay the proceedings. Against these considerations, and having concluded that Budget was merely attempting to bolster its case by presenting the new affidavits, Prothonotary Hargrave determined not to consider the new affidavits and, further, determined not to reopen the hearing before him in order to allow them to be more properly brought forward.
[24] I am satisfied that Prothonotary Hargrave was correct in deciding as he did with respect to the fresh affidavits that were tendered to him.
[25] Counsel for Budget urged, I sensed without great enthusiasm, that if I were to consider the issue of extension of time de novo, then I should take into account the fresh affidavits. If I had determined to consider the application for an extension of time de novo, I would not have considered the fresh affidavits[9].
(iii) Application of res judicata and issue estoppel
[26] Prothonotary Hargrave defined this issue in the following terms at paragraph [52] of his reasons:
The question here is whether the concept of issue estoppel could apply so that, following the default judgment on the counterclaim for barge damage, Budget Steel would be unable to proceed with its claim for cargo loss.
He concluded on this issue at paragraph [58]:
Were Seaspan to obtain a default judgment for freight and barge damage, that is by no means conclusive of the question of safe and proper carriage. While no litigation is certain, the chances of a default judgment, on the counterclaim, prejudicing the claim of Budget Steel, is quite remote.
[27] I agree with the foregoing conclusion and would reach the same conclusion if I were to hear this matter de novo.
(iv) Prothonotary Hargrave's determination to grant a time extension
[28] Prothonotary Hargrave, in his reasons, carefully and thoughtfully applied the general principles and specific tests governing the grant of a time extension and concluded in favour of an extension. While he acknowledged that the conclusion he reached was not an easy one in that the various factors considered presented very close to an equilibrium of interests in favour of Budget and in favour of Seaspan, I am satisfied that, against the overriding principle of just determination on the merits, he was correct in deciding as he did and could in no sense have been said to be "clearly wrong" in deciding as he did, particularly in the sense that his exercise of discretion could be said to be based upon a wrong principle or upon a misapprehension of the facts. Having considered the extensive material before me and the representations of counsel at hearing, I am satisfied that Prothonotary Hargrave was in fact correct in deciding as he did. Put another way, if I were now required to decide de novo the issues that were before Prothonotary Hargrave, I would have reached the same conclusions as he did.
CONCLUSION
[29] Based upon the foregoing brief analysis, this appeal by way of motion will be dismissed. Counsel for Budget sought its costs of the appeal, in any event of the cause. While Budget was successful before Prothonotary Hargrave, the learned prothonotary determined to order that costs should be in the cause. I have reached the same conclusion on this appeal by way of motion. While the interests of justice weigh in favour of the granting of the extension of time sought by Budget, that is not the same as to say that Budget was blameless in finding itself where it was required to seek an extension of time after significant delay. Equally, Seaspan could not be said to have been unjustified in seeking to test Prothonotary Hargrave's decision to grant an extension of time. In the circumstances, costs of this appeal by way of motion will be in the cause.
(Sgd.) "Frederick E. Gibson"
Judge
Vancouver, B.C.
May 15, 2003
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-168-01
STYLE OF CAUSE: Budget Steel Ltd. v. The Ship "SEASPAN 175" et al.
PLACE OF HEARING: Vancouver, B.C.
DATE OF HEARING: May 12, 2003
REASONS FOR ORDER: GIBSON J.
APPEARANCES:
John Bromley FOR PLAINTIFF (As Agent)
Shane Nossal FOR DEFENDANT
SOLICITORS OF RECORD:
Bromley Chapelski FOR PLAINTIFF (As Agent)
Vancouver, B.C.
Bull Housser & Tupper FOR DEFENDANT
Vancouver, B.C.
[1] S.O.R./98-106.
[2] Seaspan's Motion Record, Tab 5, Page 37.
[3] Defendants' Motion Record on Appeal, Page 17.
[4] Defendants' Motion Record on Appeal, pages 31 and 32.
[5] [1993] 2 F.C. 425.
[6] Neutral citation 2003 SCC 27, May 1, 2003, at paragraph 18 (need best citation I can get for this).
[7] [1985] 2 F.C. 263 (C.A.), see in particular, pages 272 and 282.
[8] [1999] F.C.J. No. 846 (Q.L.) (C.A.).
[9] See: Camoplast Inc. v. Soucy International Inc. [2001] F.C.J. No. 330 (Q.L.) (T.D.) at paragraphs 19 to 22.