Callinan Mines Ltd. v. Hudson Bay Mining and Smelting Co. et al., (2010) 259 Man.R.(2d) 295 (QBM)

• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: October 15, 2010
• Jurisdiction: Manitoba
• Citations: (2010), 259 Man.R.(2d) 295 (QBM);2010 MBQB 228

Callinan Mines v. Hudson Bay Mining (2010), 259 Man.R.(2d) 295 (QBM)

MLB headnote and full text

Temp. Cite: [2010] Man.R.(2d) TBEd. NO.010

Callinan Mines Limited (plaintiff) v. Hudson Bay Mining and Smelting Co. Limited (defendant) and Deloitte & Touche LLP (respondent)

(CI 07-01-50864; 2010 MBQB 228)

Indexed As: Callinan Mines Ltd. v. Hudson Bay Mining and Smelting Co. et al.

Manitoba Court of Queen's Bench

Winnipeg Centre

Cooper, Master

October 15, 2010.

Summary:

The defendant (Hudbay) purchased the plaintiff's (Callinan's) interests in certain mining claims. The sale agreement required Hudbay to pay Callinan royalties and a share of profits from mining the property. The agreement gave Callinan a right to access Hudbay's records in order to verify that Hudbay's calculations of Callinan's royalties and net profits interest under the terms of the agreement were accurate. Callinan sued Hudbay seeking an accounting, judgment for the amount found to be owing as a result of the accounting, and damages. Callinan sought an order under rule 30.10 requiring Hudbay and its auditor (Deloitte) to produce working papers prepared by Deloitte during its audit of Hudbay.

A Master of the Manitoba Court of Queen's Bench dismissed the motion.

Editor's Note: For related cases involving these parties see (2008), 227 Man.R.(2d) 77 and (2010), 249 Man.R.(2d) 173.

Practice - Topic 4572

Discovery - What documents must be produced - Documents in possession, power or control of a party - The defendant (Hudbay) purchased the plaintiff's (Callinan's) interests in certain mining claims - The sale agreement required Hudbay to pay Callinan royalties and a share of profits from mining the property - The agreement gave Callinan a right to access Hudbay's records in order to verify that Hudbay's calculations of Callinan's royalties and net profits interest under the terms of the agreement were accurate - Callinan sued Hudbay seeking an accounting, judgment for the amount found to be owing as a result of the accounting, and damages - Callinan sought an order under rule 30.10 requiring Hudbay and its auditor (Deloitte) to produce working papers prepared by Deloitte during its audit of Hudbay - It argued that any documents touching on the determination and calculation of net profits interest were of critical importance and clearly relevant, and this would include Deloitte's working papers - A Master of the Manitoba Court of Queen's Bench dismissed the motion - Deloitte's working papers were Deloitte's property - They were not in the possession, power or control of Hudbay - Therefore, Hudbay had no obligation to disclose them - See paragraphs 36 to 48.

Practice - Topic 4604

Discovery - Production of documents by nonparties - When ordered - The defendant (Hudbay) purchased the plaintiff's (Callinan's) interests in certain mining claims - The sale agreement required Hudbay to pay Callinan royalties and a share of profits from mining the property - The agreement gave Callinan a right to access Hudbay's records in order to verify that Hudbay's calculations of Callinan's royalties and net profits interest under the terms of the agreement were accurate - Callinan sued Hudbay seeking an accounting, judgment for the amount found to be owing as a result of the accounting, and damages - Callinan sought an order under rule 30.10 requiring Hudbay's auditor (Deloitte) to produce working papers prepared by Deloitte during its audit of Hudbay - It argued that any documents touching on the determination and calculation of net profits interest were of critical importance and clearly relevant, and this would include Deloitte's working papers - A Master of the Manitoba Court of Queen's Bench dismissed the motion - Deloitte's working papers were Deloitte's property - Disclosure from third parties was subject to stricter controls than disclosure from parties - It was the exception rather than the rule - Relevance was not the only consideration - The court was not convinced that the working papers were relevant - Alternatively, the motion was premature - Hudbay's discovery had not taken place yet - If Callinan needed explanations from Hudbay for the allocations of expenses Hudbay made in its calculations, it should seek them first from Hudbay itself, before it could claim it would be unfair to proceed to trial without requiring the non-party to produce them - Further, the sale agreement permitted Callinan to conduct its own audit - This was another source of the information which it could and should access before looking to the non-party - See paragraphs 60 to 76.

Cases Noticed:

Verwey Potatoes Ltd. v. Siemens Seed Potatoes, 2002 MBQB 195, refd to. [para. 37].

Ben-Ron Farms et al. v. Canadian Wheat Board (2009), 240 Man.R.(2d) 118; 456 W.A.C. 118; 2009 MBCA 75, refd to. [para. 37].

J-Sons Inc. v. Paterson (N.M.) & Sons Ltd. (2003), 178 Man.R.(2d) 167; 2003 MBQB 199, refd to. [para. 39].

Grenkow v. Marlatt et al. (2006), 204 Man.R.(2d) 26; 2006 MBQB 108, refd to. [para. 50].

Leicestershire County Council v. Faraday (Michael) & Partners Ltd., [1941] 2 K.B. 205 (C.A.), refd to. [para. 53].

Chantrey Martin v. Martin, [1953] 2 Q.B. 286 (C.A.), refd to. [para. 53].

Tersigni v. Circosta et al. (1997), 29 O.T.C. 141 (Gen. Div.), refd to. [para. 54].

Spencer v. Crowe and Nova Scotia Legal Aid Commission (1986), 74 N.S.R.(2d) 9; 180 A.P.R. 9 (T.D.), refd to. [para. 54].

Ministic Air Ltd. et al. v. Canadian Broadcasting Corp. et al. (1995), 103 Man.R.(2d) 296 (Q.B.), refd to. [para. 61].

Envoy Business Services Inc. v. 3196969 Manitoba Ltd. et al., [2000] Man.R.(2d) Uned. 176; 2000 MBQB 219 (Master), refd to. [para. 61].

Ontario (Attorney General) et al. v. Stavro et al. (1995), 86 O.A.C. 43 (C.A.), refd to. [para. 68].

Morse Shoe (Canada) Ltd. v. Zellers Inc. et al. (1997), 100 O.A.C. 116 (C.A.), refd to. [para. 69].

Colizza v. Arnot et al. (2007), 228 Man.R.(2d) 1; 427 W.A.C. 1; 2008 MBCA 17, refd to. [para. 69].

Chalmers et al. v. Dominion Lumber Winnipeg Ltd. et al., [1997] Man.R.(2d) Uned. 92 (Q.B. Master), refd to. [para. 70].

Counsel:

G. Todd Campbell, Brent C. Ross and D. Barry Kirkham, Q.C., for the plaintiff;

James G. Edmond and M. Lynne Harrison, for the defendant;

Robert P. Sokalski, for the respondent.

This motion was heard by Cooper, Master, of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following decision on October 15, 2010.