Callinan Mines Ltd. v. Hudson Bay Mining and Smelting Co.,

• Jurisdiction: Manitoba
• Judge: Joyal
• Neutral Citation: 2011 MBQB 159
• Citation: (2011), 266 Man.R.(2d) 214 (QB),2011 MBQB 159,266 ManR(2d) 214,(2011), 266 ManR(2d) 214 (QB),266 Man.R.(2d) 214
• Date: 30 June 2011
• Court: Court of Queen's Bench of Manitoba (Canada)

Callinan Mines v. Hudson Bay Mining (2011), 266 Man.R.(2d) 214 (QB)

MLB headnote and full text

Temp. Cite: [2011] Man.R.(2d) TBEd. JL.040

Callinan Mines Limited (plaintiff/appellant) v. Hudson Bay Mining and Smelting Co. Limited (defendant/respondent)

(CI 07-01-50864; 2011 MBQB 159)

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

Manitoba Court of Queen's Bench

Winnipeg Centre

Joyal, C.J.Q.B.

June 30, 2011.

Summary:

Callinan relinquished its interest in certain mineral claims to Hudbay in exchange for payment of a royalty and share of profits, in accordance with a Net Profits Interest and Royalty Agreement (the NPI Agreement). In its statement of claim, Callinan alleged that Hudbay had failed to make proper payments of profits (Net Profits Interest). Callinan sought production of the financial records underlying Hudbay's calculation of Net Profits Interest. It moved for an order compelling Hudbay and non-party Deloitte to produce all documents that were reviewed, relied on or generated by Deloitte during its audits, including Deloitte's working papers. Callinan filed the affidavit of Lotz, an accountant, in support of its motion compelling Deloitte to produce the documents. Deloitte moved for an order striking out and expunging the Lotz affidavit. Deloitte's motion came on for a hearing on a preliminary basis.

A Master of the Manitoba Court of Queen's Bench refused to strike and expunge the Lotz affidavit and dismissed Deloitte's motion. Deloitte appealed.

A Master of the Manitoba Court of Queen's Bench dismissed Callinan's motion for an order compelling Hudbay and Deloitte to produce the documents. Callinan appealed. Further, Callinan moved for leave to amend the statement of claim to add allegations related to Deloitte's opinion and its working papers. Weeks after the hearing of the appeal and the motion to amend, Hudbay sought leave to adduce additional evidence.

The Manitoba Court of Queen's Bench made the following determinations respecting the questions posed in relation to Deloitte's appeal, Callinan's motion to amend, Hudbay's motion to adduce fresh evidence and Callinan's appeal: (1) there was no basis to strike out or expunge the Lotz affidavit; (2) Hudbay's motion to adduce new evidence was dismissed; (3) leave was granted to Callinan permitting the amendments it sought to the statement of claim; and (4) Callinan had established that the documents it sought from Deloitte were relevant and it would be unfair to require Callinan to proceed to trial without those documents.

Practice - Topic 2101

Pleadings - Amendment of pleadings - General principles - The Manitoba Court of Queen's Bench referred to the various decisions that clarified and refined the application of Queen's Bench Rule 26.01 and the relevant factors to be considered on a motion for leave to amend - "What remains clear is that amendments to pleadings are common in Manitoba ... The court's consideration of prejudice is usually the primary and overriding factor when determining whether or not leave would be granted permitting amendments to a statement of claim ... The onus rests on the party resisting an amendment to demonstrate, on the balance of probabilities, that it will be prejudiced if the motion is granted ... Where the proposed amendments provide further particularization of facts and allegations contained in the original pleading, the court will generally allow the amendments ... Proposed amendments must not be an abuse of process, nor should they be frivolous or vexatious. Proposed amendments also ought not to be brought for an improper purpose ... Proposed amendments must disclose a reasonable cause of action and must contain sufficient particulars to enable the other side to answer them. They must also satisfy the normal requirements for pleading" - See paragraphs 106 to 110.

Practice - Topic 2106

Pleadings - Amendment of pleadings - Power of the court to amend - [See Practice - Topic 2101 ].

Practice - Topic 2120

Pleadings - Amendment of pleadings - Statement of claim - General - The Manitoba Court of Queen's Bench stated that "Where an opposing party argues that the proposed amendments raise a new cause of action for which the applicable limitation period has expired, the court must first consider whether the amendments do in fact constitute a new cause of action and, if so, whether the limitation period has indeed expired, and if so, whether special circumstances exist which would nonetheless justify allowing the amendments ... Where, however, an amendment simply pleads another breach of the very contract under which the plaintiff sued in the first place (even if the new allegation relates to a breach of implied term), the amendment should not be seen as raising a new cause of action so as to 'trigger the limitation debate'" - See paragraph 111.

Practice - Topic 2121

Pleadings - Amendment of pleadings - Statement of claim - Adding particulars or subsequent facts - The plaintiff relinquished its interest in certain mineral claims to the defendant, in accordance with a Net Profits Interest and Royalty Agreement (the NPI Agreement) - In its statement of claim, the plaintiff alleged that the defendant failed to make proper payments of profits - On its motion for leave to amend the statement of claim (prior to the examinations for discovery), the plaintiff argued that the proposed amendments provided further particulars of the defendant's breach of the NPI Agreement, namely, that the defendant failed to provide an opinion based upon a level of audit required by the NPI Agreement - The Manitoba Court of Queen's Bench granted leave permitting the amendments - The amendments resulted in no prejudice whatsoever to the defendant - There was no obvious delay of significance on the plaintiff's part - Neither did the amendments involve significant delay - Moreover, the amendments raised and were part of a valid and arguable legal issue - The amendments were compliant with the rules of pleading, i.e., they were not evidence or argument, but set out the facts which supported the plaintiff's position - Nor were the amendments sought for an improper purpose - Based on the court's conclusion that the amendments did not raise a new cause of action, no limitation date discussion was triggered - See paragraphs 113 to 136.

Practice - Topic 2142

Pleadings - Amendment of pleadings - Considerations governing granting of leave - [See Practice - Topic 2101 ].

Practice - Topic 3666

Evidence - Affidavits - Striking out - Irrelevant or improper matters - The plaintiff sought damages from the defendant on account of payments it alleged were owing under a profit sharing agreement - The dispute, between the only two parties, related to whether the royalty and net profits interest had been properly calculated - The plaintiff moved for production of documents from a non-party (Deloitte), pursuant to Queen's Bench Rule 30.10(1) - The affidavit of a chartered accountant (Lotz) was filed in support of the motion - The Manitoba Court of Queen's Bench held that there was no basis to strike out or expunge the Lotz affidavit - The unchallenged affidavit provided evidence from which the court could conclude that Deloitte would have in its possession documents that were relevant to the issue of the annual calculation of net profits interest, the central issue - The affidavit was similarly relevant to whether it would be unfair for the plaintiff to be required to proceed to trial without the documents - See paragraphs 41 to 45.

Practice - Topic 3666

Evidence - Affidavits - Striking out - Irrelevant or improper matters - Pursuant to Manitoba Queen's Bench Rule 30.10(1), the plaintiff (Callinan) moved for an order compelling non-party Deloitte to produce documents, including Deloitte's working papers - Callinan filed the affidavit of Lotz, a chartered accountant, in support of the motion - Deloitte moved to strike the affidavit - It asserted that given the Master's determination that Deloitte's working papers were not relevant in respect of Callinan's motion, neither should the Lotz affidavit be seen as relevant - The Manitoba Court of Queen's Bench disagreed - "While a discussion of 'relevance' for the purpose of a Rule 30.10(1) motion need ask whether the documents Callinan seeks from Deloitte are relevant to the issues arising in the main action (as defined by the pleadings), the discussion of 'relevance' in the context of a motion to strike and expunge need ask more specifically whether any of the evidence in the Lotz affidavit is relevant to the matters that the court must consider on the specific motion made pursuant to Rule 30.10(1)" - See paragraphs 47 to 49.

Practice - Topic 3666

Evidence - Affidavits - Striking out - Irrelevant or improper matters - The plaintiff moved for production of documents from a non-party (Deloitte), pursuant to Queen's Bench Rule 30.10(1) - The affidavit of a chartered accountant (Lotz) was filed in support of the motion - Deloitte moved to strike the affidavit, suggesting that it was based on speculation and suspicion - The Manitoba Court of Queen's Bench held that Deloitte's position was without merit - "Put simply, in the context of a Rule 30.10(1) motion, where the correctness of Lotz's professionally grounded assertions have not been directly challenged by affidavit evidence or cross-examination, the words 'speculation' and 'suspicion' have little if any application" - Even if the affidavit was speculative and suspicion-based, such a conclusion should be a matter attaching solely to the weight of some of Lotz's assertions - See paragraphs 50 to 52.

Practice - Topic 4554

Discovery - Production and inspection of documents - General - Persons whose documents must be produced - In Manitoba, Queen's Bench Rule 30.01(1) regulated production of documents from a non-party - The Manitoba Court of Queen's Bench stated that "[t]he two reference points which guide any analysis respecting Rule 30.10 are relevance and unfairness (in respect of requiring the party to proceed to trial without the discovery of the documents in question) ... The determination for relevance ... involves a threshold no higher than the threshold applicable in cases involving documents sought from a party. In other words, if a document could reasonably contain information which may (not must) enable a party to advance its case or damage the opposing party's case, then it is relevant ... The additional considerations ... which otherwise protect non-parties from unnecessary intrusion, are those associated with the analysis of the unfairness requirement of Rule 30.10(1)" - See paragraphs 139 to 142.

Practice - Topic 4554

Discovery - Production and inspection of documents - General - Persons whose documents must be produced - The plaintiff alleged that the defendant had failed to make proper payments of profits (Net Profits Interest) - It appealed the decision of the Master dismissing its motion for production of documents from a non-party (Deloitte) - The Manitoba Court of Queen's Bench applied rule 30.10(1) and ordered production of all documents which Deloitte relied on or generated during its audits - The documents were relevant to the central issue, namely, the accuracy of the Net Profits Interest calculation - Also, it would be unfair to require the plaintiff to proceed to trial without those documents, with reference to the following factors: the importance of the documents in the litigation; whether production at the discovery stage (as opposed to production at trial) was necessary to avoid unfairness to the plaintiff; whether the discovery of the defendants with respect to the issues to which the documents were relevant was adequate, and if not, whether responsibility for that inadequacy rested with the defendants; the position of Deloitte with respect to production; the availability of the documents or their informational equivalent from some other source which was accessible to the plaintiff; and the relationship of Deloitte to the litigation and the parties - See paragraphs 157 to 182.

Practice - Topic 9031

Appeals - Evidence on appeal - Admission of "new evidence" or "fresh evidence" - On an appeal from a Master, the defendant applied for leave to file further evidence to "clarify" certain facts, weeks after "a full and complete" hearing of the appeal and the motion for leave to amend the statement of claim - The new evidence largely related to the plaintiff's appeal from the Master on its motion for production from a non-party - The Manitoba Court of Queen's Bench dismissed the defendant's motion - It was important not to lose sight of Queen's Bench Rule 60.01(13)(b) (adducing further evidence at appeal hearing) - The court made reference to some of the relevant authority in relation to the test that assisted in applying that rule - The plaintiff invoked the relevant portions of the applicable test when it argued the that defendant had not demonstrated that: (a) the evidence was not available at the time of the hearing before the Master; and (b) the evidence, if admitted, could not reasonably be expected to affect the result - The court also agreed with the concerns raised by the plaintiff respecting the form in which the "new" evidence was proposed - See paragraphs 54 to 90.

Cases Noticed:

ABI Biotechnology Inc. v. Apotex Inc. et al. (2008), 231 Man.R.(2d) 259; 437 W.A.C. 259; 2008 MBCA 146, refd to. [para. 9].

Tymkin v. Winnipeg (City) Police Service - see Tymkin v. Ewatski et al.

Tymkin v. Ewatski et al. (2001), 158 Man.R.(2d) 204; 2001 MBQB 246, refd to. [para. 38].

GlaxoSmithKline Inc. et al. v. Apotex Inc. et al., [2003] F.T.R. Uned. 510; 27 C.P.R.(4th) 49; 2003 FC 920, refd to. [para. 38].

Chase Industries Ltd. v. Vermette et al. (2004), 185 Man.R.(2d) 224; 2004 MBQB 152, refd to. [para. 63].

Manitoba Crop Insurance Corp. v. Wiebe et al. (2007), 217 Man.R.(2d) 223; 2007 MBQB 157, refd to. [para. 64].

2841836 Manitoba Ltd. et al. v. 4011198 Manitoba Ltd. et al. (2009), 238 Man.R.(2d) 101; 2009 MBQB 62, refd to. [para. 69].

M.J.B. v. W.P.B. - see Fritschij v. Bazan.

Fritschij v. Bazan (2006), 203 Man.R.(2d) 291; 2006 MBQB 82 (Fam. Div.), refd to. [para. 71].

Ontario (Attorney General) et al. v. Stavro et al. (1995), 86 O.A.C. 43; 26 O.R.(3d) 39 (C.A.), refd to. [para. 80].

Callinan Mines Ltd. v. Hudson Bay Mining and Smelting Co. (2008), 227 Man.R.(2d) 77; 2008 MBQB 90, refd to. [para. 81].

Manitoba Métis Federation Inc. et al. v. Canada (Attorney General) - see Dumont et al. v. Canada (Attorney General) and Manitoba (Attorney General).

Dumont et al. v. Canada (Attorney General) and Manitoba (Attorney General), [2002] Man.R.(2d) Uned. 25; 111 A.C.W.S.(3d) 1065; 2002 MBQB 52, refd to. [para. 93].

Lloyds Bank Canada v. Sherwood (1990), 64 Man.R.(2d) 288 (Q.B.), refd to. [para. 93].

MacKechnie Estate, Re (1986), 47 Man.R.(2d) 259 (Q.B. Prob. Div.), refd to. [para. 104].

Commonwealth Group Ltd. et al. v. Banasiak et al. (2007), 218 Man.R.(2d) 252; 2007 MBQB 202, refd to. [para. 104].

Ranjoy Sales and Leasing Ltd. et al. v. Deloitte, Haskins & Sells (1990), 63 Man.R.(2d) 248 (C.A.), refd to. [para. 106].

North American Life Assurance Co. v. Pitblado & Hoskin et al. (2003), 174 Man.R.(2d) 234; 2003 MBQB 109, refd to. [para. 107].

National Trust Co. v. Furbacher (1994), 50 A.C.W.S.(3d) 1196 (Ont. Gen. Div.), refd to. [para. 109].

Miller v. Jaguar Canada Inc. et al. (1997), 123 Man.R.(2d) 161; 159 W.A.C. 161 (C.A.), refd to. [para. 111].

Arctic Foundations of Canada Inc. et al. v. Mueller Canada Ltd. et al. (2009), 248 Man.R.(2d) 123; 2009 MBQB 309, refd to. [para. 111].

Britton v. Manitoba (2010), 260 Man.R.(2d) 297; 2010 MBQB 239, refd to. [para. 111].

Ministic Air Ltd. et al. v. Canadian Broadcasting Corp. et al. (1995), 103 Man.R.(2d) 296 (Q.B.), refd to. [para. 140].

Envoy Business Services Inc. v. 3196969 Manitoba Ltd. et al., [2000] Man.R.(2d) Uned. 176; 102 A.C.W.S.(3d) 45; 2000 MBQB 219 (Master), refd to. [para. 140].

Tersigni v. Circosta et al. (1997), 29 O.T.C. 141; 12 C.P.C.(4th) 407 (Gen. Div.), refd to. [para. 149].

Leichestershire County Council v. Faraday (Michael) & Partners Ltd., [1941] 2 All E.R. 483 (C.A.), refd to. [para. 149].

Chantrey Martin (a Firm) v. Martin, [1953] 2 Q.B. 286 (C.A.), refd to. [para. 149].

Statutes Noticed:

Queen's Bench Rules (Man.) - see Rules of Court (Man.), Queen's Bench Rules.

Rules of Court (Man.), Queen's Bench Rules, rule 26.01 [para. 92]; rule 30.10(1) [paras. 39, 138]; rule 60.01(13)(b) [para. 68].

Counsel:

G.T. Campbell and B.C. Ross, for the plaintiff/appellant;

J.G. Edmond and M.L. Harrison, for the defendant/respondent;

B. Sokalski, for Deloitte & Touche LLP.

These matters were heard before Joyal, C.J.Q.B., of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following judgment on June 30, 2011.