Maple Trade Finance Inc. v. Hermes (Euler) American Credit Indemnity Co. et al., 2015 NSSC 37

Judge:Rosinski, J.
Court:Supreme Court of Nova Scotia
Case Date:May 06, 2015
Jurisdiction:Nova Scotia
Citations:2015 NSSC 37;(2015), 361 N.S.R.(2d) 203 (SC)

Maple Trade Finance v. Hermes Am. Credit (2015), 361 N.S.R.(2d) 203 (SC);

    1137 A.P.R. 203

MLB headnote and full text

Temp. Cite: [2015] N.S.R.(2d) TBEd. MY.007

Maple Trade Finance Inc., a body corporate (plaintiff) v. Euler Hermes American Credit Indemnity Company, a body corporate operating as Euler Hermes Canada, and Trading Post Clearance Management Inc., a body corporate (respondent)

(Hfx. No. 337965; 2015 NSSC 37)

Indexed As: Maple Trade Finance Inc. v. Hermes (Euler) American Credit Indemnity Co. et al.

Nova Scotia Supreme Court

Rosinski, J.

May 6, 2015.


Trading Post agreed to sell a bulk order of sugar to a purchaser. Maple Trade Finance Inc. (Maple) executed a credit agreement in favour of Trading Post by which it agreed to pay monies to Trading Post in relation to the receivable amounts. Maple required Trading Post to provide proof of accounts receivable insurance which included Maple as an additional insured. Trading Post's insurer issued a "policy beneficiary endorsement" in favour of Maple. Trading Post delivered the sugar to the purchaser. Maple, relying on the insurance coverage, advanced approximately $950,000 U.S. to Trading Post. The purchaser defaulted on the purchase of sugar. Maple submitted a claim under the policy for approximately $1.1 million U.S. The insurer refused to pay. Maple sued the insurer. Production and disclosure ensued. Disputes arose regarding questions left unanswered and requested production. Both parties moved for an order compelling the other party to provide responses. Maple also requested additional disclosure of documents.

The Nova Scotia Supreme Court determined the issues.

Choses in Action - Topic 1013

Assignment of book debts - General - Factoring agreements - The Nova Scotia Supreme Court reviewed the distinguishing characteristics of a factoring of accounts receivable - See paragraphs 87 and 88.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - The Nova Scotia Supreme Court, in the contractual context involving an insurance dispute, reviewed the law respecting the duty of good faith, punitive damages and what constituted true aggravated damages - See paragraphs 72 to 79.

Courts - Topic 586

Judges - Duties - Duty to hear evidence and submissions of a litigant - The parties each moved for an order compelling the other party to provide responses - The plaintiff also requested additional disclosure of documents - The motion was scheduled and heard during three full days - On the third day, the motions judge advised the parties that no more time would be allocated for oral argument beyond the end of the day - The defendant objected - The court allowed the parties the opportunity to make supplementary written arguments and materials - The defendant asserted that it was denied procedural fairness in that the plaintiff was granted 10 hours and 27 minutes for oral submissions, while the defendant was granted only five hours and one minute - The Nova Scotia Supreme Court rejected the argument - The plaintiff spoke for approximately 10.5 hours and the defendant spoke for approximately 5.5 hours - The motions were procedural in nature - No determinations about substantive rights were made - The litigation was at an early stage - Further motions regarding the procedural issues were possible - The parties presented their arguments clearly, both at the hearing and in substantial prehearing filings - Moreover, procedural fairness did not necessarily involve equal time for oral argument and, in the circumstances, the opportunity to file supplementary written submissions was an appropriate substitute for oral argument - The plaintiff's motion involved 75 questions, while the defendant's motion involved 17 questions - The plaintiff, having robustly discussed the law, the facts, the pleadings and the questions and requests for productions, enlightened and assisted the court in understanding all the ensuing arguments in the hearing - While the apportionment of time could have been better regulated, a reasonable observer apprised of all of the circumstances would not have concluded that the defendant had been prejudiced in any significant way in relation to the motions - See paragraphs 6 to 20.

Courts - Topic 592

Judges - Duties - Duty to conduct fair and impartial proceedings - [See Courts - Topic 586 ].

Damages - Topic 904

Aggravation - General - Aggravated damages defined - [See Contracts - Topic 3502 ].

Damages - Topic 912

Aggravation - In contract - For breach - [See Contracts - Topic 3502 ].

Damages - Topic 915

Aggravation - In contract - Aggravated damages - Against insurer - [See Contracts - Topic 3502 ].

Damages - Topic 1305

Exemplary or punitive damages - Breach of contract (incl. breach of duty of good faith) - [See Contracts - Topic 3502 ].

Evidence - Topic 4729

Witnesses - Examination - Impeaching credibility - Evidence - Disclosure - At issue was whether production had to be made and questions answered at discovery, if opposing counsel relied on Civil Procedure Rule 94.09 which allowed the withholding of information solely to impeach - The Nova Scotia Supreme Court stated that "It is proper for opposing counsel to take positions to withhold making the disclosure of, answering a question or otherwise providing, information/evidence that would be required of that party, if the decision is in accordance with Rule 94.09. Courts must rely on counsel, as officers of the Court, to govern themselves accordingly." - See paragraph 56.

Fraud and Misrepresentation - Topic 6

Fraudulent misrepresentation - General principles - What constitutes deceit or fraudulent misrepresentation - The Nova Scotia Supreme Court reviewed the preconditions for establishing negligent and fraudulent misrepresentation - See paragraphs 90 and 91.

Fraud and Misrepresentation - Topic 2508

Misrepresentation - General principles - Negligent misrepresentation - [See Fraud and Misrepresentation - Topic 6 ].

Insurance - Topic 730

Insurers - Duties - Duty of good faith - [See Contracts - Topic 3502 ].

Insurance - Topic 1851

The insurance contract - Interpretation of contract - General - The Nova Scotia Supreme Court reviewed the legal principles applicable to the interpretation of insurance contracts, including the role and nature of surrounding circumstances - See paragraphs 68 to 71.

Insurance - Topic 1863

The insurance contract - Interpretation of contract - Extrinsic aids - [See Insurance - Topic 1851 ].

Practice - Topic 4180

Discovery - Examination - General - Objection to questions - General - The Nova Scotia Supreme Court referred to Civil Procedure Rule 18.17 which addressed making objections to questions posed at discovery - The court stated that it was unaware of any cases that interpreted the rule - The court reviewed cases dealing with the proper conduct of counsel at discovery generally and concluded by saying that "Generally stated therefore, other than: exceptionally interjecting to request clarification of a patently vague question; objecting on the basis of irrelevance, (including that the question will not likely lead to relevant evidence), or that the subject matter of the question is privileged, counsel for the party being questioned should not interject. It should be an extremely rare situation that would justify counsel's interjections: for example, where an examination reveals a persistent pattern of abuse vis-à-vis the witness - Rule 18.23. Therefore, several similarly worded repetitions of an earlier question that was answered, should not generally elicit an objection based on 'asked and answered', absent the questioning approaching an abusive threshold." - See paragraphs 39 to 43.

Practice - Topic 4180

Discovery - Examination - General - Objection to questions - General - At issue was whether discovery questions had to be answered that purely went to the witness's credibility - The Nova Scotia Supreme Court stated that "Questions that purely go to the credibility of the witness are improper. However, questions that touch on collateral matters in order to test the reliability of the witness' evidence will generally be permitted, the more so as their relevance and materiality to the case at Bar increases. ... As Justice Bateman noted, albeit under the old Rules, in Wall v. Horn Abbot Ltd., 2003 NSCA 129 ... 'A practice has developed among members of the Bar to generally permit witnesses to answer all questions posed at Discovery, even when not strictly relevant to the subject-matter of the proceeding. It is a good practice and one which should be preserved. ...' ... I agree with this sentiment, even under our present Rules. It is in the interests of justice that counsel should allow each other some leeway during discoveries - gamesmanship should be discouraged." - See paragraphs 51 to 54.

Practice - Topic 4190.1

Discovery - Examination - General - Discovery in limited time periods - [See Courts - Topic 586 ].

Practice - Topic 4227

Discovery - Examination - Persons who may be examined - Experts - At issue was the use of hypothetical questions at discovery - The Nova Scotia Supreme Court pointed out that, according to Civil Procedure Rule 18.13(5), in so far as "an expert retained by a party" was concerned, one's first reference should be to rule 55.01 which provided for procedure for expert opinion - The court also referred to rule 55.11 which addressed questioning an expert in writing -The court concluded by stating that "Thus, while it may be proper, incidentally to attempt to elicit an expert opinion while discovering a fact witness in Nova Scotia, ... 'an expert retained by a party' is presumptively not subject to discovery." - See paragraphs 48 to 50.

Practice - Topic 4252

Discovery - Examination - Range of - Questions related to or relevant and material to issues between the parties - The Nova Scotia Supreme Court reviewed the jurisprudence respecting disclosure and discovery in Nova Scotia courts and the "relevance at trial" test which was to be applied under Civil Procedure Rules 14 and 18 - The court stated that "Therefore, to the extent that it is possible to do so, a chambers judge should make an assessment of the purported (trial) relevancy, including materiality to the issues in dispute, of the document, electronic information, or other things being sought to be produced. Similarly, a chambers judge should make an assessment of the purported (trial) relevancy of an objected-to question at discovery. Such questions must ask 'for relevant evidence or information that is likely to lead to relevant evidence'. I interpret 'likely to lead to ...' as more likely than not to lead to relevant evidence at trial. ... I reject, [the defendant's] apparent position that the word 'likely' is to be interpreted as indicative of a threshold 'significantly higher' than merely more probable than not. ... On the other hand, in 'too close to call' situations, I prefer to conclude that: if there is a realistic concern that denial of the information/evidence could adversely affect trial fairness, then a chambers judge should err on the side of caution and require the information/evidence be provided by discovery answer and/or production, as may be the case. I observe that some jurisdictions have opted to focus on a 'proportionality' based assessment of relevance ..." - See paragraphs 37 and 38.

Practice - Topic 4254.2

Discovery - Examination - Range of - Expert opinion - Hypothetical questions - [See Practice - Topic 4227 ].

Practice - Topic 4254.2

Discovery - Examination - Range of - Expert opinion - Hypothetical questions - At issue was the use of hypothetical questions at discovery - The Nova Scotia Supreme Court summarized its conclusions as follows: "1. Hypothetical questions are not per se improper; 2. As to factual matters, hypothetical questions cannot be allowed to masquerade as proper questions when they are in essence overbroad or speculative discovery, which will not be tolerated. An examining party may not: go beyond the pleadings to find a claim or defence that has not been pleaded; ask a witness to respond to a patently overbroad or vague question; or ask a witness to comment on the actions of, or answer for the alleged failures of, other persons (i.e. what others would have or should have done); however, exceptionally, there may be questions that are relevant and material to the issues in dispute which may be put to a witness regarding what they would have done 'if ...' ... 3. Whether seeking a specific or general opinion, the preconditions of expert ... and non-expert ... opinion evidence must be satisfied: the witness should have the expertise in relation to the matter for which an opinion is sought, and the subject matter itself must meet the relevance standard in the Rules. The Ontario Court of Appeal has aptly coined the term 'participant experts' for that subset of expert opinion ..." - See paragraph 47.

Practice - Topic 4256.1

Discovery - Examination - Range of - Hypothetical questions - [See second Practice - Topic 4254.2 ].

Practice - Topic 4259

Discovery - Examination - Range of - Relevant evidence - [See Practice - Topic 4252 ].

Practice - Topic 4259

Discovery - Examination - Range of - Relevant evidence - At issue was whether witnesses could be asked at discovery to answer how the party conducted itself in relation to circumstances other than those of the litigation at hand (e.g., insurance polices underwritten by a defendant insurer for insured who were not parties to the litigation) - The Nova Scotia Supreme Court adopted the following principles: "1-The general rule is that all relevant evidence is admissible 2-The rule excluding evidence of similar facts is an exception to the general rule 3-Judges have a discretion to admit similar fact evidence having 'regard to the general principles established by the cases' 4-Such discretion may be properly exercised after a judge has made a determination that the evidence has a clear linkage or nexus to an issue other than disposition or propensity, such as intention, pattern or system, credibility, corporate knowledge or negation of denial, and its probative value to that issue outweighs its prejudice to the [opposing party against whom the evidence/information is sought]." - See paragraphs 65 and 66.

Practice - Topic 4262

Discovery - Examination - Range of - Questions about legal issues - At issue was whether a corporate party could refuse to permit its designated discovery manager to answer questions, and insist that the questions be answered by the giving of an undertaking - The Nova Scotia Supreme Court stated that "Generally, only if the witness expressly states that they cannot answer the question, (for example, as a result of lack of knowledge), is it appropriate for counsel for the party to undertake to ensure the provision of the answer. It is, therefore, not appropriate for counsel for the party to interject before the witness answers, and insist that the answer be supplied by way of undertaking. ... There may be a narrow exception to this: where the questions put request an answer from the witness regarding the legal position of that party ... Those are best addressed by the legal counsel present at discovery - these questions are generally not 'facts' in issue in any event." - See paragraphs 63 and 64.

Practice - Topic 4265

Discovery - Examination - Range of - Officer of corporation - [See Practice - Topic 4262 ].

Practice - Topic 4280

Discovery - Examination - Range of - To test credibility - [See second Practice - Topic 4180 ].

Practice - Topic 4573

Discovery - What documents must be produced - Documents related to or relevant and material to matters in issue - [See Practice - Topic 4252 ].

Cases Noticed:

Laushway v. Messervey et al. (2014), 340 N.S.R.(2d) 163; 1077 A.P.R. 163; 2014 NSCA 7, refd to. [para. 29].

Brown v. Cape Breton (Regional Municipality) (2011), 302 N.S.R.(2d) 84; 955 A.P.R. 84; 2011 NSCA 32, refd to. [para. 29].

Saturley v. CIBC World Markets Inc. (2011), 297 N.S.R.(2d) 371; 943 A.P.R. 371; 2011 NSSC 4, refd to. [para. 29].

Saturley v. CIBC World Markets Inc. (2011), 308 N.S.R.(2d) 85; 976 A.P.R. 85; 2011 NSSC 310, refd to. [para. 29].

Saturley v. CIBC World Markets Inc. (2012), 313 N.S.R.(2d) 142; 990 A.P.R. 142; 2012 NSSC 57, refd to. [para. 29].

Jetport Inc. v. Global Aerospace Underwriting Managers (Canada) Ltd. et al., [2013] O.T.C. Uned. 6380; 2013 ONSC 6380, refd to. [para. 35].

Siemens Canada Ltd. v. Sapient Canada Inc., 2014 ONSC 2314, refd to. [para. 38].

Kudlak v. Sutherland, [2005] O.J. No. 3395 (Sup. Ct.), refd to. [para. 40].

Nwachukwu v. Ferreira, [2011] B.C.T.C. Uned. 1755; 2011 BCSC 1755, refd to. [para. 40].

C.P. v. RBC Life Insurance Co., [2013] B.C.T.C. Uned. 1434; 2013 BCSC 1434, refd to. [para. 40].

Landes v. Royal Bank of Canada, [1997] A.J. No. 1312 (Q.B.), refd to. [para. 40].

Wall v. 679927 Ontario Ltd. et al., [2003] N.S.R.(2d) Uned. 123; 2003 NSCA 129, refd to. [para. 42].

Wall v. Horn Abbot Ltd. - see Wall v. 679927 Ontario Ltd. et al.

Motaharian v. Reid, [1989] O.J. No. 1947 (H.C.), refd to. [para. 44].

Crocker v. MacDonald and Myrden (1992), 116 N.S.R.(2d) 181; 320 A.P.R. 181 (T.D.), refd to. [para. 44].

ACA Cooperative Association Ltd. v. Associated Freezers of Canada Inc. et al. (1989), 90 N.S.R.(2d) 148; 230 A.P.R. 148 (T.D.), refd to. [para. 44].

Wilson v. Winnipeg (City) (2006), 207 Man.R.(2d) 162; 2006 MBQB 203 (Master), refd to. [para. 44].

Canadian Imperial Bank of Commerce et al. v. Deloitte & Touche et al., [2013] O.T.C. Uned. 917; 2013 ONSC 917, refd to. [para. 45].

R. v. Solleveld (R.) et al. (2014), 319 O.A.C. 376; 2014 ONCA 418, refd to. [para. 47].

R. v. Graat, [1982] 2 S.C.R. 819; 45 N.R. 451, refd to. [para. 47].

Elwin et al. v. Nova Scotia Home for Coloured Children et al. (2013), 332 N.S.R.(2d) 35; 1052 A.P.R. 35; 2013 NSSC 196, refd to. [para. 47].

Westerhof v. Gee Estate (2015), 331 O.A.C. 129; 2015 ONCA 206, refd to. [para. 47].

West Coast Transmission Co. v. Canadian Phoenix Steel and Pipe Ltd., [1970] B.C.J. No. 647 (C.A.), refd to. [para. 50].

Dennison v. Sanderson, [1944] O.W.N. 606 (H.C.), refd to. [para. 51].

Sangaralingam v. Sinnathurai et al. (2011), 280 O.A.C. 146; 2011 ONSC 1618 (Div. Ct.), refd to. [para. 51].

Halifax-Dartmouth Bridge Commission v. Walter Construction Corp. et al. (2010), 296 N.S.R.(2d) 61; 940 A.P.R. 61; 2010 NSSC 350, refd to. [para. 58].

Hunter v. Society for the Prevention of Cruelty to Animals (Ont.) et al., [2013] O.T.C. Uned. 6638; 2013 ONSC 6638, refd to. [para. 64].

Mehta v. C.M. and Nova Scotia (Attorney General) (1990), 100 N.S.R.(2d) 319; 272 A.P.R. 319 (C.A.), refd to. [para. 65].

MacKay v. Ideal Computer Systems - see Mehta v. C.M. and Nova Scotia (Attorney General).

Simair v. Manufacturers Life Insurance Co. (2007), 317 Sask.R. 112; 2007 SKQB 477, refd to. [para. 67].

Creston Moly Corp. v. Sattva Capital Corp. (2014), 461 N.R. 335; 358 B.C.A.C. 1; 614 W.A.C. 1; 2014 SCC 53, refd to. [para. 68].

Canadian National Railway Co. v. Halifax (Regional Municipality) (2014), 353 N.S.R.(2d) 18; 1115 A.P.R. 18; 2014 NSCA 104, refd to. [para. 68].

Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 S.C.R. 3; 350 N.R. 40; 227 B.C.A.C. 39; 374 W.A.C. 39; 2006 SCC 30, refd to. [para. 72].

Wilson v. Saskatchewan Government Insurance (2012), 405 Sask.R. 8; 563 W.A.C. 8; 2012 SKCA 106, refd to. [para. 77].

Ackermann v. Kings Mutual Insurance Co. (2010), 292 N.S.R.(2d) 120; 925 A.P.R. 120; 2010 NSCA 39, refd to. [para. 77].

All-Up Consulting Enterprises Inc. et al. v. Dalrymple et al. (2013), 327 N.S.R.(2d) 41; 1036 A.P.R. 41; 2013 NSSC 46, refd to. [para. 77].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [para. 78].

J.A.C. et al. v. Atlantic Provinces Special Education Authority (2008), 275 N.S.R.(2d) 36; 877 A.P.R. 36; 2008 NSCA 94, refd to. [para. 83].

Minister of National Revenue v. Alberta (Treasury Branches) et al., [1996] 1 S.C.R. 963; 196 N.R. 105; 184 A.R. 1; 122 W.A.C. 1, refd to. [para. 87].

Industrial Alliance Insurance and Financial Services Inc. v. Brine (2014), 346 N.S.R.(2d) 315; 1095 A.P.R. 315; 2014 NSSC 219, refd to. [para. 89].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to. [para. 90].

Morris Bureau v. Darde (2013), 335 N.S.R.(2d) 378; 1060 A.P.R. 378; 2013 NSCA 121, refd to. [para. 91].

Statutes Noticed:

Civil Procedure Rules (N.S.), rule 18.16(6) [para. 57]; rule 18.17 [para. 39]; rule 55.01 [para. 48]; rule 55.11 [para. 49]; rule 94.09 [para. 55].

Rules of Civil Procedure (N.S.) - see Civil Procedure Rules (N.S.).

Rules of Court (N.S.) - see Civil Procedure Rules (N.S.).

Authors and Works Noticed:

Nova Scotia Barrister's Society, Legal Ethics and Professional Conduct: A Handbook for Nova Scotia Lawyers, rule 5.1-6, rule 7.2-11 [para. 59].


Michael E. Dunphy and Peter LeCain, for the plaintiff;

John N. Birch, for the defendant.

These motions were heard on January 19-21, 2015, at Halifax, Nova Scotia, by Rosinski, J., of the Nova Scotia Supreme Court, who delivered the following judgment on May 6, 2015.

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