Saskatchewan Trust Co. (Liquidation) v. Coopers & Lybrand, 2001 SKQB 8

• Judge: Goldenberg, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: January 08, 2001
• Jurisdiction: Saskatchewan
• Citations: 2001 SKQB 8;(2001), 204 Sask.R. 1 (QB)

Sask. Trust v. Coopers & Lybrand (2001), 204 Sask.R. 1 (QB)

MLB headnote and full text

Temp. Cite: [2001] Sask.R. TBEd. FE.021

Deloitte & Touche Inc., as Liquidator of the estate and effects of Saskatchewan Trust Company (plaintiff) v. Coopers & Lybrand (defendant) and Gerald Noren, Earl Dokken, Murray Acton, Kenneth Dickhoff, Harry Gemmel, N.E. (Ted) Greenaway, R. James Tomkins, David Grayson, Frank Klassen and Allan Fraser (third parties)

(1993 Q.B. No. 2482; 2001 SKQB 8)

Indexed As: Saskatchewan Trust Co. (Liquidation) v. Coopers & Lybrand

Saskatchewan Court of Queen's Bench

Judicial Centre of Saskatoon

Goldenberg, J.

January 8, 2001.

Summary:

The defendant Coopers & Lybrand sought an order: (1) requiring Mr. Sullivan to attend for the resumption of examination for dis­covery to be re-examined and answer ques­tions which he refused to answer and/or took under advisement; (2) that the plaintiff Deloitte & Touche Inc. make immediate and full production of documents requested by Coopers & Lybrand, which documents had not previously been disclosed in Deloitte & Touche's statements as to documents and those further documents production of which was refused at the examination for discovery of Mr. Sullivan.

The Saskatchewan Court of Queen's Bench determined which questions were to be answered and which documents were to be produced.

Editor's Note: For related decisions involv­ing these parties see 153 Sask.R. 81 and 204 Sask.R. 29.

Evidence - Topic 4353

Witnesses - Privilege - Particular relation­ships - Liquidators - Upon a petition by Canada Deposit Insurance Corp. (CDIC), Hunter, J., appointed Deloitte & Touche Inc. (Deloitte) as the liquidator of Saskatchewan Trust Co. (STC) - Hunter, J.'s order required Deloitte to provide information and report to CDIC with respect to the winding up - Deloitte sued Coopers & Lybrand (Coopers) for negli­gence and breach of contract with respect to annual audits which Coopers had per­formed for STC - Coopers sought answers to discovery questions with respect to whether CDIC was consulted when the decision to sue Coopers was made and with respect to who made the decision to sue Coopers - Deloitte had communicated with CDIC about the litigation and legal advice given to Deloitte by its solicitors had been discussed - The Saskatchewan Court of Queen's Bench stated that the communications link between Deloitte and CDIC as ordered by the court had to be protected and that requiring answers to the questions would render the system of court-appointed liquidation unworkable - The principle of common interest privilege also applied - See paragraphs 11 to 22.

Evidence - Topic 4353

Witnesses - Privilege - Particular relation­ships - Liquidators - Upon a petition by Canada Deposit Insurance Corp. (CDIC), Hunter, J., appointed Deloitte & Touche Inc. (Deloitte) as the liquidator of Saskatchewan Trust Co. (STC) - Hunter, J.'s order required Deloitte to provide information and report to CDIC with respect to the winding up - Deloitte sued Coopers & Lybrand (Coopers) for negli­gence and breach of contract with respect to annual audits which Coopers had per­formed for STC - Coopers sought answers to discovery questions with respect to whether there were reports or communica­tions to CDIC in connection with the liquidation (and production of such reports) (Q. 251) and whether agreements were entered into with the directors by Deloitte or STC to waive limitation period defences of the directors - The Saskatchewan Court of Queen's Bench found a communications privilege based on the statutory relation­ship that existed between Deloitte as the court appointed liquidator and CDIC as the petitioning creditor and held that the privi­lege attached to Q. 251 - However, the court held that Q. 760 met the broad rel­evance test as it related to an issue of mitigation and an encroachment on what would otherwise be a common interest privilege was allowed and the questioning was permitted - See paragraphs 34 to 36.

Practice - Topic 3708

Evidence - Undertakings respecting - Doc­uments - Deloitte & Touche Inc. (De­loitte), as the liquidator of Saskatchewan Trust Co. (STC), sued Coopers & Lybrand (Coopers) for negligence and breach of contract with respect to annual audits which Coopers had performed for STC - At issue was whether Deloitte had com­plied with undertakings to advise what mortgage files (undertaking 20) and STC books and records (undertaking 21) would have contained reasonable indicia of fraud­ulent or irregular lending - Deloitte's reply to undertaking 20 used language such as "many of the loans" - The reply to under­taking 21 indicated upwards of 2000 docu­ments - The Saskatchewan Court of Queen's Bench held that Coopers was entitled to know the case it had to meet and that the replies were not satisfactory - Deloitte had to provide Coopers with a specific listing of what was being referred to - See paragraphs 56 to 63.

Practice - Topic 4252

Discovery - Examination - Range of - Questions related to issues between the parties - [See first Practice - Topic 4259 and Practice - Topic 4573 ].

Practice - Topic 4254.1

Discovery - Examination - Range of - Expert opinion - Privilege - Deloitte & Touche Inc. (Deloitte), as the liquidator of Saskatchewan Trust Co. (STC), sued Coopers & Lybrand (Coopers) for negli­gence and breach of contract with respect to annual audits which Coopers had per­formed for STC - Coopers sought answers to a number of discovery questions, by which it sought to determine Deloitte's position on a number of matters in issue in the lawsuit - Deloitte opposed the applica­tion on the basis that the opinions of its experts were involved - The Saskatchewan Court of Queen's Bench ordered that the questions be answered - The court stated that "Coopers must know Deloitte's posi­tion on the matters raised. It is clear to me that the dominant trial evidence in the matter will be professional opinions. In my view, the fact that these opinions may be revealed does not allow Deloitte to refuse to state its position with respect to the matters set out in the questions" - See paragraphs 37 to 41.

Practice - Topic 4255

Discovery - Examination - Range of - Evidence to support facts pleaded - De­loitte & Touche Inc. (Deloitte), as the liquidator of Saskatchewan Trust Co. (STC), sued Coopers & Lybrand (Coopers) for negligence and breach of contract with respect to annual audits which Coopers had performed for STC - Coopers sought answers to discovery questions with respect to the facts relevant to Deloitte's allega­tions of various breaches of duty and contract by Coopers - Deloitte was opposed to answering the questions on the basis that what was being asked for was evidence and not facts - The Saskatchewan Court of Queen's Bench reviewed the law on the subject and held that the questions sought facts and were to be answered - See paragraphs 50 to 55.

Practice - Topic 4255

Discovery - Examination - Range of - Evidence to support facts pleaded - De­loitte & Touche Inc. (Deloitte), as the liquidator of Saskatchewan Trust Co. (STC), sued Coopers & Lybrand (Coopers) for negligence and breach of contract with respect to annual audits which Coopers had performed for STC - Coopers sought answers to discovery questions which would provide it with the calculation of Deloitte's loss of equity calculation for its damage claim - The questioning was objected to as seeking an opinion or expert evidence or as seeking evidence and not facts - The Saskatchewan Court of Queen's Bench stated that Coopers was entitled to know what was being claimed against it and how the sums were arrived at and if that transcended what would otherwise be opinion evidence or what would otherwise be evidence and not facts, the same had to be revealed - See paragraphs 47 to 49.

Practice - Topic 4256

Discovery - Examination - Range of - Opinion - [See second Practice - Topic 4255 ].

Practice - Topic 4259

Discovery - Examination - Range of - Relevant evidence - Deloitte & Touche Inc. (Deloitte), as the liquidator of Saskatchewan Trust Co. (STC), sued Coopers & Lybrand (Coopers) for negli­gence and breach of contract with respect to annual audits which Coopers had per­formed for STC - Coopers sought answers to discovery questions with respect to whether agreements were entered into with the directors by Deloitte or STC to waive limitation period defences of the directors and with respect to whether there was ever consideration of a lawsuit against a Mr. Lavoie - Coopers argued that those ques­tions were relevant on the issue of mitiga­tion of damages - Deloitte contended that those lines of questioning were not proper­ly matters of litigation and thus were not relevant - The Saskatchewan Court of Queen's Bench stated that it was for the trial judge to determine whether Deloitte's mitigation obligations extended into those areas - Under the broad relevance test, the line of questioning was allowed - See paragraphs 25 to 28.

Practice - Topic 4259

Discovery - Examination - Range of - Relevant evidence - [See Practice - Topic 4573 ].

Practice - Topic 4261

Discovery - Examination - Range of - Privileged topics or communications - [See both Evidence - Topic 4353 ].

Practice - Topic 4278

Discovery - Examination - Range of - Questions about damages claimed - [See second Practice - Topic 4255 ].

Practice - Topic 4573

Discovery - What documents must be produced - Documents relating to matters in issue - Deloitte & Touche Inc. (De­loitte), as the liquidator of Saskatchewan Trust Co. (STC), sued Coopers & Lybrand (Coopers) for negligence and breach of contract with respect to annual audits which Coopers had performed for STC - Coopers sought production of copies of guidelines within Deloitte respecting cor­porate insolvencies and the approach to be made in those - Coopers wanted produc­tion and to be allowed to question on the guidelines on the basis that it went to the quantum of damages claimed by Deloitte - The Saskatchewan Court of Queen's Bench held that Coopers was entitled to know how Deloitte went about the liquidation of STC and it was entitled to access to De­loitte's Insolvency Manual - Applying the broad relevance test, the material was to be produced and Coopers was allowed to question thereon in so far as it related to the issue of the quantum of damages - See paragraphs 29 to 32.

Practice - Topic 4583.1

Discovery - What documents must be produced - Privileged documents - Com­mon interest - [See second Evidence - Topic 4353 ].

Cases Noticed:

Deck v. Canada Safeway Ltd. (1988), 67 Sask.R. 66 (Q.B.), refd to. [para. 2].

Milton Farms Ltd. et al. v. Dow Chemical Canada Inc. (1986), 52 Sask.R. 264; 13 C.P.C.(2d) 174 (Q.B.), refd to. [para. 3].

Austman v. Royal Bank of Canada (1992), 97 Sask.R. 258; 12 W.A.C. 258 (C.A.), refd to. [para. 4].

Popowich v. Saskatchewan et al. (1996), 144 Sask.R. 166; 124 W.A.C. 166 (C.A.), refd to. [para. 5].

General Accident Assurance Co. et al. v. Chrusz et al. (1999), 124 O.A.C. 356; 45 O.R.(3d) 321 (C.A.), consd. [para. 22].

Robertson Stromberg, Re (1995), 128 Sask.R. 107; 85 W.A.C. 107; 122 D.L.R.(4th) 433 (C.A.), dist. [para. 23].

Standard Trust Co. (Liquidator of) v. Cat­tanach (1995), 24 O.R.(3d) 492 (Gen. Div.), refd to. [para. 24].

Anger v. Dykstra (1984), 45 O.R.(2d) 701 (H.C.), refd to. [para. 24].

Crescent Farm (Sidcup) Sports Ltd. v. Sterling Offices Ltd., [1972] Ch. D. 553, refd to. [para. 24].

Lessard (Guardian ad litem of) v. Canosa (1995), 12 B.C.L.R.(3d) 78 (S.C.), refd to. [para. 24].

Slavutych v. University of Alberta, [1976] 1 S.C.R. 254; 3 N.R. 587, 55 D.L.R.(3d) 224, refd to. [para. 24].

Slavutych v. Baker - see Slavuytch v. University of Alberta.

International Minerals & Chemical Corp. (Canada) Ltd. et al. v. Commonwealth Insurance Co. et al. (1991), 96 Sask.R. 109 (Q.B.), refd to. [para. 39].

Quality Investments Ltd. v. Curtis Engin­eering and Testing Ltd. et al. (1986), 65 A.R. 57 (C.A.), refd to. [para. 39].

VECW Industries Ltd. v. British Columbia (Minister of Transportation and High­ways) (1993), 51 L.C.R. 288, refd to. [para. 39].

Aitken v. Regina (City) (1990), 84 Sask.R. 257 (Q.B.), consd. [para. 39].

Lachambre v. Nair, [1988] 3 W.W.R. 114 (Q.B.), refd to. [para. 39].

International Minerals & Chemicals Corp. (Canada) Ltd. et al. v. Commonwealth Insurance Co. et al., [1991] 1 W.W.R. 503; 89 Sask.R. 81 (Q.B.), consd. [para. 40].

International Minerals & Chemical Corp. (Canada) Ltd. v. Commonwealth Insur­ance Co. (1989), 80 Sask.R. 251 (Q.B.), consd. [para. 42].

Auchstaetter v. Froese (1995), 129 Sask.R. 46 (Q.B.), refd to. [para. 44].

Montana Indian Band v. Canada et al., [2000] 1 F.C. 267; 172 F.T.R. 46 (T.D.), consd. [para. 45].

Rubinoff v. Newton, [1967] 1 O.R. 402 (H.C.), consd. [para. 51].

Condominium Plan No. 86-S-360901 v. Remai Construction (1981) Inc., [1988] S.J. No. 753 (Q.B.), consd. [para. 52].

Dervy Holdings Ltd. v. Tubby (H.J.) & Sons Ltd. et al. (1993), 110 Sask.R. 313 (Q.B.), refd to. [para. 53].

International Minerals & Chemical Corp. (Canada) Ltd. et al. v. Commonwealth Insurance Co. et al. (1991), 99 Sask.R. 123 (Q.B.), consd. [para. 60].

Authors and Works Noticed:

Halsbury's Laws of England (1998) (4th Ed. - Reissue), vol. 12(1), pp. 456 to 457, paras. 1041, 1042 [para. 27].

Counsel:

B.F. Beaubier and D.S. Gerein, for the defendant/applicant, Coopers & Lybrand;

J.S. Ehmann and D.K. Lee, for the plain­tiff/respondent, Deloitte & Touche Inc.

This application was heard before Golden­berg, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Saska­toon, who delivered the following fiat on January 8, 2001.