May 8, 1992,  E.C.B. 53/91/032 (47 L.C.R. 90)

This is an application by the respondent, the Minister of Transportation and Highways, for the following:

1.	An Order dismissing the Claimants' claims pursuant to Section 12 of the Expropriation Compensation Board Practice and Procedure Regulation and Rules 26 and 2(5) of the Rules of Court.
2.	In the alternative, for an Order requiring the Claimants to provide the Respondent with information relevant to estimate the compensation to which the Claimants are or will be entitled, and for an Order penalizing the Claimants for withholding relevant information, pursuant to Section 19 of the Expropriation Act;
3.	In the alternative to 1 and 2 above, for an Order that the Claimant's deliver to the Respondent a list of Documents pursuant to Section 12 of the Expropriation Compensation Board Practice and Procedure Regulation and Rules 26 and 2(2) of the Rules of Court.
4.	In the alternative to 1 above, for an Order that the Claimants deliver an affidavit stating whether the reservation books of the restaurant known as the "Omega Restaurant" and operated by the Claimants or either of them, are or have been in the Claimants or either or their possession or control, and if not, when the Claimants or either of them parted with them and what has become of them, pursuant to Section 12 of the Expropriation Compensation Board Practice and Procedure Regulation and Rule 26(4) of the Rules of Court.
5.	In the alternative to 1 above, for an Order that the Respondent be relieved of its obligation to deliver copies of each report or statement in writing setting out the opinion of any expert at least thirty days before the report or statement is given in evidence, pursuant to Section 10 of the Expropriation Compensation Board Practice and Procedure Regulation.
6.	In the alternative to 1 and 5 above, for an Order generally adjourning the hearing set to commence on June 2, 1992, and for an Order that any interest otherwise payable to the Claimants cease running on June 2, 1992 pursuant to Section 46 of the Expropriation Act.

The pleadings reveal that on May 18, 1990 the parties entered into an agreement pursuant to section 3 of the Expropriation Act, S.B.C. 1987, c.23 (hereinafter called the "Act") whereby the claimants or one of them transferred to the respondent title to two parcels of land in the Oyster District of Vancouver Island aggregating 0.0673 ha (l.003 acres). A further parcel containing 0.0043 ha (0.011 acres) was made subject to a construction easement.

As there is no claim for market value, the board must assume this matter was settled by the parties in the s.3 agreement. The only claim for compensation is under the head of disturbance damage, which the claimants estimate to be $184,264 for operating losses, $728,196 for lost operating profits or, in the alternative, $812,500 representing the cost to the claimants of replacing their present restaurant facility. The claimants also claim continuing operating losses. No claim is advanced under s.39 of the Act. The respondent has made advance payments to the claimants aggregating $211,000.

Some months ago, during a telephone conference with the chairman, counsel for the parties agreed to a hearing date commencing June 2, 1992. Subsequently, on January 30, 1992, a certificate of readiness was filed with the board by the claimants. No certificate of readiness has been filed by the respondent.

Mr. Hincks' affidavit on behalf of the respondent, sworn April 15, 1992, reveals that he wrote to Mr. Cram, the claimants present solicitor, on January 17, 1992, confirming the scheduled hearing dates and enclosing a demand for discovery of documents. Service of the demand was acknowledged on January 22, 1992.

On February 29, 1992 the respondent's solicitor wrote to the claimants' solicitors requesting inter alia, the list of documents. On March 6, 1992 the respondent's accountants, Deloitte Touche, wrote to Mr. Cram requesting copies of certain documents and information required by them for the purpose of preparing a report to quantify the loss suffered by the corporate claimant as a result of the disturbance caused by the respondent upon expropriation of frontage strips of the claimants' lands. Neither letter was acknowledged by the claimants' solicitors. Further letters to the claimants' solicitors from the respondent dated March 24 and April 2 were similarly not acknowledged. A telephone call to Mr. Cram's office on March 31, 1992 was equally unsuccessful in achieving production of the claimants' list of documents. This notice of motion was filed with the board on April 15, 1992, and was returnable April 24, 1992.

Section 12 of the board's Practice and Procedure Regulation, B.C. Reg. 452/87, as amended, reads:

12.	The rules of court relating to
	(a)	discovery and inspection of documents,
	(b)	examination for discovery,
	(c)	pre-trial examination of witness, and
	(d)	discovery by interrogatories,
	apply to proceedings before the board.

Rule 26 of the Rules of Court provides that a party served with a demand for discovery of documents shall comply with the demand within 21 days. The penalties for failure to comply with the demand are found in Rule 2, subrules (2) and (5), the material portions of which read:

2	(2)	Subject to subrules (3) and (4), where there has been a failure to comply with these rules, the court may
		(a)	set aside a proceeding, either wholly or in part,
		(b)	set aside any step taken in the proceeding, or a document or order made in the proceeding,
		(c)	allow an amendment to be made under Rule 24,
		(d)	dismiss the proceeding or strike out the statement of defence and grant judgment, or
		(e)	make any other order it thinks just.
2	(5)	Where a person, contrary to these rules and without lawful excuse,
		(a)	refuses or neglects to obey a subpoena or to attend at the time and place appointed for his or her examination for discovery.
			* * * * *
		(d)	refuses or neglects to answer interrogatories or to make discovery of documents, or
			* * * * *
		(f)	where the person is the plaintiff, petitioner or a present officer of a corporate plaintiff or petitioner, or a partner in or manager of a partnership plaintiff or petitioner, the court may dismiss the proceeding.... .
			* * * * *

Rule 26 must be read in conjunction with Rule 2. Rule 26 gives to a party the right to demand a list of the other party's relevant documents, to examine those documents and to obtain copies of the same. Rules 2(2) and 2(5)(d) provide penalties where the demands are ignored or are not fully complied with. Rule 2 of the Rules of Court relating to discovery and inspection of documents and examination for discovery is clearly incorporated into the board's rules pursuant to s.12(a) and (b) of the Practice and Procedure Regulation.

The time for complying with the demand by the respondent for discovery of documents expired on or about February 12, 1992. The failure of the claimants' solicitors to acknowledge the demand or to respond to the letters of February 27, March 6, March 24 and April 6, or to act on the telephone call of March 31 means that the respondent's expert, Mr. Symes, has been unable to prepare his business loss report. This is attested to by Mr. Hincks in his affidavit, where he repeats Mr. Symes advice that Mr. Symes could not produce an expert report in time for it to be served on the claimants within thirty days of the scheduled hearing. Even with the utmost cooperation on the part of the claimants, cooperation which to date has been conspicuously lacking, the board concludes that Mr. Hincks could not possibly review the documents which are still to be produced by the claimants, hold examinations for discovery and instruct Mr. Symes on the preparation of his report, all before June 2, the date scheduled for the hearing.

The board is of the view that the penalty under Rule 2(5)(f) is too severe a sanction to impose on the claimants for the omission which occurred on this occasion. The operation of the subrule is discretionary and in the circumstances of this case, the board dismisses the application to strike out the claimants' claim for compensation. See Stevenson v. Stevenson [1983] B.C.D. Civ. 3608-01. Rule 2(2) however, provides for other and lesser sanctions that may be imposed for failure to comply with the rules. In particular Rule 2(2)(e) allows the board to make any other order that it believes to be just. See Silvaggio v. Adamson (1988), 27 B.C.L.R. (2d) 182.

Having found that Rule 2(2)(e) is one of the rules on which the board may rely, the board therefore orders that the claimants:

(1)

provide the respondent with a List of Documents on or before May 22, 1992;

(2)

by the same date, deliver to the respondent an affidavit stating whether the reservations books of the restaurant, known as the "Omega Restaurant", and operated by the claimants or either of them,, are or have been in the possession or control of the claimants or either of them, and if not, when the claimants or either of them parted with the reservation books and an explanation as to what happened to them.

The board is of the opinion that the penalty sections of s.19 of the Act are not relevant to this application.

It is noted that earlier in this decision the parties were given a hearing date commencing June 2, 1992, at a time when neither party had filed a certificate of readiness. A certificate of readiness was filed on behalf of the claimants on January 30, 1992, but to this date no certificate of readiness has been filed on behalf of the respondent.

It must be clearly understood by parties to proceedings before this board that hearing dates given to counsel over the telephone are tentative only, and will not be considered as firm hearing dates unless or until both parties file certificates of readiness. Both filings should take place within a very few days following the allocation of the tentative date. In that the respondent, for obvious reasons, has not filed a certificate of readiness, the date would be lost in any event. The claimants cannot complain at this result because it was their failure to co-operate with the respondent that has led to its application and the delays necessarily entailed. As soon as both parties file certificates of readiness a new hearing date will be assigned. In the meantime, the hearing set for June 2, 1992 will be adjourned sine die.

The board must now consider whether it is appropriate to impose a penalty under s.46 of the Act. What happened here is an example of circumstances which the board is most anxious to avoid. While it is clear that the claimants' solicitors have not complied with the Rules, a delay so late in the proceedings might have been avoided had counsel for the respondent brought on its application for production of documents. Its motion could have been brought as soon as it was evident that the demand and subsequent correspondence was being ignored, certainly by mid-March of this year.

While both parties could have done more to facilitate the June 2 hearing date, the claimants must bear the major responsibility for delaying these proceedings. Pursuant to s.46 of the Act, the board therefore deprives the claimants of interest to which they may be entitled to the extent of 3% per annum from June 2, 1992 to the date on which the hearing commences. In addition, the claimants shall not be allowed their costs on this application.

Subsequent to the hearing of April 24, 1992, and the decision made by the board on that date, Mr. Cram requested that he be allowed to appear before the board on April 29, 1992, for the purpose of seeking a reconsideration of the order made on April 24, 1992.

Mr. Cram was vehement in his argument that the board should not have heard the matter on April 24 in his absence, There was no dispute that Mr. Hood of the same law firm as Mr. Cram who appeared on April 24 to speak to the matter did not seek an adjournment. Furthermore, Mr. Cram acknowledged to the board that Mr. Hood had had responsibility for all correspondence on the file since December of 1991.

On April 29, Mr. Cram did not file any affidavit material in support of his request that the board reconsider its decision of April 24, but he did produce two pieces of correspondence. The first dated February 3, 1992 is a letter addressed to the claimant Mr. Giannikos, urging him to forward financial information to the claimants' business valuator, Mr. Selman. The correspondence was silent on the issue of the preparation of a list of documents for the respondent. The second communication was a fax message to Ruffle Kraskin & Co., the claimants' accountants, dated March 2, 1992, to which was attached "a letter from the Ministry's expert." The "attached letter" as shown to the board by Mr. Cram is the Deloitte Touche letter dated March 6, 1992, and is stamped as having been received by the Attorney General's Ministry on March 10, 1992. There was no explanation how a letter dated March 6 was received in Mr. Cram's office on March 2. Be that as it may, the tenor of the fax message was that the recipient of the letter must provide the material requested by Deloitte Touche.

The board notes that both communications provided on April 29 by Mr. Cram were under the signature of Mr. Hood. Furthermore, Mr. Hood was before the board on April 24 and the board is satisfied that Mr. Hood could have introduced these communications if he thought they had any relevance to the issues being considered on that date.

In spite of repeated questioning by the board, Mr. Cram was unable to offer any explanation as to why five letters from the respondent's solicitor or agent went unanswered and why no effort was made to prepare a list of the claimants' documents as required under the rules.

In any event, as a matter of record, Mr. Cram ultimately acknowledged that under the present circumstances, the hearing could not proceed on June 2, 1992. There is, therefore, no occasion for the board to change the disposition it has made of the respondent's motion.

EXPROPRIATION COMPENSATION BOARD

John H. Heinrich, Q.C.
Chairman

John A. Coates, Q.C.
Board Member

David J. Clark, AACI
Board Member