In Canreal Management and Corp. v. Mercedes-Benz Canada Inc., the main question was about the existence of a contract between the defendant and the plaintiff, a real estate services company. Were there to be a contract, the defendant would owe the plaintiff a commission of nearly half a million dollars on its real estate transaction with a third party.

This decision is on a plaintiff’s motion for an order to strike out the defendant’s appearance or, alternatively, its statement of defense. The net result would be akin to a default judgment for the plaintiff. The plaintiff alleges that the defendant showed deliberately obstrusive and grossly negligent and failed to search of withheld documents. In his response, the defendant alleges, on the basis of a representative affidavit, that its research is still going on with its IT department best efforts, yielding new results that are forwarded to the plaintiff. Meanwhile, the plaintiff examined a former employee of the defendant who gave indications in contradiction with the defendant’s representative’s affidavit .

Although the Court is of the opinion that “the material before [it] does not support the plaintiff’s suggestion that the defendant has been guilty of deliberate misconduct or that it has attempted to conceal relevant documents”, it finds “that the defendant’s efforts to identify and produce relevant documents have been neither as thorough nor as timely as required, given the nature and circumstances of this case”[¶24].

The Court also note that:

“the defendant has not provided sufficient explanation for the dilatory and piecemeal document production that has taken place in the face of repeated demands. At the very least, the most recent document production calls into question the thoroughness of the searches previously deposed to and requires some explanation of how these documents could have been missed, as well as some assurance that whatever was defective in those previous searches has now been rectified.”

On the remedy prompted by these remarks, the Court denied the conclusions sought by the plaintiff, saying it would be too draconian and would deny the defendant a potentially meritorious defense. The prejudice of the plaintiff would better be compensated by cross-examination of the affiant and further examinations on discovery of the defendant’s representatives, the costs of which to be borne by the defendant. This is an approach consistent with BC’s Court of Appeal’s decision in Muscroft v. Euroceptor, where the Court noted that “in those situations where one side must drag the documents out of another, it does not always follow that the recalcitrant litigant should have his, her or its statement of defence struck out.”

Tags: appearance, cross-examination, default judgment, discovery, E-Discovery, motion to strike, negligence, obstrusiveness, statement of defense

This entry was posted on Friday, May 21st, 2010 at 14 02 00 05005 and is filed under E-Discovery. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.