T-4348-74
Torras Hostench S. A. and J. Vilaseca S. A. and
Papelera Industrial S. A. (Plaintiffs)
v.
The Ship Salvador Allende and Her Owners
(Defendants)
Trial Division, Walsh J.—Montreal, March 1;
Ottawa, April 2, 1976.
Practice—Application for variation of order for general
discovery of documents and extension of delays for filing—
Plaintiffs' solicitor seeking clarification as to area of docu-
mentation—Claiming defendants estopped from seeking cer
tain documents, and that others privileged, not in plaintiffs'
possession—Federal Court Rules 447-463, Form 20.
Plaintiffs' counsel applied to vary an order for general dis
covery of documents and for extension of delays for filing. He
sought clarification as to the area of documentation within the
scope of the order, claiming that defendants are estopped from
seeking production of certain documents and that others are
privileged, and not in plaintiffs' "possession, custody or power"
as set out in Rule 448, as plaintiffs have never seen them.
Held, extending the delay, plaintiffs shall produce a list of
documents, including those in possession of their counsel, and
those relating to issues in respect of which they believe defend
ants are estopped from claiming. They may list separately and
object to production of such documents. The estoppel question
is controversial enough that the Court should have the facts
before it before deciding; such a decision should not be sum
marily reached on a simple motion for discovery under Rule
448. Rule 448 may well be broad enough to refer, not only to
documents in issue in the principal litigation, but in third party
proceedings as well, assuming that they proceed in due course
and are heard simultaneously with the main action. While the
scope of the proceedings should not be unnecessarily extended,
the Court should have available all documentation relating to
the main action, defence or third party proceedings. No finding
is made as to the admission of such documents. Rules 447-463
provide a complete procedure under which the issue can be
dealt with, and it need not be definitively decided at this stage.
Secondly, it is not essential that the client have personal
knowledge of documents in his counsel's possession in taking
the affidavit required by Rule 448 as he can be deemed to have
knowledge of such documents. This is not to deny that privilege
can be claimed; this too can be decided under Rule 457. It is
possible that, if a document for which privilege was claimed is
found not to be, its production might be ordered even if it were
subject to the other objection relating to estoppel. Form 20, to
be used for the list under Rule 448, indicates that plaintiff can
object to production of the documents, and there is no reason
why there should not be a double objection.
Silver v. Ocean Steamship Company (1929) 35 LI.L.R.
49; Ciano [1947] A.M.C. 1477, referred to.
ACTION.
COUNSEL:
V. Prager for plaintiffs.
T. Bishop for defendants.
SOLICITORS:
Stikeman, Elliott, Tamaki, Mercier & Robb,
Montreal, for plaintiffs.
Brisset, Bishop & Davidson, Montreal, for
defendants.
The following are the reasons for judgment
rendered in English by
WALSH J.: This is an application by plaintiffs
for variation of an order made for general discov
ery of documents pursuant to Rule 448 and for
extension of the delays for filing same. The order
dated November 17, 1975, required plaintiffs to
file a list or lists of documents in their possession,
custody or power relating to the matters in ques
tion in the cause including alleged damage and
contamination, salvage and market value together
with an affidavit or affidavits verifying the list or
lists within 60 days or such further delay as might
be granted by the Court. In the affidavit accom
panying the present motion plaintiffs' solicitor
seeks clarification as to the area of documentation
within the scope of the order. He states that in
particular certain documents relate to the acquisi
tion and handling of the bales of woodpulp which
are the subject of the action prior to loading on
board the Salvador Allende which he- contends
defendants are estopped from proving - because of
the issuance of clean on board bills - of lading or to
alleged sawdust damage which was not alleged in
the statement of claim or defence but which
defendants attempted to raise by seeking to bring
third party proceedings against the stevedores, per
mission for which was refused. He further states
that there are documents in his custody prepared
at his request for purposes of considering the
insurance coverage which have never been in the
possession, custody or power of the plaintiffs them
selves and which he believes should be excluded.
He states further that it will be necessary for him
to go to Spain in order to explain to his clients the
significance of the order and ascertain if they have
any additional documentation which he does not
have in his possession and that he cannot do this
and prepare the lists or affidavits for filing or
serving before May 15th and must therefore ask
for an extension of the delay for this to May 15th,
1976. Under the circumstances, I am prepared to
so extend the delay pursuant to Rule 463 and to
amend the order made by me on November 17th,
1975, accordingly.
There is a serious argument, however, as to what
documents plaintiffs can be obliged to produce,
and it will help in an understanding of the situa
tion if the facts giving rise to the litigation are
briefly summarized. Plaintiffs are suing for dam
ages amounting to $550,000 to a cargo of wood-
pulp in bales carried from Saint John, New Bruns-
wick to Barcelona, Spain, and other
Mediterranean ports on the ship Salvador
Allende. Plaintiffs claim to be the owners of the
shipment and holders and endorsees for value of
the bills of lading. The bills of lading indicate that
the bales were received on board in good order and
condition. In due course defendants issued a third
party notice against March Shipping Limited
claiming to be indemnified against any sum which
plaintiffs might recover, as a result of the issuing
by March Shipping of the clean bills of lading
when same should have been claused with damage
notations in accordance with the delivery receipts
at Saint John, which constitutes a breach of con
tract by March Shipping Limited who had been
engaged by defendants as their agents. The third
party filed a conditional appearance pursuant to
permission given by Justice Addy on February
17th, 1975, being given 15 days to contest the
jurisdiction of the Court, but nothing has been
done subsequently with respect to this third party
notice.
Subsequently, defendants sought to add another
third party defendant, namely, Logistec Corpora
tion, the loading stevedores on the basis of a claim
for contamination by sawdust which allegedly took
place prior to or during the loading of the ship
ment at Saint John, sawdust having allegedly been
employed on the docks and in the holds of the
vessel. This motion was refused by judgment dated
November 17th, 1975, on the ground that no such
allegations of damage by sawdust had been raised
in the statement of claim or in the defence which
had been produced on August 29th, 1975, that the
allegations relating to the damage by sawdust
appeared to be very vague and based on hearsay
and that the scope of the proceedings should not
therefore be extended by bringing in Logistec Cor
poration as a third party at that time. This deci
sion was rendered without prejudice to defendants'
rights to present a similar motion on a subsequent
date if, after examination for discovery and inspec
tion of documents, it appeared that defendants had
grounds for contending that the alleged damage
was so sustained.
In the statement of defence, defendants claim
that the clean bills of lading were not issued with
their authority and permission but on the contrary,
March Shipping Limited, had been instructed to
note the condition of the bales on loading as noted
on the dock receipts and that they are therefore
not bound by the clean bills of lading. In answer to
this plaintiffs state that the bills of lading speak
for themselves and since they are holders in due
course for value defendants are estopped from
questioning the condition of the shipment prior to
the issuance of the bills of lading.
Plaintiffs have a twofold objection to the pro
duction of certain categories of documents:
1. With respect to documents dealing with the
condition of the cargo prior to loading plaintiffs
contend that this is not relevant in view of the
clean bills of lading which were issued and that
defendants are therefore estopped from seeking the
production of such documents.
2. With respect to documents obtained by plain
tiffs' counsel in the course of an investigation
carried on for the insurance underwriters he claims
that these are privileged documents and were in
fact not within plaintiffs' "possession, custody or
power" within the meaning of Rule 448 as plain
tiffs have never seen them. He contends that a
number of the documents may be subject to both
objections—that is to say not only are they privi
leged, but they also deal with the condition of the
cargo before the loading and hence he claims are
irrelevant. He contends that defendants wish them
to be produced not so much as a defence to the
proceedings brought by plaintiffs as in order to
assist defendants in their third party proceedings
against March Shipping Limited, which proceed
ings have not yet progressed beyond the stage of
service of a third party notice.
With respect to the question of estoppel this is a
very serious argument which has been raised in the
pleadings themselves between plaintiffs and
defendants. In the case of Silver v. Ocean Steam
ship Company, (1929) 35 L1.L.R. 49 at page 55, it
is stated:
The elements necessary to create an estoppel are three: There
must be
1. A Statement of Fact;
2. Relied upon by the person alleging estoppel and
3. He must have acted on the representations to his
detriment.
In the case of Ciano [1947] A.M.C. 1477, how
ever, it is stated [at page 1477]:
Ordinarily the carrier is free to contradict the acknowledg
ment of apparent good order, since the recital is neither con
tractual nor a warranty. Nevertheless, special circumstances
may operate as an estoppel. However, assuming a misrepre
sentation, it is an essential element in an estoppel to prove
action in reliance thereon, as well as injury resulting from such
reliance.
The good order notation in a bill of lading admits only that
insofar as inspection of the outside of the cargo could indicate,
it was in such condition: it relates to external or apparent good
order.
See also Canada and Dominion Sugar Co. v.
Canadian National (WI.) Steamship Limited
(1947) 80 L1.L.R. 13, Freedman v. M/S Con-
cordia Star [1958] A.M.C. 1308 at page 1309,
Evans v. James Webster & Bro. Ltd. (1928) 32
L1.L.R. 218 at page 222, and Tribunal de Com
merce de Dunkerque [1961] D.M.F. 678, all
referred to in Tetley: Marine Cargo Claims at
pages 66 to 68.
I conclude that the question of estoppel is suf
ficiently controversial that the Court has to have
the facts before it before reaching a decision and
that such a decision should not be summarily
reached on a simple motion for general discovery
of documents made by virtue of Rule 448. It
should be pointed out that Rule 448 refers to
documents "relating to any matter in question in
the cause or matter" which may well be broad
enough to refer not only to documents in issue in
the principal litigation between plaintiffs and
defendants but also in the third party proceedings,
assuming that in due course they proceed and that
pursuant to direction of the Court are heard at the
same time as the principal action.
On the one hand it is not desirable to extend the
scope of the proceedings unnecessarily, but on the
other hand it is desirable that when the proceed
ings come to trial the Court should have available
to it all the documentation which may have any
bearing on the principal action, defence, or the
third party proceedings.
In directing plaintiffs to include in their list of
documents any documents relating to the condition
of the goods before loading I am not making any
finding at this stage as to the admissibility of such
documents at trial, or even as to defendants' right
to inspect same. Rule 453 referring to the right of
the other party to inspect the documents states:
... other than any which he objects to produce ....
and in filing a list of documents plaintiffs may
renew their objection to the production of all
documents relating to the condition of the goods
before loading, and defendants can then by virtue
of Rule 455 seek an order for production and
obtain a ruling. The Court itself may inspect the
document or documents before making any such
ruling pursuant to Rule 457. In short Rules 447 to
463 provide a complete procedure under which the
issue can be dealt with and it does not have to be
definitively decided at this stage on this motion to
produce.
Plaintiffs' second objection based on privilege is
also a matter which can be decided at a later date.
Rule 448 requires the party to list "documents
that are or have been in his possession, custody or
power" and it is normally considered that docu
ments in the possession of the party's counsel
should be listed in the same manner as if they were
in the possession of the client itself. I do not
believe that it is essential that the client should
have personal knowledge of these documents in
taking the affidavit required by Rule 448 as he can
be deemed to have knowledge of any documents
which are in possession of his counsel. This does
not mean, however, that privilege cannot be
claimed with respect to such documents, so that if
plaintiffs' counsel had certain reports made on
behalf of plaintiffs' insurers, whether or not for use
in connection with the present proceedings, it is at
least arguable that defendants have no right to
inspect these documents and obtain information
from them for use against plaintiffs or the third
party defendants. This too is a question which can
be decided under Rule 457.
During the course of his argument plaintiffs'
counsel dealt with the possibility that if the docu
ment for which privilege is claimed is subsequently
found not to be privileged the production of it
might then be ordered even if it related to a period
prior to the loading of the merchandise on the ship,
and hence was subject to the second objection
arising out of the alleged estoppel against using
same in defence of plaintiffs' action. An examina
tion of the suggested Form 20 for use in connec
tion with the list of documents to be provided
pursuant to Rule 448 indicates quite clearly in
paragraph 2 thereof that plaintiff can object to
produce the documents enumerated therein, giving
the grounds for his objection, and I see no reason
why there should not be a double objection made
when such list is provided.
ORDER
Plaintiffs shall make, file, and serve on defend
ants pursuant to Rule 448 a list of documents that
are or have been in their possession, custody or
power, including those in the possession or custody
of their counsel relating to any matter in question
in the present case, including the condition of the
merchandise prior to loading and the alleged cause
of the damage thereto, supported by an affidavit
verifying such list. In furnishing such a list plain
tiffs may list separately and object to the produc
tion of such documents that they claim either to be
privileged, or that they claim they are not required
to produce because they relate to a period prior to
the loading of the merchandise and that defend
ants are estopped from claiming any damage prior
thereto because of the clean bills of lading issued;
both such objections may be made where appli
cable. The delay for filing and serving such list and
affidavit is extended until May 17th, 1976.
The costs of this motion shall be in the event of
the cause.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.