1. Bank of Nova Scotia v. Vansnick, [1997] N.S.J. No. 548

Bank of Nova Scotia v. Vansnick, [1997] N.S.J. No. 548

Nova Scotia Judgments

Nova Scotia Supreme Court

Amherst, Nova Scotia

Scanlan J.

Oral judgment: December 4, 1997.

Released: January 28, 1998.

S.H. No. 83348

[1997] N.S.J. No. 548 | 167 N.S.R. (2d) 181 | 78 A.C.W.S. (3d) 266

Between The Bank of Nova Scotia, plaintiff, and Richard M. Vansnick, Richard A. Vansnick, Paula E. Irving, William Roy Smith and Vansnick Property Management Limited, applicants

(7 pp.)

Case Summary

Practice — Dismissal of action — Grounds, general and want of prosecution — Delay — Excuse for delay — Prejudice to defendant.

This was an application Vansnick to dismiss an action for want of prosecution. Vansnick was named with Lloyd's of London. As security for possible future liabilities to Lloyd's, he posted a letter of credit from the respondent Bank. Vansnick agreed to reimburse the Bank for money paid under the letter. He posted security. He was required to post additional security on demand by the Bank. Vansnick became liable for huge losses incurred by Lloyd's along with other names. He refused to pledge additional security to the Bank. The Bank brought an action to set aside subsequent transfers of property made by Vansnick to other persons. The Bank was involved in extensive litigation with Lloyd's, other banks and names regarding the obligation to honour lines of credit issued as security to Lloyd's. The litigation was eventually resolved in Lloyd's favour. Vansnick was successful in holding the Bank's action against him in abeyance until the determination of the broader issues in the other actions. He sought to dismiss the Bank's action for want of prosecution.

HELD: The application was dismissed.

The Bank filed an intention to proceed with its action against Vansnick in a timely manner after an important Ontario decision regarding its general obligations to Lloyd's. Vansnick filed his application to dismiss the Bank's action shortly thereafter. The delay in prosecution in the Bank's action resulted from Vansnick's request. He attempted to gain an advantage in joining with other banks and names. The delay did not result in any material or substantial prejudice to Vansnick.

Counsel

Anthony J. Morley, for Richard A. Vansnick, Paula E. Irving and William Roy Smith. Douglas B. Shatford, for Richard M. Vansnick and Vansnick Properties Management Limited. Robert G. Belliveau, for the plaintiff.

DECISION RE MAIN APPLICATION

SCANLAN J. (orally)

1 I now want to turn to the actual application itself. By way of background, the Bank of Nova Scotia commenced the main action by originating notice dated the 14th of August, 1992. It named a number of defendants which include Richard M. Vansnick, Richard A. Vansnick, Paula E. Irving, William Roy Smith, Vansnick Property Management Limited. In that application, the bank sought an order to declare void various transactions of real estate and personal property made by Richard M. Vansnick to the other named defendants.

2This application before me seeks to have the main action dismissed for want of prosecution. By way of background, I note that the plaintiff commenced an action against Richard M. Vansnick, and the lawsuit arose pursuant to a reimbursement agreement executed by Mr. Vansnick senior in favour of the bank. This flowed from his position as a Lloyd's name. Mr. Vansnick senior decided to become a Lloyd's name and as a part of the financial arrangements with Lloyd's he was required to post security. The means by which he chose to post security was to sign a letter of credit through the plaintiff bank which had branches in London, England.

3The plaintiff bank required Mr. Vansnick senior to sign a reimbursement agreement, the thrust of which was to require Mr. Vansnick senior to repay the bank. I might add that when I am referring to Mr. Vansnick senior I understand that to be Richard M. Vansnick. The security agreement, or reimbursement agreement that Mr. Vansnick senior signed with the bank required that he pledge security. Upon request, he was obliged by the agreement to post additional security. Things went well for a number of years for Mr. Vansnick senior and the bank. I suppose the same can be said for hundreds, if not thousands of other Lloyd's names. When it appeared as though the risk was increasing, the bank asked for additional security, and that was not offered up by Mr. Vansnick senior.

4It goes without saying that this entire matter dealing with Lloyd's names is a very complex matter that transcends a number of international borders. The issue of the Lloyd's names list has indeed rocked the financial community throughout the world. It is no overstatement of this matter when Mr. Belliveau says it is a complex matter involving a number of very complex issues.

5On the main action that the bank had, where it sought to set aside the transfers to the other named defendants from Mr. Vansnick senior, there was a discovery examination in May of 1992. Subsequent to the discovery examination in relation to the reimbursement agreement, Mr. Vansnick senior consented to an order for judgment. That judgment was recorded at the Registry of Deeds office in Amherst on the 9th of July, 1992. The consent order for judgment was subject to an application to set it aside, which was heard by Madame Justice Stewart in this court this fall. The application to set aside the judgment was not successful, but it is presently under appeal before the Nova Scotia Court of Appeal.

6The defendants, except for Mr. Smith, are all closely related to Mr. Vansnick senior. Richard A. Vansnick is the son of that defendant. Paula Irving, I understand, is now the wife of Mr. Vansnick. There has been no indication as to what relationship exists between Richard Vansnick senior, and Vansnick Property Management Limited. By the name it appears as though there might be a fairly close relationship there.

7Mr. Belliveau: Might I interject, My Lord? In the affidavit there is reference that he is a close friend of Vansnick, senior. That's in the materials before you.

8The Court: Mr. Smith?

9Mr. Belliveau: Mr. Smith.

10The Court: Yes, I was talking about the familial...

11Mr. Belliveau: Oh, familial yes. He's not familial, but a close friend.

12The Court: It became apparent, in terms of the whole issue of the Lloyd's names that there were a number of matters to be resolved in different courts around the world. The issues included an allegation of fraud claimed as against a number of Canadian banks. The Canadian banks had defended claims brought against them by Lloyd's, but the banks did not allege fraud in defending that claim. They requested that a group known as the Association of Canadian Names join in defending the action in putting forth the claim for fraud. That Association of Canadian Names group did not join in the action in England. Ultimately, Lloyd's obtained judgments against the Canadian banks for the amounts due and owing under the letters of credit. This includes the letter of credit the defendant, Richard Vansnick senior had signed. The Canadian banks were forced to make payments under the letters of credit pursuant to the order for judgment obtained by Lloyd's. I note that Mr. Vansnick senior was a member of the group known as the Association of Canadian Names.

13There were a number of sub-issues in terms of the main actions against the Lloyd's names, but the most important issue in terms of this case was before Justice Farley of the Ontario High Court. That is the issue of fraud. By decision dated 19th of January, 1997 Mr. Justice Farley determined that the Canadian Names could not rely on the fraud defense, as they were prevented from doing so on the basis of estoppel by conduct and on the basis of res judicata. There was an appeal by the Canadian Names, but that was dismissed summarily by the Ontario Court of Appeal on July the 14th, 1997.

14I refer to the actions in England and Ontario as they are related to this proceeding. They are relevant to the application for dismissal for want of prosecution because it was at the request of the defendant, Richard M. Vansnick that this action was held in abeyance until the determination of the broader issues in Ontario and in London, England. It is important to note that it was less than one week after the decision of Justice Farley was filed that a notice of intention to proceed was filed on February 24th, 1997. It was very shortly after that notice of intention to proceed was filed that Mr. Vansnick made application to set aside the judgment.

15The issue in this application is whether or not the matter should be dismissed for want of prosecution. The courts in Nova Scotia have dealt with that question in a number of different cases. The Nova Scotia Court of Appeal discussed in the case of Canada v. Foundation Company (1990), 99 N.S.R. (2d) 327. Justice Chipman in that case reviewed the circumstances and found that most of the delay was not found to be inexcusable and as a result a grave injustice would result if the action were dismissed.

16I want to refer for a moment to the comments of Justice Hallett in Moir v. Landry (1991), 104 N.S.R. (2d) 281. In terms of the question as to whether or not an injustice would result if an action were dismissed. Mr. Justice Hallett said, at page 284;

"A plaintiff has a right to a day in court and should not lightly be deprived of that right. Therefore, it is only in extreme cases of inordinate and inexcusable delay that a court should presume serious prejudice to the defendant in the absence of evidence to support such a finding."

17In this case the delay resulted, to a large extent, from a request of one of the defendants to have the matter postponed until other complicated issues were determined in other forms. Specifically, Mr. Vansnick was going to gain the benefit of the banks mounting a defense in the Lloyd's main actions. Also, he was part of a larger group in terms of the Association of Canadian Names. They mounted a defense on his behalf, one must assume, as well as on behalf of all the other members in the Ontario courts. Mr. Vansnick gained the benefit of their attempting to nip this thing in the bud, and they were not successful in doing it.

18I am satisfied that the delay has been explained to this court's satisfaction. That is the first part of a two part test in determining the merits of this application. I refer to Minkoff v. Poole and Lambert (1991), 101 N.S.R. (2d) 143. In that case, the Court of Appeal here in Nova Scotia said there is a two part test enunciated. The first is whether the delay was explained to the court's satisfaction. I've already said that it has been in this case. And the second part of the test is whether the delay resulted in any material or substantial prejudice to the defendants. I have reviewed the materials submitted to me on behalf of the defendant applicants. In terms of prejudice, the one thing that I could consider to be somewhat prejudicial is the attachment order and the way it has effected improperly as relates to Paula Irving. Aside from that slight prejudice, I am not satisfied, based on the materials before me, there has been proof of any substantial prejudice to the defendant. The burden is on the defendant applicants to show there has been an inordinate delay and a substantial prejudice.

19Also, I would note in passing that the delay in this case has not been so long considering the complexity of the matter before the court and the complexity of the matter before other courts, as to give rise to a presumption of prejudice. In conclusion, I would indicate the application for dismissal for want of prosecutions cannot succeed. As regards costs, counsel?

20Mr. Belliveau: Well, there has been a fair bit of work. Could I suggest $500 plus taxable disbursements? That seems to be around the range. Some are higher, some are lower, but they bounce around that number generally.

21The Court: Mr. Morley and Mr. Shatford?

22Mr. Morley: My Lord, the application seems to have succeeded in a large part upon the Ontario decision and the bank sort of holding fire awaiting the outcome of that. Part of our submissions was that we weren't part of...there was no information given to us over that period of time, no correspondence since 93, I believe, or copies of correspondence. So in that respect, we weren't involved in that. Our application was made without that advantage. Having said that, costs...it may be appropriate to have costs in the cause in this particular case.

23The Court: Mr. Shatford?

24Mr. Belliveau: If I might just say one thing. I just noticed, actually I don't know if this is of any assistance to you, but in the application before Madame Justice Stewart in the...

25The Court: I saw that. $500 and about $800 in disbursements, I think it was.

26Mr. Belliveau: That's where I came up with the number of $500 plus disbursements.

27The Court: I am satisfied that in terms of the, this present application that it is quite closely related to the main issue as to whether or not these people as defendants should have been joined at all. I am satisfied it is so closely related that plaintiff's costs should be in the cause as opposed to being awarded on this particular application.

SCANLAN J.

End of Document