2008 BCSC 653err1 McDaniel v. McDaniel

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:	*McDaniel v. McDaniel,*
	2008 BCSC 653

Date: 20080430
Docket: S066794
Registry: Vancouver

Between:

Brian McDaniel

Plaintiff

And:

John Wayne McDaniel aka Jack McDaniel,
Jo Ann Carmichael and
Alexander Holburn Beaudin and Lang LLP

Defendants

Before: The Honourable Mr. Justice Groberman

Oral Reasons for Judgment

In Chambers
April 30, 2008

Counsel for Plaintiff	R.M. Shore
Counsel for Defendants Jo Ann Carmichael and Alexander Holburn Beaudin and Lang LLP	A.B. Hudson P. Arvisais
Counsel for Defendant John Wayne McDaniel	G.D. Phillips
Date and Place of Hearing:	April 21 -23, 2008 Vancouver, B.C.

[1] THE COURT: I have before me applications by the defendants to dismiss the action against them under Rule 19(24) and Rule 18(6). The defendant John McDaniel (“Jack McDaniel”) also applies under Rule 18A.

Background to the Litigation

[2] The background to the litigation is somewhat complex. Brian McDaniel was a realtor until approximately 1990, when he began receiving monthly disability benefits from his insurer. This insurer has on at least three occasions terminated his benefits, but the insurer has, in each case, reinstated them. For the purposes of this application, the termination that is of some moment is one that occurred in 1995. Mr. McDaniel commenced an action seeking both reinstatement of his benefits and damages for bad faith at that time. In February 1997, the parties entered into a consent order reinstating Mr. McDaniel’s benefits but leaving several issues outstanding for trial.

[3] In 2005 Brian McDaniel and Jack McDaniel had a serious falling out. The precipitating event was the administration of a trust administered at the time by Brian McDaniel in Washington State. Jack McDaniel was the settlor of the trust, and he alleged that Brian McDaniel was exceeding his authority as trustee and acting contrary to the interests of the trust. He sought to have Brian McDaniel removed as trustee.

[4] For his part, Brian McDaniel took the position that Jack McDaniel was unlawfully interfering with the administration of the trust and seeking to obtain benefits from it at the expense of the beneficiaries.

[5] Jack McDaniel commenced litigation in Washington State to have Brian McDaniel removed as trustee. Among his allegations was an allegation that Brian McDaniel either suffered from a serious emotional disability or, alternatively, had defrauded his insurance company by claiming that he suffered from a serious disability. Jack McDaniel alleged that either the serious disability on the one hand or the commission of fraud on the other made Brain McDaniel an unsuitable trustee.

[6] While I understand that some elements of the Washington State litigation remain unresolved, Brian McDaniel ultimately resigned as trustee. The two brothers appear to have made efforts since 2005 to make each other’s lives miserable. It is evident that in 2005, Jack McDaniel threatened to take steps to have Brian’s insurer terminate his disability payments. Jack McDaniel says that what he threatened to do was contact the insurer’s counsel and to provide evidence against Brian McDaniel in existing insurance litigation. Brian McDaniel alleges that the threat was much broader and that it was to contact the insurer itself to cause it to terminate its payments. There is evidence in support of both contentions, and I am unable to resolve the issue on the affidavit evidence provided.

[7] In any event, Jack McDaniel did contact the insurer and was referred to Ms. Carmichael, who was acting as the insurer’s counsel in litigation. It is apparent that Ms. Carmichael’s role was not strictly confined to the litigation. Counsel for Brian McDaniel and Ms. Carmichael agreed that all issues of ongoing entitlements and obligations under the policies would be dealt with through counsel; thus, Ms. Carmichael’s role was both that of counsel in the litigation, and as an agent of the insurer with respect to Brian McDaniel’s ongoing claim. In saying this, I do not suggest that she in any way acted outside her capacity as a solicitor.

[8] Jack McDaniel had at least six conversations with Ms. Carmichael. It is alleged that he told her that Brian McDaniel had been dishonest in his claim, that he continued to be able to function as a realtor, and that he was, in fact continuing to be involved in real estate transactions. He attempted to get information from Ms. Carmichael as to Brian McDaniel’s real estate holdings. The statement of claim also alleges that Ms. Carmichael imparted certain information to Jack McDaniel; I will say more about that later.

The Alleged Causes of Action

[9] When Brian McDaniel found out about Jack McDaniel’s conversations with Ms. Carmichael, he commenced this action. Originally a fundamental goal of the litigation appears to have been to disqualify Ms. Carmichael from continuing to act for the insurer and to open up her files for an inspection. The substantially amended statement of claim, however, alleges that Jack McDaniel defamed Brian McDaniel in his conversations with Ms. Carmichael; that Ms. Carmichael provided Jack McDaniel with confidential information concerning Brian McDaniel. Further, Brian McDaniel alleges that the information exchanged in the conversation has caused him damage both by forcing him to expend legal fees in order to deal with the issues that arose and by causing him emotional damage. He alleges against Ms. Carmichael and Jack McDaniel the torts of civil conspiracy and intentional infliction of emotional stress. He also alleges, primarily against Ms. Carmichael, breach of confidentiality and breach of undertaking, though the pleadings are also broad enough to include Jack McDaniel as a party to both of those breaches. Against Jack McDaniel alone there is also an allegation of defamation.

The Consent Order in the Insurance Litigation

[10] There was some argument before me as to the scope of the continued insurance litigation and particularly whether the consent order served to make Brian McDaniel’s disability or lack thereof irrelevant to that litigation. That issue could potentially have some relevance to the issue of litigation immunity. I will address that issue now.

[11] The consent order is not a model of priority. The operative paragraphs are as follows:

This order [sic] orders and declares that the plaintiff’s entitlement to benefits under policies of insurance no. 16 300 4450 and no. 16 300 5936 (the “policies”) issued by the defendant to the plaintiff be reinstated.

And this court further orders that the defendant pay to the plaintiff all arrears owing under each of the policies in the amount of $24,000 for each of the two policies, up to and including December 31, 1996, with interest pursuant to the Court Order Interest Act.

And this court further orders that the plaintiff’s application as set out in his notice of motion filed August 23, 1996, for an order granting (a) damages for breach of contract, (b) damages for intentional infliction of emotional distress, (c) an award for aggravated, exemplary and punitive damages, and (d) special costs, be adjourned generally.

[12] It is evident that the order was intended to reinstate Mr. McDaniel’s benefits both retroactively and prospectively. It is also clear that the main issues remaining in the litigation concern good faith and whether the insurer acted high-handedly in terminating benefits. What is not clear is whether the insurer’s defence of justification for termination was intended to be removed from the litigation or not.

[13] The first paragraph of the order, despite some awkward wording, appears to amount to a declaration that the plaintiff is, as of the date of the order, entitled to benefits. That was, indeed, the conclusion of Allan J. in McDaniel v. Provident Life, 2007 BCSC 1674, where she dismissed an application for disclosure of documents relevant only to the plaintiff’s ongoing entitlement to benefits. She held that the question of whether the plaintiff was “totally disabled” at the time of settlement or thereafter had been removed from the litigation by the settlement.

[14] The second paragraph of the order, in contrast to the first, does not specifically declare that the plaintiff was entitled to benefits at the time he was cut off, though that might be implied by the fact that the insurer is ordered to pay “arrears owing under the policies”. The fact that the issue of “damages for breach of contract” is adjourned generally in the third paragraph, however, might be seen as allowing the insurer to defend itself by continuing to argue that, notwithstanding its agreement to pay the plaintiff, it was not required to do so.

[15] I do not read Allan J.’s judgment as having decided that issue. At para. 21 of her reasons, she stated:

The Consent Order crystallized the issue of the plaintiff’s entitlement to benefits and left the balance of the relief sought in the pleadings to be litigated. The terms of that Consent Order do not support an interpretation that the parties intended to litigate future changes in entitlement within these proceedings – at least without substantial amendments to frame any new grounds upon which the defendant seeks to challenge Mr. McDaniel’s entitlement.

[16] The issue of whether the insurer could continue to defend the action by alleging that Mr. McDaniel was not, at the time he was initially cut off, actually entitled to payments under the policies was not an issue before Allan J. It is clear from the evidence before me that the parties continued to believe that that issue was a live one in the litigation. Indeed, up to the first day of the hearing of this matter, the plaintiff alleged in the statement of claim that the insurance litigation included a prayer for relief of a declaration of entitlement. At the opening of this hear, realizing that that allegation might be detrimental to his argument, counsel for the plaintiff sought and was granted leave to amend the statement of claim.

[17] I do not intend on this application to determine whether or not the insurer is entitled to defend Mr. McDaniel’s action against it by arguing that he was not entitled to benefits. It is clear to me, however, that until very recently the parties to that action believed that that remained a live issue.

Litigation Immunity

[18] The bulk of the argument before me concerned the issue of whether the defendants enjoy absolute immunity for anything said in their conversations by virtue of what is usually called witness or litigation immunity. The immunity is well established in the common law. Witnesses are absolutely immune from civil liability for anything that they say in court, even if what is said is false and even if they harboured malicious motives for giving evidence. The immunity is expansive. It applies to evidence given before quasi-judicial administrative tribunals as well as courts. It also applies to out-of-court statements made in the course of preparing to give testimony and even to discussions with counsel for the purpose of determining whether or not the witness has relevant evidence to give. Where litigation is in contemplation, statements made by a potential witness on the subject matter of the litigation will fall within the immunity: Monje-Alvarez v. Monje-Alvarez (1992), 69 B.C.L.R. (2d) 99, 93 D.L.R. (4th) 659 (B.C.C.A.).

[19] The immunity is essential to the administration of justice. In order to foster an atmosphere in which witnesses and counsel are unfettered in their preparations for judicial proceedings, neither should face the possibility of a civil suit over their discussions. The immunity, however, does have limits. It does not apply to everything a lawyer does in his or her professional capacity, nor does it apply simply because matters discussed between the parties might potentially at some point come before a judicial or quasi-judicial body. The immunity is directed at facilitating the gathering and preparation of evidence for litigation. Where that is not the context in which a statement is made the immunity will not apply.

[20] The point was put succinctly long ago by the Supreme Court of Canada in Halls v. Mitchell, [1928] S.C.R. 125, in which it was said:

[S]tatements made by a witness … in court, are absolutely privileged, and … this privilege would become illusory, were it not applicable for the protection of a statement by an intending witness, as to the nature of the evidence the witness can give, made to professional persons preparing the evidence to be presented in court. As the protection by privilege of the testimony of witnesses in court is regarded by the law as essential to the administration of justice, and as the extension of that protection to such preliminary statements is regarded as essential to the effectiveness of the substantive privilege, such preliminary statements are held to fall within the rule; but, as Lord Halsbury points out [in Watson v. McEwan, [1905] A.C. 480] this strict necessity is the basis of the privilege …. [T]he principle does not extend to [communications to persons other than those engaged professionally in preparing the evidence to be presented in court] …

[21] Despite the defendants’ ingenuity in providing me with well over 100 authorities on the issue of immunity, I am not satisfied that this is an issue I can determine on this application. I am satisfied that Ms. Carmichael was acting throughout as the solicitor for the insurer and not in any other capacity. I am also satisfied that in speaking to Jack McDaniel her main consideration was the existing litigation.

[22] I am not able to find, however, that it is clear that all of the information imparted to her by Jack McDaniel had a connection with the existing or any contemplated litigation or that Jack McDaniel’s intentions had any connection with the litigation. It is certainly possible that Brian McDaniel will be able to demonstrate that Jack McDaniel was providing information without any intention that it be used in litigation and that his goal was simply to have the insurer deny benefits. In saying this, I acknowledge Ms. Carmichael’s affidavit in which she swears that:

All communications that I had with the defendant Jack McDaniel was for the dominant purpose of determining whether he had any evidence relating to [the insurance action].

[23] I am also prepared to assume that the past disability of Brian McDaniel may have been a live issue in that litigation. What I am unable to determine on this application is whether Jack McDaniel’s statements to Ms. Carmichael were made in connection with the existing litigation or with any expectation or anticipation that he might be providing evidence in litigation.

[24] Some of the material before me suggests that Jack McDaniel’s purpose was to provide information to the insurance company itself so that it would once again terminate Brian McDaniel’s entitlements. That was clearly not a live issue in the existing litigation, nor was there necessarily any contemplation that Jack McDaniel would be a witness in future litigation. While there are elements of Jack McDaniel’s affidavits that support an interpretation of the events bringing him within the scope of witness immunity, much will depend on findings of credibility.

[25] The Nova Scotia Court of Appeal dealt with efforts to expand the bounds of litigation immunity in Elliott v. Insurance Crime Prevention Bureau, 2005 NSCA 115, 256 D.L.R. (4th) 674. Cromwell J.A. speaking for the court undertook an extensive examination of Canadian and English law and of the rationale for witness immunity. He concluded that the immunity should only be expanded as far as necessary to facilitate the preparation and giving of testimony. In respect of statements by persons who do not testify, he said (at paras. 209-211):

209. When a person does not testify, only the underlying rationale related to candour and cooperation of potential witnesses is implicated. The focus of the necessity analysis, therefore, is on the closeness of the connection between the out-of-court activity and the person’s role as a witness. Is it so close that the preservation of candour and cooperation of potential witnesses requires that the out-of-court occasion have the same protection as testimony? The focus of witness immunity is not the content of the statement, but the occasion on which it is made. The protected occasion is testifying in court. The more closely connected the out-of-court statement or conduct is to that “occasion”, the stronger the case of necessity.

210. How does one assess the closeness of the connection between the out-of-court “occasion” and giving testimony in court? As we have seen, the cases have focussed mainly on the purpose of the conduct for which immunity is claimed. Several factors are relevant to assessing that purpose. If the out-of-court statement is required by law as a precondition to testimony, the case for immunity is compelling. Exactly the same concerns about candour and collateral attack apply to such statements as to in-court testimony: see e.g., Fabian v. Marguilies (1985), 53 O.R. (2d) 380 (C.A.) and Carnahan v. Coates (1990), 71 D.L.R. (4th) 464 (B.C.S.C.)]. The same may be said about assessments ordered by the court for use in court proceedings, the preparation of testimony by professional persons engaged in litigation and inquiries by professional persons working on behalf of a party to litigation seeking information from a potential witness in pending litigation. Statements made by or to a person discharging a statutory or other public duty to gather evidence for pending or contemplated proceedings will generally be protected: see (X)Minors v. Bedfordshire County Council, [1995] 2 A.C. 633 (H.L.(Eng.)); Taylor v. Director of the Serious Fraud Office, [1998] H.L.J. No. 38, [1999] 2 A.C. 177 (H.L.(Eng.)); Ayangamn v. NAV Canada (2001), 203 D.L.R. (4th) 717 (P.E.I. S.C.A.D.), and Evans v. London Hospital Medical College (University of London) [1981] 1 All E.R. 715, [1981] 1 W.L.R. 184 (Q.B.). The need for candour is clear in those settings and the public duty strengthens the case for protection, particularly where there is a duty to cooperate with the investigation.

211. It is clear, however, that immunity does not extend to all steps in the investigation of a matter that may result in litigation. There is a distinction between the functions of investigators and witnesses even though the same person may, in the end, be both. To decide whether the immunity applies, the case law has looked to whether the action is based on the “judicial phase” of the proceedings, whether it relates to “matters of advocacy” or whether the “principal purpose” was to prepare evidence for court. These are primarily questions of fact and the burden is on the parties claiming the immunity to prove facts which bring them within it.

[26] I am unable to say, at this stage, that the defamation action against Jack McDaniel is clearly doomed to failure. If the purposes of his communications with Ms. Carmichael were unconnected with being a witness in court and were, instead, directed at influencing the insurance company to discontinue payments on Brian McDaniel’s claim, it is unlikely that witness immunity would apply. Accordingly, I am unable to say that Jack McDaniel has met the high test for striking out the statement of claim under Rule 19(24) or having the action dismissed under Rule 18(6).

[27] With respect to Jack McDaniel’s Rule 18A application, I have considered carefully whether or not it would be just to determine this matter on a summary trial. There are certainly some strong motivations for doing so. It seems to me very unlikely that the damage as suffered by the plaintiff will prove to be very substantial, and the costs of this litigation are likely to be well beyond anything that would be proportionate to the amount at stake. I say this as part of the analysis under Rule 18A and certainly not in any way to influence the ultimate trial judge, who should not have these words brought to his or her attention. If the current application is any indication, the parties seem intent on leaving no stone unturned and are likely to demand significant public resources, in the form of court time, in addition to the undoubtedly massive private resources that they have and will put into this lawsuit. It seems both unjustifiable and self-destructive.

[28] If I were able to fairly determine the issues of credibility that must be determined to rule on the defamation claim, I would have no hesitation in doing so. Unfortunately, I do not think that the credibility issues can be determined without viva voce evidence from Brian McDaniel and Jack McDaniel. I am therefore not able to determine the outcome of the defamation matter.

[29] That said, it does seem to me that certain aspects of the claim, including the entirety of the claim against Ms. Carmichael and her law firm, can be determined under Rule 19(24) and 18(6). First, some aspects of the statement of claim clearly fall within the area protected by witness immunity. For example, para. 30 of the statement of claim states:

The purpose of the exchange of information between Jack McDaniel and Jo Ann Carmichael was to, jointly, attempt to expose Brian McDaniel as a malingerer who had defrauded [the insurer] and to attempt to create additional defences to the [insurance] action. This despite the fact that the insurer was, and is, current in paying disability benefits to Brian McDaniel.

[30] It is apparent that any exchange of information for the purpose of obtaining evidence for the defence of the action would fall within the core of litigation or witness immunity. There are several paragraphs in the statement of claim dealing with the insurance litigation and the Washington state litigation. To the extent that the discussions between Jack McDaniel and Ms. Carmichael were directed at that litigation, they were immune from liability for the conversations and the claims cannot stand.

Breach of Undertaking and Breach of Confidentiality Claims

[31] With respect to the claims of breach of confidentiality and breach of undertaking against Ms. Carmichael, it is obvious to me that the claims cannot succeed. As I will indicate in a moment, in discussing the alleged breach of confidentiality, there is no evidence to support the idea that Ms. Carmichael was guilty of any such breach. Quite apart from the absence of evidence, however, I agree with defence counsel that there is no nominate tort of breach of undertaking.

[32] While it is now indisputable that litigants are under an implied undertaking to the court not to use information obtained in discovery for any purposes other than within the lawsuit in which it was obtained [see Juman v. Doucette, 2008 SCC 8], a breach of that undertaking does not give rise to a civil action. While MacKenzie J. was dealing with an undertaking to pay damages rather than an implied undertaking with respect to discovery information in C.B. Constantini Ltd. v. Slozka, 2007 BCSC 615, what she said at para. 91 of her judgment is equally applicable to the undertaking I am considering in this case:

The undertaking as to damages is given to court. There is no cause of action based on the undertaking itself and no claim for damages can be made in respect of an injunction unless and until the court orders an inquiry as to damages: Peter Kiewit Sons Co. Ltd. v. North Pacific Roadbuilders Ltd., 2005 BCSC 1586; 56 B.C.L.R. (4th) 114 (S.C.) at para. 38, leave to appeal to B.C.C.A. refused, 2006 BCCA 439.

[33] The undertaking is not a contract or a promise to an opposite party, but rather an obligation to the court. A breach of the undertaking is dealt with by the court within the context of the lawsuit in which the breach occurs. Typically a breach of the undertaking will be dealt with as a contempt of court. It may be that other remedies are possible; I do not express any conclusion on that. What is clear, however, is that the breach does not in and of itself create a private law cause of action.

[34] Of course the mere fact that counsel breaches an undertaking in providing information does not immunize counsel from suit if the breach also forms the basis of a nominate tort. Thus, the plaintiff’s allegation that Ms. Carmichael committed the tort of breach of confidence must also be considered. The allegations of breach of confidence are contained in para. 28 of the statement of claim, which states:

28. During the course of these telephone conversations Jo Ann Carmichael, contrary to her implied undertaking to the courts of British Columbia and duty of confidentiality to Brian McDaniel, discussed with Jack McDaniel various matters relating to Brian McDaniel’s health. Jo Ann Carmichael provided information to Jack McDaniel including the following:

(a) information relating to statements made by Brian McDaniel’s doctors regarding Brian McDaniel’s disability;

(b) her belief that Brian McDaniel was telling his doctors what to say;

(c) information with respect to Dr. Judith Allen, Brian McDaniel’s treating psychiatrist, and her belief that Dr. Allen would say anything that Brian McDaniel wanted her to say;

(d) the content of Independent Medical Examinations which had been conducted upon Brian McDaniel, and her belief that Brian McDaniel was malingering; and

(e) information relating to RBC’s belief that Brian McDaniel was malingering .

[35] It is very clear that most of these allegations have no foundation whatsoever. The plaintiff, if he believes the allegations at all, frankly admits that he has no evidence to support most of them. Where he claims to have evidence in the form of the transcript of a deposition given by Jack McDaniel in the Washington state litigation, the transcript is largely supportive of the position of the defendants. The evidence of Jack McDaniel and of Jo Ann Carmichael, including contemporaneous e-mails, establish that Ms. Carmichael was fastidious in refusing Jack McDaniel’s requests for information concerning Brian McDaniel’s condition. It may be, however, that she did state that the insurer believed Brian McDaniel to be malingering and that she believed that Dr. Judith Allen would say anything that Brian McDaniel wanted her to say.

[36] I am not making findings as to whether or not Ms. Carmichael said these things; I merely say that on the evidence it is possible that she did. Even if those communications occurred, I find that they would not be actionable.

[37] The test for establishing an actionable breach of confidence is described in Foreman v. Chambers, 2006 BCSC 1244, varied, without affecting this issue, at 2007 BCCA 409. At para. 56 Myers J. said:

The test for establishing an actionable breach of confidence is a three–part one. The plaintiff must show that:

(a) the information was confidential,

(b) the information was communicated in confidence,

[38] It does not appear to me that any part of this test is met in this case. Clearly there is no evidence whatsoever that Jack McDaniel misused or even could have misused any of this information. To the extent that any part of it could be said to have been confidential or communicated in confidence, it was of such little moment that it is obvious that Brian McDaniel could not have suffered any damage even if it had been used in some way by Jack McDaniel.

Other Torts

[39] The only other torts alleged to have been committed by Ms. Carmichael are conspiracy and intentional infliction of emotional stress. Except insofar as these are aimed at matters covered clearly by litigation immunity, there is no reality to these pleadings. Ms. Carmichael was, throughout, involved in this matter only in her capacity as a solicitor. While she may well have been interested in obtaining information that would assist her client in evaluating Brian McDaniel’s claim, and perhaps even in rejecting it, there is nothing before me that suggest she might have done anything that would fulfil the requirements of either of these torts.

[40] Counsel for Ms. Carmichael and her firm go so far as to allege that the action against them should be dismissed as well as an abuse of process. They argue that it has been brought for an ulterior purpose, that is, to found a claim to delve into the insurer’s solicitor’s file and to disqualify Ms. Carmichael from continuing to act for the insurer. While it is not necessary, given my findings, to decide this issue, I will simply say that the argument is not without some basis.

[41] With respect to Jack McDaniel, the claim of intentional interference with contractual relations must be struck under Rule 19(24) or alternatively dismissed under Rule 18(6). There is no allegation that Jack McDaniel caused the insurer to breach its contract with Brian McDaniel and no evidence suggesting that such breach occurred. At best what the plaintiff alleges is that Jack McDaniel attempted to interfere with contractual relations. Absent actual interference and resultant damages the cause of action is simply not made out.

[42] The allegation against Jack McDaniel of intentional infliction of emotional stress, with appropriate amendment, will have to be determined at trial. I say “with appropriate amendment” because the statement of claim does not adequately plead the nature of and particulars of the emotional stress allegedly suffered by the plaintiff. As I understand it, it is common ground between the parties that in order to be actionable, such stress must amount to a recognized psychiatric illness, and that has not been pleaded.

Summary of Relief Granted

[43] The action, then, is dismissed as against Ms. Carmichael and her firm. The action against Jack McDaniel may proceed insofar as it alleges that he defamed Brian McDaniel and that he intentionally inflicted emotional stress on him. In respect of the latter claim, I agree with the defendants that it is inadequately pleaded, as the nature of the emotional stress is not particularized.

[44] The statement of claim will have to be substantially amended to omit all allegations that Brian McDaniel communicated with Ms. Carmichael for the purposes of discussing litigation or for the purpose of preparing evidence for litigation. Such purposes fall squarely within the scope of litigation immunity.

[45] I would observe, as well, that there is a large number of allegations in the amended statement of claim concerning the Washington state litigation. I presume that these are pleaded in order to support the allegation that Jack McDaniel acted out of malice. It seems to me that those allegations should be substantially pared down so as to plead material facts only, rather than evidence.

[46] I do not intend in this judgment to redraft the plaintiff’s pleadings for him. In light of this judgment, however, the statement of claim will require substantial revision. Most of the material facts that can be pled are contained in two paragraphs, paras. 26 and 27 of the statement of claim, which are as follows:

26. At times unknown exactly to Brian McDaniel, but after the commencement of the American litigation, Jack McDaniel contacted Jo Ann Carmichael by telephone on at least 6 occasions. In those telephone conversations, Jack McDaniel told Jo Ann Carmichael that Brian McDaniel was not disabled and that he had been defrauding [the insurer] and its predecessors.

27. Jack McDaniel’s statements to Jo Ann Carmichael were false and defamatory. The predominant purpose of Jack McDaniel’s conduct was to have Brian McDaniel’s disability benefits stopped and to cause [the insurer] to seek to return from Brian McDaniel of disability benefits paid previously by [the insurer] to Brian McDaniel. Jack McDaniel, in making the statements, knew or ought to have known that his conduct would cause injury to Brian McDaniel.

[47] Insofar as they apply to Jack McDaniel, some of the legal characterizations of the facts contained in paras. 34 through 37 and 39 are also properly pleaded. Aside from these very few paragraphs, however, it seems to me that there is little in the statement of claim that should remain. I am granting the plaintiff leave to amend the statement of claim by deleting those portions which are struck, dismissed or rendered irrelevant by this judgment. The plaintiff should amend the statement of claim within two weeks, and I grant leave to do so as long as the amendments are done within two weeks. Should there be any dispute as to the propriety of the amendments, counsel may arrange to speak to the matter before me.

[48] Now, counsel for Jack McDaniel requested an opportunity to speak to the issue of costs after this judgment was pronounced. It may also be that counsel for Brian McDaniel also wishes to speak to costs. I do not know whether those requests stand in these circumstances. Do counsel wish to address the issue of costs, and if so, are they prepared to do so now?

MR. PHILLIPS: Yes and no, My Lord.

MR. SHORE: I would like some time to consider your judgment in terms of – if I may consider just on costs, My Lord.

[49] THE COURT: That is fine with respect to Jack McDaniel. With respect to Ms. Carmichael the submissions were made. I am satisfied that there was no basis for bringing this claim against Ms. Carmichael and that once brought, it ought to have been discontinued very early on when the evidence became clear. I am awarding special costs.

MR. PHILIPS: My Lord, one point just for confirmation. The causes of action that remain alive against Jack McDaniel are the defamation and the intentional infliction of emotional distress and of course the conspiracy allegation is gone?

[50] THE COURT: The conspiracy is gone because there is no co-conspirator.

MR. PHILIPS: That was what I thought, but I just wanted to be certainly clear on that.

MR. HUDSON: My Lord, just if I may, with respect to your ruling on costs, special costs, it’s not just the application to which those apply, obviously, it’s the action –

[51] THE COURT: It is the action, which is dismissed.

The Honourable Mr. Justice H. M. Groberman

September 4, 2008 – Revised Judgment

This is a corrigendum to oral reasons for judgment given on April 30, 2008, and subsequently transcribed.

When transcribed, paragraph 34 of the judgment omitted the quote from paragraph 28 of the statement of claim and subsequently offset what was intended to be paragraph 35 of the judgment. Paragraph 34 should be replaced by the following:

(a) information relating to statements made by Brian McDaniel’s doctors regarding Brian McDaniel’s disability;

(b) her belief that Brian McDaniel was telling his doctors what to say;

(c) information with respect to Dr. Judith Allen, Brian McDaniel’s treating psychiatrist, and her belief that Dr. Allen would say anything that Brian McDaniel wanted her to say;

(d) the content of Independent Medical Examinations which had been conducted upon Brian McDaniel, and her belief that Brian McDaniel was malingering; and

(e) information relating to RBC’s belief that Brian McDaniel was malingering.

A new paragraph 35 is to be inserted to read as follows:

There will be a consequential renumbering of the judgment starting at the old paragraph 35, which will now become paragraph 36.

The intervention after the former paragraph 48 (which will now be paragraph 49) attributed to Mr. Hudson should instead be attributed to Mr. Phillips.

The intervention after the former paragraph 49 (which will now be paragraph 50) attributed to Mr. Hudson should instead be attributed to Mr. Phillips, and the intervention attributed to Mr. Arvisais should instead be attributed to Mr. Hudson.

The Honourable Mr. Justice H. M. Groberman