The Bar for Striking a Claim Over Late Disclosure in BC

The Dispute

A general contractor built a custom home for two property owners and, once the project finished, sued them for the balance owing on the contract. One of the owners counterclaimed that the work was defective, and a separate dispute arose between the two owners over an arrangement they had made about the project. The house was later sold, and a large share of the proceeds sat in trust waiting for the lawsuit to be resolved. The case sat untouched for years, and by the time a trial date arrived, one side still had not produced its documents.

The Parties’ Positions

The property owner who had commissioned the house applied to strike the contractor’s claim and its response to his counterclaim, together with the co-owner’s own claim against him. He grounded the application on a failure by both to meet their document production obligations under Rule 7 of the Supreme Court Civil Rules and on non-compliance with a trial-management-conference order. He pointed to a further batch of documents the contractor produced only days before the hearing and submitted that a supporting affidavit misrepresented how and when the documents had been located, amounting to an attempt to mislead the court. On that footing he sought default judgment and a division of the trust funds, with an adjournment sought in the alternative if the strike application failed.

The contractor and the co-owner resisted the application to strike their pleadings, including the contractor’s claim for unpaid construction costs and the co-owner’s third-party notice. Both had delivered and updated their lists of documents since the trial management conference, and the contractor’s most recent amendment, filed only days before the hearing, was presented as continued compliance with its disclosure obligations. On the disputed affidavit, the contractor’s principal maintained that the delay in producing the batch in question arose because the material had been in a third party’s possession while that person was out of the country, and that the documents were passed to counsel once they were obtained. The contractor further submitted that the property owner had not used the formal document-demand procedure Rule 7 provides, and that striking a claim is reserved for conduct more serious than the record showed.

The Court’s Decision

The court dismissed the application to strike the pleadings, applying the test in Barrie v. British Columbia (Forests, Lands and Natural Resource Operations), 2021 BCCA 322. Pleadings-strike is reserved for the most egregious cases, and the disclosure record here did not reach that standard: both sides had kept exchanging and updating document lists, and the property owner had not first used the Rule 7 procedure for further production. The court also declined to find the contractor’s principal had given false evidence, holding that a disputed affidavit is properly tested through cross-examination, not resolved on the affidavits alone. The contractor and the co-owner were awarded costs of the application in any event of the cause. The court then granted the property owner’s alternative request, adjourning the trial generally given how little time either side had left to complete discovery, and reserved the costs of that application to the trial, leaving the funds held in trust unresolved for months longer.

Key Lessons for General Contractors and Property Owners

• Meet every deadline a trial management conference sets for document production, even where a later court finds a missed deadline was not egregious on its own. It still becomes part of the record an opponent can cite when seeking a harsher remedy.
• Use the formal document-demand procedure Rule 7 of the Supreme Court Civil Rules provides before treating an opponent’s non-production as grounds to strike its claim. A party who skips that process leaves the other side a ready answer: no demand was made in the way the rules require.
• Keep sworn evidence about a document search precise enough that it cannot be read two ways. An affidavit description of when and how documents were located, if it can be read more than one way, invites a credibility challenge best tested by cross-examination.
• Begin discovery well before a trial date is set. A court will adjourn a trial that the parties’ own delay left too little time to prepare for, even over one side’s objection that the available time should simply be used.

The outcome of this application turned on the state of document disclosure and the evidence before the court at the hearing. A similar application may resolve differently.

ATAC LAW represents general contractors and property owners in construction payment disputes and the procedural applications that arise in them.

Mike C. Stewart and Dan H. Griffith acted for the general contractor on the application.