Executive Summary: Key Legal and Evidentiary Issues

• Defendants applied to dismiss the case for want of prosecution, citing inordinate and inexcusable delay.

• Plaintiff Union alleged breach of consent orders and improper distribution of insurance proceeds after mill closure.

• The delay was found inordinate but not inexcusable due to counsel workload and ongoing communication.

• Claims involved allegations of fraudulent conveyance, breach of trust, and conspiracy, triggering stricter scrutiny.

• The court emphasized defendants’ inaction and lack of actual prejudice in denying the dismissal.

• No damages were awarded at this stage; costs were deferred as “costs in the cause.”

Facts and outcome of the case

The dispute arose from the closure of a sawmill in Surrey, British Columbia. The mill was operated by Mackenzie Sawmill Ltd., whose director, Rajdeep Singh Sohi, controlled related companies including 0761979 B.C. Ltd. and Pacific Lumber Remanufacturing Inc. (PLR). After multiple fires and the cessation of mill operations in 2011, unionized employees were entitled to severance under a 2012 letter of understanding. Following continued inaction by Mackenzie to rebuild the mill, a consent order in 2014 mandated severance payments for certain employees. A second consent order in 2017 required further payments to retired employees, which were never fulfilled. By 2018, Mackenzie had been dissolved.

In 2019, the Union initiated legal proceedings, alleging breach of contract, fraudulent conveyance, resulting and implied trust, and conspiracy. The Union contended that insurance proceeds—over $20 million—were misused and funneled to entities controlled by Mr. Sohi’s family. They also alleged PLR continued operations on the original mill site, attempting to hold it liable as Mackenzie's alter ego.

The defendants filed a motion in 2024 to dismiss the action for want of prosecution, citing a five-year delay and failure to pursue litigation diligently. They also claimed the Union lacked standing to assert claims over property owned by 0761979 B.C. Ltd., and that pleadings had flaws left uncorrected despite warnings. Although some delays were acknowledged, the Union's counsel explained the gaps were due to workload and efforts to schedule discovery, which the defendants repeatedly postponed or complicated.

The court applied the modern test for want of prosecution from Giacomini Consulting and Plaza 500 Hotels, evaluating whether the delay was inordinate, inexcusable, and whether it would be just to allow the case to proceed. The judge found the delay was indeed inordinate, but not inexcusable. The Union's legal counsel had acted in good faith, kept communication open, and attempted to schedule discovery. Further, there was no substantial prejudice to the defendants, no evidence that witness memory had been compromised, and litigation remained in its early stages.

Ultimately, the application for dismissal was denied. The court held that the interests of justice favored continuation of the action, especially given the seriousness of the allegations and absence of procedural misconduct. No damages were awarded since the case had not reached trial. Costs were ordered to follow the cause, meaning they will be decided after final judgment on the substantive issues.