Executive Summary: Key Legal and Evidentiary Issues

• The court considered whether inordinate delay in prosecuting a fraud and conspiracy action against a sawmill operator and its principal warranted dismissal for want of prosecution.
   
• Associate Judge Krentz applied the revised test for want of prosecution set out in Giacomini Consulting Canada Inc. v. The Owners, Strata Plan EPS 3173, 2023 BCCA 473, to determine whether the delay was both inordinate and inexcusable.
   
• A later application required the court to determine the scope of document production owed by the defendants under the Supreme Court Civil Rules.
   
• Justice Douglas evaluated whether the implied undertaking rule and settlement privilege barred production of documents generated in related proceedings.
   
• Both decisions arose from a long-running dispute over unpaid severance owed to former employees of a Surrey, B.C. sawmill following a series of fires.
   
• Adequacy of the defendants' privilege claims and the necessity of an affidavit of documents were also before the court.
   

Facts of the case

Mackenzie Sawmill Ltd. ("Mackenzie") operated a sawmill on 130th Street in Surrey, B.C., having purchased the mill's assets and equipment from Interfor in 2006, while the related company 0761979 B.C. Ltd. ("1979") purchased the underlying land. Rajdeep Singh Sohi was the director and beneficial owner of Mackenzie and 1979, and, per the 2026 decision, was also president, sole director, and shareholder of Pacific Lumber Remanufacturing Inc. ("PLR") and 0761977 B.C. Ltd. ("1977"), his wholly owned corporation. The mill suffered a series of fires — the first in late 2010, a second in early 2011 that caused Mackenzie to permanently cease production, and a third in October 2014. As a result, groups of employees represented by United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 2009 (the "Union") became entitled to severance pay.

In December 2012, the Union and Mackenzie entered a letter of understanding providing that severance would be paid if the mill was not operational by March 31, 2013. The mill was not rebuilt by that date, and the Union's resulting grievance was resolved by an October 2014 arbitral consent order covering Schedule A and Schedule B employees, with a further consent order in November 2017 obligating Mackenzie to pay a third group of retired (Schedule C) employees a total described in the 2025 decision as $1,097,000 and in the 2026 decision as $1,097,144.18 [amount stated inconsistently across the two decisions]. That amount was never paid, and Mackenzie was dissolved in 2018 with no assets to satisfy the debt. The Union alleges that Mackenzie had, in fact, decided not to rebuild before the third fire, and that the mill property was instead transferred to PLR, which completed a new mill in 2017 and later sold it to a company owned by Mr. Sohi's uncle, Avtar Sidhu.

The Union commenced this action in May 2019, pleading implied and resulting trust, fraudulent conveyance and preference, conspiracy, and breach of contract, and registered a certificate of pending litigation ("CPL") on the land owned by 1979. The defendants filed a response in September 2019 denying that insurance proceeds — which the 2026 decision states totalled $20,212,794.60 and were fully disbursed by the end of 2014 — were used to construct the new mill. Discovery scheduling stalled repeatedly between 2020 and 2024 amid COVID-19 restrictions and counsel's competing workloads, prompting the defendants to apply in May 2024 to dismiss the action for want of prosecution and to discharge the CPL, though the Union released the CPL after the application was served. Separately, the Union had already pursued a subpoena to debtor process against Mackenzie in a related enforcement action, obtaining a May 2018 consent order for document production there.

By April 2026, ongoing disputes over the adequacy of the defendants' document disclosure — including claims of implied undertaking and settlement privilege over materials from the enforcement action and from Labour Relations Board proceedings — led the Union to apply for a further and better list of documents.

Policy and legislative provisions at issue

The 2025 decision turned on the common law test for dismissal for want of prosecution, as revised by the Court of Appeal in Giacomini and summarized in Plaza 500 Hotels Ltd. v. SRC Engineering Consultants Ltd., 2024 BCCA 288. That test asks, first, whether the plaintiff's delay is inordinate; second, whether it is inexcusable; and third, if so, whether it is nonetheless in the interests of justice to allow the action to proceed, having regard to factors including prejudice to the defendants, the stage of the litigation, the reasons for delay, and the public interest in resolution on the merits.

The 2026 decision centred on the Supreme Court Civil Rules governing document production. Rule 7-1(1) requires listing of documents that could be used to prove or disprove a "material fact" — the ultimate fact in issue on the pleadings, as distinguished from merely "relevant" evidentiary facts. Rules 7-1(10), (11), (13), and (14) permit a second tier of broader production on application, including documents "relating to any or all matters in question in the action." The court also applied the implied undertaking rule, describing information obtained through discovery as generally restricted to the litigation in which it was produced unless varied by consent or court order, and considered settlement privilege, which protects communications made for the purpose of attempting to resolve a dispute. Rules 7-1(6) and (7) require that any claim of privilege in a list of documents be described with enough particularity, including class of privilege, nature of the communication, date, author, and recipient, to allow the opposing party to assess its validity.

Reasoning and analysis

Associate Judge Krentz found that the roughly five-year delay since the action's 2019 commencement was inordinate, particularly given the fraud allegations against Mr. Sohi. She nonetheless accepted the Union's explanation — that the delay stemmed from counsel's heavy caseload rather than any tactical intent to prejudice the defendants — as a credible excuse, noting the defendants had themselves failed to follow through on stated intentions to strike portions of the pleadings. She further held that even had the delay been inexcusable, the interests of justice favoured allowing the claim to proceed: the litigation remained at an early stage with no discoveries completed, the defendants showed no evidence of actual prejudice, the dispute depended heavily on documentary evidence likely to have been preserved through related litigation, and the claim was not bound to fail.

Justice Douglas, addressing the later document production application, held that the demanded categories of documents — covering Mackenzie's financial position and the defendants' roles in demolishing, rebuilding, operating, and selling the sawmill between 2011 and 2018 — were relevant to the pleaded causes of action, including fraudulent conveyance and conspiracy, applying the reasoning in Hauerbuilt Construction Ltd. v. Legendary Developments Ltd., 2021 BCSC 775. On the implied undertaking rule, the court found that documents Mackenzie itself produced in the earlier enforcement action were not shielded, since the rule binds a party only against materials it obtained from an opponent, not materials it generated itself, citing Wilson v. McCoy, 2006 BCSC 1011 and British Columbia v. Tekavec, 2012 BCSC 1348. On settlement privilege, the court declined to find that all documents from the Labour Relations Board proceedings were protected simply because those proceedings ended in a consent order. Finally, the court held that the defendants' list of documents inadequately identified dates for materials over which privilege was claimed, and that gaps in disclosure warranted an affidavit of documents under the principles in Araya v. Nevsun Resources Ltd., 2019 BCSC 262.

Ruling and overall outcome

In the 2025 decision, Associate Judge Krentz dismissed the defendants' application to strike the action for want of prosecution, finding that although the Union's delay was inordinate, it was excusable and that the interests of justice favoured letting the claim proceed; costs were left as costs in the cause, with no specific amount ordered. In the 2026 decision, Justice Douglas allowed the Union's application for document production, ordering the defendants — by consent and by order — to list and produce numerous categories of financial, correspondence, and transactional records within 30 days, to provide a further and better list identifying dates for documents over which privilege is claimed, and to serve an affidavit of documents verifying the completeness of their search. The Union was found to have been successful on the application and was awarded costs in any event of the cause, though no specific dollar amount was stated in the decision.