The Corporation of the Township of Muskoka Lakes v. 1679753 Ontario Ltd.

[Indexed as: Muskoka Lakes (Township) v. 1679753 Ontario Ltd.]

106 O.R. (3d) 540

2011 ONSC 1997

Ontario Superior Court of Justice, Divisional Court, Ferrier, Swinton and Wilton-Siegel JJ.

May 16, 2011

Civil procedure -- Discovery -- Documents -- Request to admit -- Defendant misusing request to admit procedure by employing request to admit to have plaintiff state whether it had documents evidencing damages in its possession, power or control -- That part of request to admit being nullity.

The plaintiff brought an action for damages for negligent misrepresentation. The plaintiff provided the defendant with a draft affidavit of documents. The defendant took the position that the affidavit of documents was deficient because it did not include any documents dealing with the alleged damages. The defendant served upon the plaintiff a request to admit requesting that it admit that it did not have documents in respect of damages in its power, possession or control. In its response to the request, the plaintiff stated that it did have documents relating to damages in its power, possession or control, but that losses were ongoing and that particulars would be provided through the discovery process. The defendant brought a motion for an order dismissing the action for failure to disclose all relevant documents or, alternatively, for an order that the plaintiff deliver a further and better affidavit of documents. The master declined to dismiss the action, but ordered the plaintiff to deliver a supplementary affidavit of documents. The plaintiff's appeal was allowed and the plaintiff was permitted to withdraw admissions made in response to the request to admit. The defendant appealed.

Held, the appeal should be dismissed.

The relevant part of the request to admit was a nullity. It is not a proper use of the request to admit procedure to employ a request to admit to have a plaintiff state whether it has in its possession, power or control documents evidencing the damages claimed. As that part of the request to admit was a nullity, the plaintiff's response to those questions was also a nullity.

APPEAL from a decision allowing an appeal from an order of a master.

Cases referred to

Slate Falls Nation v. Canada (Attorney General), 2005 ONSC 45206, [2005] O.J. No. 5228, 144 A.C.W.S. (3d) 241 (S.C.J.), consd

Other cases referred to

1679753 Ontario Ltd. v. Muskoka Lakes (Township), [2010] O.J. No. 736, 2010 ONSC 1230, 95 C.P.C. (6th) 71, revg [2009] O.J. No. 6306, 2009 CarswellOnt 8949 (S.C.J.) [Leave to appeal granted [2010] O.J. No. 4294, 2010 ONSC 5298 (Div. Ct.)]; Brignolio v. Brignolio, [1997] O.J. No. 1075, 29 O.T.C. 251, 70 A.C.W.S. (3d) 42 (Gen. Div.); Charles David Pty. Ltd. v. Qualico Central Meat Packers Montreal Ltd., [1996] O.J. No. 2054 (C.A.), affg [1992] O.J. No. 2500 (Gen. Div.); Children's Aid Society of Algoma v. O. (M.), 2001 ONCJ 37715, [2001] O.J. No. 5220 (C.J.); Foundation for Equal Families v. Canada (Attorney General), [1999] O.J. No. 2561, 107 O.T.C. 385, 36 C.P.C. (4th) 201, 89 A.C.W.S. (3d) 676 (S.C.J.); Gualtieri v. Canada (Attorney General), [2008] O.J. No. 698 (S.C.J.); Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, J.E. 2002-617, 219 Sask. R. 1, 10 C.C.L.T. (3d) 157, 30 M.P.L.R. (3d) 1, 112 A.C.W.S. (3d) 991; [page541] Milani v. Milani, 2005 ONSC 4444, [2005] O.J. No. 693, 137 A.C.W.S. (3d) 777 (S.C.J.); Tozzo v. State Farm Fire and Casualty Co., [1999] O.J. No. 2239, 89 A.C.W.S. (3d) 245 (S.C.J.)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 25.10, 25.11, 30, 30.02, 30.06, 30.08, 31.02(1), 51, 51.01, 51.02, 51.03, 62.02(4)(b)

Authorities referred to

Leon, J., and G.T. Roccamo, "Strategic Use of a Neglected Rule: Rule 51 Requests to Admit" (2007), 32 Advocates' Q. 247 Perell, Paul M., and John W. Morden, The Law of Civil Procedure in Ontario, 1st ed. (Markham, Ont.: LexisNexis, 2010)

Timothy J. Hill and Sanj Sood, for appellant. C.M. Loopstra, Q.C., for respondent.

The judgment of the court was delivered by

[1] FERRIER J.: -- The Corporation of the Township of Muskoka Lakes (the "appellant" or the "Township") appeals from an interlocutory decision of Madam Justice D. Wilson dated February 24, 2010 [[2010] O.J. No. 736, 2010 ONSC 1230]. In that decision, Wilson J. (the "appeal judge") allowed an appeal by the respondent, 1679753 Ontario Ltd. ("167"), from an order of Master R.A. Muir dated November 13, 2009 [[2009] O.J. No. 6306, 2009 CarswellOnt 8949 (S.C.J.)] and granted a motion in favour of 167 permitting it to withdraw admissions previously made in a response to a request to admit.

[2] Leave to appeal the order of the appeal judge was granted by Madam Justice Molloy on September 27, 2010 [[2010] O.J. No. 4294, 2010 ONSC 5298 (Div. Ct.)], on the grounds that there is reason to doubt the correctness of the order and appellate guidance would be useful on applicable disclosure principles, the use of a request to admit and withdrawal of admissions.

[3] The Township submits that the appeal judge erred in failing to show proper deference to the master, who correctly found that 167 had failed to disclose relevant documents that it admitted exist and are in its control. The Township seeks to have the order of the master restored, and costs for the appellate hearing, the leave hearing and this appeal.

[4] The respondent, 167, submits that the master misapprehended the evidence in the motion and made palpable and overriding errors that the appeal judge correctly overturned. She made no error in either the appeal ruling, the motion [page542] ruling or the cost ruling. Therefore, the present appeal ought to be dismissed.

[5] For the reasons following, the appeal is dismissed.

Background

[6] The underlying action in this case was initiated via a Statement of Claim issued September 18, 2008. The plaintiff (respondent in this appeal), 167, alleges that it purchased property based upon statements made by a representative of the Township that the municipal zoning in the area permitted the property to be developed as a resort. This information ultimately turned out to be incorrect. As a result, 167 claims for losses arising from negligent misrepresentation, which it itemized in its claim as falling within the following categories: added legal costs associated with a rezoning application; lost opportunity costs due to inability of 167 to secure financing based on the property's actual zoning; costs of carrying the property; loss of profit arising from the inability to proceed with the desired development; and diminution of value of the property due to its actual zoning.

[7] The plaintiff provided the Township with a draft affidavit of documents on July 2, 2009. Counsel for the Township took the position that 167's affidavit of documents was deficient because it did not include any documents dealing with the alleged damages. Counsel for 167 responded by stating, "We are not in a position to provide you with a full damage brief at this time, nor are we required to do so."

[8] In late July 2009, prior to serving its own sworn affidavit of documents, the Township served upon 167 a request to admit requesting that 167 admit that it did not have documents in specified categories in its power, possession or control. In its response to the request, 167 stated on the issue of documents relevant to damages under various headings that it "does have in its power, possession or control documents evidencing [such damages, costs or losses]". In some instances, however, 167 went on to say that such losses were "ongoing" and that "particulars . . . will be provided through the discovery process and prior to trial and contained in an expert's report to be produced in accordance with the Rules . . . prior to trial".

[9] Relying upon what it considered to be admissions in 167's response, the Township brought a motion on September 9, 2009 for an order dismissing the plaintiff's action for failing to disclose all relevant documents or, alternatively, for an order that the plaintiff deliver a further and better affidavit of documents. [page543]

The Master Orders a Further and Better Affidavit of Documents

[10] The motion was heard and a decision was rendered by the master on November 13, 2009. Alan Furbacher, president of 167, swore an affidavit for use on the motion in which he deposed that at the current time (November 9, 2009), 167 has no further documents in its possession, power or control dealing with the issue of damages. In other instances, he said it has such documents, but the losses are ongoing, "particulars of which will be provided through the discovery process and prior to trial". The relevant paragraphs are as follows:

17. 1679753 Ontario Limited is a bare trustee which holds the property in trust for the Alan Furbacher Trust. 1679753 Ontario Limited generates no revenues and has no expenses. Therefore, there are no financial records available for 1679753 Ontario Limited.

18. Further, 1679753 Ontario Limited is part of a conglomerate consisting of 20 corporations referred to as the Correct Group of Companies. This conglomerate bears the expenses connected with the Property along with other expenses incurred by the members of the conglomerate. Therefore, the expenses connected with the Property are commingled with the remaining corporate expenses.

19. On this basis, I verily believe that it is not possible for 1679753 Ontario Limited to produce further documentation pertaining to its damages at this stage of the proceedings without engaging an expert to produce a report. . . . . .

20. I verily believe that there are no further documents in 1679753 Ontario Limited's possession, care, or control which it can produce without engaging an expert to prepare a report.

[11] The master declined to dismiss the action, but ordered 167 to deliver a supplementary affidavit of documents within 60 days including the documents listed at paras. 8, 9, 11, 12, 14, 15 and 16 of the response to the request to admit. He wrote [at paras. 8-10]:

During argument, counsel for the plaintiff argued that the use of a Request to Admit for this purpose was an abuse of the process, of the court. I make no finding on that point. The plaintiff chose to respond to the Request to Admit. Instead it could have brought a motion under Rule 25.11 to have it struck out as an abuse of process. Alternatively it could have brought a motion under Rule 51.05 for leave to withdraw the admissions.

I am left with a situation where the plaintiff admits that it has in its power, possession and control, certain documents that are relevant to the issues in this action but declines to produce those documents as part of its documentary disclosure obligations but rather states that they will be produced as part of the discovery process and prior to trial. Documentary production is part of the discovery process. It is designed to encourage the early and complete disclosure of all documents relating to any matter in issue in a proceeding. Such disclosure fosters the "just, most expeditious and least [page544] expensive determination" of civil proceedings as set out in Rule 1.04(1). It would be very odd indeed for this court to decline to order that a party disclose as part of the documentary discovery process relevant documents that it admits that it has in its power, possession and control simply because is [sic, it] plans to deliver a damages brief or an expert report at a later date, or because some of the damages are ongoing. Those considerations do not obviate the requirement of Rule 30.03(1).

The documents identified by the defendant in its Request to Admit exist, are in the power, possession and control of the plaintiff and are related to the issues in this action. The plaintiff has admitted as much.

The master ordered costs to the Township of $7,500.

[12] 167 launched an appeal of the master's decision on November 20, 2009. It also brought a motion returnable before the appeal judge seeking leave to file an amended response to the request to admit, effectively withdrawing the admissions.

Appeal of the Master's Order Granted by the Appeal Judge

[13] The appeal and motion were argued on February 18, 2010. At the outset, counsel for Township objected to Her Honour hearing the motion at the same time as the appeal, on the basis that 167 was "seeking to change the facts that formed the basis for the Master's decision". The appeal judge rejected this submission as it was most expeditious to hear the matters together.

[14] By written endorsement on February 24, 2010, the appeal judge found [at para. 20] that she was to apply a correctness standard to the decision of the master and should only interfere with his order "if the Master made an error of law, exercised his or her discretion on wrong principles or misapprehended the evidence such that there is a palpable and overriding error".

[15] The appeal judge noted that the master's reasons did not refer to the affidavit of Furbacher. She held that the master failed to take into account this evidence, which stated that the plaintiff's claims were ongoing and that their quantification required the opinion of an expert, and which explained why the documentation was not currently in the possession of the plaintiff. The appeal judge found this to be a fundamental misapprehension of the evidence amounting to a palpable and overriding error such that the decision could not stand.

[16] In addition, the appeal judge held that the master failed to take into account the stage of the proceeding at the time of the request for documentary production. She noted [at para. 23] that damages can continue to accrue over time and that some types of damages can only be proven at trial through an expert. She held that counsel could not know what documents an expert might rely upon to come to an opinion and that to accept the [page545] Township's argument would "impose an onus on a Plaintiff to produce documents prior to discovery which an expert who has not been retained at that point may or may not feel are necessary to support his or her opinion". Further, she stated [at para. 24] that "the Rules of Civil Procedure contemplate ongoing production of documents as a case evolves", and "a motion for a further and better affidavit of documents does not require a party to produce any and all documents that a party will ever rely on during the course of the litigation".

[17] The appeal judge went on to state that it was "unusual" to deliver a request to admit prior to examinations for discovery and that it "placed the plaintiff in a difficult position" because it either had to admit it did not have documentation to support its damages claim or to say that there were documents but they were unknown at the time and would be produced later. She stated that if the plaintiff elected the first option, it would be met with an objection from the defence if it later delivered an expert report quantifying damages.

[18] On the motion to deliver an amended response, the appeal judge held that the plaintiff had met the test required to withdraw admissions. She found that [at para. 26] (1) the withdrawal gives rise to a triable issue (which was conceded); (2) "a reasonable explanation has been provided as to why the admission is sought to be withdrawn"; and (3) there was no prejudice to the defendant that was not compensable with costs, given the stage of the proceedings and the fact that discoveries had not yet commenced.

[19] The appeal judge stated [at para. 27] that "[t]he argument of [the Township] ignores the reality that lawsuits evolve over time and the Rules contemplate this and indeed provide specific timelines for delivery of documentation, expert reports and other materials". The amended response would set out the current state of the documents, and would not, as submitted by the Township [at para. 28], "allow[] the Plaintiff to manipulate the court's processes by permitting it to dictate if, when and how it will disclose relevant documents".

[20] Consequently, the order of the master was set aside, and 167 was permitted to withdraw the admissions made in paras. 8, 9, 11, 12, 14, 15 and 16 of its response, substituting the paragraphs contained in the amended response.

[21] On April 8, 2010, the appeal judge awarded costs to the Township in the sum of $3,750 on the motion before the master, and costs to 167 in the sum of $19,209.10 on the appeal including the motion to withdraw the admissions. [page546]

Leave to Appeal the Order of the Appeal Judge Granted by Molloy J.

[22] On September 27, 2010, Molloy J. granted leave to appeal [[2010] O.J. No. 4294, 2010 ONSC 5298 (Div. Ct.)].

[23] Molloy J. found that the test for leave to appeal was met in the circumstances, as she was "satisfied that: (1) there is 'good reason to doubt the correctness' of the order; and, (2) the proposed appeal raises 'matters of such importance' that leave should be granted".

[24] On the second branch for leave (rule 62.02(4)(b) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194]), Molloy J. found there was reason to doubt the correctness of a number of aspects of the appeal judgment:

-- "There is good reason to believe that the Master did not ignore [the affidavit of Mr. Furbacher], but rather found that it did not constitute a basis for not producing documentation. . . . If there are documents relevant to damages, and it appears there are, it is difficult to see why they cannot be produced without the assistance of an expert. The fact that the accounting for 167 is commingled with other corporations does not mean that 167 does not have the ability to retrieve the documents relevant to its own operations" [at paras. 21-22].

-- "Rule 51.02 clearly states that a Request to Admit can be delivered at any time. In my view, there is nothing unusual in such a Request being delivered prior to discoveries. I also have difficulty understanding why the Request to Admit put the plaintiff in a difficult position" [at para. 24].

-- "The appeal judge appears to have endorsed the plaintiff's position that it will be the expert who decides what is, or is not, relevant to its damages claim I find considerable merit in the defendant's argument that this is the responsibility of the plaintiff and that relevant documents are producible regardless of whether they are relied upon by an expert to support his or her opinion" [at para. 25].

-- "To the extent the appeal judge appears to have endorsed the acceptability of not producing documents relevant to damages until later in the action when a comprehensive damages brief and an expert report have been prepared, I would suggest this is not consistent with the case law, the Rules, or the policy underlying the Rules" [at para. 26]. [page547]

-- "There is considerable merit to the defendant's position that the appeal judge ought not to have entertained the motion to withdraw admissions at the same time as hearing an appeal from the Master. The impact on the proceeding was to permit the admission of new evidence on the appeal without meeting the test for the admission of new evidence. Further, it is unclear that the test for the withdrawal of admissions has been met. The appeal judge states that a 'reasonable explanation has been provided as to why the admission sought to be withdrawn,' but does not state what that explanation is" [at paras. 27-28].

[25] In granting leave, Molloy J. held that the issues go beyond the interests of the parties to this litigation, and are of importance to the administration of justice.

[26] Costs of the leave motion were reserved to the panel hearing the present appeal.

Issues

[27] Did the appeal judge err in setting aside the decision of the master?

[28] Did the appeal judge err in allowing the motion for leave to file an amended response to the request to admit?

Standard of Review

[29] As the parties agree, it is trite that an appeal from a decision of a master or a judge will only succeed if there has been an error of law, if the master/judge exercised his/her discretion on wrong principle or if he/she misapprehended the evidence such that the decision contains a palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 211 D.L.R. (4th) 577.

Analysis

[30] Before the master, 167 argued that it was an abuse of process to use a request to admit, as the Township did, to obtain an admission that the opposite party does not have (or does have) documents in its possession to establish its claims for damages. The master did not rule on the issue, because 167 had responded to the request to admit. The master noted that 167 could have moved to strike it as an abuse of process (see rule 25.11) or for leave to withdraw the admissions. The master appears to have treated the response to the request as a "fresh step" which would prevent 167 from arguing an abuse of process. Although 167 argued abuse of process, there is nothing in the [page548] material to indicate that 167 took the position at any stage of the proceedings below that the request to admit was a nullity.

[31] For the reasons which follow, that part of the request to admit comprising paras. 8, 9, 11, 12, 14, 15 and 16 is a nullity. 167 was not bound to respond to a nullity and its response to those questions is a nullity. Since the response is a nullity, so are the admissions.

[32] The relevant rules follow:

51.01 In rules 51.02 to 51.06,

"authenticity" includes the fact that, (a) a document that is said to be an original was printed, written, signed or executed as it purports to have been, (b) a document that is said to be a copy is a true copy of the original, and (c) where the document is a copy of a letter, telegram or telecommunication, the original was sent as it purports to have been sent and received by the person to whom it is addressed.

51.02(1) A party may at any time, by serving a request to admit (Form 51A), request any other party to admit, for the purposes of the proceeding only, the truth of a fact or the authenticity of a document.

(2) A copy of any document mentioned in the request to admit shall, where practicable, be served with the request, unless a copy is already in the possession of the other party.

51.03(1) A party on whom a request to admit is served shall respond to it within twenty days after it is served by serving on the requesting party a response to request to admit (Form 51B).

(2) Where the party on whom the request is served fails to serve a response as required by subrule (1), the party shall be deemed, for the purposes of the proceeding only, to admit the truth of the facts or the authenticity of the documents mentioned in the request to admit.

(3) A party shall also be deemed, for the purposes of the proceeding only, to admit the truth of the facts or the authenticity of the documents mentioned in the request, unless the party's response, (a) specifically denies the truth of a fact or the authenticity of a document mentioned in the request; or (b) refuses to admit the truth of a fact or the authenticity of a document and sets out the reason for the refusal.

[33] The master below expressly made no finding on whether the use of a request to admit in this way was an abuse of process.

[34] There does not appear to be any case law in Ontario addressing the propriety of employing a request to admit to have a plaintiff state whether it has in its possession, power or control [page549] documents evidencing the damages claimed. However, upon a plain reading of rule 51.02 and a consideration of the wider context, this approach is not in keeping with the anticipated use of the rule. A request to admit the existence and a party's possession of a particular type of document is not a request to admit "the truth of a fact or the authenticity of a document" for purposes of the proceeding. As no particular document is specified in the request, this is not a matter of admitting authenticity so as to ease the use of the document in trial. The only "truth of a fact" that is conceivably being admitted is the truth of the existence or nonexistence of a document relating to the specified claim. However, this is not the type of fact the request to admit procedure is meant to elicit.

[35] The request to admit procedure is intended to expedite the resolution of disputes by dispensing with the need for formal proof at trial of a particular fact or of documentary authenticity. It provides a simplified format for admissions to assist parties in defining the issues, thereby reducing the length and costs of litigation: see, e.g., Tozzo v. State Farm Fire and Casualty Co., [1999] O.J. No. 2239, 89 A.C.W.S. (3d) 245 (S.C.J.); Brignolio v. Brignolio, [1997] O.J. No. 1075, 70 A.C.W.S. (3d) 42 (Gen. Div.), at para. 11; and J. Leon and G.T. Roccamo, "Strategic Use of a Neglected Rule: Rule 51 Requests to Admit" (2006), 32 Advocates' Q. 247 at 247. It is inappropriate to use the request to admit procedure as a "weapon" to harass or badger the opposing party, and unduly repetitious requests, requests that are irrelevant, and requests that do not expedite the gathering of facts or save costs may be struck as an abuse of process: see, e.g., Slate Falls Nation v. Canada (Attorney General), 2005 ONSC 45206, [2005] O.J. No. 5228, 144 A.C.W.S. (3d) 241 (S.C.J.); Milani v. Milani, 2005 ONSC 4444, [2005] O.J. No. 693, 137 A.C.W.S. (3d) 777 (S.C.J.).

[36] The use of a request to admit as seen in the present case will not expedite the gathering of facts or save costs. An admission that the plaintiff has documents evidencing the alleged damages does not comport with the purpose of the rule insofar as the purpose is to provide an efficient means of proving matters that would otherwise have to be proved at trial by other means. An admission that a document exists is not the same as an admission that the document is authentic or that the facts contained in the document are themselves true: Charles David Pty. Ltd. v. Qualico Central Meat Packers Montreal Ltd., [1992] O.J. No. 2500 (Gen. Div.), affd [1996] O.J. No. 2054 (C.A.). As Kukurin J. stated, at para. 40, in Children's Aid Society of Algoma v. O. (M.), 2001 ONCJ 37715, [2001] O.J. No. 5220 (C.J.), "it is critical in formulating each item in the request to admit to do so in a way [page550] that will result in an admission of the truth of a desired fact, not of a fact that is useless as evidence" (emphasis added).

[37] Furthermore, using the Rule 51 procedure in this manner is redundant. If a document exists and is relevant, the disclosure obligations otherwise imposed on the plaintiff under Rule 30 require the document be disclosed regardless of whether a request to admit has been used. The tool provided by Rule 51 may be a "supplement or complement to examinations for discovery" (P.M. Perell and J.W. Morden, The Law of Civil Procedure in Ontario, 1st ed. (Markham, Ont.: LexisNexis, 2010) at 510), but it should not be taken to be a means by which a party can prod another into respecting his or her discovery obligations. If a party is of the belief that relevant documents are not being disclosed as required by rule 30.02, recourse is provided under rule 30.06, by which the party may move before the court for an order (a) allowing cross- examination on the affidavit of documents; (b) requiring service of a further and better affidavit of documents; (c) requiring disclosure or production for inspection of any non- privileged documents; or (d) directing that the court will examine a document to determine its relevance. If a party fails to accord with its disclosure obligations and any related court orders, rule 30.08 provides that the uncooperative party may be prevented from later relying on the undisclosed documents at trial, or may find his or her action or defence struck.

[38] Given this context, it is unnecessary and superfluous for a party to seek an admission of the existence of a document via the Rule 51 procedure. The Superior Court has held that the Rule 51 procedure is not to be used to "obtain particulars" (since a means of doing so is provided for in rule 25.10) or to have another party admit that there is "a lack of evidence to prove or disprove a particular fact": Slate Falls, supra, at paras. 35, 47-48. Aspects of a series of requests to admit were struck in Slate Falls, where the requesting party stated that its goal was "to pry out the information required to analyze and understand what exactly these claims [were] really all about in order to mount a proper defence" (at para. 47). Slate Falls involved 25 separate and extensive requests to admit that were deficient in a number of other ways, and that were considered by the court to be an attempt to obtain written discovery in addition to oral discovery without leave to do so, contrary to rule 31.02(1). A similar scenario was considered in Gualtieri v. Canada (Attorney General), [2008] O.J. No. 698 (S.C.J.).

[39] Although no discovery has yet occurred in the present case, and only a single request to admit has been employed, the Township has, in principle, employed the request to admit in a [page551] similarly improper manner. The purpose of the request to admit in this case appears to be to have the plaintiff either comply with its disclosure obligations or provide an admission that its claim is not supported with evidence. Although these are matters that the Township has an interest in, the procedure chosen is not authorized by the Rules.

[40] I note that Nordheimer J. in Foundation for Equal Families v. Canada (Attorney General), [1999] O.J. No. 2561, 89 A.C.W.S. (3d) 676 (S.C.J.), took the view that Rule 51 should be interpreted liberally, in order to achieve the most expeditious resolution of the issues [at paras. 20-21]:

A strict and narrow reading of these rules would clearly lead one to the conclusion that as soon as you step outside facts or authenticity of documents, you step outside the procedure available under the rules. However, as noted above, the rules mandate that a "liberal" interpretation is to be applied to the rules and, as a consequence, it is my view that a liberal interpretation of the rules regarding requests to admit ought to allow that procedure to be used where what is sought is an admission of an issue of mixed fact and law. It seems to me that as long as one element of the admission sought is factual in nature, a liberal interpretation of the rules should permit that matter to be the subject of a request to admit. Put another way, I do not see any reason why a party who seeks to obtain an admission of fact should be precluded from so doing because the requested admission would necessarily involve an admission of the legal effect or consequence of that fact.

Further, such an interpretation of the rules regarding requests to admit also seems to me to accomplish the expressed goal of achieving the most expeditious and least expensive determination of this application on its merits. First, it may obviate the need (depending on the respondent's response) for a great deal of factual material to be put before the court. Second, it permits the parties to focus on the real matters that are in issue.

[41] Nevertheless, such a "liberal" interpretation still required an attempt to obtain an admission of fact relevant to the merits of the case. This feature is absent in the case at bar.

[42] Accordingly, the request to admit is a nullity to the extent of the questions noted. That being so, the response to those questions is also a nullity. Since the master relied on the admissions in the response in making his order, that order must be set aside.

[43] The appellant argues that the Furbacher affidavit filed for the motion before the master also contained admissions about documents in the possession of the respondent. However, the master did not refer to that affidavit nor base his decision on it.

[44] I also note that the master failed to account for the fact that some additional documents had been produced by the time of the motion, and that Mr. Furbacher's affidavit indicated that [page552] some documents were not available. There is no reference to these circumstances in the reasons of the master.

[45] The appeal judge set aside the master's order because of a misapprehension of that evidence and for other reasons which I shall address below.

[46] Having set the order aside, the appeal judge could then have remitted the matter back to the master for a re-exercise of his discretion based on all the material, or she had the option of exercising her discretion in the matter -- which option she chose. This court is thus in the position of having to determine whether it was a proper exercise of discretion to make the order dismissing the motion for a further and better affidavit [of] documents.

[47] I begin with the motion to withdraw the admissions in the response. The issue is moot because the request to admit was a nullity.

[48] Contrary to the finding of the appeal judge, there is nothing in Rule 51 which restricts the timing of the delivery of a request to admit. In fact, the rule specifically states that a party may serve a request to admit at any time.

[49] Further, the fact that the corporate structure is complex or that damages are ongoing is not a basis upon which documentary disclosure can be resisted. To the extent that ongoing legal expenses and operating costs can be substantiated with documentation, these documents would be producible on an ongoing basis.

[50] The appeal judge's exercise of discretion must be considered in the context of the damages claims. The amount claimed is $50 million under several complex heads of damages. It is apparent that the appeal judge was persuaded that 167 ought not to be compelled to provide a further and better affidavit of documents at this stage in the proceedings. She was persuaded that in the circumstances of this case, such an order would place an unreasonable burden on the plaintiff to produce documents which may or may not turn out to be at all relevant. She also took into consideration the evidence of Mr. Furbacher on the extent of production already made.

[51] I am not persuaded that it was an improper exercise of discretion by the appeal judge to make the order she did. Apart from the request to admit, the only evidence in support of a further and better affidavit of documents pertained to the legal costs in respect of a rezoning application. However, the plaintiff has provided the legal bills to date upon which it relies in the action. There is also no evidence that the plaintiff's affidavit of documents omits relevant documents pertaining to the other [page553] heads of damage, which are of a qualitatively different nature. Accordingly, the appeal is dismissed.

Costs

[52] In allowing the appeal, the appeal judge reduced the costs awarded by the master to the defendant Township to $3,750. Costs should follow the event and those costs should be fixed in the amount ordered by the master, namely, $7,500, and payable to 167.

[53] For the appeal, the appeal judge awarded 167 the costs of the motion to withdraw the admissions and the costs of the appeal fixed in the total sum of $19,209.10, including disbursements and GST.

[54] In making these orders, the appeal judge took account of an offer that had been made by 167 following the master's decision, by which if the Township consented to the amended response (the withdrawal of admissions), the appeal would be withdrawn and 167 would pay $3,750 in costs. That offer was not accepted and the appeal result was more favourable to 167.

[55] I see no basis for interfering with the latter two costs awards made by the appeal judge, fixed in total at $19,209.10, including disbursements and GST.

[56] For the appeal in this court, the parties each submitted cost outlines in the amounts of approximately $17,000 and $19,000 respectively. There is no reason why costs should not follow the event. I would fix the costs at $18,000, including disbursements and HST for this appeal and the motion for leave to appeal.

Appeal dismissed.