Lazar et al. v. TD General Insurance Company et al.

[Indexed as: Lazar v. TD General Insurance Co.]

Ontario Reports

Ontario Superior Court of Justice,

Divisional Court,

Sachs, Stewart and Spies JJ.

March 27, 2017

137 O.R. (3d) 206 | 2017 ONSC 1242

Case Summary

Civil procedure — Discovery — Examination for discovery — Plaintiff spouses' credibility being in issue in action for payment of insurance proceeds — Plaintiffs moving successfully for order that they were entitled to attend each other's examination for discovery — Defendant's appeal allowed — Onus on party seeking exclusion to demonstrate that exclusion is necessary to meet ends of justice — Risk existing that plaintiffs would parrot each other's evidence or tailor that evidence if exclusion order not made — Order for exclusion in interests of justice.

The plaintiffs, a married couple, sued the defendant insurer for payment of certain insurance proceeds after their house and its contents were destroyed by fire. The plaintiff moved for an order that they were entitled to attend each other's examination for discovery. The defendant filed in response an affidavit from a law clerk stating that the amount claimed by the plaintiffs for their contents increased significantly from the first, to the second and then the third contents list, and that there were also changes in the items listed and number of items claimed. The motion judge found that the onus on the defendant to demonstrate that evidence was likely to be tailored or parroted was high. She found that that onus was not met, and granted the order sought by the plaintiffs. The defendant appealed.

Held, the appeal should be allowed.

The motion judge erred when she found that she was bound by a Court of Appeal decision dealing with the exclusion of witnesses at trial. The test for exclusion in the case of examinations for discovery is not the test set out in that decision. Rather, the onus is on the party seeking exclusion to demonstrate that exclusion is necessary to meet the ends of justice. It is not always necessary that a party prove that it is likely that evidence will be tailored or parroted. That would be an impossible task in most cases. Depending on the existence of other factors, a risk that evidence will be tailored may be sufficient to discharge the onus. In the circumstances of this case, there was a risk that the plaintiffs would tailor their evidence if an exclusion order was not made. The defendant had satisfied its onus of establishing that an exclusion order should be made in the interests of justice.

Baywood Paper Products Ltd. v. Paymaster Cheque-Writers (Canada) Ltd. (1986), 1986 2699 (ON SC), 57 O.R. (2d) 229, [1986] O.J. No. 2974, 13 C.P.C. (2d) 204 (Dist. Ct.); Liu Estate v. Chau (2004), 2004 8234 (ON CA), 69 O.R. (3d) 756, [2004] O.J. No. 306, 182 O.A.C. 366, 236 D.L.R. (4th) 711, 128 A.C.W.S. (3d) 1185 (C.A.), distd

Shuttleworth v. TGA General Contracting, [2003] O.J. No. 2997, 124 A.C.W.S. (3d) 453 (S.C.J.), consd

Other cases referred to

Ambrose v. Anderson, [2011] O.J. No. 3496, 2011 ONSC 4620, 31 C.P.C. (7th) 294, 206 A.C.W.S. (3d) 489 (S.C.J.); Atlas Corp. v. Ingriselli, [2010] O.J. No. 2915, 2010 ONSC 3678, 190 A.C.W.S. (3d) 724 (S.C.J.); [page207] Besner v. Ontario, [2011] O.J. No. 5851, 2011 ONSC 7335, 31 C.P.C. (7th) 370, 210 A.C.W.S. (3d) 334; Blomme v. Eastview Racquet & Fitness Club (1995), 1995 7237 (ON SC), 26 O.R. (3d) 496, [1995] O.J. No. 3441, 59 A.C.W.S. (3d) 28 (Gen. Div.); Changoo v. Changoo, [1999] O.J. No. 865, 95 O.T.C. 215, 33 C.P.C. (4th) 86, 45 R.F.L. (4th) 194, 86 A.C.W.S. (3d) 1021 (Gen. Div.); Heasley v. Labelle, [2013] O.J. No. 2015, 2013 ONSC 2601, 51 C.P.C. (7th) 370, 228 A.C.W.S. (3d) 68 (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; Karamanokian v. Assad, [1992] O.J. No. 2284, 1992 CarswellOnt 3979 (Gen. Div.); Lipischak v. DeWolf, [2008] O.J. No. 4918 (S.C.J.); Modriski v. Arnold, 1947 316 (ON CA), [1947] 3 D.L.R. 321, [1947] O.W.N. 483 (C.A.); Rando v. 917429 Ontario Ltd., [1998] O.J. No. 2640, 80 A.C.W.S. (3d) 763 (Gen. Div.); Resolute Forest Products Inc. v. 2471256 Canada Inc. (2016), 133 O.R. (3d) 167, [2016] O.J. No. 4464, 2016 ONSC 5398, 90 C.P.C. (7th) 337, 403 D.L.R. (4th) 121, 269 A.C.W.S. (3d) 461 (Div. Ct.); Sissons v. Olson, 1951 480 (BC CA), [1951] B.C.J. No. 77, 1 W.W.R. (N.S.) 507 (C.A.); Solutions With Impact Inc. v. Domino's Pizza of Canada Ltd., [2010] O.J. No. 423, 2010 ONSC 630, 86 C.P.C. (6th) 95, 184 A.C.W.S. (3d) 639 (S.C.J.); Visram v. Chandarana, [2010] O.J. No. 3145, 2010 ONSC 4080, 191 A.C.W.S. (3d) 66 (S.C.J.)

Statutes referred to

Courts of Justice Act, R.S.O. 1990, c. C.43, s. 19(1) (b)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 2.03, 52.06, (2)

APPEAL by the defendant from an order declaring that the plaintiffs were entitled to be present at each other's examination for discovery.

Barry I. Yellin, for plaintiffs/respondents.

Francis A. DeSantis and Jeffrey R. Goit, for defendant/ appellant TD General Insurance Company.

The judgment of the court was delivered by

SPIES J.: —

Introduction

[1] TD General Insurance Company (the "appellant") appeals the interlocutory order of Madam Justice Carpenter-Gunn (the "motion judge"), dated May 13, 2016, which confirmed Elena and Myroslaw Lazar's (the "respondents") right to attend each other's examinations for discovery.

[2] This appeal is brought under s. 19(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43. Leave was granted by Mr. Justice Lofchik on August 17, 2016; see 2016 ONSC 5133.

[3] The appellant seeks the following relief:

(1) an order setting aside the order of Carpenter-Gunn J.; [page208]

(2) an order compelling the respondents to submit to being examined individually, outside the presence of the other; and

(3) an order that the respondents' examinations for discovery take place before the appellants. The respondents consent to this.

Issues on Appeal

[4] The issues raised on appeal are essentially as follows:

(1) did the motion judge err by applying the incorrect legal test that the moving party was required to meet with respect to the exclusion of co-parties at examinations for discovery when she found that she was bound by the Court of Appeal decision of Liu Estate v. Chau (2004), 2004 8234 (ON CA), 69 O.R. (3d) 756, [2004] O.J. No. 306 (C.A.) ("Lui Estate"); and

(2) did the motion judge err by failing to consider all the relevant evidence?

Standard of Review

[5] The appellant submits that the motion judge erred on extricable questions of law and that, as such, the decision is subject to a correctness standard of review, in accordance with the Supreme Court of Canada's comments in Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, at para. 8.

[6] The respondents cite the case of Resolute Forest Products Inc. v. 2471256 Canada Inc. (2016), 133 O.R. (3d) 167, [2016] O.J. No. 4464, 2016 ONSC 5398 (Div. Ct.), at para. 13, per Corbett J., for the proposition that in interlocutory matters concerning the discretion of a motion judge, the Divisional Court should only intervene if the motion judge erred in principle, misapprehended or failed to take account of material evidence, or reached an unreasonable conclusion.

[7] In my view, the appeal on the first issue raises a question of law and so the standard of review on that issue is correctness. On the second issue, the issue is whether or not the motion judge misapprehended the evidence.

Background and Procedural History

[8] The respondents, the plaintiffs in the main action, are married. Their house along with its contents was completely destroyed by fire in February 2013.

[9] TD General Insurance, a defendant in the main action and appellant on appeal, insured the respondents' property. The [page209] policy provided coverage for losses or damages to the building and contents, with a single limit of $2,110,000.

[10] The "building" component of the respondents' insurance claim was resolved in the amount of $930,000. The appellant has paid $248,563.21 for the "contents" claim.

[11] The action was commenced on January 30, 2015, and concerns the alleged failure of the appellant to pay the full amount of the contents claim. The respondents claim the balance of the insured amount under the policy in the amount of $1,070,000. The quantum of that claim is in dispute and, apart from a claim for punitive damages, is the sole issue in the action.

[12] Examinations for discovery were booked for March 11, 2016. In anticipation of that date, counsel for the respondents confirmed his clients' intention to attend each other's examinations. After a series of communications via letter and e-mail, the appellant's counsel ultimately cancelled the scheduled discoveries.

[13] When the appellant's counsel did not bring a motion to clarify the attendance issue, the respondents brought their own motion before the motion judge to confirm their right to attend each other's examinations for discovery. They filed an affidavit of a legal assistant in support of the motion which set out the letters and e-mails between counsel dealing with the appellant's objection to the respondents attending each other's discovery.

[14] The appellant filed an affidavit from a law clerk, Cindy Gauthier (the "Gauthier affidavit") in response to the motion. The Gauthier affidavit referred to a contents list dated July 6, 2015, an updated contents list of August 12, 2015, and a proof of loss form sworn by the respondents with a third contents list dated January 18, 2016, all provided by the respondents to the appellant. The amount claimed by the respondents for their contents increased significantly from the first, to the second and then the third contents list. There were also changes in the items listed and numbers of items claimed. According to the Gauthier affidavit, the contents list includes large quantities of particular items including, for example, 81 paintings or pieces of art and 31 furs.

[15] According to the Gauthier affidavit, the only documentary evidence the respondents have are some undated pictures of various rooms in their home before the fire, which are reproduced in the affidavit. A letter from Mr. Yellin, counsel for the plaintiffs, attached to the affidavit, also refers to a supplementary affidavit of documents which he states includes two invoices.

[16] The Gauthier affidavit makes no express reference to any issues in the litigation concerning the credibility of the plaintiffs. There is no direct evidence regarding the likelihood of the plaintiffs tailoring or parroting their evidence at discovery. [page210]

[17] The respondents filed an affidavit from a law clerk in response. For some reason, the affidavit included a copy of the appellant's letter rejecting the amount claimed in the January 18, 2016 proof of loss, which had already been included in the Gauthier affidavit. It is significant, however, that this affidavit does not dispute any of the contents of the Gauthier affidavit.

Decision of the Motion Judge

[18] In her ruling, the motion judge referred to para. 23 of the Lui Estate decision, which states as follows:

I need not decide whether it is open to a trial judge to invoke rule 2.03 and dispense with compliance with rule 52.06(2). In this case, the rationale for excluding Ms. Chau was that credibility was in issue. The concern, one can assume, is the possibility that Ms. Chau would tailor her evidence so that it would be consistent with that of her husband. That was not a sufficient basis for dispensing with the rule. See Changoo at paras. 13-17. Excluding a party because of the possibility she will tailor her evidence does not give proper weight to the true basis for the party's right to be present. As Borins D.C.J. said in Baywood Paper Products Ltd. v. Paymaster Cheque-Writers (Canada) Ltd. (1986), 1986 2699 (ON SC), 57 O.R. (2d) 229 at p. 239 "[t]he presence of a party at the examination for discovery, like the presence of a party at trial, is consistent with due process and the right to protect his or her interests by observing the conduct of the examination."

[19] The motion judge rejected the submissions of the appellant who argued that the Lui Estate decision was distinguishable because it deals with the exclusion of a witness at trial, and accepted the position of the respondents that "Lui [Estate] is binding on this court". The motion judge went on to adopt the reasoning of R. Smith J. in Heasley v. Labelle, [2013] O.J. No. 2015, 2013 ONSC 2601 (S.C.J.) ("Heasley"), who found that he was bound by the Liu Estate decision and specifically chose not to follow a decision of the British Columbia Court of Appeal in Sissons v. Olson, 1951 480 (BC CA), [1951] B.C.J. No. 77, 1 W.W.R. (N.S.) 507 (C.A.) ("Sissons").

[20] In Heasley, at para. 20, Smith J. stated:

[E]ach co-party has an inherent and fundamental right to be present at all parts of the litigation process, including discovery and at trial. A co-party will only be excluded if the moving party shows there is sufficient evidence to demonstrate a real risk of tailoring, parroting, intimidation, disturbance of the proceeding, or where the ends of justice require exclusion. The onus on the moving party is to present sufficient evidence of the above factors to overcome a co-party's fundamental right to be present at all parts of the litigation process. The nature of the relationship between the co-parties by itself is not enough to constitute cause for exclusion.

[21] The motion judge, relying on Lui Estate, found that "the onus on the defendant to demonstrate that evidence is likely to be tailored or parroted is high". [page211]

[22] Regarding the Gauthier affidavit, the motion judge noted that the respondents had not chosen to file an affidavit from one of the main defendants. She found that

(a) "there is no evidence within that [Gauthier] affidavit asserting that there is a possibility of the plaintiffs parroting each other's evidence, or tailoring their evidence, or whether the ends of justice require the exclusion of the parties";

(b) "on the record before [the court] . . . this is a case where credibility is but one of the factors and . . . the defendant has not raised sufficient evidence that the discovery process will be threatened or compromised if the parties are allowed to be present at the examination of the other party";

(c) there is "not sufficient evidence on the record before [the court] to demonstrate a real risk of tailoring, parroting or any evidence where the ends of justice require its exclusion"; and

(d) there is "no evidence" in the affidavit of Ms. Gauthier about these specific issues; rather, the court is left with "speculation about these factors".

[23] In light of these findings, the motion judge held that she was "not prepared to take away the plaintiffs' due process to be present at each other's discovery on the record before it".

[24] For these reasons, the motion judge made an order confirming the right of the respondents to attend each other's examinations for discovery.

Analysis

(1) Did the motion judge err when she found that she was bound by the Court of Appeal decision of Liu Estate?

[25] In my view, the motion judge erred in law when she found that she was bound by the decision of the Court of Appeal in Liu Estate. One of the issues on that appeal was the trial judge's direction that the defendant wife leave the courtroom while her husband, who was also a defendant, testified. On this issue, in Liu Estate, Rosenberg J.A. began as follows, at paras. 20-22:

The trial judge's direction that Annie Chau leave the courtroom for part of the trial was contrary to rule 52.06(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. That rule provides, in part, that an order for exclusion of witnesses "may not be made in respect of a party to the action". The judge may, however, direct that a party give evidence before any other witnesses. As well, under rule 52.06(4), the trial judge may exclude from the courtroom [page212] "any person who is interfering with the proper conduct of the trial". That exception had no application in this case.

Counsel for the Estate suggests that the trial judge has a discretion to exclude a party, especially where credibility is in issue. He referred us to the decision in Rando v. 917429 Ontario Ltd., [1998] O.J. No. 2640 [(QL) (Gen. Div.)] where Ground J. granted a motion for an order excluding the co-defendant from the hearing. It is not, however, clear that case concerned exclusion of a party at trial. In his brief endorsement, Ground J. referred to the decision of the British Columbia Court of Appeal in Sissons v. Olson (1951), 1951 480 (BC CA), 1 W.W.R. 507 as the leading authority. Sissons deals with exclusion of a party while his co-plaintiff was being examined for discovery. The endorsement also makes no reference to rule 52.06. I do not think Rando is authority for the trial judge having discretion to exclude a party from the trial.

In Changoo v. Changoo (1999), 33 C.P.C. (4th) 86 (Ont. S.C.J.), a ruling on a motion by the plaintiff to cross-examine each of the three defendants on their affidavits in the absence of the others, Cullity J. provides some assistance in interpreting rule 52.06. He expressed the view that aside from the provisions of rule 52.06(4), which, as indicated, permits the trial judge to exclude any person who is interfering with the proper conduct of the trial, the judge may have the power to exclude a party by virtue of rule 2.03 which provides as follows:

2.03 The court may, only where and as necessary in the interests of justice, dispense with compliance with any rule at any time.

(Emphasis added)

[26] These passages were the basis of an argument by the appellant before the motion judge seeking to distinguish Liu Estate. In my view, the motion judge erred in law when she rejected this submission. The motion judge did not properly consider these paragraphs that preceded para. 23 that she relied upon. It is clear from these preceding paragraphs that Rosenberg J.A. held that these decisions dealing with discoveries and other hearings were not applicable to the matter at hand, because they did not reference rule 52.06 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] and did not pertain to a trial judge excluding a party from a trial. Had the Court of Appeal considered the question of whether a party should be excluded from an examination for discovery or other pre-trial examination to be relevant, these cases would have been considered and either adopted or distinguished.

[27] I have considered the fact that, in para. 23, although Rosenberg J.A. states he need not decide whether or not a trial judge could invoke rule 2.03 to dispense with compliance with rule 52.06(2), he goes on to say that even if such a discretion exists, the "possibility" that Ms. Chau would tailor her evidence was not a sufficient basis for dispensing with the rule, following Changoo v. Changoo, [1999] O.J. No. 865, 33 C.P.C. (4th) 86, 45 R.F.L. (4th) 194 (Gen. Div.), per Cullity J. ("Changoo"). [page213] In Changoo, however, Cullity J. was not dealing with examinations for discovery. He examined the test for exclusion from the perspective of rule 52.06 and the authority of a trial judge to exclude a party because he considered it analogous to cross-examination on an affidavit.

[28] I have also considered the fact that Rosenberg J.A. referred to Baywood Paper Products Ltd. v. Paymaster Cheque-Writers (Canada) Ltd. (1986), 1986 2699 (ON SC), 57 O.R. (2d) 229, [1986] O.J. No. 2974, 13 C.P.C. (2d) 204 (Dist. Ct.), per Borins D.C.J. (as he then was) ("Baywood"), and set out a passage of that case that refers to a party at an examination for discovery. Baywood is distinguishable from the case at bar as it dealt with the right of a party to attend the examination for discovery of the adverse party. Furthermore, read in the context of the entire decision, Rosenberg J.A.'s reference to Baywood, at p. 239 O.R., was to reinforce the principle that a party has the right to be present for trial and all other proceedings that form part of the trial process; this is "consistent with due process and the right to protect his or her interest by observing the conduct of the examination". In my view, this reference to Baywood does not expand the ratio of Liu Estate beyond the exclusion of parties at trial.

[29] Although not argued by the respondents, I have also considered the fact that, in para. 24 of the Liu Estate decision, Rosenberg J.A. referred to the majority decision in Sissons and quoted from a passage from the decision of O'Halloran J.A. where he stated the principle that every person has an inherent right to be present at the trial "or any other proceeding to which he is a party". Given the balance of the passage of the decision referred to, this appears to have been for the purpose of approving of O'Halloran J.A.'s discussion of the right of a judge to exclude a party who acted in a manner to disturb the judicial conduct of the trial or proceedings. That is not in issue in this case.

[30] My conclusion is reinforced by paras. 24, 26 and 27 of Lui Estate. The opening language of para. 24 continues with "the fundamental nature of the right to be present" at trial. After referring, in para. 26, to the rule in criminal cases that an accused is entitled to be present throughout the trial, and quoting from a Court of Appeal decision explaining the rationale for that rule, Rosenberg J.A. stated, at para. 27:

It seems to me that similar concerns apply in the civil context. Parties have the right to be present, not only to hear the case put against them, but as a matter of fairness and openness and to avoid a "justifiable sense of injustice" because they were deprived of "the opportunity of acquiring first-hand knowledge of the proceedings leading to the eventual result of the trial". [page214]

[31] For these reasons, I conclude that Liu Estate is distinguishable from this case which deals with the ability to exclude a co-party from the examination for discovery of the other co-party. I was referred to two masters' decisions that have come to the same conclusion: Master Short in Solutions With Impact Inc. v. Domino's Pizza of Canada Ltd., [2010] O.J. No. 423, 2010 ONSC 630 (S.C.J.) and Master Graham's decision, decided a few months later, Visram v. Chandarana, [2010] O.J. No. 3145, 2010 ONSC 4080 (S.C.J.), which he later followed in Ambrose v. Anderson, [2011] O.J. No. 3496, 2011 ONSC 4620 (S.C.J.).

[32] What I do take from the Liu Estate and Baywood decisions is that a party has the right to be present for all aspects of the action, a principle "consistent with due process and the right to protect his or her interest by observing the conduct of the examination".

[33] All of the cases referred to by counsel accept that there is discretion to exclude a party from the examination for discovery of a co-party. As Borins D.J.C. stated in Baywood, at para. 21:

[D]espite the absence of a specific Rule of Civil Procedure, the cases support the existence of a discretion . . . to exclude parties from the examination room during the examination of other parties in certain circumstances. This is a broad discretion . . . As in any situation where a judicial officer is empowered to exercise a discretion it must be exercised upon proper legal principles. What may require the exclusion of a party on the ground that it is necessary to do so to secure the ends of justice depends on the particular situation. Thus, a party cannot be excluded from the examination for discovery of the opposite party except for cause. What may constitute cause depends on the circumstances in each case.

(Emphasis added)

[34] Having decided that the motion judge was not bound to apply the test for exclusion referred to in Liu Estate, the question then is what test should apply in these circumstances when an adverse party seeks an order that a co-party be excluded from the examination for discovery of the other co-party. In other words, what constitutes "cause"? It appears that this is the first time an appellate court of this province has dealt with this issue.

[35] Justice Smith, in Heasley, reviewed the two competing lines of authorities on this issue. In addition to Liu Estate, he referred to a number of cases where it was held that where evidence is "likely" to be tailored or parroted an exclusion order for co-parties may be made. These cases stand for the proposition that there must be more than just a "possibility" of a co-party tailoring their evidence if an exclusion order is not made.

[36] The Sissons case from the British Columbia Court of Appeal, which was referred to with approval by Ground J. in [page215] Rando v. 917429 Ontario Ltd., [1998] O.J. No. 2640, 80 A.C.W.S. (3d) 763 (Gen. Div.) ("Rando"), has been found to be the source of authorities which have favoured what has been termed a "lower" or "less stringent" test for the exclusion of a co-party from the examination for discovery of a co-party. It is important to note, however, that the decision of that court that has actually been followed is the minority decision of Sidney Smith J.A., who came to the same result as O'Halloran J.A. for the majority but for different reasons. Smith J.A. stated, at para. 16:

The weight of authority holds, I think, that either at a trial or on discovery a party cannot be excluded while his coparty testifies, without cause shown. But I do not think the onus of showing cause thus put on the opposite party is a heavy one; and I think the onus is lighter on discovery than at a trial, since the possibility of injustice from exclusion is more remote. Even at a trial, I think the chance of injustice being done in this way is extremely small. But in many cases the chances of injustice to the opposite party from refusal to exclude may be very substantial. I think the benefit of any real doubt should be given to the party asking for exclusion. If from the pleadings or otherwise it appears that the examinations of the coparties will cover the same ground, and that their credibility will be a factor, then it seems to me their exclusion should be ordered.

[37] The minority decision in Sissons was followed in Rando, as already noted, and in a decision of Rutherford J.: Karamanokian v. Assad, [1992] O.J. No. 2284, 1992 CarswellOnt 3979 (Gen. Div.) ("Karamanokian"). Both Rando and Karamanokian were decided before Liu Estate. There have also been cases decided since Liu Estate, where no mention is made of Lui Estate; for example, Lipischak v. DeWolf, [2008] O.J. No. 4918 (S.C.J.), per Caputo J. ("Lipischak") and Atlas Corp. v. Ingriselli, [2010] O.J. No. 2915, 2010 ONSC 3678 (S.C.J.), per Lauwers J. (as he then was), which followed Lipischak. In both of those cases, the competing lines of authority on the issue of the onus were reviewed and it was determined by the respective judge that the less stringent test as set out by Smith J.A. in Sissons should apply in the circumstances.

[38] In my view, there is a risk that, by focusing on the question of whether a more or less stringent test should apply in deciding whether or not a party should be excluded from an examination for discovery or other pre-trial examination, the underlying rationale of a party's right to be present at the examination is not properly considered. I prefer the language of Borins J. in Baywood, as set out above. In my view, it is preferable to focus on the competing interests and express the onus as that the party seeking exclusion has to demonstrate that exclusion is necessary to meet the ends of justice. [page216]

[39] In considering whether or not a party has discharged its onus, a number of factors, including those enumerated by Master Rogers in Besner v. Ontario, [2011] O.J. No. 5851, 2011 ONSC 7335, at para. 24, may be considered:

Factors considered include: whether the co-parties have common interests; whether the co-parties are represented by the same lawyer; whether it appears that the examinations for discovery of co-parties will cover the same grounds; whether credibility will be a factor or an issue in the case; whether evidence is likely to be tailored or parroted; whether a party is likely to be intimidated; whether the proceedings are likely to be disturbed or disrupted; whether there would be prejudice to the excluded party; and, generally, whether the ends of justice require the exclusion.

(Citations omitted)

This list is not intended to be exhaustive.

[40] I would make one qualification to the factors outlined in Besner. In my view, it is not always necessary that a party prove that it is likely that evidence will be tailored or parroted. That would be an impossible standard in most cases. Depending on the existence of the other factors, a risk that evidence will be tailored may be sufficient to discharge the onus. In fact, the very existence of the other factors may lead to a reasonable inference that there is such a risk.

[41] As Rutherford J. stated in Karamanokian:

It is difficult to imagine how the applicant could establish in evidence directly, a probability that one other of the respondents would tailor his evidence if he had access to the evidence of the others before being cross-examined. While in rare circumstances that might be possible, direct evidence would not normally be available to demonstrate that future probability. It seems to me to be a matter which must be evaluated in the circumstances of the case and the issue or issues to be determined in the litigation.

(Emphasis added)

[42] Parties are presumed to tell the truth when they testify under oath. Given the reality that there will seldom be any direct evidence of a propensity to tailor evidence, in my view, inferences will have to be drawn from other factors, such as those identified in Besner. In light of the factors that are found to be present, consideration should be given to whether or not there is a risk that evidence will be tailored if an exclusion order is not made.

[43] Credibility is a factor in most litigation. The concern in cases where credibility will be the central issue in the action and co-parties intend to be present for the discovery of the other, however, is that a party's evidence might be affected by hearing the questions asked of the other party and the answers provided. This concern is greatest when the other factors identified in Besner are present. [page217]

[44] As Ground J. stated in Rando, at para. 41, "the risk of tailoring is greater when a party observes the evidence of his co-party at discovery before testifying himself, as there may be a subconscious (or conscious) desire to achieve consistency".

[45] Furthermore, Sheppard J. observed in Blomme v. Eastview Racquet & Fitness Club (1995), 1995 7237 (ON SC), 26 O.R. (3d) 496, [1995] O.J. No. 3441 (Gen. Div.), at para. 4, where defendants are permitted to be present at each other's discovery, it is open to them to "tailor" their evidence "so as to maintain a common front", and, at para. 10, that allowing the defendants to attend each other's discovery enables the second defendant to be discovered to become aware of the questions to be answered and to "parrot" the answers previously given by his or her co-defendant. This, Sheppard J. observed, would give the co-defendants an unfair advantage by denying the plaintiff the opportunity at least to explore inconsistencies in the defendants' evidence by excluding each other from the other's discovery.

[46] I also endorse the views of Master Kelly in Shuttleworth v. TGA General Contracting, [2003] O.J. No. 2997, 124 A.C.W.S. (3d) 453 (S.C.J.), at para. 10, where he stated that,

In the absence of direct evidence of an intention to do so (of which there is none in this case), the court presumes that the parties will tell the truth, or at least endeavour to do so. However, a party's perception of the facts depends upon memory. Memory can be distorted by the impact of another's current recollection. The often unconscious impulse to maintain consistency in the context of neutral interest and spousal loyalty is natural human behaviour.

(Emphasis added)

I should add that I do not accept the submission of Mr. Yellin that expert evidence is required in order to make such a finding. This is a matter of common experience.

[47] Another consideration is the purposes of an examination for discovery, which have been held to be as follows:

(a) to enable the examining party to know the case he or she has to meet;

(b) to enable the examining party to procure admissions which will dispense with other formal proof of his or her own case; and

(c) to procure admissions which will destroy his or her opponent's case.

See Modriski v. Arnold, 1947 316 (ON CA), [1947] 3 D.L.R. 321, [1947] O.W.N. 483 (C.A.), at p. 232 D.L.R. [page218]

[48] In my view, where credibility of co-parties with the same interest will be the central issue at the trial, an exclusion order will attenuate the risk of a co-party unconsciously tailoring his or her evidence in a desire to achieve consistency. It will also allow the party seeking exclusion to test the reliability and credibility of the evidence of each of the co-parties and, in particular, test their independent recollection of the facts in issue, untainted by the prior knowledge of the questions they will likely be asked and the answers given by their co-party. As the appellant put it, this is the only opportunity for the appellant to explore and challenge the respondents' evidence independently. This is an important consideration given the purposes for conducting examinations for discovery, which in many respects are quite different from cross-examination of a party at trial before the trier of fact.

(2) Did the motion judge err by failing to consider all the relevant evidence?

[49] In my view, the motion judge also erred when she concluded that there was no evidence asserting that there was a possibility of the plaintiffs parroting each other's evidence or tailoring their evidence, and that to come to such a conclusion would amount to speculation. In reaching this conclusion, the motion judge misapprehended the evidence that she did have.

[50] Although the appellant only filed the Gauthier affidavit, which did not specifically deal with the issue of credibility, in my view an affidavit from a representative of the appellant asserting that credibility is the main issue, would not have been of much assistance. The fact that the credibility and reliability of the evidence of the respondents will be a central issue at trial can readily be determined from the pleadings and the uncontested evidence that was before the motion judge.

[51] The pleadings make it clear that the quantum of the contents claim is the central issue in dispute in this action. The respondents have little documentary evidence to support their claim and the photographs they have produced will be of little assistance. Furthermore, the Gauthier affidavit explains that three different contents lists, prepared by the respondents, each with different items and total values, have been provided to the appellant. In my view, it is clear that the outcome of this action will turn almost exclusively on the findings by the trier of fact of the credibility and the reliability of the viva voce evidence of the respondents at trial. There is no speculation required to reach this conclusion. An affidavit from the appellant stating this [page219] was not necessary in these circumstances on the record before the motion judge.

(3) Do the ends of justice require an exclusion order?

[52] In light of the error in law and the misapprehension of the evidence by the motion judge, this court may substitute its decision for that of the motion judge. I turn then to the question of whether or not the appellant has satisfied its onus of demonstrating that the ends of justice require an exclusion order.

[53] As I have said, the Liu Estate decision explains that a party has the right to be present for all aspects of the action in order to protect his or her interests by observing the conduct of the examination. Given this, it is not necessary to assert specific prejudice in order to be allowed to be present for a co-party's examination for discovery.

[54] However, in this case, the respondents do submit that they will suffer specific prejudice if an exclusion order is made. No evidence of specific prejudice was asserted in an affidavit filed on behalf of the respondents. Mr. Yellin submitted that the respondents have the right to be present in order to gauge their own counsel and opposing counsel, instruct counsel on the facts and evaluate the reliability and credibility of the other respondent when giving evidence (an important factor for the purpose of settlement discussions). In my view, these concerns are overstated. The rules provide that a party may supplement or correct answers given on discovery and each co-party will be able to gauge counsel on their own discovery. As for the reliability and credibility of the other respondent, counsel is in the best position to give impartial advice on that issue.

[55] In my view, any prejudice to the respondents is addressed by the fact that they are able to discuss any of the matters relating to the case in advance of the examinations for discovery and instruct counsel accordingly. Furthermore, they will be able to read the examination for discovery of the other party prior to trial and of course be present for the evidence of the other party at trial.

[56] In my view in this case, all of the factors identified in Bresner favour an exclusion of the respondents from each other's examinations:

(a) the respondents are spouses and have identical interests in the recovery of damages;

(b) the respondents' respective rights of recovery under the insurance policy are identical; [page220]

(c) the respondents are represented by the same counsel;

(d) examinations for discovery will cover identical grounds for both respondents regarding the contents in their home damaged by fire; and

(e) the credibility and reliability of the respondents' evidence will be the central issue at trial and the primary factor which will affect recovery under the policy.

[57] In light of all of these factors, there is a risk that the evidence of the co-parties will be tailored if an exclusion order is not made. I emphasize that I do not suggest that they would do so intentionally. Given the purposes of an examination for discovery and in light of the factors I have referred to in this case, I find that the right of the co-parties to participate in all aspects of the action and, in particular, each other's examinations for discovery, must yield to the right of the appellant to use the examination for discovery to its fullest potential and obtain the evidence of the respondents without any possible collusion.

[58] For these reasons, the appellant has satisfied its onus of establishing that an order for exclusion of the respondents should be made in the interests of justice.

[59] During the course of oral submissions, the appellant expanded the relief sought to include other directions to prevent the exclusion order being undermined. Master Roger stated in Besner, at para. 14:

A corollary of granting an exclusion order is the impact it could have on the lawyer-client relationship. Invariably, parties seeking such an exclusion order seek an order that the lawyer not be allowed to tell his/her clients (who are co-parties) what the other co-parties indicated at their examination for discovery. This relief is typically granted with the exclusion order as, if an exclusion order is warranted to protect the interests of justice, this is required for the exclusion order to be effective: see for example Lipischak v. DeWolf, [2008] O.J. No. 4918 (S.C.).

[60] The notice of appeal does not ask for "such other order as this court deems just". In any event, in my view this request should have been expressly set out in the notice of motion as these types of orders could impede the solicitor client relationship. I understand that the plan in this case is for the discoveries of the respondents to proceed one after the other. There will be no time for a transcript and examining counsel will be able to ask whichever respondent whose discovery proceeds second if there has been any discussion about the first discovery with the co-party. Counsel for the respondents is an officer of the court [page221] and can be presumed to act in accordance with the terms and the spirit of this order.

[61] For these reasons, the request for additional relief is denied.

Disposition

[62] Accordingly, for these reasons, an order will go as follows:

(a) The order of Madam Justice Carpenter-Gunn dated May 13, 2006 is set aside.

(b) The respondents shall submit to being examined for discovery individually, outside the presence of each other.

(c) On consent, the examinations for discovery of the respondents shall take place before the appellants. These examinations shall be conducted one after the other if possible.

[63] With respect to costs, the appellant did not file a costs outline. As the successful party, the appellant is entitled to costs but only on a partial indemnity scale. The motion judge gave the respondents costs in the amount of $2,300. The costs of the leave application were reserved to this court.

[64] The respondents' cost outline totalled approximately $8,700 for fees and disbursements, inclusive of HST, for the leave and the appeal. The appellant seeks $3,500 in costs for the leave application and $7,500 for the appeal, which the respondents submits is too high.

[65] The outcome of the motion and this appeal was not predictable given the divergence of the authorities on this issue. In my view, the appellant is entitled to costs in the amount of $10,000, all inclusive.

Appeal allowed.