2017 ONSC 7185

Court File and Parties

COURT FILE NO.: CV-11-437362 DATE: 20171130 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

2287913 ONTARIO INC., TREBAR HOLDINGS INC., 2234406 ONTARIO INC. and ARCTIC SPAS OAKVILLE INC. Plaintiffs/Defendants by Counterclaim

- and-

ERSP INTERNATIONAL ENTERPRISES LTD., BREAK THROUGH ENTERPRISES LTD., KELLNER CONSULTING LTD., LIQUID LOGIC LTD., ECHO SOLUTIONS INCOPORATED, PARADISE BAY SPA 7 TUB WAREHOUSE INC., SPA LOGIC INC., BLUE FALLS MANUFACTURING LTD., ARCTIC SPAS INC., JOHN KEIRSTEAD, JAMES KEIRSTEAD, DARCY AMENDT, DENNIS KELLNER and BRENT MACKLIN Defendants/Plaintiffs by Counterclaim

BEFORE: F.L. Myers J.

COUNSEL: Ian R. Dick and A.M. Fischer, counsel for the defendants/plaintiffs by counterclaim H.R. Bennett and J. Figliomeni, counsel for the Plaintiffs/Defendants by Counterclaim

HEARD: November 30, 2017

CASE CONFERENCE endorsement

[1] Counsel participated in a case conference by telephone today to continue the case management of this matter towards summary judgment or trial.

Rule 50.13 (2) - Attendance at Mediation

[2] The parties have requested that a judge assist them to resolve the matter at a case conference under Rule 50.13. A judicial mediation has therefore been scheduled for January 10, 2018. There are five (5) shareholders of the corporate defendants all of whom are named as party defendants as well. Three (3) live in Western Canada and prefer to allow the two (2) local defendants to attend the mediation alone. The three others will be available by telephone if instructions are required. The two local defendants are the active management of the defendants’ enterprise, so, they say, it is only their attendance that is really required to allow the parties to deal meaningfully with the merits at the mediation in any event.

[3] The plaintiffs ask me to direct the remaining three defendants to attend the mediation in person. They argue that the mediation will have a much better chance of succeeding if all those who are in jeopardy in the proceeding are in attendance. Rule 50.13 (2)(b) does not require personal attendance if it will require undue travel time or expense. On the other hand, that applies better to a regular scheduling case conference. Personal attendance at mediation is probably more the norm.

[4] It is not clear to me in this case why the plaintiff thinks that the attendance of three non-management shareholders will be so helpful. Perhaps it is precisely because they are not the management who were responsible for the alleged wrongful conduct on which the plaintiff sues.

[5] There is no way for me to know what the dynamics may be between the parties or among the defendant group. The parties asked for a judicial mediation. They have not been compelled to mediate. They are sophisticated commercial players. If both sides want to settle, then the mediation will succeed. Absent evidence of a reason to direct parties as to how to arrange themselves, I tend not to view it as my role to tell a corporate enterprise how it should represent itself or conduct its business (even if the plaintiff has named shareholders personally). Moreover, the parties do not need the court to weigh in on this issue. There is no reason that the issue cannot be negotiated out among them in advance. If the plaintiffs care enough to condition their attendance on the attendance of all defendants, then the defendants will have a choice to make. The plaintiffs too, in that scenario, will have to decide whether their desire for all the defendants to be present is worth jeopardizing the mediation that they ostensibly want. The court has no reason to be drawn into this debate and save the parties from the tough calls they have to make one way or the other.

Rule 34.12 – How to use Evidence provided under Objection and Subject to a Ruling

[6] Early on in this case management process, I ordered that all questions asked on discovery were to be answered subject to Rule 34.12. [^1] That is, if a witness’s counsel objects to questions, the witness was still required to answer. Under the rule, the evidence given subject to an objection cannot be used at a hearing or trial without a ruling by the presiding judge or master on the admissibility of the evidence. I note parenthetically that this is the default provision under Title V, Rule 30 (c)(2) of the US Federal Rules of Civil Procedure.

[7] There are several reasons to require the use of Rule 34.12. The most obvious benefit of using Rule 34.12 is that it avoids the slow and duplicative process of objection-ruling-re-attendance. Here, if a ruling is obtained at the trial or hearing, the evidence is already in hand with fair notice to both sides.

[8] A second reason for proceeding under Rule 34.12 however, is that it puts the ruling on admissibility in the hands of the trier of fact rather than another judicial officer who must make rulings with an idea of the merits but lacking the detailed record and argument to assess the admissibility of the evidence proffered with the precision and nuance of the trier of fact.

[9] Justice D.M. Brown (as he then was) dealt with an issue of timing of evidence rulings in the context of motions to strike affidavits in 1196303 Ontario Inc. v. Glen Grove Suites Inc., 2012 ONSC 758. In discussing the need for the trier of fact to make evidence rulings, Brown J, held:

In light of the duty of the motions or application judge to determine issues of competency and admissibility, as well as to ascertain whether disputed issues of credibility arise or, in the case of summary judgment motions, possibly determine issues of credibility, it is important that the hearing judge be asked to consider all evidentiary issues concerning competency, admissibility and weight. In my view it would be inappropriate for a judge who will not hear the motion to purport to bind the hearing judge by determining on a limited and incomplete record issues concerning the receipt or admissibility of evidence prior to the hearing of the motion or application.

[Emphasis added]

[10] Of equal or greater significance, in my view, is the discussion by Brown J. that followed concerning the importance of limiting expensive and unnecessary motions. Interestingly, Brown J. wrote this decision well before the release of the seminal decision of the Supreme Court of Canada in Hryniak v Mauldin, 2014 SCC 7. Brown J. wrote:

[17] It remains a fundamental objective of Ontario’s civil litigation system to secure the most expeditious and least expensive determination of every civil proceeding on its merits. Unnecessary interlocutory motions stand as a major impediment to securing that objective. At the same time judicial resources in this Court are scarce, so limited judicial time should be used, as much as possible, to determine the merits of a matter, not to put out unnecessary interlocutory brush fires.

[19] But, as long as the cult of the interlocutory motion continues to weave its spell in the Toronto Region, in my view the courts of this Region should not take any steps to encourage or condone the bringing of unnecessary interlocutory motions, especially on process-related matters. So, while the learned authors of The Law of Civil Procedure in Ontario would leave open the door a crack to pre-emptive motions to strike out affidavits in “the clearest cases”, in my view to open the door a crack would be to invite the local bar to drive the proverbial Mack truck through it. Although the process of civil litigation knows no absolutes and always requires some built-in flexibility, I think the better general rule is that pre-emptive motions to strike out affidavits, in whole or in part, should only be brought in the rarest and most extraordinary of cases, with the general rule applicable to 99.9% of the cases being that such motions should be brought before the judge hearing the main motion or application.

[11] Justice Brown’s focus on efficiency and affordability was amplified many times over when the Supreme Court heralded a culture shift in Hryniak. The dominant feature of civil procedure now is proportionality so as to reduce the expense and delay of civil litigation and to enhance access to justice for all Canadians.

[12] The defendants advise that the plaintiffs objected to approximately 150 questions on their oral examinations for discovery. The plaintiffs say they have answered the questions under Rule 34.12. Rulings are required for the evidence to be used. The defendants seek leave to bring a motion to have Master McGraw (who is working in tandem with me on case managing this matter) hear days of argument on approximately 150 objections prior to the trial or a summary judgment hearing which may yet be brought. This, counsel says, will save a judge from hearing the motions and it will provide counsel with the certainty of knowing in advance what evidence she or he may use at the hearing or trial.

[13] The culture shift requires a different approach. The primary consideration is not counsel’s convenience or the absolute determination of every single possible issue so as to enhance counsel’s ability to prepare masterfully for a hearing. Of the 150 objections, how many will really result in evidence that is important for the trial or summary judgment motion hearing? Two? Perhaps three? Experience suggests that there are unlikely to be ten. So, with that in mind, counsel proposes to take two or more days, not just of court time, but of their own time, at their clients’ expense, to have a court that is not the trier of fact make the relevancy calls so as to make trial preparation simpler and more complete.

[14] Counsel argues that the judge at the hearing will not want to decide refusals and he is loathe to put 150 refusals before the hearing or trial judge. That very concern is part of the reason why Rule 34.12 should be used. If counsel hesitates to put an evidence ruling before a judge, then, probably, the ruling is not very important to the case. In my experience, judges are happy to do their jobs. It is wasting time and cost that is more unsettling. Counsel should be loathe to put 150 refusals before any judicial officer. Proportionality, efficiency, and affordability require counsel to pick the few that matter rather than spending days on the 140+ that do not. Today, less is more. More is not more. More is just expensive. Fear of criticism for leaving a possible avenue of investigation unfollowed must be replaced with the confidence to provide proportional service to clients. The focus must be on the issues that matter, not every possible piece of marginally relevant evidence. That decision-making process is the stuff of professional judgment for which clients are happy to pay. They may object to paying for expensive motions practice that has ground the system to the point where the Supreme Court of Canada has identified access to justice as the greatest challenge to the rule of law in Canada today.

[15] Granting leave to the defendants to bring a refusals motion would undermine the purpose of my invoking Rule 34.12 in the first place. If counsel is rightly hesitant to bring wasteful refusals motions to the hearing or trial judge, the answer is not to bring them to someone else. The answer is to focus the case and see if by dropping +/- 140 of the questions counsel cannot settle the remaining few important ones among themselves. Counsel for the plaintiffs will not want to be seen to be standing in the way of the admission of relevant evidence at the hearing. So there is much incentive on both sides to resolve the real issues by focusing on efficiency, affordability, and proportionality and getting on with resolution of the case on its merits.

Rule 48 – Extension of Time

[16] On consent, order to go extending the date for setting the action down for trial to March 30, 2018. If the case does not settle at mediation on January 10, 2018, then both sides have some final discovery to finish before deciding how the merits will be brought forward for adjudication. A March 30, 2018 deadline appears to be sufficient for the remaining steps.

Next Case Conference

[17] The next case conference is set for January 23, 2018 at 8:30 a.m. My Assistant will circulate call-in instructions to counsel.

F.L. Myers J. Date: November 30, 2017

[^1]: Subject only to questions objected to on the grounds of lawyer client privilege which did not have to be answered until a ruling was obtained.