COURT FILE NO.: CV-19-889 DATE: 20200807 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Scott Paterson and Jade Paterson, Plaintiffs AND: Stewart Title Guaranty Company, Defendant
BEFORE: Justice C. Boswell
COUNSEL: David A. Morin and Peter M. Reinitzer for the Plaintiffs Mark Veneziano and Madison Robins for Stewart Title Martin A. Smith and Cemeka Douglas for Anthony Borysek and Janice MacGregor
HEARD: In Writing
ENDORSEMENT on consolidation motion
Overview
[1] I suspect that so long as humans have been seeking justice, they have experienced delays, hurdles, constraints and expense. In modern times, access to justice in civil cases is a matter of consternation for all justice system constituents. Delays, hurdles, constraints and expense are acute problems. Resources are limited and there are a great many pressures on those resources. There is undeniably a pressing need to utilize the court’s resources as efficiently as possible.
[2] Adjudicating multiple proceedings arising from the same set of circumstances generally does not serve the aim of efficiency. For that reason, s. 138 of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides that a multiplicity of legal proceedings is to be avoided as far as possible.
[3] The plaintiffs in this proceeding have commenced two actions arising out of the same set of circumstances. Stewart Title seeks an order consolidating the proceedings. The plaintiffs, joined by two of the defendants in the companion action, demur. They want to see the court’s resources used as efficiently as possible, but they resist consolidation. They are agreeable to linking the actions together, but they favour an order that the actions be heard together or one after the other.
[4] For the reasons that follow, I find that the two actions should be ordered tried together. I also find that there should be certain directions to avoid unnecessary costs and to promote trial fairness.
The Proceedings
[5] Jade and Scott Paterson purchased a residence in Egbert, Ontario in February 2017 for $875,000. The purchase closed on May 23, 2017. At the time of closing they purchased title insurance from Stewart Title with a policy amount equal to their purchase price.
[6] According to the Patersons, they began to discover structural problems with the property, largely due to water damage, shortly after closing. They say they also discovered that certain renovations had been done to the property without building permits. They claim to have incurred significant expenses remediating defects. They allege that the property remains unmarketable in its current form.
[7] On May 16, 2019 the Patersons commenced two actions in this court.
[8] In the first - this one - they claim the sum of $875,000 against Stewart Title for breach of contract. They say they are entitled to indemnity under their title insurance policy for the costs of remediation. Those costs are necessary, they say, to make their property marketable. Stewart Title has refused to pay out the plaintiffs’ claim, arguing that any losses they may have suffered are not covered by their policy.
[9] In the second - action CV-19-890 - the Patersons have sued five parties: the vendors of the property; a home inspector who inspected the home prior to their purchase of it; the Township of Essa, where the property is located; a company who installed a roofing system they claim is defective; and a company that insulated the attic. Like the claim against Stewart Title, the plaintiffs seek damages in the amount of $875,000. Going forward, I will refer to the second action as the “tort action”.
[10] The Patersons’ claims in the tort action are briefly summarized as follows:
(a) They claim that the vendors, Anthony Borysek and Janice MacGregor, actively concealed known deficiencies with the property. They contend the vendors are liable for their losses in negligence and negligent misrepresentation;
(b) They claim that the home inspector was in breach of contract, or negligent. They say he breached the standard of care applicable to his profession, failed to notice deficiencies that a reasonably competent inspector would have noticed and though he identified moisture issues, he failed to explain what those issues could mean;
(c) They claim that the Township was negligent by, amongst other things, failing to ensure that the residence on the property was built according to the applicable Building Code and by failing to monitor construction on the property;
(d) They claim that the roof installer was negligent in failing to complete the new roof in a good and workmanlike manner and failing to provide for proper ventilation; and,
(e) They claim that the insulation company was negligent in failing to inspect the attic before blowing in insulation which they should have known would worsen an existing ventilation problem.
[11] All defendants across both actions have denied liability.
[12] Though the action against Stewart Title is of a different nature than the claims advanced in the tort action, there are a number of issues in common. Obviously, evidence regarding the specifics of the purchase, the inspection, the closing, the subsequent discovery of defects, the origin and cause of the defects and the cost of remediation is common to both proceedings. For that reason alone, the aspiration of efficiency strongly supports the joining of the two proceedings in some manner.
[13] More specifically, however, Stewart Title points out certain allegations in its defence that raise common issues between the two proceedings. For instance, they plead that:
(a) The Patersons have been ordered by the Township to remove a deck that was constructed without a permit. The Paterson’s title insurance policy covers the cost of removing the deck, but nothing further;
(b) The Paterson’s claim is otherwise excluded under the policy because:
(i) The policy excludes coverage for loss resulting from the violation of any law, by-law, ordinance, order, code, or government regulation, including building codes;
(ii) The policy excludes coverage where the risks are created, allowed, agreed to, or actually known by the insured;
(iii) The policy excludes coverage for any environmental issues, including water leakage;
(iv) The policy excludes coverage for losses resulting from a failure to comply with applicable building codes; and,
(v) The policy excludes coverage for physical and structural conditions and defects, including any improvements on the land.
[14] Stewart Title also pleads that the Patersons have not suffered the damages they claim to have suffered.
[15] Given the issues raised in its defence, Stewart Title contends that there is some very specific evidence likely to be adduced in the tort action that is relevant to the disposition of this action. That evidence includes:
(a) Evidence from the Township regarding any work orders, by-law compliance and any permits issued for the property;
(b) Any information provided to the Patersons by the home inspector as a result of the home inspection;
(c) Evidence of any conditions in the agreement of purchase and sale including conditions requiring the vendors to warrant that the renovations were built to Code and that all permits and inspections had been completed;
(d) Evidence that the Township did, or did not, properly exercise its statutory duty under the Building Code Act; and,
(e) Evidence regarding the extent to which the plaintiffs may have been responsible for improvements to the property.
The Legal Framework
[16] The Rules of Civil Procedure have a rule that covers orders for the consolidation or hearing together of multiple actions. It’s Rule 6 and it provides as follows:
6.01 (1) Where two or more proceedings are pending in the court and it appears to the court that,
(a) they have a question of law or fact in common;
(b) the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences; or
(c) for any other reason an order ought to be made under this rule, the court may order that,
(d) the proceedings be consolidated, or heard at the same time or one immediately after the other; or
(e) any of the proceedings be,
(i) stayed until after the determination of any other of them, or
(ii) asserted by way of counterclaim in any other of them.
(2) In the order, the court may give such directions as are just to avoid unnecessary costs or delay and, for that purpose, the court may dispense with service of a notice of listing for trial and abridge the time for placing an action on the trial list
[17] It is immediately apparent that Rule 6.01 has certain “gateway” criteria that must be satisfied before a motions judge may grant an order linking proceedings together. In this case, there is no serious dispute about the satisfaction of the gateway criteria. There are undoubtedly facts in common across the two proceedings. Moreover, the relief requested in each proceeding arises out of the same series of transactions or occurrences.
[18] What is at issue in this motion is which linkage option the court should favour: consolidation or hearing together. Rule 6.01 does not provide any guidance as to what factors the court might consider when faced with a debate about whether to consolidate proceedings or to order them tried together. The jurisprudence is not particularly helpful either.
[19] The general purposes of Rule 6.01 are well-settled. They include the obvious – avoiding a multiplicity of proceedings – as well as promoting the most expeditious and least expensive resolution of disputes and avoiding inconsistent judicial findings. See, for example, Canadian National Railway v. Holmes, 2011 ONSC 4837 at para. 43.
[20] Both proposed means of linking the actions in issue here are capable of satisfying the purposes of Rule 6.01. They achieve their common goal in slightly different ways. The differences were described by Justice Quinn in Wood v. Farr Ford Ltd. at paras. 24-26:
Where two actions are consolidated, they become, and proceed as, one action. Thus, there is one set of pleadings, one set of discoveries, one judgment, and one bill of costs.
If two actions are ordered to be tried together, the actions maintain their separate identity and there are separate pleadings, discoveries, judgments and bills of costs. But the actions are set down on the list one after the other to be ‘tried in such manner as the court directs. Usually, the trial judge will order that the evidence in one action is to be taken as evidence in the other action or actions. In this way both or all of the actions are tried together by the same judge or jury.
Although it has been said that the difference between consolidation and an order directing the trial of actions together is more technical than real, I think the difference can be quite real if the matter is addressed promptly. Actions ordered tried together largely offer a savings of time and money, and enhanced convenience, at the trial stage. However, consolidation provides those features from an earlier stage in the proceedings, including: one set of pleadings, affidavits of documents, discoveries and pre-trial memoranda and one pre-trial. (Internal citations omitted).
[21] In my view, where there are two potential means of achieving the same goal, the choice between them must be guided by a costs/benefits analysis. In other words, where, like here, the parties agree that the proceedings should be linked in one way or another but cannot agree on whether they should be consolidated or heard together, the task of the court is simple. The court must assess the salient factors that point both towards and away from an order of consolidation. Next, the court must assess the salient factors that point both towards and away from an order that the actions be heard together. Finally, the court must balance all of those salient factors to determine which linkage order will best promote the most efficient, expeditious and least expensive resolution of the disputes.
The Parties' Positions
Stewart Title
[22] Stewart Title is strongly in favour of consolidation. They point to the fact that the proceedings are both in their early stages, which is when consolidation tends to be favoured. Consolidation will allow one set of pleadings, joint discoveries, a common pre-trial and one trial. There will be no risk of inconsistent factual findings and any duplication of effort that might occur with two separate trials will be avoided.
[23] Stewart Title contends, I think correctly so, that there will be evidence adduced during the tort action that it will need to have access to in asserting its defence in this action. Absent an order that the actions be consolidated, or at least an order for common discoveries, Stewart Title will have little alternative but to seek to examine the defendants to the tort action as non-parties, which will, in effect, result in a duplication of examinations.
[24] In Stewart Title’s submission, no party would be prejudiced by a consolidation order.
The Patersons
[25] The Patersons are strongly opposed to consolidation. They argue that there are no benefits that can be obtained through a consolidation order that cannot be achieved through an order that the actions be tried together. They submit that ordering consolidation will result in considerable additional expense because all of the parties will have to redraft their pleadings.
[26] More significantly, however, the Patersons contend that Stewart Title is motivated by a hidden agenda. Specifically, they say Stewart Title is pushing consolidation because they want to assert crossclaims against the defendants in the tort claim. They say that, in effect, Stewart Title is attempting to pursue rights of subrogation before those rights arise. They submit that Stewart Title has no right to pursue claims against the alleged tortfeasers unless and until they satisfy the plaintiffs’ claim on the title insurance policy.
[27] Stewart Title denies the Patersons’ suggestion.
The Vendors
[28] The vendors’ position largely echoes that of the Patersons. The vendors additionally submit that there is a higher onus on a party seeking consolidation than there is on a party seeking only that actions be heard together.
[29] The vendors rely on this court’s decisions in Brown v. Matawa Project Management Group Inc. at paras. 24-25 and Robert A. Cartier v. Michael Stocking (B-Dry), 2015 ONSC 3242 at para. 34 to support their assertion that a party seeking consolidation has a heavy, or elevated, onus to meet. In particular, they assert that Stewart Title must establish that it would be an abuse of process not to consolidate the proceedings.
The Rest
[30] I am advised that the home inspector does not oppose consolidation but otherwise takes no position on the motion. The balance of the defendants in the tort action take no position.
Discussion
[31] Concerns about efficiency undoubtedly require the two Paterson actions to be linked, either through a consolidation order or an order that they be tried together.
[32] The differences between the two types of orders in issue are often quite subtle in my view. Indeed, in this case, the parties have filed extensive factums which they obviously spent a great deal of time and effort on. Yet I find myself largely unclear as to why each side is so strenuously opposed to one form of relief and so ardently in favour of the other. I suspect the answer lies in factors that go well beyond this particular skirmish.
[33] From the court’s point of view, either means of linkage will do. But one must prevail.
[34] As I noted earlier, the court’s task is to weigh and balance the costs and benefits of each mechanism. I do not accept that there is any form of elevated onus on a party seeking an order for consolidation as compared to a party seeking an order that actions be heard together. The plain wording of Rule 6 does not support the imposition of such an onus. In my view, any decision that purports to impose such an elevated onus is wrongly decided.
[35] Rule 6 provides different mechanisms to link actions together where doing so would avoid a multiplicity of proceedings and promote the goals of efficiency, expediency and cost effectiveness. Orders for consolidation, hearing together or hearing consecutively are simply three different tools available, at the court’s discretion, to achieve those goals. Which one, if any, is utilized depends on the prevailing circumstances. One mechanism is not inherently better or worse than the others. Whichever best serves the aspirations of the rule in the given circumstances is to be favoured.
[36] I will move on to consider the costs and benefits of the two options on the table.
Consolidation – Costs and Benefits
[37] Consolidation provides the ultimate reduction in proceedings. It will compress two actions into one. It will provide for one set of pleadings, one set of discoveries, a common pre-trial and a single trial, with no prospect of inconsistent findings. It avoids the potential for the two actions to proceed at different paces. It will gather all parties with potential liability to the plaintiffs at the same table and allow for a comprehensive ruling that identifies those liable and explains why.
[38] There are, however, downsides to a consolidation order. It will require the redrafting of double-digit pleadings. The plaintiffs indicated that there were nine pleadings filed in the tort action alone. There will obviously be a cost associated with that effort.
[39] More significantly, in my view, is the concern raised by the plaintiffs and vendors that Stewart Title is intent on raising crossclaims against the defendants in the tort action. Should they do so, which appears likely, it will trigger motions by a number of parties to strike those claims. The plaintiffs have already made it clear that their position is that Stewart Title has no legal basis to pursue what are, in effect, subrogation claims, until they satisfy the plaintiffs’ claim on its policy of title insurance.
[40] Significant additional costs, not to mention delays, will be incurred in connection with the inevitable pleadings dispute.
Hearing Together – Costs and Benefits
[41] An order that the actions be heard together will also meet the goal of avoiding a multiplicity of proceedings. It will guard against inconsistent findings. And, like consolidation, it will have the benefit of gathering all parties with potential liability to the plaintiffs at the same table.
[42] Unlike a consolidation order, however, an order that the actions be heard together (or one after the other) will not implicitly provide for one set of pleadings, one set of discoveries, one pre-trial and one trial. It will not implicitly provide for the sharing of evidence among all parties to the two actions. And it will not guard against the risk that the two actions proceed at different paces.
[43] Having said that, Rule 6 provides the court with sufficient discretion to make ancillary orders that will attenuate each of the shortcomings associated with an order that the actions be heard together.
[44] Moreover, an order that the actions be heard together will avoid the necessity of redrafting pleadings and it will avoid the inevitable pleadings motions I identified above.
The Balance
[45] In my view, there is not much to distinguish between the two competing orders. Each will, by and large, achieve the same result.
[46] Were it not for the dispute about Stewart Title’s right to advance crossclaims against the alleged tortfeasers, I might favour consolidation. But that dispute has the potential to cause significant cost and delay. And it tips the balance on this motion in favour of an order that the actions be heard together, or one after the other.
[47] I am alive to the fact that by not ordering consolidation, I may be undermining the goal of avoiding multiple proceedings. By that I mean that the resolution of the two actions, as presently constituted, will do nothing to address any potential subrogated claims that Stewart Title may have against the alleged tortfeasers. But I consider that risk speculative at this point, for two reasons.
[48] First, the risk is only realized if Stewart Title is found liable and one or more tortfeasers is found liable.
[49] Second, once factual findings are made about liability in the two existing actions, it should not be terribly difficult to sort out what, if any, subrogation rights Stewart Title has.
[50] In the result, and frankly by a narrow margin, I conclude that the following orders best serve the goals of efficiency, expediency, cost-effectiveness and fairness:
(a) This action and the tort action will be linked;
(b) The linked actions will have common examinations for discovery. If they have not already done so, all parties will exchange affidavits of documents and Schedule “A” documents with all other parties to the linked actions. Common oral examinations will occur;
(c) A common pre-trial will be held; and,
(d) The actions will be tried together – either simultaneously or one after the other, in the discretion of the trial judge.
[51] The parties are urged to come to an agreement on the costs of this motion. If they are unable to agree, they may make brief (no longer than 2 pages) written submissions on costs, on a 14 day turnaround. The submissions of the plaintiffs and the vendors shall be served and filed by August 21, 2020. The submissions of Stewart Title shall be served and filed by September 4, 2020. All should be submitted to my attention through the court’s generic email address, which is Barrie.SCJ.courts@ontario.ca.
C. Boswell J.