ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-09-44689
DATE: 20120312

B E T W E E N:

WELCH LLP

John Paul Zubec, for the moving party
moving party/plaintiff

• and –

OPTICAL VISION OF CANADA LTD., 9132-4301 QUEBEC INC., 9132-9755 QUEBEC INC., 990982 ONTARIO INC., 1043019 ONTARIO INC., 1101452 ONTARIO LTD., 1117048 ONTARIO INC., 1221904 ONTARIO INC., 1270662 ONTARIO LTD., 1278231 ONTARIO LTD., 1332745 ONTARIO LTD., 1395077 ONTARIO LTD., 1503901 ONTARIO LTD., 1550687 ONTARIO INC., 1550737 ONTARIO INC., 1663066 ONTARIO INC., 4041992 CANADA INC., 2102040 ONTARIO INC., 6702945 CANADA INC., 9167-2188 QUEBEC INC., 6270854 CANADA INC., 9166-3070 QUEBEC INC., 1634058 ONTARIO INC., 6531466 CANADA INC., 9167-2170 QUEBEC INC., 9169-5569 QUEBEC INC., 9175-3186 QUEBEC INC., 6679447 CANADA INC., 6704131 CANADA INC., 6868100 ONTARIO INC., 9182-4433 QUEBEC INC., 6790275 CANADA INC., 9180-1001 QUEBEC INC., 3503127 CANADA INC., 1351174 ONTARIO LTD., 1634109 ONTARIO INC., 6531474 CANADA INC., 6565832 ONTARIO INC., 6668364 CANADA INC., 6717624 CANADA INC., 6732429 CANADA INC., 6662862 CANADA INC., and ANTRANIK KECHICHIAN, also known as TONY KECHICHIAN

Colin S. Baxter, for the respondents
respondents/defendants

HEARD: February 23, 2012

ENDORSEMENT ON MOTION FOR COSTS

[ 1 ] Welch LLP as the moving party requests costs from the respondents as a sanction for their alleged delay in providing answers to undertakings, advisements and improper refusals (the “Answers”) given at Examinations for Discovery on two dates.

The Factual Background

[ 2 ] The relevant facts and timelines are the following.

[ 3 ] In April 2009 the moving party issued its Statement of Claim against the respondents. There are 43 respondents, most of whom are corporate franchisees of the first named respondent, Optical Vision of Canada Ltd. and its principal, Tony Kechichian.

[ 4 ] The majority of the respondents are independent operators under a franchise agreement and have sole possession of their own business records.

[ 5 ] The action is in respect of unpaid tax preparation services rendered to the respondents. The respondents have counterclaimed for alleged damages resulting from an alleged failure to complete the contractual mandate and/or negligence.

[ 6 ] On September 23, 2010 the moving party examined the respondent Tony Kechichian for a day, resulting in approximately 300 pages of transcript and numerous undertakings and refusals. It was agreed his examination for discovery was to be continued at a later date.

[ 7 ] On October 29, 2010 the moving party summarized the Answers it required by way of letter to the respondents.

[ 8 ] On November 24, 2010 the respondents agreed to provide all Answers by December 10, 2010.

[ 9 ] On December 10, 2010 the respondents sent the moving party a compact disc containing Answers amounting to approximately 8 inches of paper material when printed out. These answers substantially fulfilled the undertakings, the respondents maintained, with a promise to work on “straggler undertakings”.

[ 10 ] On March 4, 2011 the moving party continued and completed its examination of Tony Kechichian.

[ 11 ] On March 21, 2011 the moving party notified the respondents that it intended to bring a motion for Answers.

[ 12 ] On March 25, 2011 the respondents received the transcript from the March 4, 2011 examination, amounting to 98 pages.

[ 13 ] May 19, 2011 was the date of the moving party’s present notice of motion for Answers and the motion was originally scheduled for September 27, 2011. In May 2011 the moving party included charts in the Motion Record detailing 6 refusals and 22 undertakings from the first examination and 8 refusals and 35 undertakings from the second examination.

[ 14 ] On September 2, 2011 the respondents delivered a compact disc to the moving party comprised of approximately 408 pages when printed out, containing, their counsel stated, all outstanding Answers.

[ 15 ] On September 19, 2011 the moving party informed the respondents that 12 Answers were still required.

[ 16 ] On January 6, 2012 the respondents sent their straggler Answers to the moving party.

[ 17 ] On January 19, 2012 the moving party informed the respondents that 3 Answers were required.

[ 18 ] By the end of January 2012 all Answers had been provided.

[ 19 ] The moving party points to the delays and submits it took the threat of and the going ahead with this motion to obtain all the Answers, including those from the first examination on September 23, 2010. It asks for costs against the respondents for their failure to provide the Answers in a timely manner and for taking a total of 16 months before providing all the Answers.

[ 20 ] The respondents argue that costs are not an appropriate sanction because there has been a pattern of co-operation by them and although the timeline for the Answers has been longer than hoped, it has not been due to lack of effort.

Analysis

[ 21 ] The action is for accounting services rendered to the 43 respondents.

[ 22 ] As a result of the examinations of Tony Kechichian in September 2010 and March 2011, numerous or, as characterized by the respondents’ counsel, “hundreds” of undertakings were given.

[ 23 ] For the majority of the required Answers the respondents’ counsel states it was the “third party” respondents, namely, the independent corporate franchisees who were in possession of some of the necessary information.

[ 24 ] That information had to be “chased”.

[ 25 ] Within 3 months of the first examination and according to the agreed upon timetable, Answers were given in December 2010 for a substantial number of the undertakings and refusals from that first examination.

[ 26 ] Two months later the second examination took place. Approximately 5 months after the respondents’ counsel received the transcript from that second examination, Answers were supplied to the moving party in digital format that totalled about 408 pages in printed format.

[ 27 ] After that, 12 straggler Answers took another 4 months to be supplied.

[ 28 ] The 16 months timeline for the Answers to be completed is certainly a prolonged period that in many cases could be justifiably characterized as amounting to dilatory conduct and deserving of a costs sanction because of improper tactics and unnecessary delays.

[ 29 ] The particular circumstances of this case do, however, contribute to the extended timelines that have occurred.

[ 30 ] There are 43 respondents. One of them, Tony Kechichian as the principal for all the corporate respondents, was examined and while he had the authority to speak on behalf of the others, the majority of the other 42 had to be contacted by counsel and asked for necessary information.

[ 31 ] Some of the information sought was accounting related and detailed.

[ 32 ] An example of this from the first examination is the undertaking given in respect of question 413: “Cindy Lin to advise of her recollection of whether financial statements of 2007 tax returns for the companies listed in Shannon Jackson’s email of August 28 th , 2008 (exhibit 1, Tab 35) were previously provided to Welch and, if so, when they were provided and to produce any documentation supporting this assertion”.

[ 33 ] An example from the second examination is in respect of question 43: “To ask Mr. Renjilian to produce a complete copy of the adjusting journal entries he made to the financial records of each corporate Defendant” and the answer from the respondents’ counsel: “Advisement – Counsel is not sure if this is relevant, or possible to fulfil”.

[ 34 ] The first disc of Answers was provided approximately 3 months after the first examination. That complied with the agreed upon timeline for Answers after that first examination. The second disc was provided approximately 5 months after the second examination.

[ 35 ] For some advisements and refusals, the respondents’ counsel reconsidered and included them in the Answers.

[ 36 ] The straggler Answers dragged on until they were finally provided in January 2012.

[ 37 ] I conclude that the long delay in providing all Answers arose in large part from the number of respondents, the multitude of undertakings, advisements and refusals and the detailed nature of some of the accounting information being sought.

[ 38 ] I cannot conclude that the respondents were uncooperative in supplying information for the Answers. There is no evidence of this before me.

[ 39 ] Neither is there any evidence before me that the respondents’ counsel was uncooperative in trying to provide timely Answers. While it may be that some of his clients were less than diligent in complying with his information requests, there is no evidence of this before me and it would be speculative to consider any improper tactics as a significant contributing cause to the delay.

[ 40 ] In all of these multi-facetted circumstances, I cannot conclude that the respondents engaged in conduct that was improper, unnecessary or unreasonable and deserving of censure by way of a costs award.

[ 41 ] It is for these reasons I dismiss the motion for costs.

[ 42 ] In all of the circumstances including the long delay in completing the Answers, I also make no Order as to costs arising out this motion.

The Hon. Madam Justice L. Ratushny
Date: March 12, 2012

COURT FILE NO.: CV-09-44689
DATE: 20120312

ONTARIO SUPERIOR COURT OF JUSTICE RE: WELCH LLP, moving party/plaintiff -and- OPTICAL VISION OF CANADA LTD., 9132-4301 QUEBEC INC., 9132-9755 QUEBEC INC., 990982 ONTARIO INC., 1043019 ONTARIO INC., 1101452 ONTARIO LTD., 117048 ONTARIO INC., 1221904 ONTARIO INC., 1270662 ONTARIO LTD., 1278231 ONTARIO LTD., 1332745 ONTARIO LTD., 1395077 ONTARIO LTD., 1503901 ONTARIO LTD., 1550687 ONTARIO INC., 1550737 ONTARIO INC., 1663066 ONTARIO INC., 4041992 CANADA INC., 2102040 ONTARIO INC., 6702945 CANADA INC., 9167-2188 QUEBEC INC., 6270854 CANADA INC., 9166-3070 QUEBEC INC., 1634058 ONTARIO INC., 6531466 CANADA INC., 9167-2170 QUEBEC INC., 9169-5569 QUEBEC INC., 9175-3186 QUEBEC INC., 6679447 CANADA INC., 6704131 CANADA INC., 6868100 ONTARIO INC., 9182-4433 QUEBEC INC., 6790275 CANADA INC., 9180-1001 QUEBEC INC., 3503127 CANADA INC., 1351174 ONTARIO LTD., 1634109 ONTARIO INC., 6531474 CANADA INC., 6565832 ONTARIO INC., 6668364 CANADA INC., 6717624 CANADA INC., 6732429 CANADA INC., 6662862 CANADA INC., and ANTRANIK KECHICHIAN, also known as TONY KECHICHIAN, respondents/defendants ENDORSEMENT ON MOTION FOR COSTS Ratushny J.

Released: March 12, 2012