SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

BEFORE: D. M. Brown J.

COUNSEL:

J. Fine and B. Rutherford, for the Plaintiffs in the MTCC 943, 953, 853 and 831 Actions

M. Arnold, for YCC 312

L. Dizgun and J. Moher, for the Plaintiffs in the PCC 43 Action

N. Chowdhury, for the Plaintiffs in CV-11-9402-00CL: Equitable Trust and Home Trust

A. Datt, for the Defendant, S. Sadia

J. Larry and K. Borg-Olivier, for The Equitable Trust Company and Home Trust Company, and as agent for R. Horodyshy

A. Sanfilippo, for Michael J. Campbell and Deacon Spears Fedson & Montizambert

K. Kiesel, for Mihaela Jurkovic

P. Wardle, for Marko Djurdjevac

H. Clarke, for RBC

J. Squire, for Fine & Deo in the PCC 43 Action

O. Ferlisi, for CIBC in the PCC 43 Action

B. Thomas and A. Mercer, for Morrison Financial Services Limited

T. Liu, for the directors of Condo Corps. Nos. 853 and 312

M. Morden, in the PCC 43 action

HEARD: September 4, 2012

case management memorandum no. 3

[1] This memorandum summarizes the discussion held and decisions made at yesterday’s case management meeting. I again wish to start by thanking counsel for their efforts and co-operation in moving these actions forward and for the professionalism which they have displayed to each other notwithstanding the widely divergent interests of their clients.

Hearing of the “Threshold Issue”

[2] In my first two case management memoranda (May 15 and July 24, 2012), I gave directions for the holding of a hearing in early October to determine the following Threshold Issue:

Is the loan which is the subject matter of the proceeding enforceable against the condominium corporation?

At that time all parties desired the judicial determination of the Threshold Issue prior to engaging in a multi-day mediation process. The parties have performed work to prepare for a hearing of the Threshold Issue, including the service of some affidavits and working on an Agreed Statement of Facts. Examinations were to begin in the next few days.

[3] At yesterday’s case conference it became apparent that some parties were re-thinking the utility of a hearing on the Threshold Issue in light of emerging questions about the breadth of the evidentiary record for use at the hearing. Although counsel for the condominium corporations wished to proceed with the Threshold Issue hearing, other parties either expressed strong reservations about the hearing or, in the case of two parties, indicated that their clients no longer consented to the process.

[4] The actions subject to this case management process involve the fall-out from allegations of fraud which have been made against Mr. Manzoor Khan and his related companies. Condominium corporations are denying liability for loans arranged by Mr. Khan, lenders are arguing that the condo corporations remain liable, and the legal consequences of the roles played by others in the chain of events, including lawyers, are in play. The amounts of the loans in issue are large.

[5] In addition, the condominium corporations have about 1,206 individual unit owners. These unit owners have found that the litigation involving the potential liability of their condominium corporations for the loans in dispute have made their units much less attractive to sell, thereby causing real financial prejudice to the personal financial situations of some of the unit owners.

[6] These actions must be brought to a fast, cost-effective and fair determination on their merits (unless the parties can settle their disputes before trial). Last spring and this past summer the parties thought that the determination of the Threshold Issue would go a long way to achieving that objective. As they became more familiar with the evidence, some are now less sanguine and, as noted, some no longer consent to a hearing on the Threshold Issue. By giving directions for the hearing of the Threshold Issue, in effect I was ordering a separate hearing on one, of several, issues raised by these actions. Rule 6.1.01 gives the court jurisdiction to make such a bifurcation order with the parties’ consent. At the time I made that order, I had the consent of all the parties.

[7] Now, some parties are withdrawing their consent. I accept that they are doing so based on their greater understanding of the evidence as it has emerged in recent months and genuine concerns about whether a determination of the Threshold Issue really will result in the most cost-effective process for a final determination of these actions on their merits. Given their withdrawal of consent, I have concluded that I do not possess the jurisdiction under Rule 6.1.01 to compel the parties to proceed with a hearing on the Threshold Issue scheduled for early October.

[8] Although it is unfortunate that an early determination of a key issue in these proceedings cannot occur, I must balance the rights of all parties with a view to ensuring a just, cost-effective and proportionate determination of these actions on their merits. Having heard the submissions of the parties, I concluded that in the circumstances requiring the parties to proceed with a hearing of the Threshold Issue would not achieve that goal. I also do not want to insist that the parties use a process which risks wasting clients’ money. That would be the worst of all results.

[9] That said, there is urgency in proceeding to a final adjudication of these actions on the merits. Over 1,200 unit owners face uncertainty about the marketability of their units until that adjudication takes place. Accordingly a trial of all these proceedings must be held with reasonable dispatch. To that end I make the following directions;

Trial

(i) The parties shall work towards a trial date in May or June, 2013. Counsel should discuss dates for a 10-day trial;

(ii) A 10-day trial is feasible because, based on my understanding of the issues and the evidence likely to be adduced at trial, a form of hybrid trial employing an extensive written record and agreed statement of facts can be used, supplemented by viva voce evidence focused on the key issues in dispute. My initial impression is that much of the narrative about the relevant events can be placed before the court by way of documents, affidavits and/or an agreed statement of facts. The parties have been working on such an agreed statement of facts. Also, to the extent that affidavits have been prepared to set out a witness’ narrative of events, counsel should work towards making use of those affidavits as evidence at trial so that the work undertaken to date does not go to waste;

Discoveries and productions

(iii) Some, but not all, affidavits of documents have been served. All affidavits of documents must be served by September 15, 2012;

(iv) The parties had contemplated conducting numerous examinations and cross-examinations this fall. Therefore I think it more than feasible to set December 31, 2012 as the date for the completion of the examinations for discovery in all actions;

(v) In order to minimize interlocutory motions, Rule 34.14(2) will apply to all examinations for discovery, save for questions where the refusal is based on grounds of privilege;

(vi) From comments made by counsel, it sounds like issues may arise about examinations on communications between the condominium corporations and their counsel. If that will be an issue, counsel must arrange for a timely, but appropriate, motion date to determine that issue;

Trial preparation plan

(vii) Counsel are to attempt to agree on a trial preparation plan by Friday, September 21, 2012 which works within the time parameters I have set out above. By trial preparation plan I mean a discovery plan, coupled with a plan which takes into account the delivery of any expert reports and any other pre-trial step. If counsel cannot agree on a plan, they shall schedule a case conference before me on September 24 or 25, 2012. Those are non-sit days for me, so I can hold the conference at any time during those days. After hearing counsels’ submissions, I will impose a trial preparation plan;

Settlement conference

(viii) Last spring, at the start of this case management process, the parties talked about conducting a mediation before George Adams in late 2012. By the time of the July conference that date had slipped to January of 2013. Yesterday the parties repeated their interest in securing the services of Mr. Adams to conduct a mediation. I leave that to the parties. If a mediation does take place, I would be inclined to treat the mediation as a substitute for a judicial pre-trial conference canvassing the prospects of settlement.

D. M. Brown J.

Date : September 5, 2012