SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: John Wood, Plaintiff

AND:

Arius3D Corp., David Beutel, Perry Monych, Vladis Martinsons, Joe Waechter and James P. McGlone, Defendants

BEFORE: D. M. Brown J.

COUNSEL: G. Hall, for the Plaintiff

J. Annibale and A. Boudreau, for the Defendant, Arius3D Corp.

D. Woodfield, for the Individual Defendants

HEARD: October 3, 2012

9:30 appointment endorsement

I. Thinking creatively about commercial trials

[ 1 ] As I wrote in George Weston Limited v. Domtar Inc., 2012 ONSC 5001, the time has come to think creatively about designing commercial trials:

[35] The renewed interest in summary judgment motions has deflected attention from a more important task – re-thinking the civil trial, especially the judge-alone civil trial. While a school of thought (and practice) still exists that a civil trial is only a real civil trial if viva voce evidence reigns supreme from beginning to end, civil trials are capable of adapting (and indeed must adapt) to new ways of adjudicating cases. May I repeat what I wrote a few months ago in 1318214 Ontario Limited v. Sobeys Capital Incorporated :

Counsel should no longer think of a trial as a “one size fits all” procedure. Our Court is open to creative ways to structure and conduct trials, including using hybrid written and viva voce records. Often the use of creative ways to present the evidence and argument at trial goes a long way towards addressing the concerns of litigants about the costs involved in going to trial.

[36] … 2010 amendments to the Rules of Civil Procedure made available to judges and counsel alike a big box of LEGO-like building blocks with which they can construct a wide variety of modes of trial: witnesses testifying by viva voce evidence; witnesses testifying, in whole or in part, by affidavit; using pre-hearing affidavits and cross-examinations as examinations for discovery; using pre-hearing affidavits as part of the trial evidence-in-chief of a witness and pre-hearing transcripts as part of the trial cross-examination of a witness; placing time limits on examinations at trial; using written opening statements; pre-trial hot-tubbing by experts; and, filing an agreed statement of facts. The range of alternatives is not limited by the specific examples identified in the Rules because a judge “may give such directions or impose such terms as are just” in respect of the trial and make such order as the judge “considers necessary or advisable with respect to the conduct of the proceeding”.

[37] Under our Rules the “conventional trial” no longer exists as a norm; the Rules have made the civil trial modular in nature, with counsel and the judge able to fashion trials tailor-made to the circumstances of each a particular case. Our Court must use these trial building blocks to offer litigants creative, cost-attractive trial options…

[ 2 ] In this case counsel have consulted and come up with a creative proposal for the conduct of the hybrid trial which I ordered in my September 19, 2012 endorsement.

II. The issues in this action

[ 3 ] In this action the plaintiff, John Wood, sues the defendants for payment of an August 18, 2011 Promissory Note. Mr. Wood alleges that a term of the Note required Arius3D to apply proceeds from the “Irish Companies” to repay amounts outstanding under the Note. Mr. Wood alleges that Arius3D has failed to adhere to that term of the Note and he brings this oppression application against the company and its directors and chief financial officer, the individual defendants.

[ 4 ] The individual defendants filed a Statement of Defence denying that Arius3D was a party to the Note and denying any personal liability.

[ 5 ] Arius3D filed a Statement of Defence and Counterclaim contending that (i) the Note was between the plaintiff and an arm’s-length company, AD3L Limited, (ii) Arius3D was not party to the Note and, in any event, (iii) the conditions triggering repayment of the Note had not yet occurred. Arius3D also denied the diversion of any funds from the Irish Companies.

[ 6 ] In its Counterclaim Arius3D seeks damages of $2.7 million from Mr. Wood, alleging that following his departure from the company last year Mr. Wood breached the terms of his separation agreement by pursuing business opportunities with two named institutions and by diverting potential (unnamed) investors away from the company.

III. Procedural steps to date

[ 7 ] Productions were delivered the week of July 23, 2012. The plaintiff completed examinations of all five defendants on September 10, 11, 12 and 13. The Defendants’ examination of Wood commenced on September 14; it was completed on September 26. Examinations for discovery are now done, save for any re-attendance arising out of undertaking answers. In my June 13 endorsement I set October 15, 2012 as the date for delivering all answers to undertakings.

IV. Next steps

[ 8 ] In my September 19, 2012 endorsement I ordered “counsel to prepare plan for preparation of and conduct of hybrid trial, as discussed. Rough time frame: (i) shoot for completion of experts by end Jan/13; (ii) trial Mar/Apr 13”. Counsel appeared at today’s case conference with a consent proposal for the preparation of and the conduct of a hybrid trial. I thank counsel for their efforts in putting the proposal together. I have reviewed the proposal, and I am satisfied that the following directions should issue:

(i) The parties shall participate in a settlement conference, ideally before C. Campbell J., no later than the end of November, 2012. Counsel should contact Mr. DiPietro at the CLO to arrange a date before C. Campbell J. If the matter does not settle at that conference, counsel can ask C. Campbell J. to set a trial date;

(ii) Thirty (30) days prior to the hearing Mr. Wood shall serve on the defendants all affidavit evidence from the witnesses upon whom he intends to rely at the trial;

(iii) Fifteen (15) days prior to the hearing the defendants shall serve on the plaintiff all affidavit evidence from the witnesses upon whom they intend to rely at the trial;

(iv) Those affidavits shall stand as part of the examination-in-chief of those witnesses;

(v) Any expert reports shall be served no later than 120 days prior to the hearing. Any responding expert reports shall be served no later than 90 days before the hearing. If expert reports are served, 60 days before the hearing the experts will meet without counsel to discuss their respective opinions. They will prepare a joint report to the court setting out (i) conclusions in respect of which they are in agreement, (ii) conclusions in respect of which they are not in agreement, and (iii) a brief outline of the reasons for their disagreements;

(vi) Seven (7) days before the trial the parties shall file jointly with the trial judge the following materials:

a. All affidavits that have been served under paragraphs (ii) and (iii) above;

b. The experts’ joint report made under paragraph (v);

c. A joint brief of documents;

d. Each party’s written opening statement; and,

e. The questions from the examinations for discovery of the adverse party upon which each party intends to rely as read-ins as part of its case in chief.

These materials will be provided electronically in accordance with the Toronto Region Commercial List Pilot Project Guidelines for Preparing and Delivering Electronic Documents Requested by Judges dated June, 2102;

(vii) At the trial:

a. Each party will be entitled to make an oral opening statement not exceeding 30 minutes in length;

b. In respect of each witness who has sworn an affidavit, there will be a brief examination in chief not exceeding 1 hour, followed by cross-examination by any adverse party or parties, and then re-examination. There will be no time limit for cross-examinations, subject to further direction by the trial judge;

c. In respect of any witnesses who have refused to provide an affidavit and are testifying under a summons to witness, testimony will proceed in accordance with the procedures that would otherwise apply;

d. Each party will make a closing argument.

(viii) The procedures set out in paragraph (vii), of course, are subject to the ultimate direction and discretion of the trial judge.

______ (original signed by) ____________

D. M. Brown J.

Date : October 3, 2012