SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: CV-10-398634
DATE: 20130301
RE: A.G.C. Mechanical Structural Security Inc. (Plaintiff/Appellant) and Aldo Rizzo,
Appledale Property Management Inc., and Frank Giannone (Defendants/
Respondents)
BEFORE: Frank J.
COUNSEL: Sean Dewart and Chris Donovan, for the Plaintiff/Appellant, and
Jay Skukowski, for the Defendants/Respondents
HEARD: February 12, 2013
E N D O R S E M E N T
[1] This is an appeal by the plaintiff from the decision of the Master, denying the plaintiff leave to vacate the trial record it filed.
[2] The plaintiff filed the trial record, thereby certifying that the action was ready for trial, to avoid its dismissal pursuant to a status hearing notice. The filing of the trial record resulted in the plaintiff being bound by rule 48.04(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the relevant portion of which states:
…any party who has set an action down for trial…shall not initiate or continue any motion or form of discovery without leave of the court.
[3] The plaintiff sought leave from the Master to vacate its listing of the action for trial because it wished to proceed with an outstanding motion regarding documentary disclosure and to conduct examinations for discovery of the defendants.
[4] The Master concluded that he could not grant leave to vacate the filing of the trial record unless the plaintiff established a substantial or unexpected change in circumstances subsequent to filing such that denying leave would be manifestly unjust. The issue is whether this conclusion is an error in law.[^1]
[5] The Master’s decision to deny leave is discretionary and therefore attracts significant deference from this court. As stated in Tanner v. Clark, [1999] O.J. No. 581, at para. 7, “[t]he appeal should only be granted if the master exercised his discretion based upon an erroneous principle or misapprehension of the facts.”
[6] For the reasons that follow, I find that the Master erred by fettering his discretion. In the circumstances of this case, leave was available even without a substantial or unexpected change in circumstances following the filing of the trail record.
The facts
[7] The action arises out of an employment relationship between the plaintiff and the defendant Rizzo. The plaintiff is a business competitor of the defendant corporation.
[8] While in the midst of conducting cross-examinations in a motion seeking “an order for directions with respect to matters regarding production and discovery”, counsel for the plaintiff received a status notice with respect to this action. The notice stated that the action would be dismissed within ninety days unless “the action is set down for trial” or “a judge or case management master orders otherwise”.
[9] In response, counsel served and filed the trial record, thereby setting the action down for trial.
[10] The defendants responded by taking the position that the plaintiff had disentitled itself from continuing with its production motion or proceeding to discovery. Until that point, counsel for the plaintiff had not considered the consequences of his setting the action down for trial.
[11] No issue is taken with the Master’s finding that examinations for discovery would significantly assist the plaintiff’s counsel in preparing for trial, and the absence of examinations for discovery of the defendants will prejudice the plaintiff’s “ ‘preparatory ability’ to establish and evaluate the plaintiff’s claims” prior to trial, and its ability to prepare with an expert before trial.[^2]
The Master’s decision
[12] In his thorough and carefully reasoned decision, the Master, following the decisions in Gloucester Organization Inc. v. Canadian Newsletter Mangers Inc., 1995 CarswellOnt 142 (Gen. Div.) and Tanner, recognized that a rigid test for granting leave on a rule 48.04 motion was not appropriate. The Master acknowledged that where serious matters affecting substantive rights are in issue or where the action was set down for trial through inadvertence, leave may be granted despite an absence of substantial or unexpected change in circumstances.
[13] The Master accepted Wilson J.’s characterization, in Tanner, of interlocutory matters as those that are routine and can be raised before a trial judge. He concluded that although discovery can be an important tool in trial preparation, its loss does not affect the right to a fair trial. As such, the loss of discovery does not affect substantive rights. The Master accepted that the absence of discovery will cause pre-trial prejudice to the plaintiff and make the trial more cumbersome, but found this did not mean the trial would be unfair or the plaintiff would lose a substantive right.
[14] Finally, the Master concluded that as substantive rights were not in issue and as there were no substantial or unexpected change in circumstances since the action was set down for trial, leave could not be granted.
Was the Learned Master required to apply the substantial or unexpected change in circumstances test?
Was the action set down for trial through inadvertence?
[15] The plaintiff submits that the Learned Master was not required to apply the test he used, because the action had been set down for trial through inadvertence.
[16] Where a matter has been listed for trial through error or inadvertence, justice may require that the listing for trial be vacated even where there has been no substantial or unexpected change in circumstances. (see Hill v. Ortho Pharmaceuticals (Canada) Ltd., [1992] O.J. No. 1740, pg. 5)
[17] The Master did not, as the plaintiff submits before me, find that the action was set down for trial through inadvertence. I agree with the Master that how plaintiff’s counsel acted cannot be considered inadvertent. Counsel deliberately chose to serve and file the trial record to avoid the dismissal of the action, in circumstances where alternative courses of action were available to him. The fact that counsel had not considered the effect of rule 48.04(1) does not make his setting of the action down for trial inadvertent.
[18] The Master did not err in rejecting the argument that the substantial or unexpected change in circumstances test does not apply based on the action being listed for trial through inadvertence.
What are the tests to be applied in granting leave?
[19] Having concluded that the denial of discoveries was not something that affected substantive rights and that the action had not been set down for trial through inadvertence, the Master felt bound to apply the substantial or unexpected change in circumstances test in exercising his discretion as to whether to grant leave.
[20] The Master considered Van Ginkel v. East Asia Mineral Corp., 2010 ONSC 905, [2010] O.J. No. 541 (S.C.J.) to reach this conclusion. In Van Ginkel, Perell J. applied the substantial or unexpected change in circumstances test and denied leave to a plaintiff whose action had been set down for trial to bring a motion to compel answers to undertakings, refusals, and follow-up questions.
[21] Perell J., at para. 17, provides a synopsis of the principles he extracted from his review of the relevant cases. I adopt his analysis, in particular his final statement in which he sets out the test for granting leave to permit further discovery or other interlocutory proceedings when substantive rights are not in issue. He states that there are two circumstances in which leave is available:
where there is a substantial or unexpected change in circumstances such that a refusal to grant leave would be manifestly unjust; and,
where the interlocutory step is necessary in the interests of justice.[^3]
[22] This statement of the law is consistent with the contextual approach adopted in Tanner and rule 1.04 of the Rules of Civil Procedure which requires that the rules be construed in such a way as secures “the most expeditious and least expensive determination of every civil proceeding on its merits.”
[23] The Master stated that in concluding there must be “a substantial or unexpected change in circumstances before a party can seek discovery after setting the action down for trial”, he was adopting the test set out in Van Ginkel, White v. Winfair Management Ltd., [2005] O.J. No. 1542 (S.C.J. Mast.) and Jens Nielsen, Custom Contracting Ltd. v. Litwin, [2012] O.J. No. 2105 (S.C.J.)[^4]
[24] White was decided before Van Ginkel, and therefore the Master did not have the benefit of Perell J.’s conclusion that even in the absence of a substantial or unexpected change in circumstances, leave can be granted with respect to an interlocutory step where leave is in the interests of justice. In Jens Nielsen, Fragomeni J. reproduced and adopted Perell J.’s summary of applicable principles in Van Ginkel.
[25] With the greatest of respect, Van Ginkel is contrary to the Master’s conclusion regarding the parameters of his discretion and neither White nor Jens Nielsen can be viewed as limiting Van Ginkel to require the Master to exercise his discretion as narrowly as he has.
[26] The facts in this case are distinguishable from the cases relied on by the Master and the defendants. This is not a case in which the plaintiff sought to obtain an advantage by setting the action down for trial or made a tactical decision to set the action down for trial and then pursue interlocutory proceedings. (see, for example, Meloro Restaurant v. Little Caesars of Canada Inc., 2012 ONSC 1870, [2012] O.J. No. 1413, (Ont. Sup. Ct.)).
[27] Here, the consequences of counsel’s decision to avoid the dismissal of the action by filing the trial record were unintended.
[28] In White, the Master adopted the following often quoted statement in Hill v. Ortho Pharmaceutical (Canada) Ltd., [1992] O.J. No. 1740 (Gen. Div.) p. 3, as setting out the test for the exercising of his discretion:
The authorities make it clear that setting a matter down for trial is not a mere technicality of procedure. Before it can be vacated to permit any further discovery or other interlocutory proceedings, there must be a substantial or unexpected change in circumstances such that a refusal to make an order under Section 48.04(1) would be manifestly unjust.
[29] In my view, the reference in this quote to “any further discovery” is noteworthy. It reflects the facts in that case: new counsel, coming on record after examinations for discovery had been conducted and the action had been certified ready for trial, concluded that the examinations for discovery were inadequate and sought to conduct further discoveries. But, consistent with Perell J.’s analysis in Van Ginkel, this wording also reflects a recognition that circumstances may exist in which the interests of justice require the granting of an order under rule 48.04(1) even where substantive rights are not in issue.
[30] None of the cases on which the defendants rely for their position that the Master correctly stated the test for the exercise of his discretion reject the analysis in Hill. They are either older cases decided before Tanner and make no reference to Hill, or are cases in which the applicable test was found to be the existence of substantial or unexpected change in circumstances based on the facts.
[31] The defendants, in their submissions, properly emphasize the need to maintain the integrity of the procedural step of setting an action down for trial. Counsel must take the step seriously and must be mindful of the reliance that the court and the opposing party will place on the setting of the action down for trial.
[32] However, to grant leave in the circumstances of this case does not so clearly undermine the rule as to warrant impairing the prospects for a just resolution of the action. This is not a case such as Hill, in which counsel was attempting to re-open a step completed before the setting of the action down for trial or Meloro, in which counsel for the plaintiff flouted the rules in order to obtain an earlier trial date.
[33] There is no prejudice to the defendants resulting from the trial record being vacated. The action had not yet reached the stage of the scheduling of examinations for discovery. The motion before the court that the defendants now argue cannot proceed had been jointly brought.
[34] There is prejudice to the plaintiff. As the Master found, without full documentary disclosure and examinations for discovery of the defendants, the plaintiff will be prejudiced in its preparation and will be denied an important tool in the preparation for trial.[^5] In addition, the plaintiff will have to proceed to trial without benefit of a meaningful expert’s report with respect to damages.
[35] The Master was of the view that these consequences can be dealt with at trial. Technically, this is true. However, it does not take into account the practicalities of leaving the issues until trial. The consequence is likely to be the trial judge adjourning the trial for some period of time. This would be contrary to the efficient operation of the courts and would add to the parties’ costs of the trial. In my view, it would be in the interests of justice to take the necessary steps to avoid this outcome.
[36] The defendant submits that the remedy for the prejudice to the plaintiff resulting from a refusal to grant leave is through an action by the plaintiff against its counsel for the damages resulting from counsel’s error. In my view, the possibility of a negligence claim against counsel is not a proper consideration in determining whether leave to vacate the listing for trial should be granted. As the Court of Appeal stated in Finlay v. Van Paassen, 2010 ONCA 204, [2010] O.J. No. 1097, at para. 32:
Speculation about whether a party has a lawsuit against its own lawyer, or the potential success of that lawsuit, should not inform the court’s analysis of whether the registrar’s dismissal order ought to be set aside.
The fact that this statement was made in the context of a motion to set aside a dismissal order does not diminish its relevance. The fact that it may be obiter does not diminish its persuasiveness.
[37] Even if the possibility of the plaintiff taking legal action against his counsel were relevant to the analysis, I would find it difficult to imagine how such an action would represent a viable means of recovering what was lost to the plaintiff through his counsel’s failure to appreciate that by listing the action down for trial, counsel was depriving the plaintiff of the right to conduct examinations for discovery. The impracticalities of such a claim and the degree of speculation that would be required in determining the consequences of the error make its viability questionable.
Do the interests of justice require that leave be granted?
[38] As was stated in Gloucester, at para. 9, “… the principles to be considered in respect to the exercise of the discretion contained in rule 48.04(1) will vary and will depend on the nature of the leave requested and the circumstances of the case.”
[39] The leave requested by the plaintiff is that it be permitted access to an important part of the litigation process that was lost unintentionally. The circumstances as I have outlined them are, in my view, such that the interests of justice require the granting of the order sought.
[40] The appeal is allowed.
Costs
[41] The cost award of the Master is set aside.
[42] The usual rule is that the successful party is entitled to costs. The plaintiff is the successful party on this appeal. However, in my view, because it was the plaintiff’s actions, through its counsel, that necessitated the motion and appeal, the application of the usual rule is not appropriate. There will be no order for costs.
Frank J.
DATE: March 1, 2013
[^1]: The plaintiff acknowledged before the Master and on this appeal that there was no substantial or unexpected change.
[^2]: At para’s 43 and 44 of the Master’s decision
[^3]: Perell J. referenced the following cases as the basis for this principle: Hill v. Ortho Pharmaceutical (Canada) Ltd., [1992] O.J. No. 1740 (Gen. Div.) at para. 3; Machado v. Pratt & Whitney Canada Inc. (1993), 1993 5492 (ON SC), 16 O.R. (3d) 250 [1993] O.J. No. 2741 (Gen. Div.); White v. Winfair Management Ltd., [2005] O.J. No. 1542 (Master) at paras. 15-16; Benedetto v. Giannoulias, [2009] O.J. No. 3218 (S.C.J.).
[^4]: at para. 40 of the Master’s decision
[^5]: At para. 27 of the Master’s decision