SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-12-451862
DATE: 20130412

RE: Carol Ann Elgner v. The Estate of Harvey Freedman and Alana Freedman

BEFORE: Master Glustein

COUNSEL: Melvyn L. Solmon and Julie K. Hannaford for the plaintiff
Thomas Slahta and Aaron Hershtal for the defendants

HEARD: April 11, 2013

Endorsement

[1] I grant the motion by the plaintiff, Carol Ann Elgner (“Elgner”) under Rule 39.02(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) for leave to examine Aaron Hershtal (“Hershtal”) pursuant to Rule 39.03.

The applicable law

[2] I rely on the criteria set out in First Capital Realty Inc. v. Centrecorp Management Services Ltd., 2009 CarswellOnt 6914 (Div. Ct.) (“First Capital”) at para. 13 and consider the following factors:

(i) Is the evidence relevant?

(ii) Does the evidence respond to a matter raised on the cross-examination, not necessarily raised for the first time?

(iii) Would granting leave result in non-compensable prejudice that could not be addressed by imposing costs, terms, or an adjournment?

(iv) Did the moving party provide a reasonable or adequate explanation for why the evidence was not included at the outset?

[3] The court must take a flexible, contextual approach under Rule 39.02(2) having regard to the overriding principle in Rule 1.04 that the rules are to be interpreted liberally to ensure a just and timely resolution of the dispute (First Capital, at para. 14).

[4] If a deponent has no actual knowledge, undertakings may be sought or the person with knowledge could be examined with leave if necessary under Rules 39.02 and 39.03 (Mapletoft v. Service, 2008 CarswellOnt 897 (Mast.) (“Mapletoft”) at footnote 3).

[5] Relevance must be considered in the context of the substantive motion which is to be heard by the court. On a particulars motion, an issue for the court is whether the particulars are within the knowledge of the party demanding them (Pennyfeather v. Timminco Limited, 2011 ONSC 4257 (S.C.J.) at para. 61).

[6] The court can consider proportionality when determining a right to further examinations (Blenkhorn v. Mazzawi, 2010 ONSC 699 (S.C.J.) at paras. 20-24).

Application of the law to the evidence before the court

[7] I first review the four factors in First Capital.

[8] Relevance of the evidence: For the particulars motion, the defendants rely on affidavit evidence from Beverly Jusko (“Jusko”), a lawyer at the plaintiff’s law firm, to demonstrate, in part, that the particulars sought are not within the defendants’ knowledge. Jusko stated in her affidavit sworn November 21, 2012 (the “Jusko Affidavit”) that she was advised by (i) Sharon Freedman (“Sharon”), the estate trustee, and (ii) the defendant Alana Freedman (“Alana”) that neither of them had knowledge of the particulars sought.

[9] By endorsement dated January 16, 2013, Master Muir ordered that Sharon and Alana be examined under Rule 39.03 on the basis that Alana and Sharon may have relevant evidence on the issue of whether the particulars requested were within the defendants’ knowledge. Master Muir held that it would be inappropriate to assume that the Rule 39.03 examinations would become “early discovery” and stated that “[i]f the scope of the Rule 39.03 examinations strays from issues relevant to the particulars motion, I am sure that counsel for the defendants will quickly object. The question of relevance will then be determined by the court on the basis of actual questions and not speculation”. The significant number of refusals from the examinations of Sharon and Alana and the vigorously contested legal issues confirm Master Muir’s foresight.

[10] The issue of the defendants’ knowledge about the issues on which particulars are sought (which include the scope of the Freedman retainer) is relevant to the particulars motion, as is demonstrated by Jusko stating her purported knowledge of the action arising from positions taken by Elgner’s husband Claude Elgner (“Claude”) in divorce proceedings and the scope of Harvey Freedman’s retainer for Claude’s father, Ben Elgner (see paragraphs 3 and 4 of the Jusko Affidavit).

[11] On Jusko’s cross-examination, her evidence was that she relied on the statement of claim in order to make the above assertions in her affidavit (questions 109 and 126 of the transcript). However, a statement of claim is not an evidentiary basis on which to support factual statements in an affidavit. Further, Jusko acknowledged that (i) the affidavit was drafted by Hershtal; (ii) Jusko accepted that Hershtal would have undertaken due diligence to ensure its accuracy; and (iii) Jusko “didn’t do very much inquiry at all” to inform herself of the accuracy of her affidavit evidence (question 118 of the transcript) other than reviewing the statement of claim (which she would have been required to do to support her statements at paragraphs 7 and 8 of her affidavit).

[12] While defendants’ counsel added at the cross-examination that Jusko also looked at documents attached to her affidavit as exhibits, defendants’ counsel at the present motion could not indicate any documents (other than the statement of claim) which would support Jusko’s statements at paragraphs 3 and 4 of her affidavit.

[13] Consequently, while Elgner could have decided to take the position on the upcoming particulars motion that the court should give no weight to Jusko’s evidence, Elgner is also entitled to the evidence of the person who has knowledge of an issue which may be relevant to the motion. Had Jusko stated in her affidavit that the source of her information was Hershtal, the same issue would have been before Master Muir at the earlier Rule 39.03 motion rather than having to be addressed after Jusko’s cross-examination which was based on her affidavit which purported to be her knowledge.

[14] For the above reasons, I find that Elgner has met the first factor under the First Capital test.

[15] The evidence responds to a matter raised on cross-examination: The lack of personal knowledge of Jusko as to the evidence she provided at paragraphs 3 and 4 of her affidavit could not have been discovered until cross-examination, as Jusko swore that the information was within her personal knowledge. Further, Jusko’s lack of information about any matter related to this particular action was also discovered on cross-examination, when she acknowledged that (i) she had not worked on the file (except to swear the affidavit) (questions 49 and 76 of the transcript); (ii) she had no knowledge of the efforts made by litigation counsel to obtain particulars other than what she stated in her affidavit (question 64 of the transcript); (iii) she had only spoken to Hershtal about the affidavit (question 93 of the transcript); (iv) she had taken no steps to inform herself of the truth of her statement at paragraph 3 of her affidavit about positions taken by Claude (other than she assumes that she obtained the information by reading the statement of claim) (questions 119-22 of the transcript); and (v) she did not do very much inquiry because Hershtal had given her the affidavit and Jusko was satisfied that Hershtal had done the necessary inquiries (question 118 of the transcript).

[16] All of the above evidence could not have been known prior to the cross-examination and was raised on the cross-examination.

[17] Consequently, I find that Elgner has met the second factor under the First Capital test.

[18] No non-compensable prejudice: There is no evidence of any non-compensable prejudice that could not be addressed by imposing costs, terms, or an adjournment. As I discuss above, the lack of involvement of Jusko in any of the litigation, and as such her inability to provide any evidence as to the knowledge of litigation counsel about the particulars demanded in the motion, only arose at the cross-examination when it became apparent that Jusko had no personal knowledge about the litigation despite her statements at paragraphs 3 and 4 of her affidavit.

[19] Consequently, I find that Elgner has met the third factor under the First Capital test. An adjournment of the particulars motion to permit examination of Hershtal does not require further terms or costs. It is a just and fair requirement for the court to have the evidence necessary to consider whether the knowledge of litigation counsel can or ought to be imputed to the client on a particulars motion.

[20] Explanation for why the evidence was not provided at the outset: There would have been no basis for Elgner to have sought a Rule 39.03 examination of Hershtal “at the outset” as the only evidence from litigation counsel was by Jusko and her evidence did not raise the issue of lack of personal knowledge about the particulars sought.

[21] Consequently, I find that Elgner has met the fourth factor under the First Capital test.

[22] I now address the additional factors I discuss at paragraphs 3 to 6 above.

[23] A contextual approach for this motion leads to the result that Hershtal should be examined as to his knowledge relevant to the particulars motion. Jusko has no actual knowledge of any matter with respect to the litigation other than swearing the affidavit and even on that minimal involvement, at best Jusko did nothing other than accept Hershtal’s affidavit and review the pleadings and exhibits. This is the type of case raised by Master MacLeod in his comments in Mapletoft.

[24] Finally, the concept of proportionality relied upon by the defendants does not support a conclusion against examination. The information sought from Hershtal cannot be obtained from any other source except litigation counsel, and there is no evidence that an examination would be unduly onerous or time-consuming. Any issues of privilege or relevance which arise on the Hershtal examination will be addressed by the court together with similar issues of privilege or relevance arising from the examinations of Alana and Sharon and the cross-examination of Jusko, all to be heard collectively as a long motion to be scheduled with the court.

Order and costs

[25] For the above reasons, I grant the motion under Rule 39.02(2) for leave to examine Hershtal pursuant to Rule 39.03. The issue of costs for this motion is reserved to the court hearing the refusals motion, so that the court can consider the appropriate costs order in light of the court’s assessment of the utility of the examination and any maintained refusals, or if the court on the refusals motion determines appropriate, reserve the costs of the present motion to the court hearing the particulars motion.

[26] I am not seized of any further motions in this matter. It is not an appropriate case for case management as there is no lack of cooperation between counsel and the other factors in Rule 77.05(4) are not apparent at this point.

[27] Counsel agreed to schedule the collective refusals motion as a long motion. Further, given that the setting aside motion and the particulars motion have each been scheduled for an hour, I would anticipate that it would be more appropriate to book both of those motions collectively as a long motion (perhaps even for a full day hearing) to ensure that all issues are fully addressed. I make no order on the scheduling of the two substantive motions, but I advised counsel at the hearing that there is a general risk that the court will not hear matters as regular motions which ought to have been booked as long motions.

[28] I thank counsel for their thorough written and oral submissions which were of great assistance to the court.

Master Benjamin Glustein

DATE: April 12, 2013