Dr. Sylvester Chuang et al. v. Toyota Canada Inc., 2013 ONSC 3235

SUPERIOR COURT OF JUSTICE - ONTARIO

Court File No.: 06-CL-6388
Date Heard: May 31, 2013
Endorsement Released: June 6, 2013

RE: DR. SYLVESTER CHUANG, HSC HOLDINGS INC., TRANSORIENTAL FINE CARS LTD., 1405768 ONTARIO LIMITED and ONTASIAN ENTERPRISES INC. v. TOYOTA CANADA INC.

Before: Master R. Dash

Counsel:
Ian Katchin, for the plaintiffs

Timothy Pinos and Jason Beitchman, for the defendant

Megan Shortreed, for the non-parties

REASONS FOR DECISION

1This is a motion by the plaintiffs for production of documents in the possession of the defendant but which are confidential and proprietary to the non-parties. Prior to argument on this motion I heard the non-parties’ request for standing on the motion, which was opposed by the plaintiffs. For written reasons endorsed on the motion record I determined that the non-parties were entitled to notice of the motion with standing to address issues relating to protecting their proprietary interests. This endorsement addresses the productions motion.

BACKGROUND

2The plaintiffs had negotiated a Letter of Commitment (“LOC”) with the defendant to open a Lexus dealership in downtown Toronto. The defendant terminated the LOC for alleged breaches by the plaintiffs. The plaintiffs claim loss of profits as part of the damages arising out of that termination. The plaintiffs later opened an Audi dealership at the same location. The loss of profits claimed consists of the difference between profits they would have earned operating a Lexus dealership and the actual profits subsequently earned by operating the Audi dealership.

3An issue in the action is the calculation of what the plaintiffs could have earned by operating the proposed Lexus dealership.

4In their statement of claim the plaintiffs plead that particulars of their loss will be provided. On October 2, 2009, after the completion of examinations for discovery and undertakings, the plaintiffs served a trial record together with an expert report (the “Rosen Report”) quantifying their claim for loss of profits.

5The Rosen Report adopts a cash flow analysis for loss of profits and relies primarily on projections of earnings and expenses that the plaintiffs had developed in 2005 in support of their proposal to establish the Lexus dealership (the “Projections”), as well as other industry information and statistics. The plaintiffs claim that the Projections were accepted by the defendant at the time of the LOC.

6Rosen did not reference or rely upon actual profits of other Greater Toronto Area (“GTA”) Lexus dealerships either individually or by average, nor did he request that information in order to opine as to the plaintiffs’ loss of profits. No questions were asked of the defendant at examination for discovery as to actual profits earned by other Lexus dealers. The plaintiffs set the action down without having sought such information.¹

7In response to the Rosen Report, the defendant served two expert reports, one of which (“the BDO Report”) opined as to the quantification of the plaintiffs’ loss of profits. In so doing BDO rejected use of the Projections and instead relied on an average of actual operating income and expenses for seven GTA Lexus dealerships (the “Dealers” or “Dealerships”). In support of its calculations, BDO had received from the defendant and relied upon averages of Key Performance Indicators (“KPI”) that had been supplied to the defendant by the Dealers.

8It was a term of the dealership agreements between the defendant and its Lexus dealers that each dealer was required to submit KPI data to the defendant on a regular basis. The same agreements obliged the defendant to keep the information confidential and “not be submitted to any third party unless authorized by the Dealer or required by law”.

9In developing information to provide to BDO, Dieter Smythe, the defendant’s manager of business management, assembled the KPI data from the Dealers and prepared charts that summarized average KPI data of the seven GTA Lexus dealerships. The defendant forwarded the average KPI data to BDO. The defendant did not send, nor did BDO receive, review, reference or rely upon the KPI data or other financial information of the individual dealerships.

10The BDO report, which was served on the plaintiffs, referenced certain documentation that was not attached as appendices, including “Lexus GTA KPIs 2006-2010”. This was the average data from the Dealership KPIs, but not individual data from each dealer.

11Upon receipt of the BDO Report the plaintiffs demanded copies of the documents referenced in the report, including the KPI data (i.e. the average KPI data). The defendant provided the documentation subject to a confidentiality order consented to by the plaintiffs and endorsed by Brown J. on April 12, 2012. The plaintiffs were clearly entitled to these documents as foundational information for BDO’s expert findings and opinion within the meaning of rule 31.06(3).

12The plaintiffs now seek on the motion before me all financial statements and dealer statements (the KPI data) from each of the seven individual dealerships from 2006 to present. Although expressed more broadly in the notice of motion, plaintiffs’ counsel concedes that his request is restricted to such financial information (whether KPI data or otherwise) as may be in the possession of the defendant, since this not a rule 30.10 motion and they seek no documentation or other relief directly from the Dealers.

PRODUCTION UNDER RULE 31.06(3)

13Under rule 31.06(3) a party is entitled to disclosure of the “findings, opinions and conclusions” of an expert engaged by an adversarial party (unless an undertaking has been given not to call the expert at trial). The word “findings” includes all factual information or data that the expert relies upon in arriving at his opinions and conclusions² or data and records made or used by the expert in preparing his report³. This has been described as foundational information and consists of the facts upon which the opinion is based and the instructions upon which the expert proceeded.⁴ No case has been cited where data or information that was not received, reviewed, relied upon or prepared by the expert has been ordered produced as foundational information for the expert’s findings, even if related to the information that was provided.

14In this case BDO was not provided with KPI data or other financial information of any one or more of the seven individual dealers. BDO was provided only with the averages of the KPI data as summarized by the defendant from KPI data received by the defendant from the seven dealerships. While it may be argued that the expert’s report may have been more reliable if the expert had received the raw data of each dealer and prepared its own summary or average, that was not done.

15As BDO did not receive, review, reference or rely upon the individual dealer information, it cannot be considered as foundational information to BDO’s findings. The plaintiffs are not entitled to production of the KPI data or other financial information respecting individual dealerships on the basis of rule 31.06(3).

PRODUCTION UNDER RULE 30.02

16Are the plaintiffs entitled to the individual dealer documents under rule 30.02(2)? Rule 30.02(1) requires a party to disclose every document “relevant to any matter in issue” that is in its possession, control or power whether or not privilege is claimed. Rule 30.02(2) requires a party to produce those documents for inspection unless privilege is claimed. I must therefore first consider whether the individual KPI or other financial data in the possession of the defendant is relevant to a matter in issue – in this case to the issue of the plaintiffs’ loss of profits.

Relevance

17The plaintiffs claim the information is relevant for reasons set out in an affidavit by one of the authors of the Rosen report, Mr. Mak. In summary, the plaintiffs claim the KPI data used by BDO is insufficient and incomplete. They claim there are significant differences between the financial data and even the categories of line items as between the Projections as used in the Rosen Report and the financial data as used in the BDO Report. They state that disclosure of the source of the BDO data will help Rosen understand how the KPI averages given to and used by BDO were arrived at and how to reconcile the KPI data with the Projection data. Mak claims this information will enable him to opine as to the reliability, accuracy and appropriateness of the KPI averages, whether it is reasonable to use averages of existing GTA dealerships to estimate the plaintiffs’ losses and generally whether BDO’s position is reasonable. The plaintiffs claim that production of the dealers’ individual financial data will therefore permit Rosen to properly critique the BDO report and deliver a reply report.

18The defendant’s position is that the plaintiffs seek this information for the sole purpose of challenging the credibility and reliability of the expert’s opinion, or the factual assumptions upon which the opinion is based. Indeed on his cross-examination, Mr. Mak admitted that accepting averages without independently testing the reliability or appropriateness of those averages and the data used in the averages would undermine the reliability and the credibility of the opinion. He also stated that the assumption by BDO that averages are a good indicator of financial performance of any particular dealer could be challenged.

19The defendant argues that challenges to the credibility and reliability of an expert’s opinion or the factual assumptions upon which the opinion is based are properly left to cross-examination at trial but are not a matter for further discovery or production of documents. The defendant relies on the Fyffe case⁵ for the proposition that questions asked on discovery in respect of an expert’s report were “beyond the scope of discovery afforded under rule 31.06(3) and should be reserved for cross-examination.” The Fyffe case does not assist the defendant. Firstly, the questions asked at discovery in Fyfe requested that the party under examination ask questions of its own expert as to the expert’s methodology, questions the court refused to compel. In this case the plaintiffs are not requesting that defendant put any questions to its expert. If they had, that indeed would be a matter left to cross-examination of the expert at trial. Rather they are seeking production of what they claim are relevant documents in the defendant’s possession that could be used to challenge the reliability of the expert’s opinions. Secondly, in Fyffe the examining party sought the information solely under rule 31.06(3). In this case, while I have likewise determined that the documents are not available pursuant to rule 31.06(3), the plaintiffs herein also seek the documents under rule 30.02, a matter not in issue in Fyffe.

20In my view, the documents requested are not simply matters to be dealt with by cross-examination of the expert at trial, but are relevant documents within the meaning of rule 30.02(2) on the issue of calculation of the plaintiffs’ loss of profits.

21Notwithstanding that the plaintiffs do not rely on the financial performance of existing Lexus dealers in the GTA, either individually or on average, as a basis for or factor in establishing the plaintiffs’ loss of profit and that such information was never requested by the plaintiffs either at examinations for discovery or in preparation for the Rosen Report, the defendant’s use of the Dealers’ financial data, albeit average and not individual data, as the basis for calculating the plaintiffs’ projected income, has made the performance of GTA Lexus Dealers relevant to the plaintiffs’ loss of profit, which is an issue in the action.

22Indeed, the trial judge may well determine that the defendant is right and that profits of other Lexus Dealers in the GTA is the appropriate basis upon which to calculate what the plaintiffs would have earned had they been able to establish a downtown Lexus dealership.

23Even though the defendant’s expert has used the average data, the individual dealer’s financial information is also relevant in order to determine the reasonableness and reliability of the averages. This is particularly so as the averages were calculated by an employee of the defendant and given to the expert. The expert relied on the averages given to him with no independent calculation on his own part.⁶ The plaintiffs can critique by way of reply report BDO’s use of averages and can critique the use of profits of existing Lexus Dealerships in the GTA, on average or otherwise, as a basis to estimate the plaintiffs’ loss of profits without the breakdown by dealer, but the reliability of the calculations in the BDO report cannot be adequately tested without it.

24I am satisfied that the financial information in the defendant’s possession of the seven individual Lexus Dealerships is relevant to an issue in the action – the plaintiffs’ loss of profits arising out of termination of the agreement to establish a downtown Lexus dealership.

25I would add that the relevance does not stop in 2010, being the end date of the KPI data relied on by BDO in its report, as the plaintiffs’ alleged loss of profits continue to the present and beyond and were calculated by Rosen into the future.

Prejudice, Proportionality and Balancing of Interests

26Notwithstanding its relevance I am of the view that the individual Dealers’ financial data should not be produced to the plaintiffs.

27Proportionality is now a governing principle in applying all rules of civil procedure: rule 1.04(1.1). With the recent rule amendments relevance is now not the sole governing standard for production of documents:

Proportionality must be seen to be the norm, not the exception -- the starting point, rather than an afterthought. Proportionality guidelines are not simply "available". The "broad and liberal" standard should be abandoned in place of proportionality rules that make "relevancy" part of the test for permissible discovery, but not the starting point.⁷

28In particular, when making determinations as to production of documents under Rule 30 or answering questions under Rule 31, Rule 29.2 requires the court to consider a number of factors related to proportionality. Some of the factors include the time and expense in making production (which is not relevant to the matter before me) but rule 29.2.03(1)(c) requires the court to consider whether:

requiring the party or other person to answer the question or produce the document would cause him or her undue prejudice.

29In this case the Dealers claim that if the defendant is required to produce their confidential financial information to the plaintiffs they will suffer undue prejudice. I appreciate that rule 29.2.03(1)(c) is not directly applicable since the defendant does not allege that it will suffer prejudice if it produces the Dealers’ information and no production is sought from the Dealers directly (such as would be the case if this were a rule 30.10 motion). If this were a rule 30.10 motion in which the documents were being sought from the non-party Dealers the plaintiffs would be required to demonstrate both that the documents were relevant and that it would be unfair to require them to proceed to trial without the documents. The fairness requirement engages a consideration of a number of factors including the position of the non-party Dealers with respect to production, the relationship of the non-parties from whom production is sought to the litigation and the parties as well as the availability of the informational equivalence of the documents from another source.⁸ Further, if the motion had been under rule 30.10 and documents sought directly from the Dealers, rule 29.2.03(1)(c) would have been directly engaged and undue prejudice to the Dealers would have been a necessary consideration. Of course rule 30.10 is not directly applicable since no documents are sought directly from the Dealers.

30Although neither rule 29.2.03(1)(c) nor rule 30.10 directly apply to the motion before me, the principles and the interests they are designed to protect are the same. The only difference is that production is sought from the defendant of documents that are the property of the non-party Dealers and it is the Dealers that allege prejudice if such production is made. In my view it is appropriate to engage rule 1.04(2):

Where matters are not provided for in these rules, the practice shall be determined by analogy to them.

31It is therefore my view that when production of otherwise relevant documents is sought from a party that are said to be the confidential property of a non-party and the non-party alleges that it will suffer prejudice if production of their documents is made, the court must consider the views of and any prejudice to the non-parties in determining whether to order production.

32I am of the view that when considering whether to order such production, the court should weigh the prejudice to the non-party if production is ordered against the prejudice to the requesting party in presenting their case at trial if production is denied.⁹

33The documents are proprietary to the Dealers. This has not been challenged.

34Although the Dealers provided their individual financial data to the defendant on a regular basis pursuant to the requirements of an agreement between the defendant and each individual Dealer, they did so under the protection of a contractual provision that the information would be kept confidential by the defendant. The dealer agreements specifically prohibit the defendant from submitting the dealer financial information to a third party unless authorized by the dealer or required by law. Clearly both the Dealers and the defendant intended the financial information in the hands of the defendant to remain confidential. Indeed none of the Dealers supplying data to the defendant are privy to the data provided by the other Dealers. The Dealers do not authorize the release of the documents and actively oppose its release. (I appreciate that any order I may make under Rule 30 would be a “required by law” exception recognized in the Dealership agreements.)

35The plaintiff Chuang, although not owning a Lexus dealership, owns dealerships in the GTA for other luxury cars including Mercedes, BMW, Audi and Jaguar. Representatives of each of the Dealers have sworn an affidavit for use on this motion. The Dealers claim Chuang is their direct business competitor in the luxury car market and the plaintiffs have provided no affidavit evidence to the contrary. I accept they are competitors.

36The Dealers claim in their affidavits that their financial information is both confidential and commercially sensitive and that they will be prejudiced if that information is given to the plaintiffs, who are direct competitors of the Dealers. The Dealers claim that disclosure will give the plaintiffs a significant and unwarranted insight into the Dealers’ sales, expenses and operational strategies for new cars, used cars, parts and service as well as their overall cost structure and profitability. They claim that this information could be used by the plaintiffs in dealing with or targeting prospective customers or in bidding for future dealerships. Although the plaintiffs already have evidence as to the Dealers’ average profitability, they have no data about the profits of individual Dealers.

37Although the Dealers admitted on cross-examination that these were only their personal opinions, unsupported by independent or expert evidence, it is not contradicted by any evidence from the plaintiffs. The plaintiffs had an opportunity to put in reply evidence, or if cross-examinations were commenced, with leave of the court, but they chose not to do so. I accept that the Dealers will suffer prejudice if the defendant produces their individual financial data to the plaintiffs.

38The plaintiffs argue that they have made comparable disclosure to what they seek from the Dealers. That is not accurate. Although the plaintiffs have produced to the defendant the financial statements relating to the Audi dealership opened at the location where Chuang was to have opened a Lexus dealership, the production was made to the defendant, but not to the Dealers and the defendant is prohibited from sharing the information with the Dealers because of the deemed undertaking rule. There has been no production at all of financial information relating to Chuang’s other competitive dealerships.

39It is necessary for me to compare and weigh the respective prejudice to the Dealers if the defendant produces their financial information to the plaintiffs with the prejudice to the plaintiffs in their prosecution of this lawsuit if they do not receive the Dealers’ financial data.

40The prejudice to the Dealers is significant. The Dealers are not parties to the action and the plaintiffs have made no allegations against them. It is only the defendant that the plaintiffs blame for their losses. The Dealers are true strangers to this action. The defendant however is in possession of the Dealers’ proprietary and confidential financial information due to a contractual requirement. The same contract requires the defendant to treat the information as confidential. If the information is shared with the plaintiffs, who are competitors of the Dealers, the Dealers will suffer prejudice as outlined earlier in these reasons and the plaintiffs will gain an unwarranted competitive advantage.

41On the other hand, I have determined that the financial information of the individual Dealers is relevant to the calculation of the plaintiffs’ loss of profits, an issue in the action.

42The plaintiffs, however, do not rely upon that information in order for their expert to calculate their loss of profits. In fact the plaintiffs take the position that using the average of the profits earned by other Lexus dealerships in the GTA is not an appropriate method to calculate the profits that the plaintiffs would have earned by the proposed Lexus dealership. They do not say that the individual Dealer information would be relevant for that purpose any more than the averages. They claim the individual Dealer information is relevant only to test the reliability and reasonableness of the averages used in the BDO Report. Rosen does not need the individual Dealer information to critique BDO’s use of profits earned by other Lexus dealers (whether individually or by average) as the basis for calculating the profits that would have been earned by the plaintiffs running a different Lexus dealership. The plaintiffs never requested information about other Lexus Dealers’ profitability in this action, either individually or by average, despite having completed examinations for discovery and despite setting the action down for trial and serving their own expert report on loss of profits, until the defendant delivered a responding report. The plaintiffs can further test the reliability and reasonableness of the BDO report by cross-examination at trial.

43On balance, I find that the prejudice to the Dealers if the defendant discloses their confidential proprietary information is significantly greater than the prejudice to the plaintiffs in prosecuting their action without that information.

The Deemed Undertaking and Protective Orders

44Normally the deemed undertaking rule is sufficient to protect the confidentiality and privacy of documents and information disclosed during the course of a proceeding by precluding use of those documents other than for purposes of the proceeding in which the evidence was obtained.¹⁰ The deemed undertaking however may be insufficient where a party would risk serious financial harm should confidential and commercially sensitive information be made available to a competitor who may obtain an unfair commercial advantage through its release. In such a case a confidentiality or protective order restricting access to and use of documents is appropriate. This would strike a balance between the disclosure necessary for the conduct of an action and a party’s bona fide right to protect confidential and sensitive information.¹¹ Such an order for “counsel and expert eyes only” and which prevents a party from seeing the documents interferes with the lawyer-client relationship and as such should be granted only in rare circumstances where the party seeking the restriction demonstrates the risk of injury.¹²

45This analysis would suggest that a protective order is the appropriate remedy rather than denying production. The case law dealing with protective orders however deals with a party obtaining production of the documents of an adversarial party. The presumption is that “parties ought to have access to the other side’s productions.”¹³ (emphasis added) This motion does not deal with production of the defendant’s documents, but rather production of documents in its possession that are the confidential and proprietary documents belonging to a stranger to the litigation. In my view, when a party seeks information that is the confidential property of a non-party, the proper approach is not to presume production and consider a protective order, but rather to determine production based on relevance, proportionality, prejudice and balancing the interests of the party seeking production and of the non-party. As noted, I have found that the prejudice to the Dealers if the defendant discloses their confidential proprietary information is significantly greater than the prejudice to the plaintiffs in prosecuting their action without that information.

46In any event, the Dealers would not be protected by the provisions of the Brown order, even if I specifically ordered that this additional confidential information be subject to that order.¹⁴ For one thing, the Brown order permits a representative of each plaintiff to personally review, but not copy, the information. In other words it is not restricted to counsel and expert. While this may have provided sufficient protection when only averages were being revealed, it is inadequate to protect intentional or unintentional misuse of information disclosed about the individual Dealers. Secondly, even if I added a “counsel and expert’s eyes only” term to the order, the plaintiffs would be able to review references to data of individual Dealers in any reply report delivered by Rosen, references that could reasonably be foreseen given that the plaintiffs seek to challenge the reliability of the averages. In any event the plaintiffs’ counsel strongly opposes a “counsel and expert only” provision since he argues that his clients must be able to review the new data in order to give instructions.

47Even though the plaintiffs may be bound by the deemed undertaking rule not to use the information disclosed in the discovery process for purposes other than this litigation, it would be difficult to remove the information from their minds when determining or changing, for example, pricing or marketing strategies.

Conclusion

48I therefore decline to order the defendant to produce to the plaintiffs the individual Dealer financial information or KPI data in its possession and the plaintiffs’ motion will be dismissed.

49If I had granted the order sought I would have done so only with the protection of a confidentiality order given the need to protect the non-parties’ commercially sensitive material and the risk that production would give their competitors (the plaintiffs) an unfair commercial advantage. The order would have been more restrictive than the one ordered by Justice Brown respecting the material referenced in the BDO Report and would have included a “counsel and expert eyes only” provision since the Dealers have proven that there is a real risk in disclosing their confidential financial information to the defendant. As indicated however, in the circumstances of this case, a “counsel and expert eyes only” order would not provide adequate protection to the Dealers.

50This determination is without prejudice to the plaintiffs renewing their request to the trial judge on notice to the Dealers or in summonsing the Dealers as witnesses at the trial. The trial judge would be in the best position to determine the relevance and probative value of permitting disclosure at that time and whether there is an ongoing need for protection.

COSTS

51All parties provided costs outlines at the conclusion of the hearing. The defendant and non-parties provided separate costs outlines for the standing issue and for the productions motion.

52The defendant was successful on the motion and is entitled to its costs. They are entitled to include as costs of the motion, the costs thrown away of the attendance before me on March 28, 2013. The motion was adjourned at that time because the plaintiffs had failed to serve the Dealers with the motion as “persons affected by the order sought” as required by rule 37.07(1) and when the Dealers, having received the motion materials from the defendant, attended to argue on the motion, the plaintiffs challenged their standing to do so. The motion had to be adjourned because insufficient time had been booked to argue both standing and the productions motion and to prepare factums on standing. The defendant is otherwise not entitled to any costs on the standing issue and they did not participate in the argument thereon. While I would not have included the costs of the earlier attendances before a Commercial List judge attempting to schedule this motion, I note that the plaintiff also included that time in their costs outline, so it would have been within their reasonable expectations for the defendant to be entitled to those costs.

53The Dealers too are entitled to their costs. They had separate interests to protect from that of the defendant. The data sought by the plaintiffs from the defendant was in the possession of the defendant but was the confidential property of the Dealers.

54The Dealers were successful in obtaining a ruling that they had standing to present argument on the productions motion to the extent of protecting their interests and arguing a balancing of prejudice. Although I refused to allow them to argue relevance, that being permitted only to the parties in the action, I do not consider that a significant division of success and the Dealers should have their costs related to the standing issue.

55The Dealers should also have their costs of the productions motion. The evidence prepared by the Dealers and the arguments made by their counsel were instrumental in my determination to refuse production to the plaintiffs. This would include the costs thrown away on March 28 since the productions motion could have been argued on that date but for the plaintiffs’ challenge of standing to the Dealers.

56The motion was of great importance to the Dealers since the plaintiffs, who are business competitors of the Dealers, were seeking production from the defendant of the Dealers’ confidential and proprietary financial data. It was also important to the defendant who had a contractual duty to protect the confidentiality of the data; however the importance to it had to be less than to the Dealers. The amount in issue, $28 million as claimed in the statement of claim, is significant.

57The importance of the motion to all parties is to some extent demonstrated by the considerable time and expense incurred by all of them, including the plaintiffs. The motion itself was of moderate complexity and concerned the production of only one set of documents. It was clearly made more complex by the plaintiffs’ dogged insistence on challenging standing. All parties participated in cross-examinations. Each party claimed for the time of three lawyers (and in some cases students as well) and so the plaintiffs cannot complain in that regard. Nonetheless there appears to be considerable overlap in time two or more lawyers spent talking to each other with each billing for the time and in separate lawyers working on reviewing the same materials. It is not appropriate for the plaintiffs to pay for the cost of more than one lawyer attending cross-examinations and hearings.

58There is no basis for costs other than on a partial indemnity scale. Notwithstanding that the plaintiffs failed to serve the motion on the Dealers as required and that their opposition thereto based on a disjunctive reading of the word “or” in rule 37.07(1) was wrong, if not frivolous, their conduct could not be considered reprehensible such as would attract any costs on an elevated scale.

59Nonetheless, the overall costs expended by all of the parties to this motion, but particularly the defendant, were grossly disproportionate to the importance and complexity of the issues and can only be described as overkill.

60The defendant seeks costs thrown away of the standing issue, namely the March 28 adjournment, on a substantial indemnity basis and costs of the productions motion on a partial indemnity basis. The defendant’s costs outline indicates substantial indemnity costs of $6,518 on the issue of standing and $105,157 on the productions motion for a total expended of $111,675. As stated, all costs shall be on a partial indemnity basis. The defendant’s total costs on a partial indemnity scale are claimed at $3,087 for the standing issue and $52,537 on the productions motion for a total of $55,624. While I find these costs to be extraordinarily high in relation to the issues involved on the motion, I am mindful that none of the parties and non-parties could be described as impoverished or unsophisticated litigants. I am also mindful that the court should be cautious before second guessing the strategy or time spent by successful counsel. I do not fault the defendant’s lawyers from providing their client with “Cadillac” service (or perhaps more appropriately “Lexus” service), however they cannot expect the losing parties to provide indemnity for more than what is fair and reasonable and what is within their reasonable expectations.

61The non-parties have provided costs outlines indicating substantial indemnity costs of $21,716 on the standing issue plus $43,643 on the productions motion for a total expended of $65,359. On a partial indemnity scale they claim $14,518 on the standing issue and $30,261 on the productions motion for a total of $44,779. Their costs are more reasonable than that of the defendant, particularly as the motion was of far greater importance to them than to the defendant, but still in my view beyond the reasonable expectations of the plaintiffs.

62The plaintiffs provided a single costs outline for both the standing issue and the productions motion. Their costs outline indicates substantial indemnity costs of $31,655 and they would have claimed $21,171 on a partial indemnity scale had they been successful. As with the defendant, their costs include the work of three lawyers and include the cross-examinations and the earlier commercial list attendances, although apparently not the March 28 attendance before me. The plaintiffs’ costs are closer to what I would have anticipated to be fair and reasonable costs of the motion. Nonetheless, the plaintiffs, in seeking confidential information about competitors yet arguing that the Dealers had no standing, should have known that the motion would have been vigorously contested and that considerable time would be spent by both the defendant and the non-parties in defending against production.

63In any event, fixing costs of a motion is not a simple mathematical exercise of multiplying hours by an appropriate hourly rate. The court must consider the factors in rule 57.07(1) and award costs that are fair and reasonable and within the reasonable expectations of the losing party.

64In my view, fair and reasonable costs of the motion, including costs of all adjournments and of the standing issue is $30,000 to the defendant and $30,000 to the Dealers, both inclusive of disbursements and HST. Clearly costs in that range would have been within the reasonable expectations of the plaintiffs.

ORDER

65I hereby order as follows:

(1) The plaintiffs’ motion to compel the defendant to produce financial and dealer statements relating to seven named Lexus dealers is dismissed.

(2) The plaintiffs shall pay to the defendant its costs of this motion within 30 days fixed in the sum of $30,000.00.

(3) The plaintiffs shall pay to the non-party Dealers their costs of this motion within 30 days fixed in the sum of $30,000.00.

Master R. Dash

Footnotes

1. 1The defendant does not raise rule 48.04 as an objection to the plaintiffs bringing this motion without leave and so the test for leave was not considered.
2. 2Allen v. Oulahen, 1992 7620 (ON SC), [1992] O.J. No. 1661, 10 O.R. (3d) 613 (Gen. Div. – Master Sandler) at para. 26.
3. 3Award Developments (Ontario) Ltd. v. Novoco Enterprises Ltd., 1992 7587 (ON SC), [1992] O.J. No. 1288, 10 O.R. (3d) 186 (Gen. Div.) at para. 12.
4. 4Conceicao Farms Inc. v. Zeneca Corp. (2006) O.R. (3d) 792 (C.A.) at para. 14.
5. 5Fyffe (Fyffe Logging) v. Ontrac Equioment Services Inc., [2008] O.J. No. 3723 (SCJ).
6. 6While I would have thought that individual Dealer information would also be relevant in order to ascertain specific Dealers who were more appropriate comparators to the proposed dealership based on demographics and proximity, the plaintiffs have never raised this as a basis for requesting the information nor have they indicated that the individual Dealer information would be used for such purposes.
7. 7Warman v. National Post Co., 2010 ONSC 3670, [2010] O.J. No. 3455, 103 O.R. (3d) 174 (SCJ – Master Short) at para. 85.
8. 8Ontario (Attorney General) v. Ballard Estate, 1995 3509 (ON CA), [1995] O.J. No. 3136, 26 O.R. (3d) 39 (C.A.) at para. 15.
9. 9I asked all parties if the four part “Wigmore” test for determining whether confidential communications or information should be disclosed as enunciated in Slavutych v. Baker, 1975 5 (SCC), [1976] 1 S.C.R. 254 at p. 260 should be applied, but none of the parties advocated for or adduced evidence in support of such analysis.
10. 10Foss v. Foss, 2013 ONSC 1345, [2013] O.J. No. 977 (SCJ ) at para. 34.
11. 11Eisses v. CPL Systems Canada Inc., 2008 1946 (ON SC), [2008] O.J. No. 239 (SCJ- Master Glustein) at para. 5(iv)-(vii); BASF Canada Inc. v. Max Auto Supply (1986) Inc., [1999] O.J. No. 515 (Gen Div.) at para. 16 and 17.
12. 12Foss v. Foss, supra at paras. 39 and 44; Eisses, supra, at para. 5(i)-(ii).
13. 13Eisses, supra, at para. 5(i).
14. 14The plaintiffs argue that the Brown order is already wide enough in its definition of protected confidential information to cover this additional information. I am not convinced that the wording is that broad, but I have the jurisdiction to make a similar order with respect to the additional information or to order, for greater certainty, that the additional information shall be bound by the Brown order.