COURT FILE NO.: CV-10-00409967

DATE: 20131113

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Diane Furgiuele, Plaintiff

– AND –

Don Casselman Global Enterprises and Casselman Global Enterprises Inc., Defendants

BEFORE: E.M. Morgan J.

COUNSEL:
David Seed, for the Plaintiff
Philip B. Morrissey, for the Defendants

HEARD: October 23, 2013

ENDORSEMENT

[1] What is the effect of Defendant’s counsel responding late to a prolix Request to Admit containing otherwise contested “facts”, served by Plaintiff’s counsel prior to discoveries taking place and years before trial? Is the 20 day timeline in Rule 51.03(2) of the Rules of Civil Procedure a short fuse which will explode any possible defense?

[2] This motion is brought by the Plaintiff for summary judgment in an action for wrongful dismissal. The action raises a number of contentious issues, including most prominently the question of whether the Plaintiff’s employer, for which she worked less than 3 months at the time of her termination, inherited the obligations of her former employer, for which she had worked at least 16 years.

[3] Although the Plaintiff argues in the alternative that summary judgment should be granted even without consideration of the Request to Admit, for the reasons set out in Part I below this is not a case for summary judgment on the evidentiary record before me. Absent the Request to Admit, which will be considered separately, the Plaintiff cannot establish the time frame of her employment or prove her damages.

[4] As for the Request to Admit, for the reasons set out in Part II below the delayed response to the Request does not under the circumstances lead to the deemed admissions sought by the Plaintiff. This action must proceed to trial.

I. The state of the record

[5] The Plaintiff worked for Arch Industries, an industrial rags producer, for many years. By the time she left Arch Industries in 2008, the Plaintiff had become its export manager.

[6] There is an unresolved issue with respect to the number of years in which the Plaintiff was employed by Arch Industries. According to her affidavit, the Plaintiff commenced employment with Arch Industries in 1988. According to Arch’s Record of Employment dated August 20, 2008 and filed with the government of Canada, she commenced employment in 1992. She was therefore either a 16 or a 20 year employee of Arch Industries when the relevant events in issue in the claim transpired.

[7] In addition, there is an unresolved issue as to whether her subsequent employer – one or both of the Defendants – was an altogether new employer or was the purchaser of Arch Industries that inherited the employees from Arch. The Plaintiff cites section 9(1) Employment Standards Act, SO 2000, c 41, which deems an employee’s employment by the seller of a business (or part of a business) to be employment by the purchaser of that business for the purpose of calculating the length of the employee’s period of employment. Counsel for the Plaintiff submits that there is a statutory presumption of continuous employment.

[8] In support of this position, the Plaintiff contends that between the two employers there was no change in the terms of her employment. She deposes that the Defendants simply took over Arch Industries’ business, including its key employees. Her evidence is that she did the same work, serviced the same customers, at the same salary, for the Defendants as she had done for Arch Industries. She claims that although the Defendants characterize their purchase from Arch Industries as an asset purchase that did not include employees rather than a purchase of the business that did include employees, the fact is that they carried on as if they were the direct inheritors of the Arch Industries business and its employees.

[9] Further, counsel for the Plaintiff points out that the Defendants have not produced the Agreement of Purchase and Sale or any other documentation of the deal with Arch Industries in order to prove that the Plaintiff as a key employee was not included in the Defendants’ acquisition. Accordingly, he submits that the deemed continuity of employment in section (1) of the Employment Standards Act has not been rebutted. Citing Carswell’s Wrongful Dismissal Practice Manual, ch. 2, ss. 2.45-2.52, counsel argues that under these circumstances the onus is on the new employer to establish that it did not assume the Plaintiff’s contract of employment from the predecessor employer.

[10] Finally, the Plaintiff claims that she was actively recruited by the Defendants, who induced her to leave Arch and join the Defendants as their office manager. Counsel for the Plaintiff submits that inducements can be taken into account in determining whether the prior employment counts in determining the length of time with the current employer. Indeed, the courts have confirmed that this is the case, although they have been careful to stress that inducements are, at best, “of variable significance”. Robertson v Weavexx Corp. (1997), 1997 4097 (BC CA), 86 BCAC 206, at para 30 (BCCA). Accordingly, the factual circumstances of the alleged inducement are critical to any analysis.

[11] The Plaintiff states in her affidavit that she was approached directly by the General Manager of the Defendants, William Cheeseman, to discuss with him the prospect of being employed by the Defendants as an office manager. She says that she met with Cheeseman privately at his home on August 17, 2008, and that at that meeting the offer of employment was confirmed and the terms of employment were concluded.

[12] It was this direct approach by Cheeseman, she contends, that induced her to take up the new position. As Plaintiff’s counsel puts it in his factum, it was at that meeting that she “received certain assurances regarding long term employment and job security if she accepted [the Defendants’] offer of employment”. Plaintiff’s counsel goes on to argue that she “would not have accepted the employment offer from [the Defendants] had she known her position was not secure.” In support of this argument, the Plaintiff states in cross-examination that she knew, on hearsay from the owner of Arch Industries, that the Defendants were buying Arch’s retail business and that her own employment by the Defendants was a part of the deal.

[13] The Defendants, in William Cheeseman’s affidavit, directly deny that proposition. Cheeseman deposes that the Plaintiff’s continued employment formed no part of any deal with Arch. Counsel for the Defendants further submits that no inference should be drawn from the Defendants’ failure to produce any particular document between them and Arch. According to Cheeseman’s evidence, there is no document that mentions the Plaintiff; accordingly, the Defendants argue that they cannot be expected to disclose their entire business to the Plaintiff in order to try to prove a negative.

[14] Defendants’ counsel also points out that everyone concedes that the meeting between Cheeseman and the Plaintiff took place on August 17, 2008. The Record of Employment filed by Arch Industries, on the other hand, indicates that the Plaintiff quit her job with Arch on August 15, 2008. According to Defendants’ counsel, something is missing from this evidentiary picture, since it defies logic for the Plaintiff to have been induced on August 17th to leave her job on August 15th.

[15] Counsel for the Defendants also notes that the Plaintiff herself, in cross-examination, stated that she was “given the choice to go to Casselman or to stay with the export division of Arch” [q. 392]. She further conceded under cross-examination that at the time she parted ways with Arch Industries she was aware that it was undergoing financial difficulties [qs. 304-308].

[16] All of this, counsel for the Defendants submits, leads to the conclusion that it was not Cheeseman or anyone else on behalf of the Defendants that induced the Plaintiff to leave her former employer. Rather, the Defendants argue, it was the Plaintiff’s own choice to go to work for the Defendants; and, moreover, this choice was only made after she had left Arch Industries. According to counsel for the Defendants, the record establishes that the Plaintiff had independent reasons to leave her employment with Arch Industries – i.e. the knowledge that Arch was in financial trouble – and that her departure had nothing to do with either the Defendants’ asset purchase from Arch or with any inducements given by Cheeseman to the Plaintiff.

[17] Further, the Defendants point out that although the Plaintiff and two other employees of Arch Industries eventually came to work for the Defendants, numerous other Arch employees stayed put at Arch Industries and continued to work there. The Plaintiff also concedes that Arch Industries did continue in business after she left to work for the Defendants, and that indeed Arch was unhappy with her departure – suggesting that her employment by the Defendants was not part of any deal with Arch. She specifically deposes in her affidavit that she had the choice to remain with Arch, but that she decided not to do so.

[18] Counsel for the Defendants submits that this evidence undermines the Plaintiff’s allegation that the Defendants were the successor employer that inherited Arch’s obligations toward the Plaintiff. The Defendants’ position, their counsel contends, is supported by the fact that the formal Record of Employment produced by Arch Industries designates the symbol “E” – meaning ‘quit’ – in the box that indicates the reason for the termination of the Plaintiff’s employment.

[19] As the final point in this argument, counsel for the Defendants notes that the 2008 T-4 tax slip that the Plaintiff received from Arch Industries shows that the Plaintiff earned $11, 803.75 from Jan. 1, 2008 until Aug. 15, 2008 – i.e. $1,573.83 per month, or $18,885.96 per year. By contrast, the Plaintiff deposes in her affidavit that she earned $5,478 per month, or $65,736 per year, working for the Defendants. Defendants’ counsel submits that this difference in annual salary – nearly $47,000 more from the Defendants than from Arch Industries – underscores the fact that the Plaintiff’s job with the Defendants was a substantially different job than her previous one, and that there was no continuity of employment between the two jobs.

[20] This latter argument about the salary difference is answered by the Plaintiff by stating that she has no specific recollection as to what her salary was at Arch. She states in cross-examination that it was well above what is shown on her T-4 slip, although there is no evidence that it was anywhere near the $65,000 + per year that she earned with the Defendants. She does state, however, that the figure of $18,885.96 that appears on the Arch Industries T-4 slip is substantially lower than what she was actually earning there. She provides no explanation for the discrepancy.

[21] These are not the only contentious issues that remain in the case. The parties are also at odds over the meaning of an employment and/or non-competition agreement signed by the Plaintiff on August 18, 2008. Furthermore, they are in dispute over whether the Plaintiff was a probationary employee or a full-fledged employee of the Defendants at the time of her termination, and over whether the Plaintiff made adequate efforts to mitigate her damages.

[22] In addition to questioning the Plaintiff’s efforts to mitigate, the Defendants submit that the Plaintiff has in fact mitigated any losses she suffered. On this point, I note that the Plaintiff claims that she was out of work from the date of her termination on November 15, 2008 until June 1, 2009, when she took up a new job with Saltex Inc. This makes for a total of 6.5 months of unemployment.

[23] During her time out of work, the Plaintiff’s T-4E tax slip shows that she collected $9,086 in Employment Insurance. Her affidavit states that her Saltex Inc. salary is $4,451 per month. That comes to $1,027 less per month than she was being paid by the Defendants for the roughly two months in 2008 that she worked for them, but $2,877.17 more per month than her Arch Industries T-4 slip shows her to have earned during the rest of 2008.

[24] The Plaintiff claims 16 months’ pay in lieu of notice, with the monthly amount being equal to the monthly salary she received from the Defendants for the two months she worked for them. However, even if she can establish that the Defendants inherited the employment obligations of Arch, her claim speaks to a level of pay in lieu of notice that would be a blend of the two salaries that made up her final year of wages. The record does not contain any evidence or explanation of how the two salaries might be averaged in order to arrive at a figure for pay in lieu of notice; nor does it provide any means of determining how to compare that blended pay with the post-mitigation salary she began receiving from Saltex Inc. 6½ months later.

[25] In any case, it cannot be determined on the current record whether the Defendants are the successors and inheritors of the employment obligations of Arch Industries. Viva voce evidence from the owner of Arch and from Cheeseman are necessary for that finding to be made. As a consequence, it cannot be determined at this point how many years or months the Plaintiff was employed. Likewise, the Plaintiff’s salary and her loss of income, if any, are not adequately proved in the current state of the evidence.

[26] These are crucial issues in a wrongful dismissal claim. Without sufficient evidence to make a determination on issues such as length of employment, salary, mitigation, and quantum of damages, I cannot possibly conclude that there is no genuine issue for trial as required by Rule 20.04(2)(a) of the Rules of Civil Procedure.

[27] The current state of the record does not provide me with a “full appreciation of the evidence and issues that is required to make dispositive findings” on the central questions in issue. Combined Air Mechanical Services Inc. v Flesch, 2011 ONCA 764, at para 75. Accordingly, if the Request to Admit does not fill in the evidentiary gaps in the record, the Plaintiff’s request for summary judgment must be dismissed and the matter must go to a full trial.

II. The Request to Admit

[28] A 248 paragraph Request to Admit was served by Plaintiff’s counsel on Defendants’ counsel on July 3, 2012. Plaintiff’s counsel stated at the hearing that the Request to Admit took him a full week to prepare. That is entirely believable. The document is, if nothing else, thorough.

[29] The affidavit of service states that the Request to Admit was served on July 3rd by Canada Post overnight Priority Post. That delivery method is not specifically referenced in the Rules. It appears to be somewhere between service by mail, which under Rule 16.06(2) is deemed effective 5 days later, and service by courier on the solicitor of record, which under Rule 16.05(2.1) is deemed effective 2 days later.

[30] Counsel for the Defendants acknowledged receipt of the Request to Admit by letter sent to Plaintiff’s counsel on July 12, 2012. In that correspondence, Defendants’ counsel indicated that he did not propose answering the lengthy Request right away, as the parties were at that moment considering settlement proposals and it would be a waste of time and money to respond to the document in detail before giving settlement a chance.

[31] On July 25, 2012, counsel for the Plaintiff wrote back to counsel for the Defendants indicating that the Rules do not allow for any delay in responding to a Request to Admit. In making this response, Plaintiff’s counsel seems to have been unaware of the impact of Rule 51.05, which provides that the deemed admissions resulting from a late response under Rule 51.03 may be waived by consent of the parties.

[32] As it turned out, Defendants’ counsel either did not receive or did not notice the arrival of Plaintiff’s counsel’s July 25th letter. He therefore did not respond to it, and carried on with the assumption that he would only respond to the Request to Admit if a settlement could not be reached.

[33] The next thing that Defendant’s counsel received on this file was a letter from Plaintiff’s counsel dated October 17, 2012 containing further settlement proposals. That letter did not make any reference to the Request to Admit.

[34] Since the exchange of settlement proposals, including the Plaintiff’s final one on October 17th, did not result in a settlement, Defendants’ counsel served a Response to the Request to Admit the following week, on October 23, 2012. This was not a blanket denial or an otherwise cursory Response. It was a detailed, point-by-point Response such as is called for in Rule 51.03(3).

[35] I can only assume that Defendants’ counsel’s Response took roughly the same week-long time to compile as it took Plaintiff’s counsel to put together the Request. Since it came a week after the final settlement proposal from the Plaintiffs, it is evident that Defendants’ counsel was true to his word and had only delayed the Response in order to provide a short window for settlement discussions to proceed.

[36] There was no further correspondence with respect to the Request to Admit during the months that ensued after Defendants’ counsel served his Response. Defendants’ counsel understandably thought that the Request to Admit had been answered and that the matter was proceeding to trial. The Defendants subsequently have conducted and completed discovery of the Plaintiff; the Plaintiff has not yet sought to examine a representative of the Defendants. No Trial Record has been served in this action, although a Trial Record has been served in a related action in London, Ontario.

[37] The present motion for summary judgment was served in April 2013, a year-and-a-half after Defendants’ counsel provided his Response to Request to Admit. During all that time, Plaintiff’s counsel never again mentioned the Request to Admit. Likewise, Plaintiff’s counsel never communicated any further position with respect to deemed admissions, nor did he ever mention again any concern over the timing of Defendants’ counsel’s Response.

[38] Much to Defendants’ counsel’s surprise, the Plaintiff’s affidavit supporting this motion, although served in April 2013, was sworn Sept 19, 2012. In other words, the affidavit was already drafted and sworn when Defendants’ counsel provided Plaintiff’s counsel with the Response to Request to Admit; and yet, no communication regarding this ever came back to Defendants’ counsel. There is no explanation as to why the Plaintiff sat on the matter in this way.

[39] Plaintiff’s counsel takes the position that, having missed the 20 days for serving their Response to Request to Admit, the Defendants are deemed under Rule 51.03(2) to have admitted everything contained in the Request. Those deemed admissions would, if enforced, change the entire state of the Plaintiff’s claim. To take one of many readily apparent examples, paragraph 46 of the Request to Admit states that the Plaintiff “was employed in a clerical position with Arch Industries beginning in 1988 and continuing until 2008.” That is contrary to the objective, documented evidence contained in Arch Industries’ formal Record of Employment, which explicitly states that the Plaintiff began working at Arch on April 12, 1992.

[40] In other words, Plaintiff’s counsel served a lengthy Request to Admit prior to discoveries taking place which, among other things, requested that the Defendants admit “facts” that directly contradicted the available documentation. Juriansz J. (as he then was) indicated in Orlan Karigan & Associate Ltd. v. Hoffman (2000), 2000 22725 (ON SC), 52 OR (3d) 235, at para 21 (SCJ), that “[t]he primary purpose of this procedure [i.e. the Request to Admit] is to enable the parties to prepare for an efficient trial focused on what is disputed.” The primary purpose of this procedure is not to achieve deemed admissions of matters that are very much disputed and that are contradicted by documentary evidence.

[41] Defendants’ counsel requests that the deemed admissions flowing from the more than 20 day delay in issuing a Response to Request to Admit be set aside. He submits that without setting those admissions aside, the Defendants’ position would be irretrievably prejudiced. In that, he is certainly correct. To take yet another readily apparent example, paragraph 204 of the Request to Admit states that, “[t]he Plaintiff was unemployed for 8 (eight) months following her termination with Casselman.” Her own evidence indicates that she commenced employment with Saltex Inc. at the beginning of June 2009, making her period of unemployment 6.5 months, not 8 months. In other words, the Defendants are asked to admit as a “fact” a critical piece of information that even the Plaintiff’s own best evidence does not support.

[42] Rule 51.05 gives the court the discretion to order the withdrawal of a deemed admission under rule 51.03. As Nordheimer J. pointed out in Docouto v Ontario (2000), 3 CPC (5th) 341, at para 16, this discretion ought to be exercised in favour of the party seeking the withdrawal where there is a triable issue between the parties and no prejudice would result from the withdrawal. Moreover, as the Divisional Court noted in that same proceeding, (2000) 44 C.P.C. (4th) 182, at para 5, a short delay in responding to a Request to Admit cannot be taken to be an abuse of process and provides a basis for withdrawing any deemed admissions that would otherwise flow.

[43] The approach to be taken to the deemed admissions in Rule 51.03 was perhaps best articulated in Sivaji v Rajwani (2011), 2011 99908 (ON SC), 108 OR (3d) 478, at para 8 (SCJ):

In this case, there was that meaningful opportunity provided to the defendants to consider their position, a meaningful opportunity to respond to the notice served under Rule 51.02, and I also am of the view that the decision of Justice MacKay in the Federal Court in Edison v MNR, 2000 15090 (FC), [2000] FCJ No. 475, 189 FTR 76 (TD) is instructive in that it suggests that the court should have regard in interpreting Rule 51.02 to the overriding principles set forth in our rules and specifically in Ontario in Rule 1.04, and that is:

These rules shall be liberally construed to secure the just, most expeditions and least expensive determination of every civil proceeding on its merits. [emphasis added]

MacKay J. relied on Rule 3 of the Federal Court Rules, SOR/ 98-106, which is similarly worded.

[44] To reiterate the crucial point, a Request to Admit is a means to foster the timely adjudication of a claim on its merits. It is not a means by which to avoid addressing the merits.

[45] Defendants’ counsel does not contend, and I do not believe, that Plaintiff’s counsel did anything untoward in serving his Request to Admit. Indeed, formally speaking he did nothing more than to adhere as strictly as possible to the Rules. Nevertheless, this is a case in which the deemed admissions do not represent the product of a “meaningful opportunity provided to the Defendants to consider their position”. The court must therefore exercise its discretion in order to avoid an injustice.

[46] As indicated, Defendants’ counsel’s failure to provide a follow-up response to Plaintiff’s counsel’s insistence on the 20 day timeframe was inadvertent. Plaintiff’s counsel’s July 25, 2012 letter did not come to his attention. That in itself would provide a reason for the court to intervene with relief from what would otherwise be a draconian application of the deemed admissions rule. National Utility Service (Canada) Ltd. v Kenroc Tools Inc. (1995), 34 CPC (3d) 362 (Ont Gen Div).

[47] Separate from the timing of the Plaintiff’s Request to Admit, there is also the question of its contents. The Rules on their face provide no restriction on the contents of a Request to Admit. If counsel were of such a mind, they could request that the opposing side admit that the earth is flat. That request could then be inserted in the middle of several hundred other paragraphs.

[48] Although that form of Request would, strictly speaking, be within the terms of Rule 51.02(1), it would not represent a form of practice that the court would encourage. While courts support the goal of judicial economy implicit in a properly constructed Request to Admit, the idea is to help arrive more efficiently at a meritorious decision, and not the opposite.

[49] Parties are specifically discouraged under Rule 51.04 from refusing to admit the truth of a fact in a Request to Admit that they know to be true. In the same way, the policy behind the Request to Admit suggests that parties should avoid requesting that the opposing side admit the truth of a fact that they know to be false or seriously contested.

[50] Indeed, it has long been the case that admissions have been ordered withdrawn where it is apparent that they are simply not true. Canada Permanent Mortgage Corporation v City of Toronto (1951), 1951 121 (ON CA), OR 726, at 733 (Ont CA). Likewise, where the facts are in “serious controversy” they should not be the subject of an admission that has been forced on a party through its own inadvertence. Jones v Union Gas Co. of Canada (1978), 1978 1574 (ON SC), 20 OR (2d) 229, at para 13 (SCJ). The Supreme Court of Canada has opined that in such instances it is in the interest of justice that the issue between the parties be permitted to be resolved through a fully contested trial. Gardiner v. Minister of National Revenue, 1963 89 (SCC), [1964] SCR 66, at 68.

[51] It does not serve the interests of justice for a party or counsel to attempt to extract a deemed admission through strict adherence to the Rules where the “fact” whose admission is sought is, on the state of the evidence, untrue or knowingly contested by the opposing side. It is one thing to prepare a “comprehensive” Request to Admit (to invoke the description used by Plaintiff’s counsel), and to expect adherence to the timelines in the Rules. It is another thing to prepare a Request that is so comprehensive that it includes deep in its pages matters that everyone knows are not conceded or that are contrary to the documentary evidence, and to attempt to dispense with proof of these matters by lighting a 20 day fuse at a stage in the action where no deadlines are otherwise looming on the horizon.

[52] A Request to Admit is undoubtedly a useful litigation tool. In the right circumstances it serves the purpose of “limit[ing] the issues at a hearing by obtaining admissions as to facts and documents which otherwise would have to be proved…” Watson and McGowan, “Rule 51 – Admissions”, Ontario Civil Practice (Toronto: Carswell, 2013), at 1122. The discretion granted in Rule 51.05 to order an admission withdrawn should be exercised with a view to whether the Request itself, and the strict enforcement of the 20 day timeline, serves this purpose.

[53] The purpose of a Request to Admit is not served where it is used to obtain premature admissions as to incorrect or seriously contested facts or documents from a party that has missed the 20 day deadline, especially where the missed deadline caused no prejudice to the party issuing the Request. The practice of including such “facts” in a “comprehensive” Request to Admit is to be discouraged as being contrary to the very purpose of Rule 51.

III. Disposition

[54] The Plaintiff’s motion for summary judgment is dismissed.

[55] Any and all deemed admissions flowing from the Plaintiff’s Request to Admit dated July 3, 2012 are withdrawn.

[56] The parties may make written submissions on costs. I would ask that these submissions be sent to me within two weeks of the date of this endorsement.

Morgan J.

Date: November 13, 2013