Court File and Parties

COURT FILE NO.: CV-11-438283
DATE: 20131211

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: In-Store Products Limited, Plaintiff/Respondent

AND:

Jeremy Zuker, 1586960 Ontario Inc., Wagjag Inc., Toronto Star Newspapers Limited and Torstar Corporation, Defendants/Appellants

BEFORE: Pollak J.

COUNSEL:
Peter I. Waldmann, for the plaintiff

Bradley E. Berg/ Kiran Patel, for the defendant Toronto Star Newspapers Limited

Robert Macdonald, for the defendants Jeremy Zuker, 1586960 Ontario Inc., Wagjag Inc.

HEARD: November 8, 2013

ENDORSEMENT

[1] The appellant, In-Store Products Limited, appeals the order of Master McAfee dismissing its motion for a court imposed discovery plan.

[2] The appellant argues that the imposition of a discovery plan was required in this case to avoid the costs and delay of lengthy undertakings and refusals motions following examinations for discovery, followed by further discoveries arising from the production of documents.

[3] The parties agree that:

The standard of review on appeals from masters’ orders is the same standard of review that applies to appeals of judges’ orders. For questions of law, the appellate court applies a correctness standard. For questions of fact and mixed questions of fact and law, the court should apply a more deferential standard and not intervene unless there is a palpable and overriding error.

See Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; and Zeitoun v. Economical Insurance Group, (2008) 2008 20996 (ON SCDC), 91 O.R. (3d) 131, affirmed 2009 ONCA 415, 96 O.R. (3d) 639.

[4] As well, the respondents note that masters have greater experience in matters related to the discovery process and that their expertise in this area is the basis of a deferential standard of review. They rely on the following finding in the case of Noranda Metal Industries Ltd. v. Employers Liability Assurance Corporation Ltd., 2000 50967 (ON SC), [2000] O.J. No. 3846, at para. 7:

[M]atters involving the production of documents and the appropriateness of questions on examinations for discovery are matters which, under the Rules of Civil Procedure, are normally determined by Masters in the first instance. They are on the “front line” in determining such matters. The expertise that they develop, as a consequence, ought to be entitled to a measure of deference.

[5] Although the appellant makes various submissions regarding alleged errors in the master’s decision, it is important to remember that it is the order to refuse to impose a discovery plan that is under appeal and not the wording of the reasons for the order. I will, however, address each of the appellant’s stated grounds for the appeal.

[6] The respondents submit that the master’s order resulted from the application of the correct legal principles to her findings of fact made in light of the totality of the evidence. As such, her decision is reasonable and should not be disturbed.

[7] The respondents also submit that whether the circumstances warranted the imposition of a discovery plan is a question of fact. The master examined the pleadings and the evidence (including the proposed discovery plan and the correspondence between the parties relating to the discovery process), heard submissions by the parties, and decided that the imposition of a discovery plan was not warranted in this case.

[8] The appellant submits that “the learned Master erred in law or in principle in finding that because not all the pleadings had been delivered as of the date of the motion, there was insufficient evidence material before her to establish relevancy of the categories of documents in issue under Rule 29.1.03.”

[9] With respect to this issue, the master found that relevancy is determined by the pleadings. Not all of the pleadings had been delivered at the time of the motion and some were not before the master.

[10] The appellant, who had been given leave to amend the amended statement of claim did not do so until the day before the master’s motion. The defendants therefore could not deliver defences in response to the amended amended statement of claim prior to the hearing of the motion. The master therefore did not have all of the pleadings before her.

[11] The master found there was insufficient evidence/material before her to establish the relevancy and existence of the categories of documents at issue.

[12] The appellant argues that the absence of some of the pleadings did not matter as it is the relevancy of all the categories of documents that was in issue, and that such could have been determined by the statement of claim and the defendants’ non-amended statements of defence. It is submitted that the amended amended statement of claim did not alter the categories of documents at issue. It only named additional defendants to the action. As well, it is submitted that the master’s order to grant leave to amend did not require that the appellant serve and file the amended amended statement of claim, and the defendants serve and file their amended statements of defence, before the hearing of the master’s motion.

[13] Further, the appellant submits that the defendants expressly waived the need to file further statements of defence for the master to rule on the scope of the documentary production in the appellant’s discovery plan. The respondent disputes this allegation. There is no evidence of such waiver.

[14] Finally, the appellant argues that the master could have determined the scope of the discovery plan with the pleadings being subject to further amendments.

[15] I do not accept that the master erred as submitted by the appellant. The pleadings are the foundation of the action and I agree that relevancy of categories of documents should not be decided until the pleadings are finalized. Further, the fact that not all of the pleadings were available was solely attributable to the inaction of the appellant.

[16] The appellant submits that the learned master erred in law or in principle in making a distinction between the words “income statements” not listed in the proposed discovery plan and “financial statements” requested for the applicable period under the share purchase agreement, dated June 4, 2010, listed in the proposed discovery plan.

[17] At the second hearing of the master’s motion, the appellant submitted that it was seeking to have “income statements” added to the list of documents it wanted included in the discovery plan. The master found that this was a new category of documents. She stated that “[t]he plaintiff now seeks ‘income statements,’ documents not listed in the prepared discovery plan. The defendants have not had an opportunity to consider this request and seek instructions.”

[18] The respondents submit that this finding is a question of fact that was reasonably determined based on the evidence that was before the master.

[19] I agree with these submissions and find no error as alleged by the appellants.

[20] The appellant submits that the learned master erred in law in ruling or made an overriding and palpable error in finding that there was insufficient effort on the part of the plaintiff to agree on a discovery plan prior to bringing the motion.

[21] The appellant submits that prior to bringing the motion for a discovery plan, it was clear that the defendants would not agree to the plaintiff’s proposed scope of documentary production. Therefore, the parties’ failure to agree to a discovery plan was not the result of insufficient efforts by the plaintiff to agree on a plan before the June 12, 2013, motion hearing. Rather, it was the inability of both parties to reach a mutual agreement on the scope of discovery as well as the dispute over the relevancy of certain documents suggested by Zuker’s Schedule “A” productions.

[22] They also argue that if the parties reach an impasse, it is appropriate for the court to step in and order a discovery plan in the interests of expediency and to avoid the costs and delay of lengthy undertakings and refusals motions following examinations for discovery, followed by further discoveries arising from the production of documents.

[23] I do not agree that there was any “error in principle” in this finding. The master considered all of the evidence before her with respect to the efforts made by the appellant to get an agreement on a discovery plan. I do not accept the submission by the appellant that there was no point in trying to get an agreement because it was obvious that none could be reached. The evidence of the efforts made by the appellant reasonably supported the master’s finding. As well, the evidence, in my view, supports the submission that the appellant was interested in having the issue litigated immediately before a master rather than attempting to reach an agreement between the parties.

[24] I agree with the respondents’ submission that the master based her decision that the imposition of a discovery plan was not warranted in this case on her examination of all of the relevant evidence, and the submissions of the parties.

[25] The appellant submits that the learned master erred in law or in principle in ruling that the scope of the documentary production in a discovery plan should be ordered only in exceptional circumstances or, in the alternative, erred in law in failing to find that exceptional circumstances for the court to impose a discovery plan existed in this case.

[26] The appellant relies on jurisprudence to establish that the court must order a discovery plan where the parties fail to agree and that “exceptional circumstances” are not required before the imposition of a discovery plan.

[27] I agree with the respondents’ submission that the jurisprudence relied on by the appellant has held that where the parties cannot agree on a discovery plan, a master has the jurisdiction to exercise their discretion to determine the most appropriate course of action to take. The jurisprudence does not, as suggested by the appellant, require that a master exercise their discretion to impose a discovery plan.

[28] I do not agree that the master erred in this regard. As stated above, on an evaluation of all of the relevant factors and following the jurisprudence, the master decided that the imposition of a discovery plan was not warranted.

[29] The appellant submits that “[t]he learned Master … erred in applying the case of Dewan v. Burdet, 2012 ONSC 4465, [2012] O.J. No. 3672, Dewan ought not to be followed or should be distinguished on its facts.”

[30] In the case of Dewan, it was held, at para. 3, that:

The historical acrimony between the parties has interfered with their ability to agree upon a discovery plan. Rule 29.1 obligates the parties to agree upon such a plan. The ability of a party to bring a motion every time a disagreement arises in the creation of a discovery plan undermines the obligation of the parties under this rule. Except in exceptional circumstances, that obligation should remain on the parties and result in the dismissal of such a motion. Failing agreement upon a discovery plan, the parties are required to work through discovery issues as they arise as was the case prior to this rule.

[31] I do not agree that the Dewan case ought not to have been followed by the master.

[32] The appellant submits that “[i]n the alternative, the learned Master McAfee erred in law in failing to find that exceptional circumstances for the Court to impose a Discovery Plan existed in this case. The parties to this action appear nowhere close to reaching an agreement on the scope of documentary discovery for a mutually agreeable Discovery Plan.”

[33] I do not agree with the submissions of the appellant. I refer to the comments I have already made, above, with respect to the lack of effort on the part of the appellant to reach agreement and with respect to the interpretation of the jurisprudence referred to.

[34] The appellant submits that the learned master erred in law or in principle in finding that it was more appropriate to move for relief with respect to productions remaining in issue following examinations for discovery on a proper evidentiary basis.

[35] The appellant’s submission is that proceeding to examinations for discovery without the production of the relevant documents is likely to cause further delay and costs. At the examinations for discovery, the appellant will request the production of documents from the respondents which the appellant will be refused. The appellant will need to bring a motion for production of the documents and seek further discovery.

[36] I do not accept that the master erred as alleged. I again refer to the quotation above from the Dewan case. The parties’ obligations to try to reach an agreement are continuous. I find there is no error in this finding of the master.

Costs

If the parties are unable to agree on the issue of costs, they may make brief written submissions to me. As the rules provide, the submissions will be no longer than three pages in length. If there are any offers of settlement that bear on the issue of costs, these should be included. The respondent costs submissions (copied to the appellants) will be delivered by 12:00 p.m. on December 27, 2014, with the appellants’ costs submissions (copied to the respondent) to be delivered by 12:00 p.m. on January 10, 2014.

Pollak J.

Date: December 11, 2013