NEWMARKET COURT FILE AND PARTIES

COURT FILE NO.: CV-11-103135-SR
DATE: 20131126
CORRIGENDA: 20131217

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: CSES, Plaintiff

and

Capital Contracting & Interiors Corp., Defendant

BEFORE: The Honourable Madam Justice C.A. Gilmore

COUNSEL:
Alistair Riswick, for the Plaintiff
Daria Krysik, for the Defendant

HEARD: November 21, 2013

REVISED ENDORSEMENT

The text of the original endorsement has been corrected with the text of the corrigendum (released today’s date)

Overview

[1] This is the defendant’s motion for an order pursuant to rule 51.05 of the Rules of Civil Procedure, granting leave to withdraw deemed admissions referable to a request to admit delivered by the plaintiff and dated April 9, 2013.

[2] This is also the return of the plaintiff’s motion for judgment based on the above referenced deemed admissions.

Background Facts

[3] The plaintiff is a mechanical and plumbing subcontractor engaged by the defendant with respect to construction on a building for Patheon Pharmaceuticals. The base contract was $1,290,000. The scope of work under the subcontract included the supply and installation of HVAC and plumbing services by the plaintiff. The work was specified in drawings prepared by JNE Consulting Limited, the consultants for Patheon.

[4] The plaintiff submits it is owed $41,378.01 under the contract. The defendant submits there is no money owing under the contract and that, in fact, it made an overpayment to the plaintiff in the amount of $5,972.33. According to the defendant, the plaintiff’s claim is therefore excessive and unjustified.

[5] The action was commenced under the simplified rules on March 3, 2011. A defence was delivered May 9, 2011. The case was pre-tried on April 11, 2012 and listed for the November 2012 trial sittings.

[6] On October 9, 2012, the defendant served a notice of change of solicitor. On October 11, 2012, new counsel (the defendant’s current counsel) requested an adjournment of the trial date for preparation and to obtain the file from the previous lawyer. The plaintiff agreed to the adjournment as a courtesy and an order was made traversing the trial to the sittings in May 2013.

[7] On April 9, 2013, the plaintiff served a request to admit facts and documents. The plaintiff did not receive a response within twenty days of service, and as such relied on the deemed admissions and admitted documents. The plaintiff ceased any extensive trial preparation, given the deemed admissions.

[8] At the time the request to admit was received, the defendant corporation was not active. The defendant had instructed its counsel to hold the file in abeyance, and as such, counsel for the defendant did not respond to the request to admit.

[9] On May 15, 2013, the plaintiff’s lawyer delivered an exhibit book to the defendant’s lawyer, which was to be tendered as its evidence at trial. The exhibit book consisted of the request to admit and the documents referred to in the request to admit.

[10] On May 22, 2013, the plaintiff’s lawyer sent the defendant’s lawyer a letter noting that the defendant had not responded to the request to admit and that the plaintiff would be relying on the deemed admissions as its evidence at trial. In response to the May 22, 2013 correspondence from the plaintiff, the defendant’s lawyer sent an email on May 29, 2013 indicating that he was attending as counsel at the Commission of Inquiry at Elliot Lake and regretted the delay in responding. There was no specific reference to the request to admit in the May 29, 2013 email.

[11] The trial sittings ended on May 31, 2013 and the within case was not called for trial. As such, it was traversed to the trial sittings beginning November 12, 2013.

[12] Prior to trial, and in an attempt to avoid the necessity of a trial, the plaintiff brought a motion for judgment based on the deemed admissions. The motion was served September 19, 2013, with a return date of October 15, 2013. The project manager for the defendant, Jeff Merker, appeared on October 15, 2013 and asked for the motion to be adjourned in order to permit filing of responding material. The motion was adjourned to October 24, 2013, with costs ordered to be paid by the defendant in the amount of $750. Those costs have been paid.

[13] At 5:30 p.m. on October 23, 2013, the affidavit of Jeff Merker was faxed to the office of the plaintiff’s lawyer. As such, the motion could not proceed on October 24, 2013 and was adjourned to be heard prior to the commencement of trial by the trial judge, along with a motion by the defendant to set aside the deemed admissions. The judge who ordered that the matter proceed by way of pretrial motion also required that the defendants pay costs of $750. As of the date of hearing this motion, those costs have not been paid.

Positions of the Parties

[14] There is no disagreement by the parties that the case of Antipas et al. v. Coroneos et al.[^1] sets out the proper test for the court to consider on a motion to set aside deemed admissions. It is a conjunctive test which requires the parties seeking to withdraw the admission to satisfy the court of three things:

(a) The proposed amendment raises a triable issue;

(b) The moving party has a reasonable explanation for the change in position; and,

(c) The withdrawal of the admission will not result in any prejudice that cannot be compensated for in costs.

Defendant’s Position

[15] The plaintiff concedes that the first part of the test in Antipas has been met, in that the setting aside of the admission will result in triable issues. The substantive arguments in this case related to the second and third prong of the test in Antipas.

[16] With respect to the defendant’s position on a reasonable explanation for their change in position, they submit as follows:

(a) At the time of service of the request to admit, the defendant did not understand the significance of a non-response.

(b) The defendant assumed that a non-response would be treated as a denial.

(c) The defendant corporation was not fully active at the time the request to admit was served, and as such, the document did not receive the full attention that it required.

(d) The defendant did not believe there was urgency with respect to any required response or a time limit.

(e) Defendant’s counsel was away for a significant period during the time of service of the request to admit.

(f) The defendant wrongfully instructed its counsel to hold the file in abeyance. When the plaintiff brought their motion for judgment October 15, 2013, the defendant’s counsel was still under instructions to keep the file under abeyance.

(g) Only after the consequences of the motion for judgment in October 2013 had been explained to the defendant did it understand what was happening and conceded that its instructions to counsel were ill conceived and uninformed.

[17] On the issue of prejudice, the defendant submits that there is no prejudice in this case which cannot be compensated with costs. The trial will be short and the delay between November 2013 and May 2014 is a matter of months, which should be considered a minor delay in the course of any litigation.

[18] In responding to the plaintiff’s arguments that it is prejudiced because it has been on the trial list three times, that witnesses which it may require are no longer available and that the passage of time on its own is prejudicial, the defendant responds as follows:

(a) With respect to then number of times that this matter has been up for trial:

(i) The first adjournment from November 2012 to May 2013 was on consent. It was necessary because the defendant’s counsel sought to be removed from the record. The defendant had no choice but to retain new counsel, who required time to prepare and obtain documents from the previous counsel.

(ii) The second time the matter came up for trial, it was simply not reached. This cannot result in prejudice to either party, as it is an administrative matter over which neither party has control. As a result, the matter was put over to the November 2013 trial sittings.

(iii) The parties have agreed that notwithstanding the result of these motions, the matter is to be adjourned to the May 2014 trial sittings.

(b) With respect to the lack of availability of witnesses, the defendant argues that the plaintiff has not provided sufficient evidence as to why certain witnesses are required or what efforts have been made to locate them. In any event, the employees mentioned by the plaintiff have not been employed by the plaintiffs since 2009 or 2010, so there is no link between the withdrawal of the admissions and the availability of those witnesses.

(c) Finally, as for the passage of time, the seven month delay between May 2013 and now cannot be considered so inordinate as to affect any witnesses memory.

[19] In summary, the defendant moving party submits that it has met the test in Antipas, in that it never intended to admit the documents. Any prejudice to the plaintiff is compensable by way of costs and granting judgment on admissions, which the defendant says are untrue, would be a miscarriage of justice.

Plaintiff’s Position

[20] The plaintiff submits that the three stage test in Antipas for withdrawal of an admission is conjunctive and all three prongs of the test must be established[^2]. As well, counsel for the plaintiff emphasised that it is important to understand the difference between a motion under rule 51.05 of the Rules of Civil Procedure as opposed to a motion under rule 26.01 of the Rules of Civil Procedure. In a motion under rule 51.05, the onus is on the moving party to show that all three parts of the test have been met in order to set aside the admission. Prejudice is the most significant of the three prongs of the test, but the onus on the moving party is to show that the opposite party will not be prejudiced, rather than the reverse, as is the case under rule 26.01[^3].

[21] With respect to the issue of inadvertence, plaintiff’s counsel submits that there is no significance to the fact that the defendant corporation was not active at the relevant times. It is clear from Mr. Merker’s affidavit that the request to admit was received by both the defendant’s counsel (Michael Title) and the defendant. The plaintiff’s counsel submits there was a conscious decision to ignore the request to admit by both the defendant and its counsel.

[22] The plaintiff submits that the explanation of Mr. Merker is of little value and should not be relied upon without evidence from Mr. Title. Mr. Title does not specifically address the letter sent on May 15, 2013. The only response from the defendant’s counsel was a short email indicating that he was engaged in a hearing elsewhere. Further, there is no evidence from Mr. Title as to what steps he took in relation to the request to admit. Mr. Title was duty bound to explain the significance of the request to admit to his client. Mr. Merker making bald allegations in an affidavit on which he cannot be cross examined (because it is a simplified rules matter) means that his assertions with respect to inadvertence remain untested and should be given little weight.

[23] It is also important to understand the timing of the service of the request to admit. It was served in April 2013, in the context of all parties knowing and understanding that the matter was scheduled for trial in May 2013. Mr. Title’s response by email indicates that he was engaged in another significant legal matter at the time, and apparently had no intention of attending to assist the defendant at the scheduled trial in May 2013.

[24] With respect to prejudice, Mr. Merker in his affidavit, sworn October 23, 2013 (paragraph 10), deposed that unsigned change order notices were never accepted by the defendant or by JNE. Chargeable extras required either Mr. Merker’s approval or that of JNE. The plaintiff was paid only for extras which were properly authorized. Since becoming aware of this, the defendant has attempted to make inquiries of JNE to see if employees are still available with respect to authorizations. The employees are no longer available and the plaintiff has been unable to locate them.

[25] There is also a question of whether there is documentation that is still available and in JNE’s possession. Other persons who were working on site who may have relevant evidence to give are also no longer available. The fact that employees may have been terminated in 2009 or 2010, as suggested by the defendant, was not in evidence but only a submission made by the defendant’s counsel. However, the onus is on the defendant and not on the plaintiff. More is needed than simply having their counsel submitting that those witnesses are no longer available. It is up to the defendant to attempt to locate them and in not doing so, they have failed to satisfy their onus in that regard.

[26] With respect to the plaintiff’s motion for judgment, it is interesting to note that at paragraph 17 of his affidavit, Mr. Merker, indicates that when he understood the significance of the deemed admission, he embarked on a vigorous defence and response. However, there is no suggestion as to when he became aware of the significance of the deemed admission as no material was received with respect to the motion for judgment served on September 19, 2013 until October 23, 2013 at 5:30 p.m. for the October 24, 2013 motion.

[27] Finally, the plaintiff has responded reasonably in the face of all of the circumstances. Upon the time expiring for the response to the request to admit, the plaintiff had every right to rely on the deemed admission and put down their tools for trial preparation.

Analysis and Ruling

[28] In coming to a decision in this matter, I rely on the oft quoted provisions in the Antipas case.

There are competing policy issues here. On the one hand, in the interest of justice, the right of a party to have an issue tried should not be limited except in special circumstances. On the other hand, in the interest of expedient and responsible litigation, a party should not be permitted to blow hot and cold even if the other party can be compensated in costs or by an adjournment…it seems to me that the competing interests can be reconciled by providing that if there is a triable issue, a party should be able to withdraw an admission upon furnishing a reasonable explanation for the change of position.[^4]

[29] There can be no disagreement that failure to respond to a request to admit has significant consequences. Consequences, which in my view, are unlikely to be understood or anticipated by a litigant. This is exactly what appears to have happened in the within case. While the “head in the sand” approach taken by the defendant is not to be condoned, failing to set aside the admissions would result, in my view, in a miscarriage of justice in a case where it is clear that the parties are over $45,000 apart with respect to compensation for work performed by the plaintiff.

[30] While I view this as a “close call” in the sense that litigants cannot be encouraged to simply ignore their counsel’s advice or shut down while waiting for trial or the next event, I decline to disallow the plaintiff from having its claims heard on the merits.

[31] With respect to the issue of prejudice, there is no prejudice in this case that cannot be compensated by costs. Delay with respect to the hearing of a case is unfortunately endemic in our justice system. The unfortunate reality is that some cases are simply not reached during the trial sittings. The first adjourned trial related to a change of counsel, and the second to a lack of availability of resources, neither of which should be laid at the feet of the defendant. As for the lack of availability of witnesses, that is an issue in which both parties are in the same position, each trying to show that either the unsigned change notices were authorized by the defendant or JNE, or that they were not. It is not unusual in civil litigation cases for the evidence to become more difficult to marshal over time. That, however, can be remedied somewhat by ensuring the trial proceeds in May 2014.

[32] I agree that there has been prejudice to the plaintiff, not only in their having to change their litigation strategy as they were entitled to do with respect to the deemed admissions, but also in the defendant’s failure to respond to their motion for judgment in a timely way, and/or their failure to bring their own motion to set aside the deemed admission in a timely manner. However, all of those circumstances are compensable by way of costs.

Orders

[33] Given all of the above, the plaintiff’s motion for judgment is dismissed. The defendant’s motion to set aside the deemed admissions and documents is hereby granted. As indicated, I have found that there is resulting prejudice to the plaintiff, and they shall have their costs of both motions and any other costs which they can reasonably demonstrate result from the prejudice related to setting aside the deemed admissions.

[34] The defendants to pay the $750 in costs ordered by Mulligan J. on October 24, 2013 forthwith.

[35] The defendants to respond to the plaintiff’s request to admit within 20 days of the date of release of this endorsement.

[36] The matter to be placed on the November 2014 trial list with priority and peremptory on both parties proceeding when called.

[37] If the parties cannot agree on costs, I will receive written submissions, commencing with the plaintiff 14 days from the date of release of this endorsement, followed by responding submissions, then reply submissions, if any, on a 7 day turnaround. Cost submissions shall be no more than 2 pages in length, exclusive of any costs outline or offers to settle. All costs submissions shall be delivered via email through my assistant at jennifer.beattie@ontario.ca. If no submissions are received within 35 days of the first costs submission being due, the issue of costs will be deemed to have been settled as between the parties.

Justice C.A. Gilmore

Released: November 26, 2013

CORRIGENDA

1. Paragraph 36 has been amended to reflect the matter is to be placed on the November 2014 trial list.

[^1]: 1988 10348 (ON SC), 1988 CarswellOnt 358 (SCJ) at para 14.

[^2]: BNP Paribas (Canada) v Bartlett, 2012 ONSC 5604, paragraph 12.

[^3]: Bradhill Masonry Inc. v Simcoe County District School Board 2011 ONSC 6230, paragraph 20.

[^4]: Supra at para 20.