COURT FILE NO.: CV-12-443490

MOTION HEARD: 20140616
ENDORSEMENT RELEASED: 20141201

ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:

FRANZ GRONDINGER and SONJA GRONDINGER

Plaintiffs

• and –

PHILLIPS & TEMRO HOLDINGS LLC, PHILLIPS & TEMRO INDUSTRIES, INC., PHILLIPS & TEMRO INDUSTRIES LTD., LES INDUSTRIES RILEC INC., AUTO-CAMPING LIMITED, EURO-MOTOR TECH LTD., EURO-TECH MOTORS SALES INC. and EURO-TECH MOTORS INC.

Defendants

BEFORE: Master D. E. Short

COUNSEL:
Krista Chaytor Fax: 416-365-1876
-for moving defendant,
Les Industries Rilec Inc.

Adam Grant Fax: 416-860-0003
-for the plaintiff

HEARD: June 16, 2014

Endorsement

I. Overview

[1] This motion raises unusual questions in what would seem to be a not uncommon circumstance regarding the individual to be examined for the discovery of one of multiple corporate defendants.

[2] Here a fire is alleged to have resulted from the use of a defective block heater by the plaintiffs. The moving defendant Les Industries Rilec Inc. (“Rilec”) manufactured the unit in question.

[3] The plaintiffs have joined all related entities that might have some liability to them in this case. Phillips & Temro is the corporate group that supplied some of the components and in particular the heating unit.

[4] The plaintiff’s car burned allegedly as a result of the defective block heater and they are seeking to recover their property damage. The various groups of co-defendants have asserted cross-claims against each other. Of relevance in this case is the cross-claim between Rilec and Phillips & Temro. Rilec asserts it purchased the component in issue relying upon representations made to it by an employee of Phillips & Temro.

[5] Counsel for the plaintiff is content to examine for discovery the representative of Phillips & Temro individual proposed by that corporate defendant as their witness on discovery.

[6] Rilec however seeks to examine Mr. Vriese, the sales representative of Phillips & Temro with whom they communicated at the time of selecting the component supplied by that company and incorporated into the block heater.

[7] It was argued before me that Rilec relied upon that individual’s representations as to suitability for the proposed block heater in determining to purchase the components from Phillips & Temro.

[8] The issue before me is therefore, how many representatives of the defendant can be examined for discovery in a case such as this, and on what basis is the representative or representatives to be examined for discovery in a case such as this to be established.

II. An Appropriate Approach

[9] When there is a dispute such as this as to the most appropriate witness to be examined, having regard to the provisions of the Rules of Civil Procedure and related caselaw, what are the tests to be applied by a master such as myself?

[10] Earlier this year. The Supreme Court of Canada in Hryniak v. Mauldin (2014 SCC 7) gave guidance as to an overarching principle to be considered in civil cases:

“What is fair and just turns on the nature of the issues, the nature and strength of the evidence and what is the proportional procedure.”

[11] In my view the decision of the Supreme Court of Canada in Hryniak encourages the court to expedite the resolution of cases by the most proportional approach available in the circumstances.

[12] More than 20 years ago my colleague Master Sandler delivered reasons in Machado v. Pratt & Whitney Canada Inc., 1993 CarswellOnt 421, [1993] O.J. No. 1111, 17 C.P.C. (3d) 340, 40 A.C.W.S. (3d) 230, 4 W.D.C.P. (2d) 301.

[13] At that time an individual was examined for discovery on behalf of Pratt and Whitney proposed by his employer Pratt & Whitney as their representative for discovery was examined and gave numerous answers. Following the discovery Pratt & Whitney sought to file a document varying the answers given by that individual (“K”) with the intent of not being bound by those answers at trial. Master Sandler examines in great detail the uses that might be made by both the original answers and the amended answers at trial ultimately he held that a motion brought by the plaintiff in that case seeking to strike out the schedule of corrections under rule 25.11 Ought to be dismissed. The Carswell version of the case has a headnote which reads in part:

“A thorough review of the case law and legal literature led to the conclusion that there was nothing to prevent the corporate defendant from delivering any of the entries on the schedule. The court did not have power prior to trial to scrutinize the entries and determine whether they were proper as “corrections or completions” of a corporate representative’s testimony. There was no requirement that the “corrections or completions” were to be written by or produced by the person examined. Nor must such person be the source of such “corrections or completions”. The impact and effect of any entry on the schedule of corrections was to be determined by the trial judge under r. 31.11(1) and (3), 31.09(3), 53.08(d) and the general law of evidence. The defendant producing such information risked being subjected to further examination for discovery on these “corrections and completions” and risked possibly having both K and M, the original representative and the other representative of the corporation, further examined for discovery under r. 31.09(2)(b).”

[14] My reason for including extracts from this case relates to the potential situation where a corporate defendant would otherwise be held to be bound by the answers given by its representative on discovery.

[15] Counsel normally recite the question on each corporate discovery: “Witness are your answers binding on the corporate party on whose behalf you are appearing today?”

[16] One might ask, if they are not so binding what is the point in asking them?

[17] The present case provides one such justification

In the matter before me. The examination has not yet taken place. But it is clear that Phillips & Temro would prefer to have a different witness giving evidence on their behalf on discovery.

III. Applicable Rules

[18] The necessary analysis in resolving this motion begins with a review of a number of potentially applicable rule provisions. I have. I have emphasized portions of the extracts that follow with a view to indicating areas that I have considered in coming to my decision in this case.

[19] Rule 31.03 dealing with who may be examined provides

Generally

31.03 (1) A party to an action may examine for discovery any other party adverse in interest, once, and may examine that party more than once only with leave of the court, but a party may examine more than one person as permitted by subrules (2) to (8).

On Behalf of Corporation

(2) Where a corporation may be examined for discovery,

(a) the examining party may examine any officer, director or employee on behalf of the corporation, but the court on motion of the corporation before the examination may order the examining party to examine another officer, director or employee; and

(b) the examining party may examine more than one officer, director or employee only with the consent of the parties or the leave of the court.

[20] The subrule then focuses on the matters to be considered on such a motion:

(4) Before making an order under clause (2) (b) or (3)(b), the court shall satisfy itself that,

(a) satisfactory answers respecting all of the issues raised cannot be obtained from only one person without undue expense and inconvenience; and

(b) examination of more than one person would likely expedite the conduct of the action.

[21] I am satisfied up based on my understanding the facts in this case that allowing for to examinations will expedite the conduct of the action and will not result in undue expense or inconvenience. In allowing such examination, I am taking into account the directions of sub-rule (9):

Limiting Multiple Examinations

(9) Where a party is entitled to examine for discovery,

(a) more than one person under this rule; or

(b) multiple parties who are in the same interest,

but the court is satisfied that multiple examinations would be oppressive, vexatious or unnecessary, the court may impose such limits on the right of discovery as are just.

[22] I am satisfied that the limitations that I set out below are appropriate in the circumstances of this case. I have also turned my attention to the question of the order of examinations. Rule 31.04 deals with when examinations may be properly initiated:

Examination of Plaintiff

31.04 (1) A party who seeks to examine a plaintiff for discovery may serve a notice of examination under rule 34.04 or written questions under rule 35.01 only after delivering a statement of defence and, unless the parties agree otherwise, serving an affidavit of documents.

Examination of Defendant

(2) A party who seeks to examine a defendant for discovery may serve a notice of examination under rule 34.04 or written questions under rule 35.01 only after,

(a) the defendant has delivered a statement of defence and, unless the parties agree otherwise, the examining party has served an affidavit of documents; or

(b) the defendant has been noted in default.

Completion of Examination

(3) The party who first serves on another party a notice of examination under rule 34.04 or written questions under rule 35.01 may examine first and may complete the examination before being examined by another party, unless the court orders otherwise.

[23] Here there is some argument as to the proper order of examinations for discovery. As noted above, a party needs to have served an “affidavit of documents” prior to being in a position to serve a valid appointment. While many counsel seem to have adopted the practice of circulating on unsworn draft forms of affidavits of documents, it is my view that an unsworn document is not an affidavit of documents and is no more than “a list” unless all counsel, have agreed to waive the requirement of a sworn affidavit for the purposes of establishing priority.

[24] Here, counsel for the plaintiff apparently sent an unsworn document on July 15, 2013.

[25] It was not until January 7, 2014 that Rilec Counsel for Rilec served its sworn affidavit of documents. This would appear to be the first sworn affidavit of documents served by any of the parties. A month later, on February 3, 2014, a notice of examination was served by counsel for Rilec requiring Mr. Vriese to attend as a representative of Phillips & Temro. Apparently at that point in time the plaintiff had yet to serve a sworn affidavit of documents, but had endeavoured to establish several agreed dates for examinations without success.

[26] In the circumstances I am satisfied that the party entitled to examine first was in fact Rilec. As a consequence I am holding that Rilec is entitled to examine first and in this case, to examine Mr. Vriese.

[27] Rule 31.05 deals with examinations, where there are multiple parties involved:

31.05 Unless the court orders or the parties agree otherwise, where more than one party is entitled to examine a party or other person for discovery without leave, there shall be only one oral examination, which may be initiated by any party adverse to the party,

(a) who is to be examined; or

(b) on behalf or in place of whom, or in addition to whom, a person is to be examined.

[28] In reaching my decision I have also considered the possible availability to the moving party of an examination under rule 31.10. That rule provides for the discovery of non-parties with leave:

31.10 (1) The court may grant leave, on such terms respecting costs and other matters as are just, to examine for discovery any person who there is reason to believe has information relevant to a material issue in the action, other than an expert engaged by or on behalf of a party in preparation for contemplated or pending litigation.).

Test for Granting Leave

(2) An order under subrule (1) shall not be made unless the court is satisfied that,

(a) the moving party has been unable to obtain the information from other persons whom the moving party is entitled to examine for discovery, or from the person the party seeks to examine;

(b) it would be unfair to require the moving party to proceed to trial without having the opportunity of examining the person; and

(c) the examination will not,

(i) unduly delay the commencement of the trial of the action,

(ii) entail unreasonable expense for other parties, or

(iii) result in unfairness to the person the moving party seeks to examine.

[29] It is also necessary to address what use can be made of the transcript from such an examination. Master Sandler’s decision left much of that question to the discretion of the trial judge. I intend to do the same. Present rule 31.11 reads as follows, with regard to the use of an examination for discovery at trial:

Reading in Examination of Party

31.11 (1) At the trial of an action, a party may read into evidence as part of the party's own case against an adverse party any part of the evidence given on the examination for discovery of,

(a) the adverse party; or

(b) a person examined for discovery on behalf or in place of, or in addition to the adverse party, unless the trial judge orders otherwise,

if the evidence is otherwise admissible, whether the party or other person has already given evidence or not.

Impeachment

(2) The evidence given on an examination for discovery may be used for the purpose of impeaching the testimony of the deponent as a witness in the same manner as any previous inconsistent statement by that witness.

[30] This is to be contrasted with the restrictions placed under rule 30.10 (5), which places limitations on the use of evidence obtained under that rule:

(5) The evidence of a person examined under this rule may not be read into evidence at trial under subrule 31.11 (1).

[31] In my view, and always subject to the discretion of the trial judge, it would seem in the circumstances of this case that while the evidence of Mr. Vriese is not binding upon his employer simply by virtue of the fact that he is being examined as a witness for discovery, I believe it should be permissible for the evidence given by him to be read in at trial by the examining party if Mr Vriese otherwise fails to testify.

[32] In my view this is a reasonable balancing of interests of the parties.

V. Disposition

[33] The examinations for discovery of the representative selected by Rilec shall be held the first.

[34] In light of the foregoing, in my role as a case management master and with a view to trying to expedite this action in a meaningful way while not disadvantaging any particular party, I am directing that that all the parties shall be entitled to rely upon the examinations for discovery held of the representatives of Phillips & Temro and to enforce any undertakings given to any counsel.

[35] The first party to be examined on behalf of Phillips & Temro will be the representatives selected by Rilec, Mr Vriese. The examination of that witness shall be limited to matters within the knowledge of the witness selected as if he were being examined on the basis of a rule 30.10 order. All parties will be entitled to examine Mr Vriese but only with respect to the areas relating to alleged representations by him.

[36] The representative of Phillips & Temro, proposed by Phillips & Temro will then be examined for discovery. First by the plaintiff, and then any of the other remaining defendants entitled to examine that witness.

[37] Counsel for Rilec shall then be limited to 30 minutes of examination of this witness, (if so advised). after all other parties have completed their examinations of the witness.

[38] I am directing that the plaintiff be entitled to examine the representative proposed by the Corporation on all subject matters save and except any discussions which took place with Mr. Vriese, at any time ,concerning the product in issue.

[39] As a consequence the motion of the moving defendant is allowed.

[40] I am therefore awarding costs, on a partial indemnity basis, payable by Phillips & Temro to the moving defendant, payable within 30 days, fixed at an all-in amount of $ 4500.

Master D. E. Short

DATE: December 1, 2014

DS/ R.70