COURT FILE AND PARTIES
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: DAVID BERRY
Plaintiff/Appellant
AND:
SCOTIA CAPITAL INC.
Defendant/Respondent
BEFORE: Mr. Justice Lederer
COUNSEL: Robert L. Colson & Robert Brush, for the Plaintiff/Appellant
Arlen Sternberg, for the Defendant/Respondent
HEARD: August 20 & September 15, 2014
ENDORSEMENT
INTRODUCTION
1This is an appeal from an order of Master Abrams. She found that certain questions asked during the examination-for-discovery of the defendant had been properly refused. The plaintiff appeals the Master’s confirmation of eight issues reflected in those refusals.
BACKGROUND
2This appeal is part of an action for wrongful dismissal. The plaintiff, David Berry, was employed by the defendant, Scotia Capital Inc. (“Scotia Capital”), for almost ten years, beginning October 1995 and ending on June 30, 2005. In 1996, David Berry accepted a position as a sales trading associate for preferred shares with what has become Scotia Capital. Beginning in or about 1998, David Berry was appointed head of preferred trading. He was responsible for trading Scotia Capital’s proprietary book of preferred shares. Based on the Statement of Claim, it would seem that David Berry was wildly successful in this position. He claims to have taken Scotia Capital from being an insignificant participant in the preferred share market (a 9% market share) to leadership in Canada (a 62% market share). This is said to have represented between 25% and 40% of the institutional equity profits of Scotia Capital for each of the years from 2000 to 2005.
3David Berry was well-paid for his success. For the year 2002, his total earnings were $15 million, for 2003 they were $15 million and for 2004 they were $9.5 million.
4On June 30, 2005, the employment of David Berry was terminated. Scotia Capital says that this was for cause. In the action, it asserts there were irregularities in his trading practices. As a result of its liability under the Universal Market Integrity Rules, Scotia Capital entered into a settlement with Market Regulation Services (a regulator),[1] for contraventions of certain of those rules by David Berry and another of its employees.
5In the action, David Berry says there was no cause that would support his termination. He alleges that he was constructively dismissed six months earlier as a result of his refusal to accept a new compensation arrangement that had been proposed. There were jealousies internal to Scotia Capital caused by the value of his pay. He suggests that the people at Scotia Capital were looking for a way to get rid of him. David Berry asserts that his trading practices had not changed. They had for years been condoned by Scotia Capital If there were errors in the way David Berry carried out his trades, he says, it was as a result of the failure of Scotia Capital to comply with its duty and responsibility to him. He says he was not instructed as to the rules and his work was not properly monitored.
6The action was commenced by a Statement of Claim on November 20, 2006. It was subsequently amended. There was a Demand for Particulars. There was a response. A Statement of Defence and Counterclaim, dated January 31, 2007, was prepared. In the Counterclaim, Scotia Capital seeks to be reimbursed for the penalties it has had to pay as a result of the misconduct of David Berry. These penalties were paid as a result of the settlement with the regulator. The Counterclaim generated a Demand for Particulars, dated February 14, 2007. It was responded to on April 3, 2007. A Further Amended Statement of Defence was delivered on or about April 23, 2010.
7It bears observing that, although it took slightly less than 3.5 years to complete the pleadings and while the nature of the work done by David Berry was unusual and his compensation high, this, at its root, is a two-party wrongful dismissal action. Nonetheless, it has generated an extensive process of discovery.
8There has been nine days of discovery of Scotia Capital. The first two days were conducted as a cross-examination on a summary judgment motion. The parties agreed that this would constitute or be part of the examination-for-discovery. During March 2011, there was a further seven days of discovery.
9The court was advised that Scotia Capital has answered close to 5,000 questions. It has produced 1,367 documents and has answered over 400 undertakings. The examination-for- discovery is not over. There will be an opportunity for counsel for David Berry to ask follow-up questions to the answers to undertakings and questions the Master ordered answered.
10Following this discovery, the motion, heard by the Master, was brought seeking answers to over 131 questions, including requests for more documents. The motion heard by Master Abrams took 3.5 days of hearing time (November 21 and 23, 2011 and January 23, and 26, 2012. Her reasons are dated May 3, 2012. She ordered Scotia Capital to answer all or part of 30 of the questions that were in issue. Scotia Capital had agreed to provide answers to an additional 15 questions. The Master upheld the remaining refusals. At the time it was commenced, this appeal concerned 17 issues raised by the refusals which the Master confirmed. For the submissions made at the hearing of the appeal, this was reduced to eight.
THE CURRENT CONTEXT
11This history and this appeal should be considered in the context of the rules currently governing discovery. We are past the time when a “semblance of relevance” demonstrated a connection to the case sufficient to require the question to be answered or the document to be produced. The Rules of Civil Procedure have been amended. The documents to be produced and the questions to be answered on examination-for-discovery are no longer those “relating to any matter in issue” but, rather, those “relevant to any matter in issue.”[2] To be subject to discovery, such documents and questions must be relevant, but being relevant is not enough. Relevance is no longer the only or even the principle qualification.
12Once relevance has been ascertained, discretion, as to whether or not to order the document to be produced or the question to be answered, remains.[3] The factors to be accounted for in deciding how to this discretion should be exercised are found in rule 29.2.03:
(1) In making a determination as to whether a party or other person must answer a question or produce a document, the court shall consider whether,
(a) the time required for the party or other person to answer the question or produce the document would be unreasonable;
(b) the expense associated with answering the question or producing the document would be unjustified;
(c) requiring the party or other person to answer the question or produce the document would cause him or her undue prejudice;
(d) requiring the party or other person to answer the question or produce the document would unduly interfere with the orderly progress of the action; and
(e) the information or the document is readily available to the party requesting it from another source.
Overall Volume of Documents
(2) In addition to the considerations listed in subrule (1), in determining whether to order a party or other person to produce one or more documents, the court shall consider whether such an order would result in an excessive volume of documents required to be produced by the party or other person.
13“Underpinning all of these factors is the overriding principle of proportionality.”[4] Its application changed in a fundamental way the question of whether documents need necessarily be produced or questions answered:
The time has come to recognize that the ‘broad and liberal’ default rule of discovery has outlived its useful life. It has increasingly led to unacceptable delay and abuse. Proportionality by virtue of the recent revisions has become the governing rule. To the extent that there remains any doubt of the intention of the present rules I see no alternative but to be explicit.
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.[5]
14“Proportionality is a parsimonious principle.”[6] It “…signals that the old ways of litigating must give way to new ways which better achieve the general principle of securing the ‘just, most expeditious and least expensive determination of every proceeding on its merits’ ”.[7]
15I return to the observation that this is a two-party wrongful dismissal action. It does not matter to the application of the principle of proportionality that the parties have the means and the money to carry on a broad, long and expensive battle:
…A parsimonious proportionality principle provides a useful tool for cases large and small. The base line is that the Rules of Civil Procedure are designed for cases of all sizes, but the proportionality principle allows the court to downsize the procedure and still do justice for the parties….[8]
16It is the needs of the process, not the wherewithal of the parties, that governs the application of the proportionality principle and, through it, what questions are to be answered on discovery and which documents are to be produced.
THE ROLE OF THE MASTER
17In this situation, it is worthwhile to remember that it is the Master who has the most immediate and direct experience with refusal motions:
I accept the general proposition, put forward by counsel on behalf of ATP, that a Case Management Master’s decision on documentary production is one that falls squarely within the Master’s area of experience and expertise. Masters have been aptly described as being on the ‘front line’ of production and discovery motions and their decisions on those issues are entitled to deference on appeal….This is particularly so where the decision involves an element of discretion.[9]
18This was put somewhat differently, but to the same effect, as follows:
In my view, the court should, as a rule, proceed on the presumption of fitness on the part of judicial officers, judges and masters alike, to perform the mandates assigned to them. There is no functional value in assigning a task to a particular [page143] judicial officer with the reservation that a different judicial officer at a higher point in the hierarchy may substitute his or her view solely by reason of his place in the hierarchy and without some demonstrated deviation in the original decision from the applicable legal principles or some misapprehension of the facts and the evidence that affects the soundness of the result. In this, it is my view that Lord Wright's statement in Evans v. Bartlam should be laid aside, as it appears to be grounded in an adherence to hierarchical prerogative that is no longer relevant.[10]
19Any appeal from a Master, particularly those dealing with a refusal motion or other matters of discovery, should be determined based on the deference their special role, knowledge and experience calls for and the role proportionality now plays in this part of the process of the court.
STANDARD OF REVIEW
20I turn now to the standard of review. “The applicable standard of review on appeals from masters is the same as the standard of review on appeals from judges…”[11] “The decision should not be interfered with unless the Master made an error of law, exercised his or her discretion on the wrong principles or misapprehended the evidence such that there was a palpable or overriding error. Where there is an error of law, the standard of review is correctness, whether the order is final or interlocutory. Where there is an error in the exercise of discretion, it must be established that the discretion was based on a wrong principle or that there was a palpable or overriding error in the assessment.”[12]
(continued verbatim in the remainder of the decision exactly as in the source)
LEDERER J.
Date: 20140922