TAN-JEN LTD. v. DI PEDE, 2015 ONSC 3685

COURT FILE NO.: CV-08-360246 MOTION HEARD: JUNE 5, 2015

ONTARIO – SUPERIOR COURT OF JUSTICE

COUNSEL: Alexandra Peterson and Jeffrey C. Silver for the plaintiff David A. Decker for the defendants

ENDORSEMENT

Master R. A. Muir -

[1] The plaintiff brings this motion for an order requiring the defendants to produce certain documents and for an order pursuant to Rule 32.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) allowing for the inspection of the defendants’ property.

[2] This action arises from the construction by the defendants of a large new home located in Woodbridge Ontario (the “Property”). The plaintiff supplied moulds and precast elements for use on the exterior of the Property. The plaintiff alleges that the defendants have wrongfully retained design related property belonging to the plaintiff and also alleges that the defendants have converted and used the plaintiff’s property in breach of the plaintiff’s copyright.

[3] The defendants have counterclaimed. Among other claims, they seek damages in the range of $475,000.00 to $525,000.00 for the diminution in the value of the Property. The defendants take the position that it was agreed among the parties that the Property was to be unique and one of a kind. The defendants allege that the plaintiff agreed that it would not reproduce or re-use the moulds and design. The defendants allege that the plaintiff has in fact reproduced and re-used the design of some of the precast elements used in the construction of the exterior of the Property in the construction of other properties. The Property is therefore no longer completely unique and this has resulted in a diminution in value.

[4] The issues on this motion revolve around this aspect of the defendants’ counterclaim, along with the parties’ competing copyright claims.

[5] The additional documents being requested by the plaintiff all relate to the design and fixturing of the interior of the Property. The test to be applied on this request for additional production is relevance as set out in Rule 30.02. Relevance is determined by the pleadings. In my view, the plaintiff has not established that the requested documents have any relevance to the matters in issue in this action, as set out in the pleadings.

[6] The plaintiff was only involved with the construction of the exterior of the Property. It had no involvement with the interior aspects of the project. The construction of the interior is not a matter in issue in this action. The plaintiff argued that the requested documents are made relevant by paragraph 13 of the defendants’ amended fresh amended statement of defence and counterclaim. In that paragraph, the defendants allege that certain interior design drawings made by the defendant Lisa Di Pede influenced the design of the moulds and precast in issue in this proceeding. The documents requested are therefore relevant to the issue of who owns the copyright in the moulds and precast. In my view, that argument is based on an overly broad reading of the defendants’ pleading. The defendants do not allege that the overall design of the interior of the Property influenced the design of the moulds and precast. Rather, they allege that only certain interior design and other drawings made by Ms. Di Pede between 2002 and 2004 influenced the design of the moulds and precast. All of those drawings have been produced by the defendants. In my view, the requested additional production of virtually all documents relating to the interior design of the Property is simply not relevant. None of these documents need to be produced.[^1]

[7] The plaintiff also seeks an order that it be permitted to conduct an inspection of the Property. It requests that an inspection be permitted by a real estate appraiser, an interior designer and an architect. The defendants take the position that only one expert inspection by a real estate appraiser is necessary in the circumstances.

[8] Rule 32.01 permits the court to make an order for the inspection of property where it appears to be necessary for the proper determination of an issue in a proceeding. The word “necessary” has been interpreted to mean “useful” or “probative of an issue”. See Peel School District No. 19 v. 553518 Ontario Ltd. (c.o.b. Munden Park Electric), [2000] O.J. No. 3581 (SCJ) at paragraph 16. One of the objectives of Rule 32.01 is to level the playing field between the parties so that a party such as the plaintiff in this action is not entirely dependent on the examination for discovery of the defendants, who have exclusive access to the Property. See Donnelly v. Fraleigh, [2001] O.J. No. 2731 (SCJ) at paragraphs 8 and 9.

[9] In my view, the plaintiff has met this test with respect to an inspection by a real estate appraiser and an expert in interior design. As noted above, the defendants do not oppose an inspection by a real estate appraiser, subject to certain conditions which I will address below. In my view, an inspection by an expert in interior design is also necessary. It is clear from the evidence that the appraisal obtained by the defendants implicitly assumes that the interior of the Property is unique and one of a kind. In his report, the appraiser makes specific references to the Property’s “one of a kind” features. His comments in that respect are not limited to the exterior of the Property. The documents provided to the defendants’ real estate expert in advance of providing his report included many references to unique interior features. The instructions provided to the expert by the defendants’ lawyer described the Property as a “completely unique home”. In my view, it is reasonable to infer from this evidence that the defendants’ expert assumed that the interior was unique and “one of a kind” when he placed a value on the Property as a whole. The overall value of the Property was used by the defendants’ expert to calculate his opinion on the alleged diminution in the value of the Property as a result of the exterior of the Property no longer being unique.

[10] The defendants’ expert stated in his report that uniqueness has a value and that some individuals will pay extra for something nobody else owns. Indeed, this is the very essence of the defendants’ claim with respect to the alleged copying of the exterior features. The plaintiff is entitled to test this assumption of uniqueness at trial by leading evidence that the interior of the Property is not unique and the appraisal is inflated as a result.

[11] Furthermore, this inspection will not create any additional burden to the defendants as it can be carried out at the same time as the real estate appraiser’s inspection.

[12] In my view, the requested inspection by an interior designer is necessary for the proper determination of this issue at trial.

[13] However, I do not view an inspection by an architect as necessary. It would not be useful or probative of any matter in issue in this proceeding. The plaintiff argued that the architect’s inspection would be relevant to the issue of copyright and the extent to which the interior design features influenced the exterior moulds and precast. For the reasons set out above with respect to the production request, it is my view that this argument overstates the position being taken by the defendants. The pleading in question alleges that certain drawings prepared by Ms. Di Pede between 2002 and 2004 influenced the design of the moulds and the precast. It is not alleged that the entire interior design influenced those exterior features. Moreover, an inspection by an architect in 2015 would not be useful in determining this issue. The defendants have produced the drawings referenced in their pleading. The architect will be able to give an opinion on this issue by comparing the drawings to the moulds and the precast. I also note that the plaintiff has not provided any evidence from an expert architect stating that he or she required an inspection of the current interior design in order to opine on this matter.

[14] I am therefore ordering that the plaintiff be permitted to conduct one inspection of the Property by a real estate appraiser and an expert in interior design.

[15] The defendants have suggested that a number of conditions be placed on this inspection. First, they request that only the experts attend the inspection. They do not want a representative of the plaintiff or its counsel to attend. They point to the fact that they do not have a good relationship with the plaintiff or Mr. Silver as a result of this litigation. In my view, it is appropriate that Mr. Silver be permitted to attend in order to give direction to the experts and to act as an officer of the court to ensure that the inspection is carried out appropriately. See Donnelly at paragraph 11. I am certain that Mr. Silver will ensure that the inspection is carried out in a manner that respects the defendants’ privacy and results in as little inconvenience as possible. Moreover, the defendants’ counsel will undoubtedly be present for the inspection if Mr. Silver attends. In my view, the presence of counsel will promote an efficient and effective inspection process.

[16] I see no reason for a representative of the plaintiff to attend the inspection. The plaintiff played no role in the construction of the interior of the Property. Obviously, the plaintiff will not be giving opinion evidence on the value of the Property or the uniqueness of the Property. There is no evidence in the record of a need for a representative of the plaintiff to attend. If Mr. Silver needs instructions during the course of the inspection I am sure the plaintiff’s representative can be available by telephone.

[17] The defendants object to photographs and other recordings being taken during the inspection. The defendants are concerned about breach of copyright and copying of the interior design of the Property. In my view, photographs are a necessary part of the proposed inspection. The detail of the interior design of the Property and fixtures will most likely form an important part of the expert opinions. Photographic evidence will assist the experts in preparing their reports for the benefit of the court. Such evidence will also assist the court when considering the expert evidence in this case. Any suggestion of breach of copyright by the plaintiff is nothing more than an allegation at this point. Nothing has been proven in court. An inspection under Rule 32.01 is a form of discovery. The plaintiff is bound by the deemed undertaking rule.[^2] There is nothing in the evidence to suggest any concern to date over the plaintiff’s compliance with the deemed undertaking rule. Still photography and video recordings shall be permitted. For the same reason, the experts and the plaintiff’s counsel will be permitted to keep their phones and other communication devices on their person during the course of the inspection.

[18] It is appropriate that the Di Pedes be present at the time of the inspection. This is their home. It is perfectly reasonable for the Di Pedes to be concerned about unsupervised access to their Property. I see no need for an order in advance that the Di Pedes not interfere with any inspection, as requested by the plaintiff. There is no suggestion in the evidence of any improper conduct to date. I am confident that the Di Pedes will conduct themselves appropriately. The Di Pedes have a strong interest in an efficient inspection process. The Di Pedes and their counsel may be present throughout the inspection of the Property.

[19] I see no basis for an order that the plaintiff’s experts be subject to approval by the defendants. Parties to litigation are entitled to retain experts of their choosing. In addition, no background check is necessary. The experts will be accompanied by the plaintiff’s counsel. I note that the report prepared by the defendants’ real estate expert makes special note of the Property’s sophisticated security system.

[20] The defendants also request an order that all information, notes, memoranda and reports generated by the inspection be confidential and only distributed to the plaintiff and its legal counsel for the purposes of this litigation. In my view, such an order is unnecessary. The plaintiff and its counsel are already bound by the deemed undertaking rule. There is no suggestion of any past misuse of discovery information.

[21] Similarly, I am not prepared to make a general sealing order in advance as requested by the defendants. What happens in this court is a public matter. Our system of civil justice must be as open and transparent as possible. A sealing order should only be made on proper evidence and on a case by case basis. This request is refused.

[22] I therefore order as follows:

(a) the plaintiff shall be entitled to one inspection of the Property by a real estate appraiser and an expert in interior design, of the plaintiff’s choosing;

(b) the inspection shall take place on a date and time convenient to the experts and as agreed to by counsel and the parties;

(c) the plaintiff’s experts may be accompanied on the inspection by counsel for the plaintiff;

(d) no representative of the plaintiff (other than counsel) may attend the inspection;

(e) the Di Pedes and their counsel may be present throughout the inspection;

(f) still photography and video recordings will be permitted; and,

(g) the balance of the relief on this motion is dismissed.

[23] I am case managing this action. The formal order from this motion may be submitted to me for signing. If the parties encounter any difficulty with the inspection, they may request a case conference by contacting me by email.

[24] Finally, if the parties are unable to resolve the issue of costs, they shall make brief submissions in writing by no later than July 3, 2015.

June 8, 2015

Master R. A. Muir

[^1] There is a further reference to the interior design of the Property in paragraph 36 of the defendants’ pleading. That paragraph makes reference to the defendants’ use of several of the exterior moulds in creating interior elements of the Property. However, it appears from a reading of the pleadings as a whole that the defendants’ use of the moulds in their own home is not a matter in issue in this proceeding.

[^2] Rule 30.1.01 makes it clear that the deemed undertaking rule applies to evidence obtained from the inspection of property under Rule 32.01.