B. Gottardo Construction Ltd., 2015 ONSC 4875

COURT FILE NO.: CV-09-5442

DATE: 20150804

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Deep Foundations Contractors Inc. Plaintiff

AND:

B. Gottardo Construction Ltd. and Metrolinx, also known as the Greater Toronto Transit Authority Defendants

BEFORE: Ricchetti, J.

COUNSEL: E. Battiston, Counsel for the Plaintiff ("Deep Foundations")

T. Rotenberg, Counsel for the Defendant B. Gottardo Construction Ltd. ("Gottardo")

HEARD: June 26, 2015

ENDORSEMENT

THE MOTION

[1] This is a motion for summary judgment by Deep Foundations seeking:

a) the dismissal of Gottardo's counterclaim; and

b) the direction of a trial to determine pre and post judgment interest payable on the Deep Foundation's judgment.

[2] Gottardo brings a cross-motion to vary my Order of September 29, 2014, to vacate the scheduled trial date of May 2015 and to amend its counterclaim.

THE FACTS

[3] This is a Construction Lien action. Deep Foundations provided materials and services to a project where Gottardo was the general contractor. The project was the construction of the Brampton GO Station ("Project").

[4] Deep and Gottardo are very large construction companies with multiple projects at any one time. Metrolinx is no longer a party to this proceeding.

[5] Deep Foundations completed its work on September 17, 2009.

[6] Deep Foundations was not paid its final invoice for the work on the Project. As a result, Deep Foundations registered a lien on October 29, 2009.

[7] Deep Foundations served and filed its Statement of Claim in December 2009 seeking payment of $471,227.70 plus interest and costs ("Deep's Claim"). The allegation by Deep Foundations was that the parties met after Deep Foundations' work had been completed and agreed upon a final payment amount of $471,227.70. When this amount was not forthcoming from Gottardo, Deep Foundations took legal action.

[8] Gottardo served and filed its Statement of Defence and Counterclaim on December 31, 2009 seeking a dismissal of Deep's Claim and damages for delay by Deep Foundations. Essentially, Gottardo asserted a counterclaim as follows:

7. The Plaintiff failed to perform its work in a timely and efficient manner, and delayed Gottardo's performance of its work to the G.T.T.A.

8. As a result of the Plaintiff's delays Gottardo has and will incur liquidated damages claims from G.T.T.A. that will equal or exceed the sums otherwise payable to the Plaintiff.

9. Gottardo estimates that its work has been delayed by the conduct of the Plaintiff and it has incurred and will incur overhead and other costs as a result of the Plaintiff's delays.

10. Gottardo undertakes to provide before the trial particulars of the delay costs described in paragraphs 8 and 9.

[9] There are no other particulars of Gottardo's counterclaim in the pleading.

[10] After several pre-trials in December 2012 and August 2013, the trial was scheduled for the January 2014 sittings in Brampton.

[11] By September 2013, despite almost 4 years having elapsed after the claim was brought and an impending trial, Gottardo had not disclosed its financial statements and other financial documentation for the relevant period of time to support its damages arising from the alleged delays by Deep Foundations. Gottardo had not retained or served an expert report with respect to its delay claim.

[12] On September 11, 2013, Deep Foundations requested, in writing, certain financial documentation to permit its expert to properly respond to Gottardo's delay claim at trial. In particular, Deep Foundations requested Gottardo to produce its financial statements and other detailed financial records of Gottardo to properly assess the financial losses, if any, to Gottardo of an extended construction schedule allegedly caused by Deep Foundation.

[13] On October 2, 2013, Deep Foundations served a preliminary report of David Burkes dated September 26, 2013. Much of Mr. Burkes' report and an accompanying letter cited the need for the financial documentation requested from Gottardo.

[14] Gottardo failed to produce the requested financial documentation. It is hard to imagine how a "delay claim" could be advanced at trial without the production of a considerable amount of the financial documentation requested to prove Gottardo's alleged damages and without an expert's report who, upon review of financial documentation, could opine on the quantum of financial loss occurred attributable to the alleged delay. Given Gottardo is a large company with many ongoing projects at any one time, any alleged losses from the delay in this Project would necessarily involve a detailed financial analysis of Gottardo's financial statements and financial documentation generally and with respect to the Project.

[15] With the impending trial, on November 14, 2013, for the first time, Gottardo advised it would be preparing its own expert report to deal with its delay claim. Gottardo did not produce an expert report; it was simply notifying Deep Foundations of its intention to produce an expert report in the future.

[16] Given the trial was only 6 weeks away, Gottardo's decision to retain an expert to prepare a damages report would, knowingly to Gottardo, result in the January 2014 trial date being vacated and a new trial date set. Deep Foundations couldn't proceed with the trial as it sought the requested financial documentation which had not been forthcoming. This is the first time the trial date was adjourned due to Gottardo's failure to produce financial documentation.

[17] As a result of Gottardo's decision to retain an expert, Deep Foundations brought a motion that Gottardo pay to Deep Foundations the amount of its claim (the quantum had not been dispute but was subject only to Gottardo's counterclaim). Deep Foundations also sought an order with respect to the production of Gottardo's expert report and the financial documentation. This motion was heard on December 5, 2013.

[18] Gottardo did not oppose Deep Foundations' motion to pay out the full amount of Deep Foundations' claim but did dispute the amount of interest payable on Deep Foundations' claim.

[19] On December 5, 2013, this court made an Order:

a) vacating the trial date of January 2014, and rescheduling the trial for the sittings in May 2014;

b) for payment to Deep Foundations of its entire claim of $471,227.70 plus interest at 4% per annum without prejudice to Deep Foundations' claim to 2% per month on the outstanding balance. This issue would be determined at trial;

c) that costs of Deep Foundations' lien action was to also be determined at the trial;

d) that Gottardo's expert report was to be served by February 7, 2014 with any documents relied on by Gottardo's expert to be served within 7 days thereafter; and

e) permitting further discoveries before the end of March 2014.

[20] The requested financial documentation was no longer an issue as it was expected, including by this court, that Gottardo's expert would review Gottardo's financial documentation and the financial documentation would be produced to Deep Foundations in accordance with the December 5, 2013 Order.

[21] Gottardo's Counterclaim was amended on December 10, 2013. The counterclaim was increased to $2,500.000. However, no further particulars of Gottardo's delay claim were set out in the Amended Statement of Defence and Counterclaim. In early 2014, Gottardo paid the amount owing to Deep Foundations under the December 5, 2013 Order.

[22] On February 7, 2014, Gottardo served its expert report prepared by Richard Fogarasi supporting its delay claim ("Fogarasi Report"). The damages for the delay were determined Mr. Fogarasi to be "Head Office Overhead and Profits" damages of $988,906.38 and "Site Establishment Costs" of $300,155.02. The Fogarasi Report was delivered on February 12, 2014 to Deep Foundations.

[23] Gottardo did not provide Mr. Fogarasi with the requested financial documentation by Deep Foundations. Gottardo only produced limited documents to Mr. Fogarasi for his review and the preparation of his report. This is set out in the Fogarasi Report. As a result, the methodology used by Mr. Fogarasi to opine on the delay claim did not include a review of Gottardo's financial statements or other requested financial documentation. As a result, since my December 5, 2013 Order only required production of financial documentation reviewed by Mr. Fogarasi, Gottardo did not produce its detailed financial documents, including its financial statements or other requested financial documentation requested by Deep Foundations in September 2013.

[24] On February 25, 2014, Deep Foundations served Gottardo with its further expert's report and a letter, which repeated Deep Foundations' expert's need for the requested financial statements and documentation from Gottardo to complete his report and to also critique Gottardo's expert's report. Simply put, Deep Foundations' expert could not complete a final report without the requested financial documentation from Gottardo.

[25] Again, Deep Foundations requested the financial statements and documentation be produced by Gottardo. Deep Foundation's request for the additional financial documentation went without response.

[26] In early March 2014, Deep Foundations advised this court that it would bring a motion to compel Gottardo to produce the requested financial documentation.

[27] The parties attended a case conference to deal with this production issue. On March 14, 2014 directions were provided for Deep Foundations' motion. The May 2014 trial date was vacated. The trial was rescheduled for January 2015 pre-emptory on both parties. Defence materials were to be delivered by April 30, 2014. This was the second time that the trial date was adjourned because of Gottardo's failure to produce the requested financial documentation.

[28] Subsequently, Gottardo's counsel requested additional time to file its materials. A further two months (to the end of June, 2014) was provided to Gottardo's counsel to file responding materials for the motion. Deep Foundations' motion was scheduled for September 29, 2014.

[29] It was clear that the third trial date of January 2015 would have to be adjourned due to Gottardo's failure to produce the requested financial documentation and the timing of the motion.

[30] Gottardo resisted Deep Foundations' motion on the basis that "the demands for production are overly-broad, intrusive, and unnecessarily require the production of irrelevant and/or commercially sensitive material." Gottardo went on to submit that Mr. Fogarasi used an accepted methodology for calculating delay claims which was ignored by Mr. Burkes and, therefore, Mr. Burkes' "production demands were irrelevant and/or overly broad".

[31] In its factum on the disclosure motion, Gottardo conceded that it would produce the underlying financial documents for its "Site Establishment Costs" claim. With respect to its Head Office and Overhead claim, Gottardo agreed to produce some, but not all, of the 10 categories of financial documents requested by Mr. Burkes. Gottardo agreed it would produce the financial documents set out in paragraph 31 of its factum. After an entire year of refusing to produce the requested financial documentation, Gottardo now conceded that a substantial amount of the financial documentation requested by Deep Foundations should and would be produced by Gottardo.

[32] The motion was heard on September 29, 2014.

[33] Submissions were heard on each category of financial documents requested by Deep Foundations and which Gottardo objected to produce.

[34] On September 29, 2014 I made an order which required Gottardo to produce some of the financial documentation requested by Deep Foundations and which continued to be objected to by Gottardo. I also ordered that discoveries take place before the end of January 2015. Once again, given the production order, the trial date for January 2015 had to be vacated and rescheduled for the Brampton sittings in May 2015 ("September 29, 2014 Order").

[35] Essentially, after 3 trial dates had to be adjourned (January 2014, May 2014, January 2015), Gottardo conceded that a significant portion of the requested financial documents should be produced to Deep Foundations.

[36] A date for the production of Gottardo's financial information was not specifically dealt with as Gottardo's counsel had submitted it would take approximately 2 weeks to produce the financial documentation ordered. The expert reports could then be completed. Any further discoveries were ordered to take place before the end of January 2015 and the trial could finally proceed in May 2015. This was the expected unfolding of events. However, Gottardo continued to refuse to produce its financial documentation, this time despite a court order to produce the financial documentation.

[37] The September 29, 2014 Order remains outstanding. The September 29, 2014 Order was not appealed or varied.

[38] No financial documentation was forthcoming from Gottardo. Nothing!

[39] No expert report by Deep Foundations could be completed because of the absence of the financial documentation ordered to be produced. No examination for discoveries took place.

[40] As a result of Gottardo's failure to comply with the September 29, 2014 Order, in early 2015, a telephone case conference was scheduled before me by Deep Foundations. Deep Foundations indicated it wished to bring a motion to dismiss Gottardo's counterclaim for having failed to comply with my Order of September 29, 2014. I scheduled the motion to be heard on April 30, 2015.

[41] Even after being notified that Deep Foundations would bring a motion to dismiss its counterclaim for not producing the financial documentation ordered to be produced, Gottardo did not use this time period to comply with the September 29, 2014 Order.

[42] Deep Foundations' motion materials were served. The motion was returnable on April 30, 2015.

[43] On April 29, 2015 (the day immediately preceding the hearing date for Deep Foundations' motion to dismiss Gottardo's counterclaim) Gottardo, still having failed to comply with the September 29, 2014 Order, brought its own motion to:

a) vary the September 29, 2014 Order to delete production of certain financial documents;

b) vary the date by which the discoveries were to be completed;

c) reschedule the trial date from the May 2015 sittings to the January 2016 sittings;

[44] Because of Gottardo's last minute cross-motion, Deep Foundations' motion could not be heard. Responding materials would have to be filed and cross examinations take place. This was the fourth trial date (the May 2015 trial date) that needed to be adjourned because of the Gottardo's failure to produce financial documentation.

[45] A further case conference date was scheduled for May 26, 2015 to permit Deep Foundations to file responding materials to Gottardo's cross-motion. A schedule was set for any cross examinations to take place and a date for the hearing of the motion.

[46] On May 26, 2015, a hearing date was set for June 26, 2015 for all motions to be heard. The motions were heard on June 26, 2015.

THE POSITION OF THE PARTIES

Deep Foundations

[47] Essentially, Deep Foundations attributes the actions of Gottardo as continuous and deliberate attempts to delay the trial of the Gottardo's counterclaim on its merits (because it suggests there is no merit to it) and Gottardo's failure to produce the financial documentation requested for almost 2 years (including approximately 9 months pursuant to a court order), as a deliberate and flagrant breach of an interlocutory order by Gottardo which deserves the sanction of this court by the dismissal of Gottardo's counterclaim. Deep Foundations submits that it is in the interests of justice that Gottardo's counterclaim be dismissed despite the lack of the adjudication on the merits of the counterclaim.

Gottardo

[48] Gottardo submits that it should be given a final opportunity to cure the admitted default of the September 29, 2014 Order. Gottardo submits that it "agonized" over the loss of confidentiality of its financial statements to be produced pursuant to the September 29, 2014 Order.

[49] The basis of Gottardo's motion to vary the September 29, 2014 Order was that it wished to amend its pleading to limit Gottardo's counterclaim to "Site Establishment Costs" (approximately $300,000) and withdraw its claim for Head Office Overhead and Profits damages ($988,906.38). This potential withdrawal of this portion of the counterclaim was conditional. Essentially, Gottardo's position was that a significant portion (including its financial statements) of the financial disclosure ordered pursuant to the September 29, 2014 Order would no longer be relevant and need not be produced if the Head Office Overhead and Profits portion of the counterclaim was withdrawn. However, Gottardo would only withdraw the Head Office Overhead and Profits portion of its counterclaim, if this court would not enforce the September 29, 2014 Order for the production of the specified financial documentation. If this court required Gottardo to comply with the September 29, 2014 Order, Gottardo would not withdraw any portion of its counterclaim. This is set out in Gottardo's factum:

"In the alternative, if Gottardo must produce its financial statements in order to prove its Site Establishment Costs, then Gottardo's rational for abandoning its Head Office Overhead and Profit claim falls away. Gottardo will, in that event, withdraw its motion. Apart from costs, there is no prejudice to Deep."

[50] I have reviewed Mr. Burkes' affidavit and Gottardo's cross examination of Mr. Burkes. In my view, even if Gottardo's withdrawal of its Head Office Overhead and Profit was permitted, the financial disclosure ordered by the September 29, 2014 Order continues to be relevant to the delay claim relating to Site Establishment Costs. The questions posed to Mr. Burkes during the cross examination were hypothetical and presumed that certain documents, if produced by Gottardo, would satisfy Mr. Burke's need to review other Gottardo financial documents. These documents were not produced or shown to Mr. Burkes during the cross examination. I fail to see the value of such questions and answers in light of the fact, Gottardo's counsel was referring to documents not produced and which might or might not satisfy Mr. Burkes once he reviewed them. More importantly, this submission fails to recognize that Gottardo's financial documents were ordered to be produced some 9 months ago pursuant to the September 29, 2014 Order and Gottardo has failed to do so.

[51] Much of Gottardo's position was to attack the need for the financial productions, the competency of Mr. Burkes or the methodology he proposed to use. The difficulty with this submission is that it disregards the fact the September 29, 2014 Order was made and not appealed by Gottardo. Many of these submissions were made at the September 29, 2014 hearing. The time for these submissions regarding the relevance or obligation to produce the financial documents was at the September 29, 2014 motion not on this motion.

[52] It must be noted that Gottardo has produced nothing, not even the financial documents it agreed to produce at the September 29, 2014 hearing. Gottardo had agreed it could produce the documents within 2 weeks of the hearing date in September 2014. There is no explanation why even these documents were not produced within the 9 months after the order was made.

[53] It should also be noted that Gottardo agrees that certain financial documents would still need to be produced for the Site Establishment Costs delay claim – but these financial documents have not been produced. Again, no explanation is given for this failure.

[54] The only inference to be drawn is that Gottardo continues to seek to delay the trial of this matter.

THE LAW

[55] Rule 60.12 provides:

Where a party fails to comply with an interlocutory order, the court may, in addition to any other sanction provided by these rules,

(a) stay the party's proceeding;

(b) dismiss the party's proceeding or strike out the party's defence; or

(c) make such other order as it is just .

[56] Justice Nordheimer in Bottan v. Vroom, [2001] O.J. No. 2737, (appeal dismissed [2002] O.J. No. 1383 (C.A.)) considered whether actions should be struck for failure to abide by orders of the court, particularly pursuant to rules 57.03(2) and 60.12. Nordheimer J. quoting R. v. Briggs, (2001), 2001 24042 (ON CA), 53 O.R. (3d) 124 (C.A.): "If this court's rules are to be taken seriously by anybody, they must be enforced," and from Household Trust Co. v. Golden Horse Farms Inc., (1992), 1992 420 (BC CA), 65 B.C.L.R. (2d) 355 (C.A.): "The court if it fails to act becomes but a paper tiger."

[57] Justice Nordheimer stated the rationale for rules 57.03 and 60.12 is:

…predicated on the facts that there will be situations where a party's position ought to be determined for procedural reasons arising from the failure of that party to abide by orders made by the court. If it was the case that the merits of the matter always had to be determined before such remedies could be imposed, there would be little room for the effective application of either of these miles.

[58] Recently, the Ontario Court of Appeal has dealt with this issue in Koohestani v. Mahmood, 2015 ONCA 56, 124 O.R. (3d) 205; 2015 ONCA 56. There, the Court of Appeal considered whether the motion judge erred in making an order striking the statement of defence for failure to pay damages and costs awarded to plaintiffs on a previous motion for partial summary judgment. The Court of Appeal stated:

[55] The Court of Appeal acknowledged that it was open to the motion judge to consider striking the statement of defence based on the defendants' failure to pay the amounts ordered by Justice Roberts on the earlier motion.

[56] However the panel determined that "striking out a defence is a severe remedy and should generally not be imposed as a remedy of first resort. The defaulting party should, at least, be provided with an opportunity to cure the default."

[54] Notwithstanding the legitimate concerns raised before Spence J., my difficulty with his decision to strike the appellants' defence is that he failed to apply the principles relevant to such a request, particularly those set out by this court in Bell ExpressVu Limited Partnership v. Torroni (2009), 94 O.R. (3d) 614, [2009] O.J. No. 356, 2009 ONCA 85. In Bell ExpressVu, at para. 35, the majority identified striking out a defence as a severe remedy and made it clear that it should generally not be imposed as a remedy of first resort. The defaulting party should, at least, be provided with an opportunity to cure the default.

[55] Such was not done in this case.

[57] In addition to the primary principle identified in Bell ExpressVu, that striking out a defence should not be the remedy of first resort, additional factors should be taken into account in deciding whether to strike a defence for failure to comply with court orders.

[58] First, the action should be examined with particular attention to the merits of the defence: Bell ExpressVu, at para 36. The pleading and any evidence relevant to the defence may demonstrate a strong defence supporting the conclusion that the interests of justice warranted finding another way to sanction the misconduct. On the other hand, a blatantly unmeritorious defence may give rise to the inference that the defendant's refusal to comply with a court order is part of a deliberate strategy to delay a decision on the merits -- conduct that may justify the imposition of a more severe sanction.

[59] In my view, it cannot be said that the appellants' defence in this case is obviously without merit.

[60] Second, the context of the misconduct relied upon is relevant to the determination of a response that is not only proportional to the severity of the misconduct but also in keeping with the overarching objectives that guide the application of the rules, namely, that set out in rule 1.04 that the rules should be interpreted to secure the just determination of each civil proceeding on its merits.

[59] Although in the context of a family proceeding, in Roberts v. Roberts, 2015 ONCA 450 the Court of Appeal concluded that the duty to disclose financial information is a fundamental obligation in family law cases, breach of which impedes the progress of the action, causes delay and generally acts to the disadvantage of the other party. It also detrimentally affects the administration of justice with unnecessary judicial time being spent and the final adjudication being stalled. Financial disclosure is axiomatic; it should not require court orders. Although the power to strike pleadings is to be used sparingly and only in exceptional cases, persistent and ongoing failure to provide court ordered disclosure warranted an order striking out the offender's pleadings pursuant to Rule 1(8) of the Ontario Family Law Rules.

THE ANALYSIS

Leave under the Construction Lien Act

[60] Leave to bring these motions under the Construction Lien Act is granted as I am satisfied that a judicial determination of these issues might resolve or at least tend to reduce the issues to be tried in this case.

The Amendment to /Withdrawal of the Counterclaim

[61] As I stated above, there is no present withdrawal of Gottardo's counterclaim. There is only a proposed amendment by Gottardo but only on the condition that this court relieves Gottardo of its obligation to comply with the September 29, 2014 Order.

[62] In any event, an amendment to the pleading at this stage is subject to the leave of this court (see R. 26 of the Rules of Civil Procedure).

[63] Even if this was a proposed amendment (i.e. not conditional on the enforcement of the September 29, 2014 Order), there appears to me to be no valid reason why I would exercise my discretion to relieve Gottardo from producing the financial documentation pursuant to a court order made 9 months ago - when it said it would take 2 weeks for the documents to be produced. Moreover, I am satisfied that the financial documents set out in the September 29, 2014 Order are relevant to the Site Establishment Costs for the reasons set out in Mr. Burkes' affidavit of May 28, 2015 at paragraphs 8-16.

[64] Gottardo's motion to amend its pleading (if that is what the motion can be called) is denied.

Deep Foundations' Motion to Dismiss Gottardo's Counterclaim

[65] The Construction Lien Act provides as follows:

s. 67 (1) The procedure in an action shall be as far as possible of a summary character, having regard to the amount and nature of the liens in question.

(2) Interlocutory steps, other than those provided for in this Act, shall not be taken without the consent of the court obtained upon proof that the steps are necessary or would expedite the resolution of the issues in dispute.

[66] The Rules of Civil Procedure provide as follows:

1.04(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

2.01(1) A failure to comply with these rules is an irregularity and does not render a proceeding or a step, document or order in a proceeding a nullity, and the court,

(a) may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute; or

(b) only where and as necessary in the interest of justice, may set aside the proceeding or a step, document or order in the proceeding in whole or in part.

59.01 An order is effective from the date on which it is made, unless it provides otherwise.

60.12 Where a party fails to comply with an interlocutory order, the court may, in addition to any other sanction provided by these rules,

(a) stay the party's proceeding;

(b) dismiss the party's proceeding or strike out the party's defence; or

(c) make such other order as is just.

[67] I accept that striking a pleading is an order which deprives a party of the determination of its claim or defence without a trial. As a general rule, the interests of justice are best met when disputes are resolved on the merits. As a result, such an order should generally only be made after a party has a "last chance" order to comply with an order before striking its pleading.

[68] However, as set out at paragraphs 57-60 in Khoohestani, supra, the court may take other factors into account in determining whether to exercise its discretion to dismiss a party's pleading. There are circumstances where the interests of justice are seen to be perverted because of the deliberate and flagrant actions of one party who does its utmost to avoid a determination of the merits. This conduct amounts to an abuse of the litigation process. This abuse also negatively impacts the other party's rights to justice and negatively impacts on the administration of justice generally when one party is permitted to "get away with" such behaviour at the expense of the opposing party and the administration of justice.

[69] Simply put, part of the factors to be considered is the protection of the administration of justice where the Court could be held in disrepute by failing to deal with a party litigant's flaunting of the Rules and court order and appear to be assisting the party litigant who has clearly exhibited disregard for or abuse of the judicial process.

[70] In my view, to properly consider the appropriate remedy, all of the circumstances, actions of and impact on the parties requires careful consideration. Further, the court must include a consideration of the impact on the interests of justice and the administration of justice.

[71] The merits of Gottardo's counterclaim cannot be ascertained. The counterclaim pleading has no particulars and no evidence was led by Gottardo which would suggest that its counterclaim has or does not have merits.

[72] Aside from the extensive delay in dealing with this claim within a reasonable time period, Deep Foundations cannot properly assess Gottardo's delay claim without the financial documentation ordered to be produced and it continues to incur substantial legal costs to deal with this outstanding claim. The Rules are designed to encourage a resolution of disputes through production, discoveries, and pre-trials. Meaningful settlement discussions or a meaningful judicial pre-trial in this case cannot take place until the requested financial documentation is produced. The counterclaim is certainly not being dealt with in a "summary character" expected of a Construction Lien Act action.

[73] What are the remedies available?

Permit production now?

[74] Permitting Gottardo the opportunity to now produce the financial documents, allow further discoveries and set a new trial date would advance the adjudication on the merits of the counterclaim.

[75] However, there comes a point where it is clear to this court that a party is continuously and deliberately delaying the trial to such an extent that it reflects very poorly on the administration of justice and constitutes an abuse of process. It is not in the interests of justice to permit the use of these types of deliberate and continuous litigation tactics to subvert the interest of justice. Justice is negatively impacted. To grant a "last chance", in these circumstances, would be, in my view, participating in the continuation of this subversion of justice. Nothing can remedy the fact that this case has on four occasions occupied a "spot" on the trial list for a specific date to the exclusion of other matters ready for trial. This type of litigation practice is to be discouraged, not encouraged by giving Gottardo yet another and final chance to produce the financial documents at issue.

[76] The documents ordered to be produced by Gottardo are historical documents. They are readily available as evidenced by the expected 2 week production date. These same financial documents have been at issue for almost 2 years. Even where an order was made nine months ago requiring them to be produced, Gottardo deliberately chose not to comply with the production order. Even where Gottardo agreed certain documents would be produced, Gottardo deliberately chose not to produce them. Even the documents which Gottardo now agrees would be relevant to the Site Establishment Costs claim have not been produced. Gottardo has simply done everything within its power to delay this matter from being decided on the merits.

[77] Gottardo has had many "last chances" to produce the financial documentation. In this case, Gottardo had the opportunity

a) To produce the financial documentation it acknowledged were relevant and producible when Deep Foundations brought its motion returnable September 29, 2014. Gottardo did not do so;

b) To produce the financial documentation pursuant to the September 29, 2014 Order when it was made. Gottardo did not do so;

c) To produce the financial documentation when Deep Foundations indicated it would bring and then brought its motion to dismiss Gotardo's counterclaim. Gottardo did not do so;

d) To produce some or all of the financial documentation it acknowledges in June 2015 that would remain relevant and producible even if the counterclaim was amended. Gottardo did not do so;

[78] There is no reasonable explanation for these failures by Gottardo. Gottardo came to court saying, "if we must comply with the court order, give us more time".

[79] This is not a situation where there is a compelling or even a plausible explanation for the failure to produce the financial documents ordered to be produced. Clearly, the documentation is available. It is Gottardo's deliberate decision not to produce the documents or comply with the September 29, 2014 Order. Gottardo knew that failure to produce the documentation was a deliberate breach of the September 29, 2014 Order and could result in the dismissal of its counterclaim.

[80] Four scheduled trial dates have had to be vacated because of Gottardo's refusal or failure to produce financial documentation. Precious judicial resources, which could have been spent on other cases, have been squandered by Gottardo's actions. The negative impact on other cases is evident.

[81] To now suggest that the motion should be dismissed to give Gottardo another final chance to produce its financial documentation because the counterclaim should be decided on the merits is disingenuous and contrary to the interests of justice.

Costs or some other remedy?

[82] Deep Foundations has its judgment but not its interest. Deep Foundations' interest claim is substantial and being delayed by the existence of Gottardo's counterclaim. Deep Foundations has had for 5 ½ years and still has this counterclaim outstanding against it – one now claiming $2,500,000. I am not persuaded costs, even full indemnity costs, are an adequate remedy. Further, costs fail to deal with the negative impact on the interests and the administration of justice.

[83] Another possible remedy is to exclude Gottardo's financial documentation and its expert from testifying at trial. However, this would be prejudicial to Deep Foundations. Deep Foundations is entitled to the financial documentation for its expert to opine on the causes of the delay and the damages or lack of damages suffered by Gottardo arising from any delay. This is not an adequate or appropriate remedy.

Dismissing the counterclaim?

[84] This is an exceptional case where the pleading should be struck. The motion to dismiss Gottardo's counterclaim should be granted. There are a number of factors which compel me to come to this conclusion:

a) this is a Construction Lien Act action. Such actions are intended to be of a summary character, heard within a reasonable period of time after the completion of the work. We are now almost 6 years after Deep Foundations' work was completed. This matter has been set down for trial on four different dates (January 2014, May 2014, January 2014, May 2015) - in each case, the vacating of the trial dates were attributed to Gottardo's failure and refusal to produce financial documentation;

b) Gottardo's actions have been calculated to deliberately delay the trial of the counterclaim because:

i. Gottardo admitted that Deep Foundations had not been paid its last invoice. There was no dispute about this amount owing. Gottardo had not paid Deep Foundations this amount. With its "pro forma" counterclaim, Gottardo was able to resist paying this amount for approximately 4 years by denying its obligation to pay this amount because of the delay claim in the counterclaim. If the delay claim in the counterclaim was bona fide, Gottardo would have had particulars of this delay claim given its importance to avoid paying Deep Foundations almost a half million dollars. However, there is very little, in Gottardo's pleading or in the materials before me except by way of bald allegation that the delay was caused by Deep Foundations and Gottardo suffered damages;

ii. By November 2013, 4 years after the work was completed and Gottardo had first raised its delay claim and on the eve of trial, Gottardo announced it would be retaining an expert. Even then, Gottardo still didn't have an expert's report; it was simply was announcing at that late stage it would be getting an expert report. Gottardo announced this position only after repeated demands for Gottardo to produce financial documentation. Gottardo knew that its announced position to obtain and serve an expert report would delay the scheduled trial date. It should have been obvious to Gottardo from the beginning that it was necessary to retain an expert on its counterclaim. In my view, this was nothing more than a calculated delay tactic to de-rail the scheduled trial date in January, 2014 and avoid the issue of producing the requested financial documentation;

iii. In early 2014 Gottardo produced an expert report as ordered by the court. In the face of the request for certain financial documentation, Gottardo's expert used a methodology which didn't require him to review the requested detailed financial documents. So, Gottardo took the position that the requested financial documents were not necessary to be produced. This accomplished nothing but a further delay in getting the issue of financial disclosure decided and the case ready for trial. When requested to produce the requested financial documents, there was no response from Gottardo. Gottardo forced Deep Foundations to bring a motion when it was obvious that the production issue would delay the scheduled trial yet again. I have no hesitation concluding that Gottardo knew its position would again delay the new trial date in May 2014. This conclusion is clear because, at the disclosure motion in September 2014, Gottardo agreed that a significant number of requested financial documents were relevant to its delay claim and agreed to produce them. The only thing accomplished over the course of the year regarding the requested financial documentation, was the delay of three scheduled trial dates. Again, this can only be attributed to a deliberate delay by Gottardo to proceed to trial;

iv. In September 2014, having agreed to produce certain financial documents and ordered to produce other financial documents, which it stated could be produced within two weeks, Gottardo produced nothing. Gottardo didn't produce the financial documents ordered. Gottardo didn't produce the documents acknowledged to be relevant. Gottardo knew that its failure to produce any financial documentation would result in further interlocutory motion and, again, delay the scheduled trial in May 2015;

v. When Deep Foundations brought its motion arising from Gottardo's failure to comply with the September 29, 2014 Order, Gottardo waited until the afternoon before the hearing of Deep Foundations' motion to dismiss Gottardo's counterclaim to embark upon a new delay tactic – to seek to conditionally amend its counterclaim, agree to produce at a future date certain financial documents (which it had agreed and was ordered to produce) which would require further discovery and expert report and obtain yet another delay so that the May 2015 trial date would have to be vacated. In fact, Gottardo's cross-motion sought to adjourn the trial to January 2016. This was yet, another delay arising from Gottardo's own actions; and

vi. Even the financial documents which Gottardo acknowledges are relevant to the Site Establishment Costs never been produced but only a suggestion they will be produced in the future.

[85] I am satisfied this is one of those exceptional cases where the dismissal of a party's claim is warranted given the above circumstances.

CONCLUSION

[86] Deep Foundations' motion is hereby granted dismissing Gottardo's counterclaim.

[87] There remains the outstanding issue regarding the quantum of Deep Foundations' claim for interest at 2% per month. If the parties cannot agree on a resolution of this issue, either party may arrange with the Trial Coordinator's Officer for a 2 day trial before a judge to decide the applicable pre and post judgment interest rate on Deep Foundations' claim and assess the costs of Deep Foundations' costs of the action.

[88] I will deal with the costs of this motion and the counterclaim.

COSTS

[89] Any party seeking costs of this motion and the counterclaim shall serve and file written submission on entitlement and quantum within four weeks of the release of these reasons.

[90] Any responding party shall have four weeks thereafter to serve and file responding submissions.

[91] There shall be no reply submissions without leave. I may be spoken to if leave is sought.

Ricchetti, J.

Date: August 4, 2015