CITATION: Pershad v. Lachan, 2015 ONSC 5290

COURT FILE NO.: 55511/14 (St. Catharines)

DATE: 2015/08/27

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Dr. Neeraj Pershad

Stefanie Vescio, for the Plaintiff

Plaintiff

• and -

Margaret Lachan

Philton Moore, for the Defendant

Defendant

HEARD: June 10, 11, 12, 15, 16, 17 and 18, 2015

R. A. Lococo, J.

REASONS FOR DECISION

I. Introduction

[1] Dr. Neeraj Pershad is an orthodontist with offices in St. Catharines and Niagara Falls. Margaret Lachan was a long-time, trusted employee, working as a receptionist and accounts clerk. In the course of her employment, she received payments from Dr. Pershad’s patients for his services and entered the amounts in the “Orthotrac” computerized accounting system for Dr. Pershad’s practice.

[2] In September 2012, Dr. Pershad became concerned about what he considered to be accounting irregularities, and shared those concerns with Ms. Lachan. In the following days, Ms. Lachan made adjustments to the computerized accounting records relating to certain patients. Within a few days, Ms. Lachan stopped coming to the office, advising Dr. Pershad by text message that she was taking stress leave. In November 2012, she notified Dr. Pershad that she would not be returning to work.

[3] In January 2013, Dr. Pershad’s lawyer sent a letter to Ms. Lachan following a review of the practice’s financial records. The letter alleged that Ms. Lachan had misappropriated funds from the practice. It identified over 130 instances of alleged defalcations on specific dates between March 2011 and September 2012 totaling over $130,000. The letter also stated that the investigation was ongoing.

[4] In March 2013, Dr. Pershad started an action in Toronto against Ms. Lachan, alleging fraud, conversion, unjust enrichment and breach of contract. Ms. Lachan did not seek further particulars and in April 2013 served a Statement of Defence. In August 2014, Ms. Lachan started a separate action in St. Catharines against Dr. Pershad and his professional corporation, alleging constructive dismissal. Dr. Pershad’s misappropriation action was transferred to St. Catharines on consent by order dated March 6, 2015. Except as described below, neither action has proceeded beyond the pleading stage.

[5] In March 2015, Dr. Pershad brought a motion, seeking to consolidate his misappropriation action with Ms. Lachan’s constructive dismissal action. Ms. Lachan then brought a motion seeking summary dismissal of Dr. Pershad’s misappropriation action, in whole or in part. The two motions were heard one after the other, with prior time estimates of two days for Ms. Lachan’s summary dismissal motion and two hours for Dr. Pershad’s consolidation motion. In fact, the hearing of the motions lasted a total of six and a half sitting days, with most of the time being spent on Ms. Lachan’s summary dismissal motion, which was heard first.

(a) Position of the parties – summary dismissal motion

[6] On the summary dismissal motion, Ms. Lachan argued that Dr. Pershad’s Statement of Claim in the misappropriation action should be struck, in whole or in part, because it either failed to disclose a reasonable cause of action (relying on rule 21.01 of the Rules of Civil Procedure[^1]) or was prejudicial, scandalous or otherwise an abuse of process (relying on rule 25.11). According to Ms. Lachan, on the face of the pleadings, the action is statute barred. As well, Ms. Lachan argued that the material facts and particulars that Dr. Pershad pleaded are not sufficient to support the causes of action relied on or the categories of damages claimed.

[7] In addition, Ms. Lachan argued that the court should grant summary judgment in her favour, relying on Rule 20 and the principles set out in the recent Supreme Court of Canada decision in Hryniak v. Mauldin.[^2] In particular, she argued that there was no genuine issue requiring a trial, as provided for in rule 20.04(2)(a). According to Ms. Lachan, Dr. Pershad did not present evidence on the motion that “puts his best foot forward” in support of his claim that there was fraudulent and other wrongful activity by Ms. Lachan that resulted in loss to Dr. Pershad. In particular, the third party investigation report included in Dr. Pershad’s responding material was not admissible on the motion as expert evidence. Ms. Lachan also relied on what her counsel characterized as admissions by Dr. Pershad, including deemed admissions that arose from Dr. Pershad’s alleged failure to properly respond to requests to admit that Ms. Lachan served on Dr. Pershad in contemplation of the summary dismissal motion. Ms. Lachan also argued that to the extent there were any inconsistencies between Dr. Pershad’s and Ms. Lachan’s affidavit evidence on matters of material fact, those inconsistencies should be resolved in her favour as being more credible in light of all the evidence before the court on the motion.

[8] Ms. Lachan also argued that if summary judgment dismissing the whole action is not granted, there was no credible evidence of damages exceeding $100,000. Accordingly, any surviving claim in the action should continue under the simplified procedure in Rule 76 rather than under the ordinary procedure.

[9] In response, Dr. Pershad argued that there was no basis for striking his Statement of Claim, in whole or in part. According to Dr. Pershad, Ms. Lachan’s motion to strike should be dismissed because it was not brought promptly as rule 21.02 requires. He also argued that on the face of the pleadings, the action was not statute barred. As well, in his submission, the pleadings were not prejudicial, scandalous or abusive, and disclosed sufficient material facts and particulars to address the cause of actions relied on and the categories of damages claimed. Alternatively, Dr. Pershad argued that simple amendment of the Statement of Claim could cure any inadequacy without prejudice to Ms. Lachan, justifying the granting of leave to amend rather than striking the claim.

[10] With respect to the Rule 20 motion, Dr. Pershad argued that Ms. Lachan has not satisfied the onus of demonstrating that there was no genuine issue requiring a trial. According to Dr. Pershad, taking into account his affidavit evidence, with or without additional support from the third party investigation report, there were a number of genuine issues that warranted full examination through the discovery process and trial. He also argued that he had made no admissions, deemed or otherwise, of any material facts. According to Dr. Pershad, it was not appropriate in the context of this motion to resolve issues as to the adequacy of responses to a request to admit by treating the responses as deemed admissions. As well, in his submission, he had responded appropriately to the requests to admit.

(b) Position of the parties – consolidation motion

[11] Assuming that the misappropriation action is not dismissed in its entirety on the summary dismissal motion, Dr. Pershad seeks consolidation of the misappropriation action with Ms. Lachan’s constructive dismissal action pursuant to Rule 6 of the Rules of Civil Procedure. The latter action would proceed by way of counterclaim in Dr. Pershad’s action. According to Dr. Pershad, the two actions have common questions of fact and arise out of a common series of occurrences, as evidenced by the significant overlap between the pleadings of the actions. The actions involve the same parties and the same counsel. They are both at an early stage, with discoveries and document production not having occurred in either action. Consolidation of the actions would avoid a multiplicity of actions, the danger of inconsistent actions and potential prejudice to the parties. Consolidation is preferable to trial together or one after the other, since consolidation of the actions would maximize cost savings and efficiency, to the benefit of both parties.

[12] Ms. Lachan opposes consolidation. According to Ms. Lachan, her constructive dismissal action was not based primarily on the events leading up to her departure from Dr. Pershad’s practice in September 2012, but instead related to a poisoned work environment extending over a number of years. In her submission, the actions do not involve common questions of fact or law and there is little overlap in the occurrences giving rise to the actions. Ms. Lachan also argued that she would be prejudiced by consolidation, since her action was commenced using the simplified procedure in Rule 76, whereas Dr. Pershad’s action was commenced under the ordinary procedure. In her submission, consolidation would cause greater cost and delay for her action, which may result in denial of access to justice given her limited means. However, she would not oppose trial of the actions one after the other, with the evidence at each trial constituting evidence at the other, provided that the actions continue on separate tracks prior to trial. As well, she would not object to consolidation if the consolidated action proceeded by way of the simplified procedure.

(c) Issues to be determined

[13] Based on the foregoing, the issues to be determined are as follows:

1. Motion to strike: Should Dr. Pershad’s Statement of Claim in the misappropriation action be struck, in whole or in part, for any of the following reasons:

(a) Limitation period: On the face of the pleadings, are the claims statute barred?

(b) No reasonable cause of action: Do the claims otherwise disclose no reasonable cause of action?

(c) Prejudicial/scandalous/abuse of process: Are the claims prejudicial, scandalous or otherwise an abuse of process?

2. No genuine issue requiring a trial: Has Ms. Lachan established that there is no genuine issue requiring a trial of Dr. Persad’s misappropriation action?

(a) Evidence on the motion: Can the court make this determination based only on the evidence before the court on the motion?

(b) Use of enhanced fact-finding powers: Should the court make this determination using the enhanced fact-finding powers in rule 20.04?

(c) Trial management directions: Should trial management directions be provided to the parties?

3. Consolidation: Should Dr. Pershad’s misappropriation action be consolidated with Ms. Lachan’s constructive dismissal motion?

[14] For the reasons set out below, I have concluded that Ms. Lachan’s summary dismissal motion should be dismissed in its entirety. I have also concluded that an order should be made under Rule 6 requiring the two actions to be tried together or one after the other in the trial judge’s discretion. I am also providing directions relating to the conduct of the actions.

[15] In reaching these conclusions, I have been mindful of the Supreme Court of Canada’s comments in Hryniak v. Mauldin relating to the “culture shift” required in order to ensure that “ordinary Canadians” have affordable access to our civil justice system.[^3] In this regard, the Court made the following observations:

There is growing support for alternative adjudication of disputes and a developing consensus that the traditional balance struck by extensive pre-trial processes and the conventional trial no longer reflects the modern reality and needs to be re-adjusted. A proper balance requires simplified and proportionate procedures for adjudication, and impacts the role of counsel and judges. This balance must recognize that a process can be fair and just, without the expense and delay of a trial, and that alternative models of adjudication are no less legitimate than the conventional trial.

This requires a shift in culture. The principal goal remains the same: a fair process that results in a just adjudication of disputes. A fair and just process must permit a judge to find the facts necessary to resolve the dispute and to apply the relevant legal principles to the facts as found. However, that process is illusory unless it is also accessible – proportionate, timely and affordable. The proportionality principle means that the best forum for resolving a dispute is not always that with the most painstaking procedure.[^4]

[16] During the hearing of this motion, defence counsel eloquently argued that, consistent with the foregoing principles and given his client’s limited means, this action should be resolved, in whole or in part, in the context of these motions without the necessity of a trial. During the six and a half days I spent hearing these motions, I found this argument increasingly less convincing in the circumstances of this case. In fact, I began to wonder whether hearing the motions was taking longer than discoveries and trial would have taken for the two actions combined.

[17] On these motions, the record before the court included affidavits from each of the parties as well as requests to admit made to Dr. Pershad, covering 97 factual statements and the authenticity of 24 documents, together with Dr. Pershad’s responses. These requests to admit were delivered shortly before Ms. Lachan brought her summary dismissal motion. For some purposes (relating to the Rule 20 summary judgment motion), defence counsel asked me to carefully consider the evidence before the court, while for other purposes (relating to the motion to strike), counsel admonished me to consider only the pleadings and ignore the evidence. Defence counsel also asked me to scrutinize Dr. Pershad’s responses to the request to admit and make key findings of fact against him, on the basis that his responses were inadequate and therefore constituted deemed admissions. To a significant extent, such deemed admissions would be inconsistent with other evidence before the court that defence counsel characterized as unreliable or inadmissible.

[18] As indicated in the balance of my reasons, as an alternative to the convoluted and time-consuming process undertaken in relation to these motions, I have concluded that the interests of justice in this case would be served by ordering the actions tried together or one after the other and proceeding to discovery and ultimately trial. I have also provided directions as to pre-trial steps in the actions, but have not seized myself of the trial, given that the proceedings remain at a preliminary stage. I consider this result to be consistent with the principles in the Hyrniak case. In the regard, the Court included the following caveat in its comments on the required shift in culture for the civil justice system:

This culture shift requires judges to actively manage the legal process in line with the principle of proportionality. While summary judgment motions can save time and resources, like most pre-trial procedures, they can also slow down the proceedings if used inappropriately. While judges can and should play a role in controlling such risks, counsel must, in accordance with the traditions of their profession, act in a way that facilitates rather than frustrates access to justice. Lawyers should consider their client's limited means and the nature of their case and fashion proportionate means to achieve a fair and just result.[^5]

II Motion to strike

[19] In support of her motion to strike Dr. Pershad’s Statement of Claim, Ms. Lachan relied primarily on Rule 21. In particular, she relied on rule 21.01(1)(b), under which a party may bring a motion to strike out a pleading on the ground that it discloses no reasonable cause of action or defence.

[20] The principles to be applied when considering a motion under Rule 21 have been well considered in previous decisions, including by the Supreme Court of Canada in Hunt v. Carey Canada Inc.[^6] as well as by this Court in Dylex Ltd. (Trustee of) v. Anderson.[^7] In the latter case, Justice Lederman summarized the principles to be applied on a Rule 21 motions as follows:

The well settled principles applicable to motions to strike out claims as disclosing no reasonable cause of action or for the determination of points of law under Rule 21 can be stated as follows:

1. The statement of claim should not be struck out unless it is "plain and obvious" that the claim discloses no reasonable cause of action;

2. The allegations in the statement of claim are to be taken as true or capable of being proven unless they are patently ridiculous or incapable of proof;

3. The statement of claim is to be read generously with due allowance for drafting deficiencies; and

4. The court should not at this stage of the proceedings dispose of matters of law that are not fully settled in the jurisprudence.[^8]

[21] As a preliminary matter, in response to the Ms. Lachan’s motion to strike under rule 21.01, Dr. Pershad’s counsel argued that the motion should be dismissed for failure to bring the motion promptly. In this regard, rule 21.02 provides that a motion under rule 21.01 must be made promptly and a failure to do so may be taken into account by the court in awarding costs.

[22] In Fleet Street Financial Corp. v. Levinson, Justice Rouleau of this court held that if a motion under rule 21.01 is not brought promptly, remedies other than a costs penalty are available to the motion judge, who may also exercise his or her discretion not to grant the requested relief on that basis in appropriate circumstances.[^9] I agree with Justice Rouleau that rule 21.02 does not limit the motion judge’s discretion to impose consequences other than a costs penalty for failure to bring a motion to strike promptly. However, in my view, the ultimate remedy of dismissing the motion on that basis should be used sparingly, since adverse cost consequences would ordinarily provide a sufficient remedy, consistent with rule 21.02.

[23] In this case, I agree with Ms. Lachan’s counsel that the motion to strike should not be dismissed on the basis that it was not brought promptly. The record before me indicated that Dr. Pershad’s counsel had been on notice for some time of Ms. Lachan’s position that Dr. Pershad’s action should be transferred to St. Catharines, and was also aware of her intention to bring a motion for summary dismissal of the action. It was only recently that Dr. Pershad consented to the transfer of the action to St. Catharines after he changed his counsel of record from a Toronto firm to a St. Catharines firm. In all the circumstances, dismissing Ms. Lachan’s motion for delay is not warranted in this case.

(a) Limitation period

[24] Defence counsel argued that Dr. Pershad’s action should be dismissed on the basis that it was statute barred. In particular, relying on rule 21.01, he argued that Dr. Pershad’s pleading should be struck as disclosing no reasonable cause of action since, on the pleading’s face, the action was not commenced in time. In the alternative, defence counsel submitted that on the evidence before the court, there was no genuine issue requiring a trial on the limitation issue. Accordingly, there should be summary judgment in Ms. Lachan’s favour pursuant to rule 20.04(2)(a).

[25] The applicable limitation period is set out in sections 4 and 5 of the Limitations Act, 2002.[^10] Section 4 provides that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. Subsection 5(1) provides that a claim is discovered the earlier of (a) the day on which the claimant first knew of an actionable loss caused by another person, and (b) the day on which a reasonable person with the abilities and in the circumstances of the claimant first ought to have known about that loss. Subsection 5(2) provides that a claimant shall be presumed to have known of the matters giving rise to the claim on the day the act or omission on which the claim is based took place unless the contrary is proved.

[26] In his Statement of Claim, Dr. Pershad stated that he first began noticing irregularities in patient’s accounts in September 2012, but he did not indicate the specific dates on which those alleged irregularities occurred. The Statement Claim also stated that after discovering Ms. Lachan’s defalcations, Dr. Pershad commenced an audit of his practice in furtherance of his professional obligation to maintain accurate patient records. In her Statement of Defence, Ms. Lachan raised a limitation defence to the action.

[27] According to defence counsel, the Statement of Claim addressed the first part of the definition of when a claim is discovered (the date of Dr. Pershad’s actual knowledge of the actionable loss) but not the second part (the date a reasonable person ought to have known about the actionable loss). Defence counsel argued that once Ms. Lachan raised a limitation defence in her Statement of Defence, rule 25.08 of the Rules of Civil Procedure required Dr. Pershad to deliver a reply setting out the facts that he intended to prove to establish the discoverability of his claim within the limitation period. According to defence counsel, Dr. Pershad’s failure to do so was fatal to his claim.

[28] In response, Dr. Pershad’s counsel argued that it was not necessary for Dr. Pershad to file a reply, since the facts set out in Statement of Claim were sufficient to raise the issue of discoverability. His counsel argued that it was not necessary to provide further facts relating to when a reasonable person ought to have known about Ms. Lachan’s alleged defalcations, given that it was notoriously difficult to detect such activities, even if they occurred over an extended period of time. In this regard, she referred to the Ontario Court of Appeal decision in a criminal matter, R. v. Magda,[^11] as illustrating a situation where a trusted employee stole over $2.2 million from her employer (the St. Catharines Standard) over an extended period of time before her activities were detected.

[29] Having considered counsel’s submissions, I have concluded that Dr. Pershad’s Statement of Claim should not be struck on the basis that the action is statute barred on the face of the pleadings. In this regard, I find that the Statement of Claim was sufficient to raise the issue of discoverability. It is clear from the pleading when Dr. Pershad stated that he first learned of the alleged defalcations. It is clear that Dr. Pershad considered Ms. Lachan to be a long-time employee whom he entrusted with the handling of patients’ funds. In my view, it was not necessary to go further to provide facts beyond those already pleaded relating to when a reasonable person ought to have known of those defalcations.

[30] As well, even if I had concluded that the facts set out in the Statement of Claim were not sufficient for this purpose, the appropriate course of action would be to provide Dr. Pershad with leave to file a reply or amend the Statement of Claim to remedy the deficiency. That was the course of action taken by Justice Ferguson in D.S. Park Waldheim Inc. v. Epping.[^12] In that case, the plaintiff brought a motion to determine a point of law, arguing that the defendant’s counterclaim should be struck as being barred by the limitation period. The defendant had made the counterclaim in 1994, relating to events that took place in 1977. The court decided that the counterclaim was deficient, but provided leave to the defendant to file a reply to remedy the deficiency.

[31] The Ontario Court of Appeal recently took a similar approach in Collins v. Cortez.[^13] In that case, the Court set aside a summary judgment dismissing the plaintiff’s action as statute barred, on the basis that that the plaintiff had not pleaded facts relevant to discoverability. While agreeing that the Statement of Claim was deficient, the Court held that the motion judge should have considered the issue of discoverability based on the evidence before him on the motion, which raised a genuine issue requiring a trial with respect to the issue of discoverability. In these circumstances, the Court set aside the summary judgment and granted leave to the plaintiff to file a reply to remedy the deficiency in her pleading.

[32] Unlike the D.S. Park Waldheim Inc. case (which was a pleadings motion), the Collins case was a Rule 20 summary judgment motion, in which the court was required to consider the evidence before the court in reaching its decision, rather than just the contents of the pleadings. Nevertheless, in my view, the Collins decision supports the position of Dr. Pershad’s counsel that it would be appropriate to permit a reply or an amendment to the Statement of Claim to remedy any deficiency relating to discoverability rather than to dismiss the action. As well, as noted previously, Ms. Lachan has relied in the alternative on Rule 20 to justify summary judgment in her favour, including on the limitation issue, which would permit the court to look beyond the contents of the pleadings to determine the limitation issue. As indicated in the next section of these reasons, in my view, the court is entitled to take into account the contents of the letter to Ms Lachan from Dr. Pershad’s counsel dated January 10, 2013 as providing further evidence upon which Dr. Pershad is entitled to rely with respect to Ms. Lachan’s motion to strike, including that relating to discoverability.

(b) No reasonable cause of action

[33] As already noted, defence counsel also argued that the material facts or particulars pleaded were not sufficient to support the causes of action relied on or the categories of damages claimed. According to defence counsel, Dr. Pershad’s Statement of Claim should be struck on that basis, without providing leave to amend to remedy any deficiencies. In the alternative, defence counsel submitted that on the evidence before the court, there was no genuine issue requiring a trial with respect to those causes of action or categories of damages. Accordingly, there should be summary judgment in Ms. Lachan’s favour pursuant to rule 20.04(2)(a).

[34] In particular, referring to various causes of action and categories of damages relied on or claimed by Dr. Pershad, defence counsel argued that the Statement of Claim on its face had the deficiencies outlined below.

1. Fraud/breach of trust: The Statement of Claim did not contain full particulars of Dr. Pershad’s claim based on fraud or breach of trust, as rule 25.06(8) requires. Failure to plead those particulars was fatal to Dr. Pershad’s claim on that basis.

2. Conversion/misappropriation: The Statement of Claim did not plead all required elements or provide sufficient material facts to support a claim for conversion or misappropriation. In particular, the Statement of Claim did not plead or provide material facts to establish that Ms. Lachan exercised an element of control sufficient to establish a fiduciary relationship, an essential element of a misappropriation action.

3. Unjust enrichment: The Statement of Claim did not plead sufficient material facts to support a claim for unjust enrichment. In particular, the Statement of Claim did not provide material facts to support the requirement for an absence of juristic reason for the enrichment.

4. Damages: The Statement of Claim did not plead material facts necessary to support Dr. Pershad’s claim for punitive or exemplary damages, aggravated damages or special damages. In particular, the facts as pleaded did not disclose an independent wrong to support a claim for punitive or exemplary damages. As well, the pleaded facts did not indicate distress, humiliation or other intangible injury to support a claim for aggravated damages. With respect to the claim for special damages, the Statement of Claim did not plead material facts to support Dr. Pershad’s claim for reimbursement of accounting and legal expenses associated with the forensic audit of his practice, nor was updated information subsequently provided to Ms. Lachan.

[35] For the reasons set out below, I do not agree that the Statement of Claim should be struck, in whole or in part, on the basis that the material facts or particulars pleaded are not sufficient to support the causes of action relied on or the categories of damages claimed. As well, even if there were any deficiencies of this nature in the pleading, I agree with Dr. Pershad’s counsel that it would be appropriate to provide Dr. Pershad with leave to file a reply or an amended Statement of Claim, rather than to strike the Statement of Claim.

(i) Fraud/breach of trust

[36] In support of the position that Dr. Pershad’s claim based on fraud or breach of trust should be struck, defence counsel relied on rule 25.06(8). Under that provision, where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading must contain full particulars. That requirement is in addition to the requirement in rule 25.06(1) that every pleading contain a concise statement of material facts relied on, but not the evidence to prove those facts. In Joudain v. Ontario, Justice Shaw of this court stated that when rule 25.06(8) applies, “[t]he full particulars must set out precisely what the wrongful act is and the when, what, by whom and to whom of the relevant circumstances.” [^14] Using the formulation in the Joudain decision, defence counsel argued that by alleging “numerous instances” of seven categories of alleged defalcations by Ms. Lachan without specifying specific dates, the Statement of Claim provided particulars of “who” was involved in the alleged defalcations, but did not address “when” they occurred or provide sufficient particulars of “what” they comprised.

[37] Having reviewed the Statement of Claim and considered those submissions, it is not “plain and obvious” to me that Dr. Pershad’s claim based on fraud or breach of trust should be struck in this case. The Statement of Claim alleged that several different categories of defalcation occurred. Dr. Pershad identified Ms. Lachan as the perpetrator. He also stated that when he discovered those defalcations, he commenced an audit of his practice. In the circumstances of this case, I do not consider it appropriate to strike Dr. Pershad’s claim based on fraud or breach of trust.

[38] The letter dated January 10, 2013 from Dr. Pershad’s counsel to Ms Lachan provides further support for not striking that claim based on a lack of particulars. As previously noted, that letter identified over 130 instances of alleged defalcations by Ms. Lachan on specific dates between March 2011 and September 2012 totaling over $130,000. Defence counsel argued that the letter did not assist Dr. Pershad since the letter’s contents were not incorporated by reference or otherwise included in the Statement of Claim, and in any case, the court was not entitled to consider extrinsic evidence on a motion to strike a pleading. However, in my view, that letter provides an essential factual context when considering the adequacy of the Statement of Claim. In addition, as previously noted, Ms. Lachan also relied on Rule 20 as a basis for dismissing this and other claims by Dr. Pershad. On a motion under that Rule, I am required to consider the evidentiary record before me in deciding whether summary judgment should be granted. As well, given the timing of the letter, it would be fair to characterize the letter, as a matter of substance, as providing particulars of the facts set out in the Statement of Claim. In my view, to ignore the letter’s contents for this purpose would be a victory of form over substance. Its contents are also relevant to counter defence counsel’s position that his client was prejudiced by the lack of particularity in the Statement of Claim.

(ii) Conversion/misappropriation

[39] I will next address defence counsel’s position that the Statement of Claim did not plead all required elements or provide sufficient material facts to support a conversion or misappropriation claim. In particular, defence counsel argued that the Statement of Claim failed to plead that Ms. Lachan exercised an element of control sufficient to establish a fiduciary relationship, an essential element of a misappropriation action. In this regard, he relied on the Supreme Court of Canada decision in Boma Manufacturing Ltd. v. Canadian Imperial Bank of Commerce[^15] with respect to the tort of conversion as well as the Alberta Queen’s Bench decision in Thunberg v. Zadworny[^16] with respect to the elements of misappropriation. I find defence counsel’s position to be without merit, since upon review those decisions do not support his position.

[40] In Boma Manufacturing Ltd., the court stated that the tort of conversion “involves the wrongful interference with the goods of another, such as taking, using or destroying these goods in a manner inconsistent with the owner’s right of possession.”[^17] I saw nothing in the decision to suggest that a fiduciary relationship between the parties is a necessary element of the tort.

[41] In Thunberg, the court considered the elements of misappropriation and embezzlement that had to be proved in that case, but did so in the context of determining whether the claims in question survived a discharge from bankruptcy. In that regard, clause 178(1)(d) of the Bankruptcy and Insolvency Act[^18] provides that an order of discharge does not release the bankrupt from “any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity”. The court was clearly considering the elements that must be proved in order to come within that particular provision of the Bankruptcy and Insolvency Act. In my view, the court did not purport to define the elements of misappropriation for other purposes.

(iii) Unjust enrichment

[42] Defence counsel also argued that the Statement of Claim did not plead sufficient material facts to support an unjust enrichment claim. As the Supreme Court of Canada indicated in Pettkus v. Becker[^19] and Kerr v. Baranow,[^20] there are three requirements to be satisfied in order to establish unjust enrichment: (a) an enrichment of or benefit to the defendant; (b) a corresponding deprivation of the plaintiff; and (c) the absence of a juristic reason for the deprivation.

[43] In this case, Ms. Lachan argued that the pleading was deficient because it failed to allege material facts to support the allegation that there was no juristic reason for the enrichment. I see no merit in this position.

[44] The Statement of Claim clearly addressed all three elements of unjust enrichment, stating that Ms. Lachan was enriched by the monies she stole, to Dr. Pershad’s detriment, and there was no juristic reason for the enrichment. Earlier in the pleading, Dr. Pershad pleaded that Ms. Lachan dishonestly kept patients’ payments for herself through various unauthorized means. In my view, it was not necessary for him to go further by speculating as to what juristic reasons Ms. Lachan may have had for doing so and attempting to address those possible reasons.

(iv) Damages

[45] Defence counsel argued that the Statement of Claim did not plead material facts necessary to support Dr. Pershad’s claim for punitive or exemplary damages, aggravated damages or special damages. With respect to punitive or exemplary damages, counsel argued that the claim was deficient because the facts as pleaded did not indicate an independent wrong to support the claim for punitive or exemplary damages. In this regard, he relied on the Supreme Court of Canada decision in Whiten v. Pilot Insurance Co.[^21] As well, he argued that the pleaded facts did not indicate distress, humiliation or other intangible injury to support a claim for additional compensatory damages in the category of aggravated damages.

[46] In my view, the Whiten decision does not support defence counsel’s position on punitive or exemplary damages. That decision affirmed the position previously taken by the Supreme Court of Canada in Vorvis v. Insurance Corp. of British Columbia[^22] that in a breach of contract case, punitive damages were only available if, apart from the breach sued upon, the defendant has committed an independent actionable wrong.[^23] Dr. Pershad’s action is based not only on breach of contract but also the torts of fraud and conversion.

[47] In any case, Dr. Pershad’s Statement of Claim relied on an additional basis for the claim for punitive or exemplary damages (as well as aggravated damages), being breach of a duty of good faith and fair dealing, the basis for the award of punitive damages in the Whiten case. As a factual basis to support the claim for those categories of damages, the Statement of Claim cited Ms. Lachan’s retaining of payments owed to Dr. Pershad and then concealing the theft.

[48] While the support that the Statement of Claim provided for Dr. Pershad’s claim for punitive or exemplary damages and aggravated damages is less than compelling on its face, in my view, the Statement of Claim on a generous reading is not so deficient as to justify striking his claims for those categories of damages. In this regard, as already indicated, it is relevant that Dr. Pershad’s claim is based on the intentional torts of fraud and conversion as well as being a claim in contract. As well, it is clear from the Statement of Claim that Dr. Pershad considered Ms. Lachan’s actions to flagrantly disregard the relationship of trust that existed between them.

[49] I have also concluded that Ms. Lachan has not demonstrated that Dr. Pershad’s claim for special damages should be struck. In this regard, rule 25.06(9)(a) provides the amounts and particulars of special damages need only be pleaded to the extent that they are known at the date of the pleading, but the claimant is required to provide notice of any further amounts and particulars forthwith after they become known, and in any event, not less than ten days before trial. In the Statement of Claim, Dr. Pershad identified that nature of the special damages being claimed, that is, accounting and legal costs associated with the audit of his practice, and indicated that particulars would be provided prior to trial. Dr. Pershad has therefore acknowledged his obligation to provided updated information. He would in any case be required to do so by the Rules of Civil Procedure. In the circumstances, I see no cause for complaint about the pleading of his claim for special damages.

[50] If I understood defence counsel’s submissions correctly, he also argued that Dr. Pershad’s $250,000 general damages claim should be struck as being inconsistent with a statement later in the Statement of Claim that Ms. Lachan stole “approximately $150,000” of patients’ payments. It is not plain and obvious to me that that there is an inconsistency. Dr. Pershad’s claim is based on several grounds, and it would not be clear from the outset that the measure of damages would be identical for each cause of action. In addition, the Statement of Claim makes reference to an audit commenced by Dr. Pershad, which could result in evidence of additional loss. In all the circumstances, I do not see an alleged inconsistency of this nature as forming a sufficient basis for striking Dr. Pershad’s claim for general damages.

(c) Prejudicial/scandalous/abuse of process

[51] In Ms. Lachan’s submission, Dr. Pershad’s Statement of Claim should be struck, in whole or in part, because it was prejudicial, scandalous or otherwise an abuse of process. Rule 25.11 provides that the court may strike out all or part of a pleading, with or without leave to amend, on the ground that the pleading: (a) may prejudice or delay the fair trial of the action; (b) is scandalous, frivolous or vexatious; or (c) is an abuse of the process of the court.

[52] Defence counsel argued that the Statement of Claim should be struck under rule 25.11 because it contained a complete absence of material facts, as well as bald and improbable allegations that were incapable of proof. Among the cases he relied on was the decision of Justice Pierce of this court in Gravelle v. A1 Security Manufacturing Corp, in which the court stated that a pleading is frivolous and vexatious if it contains “a complete absence of material facts” and is scandalous if it contains “bare allegations.” [^24]

[53] I see no basis for striking any part of Dr. Persshad’s Statement of Claim under rule 25.11. For the reasons stated previously, I have found that the material facts and particulars contained in the Statement of Claim are sufficient to support the causes of action relied on and the categories of damages claimed. I see no basis for determining that there was a complete absence of material facts. I also see no basis for finding the allegations to be improbable or incapable of proof on their face.

III. No genuine issue requiring a trial

[54] Ms. Lachan also argued that summary judgment should be granted in her favour in Dr. Pershad’s misappropriation action, relying on rule 20.04(2)(a) of the Rules of Civil Procedure. Pursuant to that provision, summary judgment will be granted if the court is satisfied that there is no genuine issue requiring a trial. In Hryniak v. Mauldin, the Supreme Court of Canada interpreted this test in the following terms:

There will be no genuine issue requiring trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication.… It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute. [^25]

[55] In determining whether the test for summary judgment has been met, the motion judge has enhanced fact-finding powers that entitle the judge to weigh the evidence, evaluate credibility of a deponent and draw any reasonable inference from the evidence, unless it is in the interest of justice for such powers to be exercised only at a trial.[^26] These enhanced powers are therefore discretionary and presumptively available.[^27] According to Hryniak, using these powers will not be against the interest of justice if using them will lead to a fair and just result, and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.[^28] For the purpose of exercising these fact-finding powers, the motions judge is authorized to hear oral evidence, referred to as a “mini-trial.”[^29]

[56] The Hryniak decision also suggested a roadmap or approach to a summary judgment motion. The judge hearing the motion should first determine whether there is a genuine issue requiring a trial based only on the evidence before the court on the motion, without using the enhanced fact-finding powers. If the answer is yes, the judge should then determine if a trial can be avoided by using those fact-finding powers.[^30] If summary judgment is refused or granted only in part, the court has comprehensive trial management powers that may be used “to craft a trial procedure that will resolve the dispute in a way that is sensitive to the complexity and importance of the issue, the amount involved in the case and the effort expended on the failed motion.”[^31]

[57] The onus of establishing that there is no genuine issue requiring a trial is on the moving party (in this case, Ms. Lachan). However, both parties are required to “put their best foot forward” with respect to the existence or non-existence of material issues to be tried.[^32] This requirement is consistent with rule 20.02(2), which requires the responding party to place before the motions judge evidence of specific facts showing that there is a genuine issue requiring a trial.

[58] For the reasons set out in the balance of this part of these Reasons for Decision, I have concluded that Ms. Lachan has not satisfied the onus of establishing that there is no genuine issue requiring a trial. Accordingly, I am dismissing her motion for summary judgment.

(a) Evidence on the motion

[59] According to the roadmap for summary judgment motions suggested in the Hryniak decision, the motion judge should first determine whether there is a genuine issue requiring a trial based only on the evidence before the court on the motion, without using the enhanced fact-finding powers in rule 20.04(2.1). In order to make that determination, I considered the evidentiary record filed on the motion, some of the components of which are addressed below.

(i) Affidavit evidence of Ms. Lachan and Dr. Pershad

[60] The evidentiary record included affidavits from each of Ms. Lachan and Dr. Pershad, to which a number of exhibits were attached. Upon consideration of the deponents’ attestations, issues of material fact are apparent that go to the heart of the matters in issue in this action.

[61] For example, according to Dr. Pershad’s affidavit, as a result of his ongoing review of the accounting records, a significant number of defalcations by Ms. Lachan of various types were identified covering the period from March 2011 to September 2012, as set out in more detail in the attached letter to Ms. Lachan from his former lawyers dated January 10, 2013. Dr. Pershad also provided information about Ms. Lachan’s duties, which he claimed provided her with the opportunity to take the money. He also provided information to explain why he believes that she is responsible for the losses rather than someone else.

[62] In her affidavits, Ms. Lachan denied taking any money from Dr. Pershad, identifying others that she claimed had access to patient’s payments, including other employees and Dr. Pershad himself. She also provided information about her employment duties and the events surrounding her departure that were not consistent with the information provided by Dr. Pershad. Among other things, she also attested to her modest lifestyle, which she claimed was inconsistent with someone who was helping herself to significant sums of money. In these and other respects, the information Ms. Lachan provided in her affidavit is clearly at odds with the information Dr. Pershad provided, raising issues of material fact that require resolution in this action.

(ii) Third party investigation report

[63] When considering the evidence before the court, defence counsel argued that I should not take into account the report dated November 22, 2013 entitled “Report of Findings – Fraud Examination” which was attached to Dr. Pershad’s affidavit. The report was prepared by Prosperident, self-described as a “dental embezzlement investigation firm.” In the submission of defence counsel, it was improper for Dr. Pershad to place that report before the court as an exhibit to his affidavit. Defence counsel argued that in order for the contents of the report to be admissible as expert evidence on this motion, an affidavit from the person who prepared the report was necessary, which would permit cross examination of the deponent on the report. In this regard, defence counsel relied on this court’s decisions in Suwary v. Women’s College Hospital[^33] and Ewaskiw v. Zellers Inc.[^34] Among other things, defence counsel also took issue with the expertise of the persons who participated in the investigation and prepared the report, arguing that their education and background were not sufficient to permit them to give expert evidence of this nature.

[64] I do not agree with defence counsel’s submission that it was improper for Dr. Pershad to place the Prosperident report before the court as an exhibit to his affidavit. As his affidavit makes clear, he did so in response to repeated statements in Ms. Lachan’s affidavit that she believed that Dr. Pershad had no forensic evidence to support his losses. It is also evident from Dr. Pershad’s affidavit that he considered the contents of the Prosperident report as supporting his belief that Ms. Lachan misappropriated money from his practice. However, in my view, the report’s contents may be considered on this motion only for those limited purposes. Based on the case law referred to above, I agree with defence counsel that in the absence of an affidavit from a person involved in preparing the report, the report does not constitute evidence that is admissible to prove the truth of the report’s contents.

[65] Defence counsel also argued that by failing to provide admissable forensic evidence confirming that Ms. Lachan misappropriated money from Dr. Pershad, he had failed to “put his best foot forward”, with the result that I should accept as credible Ms. Lachan’s version of events rather than Dr. Pershad’s. I did not understand his reasoning on this point. On the motion before me, I have sworn evidence from each party as to the matters in issue, in each case without admissible supporting evidence from an expert witness. In the circumstances of this case, I fail see how in principle the credibility of Ms. Lachan’s evidence is somehow enhanced by Dr. Pershad’s omission to provide favourable expert evidence in admissible form to support his own evidence.

(iii) Admissions against interest

[66] In support of Ms. Lachan’s motion for summary judgment, defence counsel also relied on various alleged admissions against interest by Dr. Pershad, including deemed admissions arising from his responses to requests to admit.

[67] In particular, defence counsel referred to a letter dated March 19. 2014 from The Dominion of Canada General Insurance Company. In that letter, Dominion notified Ms. Lachan that it was looking to recover monies paid out to Dr. Pershad’s professional corporation for money stolen in the amount of $30,285.50 plus accountants fees of $9,000. The letter also indicated that this loss had a $1,000 deductible. This document was included in Ms. Lachan’s March 2015 request to admit relating to the authenticity of documents. In his response, Dr. Pershad admitted the authenticity of the Dominion letter. If I understood defence counsel’s submissions correctly, he argued that this letter should be taken as an admission by Dr. Pershad or other evidence that any loss he suffered was limited to the amounts set out in the letter. In this regard, defence counsel argued that I should not accept Dr. Pershad’s sworn statement that the extent of the indemnification he received from his insurers was dictated by his insurance coverage limits for the type of losses he sustained, since Dr. Pershad had failed to put his best foot forward by actually producing his insurance policies to prove that was the case.

[68] Having considered defence counsel’s submissions, I fail to see how the contents of the Dominion letter could be reasonably interpreted as an admission by Dr. Pershad. In his response to the request to admit, Dr. Pershad admitted the authenticity of the Dominion letter as well as a number of other documents mentioned in the request to admit, and expressly stated that he did not admit to the admissibility of those documents. In my view, the latter express statement was unnecessary since, by admitting authenticity, Dr. Pershad was not admitting to the truth of the contents of those documents, given the definition of “authenticity” in rule 51.01 as interpreted by the case law.

[69] In any case, I fail to see how the amount Dr. Pershad’s insurers paid out under the liability policies would provide cogent evidence of the amount of any loss Dr. Pershad may have suffered. Although there has been no jury notice in this case, it is worth noting that in the context of a jury trial where the amount being claimed is or may be covered by insurance, the judge would normally instruct the jury to ignore the extent of any insurance coverage or even the fact that such coverage exists when assessing whether and to what extent the plaintiff has suffered a loss.

[70] Defence counsel also took a similar position with respect to the conclusions set out in the Prosperident fraud investigation report, which concluded that Dr. Pershad had suffered losses from employee dishonesty in the amount of $80,293, consisting of $43,921 of confirmed losses and $36,472 of losses subject to further confirmation. Defence counsel argued that these findings should be considered evidence that the amount of Dr. Pershad’s losses was restricted to $43,921, the amount of confirmed losses identified in the report. I found that argument curious in light of his position that the Prosperident report was inadmissible as to the truth of its contents when relied on by Dr. Pershad to support his allegations against Ms. Lachan. Consistent with my finding on the latter issue, I find that the Prosperident report was also inadmissible on this motion for the purpose of limiting the extent off any losses that Dr. Pershad may have suffered.

(iv) Deemed admissions

[71] Ms. Lachan also relied on what her counsel characterized as deemed admissions that arose from Dr. Pershad’s alleged failure to properly respond to requests to admit served on Dr. Pershad in contemplation of the summary dismissal motion.

[72] The requirements relating to requests to admit are set out in Rule 51 of the Rules of Civil Procedure. Under rule 51.03, a party on whom a request to admit has been served is required to respond within 20 days. If the party fails to do so, that party will be deemed to have admitted the truth of the facts or the authenticity of the documents mentioned in the request to admit. Where a response is filed, there will also be a deemed admission of truth of the facts or the authenticity of the documents mentioned in the request to admit unless the responding party: (a) specifically denies the truth of a fact or the authenticity of a document, or (b) refuses to admit the truth of a fact or the authenticity of a document and sets out the reason for the refusal.

[73] Under rule 51.04, where a party denies or refuses to admit the truth of a fact or the authenticity of a document after receiving a request to admit and the fact or document is subsequently proved at a hearing, the court may take the denial or refusal into account in exercising is discretion respecting costs.

[74] As well, under rule 51.06, a judge on motion may make an order based on an admission or deemed admission by a party. By the combined effect of rule 51.06 and Rule 20, such an order may include a summary judgment or partial summary judgment against the party making the admission or deemed admission, according to the Ontario Court of Appeal decision in Ford Motor Co. of Canada v. Ontario Municipal Employees Retirement Board.[^35]

[75] As previously mentioned, shortly before Ms. Lachan brought her summary dismissal motion, defence counsel delivered requests to admit, covering 97 factual statements and the authenticity of 24 documents. Those requests to admit together with the responses prepared by Dr. Pershad’s counsel are part of the record for this motion.

[76] Upon review of Dr. Pershad’s responses to the total of 121 individual requests, there were by my count a total of 21 admissions, 44 denials and 60 refusals.[^36] Where a response to a factual statement was refused, Dr. Pershad provided an individual response explaining the reason for the refusal. In the 14 instances when the refusal related to the authenticity of a document, Dr. Pershad’s counsel provided a common explanation to the effect that Dr. Pershad had never seen the documents prior to receiving the request to admit and did not have sufficient information to know whether the documents were authentic. The documents in question included Ms. Lachan’s bank statements, deposit statements, income tax returns, mortgage statements and a wage slip as well as third party email communications printed from the internet regarding the Orthotrac accounting management system used by Dr. Pershad.

[77] Defence counsel argued that many of Dr. Pershad’s explanations for refusals to admit were inadequate and therefore constituted deemed admissions. An examination of Dr. Pershad’s responses in light of the literal wording of rule 51.03 does not support defence counsel’s position that there were any deemed admissions in this case. Each item in the requests to admit resulted in an admission, a denial or a refusal. In the case of an admission or a denial, no explanation is required, although for some items Dr. Pershad in fact provided an explanation. For each item refused, Dr. Pershad’s response “sets out the reason for the refusal”, in the words of rule 51.03(3)(b). On the face of Dr. Pershad’s responses, the explanation for his refusal complied with rule 51.03(3)(b) in each case since he set out the reason for doing so. Accordingly, taking the words of rule 51.03(b) at face value, there would be no deemed admissions by Dr. Pershad resulting from his responses to the request to admit.

[78] According to defence counsel, compliance with the literal wording of rule 51.03 does not end the analysis as to whether there has been a deemed admission by the party responding to a request to admit. Based on previous case law, defence counsel argued that a deemed admission occurs under rule 51.03 if the responding party provides a reason for refusing in purported compliance with rule 51.03(b) but the reason given is inadequate. In this regard, defence counsel argued for a liberal interpretation of Rule 51 in order to achieve the most expeditious resolution of the issues.

[79] In support of Ms. Lachan’s position on this issue, defence counsel cited this court’s decision in Foundation for Equal Families v. Canada (Attorney General).[^37] That case involved a constitutional challenge against 58 pieces of federal legislation on the basis that the legislation discriminated against same sex couples. The Attorney General refused to admit that each piece of legislation violated section 15 of the Canadian Charter of Rights and Freedoms[^38] on the basis that the requests to admit related to conclusions of law rather than factual statements or the authenticity of documents. The court held that the response was improper, finding that a mixed question of fact and law could appropriately be the subject of a request to admit upon a proper interpretation of Rule 51, which the court indicated should be given a liberal interpretation. The remedy imposed by the court was to strike the response and extend the time for responding in order to permit the Attorney General to provide a proper response. There was no suggestion in the decision that the Attorney General, by providing an improper response, was deemed to have admitted the propositions in the request to admit.

[80] The Foundation for Equal Families decision was one of several cases both counsel referred to that dealt with when and how the court should address an alleged failure to properly respond to a request to admit, including this court’s decisions in Glover (Litigation guardian of) v. Gorski,[^39] RSC Management Ltd. v. Cadillac Fairview Corp. Ltd.,[^40] Canpotex Ltd. v. Graham[^41] and Csak v. Csak.[^42] One of the threshold issues dealt with in those cases was whether it was appropriate for the court to address the adequacy of a response on an interlocutory motion, or whether the issue should be left to the trial judge, where the court would have the benefit of a full evidentiary record. While the reasoning in the cases on this issue was not entirely consistent, it appears that the court has the jurisdiction to deal with this issue at either stage, but that it is appropriate to make that determination on an interlocutory motion only in limited circumstances. In my view, a useful distinction was made in the Foundation for Equal Families decision, where the court stated that objections relating to the operation of the Rule 51 should generally be left to the trial judge, whereas more substantive objections relating to the applicability or scope of the rule should be determined as soon as possible on an interlocutory motion.[^43] However, that rationalization of the case law is of limited assistance on the motion before me, since if summary judgment were granted disposing of the action, there would be no trial.

[81] Having reviewed the requests to admit and the responses in this case in light of the case law, I see some merit in the positions taken by some both parties. For example, there is reason to question the sufficiency of Dr. Pershad’s explanation for his refusals relating to 14 documents based on a lack sufficient information relating to their authenticity. In my view, he should have either admitted their authenticity after taking steps to satisfy himself that the documents were authentic, or denied their authenticity and risked the costs consequences under rule 51.04.

[82] That being said, I do not see treating Dr. Pershad’s refusals as deemed admissions as the appropriate result in this case. The Plaintiff’s factum described many of the Defendant’s requests regarding factual statements as “convoluted, speculative and misleading,” and also took issue with the timing of the Ms. Lachan’s burdensome requests to admit in contemplation of the summary dismissal motion. While it was entirely proper for defence counsel to serve requests to admit in this context, having reviewed the requests to admit and the Plaintiff’s responses, I can understand the Plaintiff’s apparent frustration in trying to respond to many of the items. Reading the Plaintiff’s responses as a whole, in my view, Dr. Pershad made a good faith effort to respond to the requests to admit. In these circumstances, I see no useful purpose being served in parsing Dr. Pershad’s responses with a view to attributing deemed admissions to him, particularly on matters that are clearly in dispute in this action.

(b) Use of enhanced fact-finding powers

[83] According to the summary judgment roadmap suggested in the Hryniak decision, the next step is to determine if a trial can be avoided by using the enhanced fact-finding powers in rule 20.04(2.1). Those enhanced powers entitle the motion judge to weigh the evidence, evaluate credibility of a deponent and draw any reasonable inference from the evidence.

[84] Defence counsel argued that to the extent there are inconsistencies between the information in Ms. Lachan’s affidavit and the information in Dr. Pershad’s affidavit on matters of material fact, I should prefer Ms. Lachan’s evidence as being more credible and resolve the inconsistencies in her favour. As well, to the extent that I am unable to resolve issues of credibility between the parties, he argued I should hear oral evidence from Ms. Lachan and Dr. Pershad in a “mini-trial” in order to determine those issues. According to defence counsel, such a summary procedure would facilitate access to justice by his client, who may otherwise be unable to afford to defend the action through to trial given her limited means.

[85] As previously stated, on a summary judgment motion, I have the authority to exercise the enhanced fact-finding powers referred to in rule 20.04(2.1) unless it is in the interest of justice for the powers to be exercised only at a trial. Having considered the submissions of counsel and the evidentiary record on this motion, I have concluded that it would not be in the interest of justice to exercise the enhanced powers to dispose of this action by way of summary judgment, rather than proceed to trial in the ordinary course.

[86] In coming to this conclusion, I am mindful that the enhanced powers, although discretionary, are presumptively available, as described in Hryniak. However, in this case, without attempting to assign responsibility for the current state of affairs, Dr. Pershad's misappropriation action has not made much progress beyond the pleading stage. The same situation applies to Ms. Lachan’s constructive dismissal action against Dr. Pershad. There have been no discoveries or document production other the Plaintiff’s responding to the Defendant’s requests to admit in contemplation of this summary dismissal motion. As already indicated, on the record before me, there is conflicting evidence from the parties raising issues of material fact. The request to admit process, as previously indicated, has not been of significant assistance in resolving matters of material fact that are in dispute.

[87] In all the circumstances, I am not satisfied that hearing oral evidence from Ms. Lachan and Dr. Pershad (as suggested by defence counsel) or otherwise using the enhanced powers in the context of this summary judgment motion will “lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole”, in the words of the Hyrniak decision. In coming to this conclusion, I also took into account defence counsel’s submissions relating to access to justice by Ms. Lachan. However, I am not satisfied that the hybrid procedure proposed by defence counsel would lead to a result that was fair and just for both parties.

[88] Accordingly, Ms. Lachan’s motion for summary judgment is dismissed. Costs shall be determined based on written submissions, as provided for later in these Reasons for Decision.

(c) Trial management directions

[89] In the Hyrniak decision, the Supreme Court of Canada noted that upon the dismissal of a summary judgment motion, the court may wish to consider using its comprehensive trial management powers to provide directions with respect to the conduct of the action. The Court also stated that the motion judge should be seized of the matter as the trial judge in the absence of compelling reasons to the contrary.

[90] In this case, as indicated at the end of the next section of these reasons, I have decided to provide directions in accordance with rule 6.01(2), and to seize myself with respect to a matter arising out of those directions. However, I see no useful purpose in seizing myself as trial judge given the current preliminary stage of the action.

IV. Consolidation

[91] Should Dr. Pershad’s misappropriation action be consolidated with Ms. Lachan’s constructive dismissal motion?

[92] The authority to grant the consolidation order that Dr. Pershad requested is found in rule 6.01 of the Rules of Civil Procedure. Under rule 6.01(1), where it appears to the court that:

(a) two or more proceedings have a question of law or fact in common;

(b) the relief claimed in the proceedings arises out of the same transaction or occurrence or series of transactions or occurrences; or

(c) for any other reason an order ought to be made under rule 6.01,

the court has the discretion to order that the proceedings be consolidated, or heard at the same time or one immediately after the other. Where such an order is made, the court may give directions under rule 6.01(2) to avoid unnecessary costs and delay. Pursuant to rule 6.02, an order for trial together or consecutively is not binding on the trial judge, who would have the discretion to proceed in the manner he or she sees fit.

[93] The circumstances under which an order under Rule 6 should be granted have been considered by this court in a number of cases, including in Logtenberg v. ING Insurance Co.,[^44] Brown v. Matawa Project Management Group Inc.[^45] and Wood v. Farr Ford Ltd.[^46] As noted in the Logtenberg decision, “the underlying policy of Rule 6 is to avoid a multiplicity of proceedings, to promote expeditious and inexpensive determination of disputes and to avoid inconsistent judicial findings.”[^47] This policy is consistent with section 138 of the Courts of Justice Act,[^48] which states that as far as possible, multiplicity of legal proceedings shall be avoided.

[94] The Logtenberg decision goes on to state that once the moving party has met the onus of establishing one of the criteria in rule 6.01:

[I]t becomes necessary to consider other factors that might lead a court to consider whether or not the requested order ought to be granted. This involves a balancing of such factors as expediency, convenience and prejudice to the parties. A useful list of criteria has been developed in the cases of Webster v Webster (1979) 1979 CanLII 744 (BC CA), 12 B.C.L.R. 172 and Shah v Bakken 1996 CanLII 2522 (BC SC), [1996] B.C.J. No. 2836:

• Will the order sought create a savings in pretrial procedures?

• Will there be a real reduction in the number of trial days taken up by the trials being heard at the same time?

• What is the potential for a party to be seriously inconvenienced by being required to attend a trial in which that party may only have a marginal interest?

• Will there be real savings in experts' time and witness fees?

• Is one of the actions at a more advanced stage than the other?

• Will the order result in a delay on one of the actions?

• Are any of the actions proceedings in a different fashion?[^49]

[95] The same non-exhaustive list of criteria was also referred to in the Brown decision.[^50] That decision described the burden on the moving party relating to the balancing of competing factors as “a heavy onus”,[^51] quoting the Federal Court of Canada decision in Mon-Oil Ltd. v. Canada.[^52]

[96] Applying these principles to the two actions between Dr. Pershad and Ms. Lachan, I agree with Dr. Pershad’s counsel that her client has met the onus of establishing that the actions meet the threshold criteria set out in rule 6.01. In my view, the actions clearly have questions of fact in common (rule 6.01(1)(a)) and arise out of the same series of transactions or occurrences (rule 6.01(1)(b)). While there would be discrete questions of fact or occurrences that may be characterized as relevant to one action and not the other, as argued by Ms. Lachan’s counsel, there is clearly a significant degree of overlap that, in my view, brings the two actions within the purview of rule 6.01.

[97] The actions in this case are similar to the two actions that were consolidated by Justice Quinn in the Wood decision. In that case, the actions also arose out of an employment relationship, based on allegations of constructive dismissal against the former employer and allegations of fraud and other wrongful behaviour against the former employee.[^53]

[98] Having concluded that one or more of the threshold criteria in rule 6.01 have been met, the next step is to determine whether the court should exercise its discretion to make an order under that rule, balancing such factors as expediency, convenience and prejudice. In this case, I agree with Dr. Pershad’s counsel that there would clearly be advantages from the point of view of expediency, convenience and prejudice to make an order under rule 6.01. The two actions have the same parties, with the addition of Dr. Pershad’s professional corporation for the wrongful dismissal action. The same lawyers are involved in both. The principal witnesses would be common to both. Both are at the same early stage, with no discoveries or document production other than as previously noted. A single set of discoveries, document production, pre-trial conference and trial would advantage both parties, rather than duplicating these steps in each action. In my view, prejudice to both parties would be the result if an appropriate order under Rule 6 is not made. As well, an order under that Rule Would avoid the prejudice that would be caused by the potential for inconsistent findings in the two actions.

[99] On the other side of the equation, as previously noted, Ms. Lachan’s counsel argued that his client would be prejudiced by consolidation, since her action was commenced using the simplified procedure in Rule 76, whereas Dr. Pershad’s action was commenced under the ordinary procedure. In counsel’s submission, consolidation would cause greater cost and delay for Ms. Lachan’s action, which may result in denial of access to justice given her limited means. Ms. Lachan’s counsel referred to previous cases in which the court declined to order consolidation of an action commenced under Rule 76 with an ordinary procedure action, and argued that this factor should be considered fatal in the context of this motion.

[100] Consistent with defence counsel’s submissions, the fact that one action was commenced under Rule 76 and the other under the ordinary procedure is clearly a relevant factor when determining whether an order should be made under Rule 6. As previously noted, when balancing the competing factors relevant to that determination, the fact that the actions are proceeding “in a different fashion” is included in the non-exhaustive list of useful criteria referred to the Logtenberg and Brown decisions. However, in my view, that factor is only one of the factors to consider and does not necessarily determine the outcome of a motion under Rule 6. By way of example, in Domjan Investments Inc. v. D.J. Wagner Investments Inc.,[^54] Justice Cavarzin of this court made an order under Rule 6 that an ordinary procedure action and a Rule 76 action be tried together or one after the other in the discretion of the trial judge. In that case, the Rule 6 order was made even though the ordinary procedure action was at the discovery stage whereas the Rule 76 action had already been set down for trial and the pre-trial conference already held.

[101] By contrast, in the actions between Dr. Pershad and Ms. Lachan, both actions are at the same early stage, not having advanced beyond the pleadings. Ms. Lachan’s counsel argued that if the actions are consolidated, his client will lose the advantage of time-limited discovery and other aspects of the simplified procedure under Rule 76, which would include access to the summary trial procedure using affidavit evidence. However, I do not consider access to that procedure to be a significant advantage to Ms. Lachan in this case. Both she and Dr. Pershad would still be subject to discovery under the ordinary procedure in the misappropriation action as well as under the time-limited process in the constructive dismissal action. As well, given the nature of the cases and the issues of credibility arising from the conflicting evidence of the parties, it does not appear that a summary trial would be appropriate in this case.

[102] In all the circumstances, having considered the factors referred to above, I have concluded that an order under Rule 6 is appropriate in this case.

[103] Dr. Pershad’s counsel argued the two actions should be consolidated as a single action, based on the model provided by the Wood decision, rather than ordering the actions tried together or one after the other. In that case, Justice Quinn required fresh pleadings from both parties, with the defendant employer in the earlier constructive dismissal action being required to assert its later breach of trust action by way of counterclaim in the original action, and the former employee being required to amend his reply in the original action, to become a reply and defence to counterclaim. The defendant employer was also required to deliver a notice of discontinuance of its action against the former employee.

[104] In the present case, I see no significant advantage to ordering new pleadings. The adequacy of the pleadings in the misappropriation action has already been the subject of some controversy on these motions. In my view, fresh pleadings would provide fresh fodder for dispute, delaying rather than expediting the process.

[105] In this case, I consider it appropriate to order the actions tried together or one after the other in the discretion of the trial judge. I see no sufficient reason for requiring the two actions to continue as one action in this case, since any duplication between the two actions prior to trial may be addressed by appropriate directions pursuant to rule 6.01(2). As well, ordering trial together or one after the other has the advantage of maximizing the trial judge’s flexibility with respect to the conduct of the trial, based on the prevailing circumstances at that time.

[106] The directions I am providing under rule 6.01(2) will provide for common discoveries (including a common discovery plan), common document production and a common pre-trial conference for the two actions in accordance with the rules applicable to an ordinary procedure action. In this regard, I considered whether the procedure that should apply to the two actions going forward should be the simplified procedure in Rule 76 rather than the ordinary procedure rules. As an alternative submission, Ms. Lachan’s counsel indicated that his client would not object to consolidation of the two actions if the consolidated action proceeded by way of simplified procedure under Rule 76. As a related matter, Ms. Lachan’s counsel also argued that Dr. Pershad’s action should have proceeded under Rule 76 in any case, since there was no credible evidence before the court of damages exceeding $100,000.

[107] On the latter point, I do not agree that Dr. Pershad’s action should have been brought under Rule 76 in any event. In this regard, there is evidence before the court that raises triable issues with respect to Ms. Lachan’s alleged defalcations that exceed the monetary limit for a Rule 76 action. In any case, I consider the procedural rules relating to an ordinary action as the appropriate starting point for the discussions between counsel in developing a common discovery plan for the two actions. To the extent that the parties consider it appropriate to depart from the strict compliance with the rules that would otherwise apply to the action, there is room to do so within that context.

IV. Conclusion

[108] For the foregoing reasons, an order will issue pursuant to rule 6.01 of the Rules of Civil Procedure in the terms below.

1. Dr. Pershad’s action no. 55511/14 and Ms. Lachan’s action no. 55351/14 shall be tried at the same time or one immediately after the other in the discretion of the trial judge.

2. There shall be common discoveries, common document production and a common pre-trial conference for the two actions in accordance with the rules applicable to an ordinary procedure action.

3. The parties shall agree to a common discovery plan for the two actions in accordance with rule 29.1.03, and for the purpose of rule 29.1.03(2), the date of these Reasons for Decision shall be considered to be the date of the close of pleadings.

4. Should the parties be unable to agree on a discovery plan, the parties may jointly bring a motion returnable before me to resolve outstanding issues. I am not otherwise seized of this action for purposes of case management or trial.

5. Costs of this motion shall be determined based on written submissions.

[109] If the parties cannot agree on costs, Dr. Pershad may serve and file within 21 days brief written submissions (not to exceed five pages) relating to the summary dismissal motion and the consolidation motion on a combined basis, together with a costs outline and any pertinent offers. Ms. Lachan will have 14 days after receipt of the Dr. Pershad’s submissions to respond by brief written submissions. Dr. Pershad may reply by brief written submissions within seven days. All such submissions shall be forwarded to the Trial Coordinator and also to me at 59 Church Street, 4^th Floor, St. Catharines L2R 7N8. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs.

The Honourable Mr. Justice R.A. Lococo

Released: August 27, 2015

CITATION: Pershad v. Lachan, 2015 ONSC 5290

COURT FILE NO.: 55511/14 (St. Catharines)

DATE: 2015/08/27

SUPERIOR COURT OF JUSTICE - ONTARIO

BETWEEN:

Dr. Neeraj Pershad

Plaintiff

• and -

Margaret Lachan

Defendant

REASONS FOR DECISION

R. A. Lococo, J.

Released: August 27, 2015

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