CITATION: Yim et al. v. Song et al, 2016 ONSC 1707
COURT FILE NO.: CV-13-5248-00
DATE: 2016 03 09
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
KYOUNG JA YIM, MOONHO YIM and 2251363 ONTARIO INC. c.o.b
S. Bae, Counsel for the Plaintiffs
Plaintiffs
- and -
CHANG BAE SONG, KOUNG OK LEE, 2212237 ONTARIO INC. c.o.b. SONG COOKS COREAN CHILLI and 2302632 ONTARIO INC. c.o.b. SHARON GARDEN
C. Chang, Counsel for the Defendants
Defendants
HEARD IN WRITING: Friday February 26, 2016
REASONS FOR JUDGMENT
TRIMBLE J.
[1] The Plaintiffs move for Leave to Appeal to the Divisional Court from the decision of Conlan, J. of November 27, 2015 (allowing, in part, the Plaintiffs’ motion to require the Defendants to answer undertakings and refusals) and his subsequent decision of December 4, 2015 (dealing with costs of the motion).[^1]
[2] For the reasons that follow, the Motion for Leave to Appeal to the Divisional Court is dismissed. There are no conflicting decisions on law of another judge in Ontario or elsewhere on the findings of law made by Conlan, J. There is no reason to doubt the correctness of Conlan, J.’s decision. In any event, the matters addressed in Conlan, J.`s decision and the Leave Application do not affect anyone’s interest but the parties’.
[3] The Defendants are entitled to costs. The parties may address the quantum of costs, in writing, submissions not to exceed three pages excluding bills of costs and cases. The Defendants shall serve and file their submissions by 4 p.m., March 18, 2016. The Plaintiffs shall serve and file their costs submissions by the close of business, March 25, 2016.
Facts:
[4] This dispute arises from the breakdown of a business relationship in September, 2011, between the individual parties relating to their operation of a restaurant business. According to all parties, the relationship ended in September, 2011. Each party assumed one of the locations and operated independently of the other. The Plaintiffs alleged that in December, 2011, the Defendants began using the logo from the jointly owned restaurant.
[5] By Statement of Claim issued 26 November, 2013, the Plaintiffs’ claim against the defendant damages for a) breach of contract and breach of copyright/trademark, b) in the alternative, they claim damages of $80,000 by way of oppression remedy under the Business Corporations Act, and c) punitive damages. As against Defendant 230 Ontario Inc. the Plaintiffs claim $250,000 for breach of copyright/trademark, and injunctive relief. As against the remaining Defendants the Plaintiffs claim $160,000 for breach of contract, $80,000 for relief under the BCA, and $100,000 in punitive damages. The total claim is between $590,000 and $1 million. The Defendants’ cross claimed for injunctive relief and damages for lost wages.
[6] After a series of motions concerning production (heard by Donohue, J. and André, J.) and a motion to bifurcate the action (heard by Sproat, J.), Examinations for Discovery were held, and lists of undertakings and refusals delivered.
Conlan, J.’s Decision:
[7] According to Conlan, J.’s reasons, approximately 20 undertakings were at issue before him. The Defendants said that they were all answered fully, and to the best of the Defendants’ ability. The problem, according to the Defendants, is that the Plaintiffs are not, and never will be satisfied with the answers they are given. The Plaintiffs say that the undertakings were not answered, or not sufficiently so. They say that the Defendants have not done enough to answer them.
[8] In addition, the Plaintiffs say that there were 98 refusals argued (Conlan, J. counted 88).
[9] Conlan, J. held that two undertakings were unanswered or insufficiently answered. He ordered that 5 refusals must be answered, limited to the time period ending September, 2011. In this respect, he held that since everyone agreed that the parties split in September 2011, this crystalized the most relevant time period, notwithstanding that the Plaintiffs said that they remained entitled to profit sharing long after that.
[10] The test for Leave to Appeal from an Interlocutory Order:
Rule 62.02(4) is mandatory that leave to appeal “shall not” be granted. There are two exceptions to the mandatory rule, each of which has two parts that must be met.
a) where there is a conflicting decision on the same issue AND it is, in the opinion of the leave judge, desirable that leave to appeal be granted,
b) where it appears to the leave judge that there is good reason to doubt the correctness of the order AND the proposed appeal involves matters of such importance that leave should be granted.
[11] Under Rule 62.02(4) the rule, the following principles of law apply:
a) The test is strict,and leave is not easily granted [See Baradaran v. Tarion, 2015 ONSC 7333, para. 2;
b) With respect to leave regarding cost orders, leave is granted very sparingly, and only in obvious cases since costs are a matter of discretion in the judge who granted the order [see Hamilton v. Open Window Bakery Ltd. 2004 SCC 9 and Korea Exchange Bank v. Ontario, 2015 ONSC 7269, para 19;
c) Each part of the two part test must be met under each exception, in order for leave to be granted.
d) Under R. 62.02(4)(a), a conflicting decision must be on an issue of law, of at least an equal level of court, and not an exercise of discretion. Even where there are conflicting decisions, it must be desirable to have the Divisional Court resolve the conflict [see Nordic Ins. Co. v. Harkins, 2001 CarswellOnt 920 (SCJ) at para. 10; Bardaran, supra at para. 3; Comtrade Petrolium Inc. v. 490300 Ont. Ltd. (1992), 1992 7405 (ON SC), 7 OR (3d) 542 (Div. Ct.);
e) Under R. 62.02(4)(b), the moving party must demonstrate that the correctness of the result appealed from (not the reasoning) is open to very serious debate, AND that the issue is of general public importance that transcends the interests of the parties [see Baradaran, supra, para. 3 & 4; Nazari v. OTIP/RAEO Ins. Co., 2003 40868 (ON SC), [2003] O.J. No. 3442 (S.C.J.); Greslik v. Ontario Legal Aid Plan (1988) 1988 4842 (ON SCDC), 65 OR (2d) 110 (Div. Ct.); Burke v. Michaels, 2011 ONSC 2244;
f) The leave judge must presume that the judge granting the order was as competent as the leave judge to do justice between the parties [see Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 SCR 235 at para 10, page 248] and;
g) The motion judge’s factual findings are entitled to defence, notwithstanding that the motion judge proceeded on an entirely written record [see Equity Waste Management of Canada v. Halton Hills (Town) (1997), 1997 2742 (ON CA), 35 OR (3d) 321 (C.A.)].
Conflicting Decisions – 62.02(4) (a).
[12] In paragraphs 31 to 39 of their factum, the Plaintiffs raise 9 errors of law on Conlan, J.’s part. The Plaintiffs’ approach, on this issue, as elsewhere, reflects the Plaintiffs’ approach to this Leave Application: throw everything in, including the kitchen sink. In their written argument, however, the only error of law addressed is Conlan, J.’s application of the principle of proportionality. On this issue, Conlan, J. said:
[27] A certain degree of proportionality must come in to play in determining whether it is proper for a party to refuse to answer a question or refuse to give an undertaking at an examination for discovery. If the answer is bound to be useless, for example, what is the point in wasting everyone’s time and money? Fontaine v. Canada (Attorney General), 2015 ONSC 3185, at paragraphs 19 and 21.
[28] I am particularly fond of the following passage from the very recent decision of Aston J. in Kochar v. Kochar, 2015 ONSC 6650, at paragraph 4. I agree with the sentiment that Courts must be careful to not allow the discovery process to hijack the entire case.
[4] One of the major reforms that followed the subsequent work of the Task Force on the Discovery Process in Ontario was an amendment to the Rules of Civil Procedure emphasizing the “proportionality principle” as an overarching and general operative element in those rules. The proportionality principle was already enshrined in the Family Law Rules by Rule 2. Rule 2 encourages courts to downsize the procedure in any given case so long as the court is still able to justly deal with the issue raised. Comprehensive or exhaustive oral examination or production of documents may make access to justice unnecessarily expensive or protracted. Merely proving the relevance of a document may be insufficient to warrant production. To order production the court must be satisfied that it would be “unfair” to the party seeking production to go on with the case without the document or information. In essence the document must be found to be important to a party’s case, especially in relation to the amount at stake: see Himel v. Greenberg, 2010 ONSC 2325, 2010 ONSC 2325 at paras. 27 and 30 – 31.
[13] The Plaintiffs say that Kochar imposes a limit on disclosure and discovery because of proportionality. Once the moving party establishes relevance of a document or question, Kochar imposes on the moving party the burden to show that it would be unfair to go on without production or the answer, AND that it is not disproportionate. This conflicts, the Plaintiffs say, with the decision in Markson v. MBNA Canada Bank, 2011 ONSC 871 where Horkins, J. says:
[45] It is neither unreasonable nor unusual that the plaintiffs are requesting further documents having reviewed MBNA’s productions. While MBNA argues that the plaintiff’s request offends the principle of proportionality, I disagree. The documents requested are relevant to one or more common issues and Ms. Waddell’s affidavit demonstrates that documents are missing.
[46] In summary, MBNA will conduct a further search for the following: communications with cardholders, including communication that explains or gives meaning to the terms of cardholder agreements. This is limited to standard forms of communication with cardholders. Secondly, MBNA will conduct a further search for additional versions of cardholder agreements, disclosure statements and other documents that communicate or impact on the terms of the agreements with cardholders and the meaning and effect of the terms relating to the charging and calculation of interest on cash advances. To be clear, this will include a search for those missing documents identified in Ms. Waddell’s affidavit.
[14] The Plaintiffs rely on a “parsimonious” approach to proportionality expressed by Perell, J. in Ontario v. Rothmans Inc., 2011 ONSC 2504. Perell, J. says:
[159] The proportionality principle is a manifestation of the policy of frugality that led to the introduction of the simplified procedure to the Rules of Civil Procedure. To use a metaphor, the normal Rules of Civil Procedure are the Cadillac of procedure, an expensive vehicle with all the accessories. However, not all actions or applications require such an expensive vehicle, and a Chevrolet, a serviceable, no frills vehicle, will do just fine for many cases, and it will provide access to justice and judicial economy.
[160] Proportionality is a parsimonious principle. In Javitz v. BMO Nesbitt Burns Inc., 2011 ONSC 1322 at para. 28, Justice Pepall noted that the proportionality principle was introduced because the system of justice was under severe strain because cases were taking too long and costing too much for litigants. In the passage quoted by the Master from Chapter 5 of Lord Woolf’s report, Lord Woolf said that his overall aim was to “improve access to justice by reducing the inequities, cost, delay, and complexity of civil litigation.” In Abrams v. Abrams, 2010 ONSC 1928 at para. 70, Justice D.M. Brown, stated: “Proportionality signals that the old ways of litigating must give way to new ways which better achieve the general principle of securing the "just, most expeditious and least expensive determination of every proceeding on its merits."
[161] In the case at bar, however, because of his concern about Lord Woolf’s ideal of an “equality of arms,” and because of the strategic importance he gave to the jurisdictional motion, the Master concluded that proportionality could have an expansive influence and thus the jurisdictional motion in an action with an enormous claim called for a Rolls-Royce of procedure, where the court should have as much relevant information as possible, as complete a record as is available, and all reasonably available relevant evidence regardless of its age or the difficulties associated with finding it.
[162] In adopting this approach, the Master departed from his own views, with which I agree and would endorse, expressed in Warman v. National Post Co. 2010 ONSC 3670, 2010 ONSC 3670 (Master), where he stated at paras. 84-86:
[84] The time has come to recognize that the "broad and liberal" default rule of discovery has outlived its useful life. It has increasingly led to unacceptable delay and abuse. Proportionality by virtue of the recent revisions has become the governing rule. To the extent that there remains any doubt of the intention of the present rules I see no alternative but to be explicit.
[85] Proportionality must be seen to be the norm, not the exception -- the starting point, rather than an afterthought. Proportionality guidelines are not simply "available". The "broad and liberal" standard should be abandoned in place of proportionality rules that make "relevancy" part of the test for permissible discovery, but not the starting point.
[86] If embraced by the courts, parties and their counsel, such proportionality guidelines offer hope that the system can actually live up to the goal of securing for the average citizen "a just, speedy and inexpensive determination" of his or her case.
[163] In my opinion, an expansionary approach to proportionality is wrong. A parsimonious proportionality principle provides a useful tool for cases large and small. The base line is that the Rules of Civil Procedure are designed for cases of all sizes, but the proportionality principle allows the court to downsize the procedure and still do justice for the parties. If downsizing is not procedurally fair then the normal rules should apply to the proceedings without augmentation.
[164] If adopted as a precedent, the Master’s approach of treating proportionality as having an expansionary influence destroys the parsimony of the proportionality principle and allows the argument that because a case is important or the claim large, there should be more procedure not less procedure. The proportionality principle would lose its utility for large cases, such as class proceedings and other public interest litigation, where justice can be done by reducing not expanding the procedure. The proportionality principles yields an “equality of arms” by arms reduction and is not meant to prompt an arms race. In my opinion, in this particular case, the Master erred in principle in his treatment of the proportionality principle.
[15] In short, the Plaintiffs say that if a document or question is relevant, it is proportional, by definition.
[16] There is no conflict between the cases, as the Plaintiffs argue. The principle enunciated in all of them is that the procedure must be proportional to the matters at issue.
[17] Perell, J., in Rothmans, says that the proportionality principle applies to “downsize the procedure” for smaller cases, but if downsizing the procedure creates an injustice, the normal rules apply. In other words, proportionality is not an end in itself. Rather, it is a principle which allows the court to do justice between the parties in a more streamlined way where the case merits this approach and justice can still be done.
[18] The cases cited by the Plaintiffs, which limit proportionality’s impact on relevance, are all cases of substantial monetary value or weighty legal issues. Markson involved a certified class proceeding. Rothmans involved a “humungous” action in which Her Majesty sought to recover $50 billion. Palmerson v. RBC, 2014 ONSC 5134 involved a complex grain hedge deal worth upwards of $30 million. While Janda v. Riley Meggs, 1994 CarswellOnt 878 (Gen. Div.) involved modest amounts more in line with those claimed in this action, it involved serious questions concerning the law of interjurisdictional enforcement of judgments.
[19] This case, on the other hand, is a contract dispute, in the main, with possible remedies under the Business Corporations Act. There are no weighty issues. The value of the action does not appear to exceed $1 million. It is exactly the type of case that Perell, J. envisages as benefitting from a proportional procedure.
[20] Finally, there is no issue of law raised in this Leave Application that makes it desirable that the Divisional Court should hear it.
Correctness – 62.02(4)(b)
[21] The Plaintiffs’ remaining grounds of appeal fall under the “correctness” test. The Plaintiffs have failed to satisfy me that the correctness of the findings made by Conlan, J. is open to serious debate. In any event, even if the correctness of any of the findings Conlan, J. made are open to serious debate, none of them involves an issue of any importance to anyone except the litigants.
a) 88 v. 98 Refusals.
[22] The Plaintiffs say that Conlan J. failed to address 11 refusals. I disagree. He approached the list of refusals carefully. It appears that his tabulation of refusals arises from his reading of the specific questions. He considered each of them, regardless of how one counts them.
b) How Conlan J. Decided Relevance
[23] The Plaintiffs complain that Conlan J. did not clearly state how he reached his conclusion on relevance.
[24] There is no basis for this ground for leave. The case law on a leave application requires me to determine whether the conclusions of the judge are open to serious debate, not how he reached those conclusions. In any event, Conlan, J. explained why he decided in respect of any particular question.
c) September, 2011 Relevance Cut Off Date.
[25] The Plaintiffs say that Conlan, J. erred in finding that September, 2011 was the date defining relevance. I find no reason to doubt that Conlan J. is correct. The parties agreed that the parties separated their businesses in September, 2011. Relevance of a question on discovery is determined by the pleadings. Conlan, J. relied on the pleadings and the agreements of counsel in submissions.
d) Conlan, J. Turned the Undertakings/Refusals Motion in to a Motion for Summary Judgment.
[26] This ground for leave is baseless.
[27] The remaining grounds for leave are subsumed in one of the categories, above.
[28] Had I concluded that any of the conclusions of Conlan, J. were open to serious debate, I would still dismiss the leave application under R. 62.02(4)(b) as none of those conclusions concerned any matter of public importance. They pertain to issues solely between the parties in this action.
Leave to Appeal from the Costs order.
[29] Conlan, J. is entitled to deference as costs are a discretionary matter. His statement of the applicable principles (while brief, as befits the nature of the costs award) is correct. This ground for leave is dismissed.
Counsel’s Conduct and Non Compliance with the Rules:
[30] In this portion of my reasons, I address the conduct of counsel as gleaned from the written materials. While my thoughts that follow had no bearing on my decision on the merits, they will be relevant to the issue of costs.
[31] In the footnote to the introduction I commented on the deficient Notice of Motion. I also commented on the Plaintiffs’ ‘kitchen’ sink approach to this leave application.
[32] The facta filed by both parties are hardly “concise” as required by R. 61.03(2)(b). Neither party followed paragraph 64 of the Central West Consolidated Practice Direction which limits facta to 20 pages unless leave is granted to exceed that limit. The Plaintiffs’ factum is 24 pages and the Defendants’ is 25.
[33] The Plaintiffs’ motion material fails to comply with the rules in other ways. The Factum is in a small font and not double spaced in violation of R. 4.01(1). It is prolix.
[34] The motion record does not contain all of the material that was put before Conlan, J. in violation of R. 61.03(2)(a)(v). Most significant among the omissions was not including most of the correspondence put before Conlan, J., from the Defendants answering or addressing the undertakings and refusals. Further, having appealed on costs, the Plaintiffs omitted parts of the record dealing with costs, on which Conlan, J. relied.
[35] The Plaintiffs submitted a reply factum of 14 pages. It contained no proper reply in that it did not address issues raised by the Defendants which the Plaintiffs could not foresee. Largely, it is a restatement and re-argument of the Plaintiffs’ initial argument.
[36] None of the parties or their counsel can be proud of the approach each side has taken to the Facta. The Rules and Practice Direction are simple and clearly written. Neither side appeared to care. The length of the Defendants’ factum is driven by the need to respond to the prolix factum of the Plaintiffs. However, neither side sought leave to file facta in excess of 20 pages.
[37] The Plaintiffs’ approach to this motion is particularly disturbing. Their factum was prolix. It lacked focus.
[38] The Plaintiffs, overall, measured their approach to this Leave Application with coffee spoons[^2]. No possible ground for leave to appeal was left out, no minutiae unanalyzed. Everything was argued irrespective of size, weight or importance. This is ironic, given that Conlan, J.’s alleged legal error is misapplying the principles of proportionality.
Costs:
[39] The Defendants are entitled to costs. The parties may address quantum of costs in writing. Submissions are not to exceed three pages excluding bills of costs and cases. The Defendants shall serve and file their submissions by 4 p.m., March 18, 2016. The Plaintiffs shall serve and file their costs submissions by the close of business, March 25, 2016.
TRIMBLE J.
Released: March 9, 2016
CITATION: Yim et al. V. Song et al, 2016 ONSC 1707
COURT FILE NO.: CV-13-5248-00
DATE: 2016 03 09
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
KYOUNG JA YIM, MOONHO YIM and 2251363 ONTARIO INC. c.o.b
Plaintiffs
- and -
CHANG BAE SONG, KOUNG OK LEE, 2212237 ONTARIO INC. c.o.b. SONG COOKS COREAN CHILLI and 2302632 ONTARIO INC. c.o.b. SHARON GARDEN
Defendants
REASONS FOR JUDGMENT
TRIMBLE J.
Released: March 09, 2016
[^1]: The Notice of Motion in the Leave Application claims only for leave to appeal to the Divisional Court from the December 4, 2015 order on costs. The Motion Record is deficient in many ways, on which l comment under the heading “Non Compliance with the Rules”. As respects this particular deficiency, I consider that the Motion is for Leave to Appeal to the Divisional Court is in respect of both of Conlan, J.’s orders.
[^2]: With apologies to T. S. Eliot’s allegorical reference to taking a picayune approach to life when J. Alfred Prufrock says, wistfully “I have measured out my life with coffee spoons’. The Lovesong of J. Alfred Prufrock, Eliot, T. S. Prufrock and Other Observations, (London: The Egoist, Ltd., 1917), 9–16