Court File and Parties
Court File No.: CV-14-502707 Date: 20160628 Ontario Superior Court of Justice
Between: STARWOOD ACQUISITIONS INC. Appellant – and – 267 O'CONNOR LIMITED Respondent
Counsel: D. Murynka, for the Appellant J. Quigley, for the Respondent
Heard: June 23, 2016
Reasons for Decision
CAROLE J. BROWN, J.
[1] The appellant brings this appeal from the Order of Master McAfee of the Ontario Superior Court of Justice at Toronto dated May 20, 2016, dismissing the appellant's motion for an order that the defendant/respondent (i) deliver its affidavit of documents on or before May 31, 2016; (ii) arrange for a representative to attend for examination for discovery on or before June 30, 2016; and (iii) select or appoint a mediator and scheduling date for mandatory mediation.
[2] At the motion, both counsel provided motion records with documentation appended as exhibits to the affidavits. Following submissions by both counsel, the Master provided her endorsement dated May 19, 2016. She held that she was not prepared to order a timeline as requested on the following grounds: (1) the motion was premature as pleadings had not yet closed; (2) the defendant was not in breach of any court order or deadline under the rules that would warrant a court ordered timeline and (3) there was no proposed discovery plan before her within the meaning of rule 29.1.03(3).
The Background of the Action
[3] The appellant issued its statement of claim on April 23, 2014. The respondent delivered its statement of defence and counterclaim on or about May 30, 2014. The appellant thereafter unsuccessfully brought a motion for a certificate of pending litigation. The court dismissed the motion and awarded $35,000 in costs on September 10, 2014. Nothing further occurred. Starwood did not pay the $35,000 costs award. Thereafter, counsel began discussing the scheduling of documentary disclosure in November of 2015, but the respondent took the position that, until the appellant paid the $35,000 costs award, such discussions should not proceed. The appellant paid the said costs on February 3, 2016 and resumed discussion about the conduct of the litigation. After enquiry by counsel for the respondent, the appellant advised that it wished to amend the statement of claim to add an alternative claim for special damages, which had not been included before. The respondent indicated that it would consent to the amended statement of claim but wished, in exchange, to have the matter transferred to Ottawa, where the subject commercial real estate was located, along with the witnesses, and to proceed with a demand for particulars with respect to the amended claim. It took the position that given the nature of the proposed amendments to the claim for damages, it would be premature to discuss scheduling issues. A draft amended statement of claim was provided on April 4, 2016 and consent to amend was obtained on May 4, 2016. On or about May 4, the appellant filed a motion to impose a litigation timeline. Starwood did not defend the counterclaim until May 17, 2016, after it discovered that no defence to the counterclaim had been served. The motion was heard on May 19, 2016.
[4] The appellant states that the Master erred in holding that the motion was premature, and that pleadings had, in fact, closed in April of 2014, following service of the statement of defence and counterclaim. It states that the pleadings are not reopened by the service of an amended statement of claim, and that pleadings in the main action must be distinguished from pleadings in the counterclaim.
[5] It is the position of the respondent that the pleadings define the issues and the relevant documentation for purposes of discovery. In a case such as this, without all pleadings, the scope, nature and relevance of documentary evidence for purposes of propounding a discovery plan pursuant to the rules cannot be determined.
[6] The appellant further argued that the Master erred in finding that the defendant was not in breach of any court order or deadline under the rules that would warrant imposition of a timeline. It argues that, pursuant to rule 29.1.03(2)(b), it had been attempting to obtain evidence expected to be obtained through the discovery plan process since November 23, 2015 when counsel spoke of scheduling the exchange of affidavits of documents and conducting examinations for discovery. Alternatively, it submits that the Master committed a palpable and overriding error of mixed fact and law by implicitly concluding that the respondent was not in breach of rule 29.1.03(2)(b).
[7] It is the position of the respondent that "attempting to obtain the evidence" does not mean what the appellant claims and, in fact, pursuant to the rule, the discovery plan shall be agreed to before the earlier of 60 days after the close of pleadings or such longer period as the parties may agree to and attempting to obtain the evidence. It argues that the appellant has never presented a discovery plan to be agreed upon. In this regard, it is the position of the appellant that what it sought and seeks is a "limited discovery plan", as distinguished from a discovery plan pursuant to the rules.
Standard of Review
[8] Appeals from a master must be heard as appeals and not matters de novo. As observed by Nordheimer J in Noranda Metal Industries Ltd. v Employers Liability Insurance Corp., para 7:
Matters involving the production of documents and the appropriateness of questions on examinations for discovery are matters which under the Rules of Civil Procedure, are normally determined by masters in the first instance. They are on the "frontline" in determining such matters. The expertise that they develop, as a consequence, ought to be entitled to a measure of deference… [If] these matters are heard de novo, it simply encourages parties to launch such reviews and thereby adds to the costs and length of proceedings…
[9] The evidence to be used on an appeal comprises the record that was before the master.
[10] The standard of review for Masters' orders is the same standard of review that applies to appeals of judges' orders. For questions of law, the appellate court applies the correctness standard. For questions of fact and mixed fact and law, the court should apply a more deferential standard and not intervene unless there is a palpable and overriding error: In-Store Products Ltd. v Zu ker, 2013 ONSC 7091.
[11] While the appellant submits that the questions in this case are ones of law and the standard of review is correctness, I am of the view that the questions are ones of mixed fact and law and that deference is to be accorded to the Master unless there is a palpable and overriding error.
The Grounds of Appeal
[12] As regards the first ground of appeal, I do not find that the Master erred in finding that the motion was premature. At the time of the Master’s decision, pleadings in the counterclaim remained open. I do note that the Master refers not to pleadings in the main action in her endorsement, but rather to "pleadings" generally. As noted by Master Glustein (as he then was) in Cash Store Financial Services Inc. v National Money Mart Company, 2013 ONSC 2905, rule 29.1.03(2) "allows for the pleadings to define the issues to be considered for both documentary and oral discovery". Rule 27.08(1) states that the counterclaim shall be tried at the trial of the main action unless the court orders otherwise. The discovery process is not, in the normal course, divided, but held together as regards the main action and counterclaim. It was entirely appropriate for the Master to find that the motion was premature in the circumstances of this case. The pleadings define the issues to be considered in discovery and, the examinations for discovery being held together for both the main action and counterclaim in the normal course, the pleadings for both the claim and counterclaim should, in my view, be considered in their entirety as regards preparing the discovery plan. This is the most efficient and cost-effective means of proceeding.
[13] In this case, the appellant's defence to counterclaim was served May 17, 2016, two days before the motion. Thus, 60 days after the close of pleadings had not, at that time, expired.
[14] In this case, which involves the propounding of a discovery plan and agreement thereto by the parties, it is reasonable to await all pleadings in not only the main action, for which pleadings had closed, but also in the counterclaim for which pleadings had not closed, before requiring a discovery plan. While the appellant relies on rule 29.1.03(2)(b) and maintains that a discovery plan should have been agreed to following the appellant's attempt to obtain evidence in November of 2015, I do not agree, in the circumstances of this case. In order to propound a comprehensive discovery plan pursuant to rule 29.1.03(3), all of the pleadings were necessary to define the issues and assess the scope, nature and relevance of the documents required. As pleadings in the counterclaim had not closed, this could not be done in a comprehensive manner.
[15] As regards the second ground of appeal, I do not find that the Master erred in her decision. It is the position of the appellant that the respondent was in breach of rule 29.1.03(2)(b) by failing to agree to a discovery plan within 60 days of the pleadings being closed or Starwood attempting to obtain discovery evidence. The appellant maintains that the pleadings in the main action had closed and it had been attempting to obtain the evidence expected to be obtained through the discovery plan process since November of 2015. In this case, as I have found above, the Master’s finding that pleadings had not closed is not in error. As such, the pleadings had not closed. Further, while the appellant submits that it had been trying unsuccessfully to obtain discovery evidence since late 2015, I am of the view, as stated above, that in the circumstance of propounding a discovery plan, all pleadings must be considered as regards a comprehensive plan. In this case, pleadings were not closed and no discovery plan had been provided which would comply with the requirements of rule 29.1.03(3). I do not find the Master to have erred in holding that the defendant was not in breach of any court order or deadline under the Rules of Civil Procedure, that would warrant a court ordered timetable at that stage.
[16] As regards the third ground of appeal, I do not find that the Master erred in finding that there was no proposed discovery plan within the meaning of rule 29.1.03(3). As indicated above, the appellant sought a timeline. It was not a “discovery plan” in compliance with the stipulated rule and there was, accordingly, no discovery plan presented to the respondent. I do not find the traditional timeline presented by the appellant to be even a limited discovery plan, as the appellant submits.
[17] There is nothing which would cause this Court to set aside the decision of the Master, which I uphold.
[18] I anticipate that the parties will, going forward, both use best efforts to move this action forward expeditiously, and pursuant to the rules.
Costs
[19] I would urge the parties to agree upon costs, failing which I would invite the parties to provide any costs submissions in writing, to be limited to three pages, including the costs outline. The submissions may be forwarded to my attention, through Judges’ Administration at 361 University Avenue, within thirty days of the release of this Endorsement.
Carole J. Brown, J.