Court File and Parties

COURT FILE NO.: C-184-09 DATE: 20161007 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Melanie Denis, Marie Anne Denis and Stephane Denis by his Litigation Guardian, Marie Anne Denis Plaintiffs – and – Samuel Lalonde, Jennifer Lalonde, Joshua Mahon, John Mahon and Kathleen Mahon, Echelon General Insurance Company and Co-Operators General Insurance Company Defendants – and – Intact Insurance Company, added by Order pursuant to section 258(14) of the Insurance Act, R.S.O. 1990, c. I-8 as a Statutory Third Party

COUNSEL: James M. Ross, for the Plaintiffs Christopher F. Reil, for the Third Party

HEARD: September 9, 2016

Decision on Motion

CORNELL J.:

Introduction

[1] This is a motion whereby the plaintiff seeks to compel production of information from an insurance broker to permit arrangements to be made for a representative of such insurance broker to be examined for discovery in connection with a possible insurance coverage dispute. This motion is brought in anticipation of a motion for summary judgment to try and determine which insurance companies may have exposure and the limits of such exposure if the plaintiff is successful in this action.

[2] The plaintiff delivered a trial record on December 14, 2011. As a result, the moving party requires leave of the court to bring this motion. In accordance with the decision that follows, leave is denied.

Issues

[3] The following issues have been raised for my consideration:

1. Should leave be granted to permit this motion to be brought?
2. If leave is granted, should an order be made to compel the names and most recent contact information of employees or former employees of Canada Brokerlink Inc. (Sudbury) who are possessed with information relevant to this action?
3. If it is ordered that the information requested in the preceding paragraph be provided, should the existing timetable be amended to permit the plaintiff to conduct an examination for discovery of a representative of Canada Brokerlink Inc. (Sudbury)?

Procedural Background

[4] This action arises in connection with a motor vehicle accident that occurred on August 25, 2007. This action was commenced in August of 2009.

[5] The action has proceeded in the ordinary course with examinations for discovery having long since been concluded. As previously mentioned, the plaintiffs set the action down for trial in 2011. Two pre-trials and a mediation have been conducted. The matter has been in assignment court to set a trial date on 11 separate occasions.

Analysis

[6] In November of 2007, Intact Insurance Company (“Intact”) notified the defendants Samuel Lalonde and Jennifer Lalonde that it seeks to reduce the limits of insurance otherwise available to Samuel Lalonde and Jennifer Lalonde on the basis that a misrepresentation as to ownership of the vehicle was made at the time the policy was placed. In addition, Samuel Lalonde had consumed alcohol at the time of the incident in contravention of the terms of his G-2 licence and was therefore not authorized to drive at that time. The summary judgment motion seeks to determine if Intact can establish a misrepresentation or other breach of the Lalonde’s insurance policy.

[7] Intact has availed itself of its right to be added as a statutory third party pursuant to s. 258(14) of the Insurance Act, R.S.O. 1990, c. I-8, in order to contest both liability and damages. Intact has not raised the issue of whether or not there is insurance coverage available to the Lalonde’s in the statement of defence Intact filed in the main action.

Preliminary Issue

[8] Rule 48 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides that any party who sets an action down for trial shall not initiate or continue any form of discovery without leave of the court.

[9] Two recent cases highlight a conflict that has developed in the authorities that deal with this subject. The traditional approach requires that there must be a substantial or unexpected change in circumstances such that granting leave would be manifestly unjust. A second line of authority has developed that provides a broad approach to the subject and indicates that leave should also be granted where the interlocutory step “is necessary in the interests of justice.”

The Traditional Approach

[10] In Lugen Corporation v. Starbucks Coffee Canada Inc., 2014 ONSC 7141 (Mast.) (“Lugen”), Master Glustein considered a motion by the plaintiff for an order vacating the trial record to permit the plaintiff to conduct an examination for discovery of the defendant in spite of the fact that the plaintiff had set the matter down for trial. The defendant took the position that there had been no change in circumstances and accordingly leave should not be granted.

[11] Master Glustein adopted the substantial or unexpected change in circumstances test in denying leave to the plaintiff to conduct an examination for discovery. In coming to this conclusion, Master Glustein relied heavily upon the decision of Master Graham in Jetport v. Jones Brown Inc., 2013 ONSC 2740, 115 O.R. (3d) 772 (Mast.) (“Jetport”). In Jetport, Master Graham relied upon the decision of Wein J. in LML Investments Inc. v. Choi (2007), 85 O.R. (3d) 351 (S.C.) (“LML”). In LML, Wein J. applied the substantial or unexpected change in circumstances test. At para. 10, Wein J. held:

The test for granting leave was set out by this court in Hill v. Ortho Pharmaceutical (Canada) Ltd., [1992] O.J. No. 1740, 11 C.P.C. (3d) 236 (Gen. Div.):

The authorities make it clear that setting down a matter for trial is not a mere technicality of procedure. Before it can be vacated to permit any further discovery or interlocutory proceedings, there must be a substantial or unexpected change in circumstances such that a refusal to make an order under Section 48.04(1) would be manifestly unjust.

Per E. Macdonald J. at p. 3.

[12] In Lugen, Master Glustein then considered various cases that have held that even if no substantial or unexpected change in circumstances can be established, leave can be granted where the interlocutory step is necessary in the interests of justice. After doing so, Master Glustein concluded at para. 31:

For the reasons stated by Master Graham in Jetport, I prefer the reasoning in the line of cases that require a substantial or unexpected change in circumstances before leave can be granted. I adopt Master Graham’s analysis fully in these reasons.

The Broader Approach

[13] Master Muir rejected the approach taken by Master Glustein in BNL Entertainment Inc. v. Ricketts, 2015 ONSC 1737, 126 O.R. (3d) 154 (Mast.) (“BNL”). In that case, Master Muir first considered the substantial or unexpected change in circumstances test previously outlined. He then went on to consider AGC Mechanical Structural Security Inc. v. Rizzo, 2013 ONSC 1316, 49 C.P.C. (7th) 174 (“AGC”), and Cromb v. Bouwmeester, 2014 ONSC 5318. In AGC the court reviewed the decision in Ginkel v. East Asia, 2010 ONSC 905, and concluded that even if no substantial or unexpected change in circumstances could be established, leave can be granted to vacate a trial record or permit examinations for discovery “where the interlocutory step is necessary in the interests of justice”: see AGC, at para. 21. As a result, leave was granted for the plaintiff in AGC to continue a motion for documentary disclosure and to conduct examination for discovery of the defendants.

[14] Master Muir concluded his analysis in BNL by saying at para. 14:

I have reviewed and considered the various conflicting authorities cited above and relied upon by the parties. I prefer to follow the line of cases that have adopted the broader approach. In my view, it is desirable for the court to apply a flexible test when exercising its discretion to grant leave under Rule 48.04(1). The court should consider all of the circumstances of the matter before it and make the order that is just in the circumstances of each particular case. This approach is consistent with the overall interpretive provision found in Rule 1.04(1) which requires that the Rules be “liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits”.

The Conflict

[15] In Lugen, Master Glustein holds that the substantial or unexpected change in circumstances test is the appropriate test to follow. A few months later, Master Muir decides to follow the broader “necessary in the interests of justice” test. What approach is to be taken in light of this apparent conflict? A careful review of the case law provides the explanation.

[16] In Hill, the court makes it very clear that “there must be a substantial or unexpected change in circumstances” before leave can be granted. The phrase that follows, “such that a refusal to make an order under s. 48.04(1) would be manifestly unjust” refers back to the requirement for a change in circumstances and does not form a separate basis for relief.

[17] Ginkel has been cited as authority for the establishment of the broader test, but a careful reading of that decision does not support that position. Perell J. states at para. 17:

…However, the setting down for trial is not a mere technicality and the test for granting leave to permit further discovery or other interlocutory proceedings, is that there must be a substantial or unexpected change in circumstances such that a refusal to grant leave would be manifestly unjust or the interlocutory step must be necessary in the interests of justice. [Emphasis added]

[18] Perell J. then cites Hill, Machado v. Pratt and Whitney Canada Inc. (1993), 16 O.R. (3d) 250 (Ont. Gen. Div.), White v. Winfair Management Ltd. (2005), 16 C.P.C. (6th) 41 (Ont. Mast.) at paras 15-16, and Benedetto v. Giannoulias, [2009] O.J. No. 3218 (S.C.). A review of these cases indicates that they all focus on the “substantial or unexpected change in circumstances” requirement in order for leave to be granted. In all of those cases, leave was denied based upon the fact that no substantial change had occurred. There is no discussion whatsoever in those cases about the formulation of a separate “interests of justice” basis for relief.

[19] In my view, Perell J.’s statement “or the interlocutory step must be in the interests of justice” is simply a restatement of the “manifestly unjust” requirement of the original test enunciated in Hill. In other words, “manifestly unjust” and “in the interests of justice” are simply two ways to say the same thing. In any event, the interests of justice phrase used in Ginkel was not considered in that case and is therefore obiter.

[20] We then come to the decision in AGC. At para. 21, the court states:

Perell J., at para. 17, provides a synopsis of the principles he extracted from his review of the relevant cases. I adopt his analysis, in particular his final statement in which he sets out the test for granting leave to permit further discovery or other interlocutory proceedings when substantive rights are not in issue. He states that there are two circumstances in which leave is available:

1. where there is a substantial or unexpected change in circumstances such that a refusal to grant leave would be manifestly unjust; and
2. where the interlocutory step is necessary in the interests of justice.

[21] With the greatest of respect, that is not what Perell J. said in Ginkel. Perell J. used the disjunctive “or” and not the conjunctive “and”. There is nothing in Ginkel to support the establishment of the broader test. Indeed, Perell J. takes a narrow approach of the issue that was before him and denies leave to compel the defendant to answer undertakings, refused questions and follow-up questions based solely on the application of the material change in circumstances test.

[22] This takes me to the decision of Master Muir in BNL. At para. 14, Master Muir states that he prefers “to follow the line of cases that have adopted the broader approach”. In doing so, he relies upon AGC and Cromb. I have already pointed out the concerns about the approach taken in AGC. Cromb does not rely upon the interests of justice analysis as the court in Cromb finds that there were substantial and unexpected changes in circumstances that warranted the granting of leave.

[23] I have reached the conclusion that BNL was wrongly decided and that the test to be followed in order for leave to be granted under r. 48.04(1) is whether the moving party can show a substantial or unexpected change in circumstances such that a refusal to grant leave would be manifestly unjust.

[24] However, taking the position that a material change is required for leave to be granted does not end the inquiry. The judicial process has been substantially altered by the ongoing disclosure obligations contained in the Rules. This raises the question: should the traditional test incorporate granting leave if it is in the “interest of justice” to reflect these ongoing disclosure obligations? In my opinion, it should not.

[25] If additional documentation or information is provided in keeping with the continuing obligation to disclose after the matter has been set down for trial, this in and of itself may constitute an unexpected change that may form the basis for a request that leave be granted for some additional production, discovery or other appropriate interlocutory relief. Efforts to broaden the test are therefore unnecessary: see Iannarella v. Corbett, 2015 ONCA 110, 124 O.R. (3d) 523.

[26] This point can be illustrated by considering the approach taken in Cromb. Although the court purports to adopt the broader approach taken by the court in AGC, the actual basis for the decision is a finding of substantial and unexpected changes as set out in Cromb at paras. 37 and 38 that warranted further rights of production and discovery.

Conclusion

[27] Having determined that a substantial or unexpected change in circumstances is required before leave can be granted, I now turn to the facts of this particular case. Having done so, I conclude that leave should not be granted. I have reached this decision for a number of reasons.

[28] The plaintiffs knew in 2007 shortly after the accident that Intact had made it known that there were various issues about the availability of the insurance coverage. Indeed, this is the likely explanation for the fact that Echelon General Insurance Company and Co-Operators General Insurance Company were named as party defendants when the statement of claim was issued in 2009. There has been no substantial or unexpected change in connection with the question of insurance coverage, as this was known to the plaintiffs at the time the statement of claim was issued some seven years ago.

[29] It has been almost five years since the plaintiffs set the action down for trial. No explanation has been provided for the delay in seeking the current relief sought by the plaintiffs.

[30] The plaintiffs had the right to examine a representative of Intact prior to setting the action down for trial, yet chose not to do so. To permit the relief that is being sought by the plaintiffs some nine years after the accident would be to condone the significant delay that has occurred.

[31] The statement of defence filed by Intact does not raise any insurance coverage issues. In view of this, the current pleadings do not support the relief that is being sought by the plaintiffs.

[32] Finally, a timetable order was made by this court on July 8, 2016. All affidavits and all examinations were to be conducted by August 22, 2016. The timetable order makes no mention of the relief that is now being sought by the plaintiffs.

[33] The plaintiffs take the position that they are entitled to this relief in view of the fact that Intact has failed to deliver an affidavit of documents as required by r. 30.03(1). The short answer to this can be found in the fact that the plaintiffs have yet to ask for that relief.

[34] The plaintiffs’ motion for leave to compel the production of the names and most recent contact information of the employees or former employees of Canada Brokerlink Inc. (Sudbury) who are possessed with information relevant to this action and to the discovery of a representative of such corporation is dismissed.

Costs

[35] If the parties are unable to agree on costs, written submissions not to exceed two pages shall be submitted. The third party shall have 14 days to deliver such submissions. The plaintiffs shall have 14 days to respond. If submissions are not received within this time frame, it shall be conclusively determined that costs have been settled.

The Hon. Mr. Justice R. Dan Cornell

Released: October 7, 2016