COURT FILE NO.: CV-11-CV-437115
MOTION HEARD: 20161116
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ROSE ELIZABETH GRAY, Plaintiff
AND
1492569 ONTARIO INC., DAAB VENTURES INC., C.O.B. AS CHESSWOOD TRANSMISSION DRIVELINE SPECIALISTS and DAVID BRATHWAITE, Defendants
BEFORE: Master Lou Ann M. Pope
COUNSEL: Counsel for plaintiff: Sidney Klotz, Jennifer Klotz Law Firm – Professional Corporation Fax: 416-243-5730
Counsel for defendants: Blair W. M. Bowen, Fogler, Rubinoff LLP Fax: 416-941-8852
REASONS FOR ENDORSEMENT
[1] The plaintiff seeks relief for some 20 orders including relief that relates to production of documents, expert reports and refusals to answer questions at cross-examinations.
[2] This motion is brought under unusual circumstances which are set out below.
[3] Early in this action the plaintiff brought two motions; firstly, for an interim injunction relating to property at 1882 Wilson Avenue, Toronto, and secondly, for an appraisal of the said property. Cross-examinations of the plaintiff and the defendant, David Brathwaite (“David”), were conducted. Ultimately, these motions were abandoned. At a status hearing held on May 28, 2012, Master Muir ordered a timetable for completion of all steps in the action, which included completion of oral examinations by October 15, 2012. Ultimately, the parties agreed not to conduct oral discoveries and to treat the evidence given at the earlier cross-examinations as the discovery evidence. The plaintiff set this action down for trial on December 31, 2013. The matter was scheduled for trial in 2015; however, as there were no judges available to conduct the trial, it was adjourned to June 20, 2016. The trial commenced before Diamond J. and the plaintiff was called as the first witness. After a few hours of the plaintiff’s testimony Justice Diamond sought clarity from plaintiff’s counsel regarding the plaintiff’s cause or causes of action as set out in her statement of claim. Thereafter, Justice Diamond heard a motion to amend the statement of claim which was granted in part and with terms. One of the terms was that the parties were permitted to conduct further examinations for discovery for no more than one day with the scope of the examinations to be restricted to the new amendments. Justice Diamond remains seized of the trial which was adjourned to January 16, 2017.
[4] An understanding of the plaintiff’s pleadings is necessary. Regarding the original statement of claim, Justice Diamond aptly explained the issue he had with the plaintiff’s cause or causes of action, as follows:
There appear to be two irreconcilable theories of the plaintiff’s case set out in the Statement of Claim. Initially, the plaintiff alleged that she is the sole owner of the shares in the two defendant corporations 1492659 Ontario Inc. (“149”) and DAAB Ventures Inc. (“DAAB”). Each of those two companies owns real property.
The plaintiff further alleges that through some unknown nefarious means, the defendant David Brathwaite (“David”) somehow managed to transfer ownership of her shares in 149 and DAAB “into his name without the plaintiff’s knowledge or consent”. As a result, the plaintiff requests an order setting aside any transfer of those shares in favour of David as being null and void, and a declaration that she is the legal and beneficial owner of 149 and DAAB.
The above theory seems straightforward enough. However, the allegations do not end there. The plaintiff further pleads that she was in a common law relationship with David from 1999 until 2008/09, and during those years she contributed significant funds, time and effort towards 149 and DAAB. Such allegations support a claim for unjust enrichment and a request for a constructive trust remedy (although neither of those terms are explicitly used in her Statement of Claim).
Assuming the contents of the Statement of Claim to be true, if the plaintiff was the sole legal and beneficial owner of the shares in 149 and DAAB, why would she be seeking a constructive trust remedy? By asking the Court to create an ownership interest in 149 and DAAB by way of constructive trust, the plaintiff is advancing a theory based upon not having any legal or equitable interest in the two companies. The facts required to support both theories of the case are not pleaded “in the alternative”; rather in my view they reside in two difference [sic] universes.
Accordingly, I required the plaintiff to pick a proverbial horse: either I was being asked to return the shares in 149 and DAAB to her as the rightful owner, or I was being asked to find that David held all or a portion (as this was not specified) of the shares in 149 and DAAB in trust for the plaintiff as a result of David being unjustly enriched through the plaintiff’s contributions to the two companies. (Reasons for Decision of Justice Diamond dated June 24, 2016, paragraphs 8 through 12, in granting leave to the plaintiff to amend her statement of claim)
[5] Having reviewed the Amended Statement of Claim, it appears that the plaintiff has abandoned the relief sought in the original statement of claim for a declaration that she is the legal and beneficial owner of the shares of the defendant corporations based on her allegation that she was the legal and beneficial owner of the shares in the corporation. She now pleads similar allegations as in the original statement of claim to support a claim that the court impose a constructive trust over the corporate interests, including real property, and seeks a remedy of monetary compensation and/or a beneficial interest in the “assets of the defendants based on the Family Law Act, the principles of unjust enrichment/constructive trust, and the joint family venture.”
[6] Following the adjournment of the trial, and by mid-August 2016, all of the pleadings had been amended in furtherance of Justice Diamond’s order. However, examinations for discovery were not conducted.
This Motion
[7] On September 8, 2016, the plaintiff brought this motion. The plaintiff’s motion material was served and filed the same day and was returnable on September 19, 2016. The motion was adjourned on consent to today. The defendants cross-examined the plaintiff on her affidavit; however, they did not order the transcripts.
[8] Mr. Klotz advised the court that the plaintiff was not proceeding with the relief sought in paragraphs 1 and 2 of the notice of motion. Counsel made submissions on the remaining relief sought.
Whether Leave To Bring Motion is Required – Rule 48.04(1)
[9] One of the overarching issues raised by the defendants is whether the plaintiff requires leave to bring this motion for the relief sought pursuant to rule 48.04(1). The law is as set out in the defendants’ factum which I accept as being accurate.
[10] The plaintiff did not seek leave to bring this motion in her notice of motion.
[11] In summary, the plaintiff set this action down for trial on December 31, 2013. The trial of this action commenced on June 20, 2016 with part of the plaintiff’s testimony being given. Being seized of the trial, Justice Diamond adjourned the trial to January 16, 2017. On June 24, 2016, His Honour granted the plaintiff leave to amend her statement of claim and for the parties to conduct further examinations for discovery of no more than one day. It is clear that in his Reasons for Decision, Justice Diamond did not grant leave to the plaintiff to bring this motion.
[12] Although examinations for discovery were not held, the parties agreed that the transcripts obtained from the cross-examinations would serve the same purpose as transcripts for discovery as allowed by rule 31.11. One of the orders sought in this motion is that the defendant answer questions that he refused to answer on his cross-examination held in 2011. Therefore, the court is being asked to determine whether the impugned questions were proper questions.
[13] Rule 48.04(1) is clear that subject to subrule (3), any party who has set an action down for trial is not permitted to initiate or continue any motion or form of discovery without leave of the court. Subrule (3) provides that leave of the court is not required for a motion to compel compliance with any obligation imposed by a rule listed in clause (2)(b). The relevant obligation listed in clause (2)(b) for the purposes of this motion is the obligation to answer proper questions on discovery imposed by rule 31.07.
[14] With respect to the relief for an order that the defendant answer the questions taken under advisement and the refused questions, the courts have dealt with that issue recently in the case of Hamilton v. Ontario (Minister of Transportation), [2013] O.J. No. 3284, 2013 ONSC 4536, in which Firestone J. held that leave is required to bring a refusals motion after the moving party set the action down for trial. It is noteworthy that in his analysis of the law, Firestone J. concurred with the decision in Jetport Inc. v. Global Aerospace Underwriting Managers, 2013 ONSC 2740, [2013] O.J. No. 2375. (Also see my decision in Settecase v. Settecase, 2014 ONSC 7197 (Master)).
[15] For the following reasons, it is my view that the plaintiff requires leave to bring this motion for all the relief sought.
[16] Firstly, the language in rule 48.04(1) is of a mandatory nature when it states that “any party who has set an action down for trial . . . shall not initiate or continue any motion or form of discovery without leave of the court.” (emphasis)
[17] Secondly, none of the relief sought, with the exception of the paragraphs noted above, fall into the exceptions set out in subrule (2).
[18] Lastly, it is clear that Justice Diamond did not grant leave to the plaintiff to bring this motion. His Honour’s orders were clear that given his order granting leave to amend her statement of claim, he was also permitting further and brief oral discoveries, but only on the amendments.
[19] Given my finding that the plaintiff requires leave to bring this motion, the next issue is whether the plaintiff has satisfied the test to obtain leave.
Test To Obtain Leave – Rule 48.04(1)
[20] The long-standing test for granting leave under rule 48.04(1) was enunciated in Hill v. Ortho Pharmaceutical (Canada) Ltd., 1992 CarswellOnt 351 (Ont. Gen. Div.). The moving party has the onus to establish that there has been a substantial or unexpected change in circumstances such that a refusal to make an order under rule 48.04(1) would be manifestly unjust.
[21] The only portion of the plaintiff’s material that addresses this issue is in the notice of motion under the “Grounds” section and only under the subheading for relief sought for an appraisal and valuation of the defendant’s shares. It states that leave ought to be granted given the new causes of action and the amendments permitted by Justice Diamond.
[22] There is nothing in the plaintiff’s factum with respect to the issue of leave to bring this motion despite there being reference in the notice of motion to the requirement for leave for an order for an appraisal and valuation.
[23] Further, the plaintiff adduced no evidence to satisfy the test for leave set out above. With respect, I do not accept that the plaintiff has pled a new cause of action in her amended statement of claim. In her amended pleading, the plaintiff merely abandoned one of her claims and proceeded with the existing claim for a constructive trust based on the previously-pleaded unjust enrichment allegation and a new allegation that the parties were involved in a joint family venture. However, the material facts pled are essentially as pled in her original pleading. Simply put, the allegation of a joint family venture is one of the bases for the plaintiff’s original claim that a constructive trust be imposed.
[24] In my view, the fact that the plaintiff was granted leave to amend her statement of claim does not amount to a substantial or unexpected change in circumstances that would permit the plaintiff to treat the amendment as entitlement to obtain new and fresh evidence that she could have obtained before she set the action down for trial. I refer once again to Justice Diamond’s endorsement by stating that he adjourned the trial and permitted the amendment and brief oral examinations only. Although His Honour may have had concerns as to why the plaintiff had not obtained an appraisal of the property and a valuation of the businesses, clearly his order did not grant leave to seek the orders that the plaintiff now seeks in this motion.
[25] For the above reasons, I find that the plaintiff has failed to establish that there has been a substantial or unexpected change in circumstances such that a refusal to make an order under rule 48.04(1) would be manifestly unjust. Therefore, having found that the plaintiff requires leave to bring this motion for all the relief sought, and having found that the plaintiff failed to satisfy the test to obtain leave, this motion is dismissed.
[26] Given my findings above, it is not necessary to address the relief sought.
[27] Before concluding my reasons, I note that the plaintiff has chosen not to conduct further discoveries but instead elected to bring this motion and seek relief that was not expressly granted by Justice Diamond. At the hearing of this motion, defence counsel stated that if the plaintiff wished to obtain an appraisal of the Wilson Street property and a valuation of the businesses the defendants would cooperate in making the property available to an appraiser and producing documents required by a business valuator to perform the valuation. While I appreciate that the defendants’ position on this point may have been different several years ago, the fact remains that the plaintiff took no steps to bring a motion before she set the action down for trial and seek the relief she now seeks on this motion. Regarding the request to abridge the 90-day timeline as provided in rule 53.03(4), the plaintiff is at liberty to seek leave from the trial judge.
Conclusion
[28] For the reasons above, this motion is hereby dismissed with costs.
Costs
[29] Given the defendant’s success in opposing this motion, the plaintiff shall pay the defendants’ partial indemnity costs fixed in the amount of $7,500, payable within 30 days.
(original signed)____________
November 28, 2016 Master Lou Ann M. Pope