Schembri v. 1581780 Ontario Inc. et al, 2016 ONSC 8125

CITATION: Schembri v. 1581780 Ontario Inc. et al, 2016 ONSC 8125

COURT FILE NO.: C-42-11

DATE: 2016-12-23

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Gordon Schembri, Schembri Financial Limited, Leaf Construction Management Limited Inc. and 1784652 Ontario Inc. - Plaintiffs

AND:

1581780 Ontario Ltd., 1604909 Ontario Inc., 359 King Ontario Inc., Jameshill Developments Limited, Maple Hill Creek Apts. Inc., National Rent-All Inc., Oxford & First St. Inc., Simcoe & Eastwood Ave. Inc., Terra-Tec Excavating, The Shores Ltd., The Spruce Street Lofts Inc., Al Way and Steve Farlow Trustees of the Way Family Trust, Faye Patterson, Al Way, Jamesway Construction Corporation, Kinglsey Financial Inc. and Premier Project Consultants Ltd. – Defendants

AND RE: Al Way, Jamesway Construction Corporation, Kingsley Financial Inc., Triumph Financial Holdings Inc., 1725030 Ontario Inc. and Premier Project Consultants Ltd. – Plaintiffs by Counterclaim

AND:

Gordon Schembri, Schembri Financial Limited, Leaf Construction Management Inc. and 1784652 Ontario Inc.

BEFORE: The Honourable Mr. Justice J. W. Sloan

COUNSEL: Jonathan Kulathungam - Counsel, for the Plaintiff

Heath Whiteley - Counsel, for the Defendant

HEARD: September 21 & 22, November 22 & 24, & December 21, 2016

ENDORSEMENT

[1] The plaintiffs bring this motion seeking an order striking out the defendants’ pleadings.

[2] In the alternative, the plaintiffs request the following relief:

I. That the defendants’ pleadings (excepting Faye Patterson & the Trustees of the Way Family Trust) be struck by October 1, 2016, or any other date as set by this Honourable Court if the defendant, Way, fails to answer all of the remaining undertakings (as set out in Schedule A) by September 30, 2016, or any other date as ordered by this Honourable Court;

II. that the defendants post security for costs in the amount of $200,000 or any other amount as deemed appropriate by this Honourable Court by September 30, 2016;

III. that the defendants pay costs of the within motion in an amount to be determined by this court and made payable on or before September 30, 2016;

IV. that Mr. Way attend for the continuation of his examination for discovery from November 26 to December 2, 2016.

[3] Over the course of the hearing, many of the outstanding undertakings got answered, subject to confirmation from Mr. Way of what his lawyer Mr. Whiteley indicated the answer was.

[4] In an effort to assist the parties to move this matter forward, on November 25, 2016, I released a Draft Undertaking Endorsement after the fourth day of hearing. It was my hope in releasing this endorsement that the parties would be able to move forward in an effort to complete the examinations of Mr. Way and commence the examinations of Mr. Schembri. On November 25, 2016 there was only one undertaking that I had not already tentatively decided.

[5] For completeness, I have left all of the undertakings referred to in my Draft Undertaking Endorsement of November 25, 2016, in this judgment.

[6] This action involves four real estate development projects in several cities and the events underlying the action date back as far as 2006 or 2007. Damages are claimed in the $90,000,000 range.

[7] This is a 2011 Kitchener action, which was commenced in Toronto in 2010.

[8] Since then it has had a slow & torturous procedural journey through the Court system.

[9] The undertakings of Mr. Way, who is essentially the main party giving evidence on behalf of most of what I will refer to as the subject defendants, have been extremely slow in being answered and some have still not been complied with.

[10] To give some scope to the current situation, Mr. Way was examined for approximately 13 days between December 2014 and April 2015. At his examination, he gave approximately 592 undertakings.

The Plaintiffs’ Position

Motion Returnable May 28, 2015

[11] (a) May 28, 2015 - the first motion to compel answers to undertakings was scheduled, however that motion was adjourned/delayed because the defendants wanted to file materials and conduct cross examinations.

(b) Justice Broad fixed a timetable and scheduled the motion for the week of August 26, 2015.

(c) Following the adjournment of the undertakings motion on May 28, 2015, material was filed by the defendants that included the two affidavits sworn by Mr. Whiteley who was appearing as counsel on the motion.

(d) In response to the plaintiffs’ opposition, to Mr. Whiteley being both a witness and counsel, the defendants advised they would be proceeding with a motion, seeking directions regarding leave to use the Whiteley affidavits, however, that threatened motion for directions was never brought, and on the eve of the initial return date of August 26, 2015 the defendants agreed to withdraw the Whiteley affidavits from the responding material.

(e) The defendants did not proceed with any cross examination.

(f) The defendants did not take any steps to answer any undertakings between May 28, 2015 and August 26, 2015, for which no explanation has been proffered.

[12] When the motion was called for argument during the week of August 26, 2015, Mr. Whiteley was not available. This resulted in further delay, as a motion was adjourned to the week of October 26, 2015.

[13] The motion was not called during the week of October 26, 2015 and as a result was rescheduled for the week of December 8, 2015.

[14] When called on December 8, 2015, Mr. Whiteley, again advised that he was not available because of a personal matter.

[15] Eventually the motion was rescheduled for January 8, 2016.

Motion Returnable January 8, 2016

[16] On that date the defendants did not oppose the main relief sought, but rather consented to an order to the effect:

i. the defendants would answer their undertakings by February 26, 2016;

ii. the defendants would provide schedule A of their affidavit of documents, in summation format; and

iii. Mr. Way would attend for continued examinations on his answers to his undertakings, during the week of April 11, 2016.

Breach of the January 8, 2016 Order

[17] The January 8, 2016, order was not complied with despite numerous letters and emails being sent by the plaintiffs to the defendants, although some undertakings for the first 3 of 13 days of examinations were provided.

[18] Finally, on or about March 23, 2016, the plaintiffs served a notice of motion seeking to strike out the defendants’ statement of defence for noncompliance with answering their undertakings.

[19] Although the week of April 11, 2016 had been set aside to complete Mr. Way’s examination, such examinations could not proceed because Mr. Way had not complied with the January 8, 2016 court order.

Motion to Strike the Statement of Defence Returnable April 13, 2016

[20] After receipt of the plaintiffs’ motion, the defendants delivered their schedule “A” productions in summation compatible format and some further answers to undertakings.

[21] Mr. Whiteley advised that he intended to cross-examine Mr. Ventrella, who swore an affidavit in support of the motion to strike, and also to examine the plaintiff, Mr. Schembri as a witness to the pending motion.

[22] These examinations were scheduled for April 11, 2016, which was a date convenient to everyone involved.

[23] Prior to the examination and what the plaintiffs describe was an effort to save time and money, they advised the defendants that despite their continuing breach of the order, the plaintiffs would only be seeking a “last chance order” as opposed to seeking to have the statement of defence struck out.

[24] The examinations were scheduled for Mr. Schembri at 10:00 a.m. and Mr. Ventrella at 2:00 p.m. Mr. Wortzman emailed Mr. Whiteley at 9:40 p.m. on Sunday, April 10 asking if Mr. Schembri be could be examined at 2:00 p.m. so he could attend a funeral in the morning.

[25] Mr. Whiteley responded at 7:56 a.m. on Monday refusing to change the time when Mr. Schembri would be examined. The court is not aware if any reason was given for Mr. Whiteley’s position. The plaintiffs responded within four minutes at 8:00 a.m. advising Mr. Schembri would be produced at 10:00 a.m.

[26] At 9:17 a.m., (1 hour and 17 minutes later), Mr. Whiteley emailed the plaintiffs advising he would not proceed with the examinations, this, notwithstanding that Mr. Schembri was already en route to Toronto from Kitchener.

[27] Mr. Whiteley was then given the opportunity to examine either person at any time on April 11 but chose not to proceed with the examinations.

Conference Call on April 13, 2016

[28] Because of Mr. Whiteley’s insistence that the motion could not proceed, a conference call took place, wherein Mr. Whiteley on behalf of the defendants undertook to answer all undertakings by May 15, 2016.

[29] As a result of Mr. Whiteley’s undertaking, a further conference call was scheduled for May 18, 2016 and the motion to strike, if required, was scheduled to proceed on May 27, 2016.

[30] Despite Mr. Whiteley’s undertaking, the defendants failed to produce their outstanding undertakings by May 15, 2016, however did deliver some further answers, minutes before the scheduled conference call on May 18, 2016.

Last Chance Motion Returnable May 27, 2016

[31] Between May 25 and 27, 2016, Mr. Whiteley purported to answer all outstanding undertakings, which did not give the plaintiffs sufficient time to review the answers prior to the last chance motion return date.

[32] On that date, among other pronouncements, the court ordered, that if the defendants’ undertakings were not been complied with by June 15, 2016, the plaintiffs could apply on notice to the defendants to strike out their statement of defence.

[33] As of the date of service of the motion material, the plaintiffs appended at schedule “B”, its deficiency chart summarizing from their point of view, 41 outstanding or incomplete undertakings, which does not include what the plaintiffs believed were questionable answers.

[34] In addition, the plaintiffs pointed out that the defendants have not paid the costs of $12,911.87, which were ordered payable forthwith on May 27, 2016.

[35] The Court has already granted the defendants a last chance order.

[36] Way’s breaches have not only unnecessarily delayed the action, but have dramatically increased the plaintiffs’ litigation costs and caused inconvenience to counsel who have set aside large blocks of time, only to cancel examinations due to Mr. Way’s failure to comply with court orders.

Recent Correspondence between the Parties

[37] On August 2, 2016, the plaintiffs wrote to Mr. Whiteley suggesting an alternate procedure, rather than proceeding with the motion to strike. The suggestions made were:

a) your client immediately remit payment of the cost toward;

b) your client answer questions identified in the enclosed chart on or before August 12, 2016;

c) if your client complies with (a) and (b) above, we will commence your clients’ examination on August 22, 2016 and continue until done. I have set aside that week;

d) if your client complies with (a), (b) and (c) above, then I will produce my client for discovery on any of:

September 6 to 9, 2016;

October 24 to 28, 2016;

November 28 to December 2, 2016;

December 5 to 12. 2016; or

December 12 to 16, 2016

If you advise before August 10, 2016, which dates are convenient for you. I cannot hold the dates for long.

[38] Because no response was received, a follow-up letter was sent on August 12, 2016.

[39] Mr. Whiteley responded on August 15, 2016 but did not address the issue of the outstanding cost award.

[40] He did however, dispute the plaintiffs’ analysis of what undertakings remained outstanding and noted that the plaintiffs did not book time for the examination of Mr. Way during the weeks of August 8 and 15.

[41] On August 24, 2016, the plaintiffs received a letter from Mr. Whiteley to which was appended a letter dated July 13, 2016 and a cheque #133 dated July 13, 2016 from Mr. Whiteley’s general account, for payment of the $12,911.87 as per the cost endorsement.

[42] Mr. Whiteley’s explanation was that the envelope containing the July 13 letter and cheque had inadvertently accompanied him on his trip to Europe. The plaintiffs are more than a little suspicious given the correspondence that had passed between them and they did not receive requested copies of cheque #s 132 and 134 from Mr. Whitley’s general account with the payee redacted so that they could substantiate the date of the cheque.

Mr. Way’s Modus Operandi as Found in Previous Court Litigation

[43] In Schembri v. Way [2011] O.J. No. 3359, the Ontario Court of Appeal quotes from the motion Judge’s findings where she found that Mr. Way’s motion to attempt to remove a receiver, was tactical and designed to derail the sales process, so that Mr. Way could gain an advantage over Mr. Schembri in the purchase of a development property.

[44] In Schembri v. Way 2010 ONSC 5176, [2010] O.J. No. 4873, Mdm. Justice Roberts in her endorsement notes, Mr. Way did not provide a full and proper accounting to the plaintiffs and “are still resisting the plaintiffs’ request for production of relevant financial documents and information.”

[45] At paragraph 29 she states:

29. Given the strong prima facie evidence of financial and accounting improprieties already referenced, which include inflated charges and unauthorized transfers of money by and among all of the defendants, and Mr. Way’s failure to provide accurate information and for production, it is necessary to give the plaintiffs’ access to all of the defendants relevant financial documents in order to complete the accounting to which the defendants agree the plaintiffs by and are entitled.

[46] In Huber vs. Way (2014) ONSC 4426, Mr. Justice Flynn on July 23, 2014, while Mr. Way was represented by Mr. Whiteley, made scathing comments regarding Mr. Way’s integrity, particularly in paragraphs 7 through 19.

[47] Some quotes from the judgment are as follows:

7. Way was not a credible or reliable witness. While he had used every occasion on oral examinations for discovery to stonewall the plaintiffs he gave evidence at trial that was often completely contradictory to his discovery evidence and which was serendipitously filled in gaps for him.

8. In my view, he fashioned his evidence at trial after sitting through the plaintiff’s case.

9. As his cross examination went on, the defendant Way’s memory remarkably improved. It is interesting that he first claimed to have a very good memory. By the end of the cross examination, either that assertion was demolished by the cross examiner or he was unabashedly lying.

10. Mr. Way’s evidence on cross examination and his evidence at discovery about similar things cannot both be true and there were many times he stumbled over his own evidence. Either he has a horrible memory which cannot be relied upon by this court or he perjured himself both at discovery and a trial. Either way, he has nothing going for him in terms of reliability and credibility…

[48] In the case of Huber vs. Way [2014] O.J. No. 5413, on November 12, 2014, Justice Flynn in his Judgment on costs states at paragraph 13:

13. In my view, the nature of Mr. Way’s behaviour can be most readily seen in his bringing a motion for summary judgment, then abandoning it after the plaintiffs delivered six affidavits in response. And by his failure to deliver cost submissions. He simply was not going to play by the rules. This defendant was going to put the plaintiffs through hell by whatever means, including stonewalling, obfuscating, and deliberating not producing necessary documents. He fought a war of costs attrition and lost. And now he must pay.

[49] Despite the length of time that this litigation has been ongoing, the number of written requests for answers to undertakings, the number of court and conference calls attendances and subsequent undertakings and court orders, the defendants remains in breach of their obligations, under, 1) - the Rules of Civil Procedure, 2) - specific undertakings given and 3) - specific court orders.

[50] With respect to their obligations as set out in the above paragraph, the defendants appear to be of the opinion that because this action involves a claim in the magnitude of $90,000,000 dollars, a court will not strike out their defence, even if they repeatedly do not comply with procedural rules and court orders.

[51] This type of thinking, appears to be akin to, the “too big to fail” theories that arose out of the 2008 economic debacle, with respect to large corporations, particularly financial institutions.

Summary of the Defendant’s Failures to Comply

[52] The defendants have repeatedly;

a) Failed to comply with the timetable including:

i. Failed to attend at the return of the undertakings motion for 13 months, causing significant delay in this matter proceeding, and then having achieved the delay, consenting to the order sought;

ii. Failed to answer the undertakings provided at the examination of discovery for Mr. Way:

1. by February 26, 2016, in accordance with the order of Justice Sloan dated January 8, 2016,

2. by May 15, 2016, in accordance with Mr. Whiteley’s undertaking to Justice Sloan; and

3. by June 15, 2016, in accordance with the endorsement of Justice Sloan dated May 27, 2016.

iii. Failed to provide responding motion material by September 6, 2016, in accordance with the direction of Justice Sloan from the telephone conference of August 26, 2016, with respect to the motion to strike, scheduled for September 21, 2016.

b) Repeatedly failed to comply with orders of this Honourable Court including:

i. The order of Justice Sloan dated January 8, 2016;

ii. The order of Justice Sloan dated May 27, 2016;

iii. The costs endorsement of Justice Sloan dated June 14, 2016.

c) Failed to comply with an undertaking given to this court, despite having nearly 2 years in which to answer undertakings, where he has still failed and/or refused to answer all of the undertakings;

d) Failed to correct his breach and avoid this motion by accepting plaintiffs counsel’s offer in his August 2, 2016 letter;

e) Repeatedly failed to comply with the Rules of Civil Procedure, and

Failed to apologize to the court or provide any explanation for the numerous breaches.

The Defendants’ Position

[53] In response to the plaintiffs’ motion to strike, the defendants have filed a large three volume responding motion record. Each volume is approximately 1½ inches thick for a total of 4½ inches of paper.

[54] The three volume responding motion record of the defendants contains a 41 page, 169 paragraph affidavit of Mr. Way dated September 6, 2016. The affidavit in general describes the underlying issues in this and other actions between the parties, related to four land development projects.

[55] It describes, from Mr. Way’s point of view, some of the procedural steps in the litigation including amendments to the Statement of Claim and several motions. It discusses issues about arbitration that did not take place, receivership proceedings, motions in other related proceedings, sale of land, documentary disclosure and timing of discoveries etc.

[56] Attached to the affidavit are 53 mostly moderate to large sized exhibits, which include such things as joint venture and shareholder agreements, notices of motion, Judicial endorsements, affidavits of documents, reports of KPMG and Deloitte and Touche, along with some letters and emails between counsel.

[57] There is so much paper that it took a great deal of effort from the court, to try to find what material responded directly to the allegations of the plaintiffs, which is, that the defendants did not answer their undertakings in a timely manner, causing the plaintiffs to repeatedly seek redress from the courts in an effort to get those undertakings answered.

[58] By contrast the defendants have essentially tried to turn the procedural tables against the plaintiffs, which brings to mind the sports metaphor, that “the best defence is a good offence”.

[59] Mr. Way, in his affidavit, complains somewhat bitterly about how the plaintiffs have prosecuted this case.

[60] There may be some or significant truth in what is in Mr. Way’s affidavit, however that is not the issue before the court on this motion. If Mr. Way had a legitimate concern he should have brought that concern to the court in the form of a motion.

[61] The issue brought by the plaintiffs is that the defendants have been extremely lax in answering their undertakings. This, despite court orders and further undertakings that they would do so by certain dates and that as of the date of this motion they have still not complied with all of their undertakings.

[62] Also in response to the plaintiffs’ motion, the defendants served an affidavit of Mr. Way dated September 16, 2016. This affidavit and the exhibits thereto deal with the undertaking issue which is currently before the court.

[63] Within the responding motion record, is a notice of motion, requesting that the Court hear a parallel motion in a related action bearing Court File No. CV–457–12, known to the parties as the right of first refusal (ROFR) action. The defendants requested this parallel motion be heard at the same time as a plaintiffs’ motion to strike.

[64] The motion in Court File No. CV-457-12 was not discussed in the case management telephone conferences leading up to today’s date, and encompasses a myriad of issues that have essentially nothing to do with the plaintiffs’ motion concerning the defendants’ compliance with answering their undertakings in the present action.

[65] The motion also asks for the following orders in this action as follows:

a) requiring the plaintiffs, defendants by counterclaim (collectively, “Schembri”) to complete any examination in respect of the answers to undertakings by Way by no later than October 28, 2016;

b) authorizing and directing the KPMG portal (defined below) to be closed immediately;

c) requiring Schembri to deliver a further and better affidavit of documents by no later than October 31, 2016;

d) requiring Schembri to attend at examination for discovery from November 28 to December 16, 2016, inclusive;

e) requiring Schembri to set the main action down for trial by no later than December 31, 2016;

f) cost of this motion on a substantial indemnity basis payable forth with; and

g) such further and other relief as counsel may advise in this Honourable Court deems just.

[66] The defendants submit that the plaintiffs’ current “motion to strike” is just another tactic in a long series of “bully litigation” tactics.

[67] At paragraph 4 of their factum, the defendants set out approximately a page and a half of alleged bully litigation tactics.

[68] At paragraph 7 of the defendants factum, they submit, “that unless this Honourable Court makes the order requested by the defendants, Schembri will continue to ignore his obligations (under the Rules of Civil Procedure and orders of this Honourable Court) and carry on with his orchestrated efforts to avoid: (a) disclosing relevant documents; (b) being examined for discovery; and (c) setting this action down for trial; thereby rendering the court proceedings that he initiated more than six years ago “meaningless “.

The Defendants in Their Factum Make the Following Claims under the Following Headings:

[69] Main Action – in Paragraphs 11 through 14, the defendants make allegations that may be true, but none of them deal with the issue at hand concerning the answering of the defendants’ undertakings.

[70] Schembri Blocks Arbitration - the allegation in paragraph 15 does not deal with the defendants’ undertakings.

[71] The Receivership Proceeding - none of the allegations in paragraphs 16 to 24 deal with the defendants’ undertakings.

[72] Documentary Disclosure and KPMG Portal - none of the allegations in paragraph 25 to 30 deal with the defendants’ undertakings.

[73] Amendments to Statement of Claim - none of the allegations in paragraphs 31 through 34 deal with the defendants’ undertakings.

[74] Timetabling Orders - paragraph 35 does not deal with the defendants’ undertakings.

[75] Schembri’s Deceit - paragraphs 36 to 38 do not deal with the defendants’ undertakings.

[76] Examination for Discovery - although paragraphs 39 to 43 talk about the defendants’ undertakings, it is clear from paragraph 39, that as of the drafting of the factum on the 14th day of September 2016, the defendants had not delivered answers to all of their undertakings.

[77] Revisiting the Dispute – the JV Accounting - paragraph 44 does not deal with the defendants’ undertakings.

[78] The Rollover Dispute, Loan Dispute, JVD Repayment and Triumph Costs - paragraphs 45 to 52 do not deal with the defendants’ undertakings.

[79] Despite all the allegations set out in the defendants’ factum, no evidence was led to the effect, of whether or not the defendants brought motions or other procedures to deal with what they perceive were wrongdoings of the plaintiffs.

Law

[80] Rules 57.03(2), 60.12, 34.15(2) & 56.09 of the Rules of Civil Procedure apply to this motion.

[81] The plaintiffs rely in part on the case of Tizard Estate v. Quinte Detention Centre [2003] O.J. No. 3010, where the court at paragraphs 3 and 21 described the relevant factors that should be looked at when a motion is brought to court, to strike out one of the party’s pleadings. Those paragraphs state:

3. The central question on the motion is whether to impose the drastic remedy of dismissing the claim or to grant some lesser remedy. At what point should delay and disregard for the court orders by the plaintiffs (or their counsel) deprive them of their right to proceed with the claim? The answer to that question requires careful review of the substance of the default and its impact of the ability of the court to do justice. Dismissal of an action should not result from trivial technical breaches but should be ordered when continuation of the action is no longer viable and appropriate.

4. A secondary but certainly not trivial consideration is the integrity of the Justice system. Open disregard for court orders and failure to enforce them with appropriate sanctions will bring the system of case management into disrepute and undermine confidence in the civil justice system. That in a way is to put systemic needs above justice to the individual litigant, so again it should be the last resort to be used when a party has by its failure or refusal to be bound by the rules, abandoned its right of access to the courts.

[82] With respect to the issue of ordering security for costs, the plaintiffs rely on the case of Richland Investment Corp. v. Sinclair [1991] O.J. No. 23, where Justice Moldaver, as he then was, stated at page 12:

Nevertheless, the applicant, Mr. Sinclair, has conducted himself throughout in a manner which leads me to believe that he has no desire to see this matter proceed to trial. He has treated these proceedings in a way which can best be described as cavalier, and at worst, in a manner designed to protract, delay and frustrate the respondent’s sincere efforts to have this case tried.

I am satisfied, beyond any doubt, that Mr. Sinclair has treated this litigation as a game, refusing to comply with the rules, unless and until he is forced by the court to do so.

[83] The plaintiffs also rely on the case of Whitty vs. Wells [2016] O.J. No.1696 where at paragraph 24 and 25 the court states:

24. I do not accept Mr. Zbogar’s submission that it is just a scheduling order so no sanction is required. Courts are very reluctant to resolve cases based on procedural grounds rather than on their merits. This is especially true where the question involves a breach of procedural orders. But I agree with Nordheimer J. in Bottan vs. Vroom, 2001 CarswellOnt 2382, that if the merits always need to be determined before remedies for breach of procedural rules can be imposed, there would be little room for the effective application of the rules that provide such remedies…

25. The UHA Research Society vs. Canada (Attorney General), 2014 FCA 134 (CanLll) Stratus J.A. made reference to the importance of scheduling orders of the court as follows:

[8] I reiterate and underscore the fact that the end result is an order of the Court scheduling the appeal hearing. The scheduling order is no different from any other order of the court -- it is an instrument of law, on its terms mandatory and effective…

[10] Scheduling Orders of this Court are not trivial matters that can be set aside whenever something comes up for counsel.

Undertakings Remaining As of September 21, 2016

[84] At the commencement of the hearing the plaintiffs filed an updated undertaking chart of fourteen pages, setting out, from the plaintiffs’ perspective that 31 undertakings had not yet been answered.

[85] At the suggestion of the court, each individual undertaking was argued separately, such that the plaintiffs made their submissions on each individual undertaking followed by the defendants.

[86] Although counsel for the plaintiffs did not follow the chart chronologically, I intend to do so, referring to each individual undertaking by the day of the discovery that it was given and the number used in the plaintiffs’ chart.

Day 2 Number 40 - Page 2 of Chart

[87] This undertaking was resolved by the parties without argument.

Day 4 Number 7 – Page 2 of Chart

[88] After submissions and discussions in court, it is obvious that there are two undertakings. The plaintiffs are entitled to obtain admissions and narrow the issues as much as reasonably possible. To have the phrase “we believe” in the answer to the undertaking is simply unhelpful.

[89] It is Mr. Whiteley’s understanding, that Premier Project Consultants Ltd. (Premier aka PPC) rendered invoices dated May 31, 2009, for work done after May 31, 2009, because May 31, 2009 is the year end for all of the corporate defendants.

[90] Mr. Way shall therefore confirm if the information in the above paragraph is accurate and if it isn’t accurate, he shall provide whatever additional information is necessary.

[91] With respect to the undertaking, to advise whether the activities that generated these invoices were completed once/after the drawings were done the defendants advised that the drawings/design work continued on up to 2012 or 2014.

[92] This undertaking does not appear to have been answered. If there were more than one set of drawings on different dates, then there should be an answer for each date that drawings were completed. If the defendants think that this is close to an impossible task I would have expected some dialogue from the defendants to the plaintiffs so that the issue could have been refined and a decision obtained from a court if necessary.

Day 4 Number 24 – Page 3 of Chart

[93] The defendants’ position that this is not an undertaking, is incorrect. The answers given on discovery to the questions themselves use the word undertaking.

[94] Essentially there are three activities involved, being design services, project management services and predevelopment costs.

[95] After submissions and discussions in court, it is Mr. Whiteley’s understanding, that the only two written contracts he is aware of are:

(1) - the Project Management Services Agreement for $893,490 (located at tab 3858 of schedule A.1 to the Way productions) and

(2) - the Design Services Agreement (located at tab 3859 of schedule A.1 to the Way productions).

[96] It is further his understanding that there is no written contract with respect to predevelopment costs that has been located nor is there any belief that one exists.

[97] Mr. Way shall therefore confirm if the information in the above two paragraphs is accurate and if it isn’t accurate he shall provide whatever additional information is necessary to make it accurate.

Day 6 Number 35 – Page 3 of Chart

[98] This is an undertaking. Although it may not be narrow in scope, it deserves an answer in dollars and cents even if that answer is a range so that the plaintiffs, if they deem it necessary, are able to ask further questions regarding the issue at Mr. Way’s continued discovery.

Day 7 Number 62 – Page 4 of Chart

[99] After submissions and discussions in court, it was obvious that the answer to this question was, either a simple yes or no. I agree with the plaintiffs, that the answer of the defendants was essentially nonresponse.

[100] It is Mr. Whiteley’s understanding that, no other money was received with respect to the subject change orders from anyone other than from 1725030 Ontario Inc. (172), and the money received was in the amount of $154,505.92.

[101] Mr. Way shall therefore confirm if the above paragraph is accurate, and if it isn’t accurate he shall provide whatever additional information is necessary to make it accurate.

Day 9 Number 26 – Page 6 of Chart

[102] After submissions and discussions in court, it was obvious that the answer to this question was, either a simple yes or no. I agree with the plaintiffs that the answer of the defendants was essentially nonresponse.

[103] After further discussions on the 2nd day of the hearing, Mr. Whiteley indicated, it was his understanding that:

[104] All unpaid, Jamesway, PPC (if any), Terra-Tec and National Rental invoices, relate only to the change orders for the project at 345 King Street North Waterloo, and

[105] All those invoices are produced in the JCC change order binder, produced in conjunction with Day 6 answers, identified as Tab D and previously marked as Exhibit 18 to a cross examination believed to have been held in 2010.

[106] Mr. Way shall therefore confirm if the above paragraph is accurate, and if it isn’t accurate he shall provide whatever additional information is necessary to make it accurate.

Day 9 Number 28 – Page 6 of Chart

[107] The undertaking was to “produce” the accounting records of PPC (Premier Project Consultants Ltd.). During the discussions the court was made aware that the word “this” in the undertaking refers specifically to a project at 345 King Street North in Waterloo Ontario.

[108] It is the defendants’ position that the documents referred to in the undertaking, have been produced in their voluminous productions which contain up to 20,000 documents. It is further the defendants’ position that the plaintiffs are simply trying to shift their responsibility on to the defendants.

[109] The undertaking is clear and relatively narrow. From Mr. Way’s answer to question 8459 of his transcripts, it is obvious the parties are discussing the “segregated accounting records of PPC”.

[110] It appears PPC is a separate corporate entity from the other defendants and the project in question is a distinct project.

[111] The court understands that the defendants documents have been produced electronically in “summation format” however no evidence was placed before the court about how that program works with respect to, categorizing, finding and rearranging etc. documents within a large digital database.

[112] While the court assumes that it must be substantially less time-consuming than dealing with boxes of paper documents, that is not really the question. The court may need further submissions so that it can allow sufficient time for the defendants to comply with this undertaking.

[113] The defendants cannot answer their undertaking by simply stating to the plaintiffs that the documents are somewhere in the sea of documents that they have produced.

[114] I find that the undertaking was given and the defendants must comply, by answering the undertaking, either by producing a separate hard or digital document which answers the undertaking or alternatively, by referring to the specific documents and only the specific documents within their productions that form the answer to this undertaking.

Day 10 Number 8 – Page 6 of Chart

[115] The plaintiffs did not make any submissions with respect to this undertaking.

Day 10 Number 26, 27 & 28 – Pages 7 & 8 of Chart

[116] The defendants take the position that they have answered all of these undertakings because they have produced and probably overproduced documents which answer this question.

[117] They take the position, that because this property was sold in 2009 before the year end of all of the defendant corporations, being May 31 and since they have produced the corporate tax returns for all the relevant years and notices of reassessment for July 5, 2013 and November 25, 2014 that the position Mr. Way took is obvious.

[118] The undertakings are relatively simple and should be answered.

[119] Although it may be argued that the plaintiffs can “assume” from the documents that have been produced, what position Mr. Way or his staff have taken, they do not have to assume and once an undertaking is given it must be answered, including these 3 undertakings.

Day 11 Numbers 8, 9 and 10 – Pages 8 and 9 of Chart

[120] It appears in part, that the defendants’ position is, that the questions are irrelevant.

[121] These questions according to the defendants, apparently relate to land in Oshawa Ontario and to events in or after February 2010. The defendants reminded the court that this action was commenced on February 2 or 3rd of 2010.

[122] Relevancy doesn’t enter into the equation once an undertaking has been given. If the defendants thought that the question was irrelevant they should have stated so at the examination.

[123] With respect to undertaking 8, I find that Mr. Way’s answer and question 10087 is an undertaking notwithstanding he did not use the word undertaking, when asked about the commitment he answered “I would have to go back and look at the documents”.

[124] With respect to undertakings 9 and 10, they are undertakings and must be answered, whether or not there were similar undertakings for which answers were given previously.

Day 11 Numbers 26 & 27 – Page 9 of Chart

[125] Number 26 deals with a question going to at least, to one of the hearts of this matter.

[126] In answer to questions about how Mr. Schembri breached the joint venture agreement, Mr. Way initially replied that he would tell the plaintiffs in due course and in his answer to question 10535 he states “well, we can undertake to get you the information. Then if that’s what we have to do we will do it.’

[127] For Mr. Way to argue that this is not an undertaking I find quite absurd. I find it to be an undertaking, and if it were not an undertaking it would be a refusal and be ordered to be answered.

[128] Following the same reasoning as set out in the paragraph above, I find that number 27 is an undertaking, failing which it is a refusal which must be answered.

Day 12 Number 11 - Page 9 of Chart

[129] After some argument and then discussion, Mr. Whitely advised the court that:

[130] The $2,800,000 referred to in the financial statement and the $2,500,000 referred to in Mr. Way’s affidavit, is not the money owed by Oxford to Kingsley Financial and that Oxford owes Kingsley Financial $264,500.

[131] Mr. Way shall therefore confirm if the above paragraph is accurate, and if it isn’t accurate he shall provide whatever additional information is necessary to make it accurate.

Day 12 Number 12 – Page 10 of Chart

[132] Based on the answer to the undertaking at Day 12 Number 11 being accurate, this undertaking does not need to be answered.

Day 12 Number 15 – Page 10 of Chart

[133] There appears to be 3 parts to this undertaking and after some argument and then discussion, Mr. Whitely advised the court, that:

1. The $1,950,000 is owed by Triumph to 172 and not to Kingsley Financial,

2. Since the money is not owed to Kingsley Financial, Kingsley Financial does not owe the $1,950,000 to 172,

3. The answer to the undertaking “to further advise if 172 has the money (referring to the $1,950,000), would that be profits that ought to be distributed in accordance with the provisions of the JV agreement” is:

“there are no monies that will flow to Mr. Schembri’s company, JV2. As a stated several times previously, Mr. Schembri agreed to roll ‘his’ share’ of the profits from the sale of 345 King into Triumph and its subsidiaries. As such all that will occur is the calculation of a credit toward the amount that Mr. Schembri, through his company, is required to contribute to Triumph and the subsidiaries”

Day 12 Number 21 – Page 11 of Chart

[134] The undertaking was to produce any documents that support, that the PPC did work in connection with the Triumph Subsidiaries.

[135] Similar to the answer the defendants gave on “Day 9 Number 28 – page 6 of chart” the defendants answered the undertaking by stating that, the claims documentation is enclosed at Tab E on day 9. The Tab E referred to encompasses about 10 inches of paper.

[136] The plaintiffs submit that they should not have to go looking through vast quantities of paper documents to find the answer. They further submits that in answer to other undertakings, the defendants have specified the page numbers which are germane to the specific undertaking.

[137] The defendant’s state that when put in context, the plaintiffs are attacking claims filed by PPC in the receivership proceeding. In that receivership, the court-appointed receiver vetted all the claims. The 9 inches of paper encompasses 17 claims, of which three were filed on behalf of PPC.

[138] All the documents were provided to plaintiffs’ counsel in January 2012 and the defendants submit, it is their problem because they did not see fit to bring the documents to the discovery.

[139] Whether or not the plaintiffs should have prepared better for the discovery of Mr. Way and whether or not the information is easy to find in Tab E from day 9 seems irrelevant. If the defendants did not wish to give an undertaking because the answer was in the documents they are now referring to, they should have taken that position at the examination for discovery.

[140] They did not take that position and gave an undertaking and that undertaking must be fulfilled.

Security for Costs

The Plaintiffs’ Perspective on Security for Costs

[141] In addition to asking the court to enforce undertakings, the plaintiffs seeks to have the court order the defendants to pay $200,000 into court as security for costs.

[142] Plaintiffs rely on the following submissions that they submit, shows they were forced to bring a motion in their attempt to get the undertakings fulfilled.

[143] The chronology of events from May 28, 2015 to September 9, 2016 attached as Appendix A to its factum and to this Judgment.

[144] Paragraph 7 of my endorsement with respect to the defendants undertakings dated January 8, 2016, which reads; that after 13 days of discovery ending on April 2015 Mr. Way “give approximately 592 undertakings none of which have been answered”. On the same date I also ordered that the defendants deliver electronic copies of their Schedule “A” productions in Summation compatible format and on consent the undertakings were to be delivered before February 26, 2016.

[145] Paragraphs 5, 6, 13, 14, 17 and 18 of my endorsement dated May 27, 2016, which among other things, confirmed that the undertakings had not been delivered by February 26 and were then to be delivered by May 15, 2016, which date was also missed and were then to be delivered by June 15, 2016.

[146] Paragraph 13 of my May 27, 2016 endorsement reads in part, that while Mr. Way “has now made substantial efforts to comply with his obligations to answer his undertakings, there is very little doubt in the courts mind that he would not have done so, without the threat of the current motion and a case management Judge being appointed with the resultant frequent conference calls”.

[147] Paragraph 5 of my June 13, 2016 cost endorsement, where I stated, that on “The evidence before me, certainly on a balance of probabilities, is not only that Mr. Way did not appropriately comply with his obligations with respect to the undertakings, but that he initiated actions in an effort to continually delay the motion”.

[148] In the same endorsement I awarded costs in favour of the plaintiffs in the amount of $12,911.87.

[149] A letter from the plaintiffs to the defendants setting out, that if they paid the cost award and answered the undertakings by August 12, 2016, the plaintiffs would not proceed with the motion to strike, but would get on with the discoveries of both clients.

[150] The plaintiffs relies on the case of Whitty v. Wells [2016] O.J. No. 1696, where the court states at paragraphs 32 and 33:

32 Rule 56.01 lists the most common situations where security for costs is appropriate; but they are not the only situations. In this case, I originally designed a two track process to see the parties move forward with production and mediation on the merits while holding off the government’s proposed motions for summary judgment. Now as a result of the plaintiff’s failure to comply with the schedule, there will likely be a significant hiatus for several months…

33 In the circumstances, it seems to me that an order for security for costs is very much a fitting term of a further extension of time. If the plaintiffs persist in disobeying court orders or if they fail to deliver a proper expert report on a timely basis which I fear is a real likelihood, then a dismissal of the actions and a substantial award of costs of the action against the plaintiffs is indeed very likely…

[151] The plaintiffs also rely on the case of Schembri v Way 2010 ONSC 5176, [2010] O. J. No. 4873, where the Court commented at paragraphs 6 and 7 about a strong prima facie case against Mr. Way for accounting irregularities and stated at paragraph 9:

Further, notwithstanding the requests of the plaintiffs and their counsel and a court order for production, the defendants have not provided a full and proper accounting to the plaintiffs of the initial Waterloo project. As noted below, the defendants are still resisting the plaintiffs’ requests for production of relevant financial documentation and information.

[152] The plaintiffs also relies on the case of Baksh v. Sun Media (Toronto) Corp. 2003 CanLII 64288 (ON SC), [2003] O.J. No. 68 where, after stating that the plaintiffs had caused the outstanding costs to be incurred by choosing not to answer proper questions at discovery and chose to oppose a motion to compel answers and then chose to appeal the decision, the court went on to say at paragraph 19:

In my view the court has granted sufficient indulgences to the plaintiffs. The plaintiff’s breaches have in my view now become contumelious. The final indulgence granted in my order of July 25, 2002, spoke of no ambiguity as to its mandatory nature. “If the cost and security for costs are not paid by October 31, 2002 the action will be dismissed by motion on notice” for orders of the court to have any meaning they must be enforced…”

[153] In the case of Richland Investment Corp. v. Sinclair [1991] O. J. No. 23 the court ordered the applicant to post security for costs after stating on page 2 of the decision:

Nevertheless, the applicant, Mr. Sinclair, has conducted himself throughout in a manner which leads me to believe that he has no desire to see the matter proceed to trial. He has treated these proceedings in a way that can at best be described as cavalier, and at worst, in a manner designed to protract, delay and frustrate the Respondent’s sincere efforts to have the case tried.

I am satisfied, beyond any doubt, that Mr. Sinclair has treated this litigation as a game, refusing to comply with the rules, unless and until he is forced by court order to do so. Even then, his compliance is generally at the 11th hour, and often the “so-called” compliance is more in form than substance. This unacceptable behaviour has caused the Respondent to waste a great deal of time and expense, most of which, in my opinion, was not necessary. It has also delayed the prosecution of this action in a manner which can only be described as unconscionable. I intend by this order to put an end to this.

[154] The plaintiffs were unable to assist the Court with cases on how determining the quantum of the payment into court should be calculated. In the affidavit filed they set out the legal fees of Mr. Wortzman at $800/hr, Mr. Kulathungam at $575/hr and Mr. Ventrella at $275/hr.

[155] Based on his estimation of completing the examination for discovery’s in 10 days and three weeks to prepare for the trial and six weeks at trial he seeks security for costs in the amount of $200,000.

The Defendants’ Perspective on Security for Costs

[156] In addition to submitting there should be no security for costs, the defendants take issue with the quantum and submits that among the three lawyers mentioned there is no indication of, who is doing what and what is reasonable.

[157] The defendants submit that security for costs is not appropriate in this case because this is a 2010 proceeding commenced by the plaintiffs who have not been discovered yet and there is evidence that the plaintiffs has been avoiding discovery while the defendant wanted to get on with it. (How can the defendants submit that the plaintiffs are avoiding discovery, when I previously ruled that the plaintiffs are entitled to finish their discovery of the defendants including being in receipt of the undertakings, before the plaintiffs could be discovered?)

[158] The defendants took the court through various pieces of correspondence in 2014 and 2015 where both parties appear to be blaming the other for not moving the action forward.

[159] After some correspondence between the parties on May 29, 2014, Wortzman wrote to the defendants’ lawyer Cole, demanding a response by the next day or he would bring a motion seeking to amend the timetable and be seek costs.

[160] In his May 29, 2014, emailed response, Cole confirms that he will have a response and then chastises Wortzman writing;

“You will have a response, I should tell you however that your communications (of the kind below) are particularly unhelpful. You have been silent four months; you now seek to postpone discoveries in the main action to next year and thus you have broken the agreement to conduct these discoveries in July and August of THIS year in respect of which four weeks of discovery time was reserved by me and two weeks by my client; you have failed to provide a consent to an order agreed to over six months ago for trial together; you have failed to deliver a defence in the action – the ROFR action – in respect of which you now say you wish to bring a motion for summary judgment; and so on and so forth.

So perhaps you should dial back your complaint about the absence of a response to a letter you just sent to full business days ago.

[161] The defendants submit that because of the tactics and non-responses of the plaintiffs, they were put to the expense of two motions one in the main file and one in the ROFR action.

[162] Although it may be, that Mr. Wortzman was not being reasonable in some of his correspondence by demanding responses quickly and waiting until what might arguably be the 11th hour to confirm what undertakings were still outstanding, the fact still remains that approximately 30 undertakings were outstanding as of September 2016.

[163] Although a motion was brought and an order made by Justice Broad on the 4th day of September 2014, the order was made on consent to amend pleadings, try to actions together and to set a schedule for the Schembri’s summary judgment motion.

[164] Despite Justice Broad’s order for the conduct of the Schembri summary judgment motion, the motion was never brought nor as submitted by the defendants was there an apology to the court or other counsel.

[165] The defendants state that what did happen, is that the discoveries scheduled for the fall of 2014 in the main action were avoided by the plaintiffs.

[166] The defendants draw the court’s attention to paragraph 17 of the affidavit of Mr. Wortzman dated June 16, 2015 in which he deposes:

It is true that the Plaintiffs did not proceed previously with a motion for summary judgment in the ROFR Action. Instead we proceeded to examine Mr. Way for discovery. The plaintiffs have never abandoned their intention to proceed with their motion for summary judgment in the ROFR action and the plaintiffs will pursue that motion.

[167] The defendants drew the courts attention to paragraph 19 of my May 27, 2016 endorsement which reads:

At this point in time I am not inclined to order the defendants to post security for costs. I’m not prepared to order security for costs mainly because it was not requested in the mid-original motion and also I was informed that there is approximately $3,000,000 being held to the credit of this action.

[168] The defendants submit that Mr. Way, through Kingsley Financial is claiming approximately $500,000 of the $3,000,000 being held to the credit of this action, which they submit, in any event is good security for costs.

[169] With respect to the letter of Wortzman dated August 2, 2016, the defendants state, this email arrived on August 3 and the discovery of Way was scheduled to begin on August 8 and the discovery of the plaintiffs was to begin the following week.

[170] The defendants submits that this request for a further 97 undertakings on the eve of discovery came out of the blue.

[171] The defendants had previously emailed the plaintiffs on June 9, 2016 stating that the plaintiffs’ list of outstanding undertakings differed from theirs and stating that they would like to resolve the differences as soon as possible.

[172] On June 16, 2016, the defendants wrote to the plaintiffs confirming that Mr. Way would be produced for his continued examination on the week of August 8 and Mr. Schembri would be produced the week of August 15. In his closing paragraph Mr. Kulathungam states:

As indicated during the telephone conference call, we are reviewing all of the undertakings and I will advise as to our position as to whether there are any outstanding undertakings.

[173] This June 16, 2016, letter from Kulathungam is the last letter with respect to undertakings until the August 2, 2016 letter referred to above. That is why the defendants submit that the August 2, 2016 letter, came right out of the blue.

[174] By letter responding to the plaintiffs’ August 2, 2016, correspondence, the defendants wrote on August 15, 2016, that the plaintiffs’ allegations, that there were 96 outstanding undertakings it disingenuous and suggests that the plaintiffs analysis of the answers to the undertakings is lacking.

[175] Mr. Whitely, because the plaintiffs had not booked any time at Victory Verbatim for the week of August 8, suggests the plaintiffs were not prepared for Mr. Way’s attendance on that date and they have tried to come up with an excuse for not proceeding on that date, as Mr. Whitely states also occurred in December 2014.

[176] In addition to the defendants submissions with respect to the individual undertakings, the defendants took the court through a torturous journey of dates and correspondence in an effort to persuade the court that the plaintiffs were, purposely delaying the action, shifting the burden of work on to the defendant, seeking to stay an arbitration, serving motions and not following through with them, not allowing GST to be paid from money derived from the sale of properties, not obeying court ordered timetables for examinations and by not making adequate disclosure etc.

[177] How much if any truth there is to the allegations in the foregoing paragraph, seems to me, to miss the main point of this motion which was to get undertakings complied with. This motion was and always has been from its inception, through to the commencement of this hearing in September 2016 a method used by the plaintiffs in an effort to have Mr. Way complete his undertakings.

[178] If the defendants feel that the plaintiffs are breaking any rules, they have as much right to bring a motion to the court to seek redress as the plaintiffs do with respect to this undertakings motion.

[179] The defendants submit, that the facts here are very different from the facts set out in the case law relied upon by the plaintiffs for ordering security for costs, however the plaintiffs reply that most of the case law they referred to did not set out many particulars about the case such as the amount claim for damages, the number of documents produced, the cost expended to produce the documents, the amount of time already spent on discoveries and other accommodations which the offending party may have made to the opposite party.

[180] Finally the defendants submit that both parties here have enough money to be responsible for whatever costs the court may award after the trial of this action.

Short Summary of the Main Events

[181] Mr. Way was examined between December 2014 and April 2015 for 13 days, & over that period of time he gave approximately 592 undertakings.

[182] Because the plaintiffs were concerned that undertakings were not being answered appropriately they scheduled a motion on May 28, 2015, (over a year after the close of the Way discovery) to try to obtain an order that the undertakings be answered.

[183] That motion, for various reasons, got adjourned to August 26, 2015, then to October 26, 2015 and December 8, 2015 and was finally heard on January 8, 2015.

[184] On January 8, 2015, the motion was heard/consented to and an order was taken out to the effect that, all undertakings would be fulfilled by February 26, 2016, and the defendants would produce their productions in summation compatible format and the examination of Mr. Way would proceed on the week of April 11, 2016.

[185] On March 23, 2016, because the undertakings had still not been fulfilled the plaintiffs served a motion to strike the defendant’s statement of defence with a return date of April 13, 2016.

[186] After service of the motion more undertakings were produced along with the defendants’ production in summation compatible format.

[187] At the request of the defendants, examinations were scheduled for the deponents of the affidavits in support of the motion to strike, however on the date set aside for the cross examinations being April 11, 2016, Mr. Whiteley declined to attend.

[188] A conference call took place on April 13, 2016, at which time Mr. Whiteley on behalf of the defendants undertook, that all of the defendant’s undertakings would be produced by May 15, 2016. This did not happen.

[189] A conference call was scheduled for May 18, 2016 and the motion to strike was scheduled for May 27, 2016.

[190] Just prior to the May 18 conference call, the defendants produced more undertakings.

[191] On May 27, 2016, at which time the plaintiffs alleged there were 41 undertakings outstanding, the court gave what might be described as a last chance order, ordering that undertakings were to be produced by June 15 2016, failing which the plaintiffs could bring this motion on notice to the defendants.

[192] At the start of this hearing on September 21, 2016, it was approximately 22 months (now 24) from the commencement of Mr. Way’s examination and approximately 18 (now 20) months since it ended.

[193] It appears to this court that trying to get the defendants’ undertakings answered has been akin to “pulling teeth”. To use the analogy of hammers, the court first used a little hammer to make an order that the defendants’ undertakings be complied with, the court then used a slightly larger hammer when it ordered costs and set out in its order that the plaintiffs could bring a motion to strike out the defendants’ statement of defence if the order wasn’t complied with.

[194] To continue the analogy, the plaintiffs initially requested the court to use a sledgehammer to strike out the defendants’ statement of defence. (Since almost all of the undertakings had been complied with by December 21, 2016, the plaintiff no longer seeks an order striking out the defendants pleadings.)

Findings and Order

[195] Plaintiffs were entitled to complete their examination for discovery of Mr. Way before producing Mr. Schembri for many reasons:

(a) They are entitled to under the Rules.

(b) Paragraph 8B of my January 8, 2016 endorsement.

(c) If the rules and my endorsement were not sufficient enough reasons, based on the findings of Justice Flynn that Mr. Way in a previous court action tried to tailor his evidence at trial after sitting through the plaintiff’s case, it would simply be unfair to the plaintiffs to allow Mr. Way to have access to the plaintiffs’ discovery before his own has been completed.

[196] I found, as set out in my endorsement of May 27, 2016, at paragraph 17; “It is evident and I find as a fact, that Mr. Way did not fulfil his obligations to answer his undertakings in anything close to an appropriate fashion and in an appropriate time frame.”

[197] I found in my endorsement of June 13, 2016, at paragraph 5; “… Mr. Way put in an extremely lackluster effort to comply with his obligations with respect to his undertakings and refusals.”

[198] This court certainly gets the impression that the parties involved in this court action can afford and are prepared to spend hundreds of thousands of dollars in legal fees.

[199] They, because of the resources available to them appear to be using/abusing the publicly funded court system as if it were their private system.

[200] Despite what appears to this court, to be many obvious situations where the parties should, and could easily have resolved many of the issues, mostly with respect to the undertakings and refusals which I have dealt with since being appointed the Case Management Judge, they have not done so.

[201] While Mr. Way complains bitterly about the tactics of the plaintiffs and at the slow progress being made in an attempt to have this matter adjudicated on its facts, on the material that has been filed before me since I became Case Management Judge, it appears that Mr. Way is at least 90% responsible for this matter not having progressed past the discovery stage.

[202] If Mr. Way had put in 30% of the energy answering his undertakings, that he and his lawyer have had to expend to prepare for and appear in court for 4 ½ days on this motion, the undertakings (even if Mr. Way thought, he did not legally have to answer some of them) would have been answered and very likely his examination would have been completed and his lawyer would be well on his way to completing the examination of Mr. Schembri.

[203] It appears to this court that Mr. Way was of the opinion that it was very unlikely that the court would strike his pleadings. From a practical point of view he was correct given the quantum of damages claimed, the tens of thousands of documents produced and the 13 days of examinations already completed.

[204] The court was essentially left in the role of doing everything it could short of striking the defendants’ pleadings which would have led to another delay as a matter wound its way to the Ontario Court of Appeal.

[205] Since Mr. Kulathungam essentially withdrew his claim to strike the defendants pleadings on December 21, 2016 I decline to make that order.

[206] Notwithstanding the money currently being held in trust, and that it appears Mr. Way is a man of means sufficient enough to pay even a very large award of costs at the end of the trial, I order that Mr. Way shall pay $100,000 into court as security for costs within 45 days of the date of this order.

[207] I make this order in essence because the court has to have some means of enforcing its processes, particularly where there is a wealthy party who does not follow court orders and appears to this court, that he would rather pay legal fees to complicate and delay matters than simply get on with the action.

[208] This court also concludes that the defendants have had more than sufficient indulgences to comply with her undertakings.

[209] The ROFR motion in file CV-457-12 is adjourned to a date to be set by the trial coordinator.

[210] If the parties are unable to agree on costs, Mr. Kulathungam shall forward his brief (four pages plus a bill of costs) submissions on costs to me by January 6, 2017. Mr. Whitley shall forward his brief response (four pages) to me by January 13, 2017. Mr. Kulathungam shall then forward his reply, if any, to me by January 18, 2017. Cost submissions may be sent to my attention by email, care of Kitchener.Superior.Court@ontario.ca.

Justice James W. Sloan

Date: December 23, 2016