Court File and Parties

COURT FILE NO.: 14-62231 MOTION HEARD: 2016-11-29 DATE: March 03, 2017

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DST CONSULTING ENGINEERS INC. v. 2299910 ONTARIO INC. et al

BEFORE: Master Champagne

COUNSEL: Jock Climie, for the Plaintiff Michael S. Hebert, for the Defendants

REASONS FOR DECISION

[1] The plaintiff DST Consulting Engineers Inc. (DST) claims to recover $31,114.57 for work it says it completed for the defendants. The plaintiff brings this motion to compel answers to refusals by the defendants at examinations for discovery and to compel re-attendance by the defendants at examinations for discovery.

Background

[2] The plaintiff DST Consulting Engineers Inc. (DST) is a consulting firm providing full service environmental, geotechnical and blast engineering consulting.

[3] The defendant CanRil Corporation (CanRil) is a corporation conducting business in the development of residential and commercial properties. Its head office is 300-335 Rideau Street, Ottawa, Ontario.

[4] The defendant 2299910 Ontario Inc. (229) is a corporation incorporated in Ontario having its mailing address as 300-335 Rideau Street, Ottawa, Ontario. It states it does not maintain a head office.

[5] DST claims it was retained by CanRil and 229 to perform an environmental engineering assessment of two parcels of land that CanRil was interested in developing. It claims it performed the work and sent CanRil and 229 five invoices which remain unpaid to date. CanRil denies that it retained DST to conduct the assessments. While CanRil and 229 acknowledge that DST carried out certain work for 229, they claim that the work was not properly done and that DST’s invoices are overstated and in excess of the value of the work performed. Examinations for discovery of CanRil and 229 took place resulting in a number of refusals and undertakings and in the termination of the examinations for discovery which led to this motion.

Issues

[6] The issues in this motion are the following:

1. Whether 229 and CanRil should be compelled to answer to questions they refused to answer or to provide better and more comprehensive answers to questions alleged by the plaintiff to be deficient.
2. Whether Terrence Guilbault should be compelled to attend for examinations for discovery with respect to answers to questions in the defendants chart.

Decision

[7] For reasons that follow, I will compel the defendants to answer all but one question that was refused/objected to and I will order Terrence Guilbault to attend for examinations for discovery. I also order the defendants to provide particulars of the alleged deficiencies in the plaintiff’s work within 60 days.

Evidence

[8] CanRil carries on business as a real estate developer, mainly relating to commercial property development. It is unclear from the evidence what the business of 229 is, but at the material time, it is said to have been a party to an agreement of purchase and sale of land located at 3795 and 3805 Richmond Road in Ottawa, Ontario. It was also a party to the agreement of purchase and sale of an adjacent property located at 3809 and 3817 Richmond Road. At some point, 229 became aware that 3795 and 3805 Richmond Road might be contaminated. DST’s claim is that it was approached by Charles Guilbault in May 2013 to conduct an environmental assessment on the property for CanRil. It is undisputed that on June 12, 2013, DST signed a retainer agreement with 229 to conduct a Limited Phase II Environmental Site Assessment for properties located at 3809 and 3817 Robertson Road Ottawa, Ontario. That agreement is signed by George Thomas as Senior Principal for DST and by Charles Guilbault as a consultant for 229. DST conducted an assessment and produced a draft report which it sent to Charles Guilbault on August 2, 2013 and a final report on or about October 1, 2013. It is undisputed that between May 31, 2013 and September 30, 2013 the plaintiff sent invoices to CanRil to the attention of Charles Guilbault for services rendered totaling $31,114.57. None of those invoices have been paid.

[9] While DST claims that the work performed was for both 229 and CanRil, it is clear the agreement dated June 12, 2013 was between DST and 229. CanRil takes the position that it was not a party to the agreement and DST takes the position that the actions of the parties belie that assertion. There is in fact evidence that DST understood the work it was to complete was for CanRil as well as 229. Questions 71 through 86 of Charles Guilbault’s Examination for Discovery make reference to communication that would indicate that CanRil had retained the services of DST for some work related to 3809-3817 Richmond Road. No copy of that communication was provided to the court on this motion.

[10] There is no dispute that there was a delay between the time DST sent CanRil its invoices and the time those invoices came to the attention of Charles Guilbault. CanRil’s position is that it had no responsibility for the invoices that were sent to it as the invoices related to work done for 229. The evidence is that it did not advise DST of this position at the time, nor did it advise DST that the invoices were sent to the wrong corporation. The evidence from the examination for discovery (questions 137 and 144) is that Charles Guilbault contacted CanRil about why the invoices remained outstanding. Despite this inquiry the invoices were not paid and no reason was given to DST until CanRil and 229 filed their Statement of Defence.

[11] The plaintiff issued a Statement of Claim on October 8, 2014 in which it claimed payment from CanRil and 229 for an environmental assessment it states it was retained to perform for the two defendants. In their Statement of Defence, CanRil and 229 deny that the work done by DST was for both defendants and point to the fact that CanRil was not a party to the agreement. They also claim that DST’s work was not done diligently, its bills were inflated and that its delay in completing the assessment led to a breakdown in the agreements of purchase and sale for the subject lands.

[12] Notices of Examination were sent to CanRil and 229 by DST on September 2, 2015. One notice sought to examine Charles Guilbault on behalf of 229 and the second notice sought to examine Terrence Guilbault on behalf of CanRil corporation. Both examinations were to take place on September 10, 2015. On September 9, 2015, the defendants’ counsel advised that Terrence Guilbault was not available on the proposed date. As a result, DST served an amended Notice of Examination substituting Charles Guilbault for Terrence Guilbault on behalf of CanRil corporation. At the time the notice of examination was sent, DST also sent counsel for the defendants the corporation profile reports of CanRil and 229 which it advised would be put to Mr. Guilbault at his examination. Those reports show that Terrence Guilbault was the Administrator, President and Secretary of both corporations.

[13] The examinations for discovery took place the following day. At the outset, Charles Guilbault stated that he was not a director, officer or employee of either corporation. He stated that nonetheless, he had the authority to bind the two corporations. As questioning got underway, Mr. Guilbault advised that he had no relation to CanRil but had authority to bind the corporation. A number of his answers and refusals to answer gave rise to this motion.

[14] The questions of Mr. Guilbault which gave rise to the refusals or objections by the defendants can be separated into three categories. The first is with respect to the reasons the invoices were not paid. Those questions and answers are as follows:

Question 166: Can you explain why the invoices are not paid? Answer: Counsel for CanRil and 229 states “Don’t answer that” Question 167: Can you inform yourself from Canril’s accounting department as to why those invoices were not paid? Answer: Counsel for CanRil states “No. I’m going to object to that“ Question 184: May I receive an undertaking to have a list of those deficiencies [in DST’s work/report] A: MS. GERHARDT McLUCKIE: We’ll undertake to provide you particulars.

[15] In response to Question 184 Ms. Gerhardt McLuckie later wrote “An expert will be retained to address the deficiencies in the report. In addition, Mr. Guilbault provided evidence on his examination as to the fact that there was no benefit from the Plaintiff’s work and that its work did not advance the project to a state where the purchaser could move forward with the vendors.” The plaintiff is not satisfied with that answer and seeks particulars of those deficiencies.

[16] Ms. Gerhardt McLuckie submits that questions 166 and 167 are improper as they go to motive. She states that the defence sets out why the defendants take the position that the invoices should not be paid and takes the position that the questions need not be answered.

[17] The next category of questions that Mr. Guilbault refuses to answer relates to the relationship between 229 and CanRil. Those refusals are as follows:

Question 56: Mr. Guilbault, do you know if Canril ever retains 229 to do business on its behalf?

[18] The question was taken under advisement and Ms. McLuckie later wrote “This question is objected to as it is not relevant to the issues in this litigation and is beyond the scope of discovery. The question is improper.” Counsel further wrote “The question asked which was objected to has no relevance to the issue raised by the Plaintiff .”

Question 24: You are a consultant and you are being paid directly by Canril? A: Ms. Gerhardt McLuckie stated “Don’t answer that. That’s not relevant.” Question 28: During your consulting services for Canril was there a consulting agreement between the both of you? A: Ms. Gerhardt-McLuckie states “Don’t answer that.”

[19] She followed up in writing stating “The question is not relevant to the issues in this litigation and is beyond the scope of discovery. The question is improper. Further, Mr. Guilbault’s evidence was that he acted as a consultant for Canril Corporation off and on various times going back 20 years (Qu. 23). Whether or not there was a consulting agreement in place is not relevant to the issues in this litigation.”

[20] The next category of questions relates to what happened to the invoices sent by DST to CanRil for payment:

Question 132: If these were not meant for Canril, can you explain why Canril Corporation would not have questioned those invoices and called Mr. Thomas to say they were addressed to the wrong person? Ms. McLuckie takes this question under advisement and later wrote “ The routing of the invoices cannot be determined. The accountant has been on medical leave for several months and replaced by temporary staff in the interim.” Question 125: Why would you have received all these invoices after the fact? A: My answer is speculative but as with other invoices that were directed to 229, I would have seen them, and there were other invoices directed to 229 that were paid. Question 126: Can you give me an example? A: Not off-hand, no. MS. ARCAND: Can I have an undertaking to that effect? MS. GERHARDT-McLUCKIE: I’ll give you an advisement on that one.

[21] Ms. Gerhardt McLuckie later responds that “This question is overbroad, not relevant to the issues in this litigation and is beyond the scope of discovery. The question is improper. The only invoices that are at issue in this litigation are those issued by the plaintiff which were incorrectly issued to CanRil Corporation. The fact that the Defendant corporations share an accountant and a mailing address does not lead to the conclusion that the work performed by the Plaintiff for 2299910 Ontario Inc. was for the benefit of Canril Corporation, as suggested by the Plaintiff, and the evidence is contrary. (Examination for Discovery of Mr. Guilbault Qu. 75, 87, Retainer Agreement).”

[22] DST’s position is that CanRil and 229’s examinations for discovery were frustrated by Mr. Guilbault’s lack of knowledge. DST points to some of the answers given by Mr. Guilbault in support of this contention. In particular the following:

Question 40: What is the business of the Defendant 229? What is their main business? A: I’m not sure. Question. 41: You are a consultant for 229 but you don’t know what type of business they’re engaged in? A. I don’t know why 229 was formed. I didn’t form it. I don’t know if it’s doing any other business now. I know of this business. That’s what I know of 229. Question 45: Who manages the day-to-day business of 229? A: I don’t think I know. Question 46: Who engages your work as a consultant on behalf of 229? MS. GERHARDT McLUCKIE: 229.

MS. ARCAND: Question 47: Which individual is giving you those instructions? Answer: I generally talk to Terry. Question 48: Terry, Terrance Guilbault, he is your brother? Answer: Yes. Question 49: He is the president of 229? Answer: I think that is the case, yes. Question 50: He will engage with your services as a consultant on behalf of 229? Answer: That sounds a bit too formal than -- like typically I may call him up and say, “’We should look at this,” or he may call me, “Drive by that thing and have a look at it for me, would you?” Question 51: Does he do this on behalf of Canril or 229 Does he make that clear to you? Answer: In the last few years I assumed it was on behalf of 229. There was no precise discussion to that effect but I assumed it was for 229. Question 52: Does 229 have any employees? Answer: I don’t know. Question 53: Can you inform yourself to that? Can I obtain an undertaking for that question? MS. GERHARDT McLUCKIE: Sure Question 56: Does Canril ever retain 229 to do business on its behalf? A. I don’t know. Question 57: Can you inform yourself of that? MS. GERHARDT McLUCKIE: I’ll take that as an advisement.

[23] Mr. Guilbault’s examination transcript also contains exchanges which I found to be evasive or unresponsive, examples of which are as follows:

Question: 29: You stated that you are a consultant for 229. Answer: I did. Question 30: What type of work do you do in that capacity for 229? Answer: I investigated properties. Question 31: What are your responsibilities with respect to investigating properties? Answer. They vary quite a bit. Question 32: Could you elaborate a little bit? What would a typical day be for you with respect to your consulting work for 229? Answer: I don’t think there are any typical days. Question 33: I am looking to understand what you do, the type of work you do for 229. What do you do all day when you get up in the morning and do your consulting work for 229? You investigate properties. How do you do that? Answer: Sometimes I drive around in my car and sometimes I get on the internet.

[24] Further on in the examination we see the following exchange:

Question 153: Did you benefit from any of [DST’s] work? Answer: No. Question 154: How come? Answer: It did not result in positions I had to achieve with the property vendors to complete the development. Question 155: But you agree that DST did provide the services that you had retained them to provide? Answer: Which specific services are you referring to? Question 156: The fact that they provided consulting work on the Suncor property and that they did the environmental assessment on the Al’s Steak House property. MS. GERHARDT McLUCKIE: Those are incredibly broad terms counsel.

MS. ARCAND: Question 157: Which company was responsible for payment of DST’s invoices? Answer: In my mind it should have been 229. Question 158: On behalf of 229 did you have the authority to pay those invoices? Answer: I had the authority to request payment. Question 159: Request payment from whom? Answer: The accountant at Canril. Question 160: Why would the accountant at Canril be paying invoices for 229? Answer: Well, getting back to your previous question, I had the authority to request payment of invoices generally was what I think I answered your previous question. Question 161: You said you would request that from the accountant at Canril. Answer: No. That was the question following that question. If you go back in your questions, I said I had the authority on behalf of 229 to request payment of 229 invoices. Then you asked me who would you ask that of and I said I would ask that of the accountant at Canril. Question 162: But why would you ask the accountant at CanRil be paying the 229 invoices? Answer: I wasn’t speaking directly to a specific invoice but I was answering a general question. You asked me if I had the authority on behalf of 229 to pay invoices and my answer was I had the authority to requisition or suggest payment. Question 163: Why would you request it from Canril on behalf of 229? Answer: Because it was the same accountant. Question 164: It was the same accountant for both companies? A: Correct.

Analysis

Refusals

[25] In Andersen v. St. Jude Medical Inc., Master MacLeod summarizes the caselaw on the purpose of discovery nicely. At para 17 of that case he states that the purpose of discovery is to obtain:

(a) Disclosure of the evidence and the legal theory of the opposing party; (b) Verification that all relevant documents have been produced; and (c) Admissions that will narrow the issues, dispense with formal proof, or reveal deficiencies in the opponent's case.

[26] He goes on to say that the objectives of discovery are:

(a) Allowing the examining party to understand the case to be met; (b) Narrowing the issues that will require adjudication; (c) Streamlining pre-trial and trial procedures; (d) Facilitating settlement; (e) Determining if a full trial or a summary procedure may be appropriate; and (f) Preparing for trial or other form of adjudication.

[27] While that case predates the change to Rule 31.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) on the scope of examination for discovery, in my view those principles apply and I am guided by them.

[28] Rule 31.06 was amended in 2010 and requires a person who is examined for discovery to answer to the best of his or her knowledge, information and belief, any proper question relevant to any matter in issue in the action or to any matter made discoverable by subrules (2) to (4). The requirement to answer must be proportional in terms of effort, time and expense, to the issues in the litigation.

[29] While Rule 31.06 does not specify what a proper question is, Ontario v. Rothmans, sets out guiding principles on the scope of discovery at paragraph 129:

• The scope of the discovery is defined by the pleadings; discovery questions must be relevant to the issues as defined by the pleadings: Playfair v. Cormack (1913), 4 O.W.N. 817 (H.C.J.).
• The examining party may not go beyond the pleadings in an effort to find a claim or defence that has not been pleaded. Overbroad or speculative discovery is known colloquially as a "fishing expedition" and it is not permitted. See Cominco Ltd. v. Westinghouse Can. Ltd. (1979), 11 B.C.L.R. 142 (C.A.); Allarco Broadcasting Ltd. v. Duke (1981), 26 C.P.C. 13 (B.C.S.C.).
• Under the former case law, where the rules provided for questions "relating to any matter in issue," the scope of discovery was defined with wide latitude and a question would be proper if there is a semblance of relevancy: Kay v. Posluns (1989), 71 O.R. (2d) 238 (H.C.J.); Air Canada v. McConnell Douglas Corp. (1995), 22 O.R. (3d) 140 (Master), aff'd (1995), 23 O.R. (3d) 156 (Gen. Div.). The recently amended rule changes "relating to any matter in issue" to "relevant to any matter in issue," which suggests a modest narrowing of the scope of examinations for discovery.
• The extent of discovery is not unlimited, and in controlling its process and to avoid discovery from being oppressive and uncontrollable, the court may keep discovery within reasonable and efficient bounds: Graydon v. Graydon (1921), 67 D.L.R. 116 (Ont. S.C.) at pp. 118 and 119 per Justice Middleton ("Discovery is intended to be an engine to be prudently used for the extraction of truth, but it must not be made an instrument of torture ..."); Kay v. Posluns (1989), 71 O.R. (2d) 238 (H.C.J.) at p. 246; Ontario (Attorney General) v. Ballard Estate (1995), 26 O.R. (3d) 39 (C.A.) at p. 48 ("The discovery process must also be kept within reasonable bounds."); 671122 Ontario Ltd. v. Canadian Tire Corp., [1996] O.J. No. 2539 (Gen. Div.) at paras. 8-9; Caputo v. Imperial Tobacco Ltd., [2003] O.J. No. 2269 (S.C.J.). The court has the power to restrict an examination for discovery that is onerous or abusive: Andersen v. St. Jude Medical Inc., [2007] O.J. No. 5383 (Master).
• The witness on an examination for discovery may be questioned for hearsay evidence because an examination for discovery requires the witness to give not only his or her knowledge but his or her information and belief about the matters in issue: Van Horn v. Verrall (1911), 3 O.W.N. 439 (H.C.J.); Rubinoff v. Newton, [1967] 1 O.R. 402 (H.C.J.); Kay v. Posluns (1989), 71 O.R. (2d) 238 (H.C.J.).
• The witness on an examination for discovery may be questioned about the party's position on questions of law: Six Nations of the Grand River Indian Band v. Canada (Attorney General) (2000), 48 O.R. (3d) 377 (S.C.J.).

[30] All of the objections by the defendants counsel in the present case were on the basis that the question was improper and was either irrelevant, overbroad or exceeded the scope of the discovery. None of the objections dealt with proportionality.

[31] Having regard to the caselaw, on the evidence before me, I am satisfied that all but one refusal ought to be answered. I have outlined my decisions in the defendants’ chart which I have submitted directly to them.

[32] All questions regarding the reasons that DST’s invoices were not paid are relevant. The non-payment of the invoices and the reasons for it are at the heart of this litigation. It is not sufficient for the defendants to state that they will retain an expert to evaluate the deficiencies in the plaintiff’s work. The plaintiff is entitled to know the details of those allegations and is entitled to know the defendant’s case. This is the objective of discovery. The defendants decided not to pay the plaintiff’s invoices when they were submitted. They must explain the reasons for their failure to do so.

[33] All questions relating to the connection between CanRil and 229 except for one, are to be answered. The plaintiff pleads that CanRil and 229 are connected and there is evidence in support of this contention as follows:

(a) Both companies use the same accountant and payment for invoices to 229 must be requisitioned from that accountant. (b) Terrence Guilbault is the president and sole director of both companies and their businesses appear to be in relation to the purchase and development of properties. (c) There is evidence that CanRil initially approached DST to do an environmental assessment (questions 71 through 86 of Charles Guilbault’s examination for discovery). (d) The evidence from the examination for discovery (questions 137 and 144) is that Charles Guilbault contacted CanRil about why the invoices remained outstanding.

[34] In light of this evidence, I find the questions regarding the relationship between 229 and CanRil relevant, other than question 126 which need not be answered. Question 126 related to the disclosure of invoices other than those submitted by the plaintiff.

[35] The defendants shall answer all questions about Charles Guilbault’s relationship to the two companies. He signed the agreement with DST as a representative or 229 and attended for examinations for discovery as the corporate representative for both defendants. In the circumstances I find that his relationship with the two companies is relevant.

Leave for the Plaintiff to examine a Second Representative of the Defendants

[36] The plaintiff seeks leave to examine a second representative of the defendants.

[37] The plaintiff argues that the examination for discovery of Charles Guilbault was frustrated by Mr. Guilbault’s lack of even basic knowledge regarding the two corporations of which he was a representative, and that his answers to questions were vague, unresponsive and ambiguous.

[38] The defendants argue that a second examination should not be ordered. They submit that it should only be ordered in rare circumstances for good reasons which are absent in the present case. They submit that the examiner was not effective, failed to ask appropriate questions or follow-up questions to elicit the information she sought. They further argue they should not be put to the additional costs of a second examination. I agree with the defendants’ submission that a second examination should rarely be ordered but I believe that the matter before me is one of those rare instances in which it should.

[39] Rule 31.03 makes clear that an examining party is only entitled to a single discovery of each party. Any additional examinations must be approved by the court. For this reason, it is important for a deponent to prepare for the examination for discovery. In fact, a corporation is obligated to prepare to answer questions that could reasonably be asked at an examination for discovery. So important is this obligation that in Metropolitan Toronto Condominium Corp. No. 979 v. Ellis-Don Construction Ltd., Master Clark found that a representative’s lack of preparation amounted to constructive refusal to participate in the discovery process. Master Clark reviewed the transcript of the examinations and found the record “sufficient to show that the attitude of the witness is not conducive to an efficient discovery process”. He ordered a further examination.

[40] The development of the case law since the late 1990’s makes clear that a moving party seeking a further examination with a second representative must show that the representative who was first examined did not or cannot inform himself on the matters in dispute and that it cannot obtain the discovery to which is entitled without a second examination.

[41] Applying the principles set out in the jurisprudence, on the evidence before me, I find that the plaintiff meets the test for a second examination with a different representative. The evidence from the transcript of the aborted examination leads me to conclude Charles Guilbault did little to prepare for the examination for discovery. When asked what type of business 229 was engaged in, Mr. Guilbault answered “I don’t think I know”. When asked who managed the day-to-day operation of 229, Mr. Guilbault answered that he did not know. When asked whether 229 had any employees, Mr. Guilbault stated that he did not know. When asked whether CanRil ever retained 229 to do business on its behalf, Mr. Guilbault answered that he did not know. When asked about the type of work he did for 229, his answer was vague and counsel had to ask a number of questions to elicit an answer. When asked about which company was responsible DST’s invoices, Mr. Guilbault was less than forthcoming and entered into a debate with counsel as to what question was asked.

[42] While the examiner did not ask Mr. Guilbault whether he had prepared himself for the examination for discovery and she should have, it is clear from the transcript that he had not in fact prepared himself as required and was unable to answer many of the most basic questions. In addition, I found many of his responses to be ambiguous and evasive. Like Master Clark in Metropolitan Toronto I found Mr.bGuilbault’s attitude to be such that to continue the examination would have been futile. I conclude from the transcript that the plaintiff was deprived of the discovery to which it is entitled and that a second examination in this case is appropriate.

[43] The plaintiff’s motion is granted accordingly.

[44] If the parties are unable to agree on costs, they may provide me with written submissions no more than 3 pages in length within 30 days.

Master Champagne DATE: March 03, 2017