COURT FILE NO.: 216/11 and 501/12 DATE: 2017-05-01 ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
GREAT LAKES COPPER INC. Milton Davis, for the plaintiff and for the defendant, 3072453 Nova Scotia Company Plaintiff
- and -
1623242 ONTARIO INC. and 3072453 NOVA SCOTIA COMPANY Gregory Govedaris, for the defendant, 1623242 Ontario Inc. Defendants
HEARD: May 1, 2017, at Brampton, Ontario
Price J.
Endorsement
NATURE OF PROCEEDING
[1] The trial of these actions has been scheduled to proceed at the trial sittings in Guelph beginning May 8, 2017, pursusant to the Order of this Court made on April 27, 2016. As Case Management Judge in these actions, I have convened this Case Conference, at the request of the plaintiff, to hear the following motions:
a) A motion by the plaintiff, Great Lakes Copper Inc., for:
i) An order for substituted services of a Summons to Witness on Kapley Judge, or dispensing with the service of a Summons on him;
ii) A remedy for 162’s failure to deliver will say statements to GLC for the witnesses it intends to call at trial;
[2] The defendant, 1623242 Ontario Inc., upon receiving the plaintiff’s motion, seeks its own relief at the Conference. It claims:
i) An Order requiring GLC to produce all evidence and law it relies on in support of its claim for costs personally against Gregory Govedaris, and directing that the dismissal of GLC’s lien claims without costs on November 28, 2016, precludes GLC, at the trial of the present actions, continuing solely on the issues of unjust enrichment, quantum meruit, and contractual entitlement to remediation costs, from claiming costs incurred prior to November 28, 2016;
ii) During the hearing, 162 additionally requested a Will Say Statement from GLC for the witnesses, Kapley Judge and Buramuddin Nizami, whom GLC has summonsed or has indicated that it intends to call as witnesses at trial.
[3] Additionally, a non-party, Andrea Huckins, a Crown Counsel with the Ministry of the Environment, filed a letter through the plaintiff’s solicitor, requesting leave of the court to bring a motion at the commencement of the trial to quash a Summons to Witness served on her by the defendant’s lawyer, as Ms. Huckins says that her evidence is not in dispute and she is to appear as counsel at a Coroner’s Inquest scheduled to take place from May 9 to 22, 2017.
BACKGROUND FACTS
[4] A Case Conference in the present two actions, a related fraud action (court file no. 571/12) by 1623242 Ontario Inc. (“162”) and a related mortgage foreclosure action (court file no. 640/13) by 3072453 Nova Scotia Company (“307”), was adjourned from January 28 to February 17, 2016, to permit 162 to discontinue its fraud action and redeem its mortgage.
[5] On February 9, 2016, 162 discontinued its fraud action and redeemed its mortgage. As a result, the mortgage foreclosure action was dismissed. This left the remaining two construction lien actions (court file no. 216/11 and 501/12) to be tried.
[6] When 162 discontinued its fraud action and its counterclaim in the mortgage action on February 9, 2016, the court ordered that neither 162 nor its officer and director, Krishan Judge, were to commence any future action against any of the parties based on a cause of action they asserted, or could have asserted, in the fraud action or mortgage action. The Order in the mortgage action stated:
- 1623242 Ontario Inc. and Krishan Judge have leave to discontinue their counterclaim in this action (court file no. 640-13) and the fraud action of 1623242 Ontario Inc. (court file no. 571-12), upon payment of the defendants’ costs in the amount fo $516,395.23, as set out above, inclusive of the amount assessed by Assessment Officer Stevens on October 8, 2014, the costs of that assessment, and the defendants’ post-assessment costs, including their costs of the motions by 1623242 Ontario Inc. and Krishan Judge for leave to discontinue their counterclaim, and by 1623242 Ontario Inc. for leave to discontinue action 571-12, provided that neither 1623242 Ontario Inc. nor Krishan Judge shall commence any future action against any of the parties, based on the causes of action they asserted, or could have asserted, in those proceedings. [Emphasis added.]
[7] On February 17, 2016, 162 applied, pursuant to s. 67(2) of the Construction Lien Act, for leave to move for summary judgment dismissing the construction lien actions against it. Great Lakes Copper Inc. (“GLC”) took the position that if 162 was granted leave to make such a motion, GLC would seek leave to make a cross-motion for summary judgment against 162.
[8] 162 submitted that a determination of the following issues of law would likely dispose of, or substantially shorten, a trial of the construction lien actions:
a) Whether GLC could succeed in its construction lien claims in the absence of a contract with 162;
b) Whether the Agreement of Purchase and Sale which 162 entered into for the purchase of the subject property, which contained the term:
The Buyer further agrees and acknowledges herewith that any and all environmental matters, liabilities and/or contingent liabilities pertaining to the subject property, whether already in existence or whether arising following completion of this transaction, shall remain the responsibility of the Buyer [Emphasis added.]
amounted to a “contract” within the meaning of the Construction Lien Act, so as to render 162 liable to a claim for lien and for payment of the cost of “improvements”, consisting of work performed by GLC in the clean-up of contaminants from the property, pursuant to orders made by the Ministry of the Environment (“MOE”), directed at both the buyer and the seller of the property;
c) Whether the work performed by GLC in removing the contaminants from the property amounted to an improvement made at 162’s implied “request”, in such a way as to render 162 liable to a claim for lien or for payment of the cost of remediation;
d) Whether GLC’s remediation of the environmental contamination of the property entitles it to recover the cost from 162 either pursuant to s. 14 of the Construction Lien Act or at common law, based on unjust enrichment or quantum meruit.
[9] GLC opposed a bifurcation of the trial, or the granting of leave to 162 to bring a motion for summary judgment on the ground that the determination of those issues would not be possible without a determination of facts that were disputed and without which such a motion would not substantially shorten the trial.
[10] In reasons issued on April 27, 2016, and amended August 31, 2016, I dismissed 162’s motion for leave to bring a motion for a summary judgment. I noted that the parties had been unable to agree on the facts that would form the basis of a determination of the relevant issues of law and concluded that:
a) It was unlikely that the issues of law could be determined without hearing the evidence that would be called at trial, and making the determinations of fact that the trial judge would be called upon to make.
b) Without agreement on the facts, it was likely that the issues of value that were involved in the quantification of GLC’s claim would intrude upon the issues of 162’s liability. For example:
i) The knowledge possessed by 162’s owner, Krishan Judge, at the time he purchased the property, as to the extent of environmental contamination, may have to be determined before a finding can be made as to what the parties intended by the wording used in the Agreement of Purchase and Sale, and as to the extent of his knowledge as to the remedial work later undertaken by GLC.
ii) The value of the property at the time of the purchase, absent the contamination, and the extent to which the purchase price of the property was discounted based on that contamination, might have to be determined before a finding can be made as to whether 162 was unjustly enriched.
iii) The cost of the clean-up, and the amount paid to GLC by Wolverine Tube, may have to be determined before a finding can be made as to whether GLC was compensated for its work, whether the enrichment of 162 was at GLC’s expense, and the extent of any uncompensated work on the principle of quantum meruit.
[11] In my order dated April 27, 2016, and amended August 31, 2016, I ordered that:
a) GLC, by June 30, 2016, was to produce to 162 evidence in response to questions asked at the examination of its representative, Kevin Grosbeck, on January 26, 2015, consisting of:
i) All documentation evidencing all payments to all contractors in respect of the first lien;
ii) A detailed summary in respect of all payments of expenses made in respect of the second lien.
b) If required by 162, Kevin Grosbeck was to re-attend, at GLC’s expense, by July 31, 2016, to answer questions arising from answers he had given after his examination on January 26, 2015.
c) 162 was to permit entry by GLC’s expert onto the subject property for the purpose of valuing or appraising the property and taking soil and/or water samples, if required, for the purpose of the valuation or appraisal.
d) GLC, by September 30, 2016, was to serve on 162 a list of the witnesses it would be calling at trial, with the time it would require to examine each of them, and will say statements for all witnesses other than (i) those examined prior to trial; and (ii) experts whose reports have been served.
e) By September 30, 2016, GLC was to deliver its Trial Record, a document brief containing all documents to be relied on at trial, and a factum and case book in respect of court files 216/11 and 501/12.
f) By October 31, 2016, 162 was to serve on GLC a list of the witnesses it would be calling at trial, with the time it would require to examine each of them, and will say statements for all witnesses other than (i) those examined prior to trial; and (ii) experts whose reports have been served.
g) By October 31, 2016, 162 was to deliver its Supplementary Trial Record, a document brief with all documents it would rely on at trial, a factum and a case book in respect of court files 216/11 and 501/12;
h) The parties were to return for a pre-trial conference before me in November 2016.
i) The actions were to be tried at the blitz sittings beginning May 8, 2017, for an estimated 5 days.
j) If any disputes arose in the implementation of my order, either party had leave to move before me for directions.
[12] At a further Case Conference on November 28, 2016, on the consent of the parties, I dismissed GLC’s claims for lien in these actions without costs.
[13] On February 21, 2017, 162 delivered a list of witnesses and took the position that its will say statements were not due until March 31, 2017. On February 28, 2017, Mr. Govedaris sent a letter to GLC’s counsel in which he stated:
Counsel:
We do not possess any will say statements.
We anticipate the witnesses will provide the following evidence:
Andrea Huckins (Crown Counsel) – Give evidence on what reports were received from Great Lakes Copper.
A representeative of Aevitas – Produce their entire file.
Albert Engel – Efforts to obtain contract from 1623242 Ontario Inc.
Sanjay Pahuja – Efforts by Albert Engel to obtain contract from 1623242 Ontario Inc.
Sheldon Kosky – Produce entire real estate file.
Kapley Judge – Evidence concerning purchase of property and remediation efforts by Great Lakes Copper.
If we receive any formal will say statements, we will produce same.
We will not accept service on behalf of Mr. Kapley Judge. [Emphasis added.]
[14] After providing its list of witnesses, 162 removed Kapley Judge’s name from its witness list. Kapley is the son of 162’s sole officer and director, Krishan Judge. He acted as 162’s representative in its purchase of the subject property.
[15] During the examination for discovery of Krishan Judge, Mr. Govedaris took all questions relating to Kapley Judge under advisement. He later delivered answers from Kapley Judge. The questioning of Krishan Judge disclosed that Kapley lived with his father.
[16] On March 1, 2017, GLC gave notice to Mr. Govedaris, counsel for 162, that it reserved the right to seek costs against him personally pursuant to Rule 57.07 of the Rules of Civil Procedure. On March 14, 2017, in response to a Request to Admit which Mr. Govedaris served on behalf of 162, GLC gave Mr. Govedaris formal notice of its intention to seek an award of costs against him personally, on the ground that “your conduct in this litigation…has unquestionably caused costs to be incurred without reasonable cause.”
[17] GLC made further reference to its intention to seek costs against Mr. Govedaris personally in a letter dated April 19, 2017, in response to Mr. Govedaris sending documents that were allegedly protected by the deemed undertaking rule and asking GLC to waive application of the said rule, and again on April 20, 2017, in response to Mr. Govedaris’ refusal to accept service of a Summons on behalf of Kapley Judge.
[18] When 162 removed Kapley Judge from its list of witnesses, GLC’s counsel retained Canadian Process Serving to serve Kapley Judge with its own Summons to Witness. James Fraser of Canadian Process Serving provided an Affidavit of Attempted Service sworn March 14, 2017, detailing the steps he took in attempting to serve Kapley Judge with the Summons to Witness. In his Affidavit, Mr. Fraser states that he spoke with Kapley by telephone and, upon explaining that he was attempting to serve Kapley with a Summons to Witness in connection with these actions, Kapley directed him to speak with “his lawyer” Gregory Govedaris. Mr. Fraser further deposes that he spoke with Mr. Govedaris, who undertook to make arrangements for service, but who then failed to return Mr. Fraser’s follow-up telephone calls.
[19] On February 28, 2017, GLC’s counsel, Robert Macdonald, e-mailed Mr. Govedaris as follows:
Mr. Govedaris,
Our process server has been attempting to serve Kapley Judge with a Notice of Intention to call him as a witness at trial. We are advised that Kapley told the process server that you are his lawyer, and asked him to deal with you.
In the circumstances, please provide us with your undertaking to call to Kapley as a witness at trial. Alternatively, please confirm that you will accept service of our client’s Notice of Intention on Kapley’s behalf, or provide us with an address where Kapley can be personally serviced.
Failing receipt of any of the above, we intend to seek an order for substituted service of the notice of Intention on your office.
[20] Mr. Govedaris stated that he would not accept service of the Summons to Witness on behalf of Kapley Judge. On March 14, 2017, Mr. Macdonald e-mailed Kapely Judge as follows:
Mr. Judge,
As you know, we act for Great Lakes Copper Inc. in the above-noted proceedings. Our process server has attempted to serve you with a summons to wtiness with respect to the upcoming trial.
I understand that you declined to cooperate in accepting service of the summons. I also understand that you told the process server that Mr. Govedaris is your lawyer, and directed him to deal with Mr. Govedaris directly.
Our process server has spoken with Mr. Govedaris, who stated that he would return the process server’s call, and hasn’t. We have also written to Mr. Govedaris and asked him to accept service of the summons on your bhelaf. He has declined to do so.
This e-mail is to advise you that we have instructions to move for an order for substituted service of the summons on Mr. Govedaris’ office. In light of your failure to cooperate with service of the summons, we reserve the right to seek an order that you pay our client’s costs for the motion.
Please note that I have copied Mr. Govedaris on this email.
[21] Kapley Judge did not respond to Mr. Macdonald’s email. At the hearing today, Mr. Govedaris explained that he only became aware in February that he could call as a witness Micheal Klein, the real estate agent who acted on the purchase of the subject property, and that this obviated the need for him to call Kapley Judge. He states that he was out of Canada on vacation for March break and on his return, he served a revised witness list which removed Kapley Judge as a witness 162 intended to call. He states that when he received a call from the process server who was attempting to serve Kapley Judge, he did not have Mr. Judge’s telephone number. Since receiving GLC’s motion record, he has been able to contact Kapley Judge and his client, both of whom authorized him to accept service of the Summons on behalf of Kapley Judge.
[22] Mr. Davis delivered the Summons to Mr. Govedaris in the courtroom, and Mr. Govedaris confirmed that he accepted service of the Summons on behalf of Kapley Judge.
[23] The parties additionally reached agreement today on an admission as to the authenticity of documents that Andrea Huckins was expected to tender and as to the truth of the evidence she can give, which is contained in a letter from the Ministry.
ISSUES
[24] The parties have raised the following issues for determination at this Case Conference:
a) Whether the failure of 162 or GLC to deliver will say statements entitles the opposing party to a remedy;
b) Whether GLC should be required to produce all evidence and law it relies on in support of its claim for costs personally against Gregory Govedaris, and whether the dismissal of GLC’s lien claims precludes GLC from claiming such costs incurred prior to November 28, 2016, in the actions in which those liens were claimed, or whether that issue should be left to the trial judge.
POSITIONS OF THE PARTIES
a) Substituted service of a Summons on Kapley Judge
[25] As noted above, Mr. Govedaris agreed today to accept service of the Summons on behalf of Kapley Judge.
b) Failure to deliver Will Say Statements
[26] GLC submits that 162 should be prohibited from calling witnesses at trial for whom it failed to deliver will say statements. 162 submits that it has complied with the Order dated April 27, 2016, by stating the nature of the proposed witnesses’ testimony.
[27] Both parties take the position that they are not obliged to deliver a Will Say Statement setting out the substance of evidence that an intended witness is expected to give unless the witness is under their control and they are able to secure a statement from the witness.
c) Leave requested by Andrea Huckins to move at the commencement of trial to set aside the Summons to Witness that was served on her
[28] As noted above, the parties came to an agreement today as to an admission that will be filed at trial as to the authenticity of documents Ms. Huckins can provide, and the facts which she would give if called to testify. The issue regarding her Summons is therefore moot, as the admission will stand in place of Ms. Huckins’ testimony.
[29] GLC submits that Ms. Huckins’ evidence is relevant only to the issue of whether 162 has a contractual obligation to remediate the subject property and whether GLC is entitled, pursuant to 162’s obligation, to payment for the remediation. GLC submits that 162 and Krishan Judge are precluded by my Order dated February 9, 2016, and by the principle of res judicata, from litigating the issue of whether the Agreement of Purchase and Sale of the subject property required 162 to pay for the remediation of the property that GLC subsequently undertook.
[30] 162 and Krishan Judge submit that these are live issues in these actions and that they are only precluded from raising issues that were raised in the fraud and mortgage actions in any future actions, by claim or counterclaim against GLC or its related companies.
d) Mr. Govedaris’ entitlement to production of the evidence and law relied on by GLC in support of it claim that he be required to pay GLC’s costs of the action personally, and whether GLC is precluded from claiming such costs for the period prior to November 28, 2016, when the lien claims were dismissed.
[31] Mr. Govedaris submits that GLC’s solicitor gave notice on March 14, 2017, of its intention to seek an award of costs against Mr. Govedaris personally pursuant to Rule 57.07(1), and that he is entitled to the production, prior to the trial, of the evidence and law which GLC relies on in support of this claim.
ANALYSIS AND LAW
a) Substituted service of the Summons to Witness on Kapley Judge
[32] This issue was rendered moot by Mr. Govedaris’ agreement to accept service of the Summons on behalf of Kapley Judge.
b) Does 162’s and GLC’s failure to deliver Will Say Statements entitle the other party to a remedy?
Legislative framework
[33] The Rules of Civil Procedure provide as follows:
60.12 Where a party fails to comply with an interlocutory order, the court may in addition to any other sanction provided by these rules,
(a) stay the party’s proceeding;
(b) dismiss the party’s proceeding or strike out the party’s defence; or
(c) make such other order as is just [Emphasis added.]
Applying the Rule to the facts of this case
[34] Both parties breached my Order dated April 27, 2016, as amended August 31, 2016, when they failed to serve Will Say Statements for the witnesses they intend to call. A Will Say Statement is one that sets out the substance of the witness’ anticipated evidence. The letter from Mr. Govedaris fails to do this in relation to the witnesses 162 intends to call.
[35] GLC similarly breached the Order when it failed to serve Will Say Statements for Kapley Judge and Burramuddin Nizami. The Order required each party to serve Will Say Statements setting out the substance of evidence that it anticipates each witness it intends to call will give. The witness does not have to be under the control of the party who calls the witness, or willing to provide a statement, in order for the obligation to arise. The purpose of the Will Say Statements is to provide full disclosure of the case that the opposing party has to meet. That knowledge is best derived from a statement from the party who intends to call a witness as to what evidence the proposed witness is expected to give.
c) Should the summons to witness that was served on Andra Huckins be set aside on the ground that 162 and Krishan Judge are precluded by the Order dated February 9, 2016, and the principle of res judicata from litigating the issue of whether the Agreement of Purchase and Sale of the subject property required 162 to pay for GLC’s remediation of the property?
[36] As noted above, the parties came to an agreement today on an admission as to the authenticity of documents that Andrea Huckins was to tender and as to the truth of the evidence she could give concerning those documents. This issue is therefore also moot.
[37] GLC submits that the issue of whether 162 and Krishan Judge are precluded from litigating the issue of whether the Agreement of Purchase and Sale required 162 to pay for the remediation of the property that GLC subsequently undertook should be left to the trial judge, I do not agree.
[38] The issues to be tried are a matter for determination by the case management judge. Additionally, I am in the best position to determine what was intended by, and what was the effect of, the order made on February 9, 2016.
[39] The Order dated February 9, 2016 prohibited 162 and Krishan Judge from raising, in future actions, including counterclaims, issues that were raised or could have been raised in its fraud action or its counterclaim in the mortgage action. The issues in the fraud action and the counterclaim in the mortgage action were not determined on their merits but, rather, were settled. The Order precluding future actions was requested for greater specificity of the Order which discontinued or dismissed 162’s actions, in order to protect the defendants in the fraud action and the counterclaim in the mortgage action from future liability arising from the issues in those actions.
[40] The Order made on February 9, 2016 was not intended to affect, and does not affect, 162’s defence to the present actions nor preclude it from raising, in its defence to the present actions, issues that it relied on in its fraud action or in its counterclaim in the mortgage actions.
d) Should GLC be required to produce all evidence and law it relies on in support of its claim for costs personally against Gregory Govedaris, and is it precluded from claiming costs for the period before November 28, 2016?
[41] The costs of the present actions is an issue for the trial judge. The issue of whether the costs incurred before November 28, 2016 pertained to the claims for lien, or to other aspects of the actions, is one of fact. As the costs of the actions are within the sole jurisdiction of the judge who tries the actions, that judge must determine which costs are properly recoverable in those actions.
[42] It is premature, until a determination of substantive issues has been made, to require production of the evidence and law that will be relied on in support of the parties’ claims for costs. Mr. Govedaris will be entitled to production of such evidence if, upon the determination of the substantive issues, GLC continues to assert a claim for costs personally against him. In that event, Mr. Govedaris will be given the opportunity to deliver responding evidence and to cross-examine on such evidence as GLC adduces in support of its claim against him personally.
d) Costs of the Motion
[43] GLC obtained service of the Summons to Witness on Kapely Judge, and an Order requiring 1623242 Ontario Inc. to deliver Will Say Statements for its proposed witnesses in compliance with the Court’s Order dated April 27, 2016, as amended August 31, 2016. It over-reached, however, in seeking an Order requiring GLC to produce the evidence it intends to rely on in support of its claim for costs against Mr. Govedaris personally and a direction precluding GLC from seeking such costs for the period before November 28, 2016.
[44] 162 obtained an Order requiring GLC to deliver Will Say Statements for its proposed witnesses, Kapley Judge and Buramuddin Nizami. It also obtained an admission regarding the evidence of Andrea Huckins.
[45] In the present conference/motions, both parties sought unreasonably to confine the other’s arguments at trial. Neither will be permitted to do so. There are risks to both parties if these actions proceed to trial, and neither party can shield itself from those risks based on the orders that were made previously, or by avoiding compliance with procedural orders in relation to the trial, or by avoiding the attendance of a material witness at the trial. However the substantive issues may be determined at trial, both parties must comply with the order made on April 27, 2016, as amended August 31, 2016, requiring them to deliver Will Say Statements for its proposed witnesses. They have not done so, or done so fully. Additionally, GLC will be required to produce the evidence it relies on in support of its claim for costs against Mr. Govedaris personally, if it chooses to pursue that claim. However, such an Order is premature at this stage of the proceeding. It must await a determination of the substantive issues at trial.
CONCLUSION AND ORDER
[46] For the foregoing reasons, it is ordered that:
Great Lakes Copper Inc. has served Kapley Judge with its Summons to Witness by delivering it to Mr. Govedaris in court today and by Mr. Govedaris’ acceptance of service of the Summons on Kapley Judge’s behalf.
The Summons to Andrea Huckins is set aside. The Agreed Statement of Facts is attached as Schedule “A” to these reasons.
Great Lakes Copper Inc. shall, by May 4, 2017, serve on 1623242 Ontario Inc. a detailed Will Say Statement with the anticipated evidence of Kapley Judge and Burramuddin Nizami.
1623242 Ontario Inc. shall, by May 4, 2017, serve on GLC a detailed Will Say Statement for each of the witnesses it intends to call at the trial of these actions. If the witness is being called only for the purpose of tendering documents or a file that is in the witness’ possession, the Will Say Statement shall confirm that fact, and state that no other evidence will be adduced from the witness. If the witness will be asked questions on any substantive matters, the substance of the witnesses’ evidence shall be set out in detail in the Will Say Statement.
In the event that paragraph 3 or 4 is not complied with, the other party has leave to move before the trial judge to dismiss the actions or strike out the Statements of Defence.
In the event that paragraph 3 or 4 is complied with, it shall be in the discretion of the trial judge whether to permit a party to call a witness whose Will Say Statement was not served in compliance with my Order dated April 27, 2016, as amended August 31, 2016, and, if it is permitted to call such witness, what weight to give to that witness’ testimony, and whether an adverse inference will be drawn from the failure of the party to call the witness by reason of its failure to serve a Will Say Statement in compliance with the Order of that date.
Great Lakes Copper Inc. shall be prepared, at the conclusion of the trial, to file an affidavit with the evidence it relies on in support of an order for payment of costs by Gregory Govedaris personally, and a Costs Outline setting out the costs that it seeks against him. Mr. Govedaris shall be permitted time to deliver an affidavit in response and the Affidavit and Costs Outline of GLC, and to cross-examine on the affidavit and Costs Outline of GLC, if he wishes, before the trial judge makes a determination as to costs.
Success on these motions was divided. There shall be no Order as to costs.
Price J.
Released: May 1, 2017