Court File and Parties

COURT FILE NO.: 16-CV-557418 Motion heard: April 19, 2017 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: JONATHAN BEATTY and JACQUELINE BEATTY, Applicants AND ZHONG WEI and RE/MAX PREMIER INC., Respondents

BEFORE: Master Lou Ann M. Pope

COUNSEL: Counsel for applicants: John Lo Faso, Professional Corporation Fax: 905-850-9969 Counsel for respondents: William Friedman, Friedman Law, Professional Corporation Fax: 416-497-3809

Reasons for Endorsement

[1] The respondent, Zhong Wei (“Wei”), seeks costs of this motion to compel the applicant, Jonathan Beatty (“Beatty”), to answer undertakings and refusals given at cross-examination on his affidavits held on November 23, 2016. In particular, Wei seeks costs against both Beatty and his counsel on a joint and several basis.

Background

[2] Pursuant to an agreement of purchase and sale dated May 15, 2016, Wei offered to purchase residential property from Beatty. Prior to closing, Wei learned from his agent that the property had been used as marijuana grow op and refused to close the transaction. The agreement contained the express warranty and representation that to the best of the seller’s knowledge and belief, the property had never been used for the growth or manufacture of illegal substances, which warranty survived the completion of the transaction.

[3] Both parties to the agreement brought applications claiming damages and return of the deposit.

[4] A timetable order was made on October 24, 2016 which required a party to serve a notice of motion for any refusals motion by January 15, 2017. The hearing of this application was scheduled for February 27, 2017.

[5] Wei served his notice of motion herein on January 16, 2017 with a return date of April 19, 2017.

Undertakings and Refusals

[6] Beatty answered his undertakings and refusals between December 2016 and March 8, 2017, when the last refusal was answered without conditions. In particular, by January 19, 2017, there were three refusals outstanding. On January 31, 2017 Beatty produced more documents and only refusal 9 was outstanding. On March 2, 2017, counsel for Wei advised that the motion was proceeding on the last refusal and Wei made an offer to settle the motion. Finally, on March 8, 2017, Beatty removed his condition on refusal 9, being rule 34.12(2) of the Rules of Civil Procedure. As such, by virtue of the fact that Beatty answered all questions that he had refused on his cross-examination, his answers amount to an admission that the refused questions were all relevant to the issues in this proceeding.

Costs

[7] Wei seeks costs of the motion against both Beatty and his counsel, Mr. Lo Faso, personally, on a joint and several basis.

Costs of the Motion against Beatty

[8] For the reasons set out at paragraph 6 above, I find that this motion was necessary in order for Wei to obtain answers to Beatty’s undertakings and his refusals. Further, Wei was obliged to comply with the timetable order that required the notice of motion on a refusals motion to be served by January 15, 2017. Thus, Wei served the notice of motion on January 16, 2017, one day late. The motion record, factum and brief of authorities was served on April 7, 2017. I find that it was necessary for Wei to deliver those documents because although Beatty had answered the final refusal on March 8, 2017, the parties had not resolved the issue of costs of the motion.

Costs of the Motion against Mr. Lo Faso personally

[9] Wei relies on rule 57.07(1) of the Rules of Civil Procedure which states:

57.07(1) Where a lawyer for a party has caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default, the court may make an order,

(a) disallowing costs between the lawyer and client or directing the lawyer to repay to the client money paid on account of costs;

(b) directing the lawyer to reimburse the client for any costs that the client has been ordered to pay to any other party; and

(c) requiring the lawyer personally to pay the costs of any party.

(2) An order under subrule (1) may be made by the court on its own initiative or on the motion of any party to the proceeding, but no such order shall be made unless the lawyer is given a reasonable opportunity to make representations to the court.

[10] Regarding subrule (2), there is no issue regarding notice of the motion to Mr. Lo Faso.

[11] The applicable principles in circumstances in which a lawyer should be ordered to pay costs of a proceeding or a step in a proceeding personally are as follows:

1. Rule 57.07(1) is not concerned with the lawyer’s professional conduct generally or the discipline or punishment of a lawyer but only with compensation for conduct which has caused unreasonable costs to be incurred.
2. Mere negligence can attract costs consequences as can action or omissions which fall short of negligence. Bad faith is not a requirement for imposing costs consequences on a lawyer under rule 57.07(1)(c). It is only when a lawyer pursues a goal which is clearly unattainable or is clearly derelict in his or her duties as an officer of the court that resort should be had to rule 57.07.
3. The first step in determining whether an order is warranted is to inquire whether the lawyers conduct falls within rule 57.07(1) in the sense that it caused costs to be incurred unnecessarily. Rule 57.07(1) refers specifically to conduct that “caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default.”
4. The second step in the application of the rule is to consider, as a matter of discretion and applying the extreme caution principle enunciated in the Supreme court of Canada decision in Young v. Young, [1991] 4 S.C.R. 3, whether in the circumstances, the imposition of costs against the lawyer personally is warranted. The “extreme caution” principle, as stated in Young, means that “these awards must only be made sparingly, with care and discretion, only in clear, and not simply because the conduct of a lawyer may appear to fall within the circumstances described in rule 57.07(1).” (Royal Bank of Canada v. Bodanis, 2016 ONSC 2929, at para. 32; Galanov v. Russell (Township), 2012 ONCA 410)

[12] Wei’s allegations against Mr. Lo Faso are with respect to his conduct on Wei’s cross-examination of Beatty. Wei relies on Madonis v. Dezotti, 2010 ONSC 2180, at para. 16, with respect to the conduct of examinations for discovery generally, where Master Dash set out the principles for the conduct of an examination for discovery that has developed in our jurisprudence. They are as follows:

1. An examining party has a right to ask questions at an examination for discovery without unnecessary interruptions. The role of the lawyer for the party being examined is to listen to the question asked, decide if the question is improper or incomprehensible and if so to make an objection. They must not interfere in the examination any more than is necessary to perform that function. Otherwise such interjections by counsel may interrupt the proper flow of the examination. Further, such interruptions may affect the quality of the examination record making it difficult or impossible for the examining party to have it read into evidence at trial as part of his or her own case as permitted under rule 31.11(1) or to use the transcript for purposes of impeachment as permitted under rule 31.11(2).
2. The lawyer for the party being examined may therefore interrupt the proceeding for the purpose of objecting to an improper question, placing the objection on the record and directing the party either to not answer or, as permitted by rule 34.12(2), to answer under objection. Rule 34.12(1) requires that the objecting party “briefly state the reasons for the objection.” This does not give licence to the lawyer for the party being examined to engage in an argument with the examining lawyer about the question asked or to provide gratuitous information not requested. The reasons for the objection should be stated on the record briefly and simply; for example, that the question is not relevant or that it is protected by a particular privilege or that the question has already been answered.
3. The lawyer for the party being examined may also interrupt the examiner if necessary to ensure that the witness and counsel understand the question. The lawyer should simply advise the examiner that the question is unclear or ambiguous and should not suggest what the question should be or how the questions may be rephrased. The lawyer must be scrupulously careful not to engage in a dialogue that would provide a cue to the party being examined on how to answer the question.
4. It is the party who is being examined and not his or her lawyer. The examining party is entitled to the evidence of the witness and not that of counsel. Rule 31.08 requires that questions at an oral examination for discovery “shall be answered by the person being examined but, where there is no objection, the questions may be answered by his or her lawyer. “If questions are put to the witness, it is expected that the witness will personally answer the questions asked. As a practical matter the lawyer may wish to assist by answering a question or correcting an answer, but once the examiner objects then neither of these are permitted even if the answer given by the party is wrong. If the examining party objects to counsel answering, the lawyer must refrain from answering even if counsel may provide a more fulsome answer than his or her client. It would of course be appropriate for the lawyer for the party being examined to answer questions directly put to him or her by the examining party.
5. Often there is a spirit of cooperation at an examination for discovery where counsel allow each other some latitude and permit the lawyer for the witness to offer assistance; however, if examining counsel wishes to insist on strict compliance with the rules he or she should be clear about it. A party should not dredge up on a rule 34.14 motion interjections at an examination prior to the time that objection was made.
6. It is the duty of the party and not counsel to correct an answer given, even if the answer given by the party is wrong. If the lawyer for the party being examined wishes to correct an answer they have two options – counsel may (a) choose to re-examine their own client under rule 34.11(1) to correct, clarify, explain or complete an answer but only after the completion of the examination by the examining lawyer or (b) provide the clarification, correction or completion of the answer in writing after the conclusion of the examination as permitted by rule 31.09(1)(a). Sometimes it may be more desirable to correct or clarify the answer at the time it is given, but if the examining party objects then the correction must be made in accordance with these rules.
7. Counsel must not communicate with his or her client during the examination except on the record, and even then, this communication should be made sparingly so as not to interfere with the flow of the examination. Counsel must not lead his or her own witness after the witness has given a damaging or incorrect answer since this serves to cue the witness to offer an explanation for his damaging answer. Counsel must not suggest directly or indirectly to the client how a question should be answered.

[13] Prior to cross-examinations, the parties herein agreed that the scope of the applications were with respect to whether Wei was required to complete the purchase of the property, whether Beatty knew there was a grow operation and concealed it, whether the information provided by Wei that the property was used as a grow operation negates the warranty, and if Wei must still close, the amount of Beatty’s damages.

[14] Wei alleges that Mr. Lo Faso repeatedly and improperly answered questions on behalf of his client, Beatty, by interfering with the proper conduct of the examination by:

(a) objecting to proper questions; (b) interfering with the questioning; (c) denying what had not previously been in dispute; (d) telling Mr. Bakos, counsel for Wei, what questions he should ask and how he should ask the questions; (e) continuing to give his views and lead Beatty as to how he should answer the question after Mr. Bakos objected to Mr. Lo Faso interfering in the examination; (f) answering questions for his client despite Mr. Bakos’ objection to Mr. Lo Faso doing so; (g) refusing to allow Beatty to answer a question without stating proper grounds.

[15] Wei filed the transcript of the cross-examination of Beatty. It is 238 pages long, including 924 questions, 7 exhibits, 12 undertakings and 28 refusals.

[16] Wei’s factum sets out numerous examples of alleged improper conduct by Mr. Lo Faso during the cross-examination of Beatty.

[17] Having reviewed the transcript, I am satisfied that Mr. Lo Faso’s conduct during the cross-examination was improper at times and in breach of the Rules of Civil Procedure for the reasons cited by Wei set out above.

[18] One glaring example of his improper interference is at page 128, question 565, at lines 18-21, when Mr. Lo Faso, having accused Mr. Bakos of yelling at him, stated:

You raise your voice when you don’t get what you want. You act like a little child that you don’t get what you want you raise your voice. Really. Come on.

[19] An example of Mr. Lo Faso answering a question for his client is located at page 127, question 561, as follows:

Mr. Bakos: Okay. Exhibit F to your affidavit there is a letter by Mr. Wei’s former counsel to Frank Soppelsa. Was that your former lawyer?

Mr. Lo Faso: It’s a real estate lawyer. I don’t know if it’s a former lawyer.

[20] The following is an example of Mr. Lo Faso improperly interfering with the questioning by answering a question for his client rather than advising Mr. Bakos that he objected to the question and briefly stating the reason for his objection. (Questions 335-336, page 82):

335 Mr. Bakos: So you were made aware prior to closing this transaction that there was a grow op at the property formerly, correct?

Mr. Beatty: Prior to closing?

336 Mr. Bakos: Yes. Prior to Mr. Wei’s closing date you were made aware that there was formerly a marijuana grow operation at the property, correct?

Mr. Lo Faso: Don’t answer that. Again, if you say he was aware your position is that it was previously a grow op that’s a fair question because we do not know.

Mr. Bakos: So you don’t concede there was a former grow up?

Mr. Lo Faso: You’ve got to be joking me, Mr. Bakos. Are you –

Mr. Bakos: I’m not joking you at all.

Mr. Lo Faso: Would you bet your life that that house was previously a grow op because the police –

Mr. Bakos: Is that the standard of proof in the court?

Mr. Lo Faso: Then don’t say it. Don’t say it.

Mr. Bakos: Don’t say what, Counsel?

Mr. Lo Faso: Don’t say that it was previously a grow op. You can say it’s your position.

Mr. Bakos: I’m not going to argue with you on the record, Counsel.

Mr. Lo Faso: There’s a fact that you have a police report. We acknowledge the police report but if you’re going to say –

Mr. Bakos: Do you dispute the police report?

Mr. Lo Faso: He just answered he doesn’t have any evidence to dispute it.

Mr. Bakos: Okay. So you can’t dispute –

Mr. Lo Faso: But that doesn’t mean it was.

Mr. Bakos: It was what?

Mr. Lo Faso: That 39 Stainforth Driver in Toronto, Ontario was previously a grow op. It is the police reported that. Police make mistakes. God dammit I see police make thousands of mistakes. It could be 37 Stainforth. It could have been some other property. So don’t put any question that it’s conclusive that 39 Stainforth was a grow op. You can say it’s your position.

Mr. Bakos: Thank you, Counsel. Prior to closing do you recall being advised that the purchaser, Mr. Wei, believed there was a grow op at the property?

Mr. Lo Faso: That’s a better question.

Mr. Bakos: Counsel, thank you. I don’t need you to approve my questions. You either object or you don’t.

Mr. Lo Faso: Well, I’m hoping it will help you for the next question.

Mr. Bakos: Counsel, I don’t need to hear your commentary.

[21] The following is an example of Mr. Lo Faso telling Mr. Bakos what the question should be or how the question should be rephrased. In addition, Mr. Lo Faso interrupted the examination unnecessarily by failing to instruct Beatty not to answer the question and thereafter state briefly the reason for his objection. Essentially Mr. Lo Faso engaged in a discussion and debate about the propriety of the question. The discussion takes up two and one half pages of the transcript. In my view, the question was proper and could easily been answered by Beatty by stating, “I don’t know who prepared the offer,” or “I believe Wei and his agent prepared the offer.” (Question 139, pages 43-46)

By Mr. Bakos:

Q. 139. . . All right. Let’s go to Exhibit C which is Mr. Wei’s offer. Who prepared this offer:

Mr. Lo Faso: Don’t answer that. See, Mr. Bakos, when you say who prepared it, right, that’s an unfair question. I think the question should be –

Mr. Bakos: counsel –

Mr. Lo Faso: Just a second.

Mr. Bakos: It’s not an unfair question.

Mr. Lo Faso: It is.

Mr. Bakos: It’s a completely open ended question for your client to answer however he sees fit and I can ask a follow up. So if you don’t have an objection about it being an unfair question without any justification it’s not a proper objection so please let the witness anser the question.

Mr. Lo Faso: I won’t. I know that you used the word please and I appreciate that.

Mr. Bakos: that a refusal?

Mr. Lo Faso: That is a refusal. Kelly, that’s a refusal. Now, if you ask this gentleman, Mr. Beatty, if he prepared it; he’ll give you a yes or a no. If he says no then you can ask him, “Do you know who prepared it?” that’s a fair question. But to present the document and say who prepared it then that means he’s God who knows everything about everybody and he’s not God; at least he’s told me he’s not God.

– refusal

Mr. Bakos: Counsel, can you please stop?

Mr. Lo Faso: He could be God but he’s not God. So ask a fair question.

Mr. Bakos: Counsel, my question was absolutely fair and I cannot even understand your interpretation of why it’s not. I’m completely at a loss.

Mr. Lo Faso: Or you could say, “Do you know who prepared the document?” That’s a different question.

Mr. Bakos: I don’t need to lay a foundation for every single question that I ask, Counsel, or else we’ll be here all day like we did yesterday.

Mr. Lo Faso: When you say, “Who prepared this document” you have to build a foundation if he even knows. You can’t just ask who prepared it.

Mr. Bakos: I can’t despite it being –

Mr. Lo Faso: You could and I’ll object.

Mr. Bakos: And in his affidavit he swears that this is an offer that he accepted. “Jacqueline and I entered into an agreement of purchase and sale.” Here it is at Exhibit C and I can’t ask him and presume that he knows who prepared it?

Mr. Lo Faso: Don’t presume anything.

Mr. Bakos: A document that he entered into?

Mr. Lo Faso: You can ask him if he knows –

Mr. Bakos: counsel, that why I’m saying please stop interjecting or we’re going to be here all day and we’re going to have to come back.

Mr. Lo Faso: Mr. Bakos, your question was who prepared it and I’m objecting to the form of the question. You can ask him if he’s aware of it. That’s fine.

[22] The above are merely a few examples of Mr. Lo Faso failing to comply with the rules regarding the principles of the conduct of examinations.

[23] As such, I find that by his conduct, Mr. Lo Faso unnecessarily and unreasonably lengthened the time to complete the cross-examination of Beatty, which has affected the quality of the examination record and will make it difficult for Wei’s counsel to have it read into evidence at trial.

[24] I am satisfied that Wei has met his onus under rule 57.07 of demonstrating that Mr. Lo Faso caused costs to be incurred without reasonable cause or to be wasted by his conduct referred to above.

[25] Therefore, I exercise my discretion under rule 57.07(1)(c) and order that Mr. Lo Faso pay a portion of Wei’s costs of this motion in an amount which represents the extra time spent conducting the cross-examination due to his improper conduct.

[26] Counsel for Wei filed a bill of costs. Wei seeks $11,079.43 inclusive of disbursements and taxes on a partial indemnity scale. A total of 53 hours is claimed to have been spent on this motion. Wei filed a motion record, factum and brief of authorities.

[27] Mr. Friedman advised the court at the conclusion of costs submissions that Wei had made an offer to settle the motion; however, he did not file the offers. Therefore, I will defer my determination of the quantum of costs until all offers to settle are filed, which shall be completed within seven days of the date of this order. Any offers to settle shall be filed with my assistant trial coordinator, Ms. Christine Meditskos, at 393 University Avenue, Toronto, 6th floor.

May 12, 2017 Master Lou Ann M. Pope