Court File and Parties

Court File No.: 12-54496 Date: 2017/05/16 Superior Court of Justice - Ontario

Re: Brendan Donald McLellan on Behalf of the McLellan Family Trust; Myles Frederick McLellan; Paddon + Yorke Inc. - the Trustee for Myles Frederick McLellan, Plaintiffs

And

Ronald D. McCowan; Laura Philp; Sheldon Barris; 1645112 Ontario Limited; 1729982 Ontario Limited; 1729981 Ontario Limited; 1083018 Ontario Limited; 1442968 Ontario Limited; Ashley Sherrard; First Contact Realty Ltd. o/a Royal LePage First Contact Realty; In Touch Realty Inc. o/a Royal LePage First Contact Realty; Royal LePage Limited Royal LePage Limitee; Thomas Ambeau; Allen W. Weinberg; Stephen Altwerger; Robert Martin; Gregory Jardine; Oxana Arkhitko; Bogden Jurewicz; Constable Maxwell Brown; Inspector Thomas McDonald; Chief Bruce Davis; South Simcoe Police Service; Corporation of the Town of Innisfil; Corporation of the Town of Bradford West Gwillimbury; Raymond Williams; Frank Faveri; Sarah Tarcza; Her Majesty the Queen in Right of the Province of Ontario as Represented by the Ministry of the Attorney General, Defendants

Before: Madam Justice Robyn M. Ryan Bell

Counsel: Arthur Ayers, Counsel for the Plaintiffs Brendan Donald Kenneth McLellan and Myles Frederick McLellan Amandeep S. Dhillon, Counsel for the Defendants Ronald D. McCowan, Laura Philp, 1645112 Ontario Limited, 1729982 Ontario Limited, 1729981 Ontario Limited, 1083018 Ontario Limited, 1442968 Ontario Limited and Ashley Sherrard Allan R. O’Brien, Counsel for the Defendant Allen W. Weinberg

Heard: May 9, 2017

Endorsement

RYAN BELL J.

Introduction

[1] This action was commenced by way of Notice of Action issued May 25, 2012 and Statement of Claim filed June 20, 2012 in the name of three plaintiffs: Brendan Donald Kenneth McLellan (“Brendan”) on behalf of the McLellan Family Trust, Myles Frederick McLellan (“Myles”), and Paddon + Yorke Inc. – the Trustee for Myles Frederick McLellan.

[2] The action was dismissed as abandoned in January 2013. Neither the Notice of Action nor the Statement of Claim was served on the defendants.

[3] The plaintiffs brought what the parties have referred to as the “Revival Motion,” originally scheduled for December 8, 2016, to set aside the order dismissing the action, revive the abandoned action, and obtain leave to amend the Statement of Claim.

[4] In support of their Revival Motion, the plaintiffs delivered an affidavit sworn by Myles. No affidavit was filed by Brendan. The plaintiffs refused to produce Brendan to be examined without a court order. Brendan currently resides in Boston, Massachusetts.

[5] The Revival Motion has not been heard. In response to the Revival Motion, the defendants represented by Mr. Dhillon (the “McCowan defendants”) brought a motion before the Master for an order requiring Brendan to attend for an examination as a witness before the hearing of the Revival Motion (the “Examination”). The McGowan defendants were successful on this motion. On December 20, 2016, Master Fortier ordered that Brendan attend the Examination pursuant to Rule 39 of the Rules of Civil Procedure.

[6] The plaintiffs Brendan and Myles appeal the decision of the Master that Brendan attend the Examination. The plaintiffs also seek to appeal the award of costs made by the Master.

The Master’s Order

[7] The Master ordered that Brendan shall attend the Examination on the Revival Motion and that the Revival Motion be adjourned to June 19, 2017. After ordering the Examination, the Master requested counsel to agree as to the date, time and location of the Examination. Paragraph 4 of the Master’s order provides that as a result of the Examination order, on consent of the parties, Brendan will make himself available to be examined by the defendants on one of the dates set out in paragraph 3 of the order, both in person in downtown Boston, Massachusetts, and by way of video-conferencing. The Master ordered that the plaintiffs pay the McCowan defendants fixed costs of the motion in the amount of $5000 within 60 days of the order.

The Master’s Reasons

[8] In her reasons dated January 26, 2017, the Master made the following findings and reached the following conclusions:

• At the time that the action was commenced, Myles was bankrupt (he was discharged in May 2015) and did not have the capacity to personally commence the action. (para. 5)
• Paddon + Yorke Inc. did not consent to be named as a plaintiff. (para. 5)
• Brendan was the only plaintiff who was in a legal position to commence the action. (para. 5)
• Brendan is the only plaintiff who could have moved the action forward and ensured that it was not administratively dismissed. The evidence of Brendan’s actions and inactions is relevant to the pending Revival Motion. (para. 11)
• There is no compelling evidence that the Examination is an abuse of process. The McCowan defendants have a prima facie right to the Examination pursuant to Rule 39.03. (para. 11)
• In applying the test for commission evidence as set out in Moore v. Bertuzzi, 2015 ONSC 1318, the anticipated evidence of Brendan is material to the issues to be determined on the Revival Motion and the Examination is not a fishing expedition. The Examination will ensure a full and fair hearing of all parties at the Revival Motion. (para. 13)

Issues on Appeal

[9] There are four issues on this appeal:

(i) Did the Master err in law with respect to the proper test for an extra-jurisdictional examination? (ii) Did the Master fail to provide sufficient reasons? (iii) Did the Master misapprehend the evidence giving rise to a palpable and overriding error? (iv) Is leave to appeal the issue of costs awarded by the Master required?

Standard of Review

[10] The parties who appeared before me on the appeal agree that the appropriate standard of review on an appeal of a master’s order is the same as that which applies to trial judges: the decision will be interfered with only if the master made an error of law or exercised his or her discretion on the wrong principles or misapprehended the evidence such that there is a palpable and overriding error. (See Zeitoun v. Economical Insurance Group, 2008 CarswellOnt 2576 (Div.Ct.) at paras. 40-41.)

i) Extra-Jurisdictional Examination

[11] I find that the Master applied the proper test when making the order for the Examination.

[12] A party seeking to examine a witness under Rule 39.03(1) has the onus of showing, on a reasonable evidentiary basis, that the examination will be conducted on issues relevant to the pending motion and that the proposed witness is in a position to offer relevant evidence. If the evidence sought is relevant, there is a prima facie right to examine under Rule 39.03 so long as the right is not exercised in a manner which constitutes an abuse of process. (See 1632842 Ontario v. Great Canadian Gaming Corp., 2008 CarswellOnt 4690 at para. 8.)

[13] I agree with the following findings of the Master:

• That only Brendan had standing both at the time the action was commenced and when it was administratively dismissed;
• That the evidence of Brendan’s actions and inactions is relevant to the pending Revival Motion; and
• That there was no compelling evidence that the Examination would be an abuse of process.

[14] Brendan currently resides in Boston, Massachusetts. The Master ordered that Brendan is to make himself available to be examined by the defendants both in person in downtown Boston and by way of video-conferencing. The Master considered and applied Rule 34.07(1) of the Rules of Civil Procedure, which provides for the Court to determine whether the examination shall take place within or outside Ontario.

[15] Rule 34.07(2) provides that where the person is to be examined outside Ontario, the evidence shall be taken by a commissioner. The test for commission evidence intended for use at trial is set out in Moore v. Bertuzzi, 2015 ONSC 1318 at para. 30: the anticipated evidence must be material to an issue in the action as opposed to a collateral matter, must be more than merely corroborative of evidence of other witnesses, and must not simply be a fishing expedition. The overriding principle in the granting of a commission is a fair and full trial.

[16] I find that the Master correctly considered and applied the factors set out in Moore v. Bertuzzi. I agree with the Master’s findings that:

• Brendan’s evidence is relevant to the Revival Motion;
• Brendan is the only plaintiff who could have moved the action forward and ensured that it was not administratively dismissed;
• The anticipated evidence is not a fishing expedition
• The examination will ensure a full and fair hearing of all parties at the Revival Motion.

ii) Sufficiency of the Master’s Reasons

[17] I find that the Master’s Reasons provide a clear and sufficient explanation as to why she came to her decision.

[18] Reasons for decision serve three main functions: (i) they tell the parties why the decision was made; (ii) they provide public accountability of the judicial decision; and they permit effective appellate review. (See R. v. M. (R.E.), 2008 SCC 51 at para. 11.) These purposes are fulfilled if the reasons, read in context, show why the judge decided as he or she did. (See R. v. M. (R.E.) at para. 17.)

[19] For the reasons set out in paragraphs 12 to 16, I find that the Master’s reasons, read in context, show why the Master decided as she did. I find that the Master’s Reasons satisfy the test for sufficient reasons.

iii) The Master’s Understanding of the Evidence

[20] I find that the Master did not misapprehend the evidence before her and made no overriding and palpable error in ordering the Examination.

[21] The plaintiffs submit that Brendan is a nominal plaintiff and that the Master misapprehended the nature and role of a nominal plaintiff. I find that the Master acknowledged the plaintiffs’ submissions on this issue (see para. 8 of the Master’s Reasons); however, based on the evidence before her, the Master found that it had been clearly established that Brendan was the only plaintiff with standing at the time the action was commenced and when it was administratively dismissed. The Master also found that Brendan is the only plaintiff who could have moved the action forward and ensured that it was not administratively dismissed. I agree with these findings of the Master.

iv) Appeal of the Costs Award

[22] On the issue of costs awarded by the Master, an issue was raised by the McCowan defendants that the plaintiffs had failed to comply with section 133 of the Courts of Justice Act, R.S.O. c. C.43 because they did not seek leave to appeal the costs award. The plaintiffs’ position was that leave to appeal was not required. Following argument on this issue, I provided the parties with oral reasons. In summary, I agreed with the McCowan defendants and directed the plaintiffs to seek leave with respect to costs.

[23] It is clear that leave to appeal the Master’s decision with respect to costs is required. Leave to appeal a costs order will be granted sparingly and only when there are strong grounds to believe the lower court erred. I would have significant concern whether the test for leave would be met in this case. (See Feinstein v. Freedman, 2014 ONCA 205.)

Disposition

[24] For the reasons set out above, I order that:

(i) The appeal by the plaintiffs Brendan McLellan and Myles McLellan from the order of Master Fortier dated December 20, 2016, on issues other than costs, is dismissed. (ii) The appeal by the plaintiffs Brendan McLellan and Myles McLellan from the order of Master Fortier dated December 20, 2016 as to costs is dismissed, without prejudice: (a) to the plaintiffs to bring, independent of this appeal, a motion for leave with respect to costs; and (b) to the defendants to raise as an issue, the timing of the motion for leave. In the event the plaintiffs decide to bring a motion for leave to appeal, their motion record shall include a copy of this endorsement.

Costs of the Appeal

[25] The parties are in agreement that costs of the appeal are to be awarded on a partial indemnity basis. The plaintiffs and the McCowan defendants also agree on the partial indemnity hourly rates set out in their respective costs outlines. In fixing the costs of the appeal, I have considered the factors set out in Rule 57.01 of the Rules of Civil Procedure and the principles set out in Boucher v. Public Accountants Council for the Province of Ontario, (2004), 71 O.R. (3d) 291 (C.A.). The plaintiffs were not successful on the substantive appeal. In addition, the appeal in relation to costs is dismissed (albeit on a without prejudice basis) as leave to appeal was not sought by the plaintiffs. I am also mindful of the fact that costs of the motion were fixed by the Master in the amount of $5,000.

[26] The plaintiffs submitted that costs of the appeal should be in the cause. I am not satisfied that such an order would be more just and accordingly, I award costs to the defendants, in the amounts fixed below, to be paid within 60 days.

[27] Bearing in mind that the overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in all of the circumstances, and addressing fairness and proportionality, I fix the McCowan defendants’ costs in the amount of $4,500. I fix the costs of the defendant Allen W. Weinberg in the amount of $1,500.

[28] Costs are awarded as follows:

(i) Plaintiffs shall pay to the McCowan defendants costs of this appeal, fixed in the amount of $4,500, within 60 days. (ii) Plaintiffs shall pay to the defendant Allen W. Weinberg costs of this appeal, fixed in the amount of $1,500, within 60 days.

Madam Justice Robyn M. Ryan Bell

Date: May 16, 2017