Court File and Parties
Newmarket Court File No.: CV-14-118210/00 Date: 20170523 Ontario Superior Court of Justice
Between: 1853491 Ontario Inc. and 2278385 Ontario Limited, operating as Kirby Waste Transfer Solutions, Plaintiffs -and- Regional Waste North Inc. and Alex Sivitilli, Defendants -AND- Regional Waste Transit Inc., Alex Sivitilli, Regional Waste Transit Inc. and Snowpro Winter Services Ltd., Plaintiffs by Counterclaim -and- 1853491 Ontario Inc., 2278385 Ontario Inc. c.o.b. as Kirby Waste Transfer Solutions, 1854488 Ontario Limited Vincenzo Ussia Senior, Vincenzo Ussia Junior, Michael Ussia, Lucia Ussia, 1116941 Ontario Limited, Verde Excavating Ltd., A1A Demolition Inc., and Public Disposal and Recycling Inc., Defendants by Counterclaim
Counsel: M. Marchioni, for the Plaintiffs/Defendants by Counterclaim M. Kestenberg and B. Jusko, for the Defendants/Plaintiffs by Counterclaim
Heard: May 11, 2017
Before: WOODLEY, J.
Order
Nature of the Motion
[1] The sole issue before me on this motion is whether the Plaintiffs should be granted leave under Rule 39.02(2) of the Rules of Civil Procedure to file a Supplementary Affidavit, dated January 23, 2017, and if leave is granted, to determine the terms that would be just in the circumstances of this case.
Overview of Dispute and Litigation
[2] The Plaintiffs’ Claim and the Defendants’ Counter-claim arise as a result of a failed business relationship between the Ussia Family (the Plaintiffs) and the defendant Alex Sivitilli (the Defendants).
[3] In general terms the following is a summary of the dispute between the parties and the litigation arising therefrom: a. In 2011, the Plaintiffs entered into a business agreement with the Defendants. b. In late 2013, the business relationship between the parties deteriorated. c. In early January 2014, the Plaintiffs requested that the Defendants vacate the Plaintiffs’ property (Kirby Waste). Around this same time, the Defendants asserted an ownership interest in that same company (Kirby Waste). d. On January 14, 2014, the Plaintiffs sent an email to the Defendants denying the Defendants’ ownership claims in Kirby Waste. e. On January 22, 2014, the Plaintiffs’ counsel and the Defendants’ former counsel met to address the parties’ claims. The parties agreed to consult with Kirby Waste’s corporate accountant and corporate lawyer to determine the Defendants’ claims of beneficial ownership. f. On March 20, 2014, after being unable to resolve their issues, the Plaintiffs commenced the within action by Statement of Claim. g. On June 16, 2014, the Defendants filed a Statement of Defence to the Claim. h. On March 3, 2016, the Defendants filed a Fresh as Amended Statement of Defence and Counterclaim. Among other matters, by their amended pleadings the Defendants as Plaintiffs by Counterclaim seek: (i) a declaration that Mr. Sivitilli is a beneficial owner of Kirby Waste; and (ii) payment for landscaping work done in 2012 and 2013. i. On April 29, 2016, the Plaintiffs filed a Motion Record seeking partial summary judgment claiming that the Defendants’ Counterclaim is statute-barred. j. In response to the Plaintiffs’ Motion for summary judgment, the Defendants served an Affidavit and a Supplementary Affidavit sworn by Mr. Sivitilli. By the Supplementary Affidavit, delivered November 18, 2016, the Defendants recite details of the parties’ agreement to verify Kirby Waste’s ownership structure and include some of the communication exchanged relating to this agreement. k. On December 16, 2016, the Plaintiffs conducted their cross-examination of Mr. Sivitilli with respect to the affidavits filed on the Plaintiffs’ Motion. Plaintiffs’ counsel did not seek to cross-examine Mr. Sivitilli with respect to the Supplementary Affidavit delivered November 18, 2016. l. Also on December 16, 2016, following the cross-examination of Mr. Sivitilli, the Plaintiffs learned for the first time that the Defendants intend to rely on s. 11 and the tolling provisions of the Limitations Act as a defence to the Plaintiffs’ Motion for Summary Judgment. m. On January 23, 2017, the Plaintiffs filed an Amended Notice of Motion seeking leave to admit additional affidavit evidence under r. 39.02(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, on such terms as are just.
The Law
[4] Rule 39.02(2) of the Rules of Civil Procedure reads as follows:
39.02 (2) A party who has cross-examined on an affidavit delivered by an adverse party shall not subsequently deliver an affidavit for use at the hearing or conduct an examination under rule 39.03 without leave or consent, and the court shall grant leave, on such terms as are just, where it is satisfied that the party ought to be permitted to respond to any matter raised on the cross-examination with evidence in the form of an affidavit or a transcript of an examination conducted under rule 39.03. R.R.O. 1990, Reg. 194, r. 39.02 (2).
[5] The Plaintiffs argue that a flexible, contextual approach is to be taken in assessing whether to admit new evidence under r. 39.02(2), citing the Divisional Court’s decision in First Capital Realty Inc. v. Centrecorp Management Services Ltd., 2009 CarswellOnt 6914, at para. 14, (Ont. S.C. [Div. Ct.]).
[6] The Defendants emphasize that there is a high threshold for admissibility under the rule, per Arif v. Li, 2016 ONSC 4579, at para. 38.
[7] Both sides, however, agree that whether to grant leave on a r. 39.02(2) motion is determined by a consideration of the following criteria: 1. Is the evidence relevant? 2. Does the evidence respond to a matter raised on the cross-examination, not necessarily raised for the first time? 3. Would granting leave to file the evidence result in non-compensable prejudice that could not be addressed by imposing costs, terms, or an adjournment? 4. Did the moving party provide a reasonable or adequate explanation for why the evidence was not included at the outset?
[8] The Plaintiffs contend that each factor supports granting leave, while the Defendants concede only the first factor, relevancy.
Review of the Four Factors to Consider When Asked to Grant Leave
[9] As relevancy is conceded, we begin with the second factor - does the evidence respond to a matter raised on the cross-examination, not necessarily raised for the first time?
[10] The Defendants submit that the matters for which they seek to file further evidence were not raised on cross-examination but rather were contained in the affidavit of Mr. Marchioni filed by the Plaintiffs in support of their Motion for Summary Judgment and by the Defendants in the Supplementary Affidavit of Mr. Sivitilli delivered November 18, 2016.
[11] The Plaintiffs deny the Defendants’ submission and assert that the Defendants did not allude to the tolling issues until Mr. Sivitilli mentioned them following cross-examination at the prompting of his counsel on re-examination and did not allude to the s. 11 issues until following the completion of the cross-examination.
[12] On my review of this second factor, I note that the test from the First Capital Realty Inc. v. Centrecorp Management Services Ltd., 2009 CarswellOnt 6914, does not strictly require that the matter was raised for the first time on cross-examination. In the present case it is clear that the Plaintiffs’ were unaware that the matters for which they seek to file further evidence were matters in dispute until following the cross-examination of Mr. Sivitilli. In the circumstances I find that the Plaintiffs were completely unaware that the matters in issue were disputed and this is sufficient to satisfy the second factor.
[13] The third factor - would granting leave to file the evidence result in non-compensable prejudice that could not be addressed by imposing costs, terms, or an adjournment – is easily answered.
[14] Non-compensable delay is not a factor in this case. The bulk of the delay to date can be attributed to the Defendants and any delay caused by leave being granted will be minimal.
[15] The Defendants further argue that admitting the affidavit would give the plaintiffs the opportunity to split their case, thereby prejudicing the defendants/plaintiffs by counterclaim. I do not accept this argument as the proposed affidavit seeks to respond to issues admittedly already raised by the Defendants – it does not seek to raise new issues. In the circumstances there is no prejudice that would arise from leave being granted.
[16] The fourth factor - did the moving party provide a reasonable or adequate explanation for why the evidence was not included at the outset – is somewhat more complicated.
[17] The Plaintiffs argue that prior to the completion of the cross-examinations they did not understand that the Defendants intended to rely upon s. 11 of the Limitations Act or any tolling agreement. The Plaintiffs note that the Defendants did not plead the Limitations Act in their Defendants’ Fresh as Amended Statement of Defence and Counterclaim. The Plaintiffs advise that they were taken by surprise when advised of the Defendants’ position following the cross-examination.
[18] The Defendants submit that Mr. Sivitill’s Supplementary Affidavit clearly sets out the Defendants’ position that the limitation period had been extended by virtue of the parties agreeing to consult with the accountant and corporate lawyer. The Defendants further submit that it is not necessary for them to specifically plead the Limitations Act to rely upon the provisions of the Act.
[19] Notwithstanding this argument, the Defendants’ very candidly and properly informed the court that the Defendants were aware that the Plaintiffs’ had “missed” the s. 11 and tolling issues. Further, although the Defendants’ position with respect to the evidence filed on the Motion for Summary Judgment was strategic - it was also entirely permissible by the Rules of Civil Procedure. The Defendants argue that (i) the Rules exist for a purpose; (ii) it is good advocacy to employ litigation strategy where permissible; and (iii) a “lawsuit is not a tea party”.
[20] I greatly appreciate the Defendants’ candor in this regard. I accept the Defendants’ submission that a “lawsuit is not a tea party” and that good advocacy requires thoughtful litigation strategy. I also agree that lawyers should be encouraged to develop a fulsome view of the litigation and develop a litigation plan or strategy according.
[21] However, in the present case I am not persuaded that strategic advocacy which utilizes permissible applications of the Rules outweighs the general principle that the Rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
[22] Had argument on the motion for summary judgment already commenced, I may have reached a different conclusion. However, in the present case the parties have not begun argument of the Motion for Summary Judgment which Motion may fully and finally determine the tolling and s. 11 issues under the Limitations Act between the parties on a final basis without the necessity of a trial.
Conclusion
[23] In the circumstances I find that leave should be granted in accordance with Rule 39.02(2) and Rule 1.04(1) on the following terms: a. The Plaintiffs shall be entitled to file the proposed Supplementary Affidavit of Mr. Ussia for use on the Motion for Summary Judgment; b. The Defendants shall be entitled to cross-examine all affiants on all affidavits filed by the Plaintiffs in support of the Motion for Summary Judgment, including the affiant of the Supplementary Affidavit for which leave is granted; c. No further affidavits or evidence shall be filed with respect to the Motion for Summary Judgment except on consent or as may be further ordered; and d. The parties shall jointly contact the trial coordinator to schedule a date for argument of the Motion for summary judgment before any available judge. I am not seized of this matter.
[24] The parties have agreed that the costs of the motion for leave argued before me shall be reserved to the judge hearing the Motion for Summary Judgment.