COURT FILE NO.: 16-67479 DATE: 2017/06/06 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Farley Manufacturing Inc., Plaintiff AND Oz Optics Ltd., Defendant

BEFORE: Madam Justice Robyn M. Ryan Bell

COUNSEL: Richard S. Nishimura, counsel for the Plaintiff Bruce Marks and Thomas Kerr, counsel for the Defendant

HEARD: May 16, 2017

Endorsement

Introduction

[1] The central issue on this motion is whether the plaintiff Farley Manufacturing is entitled to an order pursuant to Rule 32 of the Rules of Civil Procedure permitting the inspection of the defendant Oz Optics’ dome facility on Westbrook Road in Ottawa. Farley Manufacturing proposes that two experts, each accompanied by a senior representative of the plaintiff, inspect Oz Optics’ facility. Oz Optics objects on the basis that one of the proposed experts is not a qualified expert under Rule 53 of the Rules of Civil Procedure.

[2] A secondary issue is the scheduling of mediation in this matter. Farley Manufacturing seeks an order that mediation be held within 90 days. Oz Optics takes the position that mediation should be held after the parties obtain “independent unbiased evidence,” allowing for a meaningful quantification of damages, if any.

Nature of the Claim and Counterclaim

[3] Farley Manufacturing’s claim is for payment of the outstanding balance of $76,000 for construction of an air-supported structure (“the Dome”) at Oz Optics’ premises at 219 Westbrook Road in Ottawa. The Dome is of a considerable size – it has been used as a soccer playing field. Oz Optics has counterclaimed for $500,000 in general damages based on alleged deficiencies and abandonment of the contract. Oz Optics alleges two categories of defects: (i) defects in the fabric comprising the membrane of the Dome; and (ii) defects in the mechanical equipment.

Events Leading up to the Motion

[4] An engineer retained by Oz Optics, Mr. Zeitoun, identified the status of alleged deficiencies in the Dome. In his first report, Mr. Zeitoun recommended that the fabricator of the Dome’s membrane (Seaman Corporation) “acknowledge the damaged areas in the fabric and indicate to the owner in writing that they will honour the provided fabric warranty for any future claims relating to these areas.” Oz Optics also expressed a wish to know the status of warranty coverage by Seaman. This is relevant because one of the experts proposed by Farley Manufacturing to conduct the inspection is Mr. Shimko of Seaman. Warranty coverage is not an issue in the litigation.

[5] Numerous photos of the alleged fabric deficiencies accompanied Mr. Zeitoun’s first report. Additional photos were attached to a follow-up report. Farley Manufacturing says that based on these photos, it is not possible to tell where the alleged deficiencies are in the Dome, nor is it possible to assess the extent of the alleged deficiencies.

[6] During the examination for discovery of Oz Optics’ representative, counsel for OZ Optics advised counsel for Farley Manufacturing that the specific areas of the alleged deficiencies are “in the reports.” Farley Manufacturing was advised that it could attend the Dome and take measurements at its own expense.

[7] Through counsel, Farley Manufacturing advised Oz Optics that a representative of the plaintiff and Mr. Shimko of Seaman would attend the Dome on October 11, 2016. Farley Manufacturing encouraged the attendance of the then General Manager of Oz Optics. Oz Optics objected to the October 11, 2016 date on the basis that Mr. Zeitoun was not available.

[8] Counsel for Farley Manufacturing responded to these objections by advising that another engineer from Mr. Zeitoun’s firm could attend the inspection, that Mr. Shimko had other business in Ottawa on October 11, 2016, and that Mr. Shimko was believed to be in a position to reconfirm the warranty coverage of the areas in issue.

[9] Counsel for Oz Optics responded by advising that unless a retraction of the “threatened trespass” was made, a report to the Law Society of Upper Canada would be made and the Ottawa Police contacted.

[10] No representative of Farley Manufacturing or anyone from Seaman attended the Dome on October 11, 2016. No inspection of the Dome has been conducted.

Issues

[11] The two issues on this motion are:

(i) Is Farley Manufacturing entitled to a Rule 32 order permitting the inspection of the Dome by two experts, including Mr. Shimko, accompanied by a senior representative of Farley Manufacturing? (ii) When should mediation in this matter be scheduled?

Proposed Inspection under Rule 32 by a Representative of Seaman

[12] Rule 32.01(1) of the Rules of Civil Procedure permits the court to make an order for the inspection of real or personal property where “it appears to be necessary for the proper determination of an issue in a proceeding.” The word “necessary” in Rule 32.01 has been interpreted to mean “useful” or “probative of an issue.” One of the objectives of Rule 32.01 is to level the playing field between the parties, where one party has exclusive access to the property. (See Tan-Jen Ltd. v. Di Pede, 2015 ONSC 3400 at para. 8).

[13] Rule 32.01(2) specifically contemplates that for the purposes of an inspection, the court may authorize entry on property in the possession of a party, permit measuring, surveying or photographing of the property, and permit the making of observations.

[14] I find that an order for inspection of the Dome by the plaintiff and an expert would be useful and probative of an issue in this proceeding and would level the playing field between the parties. Farley Manufacturing is in Guelph. The Dome is in Ottawa. The alleged deficiencies in the Dome, both structural and mechanical, are at the heart of the counterclaim. The Dome is very large: 184 feet by 118 feet by 36 feet. Mr. Zeitoun’s reports and photographs do not specifically identify the areas or extent of the alleged deficiencies. Details were not provided on Oz Optics’ examination for discovery; however, Oz Optics recognized that it would be necessary for Farley Manufacturing to inspect the Dome (at the plaintiff’s expense) when it invited the plaintiff to do so.

[15] Having determined that an inspection order under Rule 32 is necessary, the next issue is the terms on which such order should be made. There are four terms which are in dispute: (i) Mr. Shimko’s attendance; (ii) the attendance of any other experts; (iii) the attendance of senior representatives of Farley Manufacturing; and (iv) payment of any travel and accommodation costs associated with the inspection.

(i) Mr. Shimko’s Attendance on the Inspection

[16] As the alleged defects fall into two groups – those associated with the fabric membrane and those associated with the mechanical equipment – Farley Manufacturing seeks the attendance of two experts. Farley Manufacturing takes the position that Mr. Shimko, an engineer with Seaman, the fabric manufacturer, should attend. Mr. Shimko is believed to be in a position to confirm the warranty coverage.

[17] Oz Optics objects to Mr. Shimko’s attendance. Oz Optics says that Mr. Shimko cannot be qualified as an expert under Rule 53 and that Mr. Shimko’s evidence would not be admissible at trial. Oz Optics takes the position that Mr. Shimko is in a position of “irreconcilable conflict” and that he cannot opine on his own work.

[18] I find that Oz Optics’ objection to Mr. Shimko’s attendance on the inspection is without merit. Parties to litigation are entitled to retain experts of their choosing. (See Tan-Jen Ltd. v. Di Pede at para. 19.)

[19] The fact that Farley Manufacturing may propose Mr. Shimko as an expert at trial under Rule 53 does not change the analysis. The admissibility of proposed expert evidence at trial is for the trial judge to determine. As the Court of Appeal stated in Harrop (Litigation guardian of) v. Harrop, 2010 ONCA 390, [2010] O.J. No. 2300:

2. In our view, the policy considerations relevant to this issue [whether a motion judge can decide on the admissibility of proposed expert evidence] all point to the trial judge determining this question. It avoids the risk of a multiplicity of proceedings in any given case. It ensures a full context in which the decision can be made. It avoids the risk of preliminary steps being taken for purely tactical reasons. And it avoids creating different appeal rights depending on whether the decision is made by a motion judge as an interlocutory order or the trial judge.
3. Thus, even if a motion judge has such jurisdiction, it should be exercised only in the rarest of cases…

[20] If Farley Manufacturing later proposes Mr. Shimko as an expert at trial, the issue of the admissibility of his proposed expert evidence will be a matter for the trial judge to determine. This is not a matter within my jurisdiction as the motion judge.

(ii) Attendance of Other Experts

[21] I find that Farley Manufacturing is entitled to an inspection of the Dome by two experts as Oz Optics is alleging fabric membrane defects and mechanical equipment defects. For the reasons set out in paras. 18 to 20, both experts are to be of the plaintiff’s own choosing.

(iii) Attendance by Senior Representatives of Farley Manufacturing

[22] Oz Optics objects to the attendance at the inspection by senior representatives of Farley Manufacturing. In Tan-Jen Ltd. v. Di Pede, the Master ordered that the plaintiff’s experts could be accompanied on the inspection by counsel for the plaintiff, on the basis that the presence of counsel would promote an efficient and effective inspection process. In Tan-Jen, the plaintiff had not been involved in the construction process. Here, Farley Manufacturing constructed the Dome. I find that the presence of senior representatives of Farley Manufacturing would further the efficiency and effectiveness of the inspection process. Senior representatives of Farley Manufacturing are permitted to attend the inspection.

(iv) Payment of any Travel and Accommodation Costs Associated with the Inspection

[23] For the following reasons, I find that Oz Optics is required to pay for the travel and accommodation costs associated with the attendance of Mr. Shimko or another representative of Seaman on the inspection.

[24] Rule 32.03 provides that in making an order for inspection, the court may order such terms as are just, including “the payment of compensation.” Farley Manufacturing advised Oz Optics that the inspection would be conducted by a representative of Seaman, that the representative is located in the United States, and that the representative had other business in the Ottawa area on October 11, 2016. In doing so, Farley Manufacturing was pursuing the invitation made on the defendant’s examination for discovery. I find that Farley Manufacturing acted reasonably with respect to the inspection.

[25] I find that Oz Optics acted unreasonably in objecting to the inspection based on the unavailability of Mr. Zeitoun. Another engineer from Mr. Zeitoun’s firm could have attended. I also find that counsel for Oz Optics’ subsequent course of conduct was unreasonable. Counsel for Oz Optics characterized the situation as a “threatened trespass” and advised that without a “retraction” the Ottawa Police and the Law Society would be notified. A formal complaint to the Law Society was made. As a result of the conduct of counsel for Oz Optics, no inspection of the Dome has taken place. Oz Optics shall pay for the travel and accommodation costs of the attendance of Mr. Shimko or another representative from Seaman.

Timing of Mediation

[26] Farley Manufacturing’s position is that mediation in this matter is long overdue and that the mediation should take place within 90 days. Oz Optics’ position is that before a meaningful mediation can be conducted, the inspection should occur and reports and reply reports should be exchanged.

[27] Oz Optics has Mr. Zeitoun’s reports. The Dome is in their possession. The playing field will be levelled following the Rule 32 inspection. As Rule 24.1.01 states, the purpose of mandatory mediation is “to reduce cost and delay in litigation and facilitate the early and fair resolution of disputes.” This action was commenced in February 2016. Mediation in this matter is long overdue. I order that mediation shall be held within 90 days from the date of this decision.

Disposition

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

(i) The plaintiff shall be entitled to an inspection of the defendant’s premises at 219 Westbrook Road, Ottawa, by two experts of the plaintiff’s choosing, each accompanied by a representative of the plaintiff. (ii) The inspection shall be for the purpose of inspecting all aspects of the air-supported structure, including the fabric membrane and the mechanical systems, and shall include taking photographs, measurements and air pressure readings. (iii) One of the plaintiff’s experts attending on the inspection shall be Andrew Shimko or another representative from Seaman Corporation. (iv) The name and qualifications of the proposed expert who shall conduct an inspection of the mechanical systems, will be provided to the defendant ten days prior to the date of the inspection. (v) A representative of the defendant may be present throughout the inspection. (vi) The inspection shall take place on or before July 31, 2017, on a date and time convenient to the experts and as agreed to by counsel and the parties, and shall last as long as may reasonably be required. (vii) The defendant shall pay the reasonable travel and accommodation costs of the attendance of Andrew Shimko or another representative of Seaman Corporation. (viii) Mediation shall be held within 90 days from the date of this order, in Ottawa.

Costs

[29] In the event the parties are unable to agree upon costs of the motion, they may make written submissions as follows:

(i) The submissions shall be limited to a maximum of five pages, double-spaced, exclusive of a bill of costs. (ii) Written submissions shall be delivered by 5:00 p.m. on the tenth business day following the date on which this decision is released. (iii) If either party determines that it is necessary to deliver submissions in reply, then the reply submissions shall be limited to three pages and be delivered by 5:00 p.m. on the fifteenth business day following the date on which this decision is released.

Madam Justice Robyn M. Ryan Bell

Date: June 6, 2017

COURT FILE NO.: 16-67479 DATE: 2017/06/06 ONTARIO SUPERIOR COURT OF JUSTICE RE: Farley Manufacturing Inc., Plaintiff AND Oz Optics Ltd., Defendant BEFORE: Madam Justice Robyn M. Ryan Bell COUNSEL: Richard S. Nishimura, counsel for the Plaintiff Bruce Marks and Thomas Kerr, counsel for the Defendant ENDORSEMENT Justice Ryan Bell Released: June 6, 2017