MVL Leasing Limited - Location MVL Limitee v. CCI Group Inc. et al.
CITATION: 2017 ONSC 6280
COURT FILE NO.: CV-14-500454
MOTION HEARD: 20170804
REASONS RELEASED: 20171020
SUPERIOR COURT OF JUSTICE – ONTARIO
BETWEEN:
MVL LEASING LIMITED - LOCATION MVL LIMITEE
Plaintiffs
- and-
CCI GROUP INC., CONSTRUCTION CONTROL INC., ELIZABETH VERGHIS and TREVOR DISEKO
Defendants
- and-
SUPIMA HOLDINGS INC., PAUL MUSER,
LUX TIME (CANADA) LIMITED,
ROBERTSHAW CANADA INC.,
L.H. FROST LIMITED and ATC-FROST MAGNETICS INC.
Third Parties
BEFORE: MASTER D. E. SHORT
COUNSEL: Joanna Vince & Jacqueline Stevens, Fax: 416-863-1938 -for the plaintiff
John Callaghan & Jessica Boily, Fax: 416-862-7661 -for the defendants
Iris Antonios, Fax: 416-863-2653 -for the third party Robertshaw Canada
John M. Buhlman, Fax: 416-365-1876 -for the third parties Supima Holdings and Paul Muser
REASONS RELEASED: October 20, 2017
Reasons for Endorsement
I. Overview
[1] MVL, the Plaintiff in by MVL Leasing Limited - Location MVL Limitee ("MVL") brings this motion for, inter alia:
(a) An Order under Rule 31.05 allowing the Plaintiff to proceed with the examination for discovery in the Main Action separately from any examination for discovery that may take place in the future in the Third Party Claim
(b) Alternatively, an Order under Rule 29.09 that the Plaintiff is not to be unnecessarily delayed by the Third Party Claim and allowing the Plaintiff to proceed with the examination for discovery in the Main Action separate from the Third Party Claim to prevent such delay.
[2] Rule 31.05 deals with the possibility of oral examinations of a litigant by more than one party in an action:
31.05 Unless the court orders or the parties agree otherwise, where more than one party is entitled to examine a party or other person for discovery without leave, there shall be only one oral examination, which may be initiated by any party adverse to the party,
(a) who is to be examined; or
(b) on behalf or in place of whom, or in addition to whom, a person is to be examined.
[3] MVL asserts that the action has been “significantly and unnecessarily delayed” by one of the defendants, Construction Control Inc. (“CCI”) issuing a Third Party Claim against previous owners of the MVL lands.
[4] The plaintiff looks to this rule in seeking the assistance of this Court in moving this action forward and scheduling examinations for discoveryof the parties in the original action, without the encumbrance of the possible examination by the third parties (who have not defended the main action).
[5] For the reasons that follow I have determined that this is an appropriate case for a division of the examination for discovery of the defendant CCI as sought by MVL.
II. History of Main Action
[6] MVL is the current owner of three contiguous commercial properties in Oakville, Ontario (collectively the "Property"). MVL discovered soil and groundwater contamination at the Property after the purchase of the Property.
[7] Prior to its purchase, MVL was first offered an opportunity to have the property inspected but it was clear that it was not the subject of any warranties whatsoever with respect to the quality of the land or its usability for the purposes intended by the purchaser.
[8] The Defendants, CCI, Elizabeth Verghis, and Trevor Diseko, carried out pre-purchase environmental consulting work at the Property. The Defendants pre-purchase environmental consultant work gives rise to the Main Action.
[9] MVL issued its Statement of Claim on March 19, 2014 which alleges that the Defendants failed to accurately advise MVL about potential environmental concerns relating to the Property prior to the purchase by MVL.
[10] Examinations for discovery in the main action have been sought but not held.
[11] All Defendants in the Main Action defended the Main Action in 2014. However it was not until August 12, 2015, that only one of the defendants, CCI issued its Third Party Claim. At the date of the argument of this motion before me, the pleadings in the Third Party Claim were not closed. No Third Parties have defended the Main Action.
[12] Unsuccessful attempts have been made to mediate these disputes. The plaintiffs factum asserts:
After the Third Party Claim was issued, the Plaintiff contacted CCI on August 14, 2015 to revisit the possibility of a mediation for the Main Action and the Third Party Claim. The Plaintiff proposed dates for November or December 2015 in order to allow CCI adequate time to move the Third Party Claim along.
[13] Those efforts seem to have failed and then late in 2015, the plaintiff was advised that CCI and Mr. Diseko were in the process of changing counsel. A Notice of Change of Solicitor was issued on January 5, 2016.
[14] On October 13, 2016, the Plaintiff followed up with CCI “to move the matter forward to a mediation or settlement discussion, and advised CCI that the Plaintiff would set dates for examination if mediation was not forthcoming.”
[15] With no mediation forthcoming, on November 7, 2016, the Plaintiff contacted CCI and proposed discovery dates in January 2017 or February 2017. On January 3, 2017, the Plaintiff followed up with dates for discovery that would include the Third Party Defendants at the end of January or beginning of February 2017. On January 3, 2017, counsel for CCI advised MVL that pleadings in the Third Party Claim had not yet closed. In response, the Plaintiff requested that CCI move the Third Party Claim along to be able to attend discoveries in January 2017.
[16] Apparently, on January 9, 2017, CCI advised that it would only move the Third Party Claim along after a settlement meeting with MVL and if the Main Action could not be resolved. A settlement meeting was again scheduled for February 13, 2017. The moving party’s factum reports that:
“The February 13, 2017 settlement meeting proceeded and at this meeting MVL and CCI agreed on June 19, 20, 22 and 23, 2017 for discoveries, subject to the availability of clients and the Third Party Defendants. The dates were deliberately set far enough in advance to allow the Third Party Defendants time to prepare for discovery. At this meeting, MVL requested that CCI canvass the Third Party Defendants availability for the June 2017 dates.
[17] Despite the Plaintiff's request at the February 13, 2017 settlement meeting that CCI bring the Third Party Claim up to speed for the proposed June 19 and 20, 2017 discoveries, CCI did not request that the Third Party Defendants defend the Third Party Claim until May 24, 2017.
III. Trying to Organize Discoveries
[18] A call was proposed for June 16, 2017 for the Main Action and Third Party Defendants to discuss setting discovery dates in mid to late August 2017. Counsel for each of the Third Party Defendants independently advised MVL that they would be bringing a motion to dismiss the Third Party Claim and would not participate in the June 16, 2017 call.
[19] During the June 16, 2017 call, CCI and Mr. Diseko communicated their position that they would not consent to being produced twice for discoveries, and that, discoveries would have to wait until the Third Party Defendants' motions to dismiss the Third Party Claim were heard by the Court.
IV. Nature of Third Party claims
[20] It would appear that previously the third parties directly or indirectly owned one or more of the components of the Property, decades in the past and may have contributed to the environmental contamination of the Property.
[21] The Third Party Claim made by Construction Control Inc. summarizes the main action claim, in part, in these terms:
The Plaintiff's Action for Damages
In the main action, MVL Leasing alleges that CCI was negligent in carrying out environmental consulting work in respect of the Property for, inter alia, failure to identify and advise MVL Leasing of soil and groundwater contamination at the Property.
Subsequent to the delivery of CCI's Phase One and Phase Two Environmental Site Assessment Reports, and subsequent to the closing of the sale of the Property to MVL Leasing, MVL Leasing retained other consultants to conduct groundwater testing.
The groundwater sampling and testing conducted by the consultants subsequently retained by MVL Leasing is alleged to have disclosed concentrations for cis-1, 2 dichloroethylene, trichloroethylene and vinyl chloride in amounts exceeding applicable Ontario Regulation 153/04 Soil, Ground Water and Sediment Standards for the Property.
MVL Leasing has claimed damages in the total amount of $8,000,000 for diminution in the value of the Property and anticipated remediation costs resulting from the soil and groundwater contamination caused by the conduct of the third parties.
[22] The basis of the claim against the third parties is then summarized in these terms:
“Contamination of the Property and Nuisance
Ongoing investigation of the source of the contaminants alleged to be present at the Property indicates that the contamination was caused by one or more of the businesses operated by the third parties at the Property.
CCI states that the third parties made special use of their leased premises and the Property which included regular work with regulated contaminants which were likely to do mischief if they escaped.
CCI states that chemical substances did escape in the course of the third parties' conduct of their respective businesses through, inter alia, careless handling, which escape substantially interfered with the properties surrounding their respective leased premises by contaminating the soil and groundwater under the Property, causing damages. CCI pleads that the third parties are liable for the damages caused by the escape of contaminants into the soil and groundwater at the Property. CCI pleads that Supima, as owner, was liable for the conduct of its tenants as an "occupant" under the Occupiers' Liability Act, ….
CCI states that it was in the reasonable contemplation of Supima and the other third parties that, under their respective leases, substances likely to cause contamination of the soil and groundwater at the Property would occasionally escape in the ordinary course of the third party tenants.”
[23] In my view there is no overlap in the claims made against the consultants between the claims asserted against the consultants, and these much earlier alleged instances of contamination, which may have caused the ground conditions which the plaintiff asserts that one or more of the defendants failed to properly identify.
[24] In particular CCI pleads that the third parties' conduct at the Property, which caused physical damage to the land surrounding their respective leased premises, constituted a substantial and unreasonable interference with the enjoyment of the land by the owner of the Property, and by its successors in title.
[25] They also assert that the third parties knew, or ought to have known, that their failure to observe the requisite standard of care in the use of hazardous chemicals would result in groundwater contamination and would cause a diminution in the value of the lands surrounding their respective leased premises.
[26] The Limitations Act 2002 addresses “undiscovered environmental claims” in these terms:
- -there is no limitation period in respect of an environmental claim that has not been discovered.
[27] As well the next section of the Act deals with contribution and indemnity and provides :
18-(1) For the purposes of subsections 5(2) and section 15, in the case of a claim by one alleged wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought shall be deemed to be the day the act or omission on which that alleged wrongdoer’s claim is based took place.
[28] As well, CCI pleads that it is entitled to compensation for any costs incurred for remediation of any damages caused by the third parties, or any one or more of them, pursuant to the provisions of the Environmental Protection Act.
[29] These provisions make clear that there are number of potential arguments that will impact upon the potential liability of the former owners to CCI in its third party claim. However, I see no overlap between those issues And the questions relating to the potential contractual and other liability of CCI to the plaintiff.
[30] I feel this is particularly case, having regard to the entirely different time periods involved in these two distinct aspects of this litigation.
V. Duty to Proceed
[31] The plaintiff is now into the third year of its action. The rules contemplate a five year period for matters to reach trial.
[32] The plaintiff points to the requirements of rule 48, and in particular, the need to endeavor to have the matter set down for trial within five years of the commencement of the action:
48.14 (1) Unless the court orders otherwise, the registrar shall dismiss an action for delay in either of the following circumstances, subject to subrules ( 4) to (8):
- The action has not been set down for trial or terminated by any means by the fifth anniversary of the commencement of the action.
[33] I see no meaningful prejudice to the defendant CCI in my requiring that it attend for discovery on two separate occasions. The first with respect to the main action and the second with respect to its third party claims against the previous owners.
[34] Apparently the third parties have been contemplating a motion to dismiss the third party claim perhaps based on limitation or other grounds, such as no tenable cause of action has been asserted.
[35] If the Third Party Defendants' motions to dismiss are not successful, the Third Party Defendants will need to deliver defences, affidavits of documents and arrange for and attend at examinations for discoveries. Additionally, depending on the outcome of the motions to dismiss, one or more of the parties may decide to appeal the decision, further delaying the Main Action.
[36] In my view, given that the third party action was commenced in 2015, there is much more than adequate opportunity to bring that motion forward. I see no value in delaying the examination for discovery by the plaintiff of all the defendants, including CCI.
[37] CTI now takes the position that it cannot and should not be examined twice for discovery. However, I see no probability of significant duplication and the plaintiff has already been held up unduly in moving its action forward.
[38] The main claim sounds in contract. The third party claim is entirely distinct from the contractual dispute. I really do not see much overlap in the two types of cause of action and think that it is probably remote that there will be questions asked on the third parties’ examinations of CTI that would have been dealt with an examination by the plaintiff.
[39] Since the third parties have not defended the main action, it would seem to me that they are not entitled to participate in the discovery of the plaintiff.
[40] I am again by the philosophy of rule 1.04 to construe the rules liberally to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
[41] Rule 29.09 addresses the plaintiff’s position in these circumstances (my emphasis):
29.09 A plaintiff is not to be prejudiced or unnecessarily delayed by reason of a third party claim, and on motion by the plaintiff the court may make such order or impose such terms, including an order that the third party claim proceed as a separate action, as are necessary to prevent prejudice or delay where that may be done without injustice to the defendant or the third party.
[42] The second part of the Rule 29.09 test requires the Court to determine whether the relief sought by the plaintiff will cause injustice to the defendant or the third party.
[43] In my view allowing the Plaintiff to proceed with a separate, earlier examination for discovery in the Main Action would not cause injustice to the Defendants or the Third Party Defendants. There are no overlapping issues of liability between the claims that would require the attendance of the Third Party Defendants at discovery within the Main Action. In addition, the Plaintiff is not opposed to the Third Party Defendants attending discoveries in the Main Action. The Plaintiff is simply seeking to move the Main Action forward.
[44] In considering the significant delays threatened by a pending third party claim, the court in Wilson v Servier Canada Inc. 2001 CarswellOnt 4267; 110 A.C.W .S. (3d) 268 ,stated that the timely resolution of claims is critical to a just and fair court process:
“Our society's concept of justice dictates that fairness is inherently fundamental to our court processes. Timeliness in the determination
of claims on their merits is critical to achieving fairness to the parties. Justice must be done and it must be seen to be done in a timely way and manner. It is prejudicial to plaintiffs to deny them fairness through further substantial delays by granting Servier's motion [for an order extending the time for issuing a third party claim].”
[45] A timely determination of MVL's claim is critical to achieving fairness. MVL should not be denied fairness as a result of further substantial delays that would arise if MVL is required to postpone examinations for discovery in the Main Action until after the Third Party Defendants' motions to dismiss are heard by the Court as well as the determination of any potential subsequent appeals that may be brought.
VI. Disposition
[46] After issuing the Third Party Claim in August 2015, it was not until May 2017 that the Defendants took steps to move the Third Party Claim forward. It is unfair to MVL to allow the Third Party Claim to cause further substantial delays.
[47] I am therefore directing that the examination for discovery of the defendant CCI by the plaintiff proceed within the next 60 days , unless all parties agree otherwise.
[48] I see no reason to prevent counsel for the third parties from attending the discovery of CCI by the plaintiff. If they wish. However they shall not be entitled to otherwise participate in the main action discovery at this time
[49] In the event that motion by the third parties to dismiss the action as against them, is ultimately unsuccessful, then they will be entitled to rely upon a copy of the transcript of the plaintiff’s examination of the defendant as well as conducting their own discovery of CCI with respect to the third party claim. However, they will not be entitled to cover the same ground covered by the plaintiff on its discovery without further court order in that regard.
[50] . While this is somewhat of a novel problem I am nevertheless satisfied that the plaintiffs were justified in bringing their motion, and that they ought to receive an amount on account of costs. Their bill of costs costs however is my view, excessive. In the circumstances. I am awarding $6000 as costs on an all in basis, to be paid by CTI within 45 days.
Released: October 20, 2017
DS/ R198 ______________________
Master D. E. Short