Schellings et al. v. W. O. Stinson & Son Ltd. et al., 2017 ONSC 7721

CITATION: Schellings et al. v. W. O. Stinson & Son Ltd. et al., 2017 ONSC 7721

COURT FILE NO.: 12-55685

DATE: 2017/12/27

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Robert Schellings and Catherine Schellings

Plaintiffs/Moving Parties

– and –

W.O. Stinson & Son Limited and DTE Industries Limited

Defendants/Respondents

William G. Scott for Plaintiffs/Moving Parties

Pierre Champagne for Defendant/Respondent W. O. Stinson & Son Ltd.

HEARD: November 30, 2017

JUSTICE SALLY GOMERY

[1] The plaintiffs Robert and Catherine Schellings seek an order compelling the defendant W. O. Stinson & Son Limited (“Stinson”) to answer questions refused at the examination for discovery of its representative Bob Herres on January 25, 2017.

Events leading to the motion

[2] The Schellings are suing Stinson for damages caused by a leak of 700 litres of fuel oil onto their residential property on or around June 1, 2011. The leak came from a steel tank purchased from Stinson and installed on the Schellings’ property in 2002. Stinson continued to service the tank and refill it on a regular basis between 2002 and 2011. In their statement of claim, the Schellings allege that water accumulated in the tank and caused it to corrode. They say that Stinson should have warned them that this could happen so that they could have taken steps to prevent it.

[3] This is the plaintiffs’ second refusals motion. Their examination for discovery of Mr. Herres began on January 24, 2014. A motion arising from that examination was heard by Justice Roger on August 18, 2015. He ordered Stinson to disclose its knowledge of claims by its customers for leaks resulting from corrosion in steel tanks between 2006 and 2011.

[4] On March 10, 2016, further to Justice Roger’s order, Stinson provided answers to questions asked at Mr. Herres’ January 2014 discovery. Stinson said that it “has not been provided with information from its customers about problems with corrosion inside their tanks”. In response to a question about Mr. Herres’ personal recollection, Stinson said:

Bob Herres does not have a recollection of claims involving a steel tank leaking because of corrosion to the tank. Bob Herres has a recollection of steel oil tanks leaking in the five years before 2011 for a variety of reasons, including manufacturer defect, 3rd parties hitting the oil tank, expiry of the useful life of the oil tank, failure to carry out annual maintenance, failure to follow recommendation(s) of the maintenance company technician etc…

[5] On January 25, 2017, the plaintiffs examined Mr. Herres again. This is the discovery that has given rise to this second refusals motion.

[6] During the January 2017 discovery, Mr. Herres was asked about two other lawsuits against Stinson for damages alledgedly caused by leakage from corroded oil tanks (the “Brown lawsuits”).[^1] Counsel for Stinson refused to let Mr. Herres answer questions about the Brown lawsuits, or any further questions about customer claims.

[7] On March 31, 2017, the trial decision in the Connie and Scott Brown lawsuit was issued.[^2] The Browns’ action against Stinson was dismissed. Mr. Herres testified at the trial of this action as Stinson’s representative. The trial judge noted the consensus among the ordinary and expert witnesses that tank corrosion had been a concern within the industry for years:

All of the experts, and the Stinson witnesses, agreed that water in fuel oil tanks is an ongoing concern in the oil industry because of the water damage can cause, leading to leaks.[^3]

[8] She made a specific finding about Mr. Herres’ knowledge of this risk:

Herres appeared very well-informed about his business and industry. He agreed that condensation is and has been a concern for the integrity of oil tanks for many years.[^4]

[9] The other Brown lawsuit, involving Douglas and Carole Brown, also ended with a dismissal. I assume this was on consent since I have not been provided with a judgment.

Principles applicable on a refusals motions

[10] In Eisen v. Altus Group Limited, Justice Faieta reviewed the principles for determining whether a question on an examination for discovery should be answered.[^5] It builds upon Justice Perell’s thorough review of Rules 31.06(1) and 29.2.03 of the Rules of Civil Procedure in Ontario v. Rothmans Inc.[^6] Based on the analysis set out in these decisions, I must consider the following questions on a refusals motion:

Is the question relevant? That is:

(a) does it relate to a fact alleged in the pleadings?[^7]

(b) is the evidence that will be produced through the answer going to assist the court in determining whether or not an allegation is true?[^8]

(c) is the question improper? For example, does it seek information that is privileged?

[11] Is the question proportionate? Would answering a question require an unreasonable amount of time or effort, or unduly prejudice the party being examined, or otherwise hinder rather than advance the litigation?

Questions refused at Mr. Herres’ January 25, 2017 examination

Questions relating to complaints and claims from Stinson’s customers (Questions 3072, 3090, 3100, 3102, 3108, 3114, 3123, 3124, 3150, 3254 and 3263)

[12] At paragraph 15 of their amended statement of claim, the Schellings allege that Stinson knew about the risk related to the build-up of water in their oil tank because they had “received complaints and claims from their other customers who were also having problems with tanks of the same or similar specification that were sold to them by Stinson”.

[13] As already noted, Justice Roger ordered Stinson to disclose its knowledge of claims by its customers for leaks resulting from corrosion in steel tanks between 2006 and 2011. The Schellings argue that Stinson has not complied with this order, because it failed to disclose the two lawsuits from other customers in its March 2016 answers. As a result, they say that they should be entitled to answers to broader questions.

[14] Counsel for Stinson argues that the questions during the January 2017 discovery relating to claims and complaints are too broad and seek information irrelevant to the Schellings’ claim. He says that Stinson has since disclosed to the plaintiffs a list of all lawsuits against Stinson by its customers. He points out that counsel for the Schellings clearly knew about the Brown lawsuits because he asked Mr. Herres about them during his January 2017 discovery.

[15] I find that the answers provided by Stinson did not comply with Justice Roger’s order. Mr. Herres’ answer about his personal knowledge of customers’ problems with their tanks and the answer provided about the company’s knowledge of complaints were, to put it charitably, evasive. Stinson takes the position that the oil leaks in the two Brown lawsuits were not caused by corrosion, despite the Browns’ allegations to the contrary. But this misses the point. In their action, the Schellings allege that Stinson knew about water build-up problems in steel oil tanks because of customer complaints but failed to pass on this information to them. Evidence of customer complaints is relevant to this allegation, whether or not the source of the problem was ultimately attributable to some other cause. This evidence may assist the court in determining whether the plaintiffs’ allegation about Stinson’s state of knowledge is true.

[16] To avoid any further misinterpretation of Justice Roger, I am issuing a revised order spelling out exactly what information Stinson must provide.[^9] I am also broadening the scope of the order to capture the entire time period between the installation of the oil tank and the leak. Given the amendments to the statement of claim in March 2016, Stinson’s knowledge of potential corrosion problems through the entire period is relevant.

[17] Stinson must provide the Schellings with a list of all complaints or claims by any customer about water build up or a leak possibly caused by corrosion in a steel oil tank between 2002 and 2011. A complaint or claim means a lawsuit or any form of notice to Stinson that resulted in some form of investigation or follow-up by Stinson or its insurer. Stinson must provide the following information about each claim:

− The customer’s name and address where the tank was installed;

− The model, size and type of tank;

− The year it was manufactured;

− The date the tank was installed;

− The date that Stinson received notice of the problem and the date that any leak occurred;

− Anything known about the cause of the problem, including any allegations about the cause by the customer;

− Stinson’s explanation for the problem;

− Whether a legal action was started and, if so, the court file number and court location; and

− Whether the matter proceeded to trial.

[18] Stinson is required to use best efforts to comply with this order. This includes searching any physical or electronic records used to track customer complaints and service calls between 2002 and 2011, reviewing any notices from 2002 to 2011 to Stinson’s insurers about any claim or potential claim arising from water build up or corrosion, and reviewing any notices to the Technical Standards & Safety Authority (“TSSA”) about water build-up issues or leaks caused by corrosion during this same period.

[19] Stinson argued that it should not be obliged to provide the names and addresses of its customers as part of the order. I accept the Schellings’ argument that they should have the ability to seek information from other customers who have experienced similar problems with their oil tanks.

[20] Stinson has also argued that a review of all of its records would require a disproportionate effort and expense. It has filed an affidavit by Ginger Warner, a lawyer from the firm representing Stinson. She says that Mr. Herres has advised her that Stinson has serviced “countless clients … throughout a large geographical area” and that answering the Schellings’ questions would require “significant time and cost efforts”. There are two problems with this evidence. First, Mr. Herres apparently did not give Ms. Warner any kind of detailed information to support his sweeping assertion about the effort required to answer the Schellings’ questions. He has not provided even an estimate of the total number of clients nor any idea of the scope of the geographical area involved. Second, in the absence of any such detail, Ms. Warner does not explain why she believes Mr. Herres’ assertion. I accordingly cannot give this evidence any weight, or accept Stinson’s argument on proportionality.

[21] At question 3072, the Schellings asked for production of a log book kept by Mr. Herres between 2002 and 2012. Based on the answer provided by Stinson’s counsel on the record, Mr. Herres does not have a physical logbook. The Schellings’ counsel has suggested there could be electronic records with this information, but has not suggested what form they would take. I will accordingly make no production order for such records.

[22] If Stinson discovers any customer complaints and claims made in writing, Stinson must update its affidavit of documents to include these records and produce them to the Schellings.

Questions about Stinson’s overall knowledge of risks of oil tank leakage between 2002 and 2011 (Questions 3053 and 3099)

[23] Mr. Herres was asked whether his knowledge about the risk of leaks in steel tanks changed between 2002 and 2011, and whether it was unusual for a tank to leak. Both these questions as framed are over-broad and unlikely to yield any information that would assist the court. I also note that Mr. Herres has gone on record on this issue, through his testimony at trial in the Connie and Scott Brown lawsuit.

Questions about reports to, orders from, and communications with, the Technical Safety Standards Authority between 2002 and 2011 with respect to oil spills from steel tanks (Questions 3115 and 3149)

[24] The request for all communications with the TSSA is too broad. Stinson must howver produce all reports to and orders from the TSSA with respect to oil spills from steel tanks between 2002 and 2011.

Questions about Stinson’s reports to and communications with their insurers (Questions 3104, 3116, 3117 and 3154)

[25] Stinson argues that reports to its insurers about potential and actual claims by customers are privileged. I agree.

[26] Mr. Herres was asked about how Stinson went about notifying its insurer about an oil spill. I do not see how the answer to this question would advance any issue in the lawsuit.

[27] On the other hand, any advice that Stinson received from its liability insurer between 2002 and 2011 on steps to mitigate the risk of oil tank leaks would be relevant to Stinson’s knowledge of the risk. Stinson is therefore ordered to answer question 3116.

Additional terms of the order

[28] Stinson must provide all of the information and productions responsive to this order to the Schellings and produce a revised affidavit of documents within 60 days.

[29] In his order on the first refusals motion, Justice Roger ordered Stinson to pay $6000 in costs to the Schellings, even though he upheld some of Mr. Herres’ refusals. The Schellings have requested the same costs on this motion.

[30] The Schellings did not produce a table of costs. According to Stinson’s counsel, however, its partial indemnity costs would be about $5000 and substantial indemnity costs $10,000.

[31] In the circumstances, the costs requested by the Schellings are reasonable. Stinson must pay the Schellings $6000 in costs, inclusive of fees, disbursements and HST. These costs are payable forthwith.

S. Gomery, J.

Released: 2017/12/27

CITATION: Schellings et al. v. W. O. Stinson & Son Ltd. et al., 2017 ONSC 7721

COURT FILE NO.: 12-55685

DATE: 2017/12/27

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Robert Schellings and Catherine Schellings

Plaintiffs/Moving Parties

– and –

W.O. Stinson & Son Limited and DTE Industries Limited

Defendants/Respondents

REASONS FOR JUDGMENT

S. Gomery, J.

Released: 2017/12/27

[^1]: Although these two lawsuits involve different plaintiffs, the style of cause in each is Brown et al. v. W.O. Stinson & Son Limited. The plaintiffs in the first case were Connie and Scott Brown, and the court file number was CV-15-63763. The plaintiffs in the second lawsuit included Douglas and Carole Brown, and court file number was 10-0116.

[^2]: 2017 ONSC 2035.

[^3]: Brown at para. 18.

[^4]: Brown at para. 81.

[^5]: 2016 ONSC 1301.

[^6]: [2011] O.J. No. 1896, 2011 ONSC 2504.

[^7]: Rule 31.06(1) of the Rules of Civil Procedure, RRO 1990, Reg 194 as amended.

[^8]: R. v. Arp, 1998 CanLII 769 (SCC), [1998] 3 S.C.R. 339 at para. 38.

[^9]: I am basing this order on the template provided by Justice Roger in another case involving an oil tank leak, Keats et al. v. Peloso Fuels Ltd. et al, 2010 ONSC 6865 at para. 5.