Superior Court of Justice - Ontario

Re: The Manufacturers Life Insurance Company v. Parc-IX Limited

Court File No.: CV-17-587537

Motion Heard: 2018 06 27

Before: Master R.A. Muir

Counsel: Lisa Constantine for the applicant, The Manufacturers Life Insurance Company Bradley Vermeersch for the respondent, Parc-IX Limited

Reasons for Decision

[1] The applicant brings this motion for an order requiring the respondent to answer certain questions refused on the cross-examinations of the respondent’s witnesses, Nolan Rodrigues and Georges Gantcheff.

[2] The cross-examinations arise from two separate applications. The applications involve an apartment building owned by the respondent in the City of Toronto. The land on which the apartment building is located is owned by the applicant. The respondent leases the land from the applicant pursuant to a 99 year ground lease.

[3] The ground lease is dated January 16, 1964. The apartment building was built in 1968. The applicant acquired title to the land and assumed the lessor’s rights and obligations under the ground lease in 2015. Shortly after assuming ownership, the applicant arranged for inspections to be carried out with respect to the condition of the building. Two reports were generated in August 2016 and February 2017. Those reports revealed what the applicant alleges are structural problems, municipal and fire code violations and health and safety concerns in relation to the building.

[4] The applicant takes the position that the ongoing presence of these alleged problems and issues with the building constitutes a breach of the ground lease.

[5] In furtherance of this position, the applicant issued notices of default and termination of the ground lease based on these alleged breaches. The respondent countered by commencing an application for a declaration that it was in compliance with the ground lease, declaring the notice of default to be of no force and effect and alleging bad faith on the part of the applicant. The applicant responded with an application of its own seeking an order requiring the respondent to perform certain work to rectify the issues identified by the applicant’s inspection reports, along with other related relief.

[6] The applications are presently scheduled to be heard together in December 2018.

[7] The principles governing the scope of cross-examination are summarized by Justice Perell in Ontario v. Rothman’s Inc., 2011 ONSC 2504 at paragraph 143; leave to appeal refused 2011 ONSC 3685 (Div Ct). It is important to note that the scope of a cross-examination is somewhat different than an examination for discovery. The questions asked must be relevant to the issues on the pending motion or application or to matters raised in the deponent’s affidavit, even if not relevant to the issues on the motion or application. Questions may also be asked that address the deponent’s credibility and reliability.

[8] In my view, it is also important to emphasize that when dealing with matters raised in an affidavit that are not relevant to the motion or application, some exercise of proportionality is appropriate. The applicant properly acknowledges this point at paragraph 36(h) of its factum. In my view, the court must retain a discretion not to order such questions to be answered where they will have little or no probative value to the underlying motion or application.

[9] I do not accept the applicant’s argument that the scope of cross-examination on an application should necessarily be broader than cross-examination conducted in relation to a motion. Although Justice Perell’s decision in Ontario v. Rothman’s Inc. involved cross-examinations in connection with a motion, it is clear from his reasons that the principles he summarized applied equally to both motions and applications. See Ontario v. Rothman’s Inc. at paragraph 143.

[10] I have considered and applied these principles in determining the outstanding issues on this motion. In my view, even accepting the principle of proportionality as applicable to cross-examination, all of the refused questions must be answered.

[11] The applicant seeks answers to 14 refused questions on the cross-examination of Mr. Rodrigues. These refusals have been divided into six separate categories. The same questions were asked of Mr. Gantcheff and the court’s ruling on the refusals of Mr. Rodrigues applies to the questions refused by Mr. Gantcheff.

[12] The first category involves one question. The applicant seeks production of a notice of violation apparently issued by Toronto Fire Services in April 2018. In my view, this question is relevant to matters in issue in the respondent’s application. The respondent seeks a declaration that it is in good standing under the terms and conditions of the ground lease. Section 6(o) of the ground lease contains a very broad covenant that the respondent will comply with all municipal and other governmental laws, rules, orders and other statutory and regulatory requirements. In my view, a fire code violation is relevant to the issue of whether the respondent is entitled to a declaration that it is in good standing under the ground lease. The notice of violation will be probative of that issue. In addition, Mr. Rodrigues has clearly raised the issue of the building’s fire code status in paragraph 117 of his affidavit and has also attached a copy of a notice of violation issued by Toronto Fire Services on December 14, 2017. I see no distinction, for the purposes of the pending applications, between a notice issued in December 2017 and a subsequent notice issued in April 2018. Refusal 2 on the examination of Mr. Rodrigues shall be answered.

[13] The second category of refused questions seeks information concerning remedial work carried out by the respondent apparently in response to the applicant’s August 2016 inspection report. In my view, the applicant’s demands with respect to the structural condition of the building are clearly in issue in the respondent’s application. The respondent seeks a declaration that the ground lease is in good standing. The respondent’s notice of application expressly states at paragraph 2(kk) that the applicant’s repair demands were not in compliance with the ground lease. The nature and extent of the work carried out in response to the applicant’s repair demands is relevant to and potentially probative of this allegation. Refusals 7, 8 and 9 on the examination of Mr. Rodrigues shall be answered.

[14] The third and fourth categories of refusals involve questions seeking the production of the respondent’s internal communications in relation to the issues raised by the applicant’s two inspection reports. In my view, these requested documents are clearly relevant to matters in issue in the respondent’s application. As stated above, the respondent seeks a declaration that the ground lease is in good standing. The respondent’s notice of application expressly states at paragraph 2(kk) that the applicant’s repair demands were not in compliance with the ground lease. The respondent has challenged the accuracy of the applicant’s August 2016 inspection report at paragraph 2(s) of its notice of application. The affidavit of Mr. Rodrigues discusses the issues in the August 2016 report at great length. The affidavit of Mr. Rodrigues states at paragraph 115 that as of June 20, 2017 the City of Toronto confirmed that there were no active notices, orders, violations or investigations concerning the building. As well, the respondent has chosen to produce and rely upon a few select pieces of internal communications but objects to full production. In my view, the questions are relevant given the issues raised by the respondent’s notice of application and by its own evidence.

[15] These questions are also proportional. They are directed to a few individuals and focus on the applicant’s two inspection reports. This is a significant piece of litigation. A great deal of evidence has already been assembled and filed. The issues are important to the parties and the subject properties are valuable. Refusals 10, 11, 12, 13, 14, 15 and 16 on the examination of Mr. Rodrigues shall be answered.

[16] The fifth category of refused questions seeks an undertaking from the respondent to provide the applicant with copies of any future fire code or City of Toronto notices of violation or orders. In my view, these questions are relevant for the same reasons I have set out above in respect of first category of refusals. In addition, and as also mentioned above, the affidavit of Mr. Rodrigues states that as of June 20, 2017 the City of Toronto confirmed that there were no active notices, orders, violations or investigations concerning the building. Mr. Rodrigues has clearly raised the issue of compliance in his affidavit. If that information was relevant as of June 2017, it is relevant now and over the next several months leading up to the return of the application. Refusals 20 and 21 on the examination of Mr. Rodrigues shall be answered.

[17] The sixth category of refusals seeks the respondent’s internal communications in connection with the notices of default and notices of termination issued by the applicant. In my view, these questions are relevant and proportional for the same reasons set out in respect of the internal communications requested in connection with the applicant’s inspection reports. Paragraph 2(kk) of the respondent’s notice of application states that the applicant’s threats of termination and repossession were not in compliance with the ground lease. Paragraph 1(b) of its notice of application seeks a declaration that the applicant’s notice of default was invalid and of no force and effect. The applicant’s notices of default are expressly referenced and challenged by Mr. Rodrigues in his affidavit at paragraphs 97 to 105. Mr. Rodrigues concludes his affidavit at paragraph 121 by stating that the applicant had no basis to issue the notice of default and the notice of termination. In my view, these requested communications are relevant to and may be probative of matters in issue in the respondent’s application and raised by Mr. Rodrigues in his affidavit. Refusal 22 shall be answered.

[18] The refusals on the examination of Mr. Gantcheff seek the same answers and production as the refusals from the examination of Mr. Rodrigues. Mr. Gantcheff’s refusals shall be answered for the same reasons, as set out above.

[19] These questions shall be answered by August 15, 2018. Documents over which privilege is being claimed need not be produced.

[20] The parties did not address the requested re-attendance relief in argument. If the parties are unable to resolve the issues of re-attendance or the costs of this motion, they shall provide the court with brief submissions in writing by July 30, 2018. These submissions may be sent directly to me by email.

Master R.A. Muir

Date: 2018 06 28