Court File and Parties

Court File No.: 467/13 Date: 2018-07-11 Superior Court of Justice - Ontario

Re: Tricar Developments Inc. and Carvest Properties Inc., Plaintiffs And: Terex Corporation, Terex USA, LLC and Terex Deutchland GMBH, Defendants

Before: Justice A. K. Mitchell

Counsel: R. Love and S. Bonanno, for the Plaintiffs L. Lorimer and L. Ray, for the Defendants

Heard: June 20, 2018

Endorsement

Overview

[1] This is a status hearing sought by the plaintiffs pursuant to rule 48.14 of the Rules of Civil Procedure. The plaintiffs ask that the action be allowed to proceed despite the passage of more than 5 years’ time since it was commenced and that a timetable be imposed for the remaining steps. In response, the defendants oppose the motion and ask that the action be dismissed claiming they have suffered non-compensable prejudice arising from the death of a key witness in February 2017 and spoliation of evidence.

[2] The defendants bring a cross-motion seeking to strike the reply affidavit of Christopher Leigh sworn April 11, 2018 on the basis it appends the reports of experts retained by the plaintiffs and the plaintiffs rely on the truth of the contents of those reports in support of their position on the status hearing. Specifically, the defendants argue that the affidavit offends the general rule against hearsay. In response, the plaintiffs argue that the reports are included in the affidavit not for the truth of their contents but rather to establish that evidence exists on the issue of liability separate and apart from the evidence of the crane operator.

[3] At the commencement of the status hearing, I ruled on the cross-motion. The cross-motion was permitted in part. Paragraphs 6 – 8, the last sentence of paragraph 9 and paragraphs 10 – 13 were struck. These paragraphs contain a summary of the opinions provided by the plaintiffs’ experts and append the reports as exhibits. This evidence is irrelevant and unnecessary to establish, as a fact, the existence of evidence relevant to the issue of liability.

Nature of the Action

[4] This action arises from a workplace fatality that occurred on March 9, 2011 in Kitchener Ontario. The deceased, John Catunto, was a construction worker employed by the plaintiff, Tricar Developments Inc. Mr. Catunto was crushed when a live load hoisted on a tower crane owned by the plaintiff, Carvest Properties Inc. and operated by another Tricar employee, unexpectedly fell. The defendants are the designers and manufacturers of the crane.

[5] In this action, the plaintiffs claim damages relating to legal and expert fees incurred in defending a statutory proceeding pursuant to the Occupational Health and Safety Act (“OHSA”), delay costs attributable to the Ministry of Labour’s closure of the plaintiffs’ construction site for approximately 41 days, and an increase in their Workplace Safety and Insurance Board premiums.

Chronology of the Proceedings

[6] A timeline of the steps taken to date in this proceeding is as follows: (a) March 7, 2013 - a Notice of Action was issued. (b) April 3, 2013 – the Statement of Claim was issued naming Terex Corporation. (c) August 7, 2013 – the Statement of Claim was served on the defendant, Terex Corporation. (d) August 9, 2013 – defendant’s counsel advises plaintiffs’ counsel that the incorrect defendant has been named in the Statement of Claim. (e) September 30, 2013 – Terex Corporation serves its statement of defence and identifies the correct defendant. The defendant serves a motion record and factum in support of a Rule 21 motion to strike the claim on the basis it discloses no cause of action and is premature. (f) January 22, 2014 – the defendant’s motion to strike is adjourned by court order to July 23, 2014 to allow for a determination of the liability of the plaintiffs in the OHSA proceedings. (g) June 4, 2014 - the OHSA charges are dismissed against the plaintiffs. (h) July 9, 2014 – a cross-motion is brought by the plaintiffs to amend the claim to add additional Terex defendants (Terex USA, LLC, Terex-Peiner GmbH and Terex Deutschland GmbH) returnable together with the defendant’s motion to strike on July 23, 2014. (i) July 23, 2014 – pursuant to a court order, both motions are adjourned to January 21, 2015 and a timetable is imposed for cross-examinations on affidavits filed in support of the motions. (j) December 4, 2014 – cross-examinations on affidavits are concluded. (k) December 19, 2014 – the defendants notify the plaintiffs that they are abandoning their motion to strike and are not objecting to the amendments contained in the draft Fresh as Amended Statement of Claim. (l) January 21, 2015 – Motion to amend the claim is granted and costs of both motions are fixed by order of the Court. (m) January 22, 2015 – the plaintiffs serve the Fresh as Amended Statement of Claim on the defendants. (n) February 25, 2015 – the defendants serve their Statement of Defence to the Fresh as Amended Statement of Claim. (o) March 24, 2015 – the plaintiffs serve their Reply. (p) March 31, 2015 - September 23, 2015 – numerous discussions take place with respect to finalizing a discovery plan and negotiating the form of the defendants’ requested confidentiality agreement. (q) October 23, 2015 – the plaintiffs appoint new counsel of record. (r) March 23, 2016 – all counsel participate in a telephone call and it is agreed that counsel will hold November 16 and 17, 2016 for the plaintiffs’ discovery and November 22, 23rd and 24th for the discovery of the defendants. (s) August 2016 – counsel resume discussions regarding the discovery plan and the confidentiality agreement. (t) August 29, 2016 – the plaintiffs deliver an executed copy of the confidentiality agreement to the defendants. Defendants’ counsel requests until September 6, 2016 to deliver their affidavit of documents. (u) August 2016 – Mr. Bergemann is identified by the plaintiffs as the representative of Terex USA, LLC they wish to examine. (v) September 6, 2016 – the plaintiffs serve their affidavit of documents. (w) September 29, 2016 – the defendants advise the plaintiffs that the November dates for discovery have to be rescheduled due to the American Thanksgiving. (x) October 3, 2016 - the defendants serve their affidavit of documents. (y) November 17, 2016 – the defendants confirm June 2017 dates for rescheduling the discoveries. (z) December 9, 2016 – the plaintiffs serve three expert reports opining on the issues of whether the crane was defective and whether the crane was not maintained and/or operated properly. (aa) January 6, 2017 - the defendants serve additional productions. (bb) February 2017 – the crane operator, Joseph Soares, dies. (cc) June 2017 – the defendants serve additional productions. (dd) June 8, 2017 – defendants’ counsel advises that Mr. Bergemann is unable to attend his examination for discovery scheduled for later that month because he is unable to cross the Canadian-United States border. No alternate dates are provided. (ee) June 2017 – the remainder of the examinations for discovery proceed as planned. During examinations, the plaintiffs advise the defendants that the crane operator has died. (ff) September 18, 2017 – the plaintiffs propose new dates for the examination for discovery of Mr. Bergemann. Defence counsel advises they are unavailable but do not provide alternate dates. (gg) September 21, 2017 – the plaintiffs propose new dates for the examination for discovery of Mr. Bergemann. Defence counsel advises they are unavailable but do not provide alternate dates. (hh) December 6, 2017 – the plaintiffs propose new dates for the examination for discovery of Mr. Bergemann. Defence counsel advises they are unavailable but do not provide alternate dates. (ii) December 18, 2017 - the plaintiffs request the defendants to consent to a timetable for the remaining steps in the litigation to prevent the administrative dismissal of the action pursuant to rule 48.14. (jj) January 15, 2018 – the defendants advise they will not consent to the proposed timetable and that a status hearing will be necessary. The defendants allege prejudice caused by the death of the crane operator, Mr. Soares and by the destruction of evidence. (kk) February 27, 2018 – the plaintiffs bring a motion for a status hearing.

Positions of the Parties

[7] The defendants submit that the plaintiffs are responsible for accumulating approximately 31 months of unnecessary delay in this action. Moreover, they submit they have been prejudiced as a result of a number of factors, including prejudice arising from the death of the crane operator and the spoliation of evidence. The defendants contend that absent the crane and the evidence of Mr. Soares, this action cannot fairly be tried on its merits. The defendants ask that the action be dismissed with costs or, alternatively, that I make an order that Mr. Soares’ statements from the date of the incident are admissible at trial for the truth of their contents.

[8] Conversely, the plaintiffs argue that the case has not been plagued with delay, rather, since the commencement of this action, the parties have been engaged in numerous interlocutory proceedings spanning many months. The plaintiffs submit that they should not be penalized due to the length of time the interlocutory steps have taken given their diligence in pursuing the action. With respect to the issue of non-compensable prejudice, the plaintiffs submit that the death of the crane operator does not, in and of itself, justify the dismissal of the action for delay. The plaintiffs point to other witnesses, both lay and expert, who can testify as to the liability issues in the action. In addition, the parties have at their disposal statements and transcripts of Mr. Soares’ evidence available from the Coronor’s inquest and the OHSA proceedings. Last, the plaintiffs submit they have not destroyed evidence critical to a defence of the claims. Critical components of the crane remain available for inspection by the defendants’ experts.

Analysis

The Law

[9] Pursuant to rule 48.14 of the Rules of Civil Procedure, the registrar will dismiss an action for delay if it is not set down for trial within five years of its commencement. A dismissal can be avoided if the parties file a consent timetable or by moving for a status hearing. On a status hearing the Rules require the plaintiff to show cause as to why the action should not be dismissed for delay.

[10] In order to “show cause” as to why the action should not be dismissed for delay, the onus is on the plaintiffs to demonstrate that: (i) there is an acceptable explanation for the delay: and if the action were allowed to proceed, the defendants would suffer no non-compensable prejudice. The test is conjunctive. [1]

[11] With respect to the general approach to be taken on a status hearing, I adopt the comments of Myers J. in Orsi v. Fromstein [2] at para. 20 where he states:

I do not see it as desirable to turn status hearings into collateral inquisitions on every imaginable procedural decision made in the case. Similarly, I do not see status hearings involving a set of many discoveries. That just causes more cost and delay. The substance of the defendant’s argument regarding pre-litigation delay is a limitation period defence. This defence is extensively and cogently pleaded in the statement of defence. Just prior to the defendant’s counsel advising that they would be contesting this motion below, they also advised the plaintiffs’ counsel that they would be bringing a motion for summary judgment on the limitation period. They should feel free to do so. But status hearings should not be opposed because of concerns with the particularity of pleadings, to try to test limitation defences, or to bog down a case in procedures covered elsewhere in the Rules and the law. Cases with real delay causing real prejudice will be dismissed much more readily now than in past. But the Rules of Civil Procedure remain focused on providing the most efficient means to resolve disputes on the merits.

Delay

[12] During argument, plaintiffs’ counsel painstakingly addressed delay attributable to each of the periods comprising the 31 months’ delay which the defendants allege is attributable to the plaintiffs. Having considered the history of these proceedings, I find that to the extent there has been litigation delay, it has been caused and/or contributed to by the following: (a) the OHSA proceedings. By court order of Gorman J. dated January 22, 2014 these proceedings were held in abeyance until the OHSA proceedings were resolved which did not occur until June 2014. In her endorsement, Gorman J. writes: “it would be impractical for the [special appointment] to proceed if [the Ministry of Labour] has not yet rendered its decision. In that event, counsel for [the plaintiffs] may seek further adjournment of [special appointment].” (b) the court ordered adjournment of Rady J. made July 23, 2014 whereby the parties’ motion and cross motion were ordered adjourned to January 21, 2015 to allow for cross examinations. (c) The defendants’ request to reschedule examinations scheduled eight months prior in order to accommodate American Thanksgiving. (d) The defendants’ consent to allow the plaintiffs’ new counsel time to review the file from October 2016 through March 2017. (e) The defendants advising that a representative identified 10 months earlier was unable to attend in Canada for examination because of border issues a week before his scheduled examination was to take place in June 2017. (f) The defendants’ failure to schedule Mr. Bergemann’s examination in the United States despite multiple dates being proposed by plaintiffs’ counsel on multiple occasions.

[13] The plaintiffs have successfully established that they were not responsible for the delay. The history of these proceedings set forth above leads me to conclude that there has been no delay for which a reasonable explanation has not been provided. The plaintiffs have met their burden with respect to the first prong of the test.

Non-compensable Prejudice

[14] The main thrust of the defendants’ argument on this status hearing was focused on the second prong of the test, namely, non-compensable prejudice.

(i) Prejudice Arising from the Delay

[15] The plaintiffs argue that only prejudice arising from a delay for which a reasonable explanation has not been provided may be considered. I disagree with the plaintiffs’ argument insofar as it suggests that success on the first prong of the test presumptively leads to success on the second prong of the test. If that was the correct interpretation of the test, it would render the second branch of the test meaningless. As has already been earlier noted, the test is conjunctive. However, the case law supports the proposition that any non-compensable prejudice must arise as a result of the delay giving rise to the status hearing. [3]

[16] The death of Mr. Soares occurred long before the critical five year anniversary mark in these proceedings. Assuming examinations took place in November 2016 as originally scheduled (which examinations were aborted at the request of the defendants), a trial date would not have been obtained until long after Mr. Soares’ death, in any event. Put another way, had examinations been completed and the plaintiffs been in a position to file a trial record in advance of February 2018 thus avoiding an automatic dismissal of the action, the defendants would have been facing the same prejudice.

[17] Similarly, the destruction of evidence by the Ministry of Labour, if any, occurred before this action was commenced. I find that any prejudice which may arise from the destruction of the evidence by the Ministry of Labour and/or the death of Mr. Soares did not relate to the delay necessitating this status hearing.

[18] If I am incorrect in my approach to the issue of prejudice, I will address whether such prejudice is non-compensable.

(ii) The Death of the Crane Operator

[19] Mr. Soares died in February 2017 after a brief battle with cancer. Mr. Soares ceased to be an employee of Tricar as of March 11, 2011 and was a material witness available to all parties, including the defendants. No efforts were made by the defendants to take a statement from Mr. Soares.

[20] Mr. Soares gave evidence at the Coroner’s inquest into Mr. Catunto’s death at which point counsel for the defendants had the opportunity to cross-examine him. [4] Mr. Soares also testified as part of the OHSA proceedings. Mr. Soares also gave three statements to the Ministry of Labour and an audio-recorded statement to the Waterloo Regional Police Services. These statements and transcripts are available for use at the trial subject to a ruling as to their admissibility. In addition, it is open to the defendants to retain their own experts to respond to the expert opinions offered in support of the plaintiff’s position on the issue of liability.

[21] In passing, I note that Mr. Soares’ transcribed evidence will likely be found to be necessary and reliable [5] particularly where, as here, the Ministry of Labour inspectors are not compellable witnesses at trial. [6] As I indicated to defendants’ counsel during argument, whether and to what extent the evidence of Mr. Soares which remains available to the parties from the OHSA proceedings, the Coroner’s inquest and statements provided to investigators may be admissible at trial, is a matter for the trial judge, not the status hearing judge.

[22] As noted by Myers J. in Orsi cited above, there is a process provided for under the Rules and at common law to determine the admissibility of evidence at trial. Whether and to what extent this evidence is admissible will be determined at trial. Now is not the time. I am not in a position to assess the quality of the evidence at this stage nor is it my duty as judge on the status hearing to assess what a trial judge might do with regards to admissibility of the evidence.

[23] I find that any prejudice occasioned by the death of Mr. Soares is not to such extent as to prevent a fair trial.

(iii) Spoliation of Evidence

[24] The defendants submit that the testing done by the Ministry of Labour included destructive testing, both of the physical brake components and electrical relay systems. The plaintiffs were invited to and did participate in the testing; however, it is not suggested that the plaintiffs were responsible for the destruction of evidence.

[25] Spoliation does not occur merely because evidence has been destroyed. Rather, spoliation occurs where a “party has intentionally destroyed evidence relevant to ongoing or contemplated litigation in circumstances where a reasonable inference can be drawn that the evidence was destroyed to affect the litigation.” The unintentional destruction of evidence is not spoliation. [7] On this evidentiary record, I find there has been no spoliation.

[26] With respect to the issue of destruction of evidence by the Ministry of Labour and resulting prejudice to the defendants, I note that the plaintiffs preserved the electrical relays after they were removed from the crane in the form received by the plaintiffs from the Ministry of Labour after its investigation. The plaintiffs have also undertaken to preserve the crane’s programmable logic controller for future joint inspection purposes. I further note that the defendants inspected the crane following the incident.

[27] In these circumstances, I find that any prejudice occasioned by the destruction of evidence by the Ministry of Labour will not prevent a fair trial.

Summary

[28] The defendants manufactured a situation which required the plaintiffs to seek the court’s indulgence. Not only have the plaintiffs provided a reasonable explanation for the delay, I find they were not the cause of the delay. There are no gaps in this litigation. The defendants have taken a very hard-lined, technical approach to the litigation. This is their right but they cannot now complain of prejudice arising from the fact their approach has resulted in protracted litigation.

[29] The defendants’ objection to allowing this action to proceed to trial on its merits is disingenuous. I find it curious that no mention of prejudice was raised by the defendants when they were first advised of Mr. Soares’ death in June 2017. Instead, it was seized upon by the defendants to support their prejudice argument only once they were apprised that a registrar’s dismissal of the action was looming. But for the defendant’s failure to produce Mr. Bergemann on two prior occasions as agreed, the plaintiffs would have been in a position to set this matter down for trial well before the critical five year anniversary date which would have dispensed with the necessity of this status hearing. I find this type of litigation tactic verging on sharp practice. The court should not tolerate or condone such practices as they are an affront to judicial efficacy and economy.

Disposition

[30] Motion granted. Order to issue on the following terms: (a) The examination for discovery of David Bergemann, representative of Terex USA, LLC, shall be completed by October 31, 2018. (b) Undertakings of all parties shall be completed on a rolling basis but no later than 60 days after the completion of all examinations for discovery of all parties. (c) Any motions arising from undertakings and refusals shall be scheduled within 60 days after the expiration of the deadline for undertakings outlined in paragraph (b) above. (d) The action shall be set down for trial on or before March 31, 2019.

Costs of Motions

[31] There was divided success on the cross-motion and it is my preliminary view that there should be no costs of the cross-motion awarded to either party. Of course, the parties may provide submissions on costs of the cross-motion should they disagree with my preliminary view. Any costs submissions relating to the cross-motion may form part of their costs submissions on the status hearing.

[32] If costs of the motions cannot be agreed upon by the parties, I will receive written cost submissions as follows: (a) the plaintiffs shall serve and file their written costs submissions not exceeding 5 pages in length (exclusive of time dockets, costs outline and case law) within 15 days; (b) the defendants shall serve and file their written costs submissions not exceeding 5 pages in length (exclusive of time dockets, costs outline and case law) within 15 days thereafter; and (c) any reply submissions not exceeding 2 pages in length shall be served and filed 7 days thereafter.

“ Justice A. K. Mitchell” Justice A. K. Mitchell Date: July 11, 2018

[1] Faris v. Eftimovski, 2013 ONCA 360 at para. 11; Khan v. Sun Life Assurance Co. of Canada, 2011 ONCA 650 at para. 1; and Postmedia Network Inc. v. Meltwater Holding B.V., 2017 ONSC 6036 at paras. 14-15. [2] Orsi v. Fromstein, 2014 ONSC 2508. [3] See Stokker v. Storoschuk et al., 2018 ONCA 2 at para. 13. Also prejudice will not be found in situations where a witness has died before the action was struck from the trial list: Fenton v. Nubury Properties Ltd., 2011 ONSC 1005, at para. 19. [4] Defence counsel notes that the Coroner limited both the scope and the time allowed for cross-examination of Mr. Soares and counsel were expressly prohibited from asking questions addressing fault or liability. [5] Mr. Soares’ evidence has been consistent throughout. [6] Section 63(1) Occupational Health and Safety Act. [7] Leon v. Toronto Transit Commission, 2014 ONSC 1600, at para. 9.