COURT FILE NO.: CV-13-472439
DATE: July 20, 2018
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ABCO One Corporation v. City of Toronto, Toronto Transit Commission and Pomerleau Inc.;
BEFORE: MASTER C. WIEBE
COUNSEL: Karen B. Groulx for Pomerleau Inc. (“Pomerleau”); Angela Assuras for ABCO One Corporation (“ABCO”);
Christian R. Riveros for Canada-Wide Reinforcing Steel Co. (1987) Ltd. (“Canada-Wide”);
Howard Krupat for the Toronto Transit Commission (“TTC”).
COSTS DECISION
(ABCO motion for production)
[1] On June 11, 2018 ABCO brought a motion before me in this reference seeking an order for the production for inspection of transcripts of the evidence, the document briefs and expert reports filed in an arbitration between Pomerleau, the general contractor, and the TTC, the owner, concerning the subject project, namely the construction of the Ashbridges Bay TTC street car facility. I was advised that this arbitration is large, involves numerous documents, has been going on for some time (over a year) and is not finished.
[2] By this time, not insignificant material had been filed in the ABCO motion. There was a motion record from ABCO with a five page affidavit sworn by Ms. Assuras’ legal assistant, Yulian Fu. There was a responding motion record from Pomerleau that contained a nine page affidavit sworn by its bid manager, Michael Faustini. Both ABCO and Pomerleau had filed facta and books of authorities. There was also a transcript of a cross-examination of Mr. Faustini conducted on June 8, 2018.
[3] Mr. Krupat, counsel for the TTC, appeared before me on June 11, 2018 seeking an adjournment of this motion. He conceded that the motion material had been delivered to his office in the beginning of May, 2018, but that he had not been able to find the time to prepare responding material for this motion due primarily to this ongoing large arbitration. Ms. Groulx for Pomerleau did not oppose the adjournment. Ms. Groulx does not act for Pomerleau on the arbitration.
[4] Ms. Assuras for ABCO opposed the adjournment request arguing that the immediacy of the trial in the ABCO claim made an adjournment of the motion unworkable. On December 12, 2017 (six months earlier) I had scheduled an 18 day trial in the ABCO action commencing October 2, 2018. At that time on December 12, 2017 Ms. Assuras advised the court that ABCO was contemplating a “Rule 30.10 motion,” which is this motion.
[5] In light of the gravity of this motion (namely the disclosure of material subject to a confidential arbitration agreement), the impact that the ABCO motion would have not only on Pomerleau but on the TTC, and the lack of an explanation from ABCO as to why this motion had not been brought sooner, I granted the adjournment request, and set a schedule whereby the motion would be argued before me on August 7, 2018.
[6] Two days later, on June 13, 2018, Ms. Assuras sent me a letter, copied to the other counsel, advising that ABCO was withdrawing this motion as “there is a risk that the Trial Date will be impacted” in light of the adjournment. I vacated the August 7, 2018 date, and set a schedule for costs submissions as Pomerleau wishes to have its costs.
[7] As ABCO has abandoned its motion, Rule 37.09(3) of the Rules of Civil Procedure applies. This rule specifies that where a motion is abandoned, the responding party “is entitled to the costs of the motion forthwith, unless the court orders otherwise.” Therefore, Pomerleau has a prima facie entitlement to its costs of this motion.
[8] Pomerleau has delivered a costs outline which shows two figures, one being $13,492.03 for both substantial indemnity costs and actual costs, and the other being $12,813.95 for partial indemnity costs. In her written submission, Ms. Groulx argues that Pomerleau should be paid the higher figure, $13,492.03, on the ground that its costs in this motion are entirely “costs thrown away,” namely costs that are otherwise useless to Pomerleau in the ABCO action and that were entirely due to this now abandoned motion; see TIFF Mechanical Ltd. v. Ortolli, 2015 ONSC 1475 (Ont. Master) at paragraph 33.
[9] Ms. Groulx also argued that the timing difficulties with the ABCO motion did not arise solely from the adjournment of the ABCO motion. She argued that, had the motion been argued on June 11, 2018 and had it been determined that day without reserve in favour of ABCO (which is an unlikely proposition given the issues), there would have been timing difficulties in getting the requested substantial disclosure done in time for a trial that was less than four months away. This timing issue is something she alerted Ms. Assuras to by letter dated May 3, 2018, the day after the motion record was served. ABCO did not heed this warning and proceeded with the motion, a motion that it now has abandoned alleging timing issues.
[10] Ms. Assuras had two responses. First, she argued that the only reason for the motion withdrawal was that the adjournment of the motion granted to the TTC potentially jeopardized the trial date of October 2, 2018. She argued that the original return date for the motion itself, June 11, 2018, was reasonable in the circumstances, and that ABCO had properly served the motion material to make that return date happen. Second, she argued the ABCO motion was in substance reasonable given the legal authorities and the evidence as to what had happened in the arbitration. She submitted that there should be no award as to costs as a result, or, in the alternative, that there should only be a “nominal” award of costs in favour of Pomerleau.
[11] Ms. Grouly replied by arguing that the motion was indeed unreasonable. First, she argued that the leading case authorizing such disclosure, Adesa Corp. v. Dickenson, 2004 CarswellOnt 5087 (SC [Commercial List[), is distinguishable from this case on several grounds. In Adesa the plaintiff, a party to the third party arbitration, consented to the production of documents from the arbitration; here Pomerleau, a party to the arbitration, did not consent. In Adesa, the issues in the arbitration clearly overlapped with the issues in the action; here Pomerleau has stated throughout that the arbitration relates to an event that happened after ABCO’s subcontract was terminated. In Adesa, the arbitration concluded some time before the action and therefore assisted the court with refresher evidence; here the third party arbitration and this action are running in tandem, and there is no such benefit. In Adesa the plaintiff, the party to the concluded arbitration, commenced the action on overlapping issues and, thereby, was found to have waived the arbitration privilege; here Pomerleau is being sued and cannot be viewed as having waived the privilege.
[12] Ms. Groulx went on to argue that ABCO’s evidence of the relevance of the arbitration documents was thin. The governing test is that the arbitration documents must be shown to be “necessary” for the case of the party seeking production; see Adesa, op. cit., paragraphs 44 and 45. Ms. Groulx argued that the ABCO motion fell well short of this mark. ABCO referred to three Pomerleau back-charges; but Ms. Groulx pointed out that two of the three did not relate to the foundation work which is the subject matter of the arbitration, and the third was withdrawn.
[13] Finally, Ms. Groulx pointed out that the ABCO motion was brought much too late. She indicated that ABCO knew about the arbitration as early as June, 2015. She indicated that ABCO raised no questions about the arbitration during discoveries in March and April, 2016. She pointed out that, after advising the court of its intention to bring this motion on December 17, 2017, ABCO made its first formal request for the arbitration documents no sooner than January 29, 2018 and brought this motion three months later at the end of April, 2018 knowing full well of the immediacy of the trial date.
[14] On balance, I agree with Ms. Groulx. I am not satisfied that ABCO brought this motion with the diligence and care that it should have applied, particularly given the immediacy of the trial. I note and accept Ms. Groulx’s argument about the case authority. Furthermore, the evidence of the necessity of the arbitration document disclosure was indeed thin. I note and accept the points raised by Ms. Groulx on this point as well. In addition, I note that Ms. Assuras pointed out that in his recent cross-examination Mr. Faustini stated was that Pomerleau’s costing expert report in the arbitration “may” have referred to the Pomerleau back-charge against ABCO that is now withdrawn. She also pointed out that Mr. Fautini said that he “spoke” about ABCO in discussing the project history at the arbitration. This is not the compelling evidence of “necessity” required on a motion such as this. In its motion material ABCO also pointed out that the Pomerleau pleading in its arbitration against TTC referred to inaccurate and erroneous drawings from the owner, which is a complaint made by ABCO’s own expert. This connection is simply speculative.
[15] I am particularly critical of the timing of the ABCO motion. Having known about the arbitration for some time, ABCO simply took too long and was too cavalier about the process. It should have asked questions about the arbitration at the discovery in March and April, 2016 (over two years ago) to lay the foundation for the motion. It did not. It should have investigated the matter in a timely way, and moved as quickly as possible for the documentation. It did not. When I scheduled the trial on December 12, 2017, ABCO was contemplating this motion and should have moved forthwith thereafter. It did not. I am not at all satisfied that the eventual motion date of June 11, 2018 (six months later and less than four months before the trial date) gave sufficient time for the requested disclosure even if the disclosure had been ordered that day. I am mindful that this period before the trial will be full of other trial preparation work.
[16] All of this, when combined, made the motion appear to me in the end to be a last minute “try-on” to get helpful documents that are not critical to ABCO’s case. In short, it appeared to be a “fishing expedition.” This impression was reinforced when ABCO quickly withdrew the motion when it was adjourned. In the modern era of proportionality and directional production and discovery, this conduct cannot be accepted. Therefore, I have reached the conclusion that there must be an award of costs, and that it cannot be nominal.
[17] As to the issue of costs thrown away, I agree with Ms. Groulx that there do not appear to be any Pomerleau costs in this motion that Pomerleau will be able to make use of in the ABCO matter going forward. This proposition was not challenged by Ms. Assuras. The usual recovery of costs thrown away is full indemnity; see Caldwell v. Caldwell, 2015 ONSC 7715 at paragraph 11.
[18] Having said that, I believe that I still retain the discretion to critically assess the quantum of the Pomerleau costs outline to determine whether all of the costs were properly incurred and reasonable. I find that Ms. Groulx has been judicious in using less expensive junior counsel and a law clerk wherever possible in this motion. The requests to inspect documents and the cross-examination were parts of this motion and were brought on by ABCO. The importance of the motion to Pomerleau is clear and accepted. If confidential arbitration proceedings can be penetrated for speculative reasons, a prime point of arbitrations, namely confidentiality, would be lost. But I do question the need for the associate’s time on the cross-examination. I also find that the shown costs for the preparation of the motion record are somewhat excessive.
[19] I have decided in the end to award Pomerleau $12,000 in costs, to be paid by ABCO in 45 days from the date of this order.
DATE: July 20, 2018 __________________________
MASTER C. WIEBE```