COURT FILE NO.: CV-11-2721-00
DATE: 20180201
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: INZOLA GROUP LIMITED
Plaintiff
V.
THE CORPORATION OF THE CITY OF BRAMPTON
Defendant
BEFORE: Daley, RSJ.
COUNSEL: Stuart Svonkin, for the Plaintiff
Elizabeth Bowker, for the Defendant
HEARD: November 15, 2017
E N D O R S E M E N T
Introduction:
[1] The defendant the City of Brampton (“the City”) moves for production of a large number of documents following a further examination for discovery of the plaintiff’s representative John Cutruzzola on July 5, 2017.
[2] Although it is submitted on behalf of the defendant that the scope of this examination was much broader, I have concluded based on the submissions and the evidence adduced that the only reasonable conclusion that can be reached so far as the purpose of this examination was to allow the defendant an opportunity to question the witness in regard to a specific number of documents that were contained in an Electronic Brief served on the City, which were referenced in the plaintiff’s expert’s report served on April 12, 2017.
[3] Counsel for the City framed the defendant’s motion as a refusals motion, however whether the plaintiff should be required to answer the refused questions and produce documents sought, will turn on the determination of the questions of whether or not the defendant is simply seeking to reopen its examination for discovery of the plaintiff’s representative afresh, and whether or not the plaintiff is obligated to produce documents that were not considered by its expert on damages, Peter Steger, during the preparation of his report.
[4] As I have determined, for the reasons that follow, that the defendant is not entitled to production of any of the documents and information requested, I will not consider the specific refusals as outlined in the defendant’s motion.
[5] It is important, in considering this motion, to review the history of this litigation.
[6] This action was instituted in July 2011 and the plaintiff produced the documents it was relying upon to the defendant in May 2012.
[7] Examinations for discovery of the plaintiff’s representative were conducted in March 2013 and May 2014 and at the close of the examinations for discovery counsel for the City concluded the examination and stated on the record: “subject to the questions that have been refused and subject to the production of documentation and information and answers to undertakings and any reasonable questions that may arise there from.”
[8] Answers to undertakings from discovery of the plaintiff’s witness were provided in 2013, 2014 and 2015.
[9] The plaintiff set this action down for trial in February 2016 and a pretrial conference was conducted on June 22 and 23rd, 2016 with this action being fixed for trial to commence on May 7, 2018.
[10] The plaintiff served its expert report on damages on April 12, 2017 and at that time as well a copy of an Electronic Brief containing 9 items of documentation was also delivered, which included documentation relied upon by Mr. Steger in the preparation of his report.
[11] The Steger expert report included the Electronic Brief as Appendix A to the report and under section 7 (a) – 7 (i) of the author’s “Scope of Review” he listed the documentation referred to and relied upon by him in the preparation of his report namely the following 9 items:
- Additional Inzola documents attached as a separate electronic brief:
(a) Excerpts from six of Inzola’s other retails lease agreements in Brampton, Ontario;
(b) Excerpts from two appraisal reports re: Brampton retail cap rates;
(c) Drawings prepared by architect Giannone Petricone Associates Inc. in April 2017;
(d) Altus appraisal report for 65-69 Queen St. West dated Oct 24, 2013;
(e) Cost Breakdowns of Inzola Proposed Retail Space, Construction Soft Costs and Commercial Space Cost prepared by Inzola;
(f) Altus Construction Cost Estimate prepared for Inzola re Park Place dated December 5, 2006;
(g) Schedule of cash draws and interest for a period of 24 months prepared by Inzola;
(h) Inzola’s “Schedule 3 Special Conditions” – excerpt from Inzola’s borrowing letter from SunLife Financial;
(i) Cost of Uncompleted Offsite Parking at Hurontario prepared by Inzola.
[12] I have concluded that the continued examination for discovery of the plaintiff’s representative was for the limited purpose of allowing the defendant’s counsel to examine the witness in respect of the documents referred to in the “Scope of Review” section of the plaintiff’s expert witness Mr. Steger. This is the only reasonable conclusion that can be reached on the evidence adduced and certainly the only one that is consistent with the Rules of Civil Procedure relating to oral and documentary discovery.
[13] On behalf of the defendant, it is submitted that the questions in dispute and the documentary disclosure sought on this motion in respect of those additional documents are all relevant as they go to the issue of the plaintiff’s damages and its mitigation of same.
[14] It is urged on behalf of the defendant that the documents and information sought as outlined in their motion are relevant to specifically the following issues:
(I) Inzola’s construction profit;
(II) Inzola’s financing profit; and
(III) Inzola’s mitigation and total profits.
[15] Following the examination of the plaintiff’s witness, counsel for the defendant sent a letter dated August 8, 2017 providing a chart outlining questions taken under advisement and refusals and as well a list of 15 questions, with sub-questions included, which were not posed during the oral examinations. The list of additional questions was very substantial and the additional documentary disclosure requested was broad and sweeping in terms of the timeframes in question, as well as the volume of documentation sought.
Analysis:
[16] The scope of documentary discovery was narrowed significantly by amendments to the Rules of Civil Procedure in 2010, whereby this form of discovery was narrowed by the replacement of the broad “semblance of relevance” test with a narrower test calling for actual relevance. The intended purpose of this amendment was to “inject a sense of restraint into the discovery process.”: Hansen Estate v. Stollery Estate, [2017] O.J. No. 295 at para. 55; Stewart v. Kempster, [2012] O.J. No. 6145.
[17] A question arising from the defendant’s motion is: what is the scope of documentary discovery, if any, related to documents and information not provided to the retained expert witness, nor considered by him or her, in the preparation of their report. No examination of the plaintiff’s expert witness was sought as a nonparty under Rule 31.10 and thus the essence of the defendant’s motion is one seeking an order requiring the plaintiff to disclose to the defendant numerous documents in the plaintiff’s possession and in the possession of third parties, which it is submitted would have been relevant for the expert witness to consider in formulating the findings, opinions and conclusions reached.
[18] This question was considered by Master Dash in his decision in Chuang v. Toyota Canada Inc., 2013 ONSC 3235.
[19] In Chuang the Master considered a motion by the plaintiff for production of specific data and financial information that had not been considered by the defendant’s expert in the preparation of his report.
[20] The Master provided helpful and instructive analysis, which is most apt to this motion, with respect to Rules 31.10 and 30.02 in paras 13 – 16, 20 – 23 and 26 which read as follows:
PRODUCTION UNDER RULE 31.06(3)
[13] Under rule 31.06(3) a party is entitled to disclosure of the “findings, opinions and conclusions” of an expert engaged by an adversarial party (unless an undertaking has been given not to call the expert at trial). The word “findings” includes all factual information or data that the expert relies upon in arriving at his opinions and conclusions[ 2] or data and records made or used by the expert in preparing his report[3]. This has been described as foundational information and consists of the facts upon which the opinion is based and the instructions upon which the expert proceeded.[4] No case has been cited where data or information that was not received, reviewed, relied upon or prepared by the expert has been ordered produced as foundational information for the expert’s findings, even if related to the information that was provided.
[14] In this case BDO was not provided with KPI data or other financial information of any one or more of the seven individual dealers. BDO was provided only with the averages of the KPI data as summarized by the defendant from KPI data received by the defendant from the seven dealerships. While it may be argued that the expert’s report may have been more reliable if the expert had received the raw data of each dealer and prepared its own summary or average, that was not done.
[15] As BDO did not receive, review, reference or rely upon the individual dealer information, it cannot be considered as foundational information to BDO’s findings. The plaintiffs are not entitled to production of the KPI data or other financial information respecting individual dealerships on the basis of rule 31.06(3).
PRODUCTION UNDER RULE 30.02
[16] Are the plaintiffs entitled to the individual dealer documents under rule 30.02(2)? Rule 30.02(1) requires a party to disclose every document “relevant to any matter in issue” that is in its possession, control or power whether or not privilege is claimed. Rule 30.02(2) requires a party to produce those documents for inspection unless privilege is claimed. I must therefore first consider whether the individual KPI or other financial data in the possession of the defendant is relevant to a matter in issue – in this case to the issue of the plaintiffs’ loss of profits.
[20] In my view, the documents requested are not simply matters to be dealt with by cross-examination of the expert at trial, but are relevant documents within the meaning of rule 30.02(2) on the issue of calculation of the plaintiffs’ loss of profits.
[21] Notwithstanding that the plaintiffs do not rely on the financial performance of existing Lexus dealers in the GTA, either individually or on average, as a basis for or factor in establishing the plaintiffs’ loss of profit and that such information was never requested by the plaintiffs either at examinations for discovery or in preparation for the Rosen Report, the defendant’s use of the Dealers’ financial data, albeit average and not individual data, as the basis for calculating the plaintiffs’ projected income, has made the performance of GTA Lexus Dealers relevant to the plaintiffs’ loss of profit, which is an issue in the action.
[22] Indeed, the trial judge may well determine that the defendant is right and that profits of other Lexus Dealers in the GTA is the appropriate basis upon which to calculate what the plaintiffs would have earned had they been able to establish a downtown Lexus dealership.
[23] Even though the defendant’s expert has used the average data, the individual dealer’s financial information is also relevant in order to determine the reasonableness and reliability of the averages. This is particularly so as the averages were calculated by an employee of the defendant and given to the expert. The expert relied on the averages given to him with no independent calculation on his own part.[6] The plaintiffs can critique by way of reply report BDO’s use of averages and can critique the use of profits of existing Lexus Dealerships in the GTA, on average or otherwise, as a basis to estimate the plaintiffs’ loss of profits without the breakdown by dealer, but the reliability of the calculations in the BDO report cannot be adequately tested without it.
Prejudice, Proportionality and Balancing of Interests
[26] Notwithstanding its relevance I am of the view that the individual Dealers’ financial data should not be produced to the plaintiffs.
[21] It is noteworthy that the Master, in paragraph 13, above states that no case was cited in support of the proposition that data or information that had not been received, reviewed, and relied upon or prepared by an expert could thereafter be ordered produced as foundational information for the expert’s findings, even if related to the information that was provided. Similarly in the case at bar, counsel offered no such authority.
[22] Although standing alone it is not determinative of this motion, it is important to note as well that no evidence was offered on behalf of the defendant, from either its expert or any other witness, that in order to complete a proper review of the plaintiff’s claim for damages, it was necessary that all of the refused documentation and information requested be produced.
[23] As to the specific areas of inquiry put forward during the examination for discovery on the additional documents contained in the Electronic Brief, approximately half of the questions posed seek production of documents relating to an entirely distinct development project, which has no connection whatsoever with the construction project which is the subject of this action.
[24] Those questions were in relation to a condominium development project known as Park Place, which was carried out by an affiliate of the plaintiff corporation. Mr. Steger, in his report, does not use the Park Place project as a comparator or as a foundation for any calculations contained in his report and it is noteworthy that Park Place is a residential condominium with little, if anything, in common with the Brampton City Hall addition project, which is the subject of this action.
[25] Another area of inquiry being pursued by the defendant, which was opposed by counsel for the plaintiff, was in respect of the production of any financing arrangements that the plaintiff and a third-party entered into with respect to any and all projects on which the plaintiff was involved between 2007 and the present time. Plaintiff’s counsel opposed production of any such records simply on the basis of lack of relevance. I agree that the defendant has failed to establish sufficient relevance to warrant the production of the information sought.
[26] The further and even more expansive documentary disclosure requested in defence counsel’s correspondence of August 8, 2017 calls for the production of potentially immense volumes of irrelevant documentation involving 7 varieties of documents on 13 different projects from 1990 to the present. Counsel for the defendant, on this motion, fairly acknowledged that the breadth of the request as set out in this letter was far too expansive, however it was never made clear, during those submissions, as to what aspects of the requests being made in that letter were being abandoned.
[27] Turning to the defendant’s motion as it relates to production of additional financial documentation and data that were not considered by the plaintiff’s expert, I have concluded that as those records did not form the foundational information used by the expert in preparing his report, those documents cannot now be ordered produced. While the data and documents may have been open to consideration by the expert, that is not the case and as such I have concluded that the documentary disclosure sought beyond the documents in the Electronic Brief must be denied as being beyond the scope of Rule 31.06 (3).
[28] Rule 29.2.03, which was incorporated in the Rules of Civil Procedure in 2010 provides as follows:
29.2.03 (1) In making a determination as to whether a party or other person must answer a question or produce a document, the court shall consider whether,
(a) the time required for the party or other person to answer the question or produce the document would be unreasonable;
(b) the expense associated with answering the question or producing the document would be unjustified;
(c) requiring the party or other person to answer the question or produce the document would cause him or her undue prejudice;
(d) requiring the party or other person to answer the question or produce the document would unduly interfere with the orderly progress of the action; and
(e) the information or the document is readily available to the party requesting it from another source. O. Reg. 438/08, s. 25.
[29] One of the hallmarks of oral and documentary discovery now is the principle of proportionality and that consideration must be carefully looked at when balancing the competing interests of the parties on a motion such as this, particularly at this point in time in the history of this action.
[30] Further, I have concluded that even if basic relevance was established, which I conclude has not been done, the additional documentary disclosure is entirely disproportionate, when considering the history of this action, the enormous documentary disclosure and lengthy oral discoveries conducted, and last but not least the fact that this case has been fixed to proceed to trial on May 7, 2018.
[31] The additional disclosure sought will involve an extraordinary amount of document collection and organization and the projects involved in these additional documents are in no way similar to this project which is the subject of this action but rather include commercial, residential and retail buildings. The relevance of this additional material is highly suspect and voluminous.
[32] Weighing all of the considerations of fair and adequate disclosure, relevance, proportionality and the current state of this action, which is pending trial, I have concluded that the defendant’s motion must be dismissed.
[33] As to costs, counsel for the plaintiff shall deliver submissions on costs, along with a costs outline within 20 days, followed by similar submissions on behalf of the defendant within 20 days thereafter. No reply submissions are to be filed.
Daley, RSJ
DATE: February 1, 2018
COURT FILE NO.: CV-11-2721-00
DATE: 20180201
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: INZOLA GROUP LIMITED
Plaintiff
V.
THE CORPORATION OF THE CITY OF BRAMPTON
Defendant
BEFORE: Daley, RSJ
COUNSEL: Stuart Svonkin, for the Plaintiff
Elizabeth Bowker, for the Defendant
HEARD: November 15, 2017
ENDORSEMENT
Daley, RSJ
DATE: February 1, 2018