Horizon Entertainment Cargo Ltd. v. Marshall 2019 ONSC 2052

Court File and Parties

Court File No.: CV-13-486658 Motion Heard: 19 March 2019 Superior Court of Justice – Ontario

Re: Horizon Entertainment Cargo Ltd., Plaintiff And: Jeffrey Marshall, Robin Peter Williams, Raymon M.J. Lord, Michelle Spanik, G. Martin Moore, Shuttle Freight Logistics Inc., Global Motion Canada Inc. and Lucky 13 Productions Inc., Defendants

Before: Master Jolley

Counsel: Harvey Dorsey, Counsel for the Moving Party Plaintiff Alan Cofman, Counsel for the Responding Party Defendants

Heard: 19 March 2019

Reasons for Decision

[1] The plaintiff brings this motion for an order excluding the defendants from attending each other’s examination for discovery or being told about or permitted to read the transcript of the evidence of their co-defendants before their own examination.

[2] In order to obtain an exclusion order, the moving party must demonstrate that the exclusion is necessary to meet the ends of justice ( Baywood Paper Products Ltd. v. Cheque-Writers (Canada) Ltd. (1986), 57 O.R. (2d) 229 at page 238 and adopted in Lazar v. TD General Insurance Co. 2017 ONSC 1242 at paragraph 38 (Div. Ct.). A party cannot be excluded from examinations for discovery except for cause. What may constitute cause depends on the circumstances of each case.

[3] In exercising its discretion, the court may consider factors such as whether (a) the co-parties have common interests, (b) the co-parties are represented by the same lawyer, (c) it appears the examinations for discovery will cover the same grounds and (d) credibility will be a factor or an issue.

[4] Additionally, the court may consider the likelihood that a party will tailor his or her evidence as a result of being privy to the evidence given by his or her co-party. Depending on the circumstances of the case, it is not always necessary that the moving party prove that it is likely that evidence will be tailored or parroted. Depending on the existence of other factors, proof that there is a risk that evidence will be tailored may be sufficient to discharge the onus. Further, inferences of a risk of tailoring evidence may, if appropriate, be drawn from the other factors noted ( Lazar, supra at paragraphs 40 and 42).

Common Counsel and Common Interests

[5] Counsel conceded that these two factors exist in this case. However, I do not put much weight on the second factor as an independent consideration. As the court noted in Besner v. Ontario 2011 ONSC 7335 at paragraph 15, “a lawyer representing multiple plaintiffs or multiple defendants does so when the parties have common interests in the outcome of the litigation; otherwise the lawyer would be in a conflict of interest position and could not act for all co-parties. As a result, in such cases, the co-parties share a common or similar position on factual issues.”

Scope of Examinations for Discovery

[6] While the examinations for discovery will cover the same ground for certain of the defendants, other defendants are only involved in specific events or issues. For instance, the only allegation against Moore is that, at the direction of Williams, he deleted information from the plaintiff’s computer used by Spanik. There are no other material facts alleged against him, although the plaintiff does seek damages against him for conspiracy and intentional interference with economic relations, given his positions with the defendants Global Motion Canada and Shuttle Freight. Damages for breach of contract and breach of fiduciary duty are sought against Williams, Marshall and Spanik but not against Moore or Lord.

Credibility

[7] Both parties agree, and it is evident from the pleadings, that credibility will be an issue in these proceedings. The plaintiff alleges it entered into a verbal agreement with some or all of the defendants to merge the entertainment aspects of their businesses. It further alleges that the defendants, or some of them, breached the bargain and then breached their fiduciary duties by soliciting the clients that did or should have belonged to the plaintiff.

[8] This is unlike Lazar, supra where the court found in support of the exclusion order that the plaintiffs had little documentary evidence to support their claim for payment of contents insurance, the photographs they had produced would be of little assistance and the plaintiffs had already produced contradictory contents lists. There, critically, the court on appeal held at paragraph 51 that “it is clear that the outcome of this action will turn almost exclusively on the findings by the trier of fact of the credibility and the reliability of the viva voce evidence of the respondents at trial. There is no speculation required to reach this conclusion.” In this case, I am advised that the parties have generated thousands of pages of evidence to date, much of it in answer to undertakings. Additionally, they have produced contemporaneous emails that will assist the court in determining what the parties agreed to. While credibility will be an issue in this dispute, it will not carry the day alone.

[9] In making the exclusion order in Lazar, the court held that the order would also permit the defendant to test the reliability and credibility of the evidence of each of the co-plaintiffs and test their independent recollection of the facts in issue, untainted by the prior knowledge of the questions they will likely be asked and the answers given by their co-party. While I agree with this statement, Lazar did not rely on that alone to grant the exclusion order, nor would it be appropriate to do so, in my view as this commentary is applicable to the vast majority of examinations for discovery where there are co-parties. Relying on this statement solely or even primarily as the basis for an exclusion order, in my view, would weaken the general rule that a party may attend the examinations for discovery of his or her co-parties, absent cause.

Risk of Tailoring or Parroting of Evidence

[10] The largest factor militating against the exclusion order in this case is my assessment of the risk of tailoring or parroting evidence. In my view there must be some basis to find that this risk is present apart from the general court observation that a co-party may have a subconscious or conscious desire to achieve consistency with his or her co-party. As noted in Besner, supra, at paragraph 20, “recognizing human frailties, a possibility that the evidence of co-parties given at their examinations for discovery might be tailored (at least to some extent) exists as well in all civil cases.” In other words, there must be something other than the fact that there are co-parties and credibility is an issue to support a finding that justice will be threatened if an exclusion order is not granted. While proof of a likelihood of tailoring may not always be required, there should be proof of some concern that warrants departure from the general rule that a litigant may attend the examinations for discovery in his or her action. What that additional something is that is needed to show cause for an exclusion order is fact specific but relates to protecting the interests of justice ( Besner, supra at paragraph 24).

[11] In considering a request for an exclusion order in ICC International Computer Consulting & Leasing Ltd. v. ICC International Computer & Consulting GmbH et al (1988), 31 C.P.C. (2d) 178, Anderson J. said in reference to the probable conflict of evidence of the parties:

“… Nor am I satisfied that the Knoppke defendants have made out on the material any likelihood that Rosen will tailor his evidence according to that which he hears from Knoppke. No doubt such a possibility exists. It must exist in every case given the frailty of human nature. It will no doubt be often a cause for concern. But, again, in my view, it is necessary that something more be shown than such a possibility.”

[12] The court in Karamanokian v. Assad [1992] O.J. No. 2284 (Ont. Gen. Div.) noted that it would be difficult to imagine how the moving party could establish directly in evidence a probability that one of the respondents would tailor his evidence if he had access to the evidence of the other respondents before being cross-examined. The court noted that the circumstances would be rare where that would be possible. However, in this case we have those rare circumstances where it would be possible for the moving party to prove such a likelihood. I find on the evidence before me it has not done so.

[13] In this unusual case, the defendants Williams and Marshall have already been cross-examined on substantive affidavits filed in support of various motions. For instance, on the defendants’ motion for summary judgment, Marshall swore a reply affidavit that outlined his background in the music industry, his involvement with John Greenstreet, the principal of the plaintiff, his subsequent employment by the plaintiff, his introduction to Global Motion UK and to Williams and Moore, the principal and general manager, respectively, of Shuttle Freight, the company that had been acting as agent for Global Motion UK in Canada. He also outlined the representations that Greenstreet made to him about the proposed merger, his role in the new arrangement, the financial position of the plaintiff prior to the merger, the disintegration of the Global Motion UK-Horizon relationship and the subsequent change proposed by the plaintiff to Marshall’s ownership and salary thereafter. He also deposed to his dealings with former clients after his resignation from the plaintiff, his decision to join Global Motion Canada, the timing of that decision and the ongoing work of Shuttle Freight and Global Motion Canada. He was cross-examined on that affidavit on 5 February 2016 and the transcript of that cross examination was put in evidence.

[14] While Williams did not file any affidavits, the record shows that he was “cross-examined” on 4 February 2016 pursuant to a notice of examination. During that examination, he was asked about his background in the freight business, his founding of Shuttle Freight with the defendant Lord, the incorporation and business of the defendant Global Motion Canada and his introduction to Greenstreet and the plaintiff. He was asked about the discussions he had with Greenstreet concerning a proposal to do business together, who would own that new business and in what percentages, what the anticipated new roles would be in the new business entity, what his role was and about the events leading to the breakdown of the relationship. Lastly, Williams was asked about the work Marshall does for Global Motion Canada and the common customers between Global Motion Canada and the plaintiff.

[15] By way of one specific example, in support of this motion plaintiff’s counsel submitted an affidavit that notes that “Marshall and Williams also appear as officers and directors of the plaintiff in respect to the banking resolutions and account forms. Both of them deny that they were officers and directors of the plaintiff, which the plaintiff disputes. I am concerned that if each of these parties (i.e. Williams and Marshall) hear the other’s evidence, the subsequent party will tailor his evidence to make it consistent with the previous deponent. The issues revolve around who instructed them to go to the particular bank branch and what transpired at the meeting where each of them executed the documents (although, apparently, on separate occasions).”

[16] The plaintiff points to the defendants’ answers on various points including their recollection of their attendance at the bank meeting as evidence of parroting or at least a risk of parroting or tailoring of their evidence. At its highest, there is evidence that Williams and Marshall both recalled very little from their respective bank meetings. While the meetings may have stood out less for the bank representative than for the defendants, given its routine nature for her, I note that she also had no specific recollection of these meetings. I further note that there is little risk of Williams and Marshall parroting what happened at the bank meetings as it was established during their cross examinations that they attended the bank separately.

[17] For both Williams and Marshall, the cross examinations were wide-ranging. The questions covered each of the topics outlined in paragraphs 13 and 14 above. I am told that Williams and Marshall have each attended each other’s cross examinations and certainly have had the transcripts of each other’s evidence available to them for review. The transcripts have also been available to their co-defendants to review, should they have wished and they may well have done so.

[18] On this rare instance where the defendants have already been extensively cross-examined and evidence of the risk of tailoring could presumably have been available, I have not been pointed to evidence that would support that either of these two defendants consciously or otherwise tailored their evidence on any point on which they were cross- examined, even after having heard the evidence of the other.

[19] There was some evidence put to me that when certain questions were put to Williams on cross examination, he responded that he did not know or did not recall, and it was suggested he was being evasive. However, those answers were not replete and I do not draw the inference from those answers that Williams did or would tailor his evidence after hearing the evidence of Marshall.

[20] While recognizing that the facts of Baywood Paper, supra were slightly different in that that case dealt with a motion to exclude a party from the opposite party’s examination, I echo the words of Borins, J. at paragraph 20 that:

“the presence of a party at the examination for discovery, like the presence of a party at trial, is consistent with due process and the right to protect his or her interests by observing the conduct of the examination.”

[21] In declining a request for an exclusion order in Lesniowski v. H.B. Group Insurance Management Ltd., [2003] O.J. No. 6263, 57 C.P.C. (6th) 374 (Ont. S.C.J.), Justice Echlin stated:

“19 I find that although the plaintiff has expressed potential concerns, there is not sufficient evidence for me to extinguish a co-defendant's right to be in attendance at all of the examinations, even if credibility is a factor. The parties are under oath when testifying.

20 The nature of one party's potential evidence or relationship to another party, by itself, is not enough to constitute cause to order exclusion. There must be more than just a possibility of cause: Lamb v. Percival (1992), 7 O.R. (3d) 775 (Ont. Ct. (Gen. Div.)). That possibility exists in every case, given "the frailty of human nature" ... [ICC International Computer Consulting & Leasing Ltd. v. ICC Internationale Computer and Consulting GmbH (1988), 66 O.R. (2d) 187 (H.C.) at p.190].There must be a real & substantial probability.”

[22] As the court found in Simon Zaslavski Enterprises Inc. v. Antique Treasure Traders Inc., [2004] O.J. No. 3020 (Ont. S.C.J.):

“2 It is settled law in Ontario that a party has the right to be present at the examination for discovery of a co-party except for cause. What constitutes cause depends on the circumstances of each individual case. The onus rests on the party seeking exclusion to satisfy the court that the interests of justice require exclusion. I adopt the reasoning of Master Kelly in Shuttleworth v. TGA General Contracting, [2003] O.J. No. 2997 that the possibility for tailoring evidence is not a heavy enough onus - rather there must be strong support for a finding by the court that the discovery process may well be compromised.”

[23] Even if one applies the ‘risk of tailoring’ test as opposed to the ‘real and substantial probability of tailoring’ test referenced by Echlin, J., on the unique facts before me and in particular the fact that Marshall has already sworn an affidavit and both Williams and Marshall have been cross-examined on many of the key issues in this case in each other’s presence with no evidence of tailoring or parroting, and the fact that their co-parties have had access to these transcripts throughout, I do not find support for a finding that the discovery process may be compromised absent an exclusion order.

[24] In conclusion, I am not satisfied that the plaintiff has demonstrated that the ends of justice require an exclusion order and I decline to make such an order.

[25] The defendants shall have their partial indemnity costs which I fix at $4,500 inclusive of HST and disbursements.

Master Jolley Date: 1 April 2019