Court File and Parties

COURT FILE NO.: C-403-13 DATE: 2019-04-30 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Manish Gupta, 2357939 Ontario Inc. and EB Investments Inc. Plaintiffs – and – 2075750 Ontario Inc. and Re/Max Capital Inc. Defendants

COUNSEL: Manish Gupta – Self-represented counsel for himself and 2357939 Ontario Inc. Amandeep Sidhu – Counsel for the EB Investments Inc. John Adair – Counsel for the Defendant 2075750 Ontario Inc.

HEARD: April 25 & 26, 2019

Reasons for Judgment

The Honourable Justice James W. Sloan

[1] Lyndsay Butlin, from Gowling WLG, represents Third Parties and attended the hearing with a watching brief, but did not make any representations on the motion and does not oppose the relief sought.

[2] This action arises out of a real estate transaction in Guelph, Ontario which failed to close in the summer of 2012 (the Property).

[3] There are currently two motions before the court, one by 207 to dismiss the plaintiffs’ action, and one by the plaintiffs for leave to issue a certificate of pending litigation (CPL).

[4] Alternatively, if unsuccessful in having the action dismissed, 207 requests the following orders:

(a) requiring the plaintiffs to re-attend for a further examination for discovery;

(b) ordering costs thrown away in the amount of $25,000ordering the plaintiffs to post security for costs in the amount of $100,000; and

a) ordering the Director of Land Titles to delete from title, instruments: WC354284, dated September 9, 2012: WC365555, dated January 31, 2013 and WC365585, dated February 1, 2013.

Underlying Facts

[5] The initial agreement of purchase and sale (APS) was scheduled to close in June or July 2012.

[6] When the APS did not close, Gupta obtained the assistance of Mr. Singh whose company is EB Investments.

[7] The APS was revived in November 2012 with a closing date set for 30 days after the purchaser waived conditions. The conditions were waived on December 18, 2012, such that the closing date should have been January 17, 2013.

[8] The transaction did not close on January 17, 2013 or at any other time and there is a dispute as to whether the closing was extended.

[9] On May 9, 2013 the plaintiff commenced this action for specific performance and in the alternative damages of $2,000,000 for breach of the APS.

[10] Neither party tendered on the other.

[11] The central issue appears to be whether or not the plaintiffs were ready, willing and able to close on January 17, 2013, or alternatively on January 31, 2013.

207’s Position on the Facts

[12] 207 submits that five conclusions can be drawn from the relevant evidence as follows:

(a) there is at least a strong case to be made that the plaintiffs were in dispute among themselves in January 2013 and therefore not ready, willing and able to close;

(b) the plaintiffs repeatedly breached their production obligations, specifically with respect to evidence of the dispute between them in January 2013;

(c) the documents not produced go to the heart of the ready, willing and able issue;

(d) the plaintiffs, in addition to breaching their production obligation, have engaged in a pattern of delay and abuse of the court process; and

(e) the plaintiffs’ conduct in breaching their production obligations and delaying the proceeding has caused demonstrable prejudice in the form of lost documents and faded memories on key issues and events.

The Plaintiffs Were Not Ready, Willing and Able to Close

[13] The plaintiffs were not ready to close on January 17, 2013 because they did not have their financing in place.

[14] In January 2013, and specifically on January 17, 2013, the plaintiffs were fighting among themselves with respect to how ownership to the property would be taken. This issue was never resolved.

[15] By January 19, 2013, Gupta began trying to arrange his own financing independent of Singh’s efforts and shortly thereafter each party retained their own real estate lawyer, and each began preparing to close the transaction on their own, independent of the other.

The Plaintiffs Repeatedly Breached Their Production Obligations Specifically with Respect to the Evidence of the Dispute between Them in January 2013

[16] While Gupta failed to deliver an affidavit of documents, the affidavit of documents delivered by EB Investments (Singh), sworn November 18, 2013, failed to list a single piece of correspondence between the plaintiffs for the month of January 2013. This deprived 207 of the opportunity to learn that there was a dispute between the plaintiffs, including the nature and extent of the dispute.

[17] At his examination for discovery in February 24, 2015, Gupta refused to answer questions about the dispute.

[18] The court ordered the plaintiffs to produce relevant correspondence by October 15, 2016, which was not done until November 14, 2016.

[19] Rather than produce the documents in an acceptable form, the plaintiffs uploaded reams of documents to a file-sharing website in a disorganized fashion, without an index.

[20] Although the plaintiffs were ordered to deliver a Schedule B to the affidavit of documents by October 15, 2016, they failed to do so by that date. Rather than listing individual documents and their basis for any assertion of privilege, the plaintiffs simply made a blanket assertion of privilege for an unknown list of documents that were not identified.

[21] Individual communications between the parties from January 2013 were not listed in the particularized sworn Schedule B until June 2018, approximately 20 months after the deadline ordered by the court in September 2016.

[22] In an effort to hide and not produce all relevant emails and texts of the plaintiffs:

(a) in their original affidavit of documents, did not produce a single piece of correspondence between them for the period December 2012 through February 2013 (V1 T2 Para26);

(b) Gupta, on his February 24, 2015 examination, refused to answer any questions about any disputes between himself and Singh (V1 T2H Q276-268);

(c) Gupta specifically denied that they were fighting about anything to do with the subject transaction (V1 T2H Q270), this answer is false and has never been corrected;

(d) in answer to a refusal about what the plaintiffs were fighting about, the answer was, that the dispute was about who would be managing the subject property after closing. This was patently false. This lack of information and false information influenced what the counsel for 207 would do on discovery and how he might approach settlement discussions (V1 T2K P92);

(e) the plaintiffs took the position that any questions about disputes between the plaintiffs were simply a fishing expedition, notwithstanding that in late January 2018 time was running out (V1 T2H Q271);

(f) in answer to a matter taken under advisement about whether or not the plaintiffs would produce correspondence between the plaintiffs between August 2012 and February 2013, the plaintiffs responded by attaching only the correspondence for July and August 2012, thereby continuing their deception and not producing the much more relevant January 2013 correspondence (V1 T2K P95);

(g) pursuant to Justice Sloan’s order dated September 16, 2016, the plaintiffs were ordered to produce documents up to and including February 2013, along with a list of alleged privileged documents with a general description sufficient to allow the defendant to ascertain whether or not they were privileged (V1 T2M Para13);

(h) subsequent to the court’s order of September 15, 2016, the plaintiffs provided additional productions by simply uploading them to a “dropbox” link that contained a series of files that were disorganized and not identified as being responsive to any specific undertaking or refusal;

(i) none of the emails between January 12 and January 28, 2013, referred to in the paragraph above were uploaded to the “dropbox”;

(j) notwithstanding the clear order of the court for the plaintiffs to list the alleged privileged documents with a general description sufficient to allow the defendant to ascertain whether or not they were privileged, they did not do so. They gave a meaningless answer, stating that documents were in the “dropbox” folder and the only documents withheld for privilege were “correspondence subject to solicitor client privilege and common interest privilege” with no further delineation. This does not conform to a particularized schedule B to an affidavit of documents. Notwithstanding further correspondence from 207’s counsel, the Schedule B problem persisted (V1 T2P P193);

(k) in mid June 2017, the plaintiffs changed lawyers, and the new lawyer served an unsworn affidavit of documents which was due October 16, 2016. The new draft affidavit of documents is replete with claims of solicitor client privilege and common interest privilege, some of which are simply ridiculous because the emails in question are sent to non-lawyers and/or are also sent to third parties. This is nothing more than a blatant attempt to shelter producible documents;

(l) as a result of not producing the incriminating emails, discoveries continued in July 2017 without them, and on July 25, 2017 the plaintiffs filed the trial record;

(m) although the affidavit of documents of the plaintiff was sworn on June 14, 2017, it was not given to 207’s counsel before the discovery of the plaintiffs on July 19 and 20 of 2017;

(n) most of the plaintiffs’ undertakings were not answered until after the pretrial held on March 6, 2018;

(o) notwithstanding that the plaintiffs were ordered on March 6, 2018 to answer all undertakings and requests for information by March 30, 2018, they did not do so until June 13, 2018; and

(p) for the first time on June 13, 2018, after changing to their fifth lawyer, Greenspoon, several emails dated between January 12 and January 28, 2013 were produced. These emails set out serious disputes between the parties about financing, closing the transaction and threatening to sue each other. Also included are emails between the plaintiffs and their real estate lawyer(s). At the very least, the tenor of the emails seriously calls into question whether or not the plaintiffs were ready, willing and able to close the subject transaction (V2 TFF P429-437).

Documents Not Produced That Go to the Heart of the Ready, Willing and Able Issue and Delay Tactics of the Plaintiffs

[23] The documents withheld until October 2017 and June 2018, provide important evidence about the dispute between the plaintiffs in January 2013, including that Singh was threatening to sue Gupta before January 31, 2013.

[24] Gupta swore a supplementary affidavit of documents on June 14, 2017, one month before the July 2017 examinations for discovery, yet failed to deliver that affidavit until June 2018.

[25] The plaintiffs brought two summary judgment motions, one in May 2014 and the other in March 2016, both of which were later abandoned.

[26] The plaintiffs also served a notice of motion in September 2016 for leave to appeal the undertakings Order of Sloan J. They did nothing to pursue that motion which was later dismissed by Campbell J., who made it clear in his reasons that the motion was nothing more than a delay tactic.

[27] The plaintiff did not comply with a court order to answer undertakings by October 15, 2016. While some efforts were made, the final answers were not provided until June 2018.

[28] The plaintiffs have also changed counsel five times, despite knowing the changing counsel causes delay. They have even changed counsel after this motion to dismiss for breach of discovery obligations and delay was served.

The Plaintiffs’ Conduct In Breaching Their Production Obligations And Delaying The Proceeding Has Caused Demonstrable Prejudice In The Form Of Lost Documents And Faded Memories On Key Issues And Events

[29] Evidence has been lost in two important ways by the plaintiffs’ breach of their production obligations and delay.

[30] Documents have been lost, and in particular Singh’s relevant emails. Singh’s only effort to identify and produce relevant emails was to have his counsel search his computer. The counsel only searched the computer’s inbox and not the sent or deleted items. The lawyer only searched for the phrase Manish Gupta and not the name of the street, the vendor’s name, the real estate agent’s name or the real estate lawyer’s name, etc.

[31] Singh no longer has the same computer and has deleted emails over the years.

[32] The plaintiffs also confirmed on discovery that they exchanged text messages all of which have been lost.

[33] In addition, the plaintiffs’ real estate agent exchanged text messages with Gupta in 2013, which text messages have been lost.

[34] In addition, the facts underlying this case are more than six years old and witnesses’ memories have faded.

207’s Legal Position

[35] 207 relies on Rules 30.08 and 34.15(1)(b) of the Rules of Civil Procedure for the court’s authority to dismiss a party’s proceeding for failure to serve an affidavit of documents or produce a document for inspection.

[36] In dealing with these issues, the court must balance the importance of resolving cases on their merits, with the need to protect the integrity of the judicial system and the moving party’s right to a fair trial.

[37] Rule 24.01 of the Rules of Civil Procedure gives the court authority to dismiss an action for delay.

[38] 207 relies in part on the case of Musselman v. Estate of Robert Carbin, 2016 ONSC 7745 at paragraphs 23, 24 and 30 which read:

[23] An action may be dismissed for delay where the delay is (1) inordinate; (2) inexcusable; and (3) such that it gives rise to a substantial risk that a fair trial of the issues in the litigation would not be possible because of the delay: Langenecker at paras. 6 – 7.

[24] Very recently, the Court of Appeal summarized some guidelines for evaluating these requirements in Sickinger v. Krek, 2016 ONCA 459 at para. 30:

[30] The jurisprudence provides guidelines for evaluating the three requirements:

Inordinate: A court will measure the length of time from the commencement of the proceeding to the motion to dismiss to determine if the delay is inordinate: Langenecker, at para. 8 … When considering the delay, the court should remember that some cases will move slower than others because of the issues raised, the parties involved, and/or the nature of the action …

Inexcusable: A court should consider the reasons offered for the delay and whether those reasons provide an adequate explanation, with regard to the credibility of the explanations, the explanations for individual parts the delay, the overall delay, and the effect of the explanations considered as a whole …

Prejudice: The third factor considers the prejudice caused by the delay to the defendant’s ability to put forward its case for adjudication on the merits: … An inordinate delay will give rise to a presumption of prejudice and, unless rebutted, that presumption may result in the action being dismissed … A defendant may also suffer, and demonstrate, case specific prejudice ...

[39] 207 also relies on the case of Madonia v. Mulder 2001 CarswellOnt 1025. In the Madonia case, the plaintiffs were persuaded to invest $600,000 in a project by people who knew the investment had some problems. The court stated:

43 The issue in this action is whether the defendants induced Mr. Madonia to invest 600,000 in the King Street project in order to bail themselves out of $600,000 of the $750,000 loan obligation to Mutual Trust.

44 Evidence critical to this issue includes:

i minutes of meetings of the King Street partnership held after November 1989;

ii. terms and obligations under the Mutual Trust loan; and

iii. Mr. Cooper’s files, recollections and notes.

45 A party has an obligation to provide full disclosure at examinations for discovery, subject to a few limited exceptions, none of which apply here … Where a party undertakes to obtain information from a nonparty, the party must report on what efforts were made and whether those efforts were made in a timely fashion. A party who fails to report in this way is not responsive to the undertakings given (Cardoso, at p. 139).

46 In this case the defendants have consistently resisted fulfilling their disclosure obligations. Many of the responses provided by the defendants are inadequate and nonresponsive.

47 Where a party’s right to full disclosure has been undermined and resisted by the opposite party, then the pleading of the party in breach may be struck out …

48 Pursuant to rules 34.15(1) and 60.12 of the Rules of Civil Procedure the court has jurisdiction to strike the defence of the party who has failed to answer proper questions, or who has failed to comply with an interrogatory order. Striking a defence is an extreme remedy and should be applied only in the most serious of cases. The court must consider whether the conduct of the defendant was so egregious as to warrant such a remedy.

[40] 207 also relies on the case of Langenecker v. Sauve, 2011 ONCA 803, where the court at paras. 6 & 7 stated:

6 The first type of case described by Lord Diplock refers to those cases in which the delay is caused by the intentional conduct of the plaintiff or his counsel that demonstrates a distain or disrespect for the court process. In dismissing cases which fall within this category, the court effectively declares that the continuation of the action in the face of the plaintiff’s conduct would constitute an abuse of the court process. These cases, thankfully rare, feature at least one and usually serious violations of court orders. This case does not fall into that category.

7 The second type of case that will justify an order dismissing for delay has three characteristics, one the delay must be inordinate, inexcusable and such that it gives rise to a substantial risk that a fair trial of the issues in the litigation will not be possible because of the delay …

[41] 207 the submits that:

(a) the breach of the plaintiff’s production obligations was intentional;

(b) the plaintiffs have intentionally delayed pursuing this action; and

(c) there is demonstrated actual prejudice.

[42] The plaintiffs’ breaches were intentional and the evidence hidden was extremely relevant. As a result, 207 has been forced to litigate from May 2013 through June 2018, including a productions motion, three rounds of examinations for discovery, two abandoned summary judgment motions, a mediation, and a pretrial conference, without proper production of critical documents. All of this resulted in significant and unnecessary delay.

[43] The plaintiffs were well aware when they started their action and certainly when they filed their initial affidavit of documents in 2014 that the most significant issue was whether or not they were ready, willing and able to close the real estate transaction in January of 2013. The plaintiffs were at all times aware of their obligations to produce all relevant documents. This would have included all discussions and disputes between the parties themselves and discussions with their real estate agent and broker and their lenders. The plaintiffs knew they had to work together to close the transaction.

[44] At all material times the plaintiffs were represented by counsel and would have known of their obligations to produce relevant electronic documents such as emails and texts. They have intentionally treated the court procedure with disregard and distain in order to avoid disclosing evidence harmful to their case, and in a manner which caused some evidence to be lost.

[45] 207 submits that the plaintiffs intentionally and tactically withheld producible and important documents going to the heart of the issue in this lawsuit. Based on the above, it is impossible for their conduct to have been inadvertent and the only other explanation is that they were acting in bad faith.

[46] These critical documents were produced after 207 had exhausted its discovery process, including dealing with undertakings and refusals.

[47] The plaintiffs have played with the court procedures by bringing and abandoning two summary judgment motions, by bringing and abandoning a motion for leave to appeal.

[48] In addition, the plaintiffs have continuously failed to meet court ordered deadlines adding to further delay.

[49] The plaintiffs have changed lawyers six times, the last time in October 2018.

[50] In the plaintiff’s responding material, they have failed to offer any substantive explanation for the inexcusable delay.

[51] Both emails and texts which would have a bearing on the facts of this case have been lost. Even if the texts were short they may be extremely helpful to a witness such as a real estate agent, financing agent or real estate lawyer in jogging their memory.

[52] Emails have in all probability been lost, since the lawyer who undertook the search of Singh’s emails only searched for the specific phrase “Manish Gupta”. He did not search the real estate agent’s name, the real estate lawyer’s name, the lender’s name, the broker’s name, the address of the subject property or simply the name Gupta. It is also in evidence that Singh regularly deleted emails.

[53] The facts of this case go back over six years and if the matter had to continue, 207 would need further discoveries, particularly on the critical emails after which it would need to retain an expert and obtain his/her report.

[54] Memories of the plaintiffs, and the real estate and financing agent have faded, simply by the passage of time and in this case without emails and texts to refresh their memory, they are simply unable to recall particular events.

[55] All of these factors add up to a substantial risk that 207 can no longer have a fair trial and the plaintiffs’ action should be dismissed with costs.

[56] Alternatively, if the court does not see fit to dismiss the plaintiffs claim, 207 requests the following orders that the plaintiffs:

i. re-attend for a further examination for discovery unlimited, at this, as to scope;

ii. produce all documents over which they have claimed a common interest privilege if not already produced;

iii. pay costs fixed at $25,000, as costs thrown away for the prior examinations for discovery;

iv. paid into court security for costs in the amount of $100,000; and

v. it’s costs of this motion.

The Plaintiffs’ Position on the Facts

[57] It is the plaintiffs’ position that their respective real estate solicitors mutually agreed to extend the closing to January 31, 2013 and that they were ready, willing and able to close on that date.

[58] It is further their position that neither party was ready, willing and able to close on January 17 and that the APS was anticipatorily breached by 207, after January 17, 2013.

[59] They further allege that this motion by 207 seeking dismissal for delay and removal of notices against the subject property is unnecessary and premature, because 207 has issued a third-party claim against its lawyers, alleging failure to adhere to instructions regarding the extension of the January 17, 2013 closing date.

[60] An amended trial record was filed on December 18, 2018 and the only step(s) left for trial in both the main and third-party action, is potentially a further pretrial.

[61] 207 continues to request documents and appears to be on a fishing expedition. The plaintiffs first filed a trial record on January 25, 2017, and the trial was scheduled for the November 12, 2018 sitting. At the March 6, 2018 pretrial, 207 agreed to proceed to trial in November 2018.

[62] Following the pretrial, EB delivered written interrogatories and made at least six follow-up requests to have them answered, however, to date 207 has not replied to the interrogatories.

[63] EB submits that it could not comply with a court order of March 16, 2018 for the delivery of an expert’s report by May 15, 2018, because 207 would not answer the written interrogatories. Without answers to the written interrogatories, EB’s expert could not draft a report. It was not until November 8, 2018 that 207 advised it would not answer the written interrogatories.

[64] During the same period of time, 207 was not responding to EB’s requests to allow its expert to have access to the subject property.

[65] With respect to the issue of delay, 207:

(a) agreed to proceed to trial in November 2018;

(b) has not complied with any of its obligations pursuant to the timetable set at the pretrial

(c) has failed to respond to written interrogatories,

(d) has failed to cooperate with respect to arranging an appraisal; and

(e) has persisted in bringing unnecessary motions.

[66] 207 did not bring its motion expeditiously. It first advised of its motion in its pre-trial conference brief just prior to March 6, 2018. It delivered a draft notice of motion dated July 9, 2018, which sought the same relief as the current motion dated August 29, 2018.

[67] The plaintiffs have produced all relevant documents and undertakings to their examination in these proceedings.

[68] The plaintiffs have always been cooperative in scheduling and attending scheduled examinations. The plaintiffs have attended 3 to 5 times for examinations and therefore it appears that 207 is simply on a fishing expedition.

[69] While it may have been the strategy of the plaintiffs’ lawyer, or lawyers before Greenspoon, to claim common interest privilege over documents, Greenspoon withdrew the common interest privilege claim on June 13, 2018.

[70] Rather than simply complying with the plaintiffs’ request of July 5, 2018, for answers to the written interrogatories and access, 207 did not respond but simply served this motion on July 11, 2018.

[71] On November 7, 2018, EB retained Sidhu, who again requested access to the property. 207’s response is that they would answer the questions and arrange for access as soon as the plaintiffs had served their responding motion material. On November 8, 2018, 207 sent an email stating they would provide the information and the access as soon as the plaintiffs delivered their responding record to the motion.

[72] To date, more than a year after the first request for answers to the written interrogatories, 207 has not complied with the request.

[73] It is the real estate agent’s testimony that texts between himself and Gupta were usually short and more like an invitation to have a discussion.

[74] The parties agreed that two of the three narrow issues in this case could be dealt with by the trial judge, based on the documentation and testimony produced so far. Those issues are whether or not the APS was extended to January 31, 2013 and whether or not 207 committed an anticipatory breach of the APS.

[75] Where the parties differ is, if 207 did not commit an anticipatory breach, were the plaintiffs ready, willing and able to close the transaction on January 31, 2013.

Gupta’s Position on the Facts and the Law

[76] Gupta agrees with and adopts the statements and submissions made by Mr. Sidhu on behalf of EB.

[77] He attempted to give oral evidence about why the plaintiffs changed lawyers and why summary judgment motions, etc. were not proceeded with, however the court informed him that it could not accept his oral evidence because it was not in his affidavit.

Reply Submissions of 207

[78] The plaintiffs are not in full compliance with all court orders because there are lost documents and that in itself is noncompliance.

[79] An email from the real estate agent Fazakas to Gupta dated January 30, 2013, which was made Exhibit 1 to the examination of Fazakas (V4 T1A P1) is not and cannot be a privileged document. This document does not appear anywhere in the productions forwarded to 207 by Greenspoon nor does it appear to be listed anywhere in the supplementary affidavit of documents sworn by Singh on June 11, 2018 (V2 TFF).

[80] Therefore, it was either lost by Gupta or purposely withheld. From reading the email, it is apparent that the text message from Gupta was substantial and had a direct bearing on whether or not the plaintiffs were ready, willing and able to close the transaction the next day.

[81] This motion arises from a unique situation. 207 seeks to dismiss the action for intentional withholding of documents and for the plaintiffs to say that the documents are now produced misses the point.

[82] This essentially has nothing to do with a last chance order. The plaintiffs simply cannot produce lost documents and people cannot remember what they cannot remember.

[83] 207 accepts that the plaintiffs, in some fashion, want to move the case forward, but the delay comes from the plaintiffs purposeful nonproduction, claims for privilege, suggesting 207 is on a fishing expedition and claiming common interest privilege over documents.

[84] There is no explanation in the plaintiffs’ record for these breaches. There is nothing that says the plaintiffs relied entirely on their lawyers and there is nothing to suggest that they have commenced a court action against their lawyers for improper advice.

[85] The obligation to produce all documents is that of the individuals. They are both sophisticated investors and would have read what they were swearing to when swearing their affidavit of documents.

[86] Although the plaintiffs accused 207 of delay, the plaintiffs unbelievably set up a mediation, a pre-trial and passed their trial record, all before completing their productions and in particular producing the January 2013 emails.

[87] 207 relies on the case of Broniek-Harren v. Osborne, 2008 ONSC 19782, for the proposition that they do not have to show prejudice if there is evidence of wrongful holding. At paragraphs 33 and 35 of that case the court stated:

33 In the paragraph immediately following the paragraph just quoted, Ferrier J. noted that “the rules must not be rendered nugatory by failure to impose appropriate sanctions in cases of breaches of orders”, and at paragraph 27 of his judgment, he said:

There comes a time when this court is obligated to meet its responsibility for the effective administration of justice through case management by dismissing an action. Such is the case where the plaintiff repeatedly failed to comply with orders of the court whether or not there has been prejudice to the defendants.

34 With respect, I entirely agree with Ferrier J. As he noted, there comes a time when the court must meet its responsibility for the effective administration of justice by dismissing an action where procedural requirements imposed by court orders are not observed. In my view, that time has arrived in this case.

[88] 207 submits that if the emails were helpful to the plaintiffs they would have been produced. Although there may be lots of transcripts, 207 had not yet been able to examine on the important emails.

[89] When the real estate agent, Fazekas, suggests that texts are short, he is talking about texts in February and March, not the January 2013 texts which were substantive.

[90] Of the five points raised by the plaintiffs suggesting that 207 did not comply with the March 6, 2018 order, 207 admits it could have done a better job with respect to responding to written interrogatories and producing financial information, however, if this motion is successful that work will not be necessary.

[91] The March 6, 2018 order sets out steps which build on each other.

i. 207 consented to the amending of pleadings in 2017 and the plaintiffs did nothing with it. 207 could not file its amended defence until the plaintiff had filed its amended statement of claim. In the end, 207 assisted the plaintiffs in filing their amended pleadings in an effort to move the action forward.

ii. The undertaking list was provided March 23, 2018, four days after it was requested.

iii. The plaintiffs’ lawyer was aware that 207’s lawyer was essentially unavailable in April 2018 because he was involved in a lengthy trial.

iv. 207 offered access to the plaintiff’s appraiser for 2 weeks in May 2018.

v. This motion makes the expert’s report not as important, since if the case is dismissed it will not be necessary and the expense of the report would be saved. In any event given the time it would take to get the motion heard the financial information would have to be updated after that date.

[92] For the court to punish the plaintiff by ordering it to pay money would send an unfortunate and terrible message to future litigants, particularly those who do not think rules or orders apply to them or hope to win a case by outspending the other party.

[93] A monetary ruling would suggest that a party can hide relevant documents and if by chance they are caught, they can simply buy their way out of the problem.

The Plaintiffs’ Legal Position

[94] The court’s decision to dismiss an action is discretionary and should only be granted in the most serious cases and as a remedy of last resort. They rely on Rules 30.08 and 34.15(1)(b) of the Rules of Civil Procedure.

[95] The plaintiffs rely in part on the case of Starland v. 1581518 Ontario Inc., a decision of the Divisional Court dated April 24, 2009, where the court stated the following at paragraphs 27, 34 & 35:

[27] Master MacLeod … and Master Dash … identify the principles that are relevant to the exercise of the discretion to strike a pleading. Both emphasize the gravity of such an order, and confirm that the discretion should be exercised as a last resort where warranted in order to protect the integrity of the justice system from abuse by a recalcitrant a litigant.

[34] Where an order is made by a court on a “last chance” basis, the defaulting party is given fair warning as to the possible consequences of a failure to comply with its terms. Unless the court has the authority to follow through with the threatened sanction its ability to control its process will be undermined. That said, the fact that an order has been described as a “last chance” order is not determinative where a party seeks to strike the other party’s pleadings. In each case the discretion of the master or judge must be exercised having regard to the circumstances prevailing at the time the matter was brought back to court, including whether and to what extent the party remains in default of the order in question.

[35] We conclude that the master’s reasons reflect a misapprehension of the relevant evidence as to 158’s compliance with the September 15, 2008 order. The responsibility for the error may well lie with counsel, as a motion appears to have been argued with reference to the history of the proceeding rather than focusing on whether there was a continuing breach of specific terms of the master’s September 15, 2008 order.

[96] In Yongton v. C.L.K. Inc., 2010 ONSC 5857 at paragraph 18 the court stated:

[18] I am not satisfied that all the circumstances the Defendant’s statement of defence and counterclaim ought to be struck. On the record before me, I cannot conclude that the Defendants have deliberately and wholly ignored the court order. The striking of pleadings and dismissal of the counterclaim are remedies of last resort. Has the conduct of the Defendants as set out in the record before me reached a level that points only to the remedy sought by Yongton? I cannot conclude that it does. The continuation of the action is still viable and appropriate and the matter at this point should still be dealt with on its merits.

[97] There has been no last “chance” order made in this proceeding and cases if possible should be decided on their merits.

[98] In this case counsel for the plaintiffs made significant efforts to comply with 207’s production requests.

[99] The plaintiffs rely in part on the case of Temelini v. Wright, 2013 ONSC 6691 where the court stated at paragraph 28 through 31:

[28] The defendant claims, as a result of the delay caused by the pace of the plaintiff’s fulfilment of his production obligations, that it has suffered prejudice by being unable to proceed with examinations for discovery because of the missing documents, by the diminished memories of its witnesses …

[29] The plaintiff submits that this claim of prejudice should not be accorded any weight in the exercise of this court’s discretion on this dismissal application.

[30] In the context of this action, I agree the defendant’s claim of prejudice is largely one of potential prejudice to it because of the passage of time. It is a bear claim with little evidence behind it and has not been proved. Neither is there any evidence of actual prejudice. Additionally, the defendant could now be said to have contributed to some of the delay, stemming from its prolonged disagreement over productions and its refusals of the plaintiff’s requests to schedule examinations for discovery even as late in the course of this action …

[31] As a factor to be balanced with the other factors in the circumstances of this case, therefore, the issue of prejudice to the defendant caused by the passage of time to obtain the plaintiff’s productions is one that carries little if any weight.

[100] The plaintiffs also rely on the case of Langenecker v. Sauve, 2011 ONCA 803. At paragraph 5 the court stated:

5 The language used to describe the appropriate test varies slightly in the authorities. I prefer the language of Lord Diplock in Allen, at p. 556, where he described the exercise of the power to dismiss for delay in these terms:

It should not in any event be exercised without giving the plaintiff an opportunity to remedy his default, unless the court is satisfied either that the default has been intentional and contumelious, or that the inexcusable delay for which the plaintiff or his lawyers have been responsible has been such as to give rise to a substantial risk that a fair trial on the issues in the litigation will not be possible at the earliest date at which, as a result of the delay the action would come to trial if it were allowed to continue.

[101] 207 is not coming to this court with clean hands since it refused to comply with Justice Sloan’s order of March 6, 2018. In addition, it delayed commencing this motion and based on the doctrine of latches has disentitled it to the relief it now seeks.

[102] It makes no practical sense for the plaintiffs to delay prosecuting the action since the defendant RE/MAX continues to hold their $200,000 deposit in the trust account.

[103] The plaintiffs therefore submit the only relevant test to be considered under Rule 24.01 of the Rules of Civil Procedure is the three-part mandatory test set out in Langeneker.

[104] There was no inordinate or unreasonable delay. The delay was caused by 207 having made an issue of the January 2013 correspondence between Singh and Gupta, in which there were differing legal judgment calls between counsel for the plaintiffs at that time.

[105] In addition, 207 also caused delay by not complying with Justice Sloan’s order of March 6, 2018, and the particulars with respect to the delivery of responses to written interrogatories. This has prevented the timely appraisal of the property and filing of experts’ reports.

[106] The plaintiffs have the right to change counsel and in fact the change of counsel helped him move the action along towards trial.

[107] The length of the delay is not so inordinate as to meet the third branch of the test for dismissal.

[108] In this case, no witnesses have died and the most important witnesses, including the parties and their representatives, have either given evidence under oath already or are available to testify.

[109] The parties were represented by counsel at all pertinent times and the documentary evidence has been preserved to assist witnesses to recall the pertinent events surrounding the main questions of whether or not parties were ready, willing and able to close on certain dates.

[110] Although six years has past since the events dealing with whether or not parties were ready, willing and able to close the transaction, that is too short a time to presume that that factor alone will cause prejudice to either party.

[111] No actual prejudice has been shown since, in this case, all witnesses are alive, most witnesses have already been examined and there are a significant number of documents.

[112] In the case of Panther v. HSBC, 2016 ONSC 3156, on the issue of presumption of prejudice, the court allowed the action to continue stating at paragraphs 20 and 21:

[20] In Armstrong v. McCall (2006) O.A.C. 229 … the Court of Appeal adopted an earlier statement of law describing how the presumption can be rebutted. Essentially, the presumption can be rebutted where there is evidence that the documentary evidence has been preserved and the issues do not depend on the recollection of witnesses or that the witnesses recall the events.

[21] I agree with Mr. Honickman that the affidavit of Ms. Freitas sets out a sufficient basis to show that the documents have been preserved. The parties have exchanged affidavits of documents. Ms. Freitas’ unchallenged evidence is that the documents are in existence, all of Panther’s key witnesses are available. Notwithstanding the availability of witnesses, it is her position that this is primarily a document case.

[113] With respect to the alternate claim of security for costs there is no evidence to suggest that the plaintiffs are impecunious and in fact there is evidence that in January 2013 they had raised over $5,000,000 for the purchase of the subject property. In addition, the realtor RE/MAX holds a $200,000 deposit.

Findings

[114] Notwithstanding the parties spent significant time on the issue of delay, that issue takes a backseat to the modus operandi of the plaintiffs.

[115] Our whole system of civil litigation requires litigants to adhere to the Rules of Civil Procedure. In particular, parties are required to produce to the other side all the relevant documents they have in their possession or are under their control.

[116] Even when a party is claiming that a document is not producible because it is privileged, they must list the document with some particularity and state why they consider it privileged. This allows the other side to either agree that a document is privileged or challenge the claiming party’s assessment of it.

[117] Rule 30.03(1) and Forms 30A & B of the Rules of Civil Procedure state:

30.03(1) A party to an action shall serve on every other party an affidavit of documents (Form 30A or 30 B) disclosing to the full extent of the parties knowledge, information and belief all documents relevant to any matter in issue in the actions that are or have been in the parties possession, control or power.

Forms 30 A & B, contain the sentence; “This affidavit discloses to the full extent of my knowledge, information and belief, all documents relevant to any matter in issue in this action that are or have been in my possession, control or power.

Both forms contain a lawyer’s certificate which reads “I CERTIFY that I have explained to the deponent” the necessity of making “full disclosure” and “what kinds of documents are likely to be relevant to the allegations made in the pleadings”

[118] Rule 30 of the Rules of Civil Procedure and the forms under it go on to state that the documents shall be listed and described in separate schedules and the deponent shall state if he/she/it is claiming privilege over any of the documents.

[119] Evidence in the form of emails from January 2013 were not produced. These emails are incredibly important and producible evidence in this litigation. If the January 2013 emails’ evidence are not devastating to the plaintiffs’ case, it appears they would certainly take some of the wind out of their sails and would equip 207 with significant evidence to argue on a balance of probabilities that the plaintiffs were not ready, willing and able to close the transaction on January 31, 2013.

[120] At all material times the plaintiffs were represented by counsel.

[121] The following is a timeline of some major events in the litigation:

i. May 9, 2013 – the action is commenced.

ii. November 18, 2013 – A. Singh swears an affidavit of documents under oath which does not include any correspondence between himself and Gupta in January 2013. Gupta does not deliver an affidavit of documents.

iii. May 2014 – plaintiffs serve a summary judgment motion which is later abandoned. The fact that there are January 2013 emails had not be disclosed.

iv. February 24, 2015 – Gupta, at his discovery, refused to answer any questions about whether or not there may have been any disagreements in January 2013 between himself and Singh. Gupta’s lawyer stated “any issues between himself and Mr. Singh were different issues that had nothing to do with the closing of the transaction”. Notwithstanding that this answer was patently false and misleading, it was never corrected.

v. March 2016 – plaintiffs serve another summary judgment motion which is later abandoned. The January 2013 emails had still not been produced.

vi. September 15, 2016 – plaintiffs continue to refuse to produce emails between Gupta and Singh, forcing 207 to bring a motion to force them to do so. The plaintiffs were ordered to produce the emails by October 15, 2016 and costs were ordered against them.

vii. November 24, 2016 – rather than complying with the court’s September 15, 2016 production order, the plaintiffs sought leave to appeal in their continuing effort to hide the January 2013 emails. The court, in a strongly worded endorsement, dismissed their motion for leave to appeal.

viii. When requested to produce all correspondence from August 2012 to February 2013 the plaintiffs’ lawyer, in answer to the undertaking, only produced the emails from July and August 2012.

ix. The plaintiffs’ lawyer later advised 207 that all the undertakings had been uploaded to an internet “dropbox.” The dropbox which contained a series of disorganized and unidentified files.

x. June 2017 – the plaintiffs produced an affidavit of documents claiming “common interest privilege” over numerous documents, including the subject emails, however, no appropriate delineation was provided to 207 to allow them to ascertain whether or not the privilege claims were appropriate. The January 2013 emails had still not been produced.

xi. July 19 and 20, 2017 – the discovery of the plaintiffs continues without the January 2013 emails having been produced.

xii. July 2017 - the plaintiffs serve an affidavit of documents of Gupta, after the July 19 and 20, 2017 discoveries. It was sworn June 14, 2017, approximately five weeks before the discoveries.

xiii. July 25, 2017 – plaintiffs file the trial record.

xiv. March 6, 2018 – a pretrial is held.

xv. June 13, 2018 – plaintiffs’ fifth lawyer finally answers the plaintiffs’ undertakings and requests for information, including producing the January 2013 emails. The answers were to be completed by March 30, 2018. It was then 5.5 years after the events and 5 years after the action was commenced.

xvi. July 11, 2018 – after receiving productions, including the January 2013 emails, 2007 serves this motion to dismiss the plaintiffs’ claim.

[122] Based on the above facts I would attribute at least 90% of the delay in this action to the plaintiffs.

[123] Now that the January emails have been produced, has 207 suffered any prejudice?

[124] There is of course always some prejudice to the parties in litigation by the passage of time. That in itself, in this case, would not result in a dismissal of the action.

[125] However, in addition to whatever prejudice 207 may have suffered from the passage of time, they have certainly suffered prejudice from the loss, whether intentional or not, of emails and texts between Gupta, Singh, the real estate agent, the financing agent and perhaps others.

[126] The search of Mr. Singh’s computer was not carried out by a computer expert and does not appear to have been very robust. It is far more likely than not, that emails from the computer have been lost. On the evidence before the court it appears that Mr. Singh no longer has the computer that he used in January 2013. The court was not apprised of any evidence with respect to any computer Gupta may have used.

[127] No text messages whatsoever were saved. Both parties and the real estate agent communicated in part by texts. It appears that there were numerous texts and even if they were short, the texts and particularly a series of them, would afford a witness some ability to recall what was being discussed.

[128] However, the submission by the plaintiffs that all texts were very short and essentially only invitations to make phone calls, is not correct. Based on an email from the real estate agent to Gupta dated January 30, 2013, it is readily apparent that the text message the real estate agent received from Gupta had significant information in it. This email was not produced by the plaintiffs.

[129] Therefore, I find that there is actual prejudice to 207, since all of what were likely numerous texts, are no longer available either as evidence in themselves or to assist witnesses to recall events.

[130] I find that it was only through the dogged persistence of Mr. Adair, that the January 2013 emails were produced.

[131] Neither of the plaintiffs have offered any explanation for why they hid and continually refused to produce the subject emails and why they lied on discovery about their content.

[132] Although the Judge in Yongton could not conclude that the defendants had deliberately and wholly ignored the court order, I have no difficulty in concluding that the plaintiffs in this action have deliberately and wholly ignored the Rules of the Court with respect to the production of documents.

[133] The court recognizes its duty to be fair to both parties and importantly, in this case, the court’s responsibility to uphold the integrity and effectiveness of the Administration of Justice.

[134] If on the facts of this case, the court did not draw a line in the sand and, it simply punished the plaintiffs monetarily, the court would be offering an open invitation to litigants, particularly those with resources to try to win their cases by breaching the court rules and the ethics that go with them.

[135] It is with the utmost sadness that I add this paragraph to my reasons for judgment. The plaintiffs were represented by numerous lawyers throughout this litigation. Based on the evidence before me, it is almost inconceivable that some of the lawyers did not play a major role in aiding and abetting the plaintiffs’ deceptions. In addition to the Rules of Civil Procedure that every lawyer practicing litigation would be deemed to know, lawyers are also subject to and governed by codes of conduct and ethics.

[136] Based on my above findings, I dismiss the plaintiffs’ action in its entirety, with costs.

[137] I further order the Director of Land Titles to delete from the title to the subject property, the following instruments:

i. WC354284, dated September 9, 2012,

ii. WC365555 dated January 31, 2013, and

iii. WC365585 dated February 1, 2013.

[138] If the parties are unable to agree on costs, Mr. Adair shall forward his brief submissions on costs to me by May 7, 2019. Mr. Sidhu shall forward his brief response to me by May 13, 2019. Mr. Adair shall then forward his reply, if any, to me by May 16, 2019. Cost submissions may be sent to my attention by email, care of Kitchener.Superior.Court@ontario.ca. Cost submissions, excluding bills of costs shall be limited to 5 pages using spacing of 1.5 and 12 pitch font.

Justice in James W. Sloan

Released: April 30, 2019

COURT FILE NO.: C-403-13 DATE: 2019-04-30 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Manish Gupta, 2357939 Ontario Inc. and EB Investments Inc. Plaintiffs – and – 2075750 Ontario Inc. and Re/Max Capital Inc. Defendants

REASONS FOR JUDGMENT J.W. Sloan J.

Released: April 30, 2019