COURT FILE NO.: CV-14-515255 DATE: 20190517 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

METROLINX Plaintiff/ Defendant by Counterclaim (Appellant/Respondent) – and – EXCLUSIVE ADVERTISING INC. Defendant/ Plaintiff by Counterclaim (Respondent/Appellant)

Counsel: Adam Stephens, for the Plaintiff/Defendant by Counterclaim (Appellant/Respondent) Riaz Ahmed, for the Defendant/Plaintiff by Counterclaim (Respondent/Appellant) Q. Ryan Hanna, for the IMA Outdoor Inc. (Non-party Appellant/Respondent)

HEARD: April 29, 2019 nakatsuru j.

[1] Metrolinx is a government agency that owns and operates the GO Transit public transportation system. Exclusive Advertising Inc. (“Exclusive”) was formerly Metrolinx’s exclusive advertising broker for all advertising on GO trains. IMA Outdoor Inc. (“IMA”) was Metrolinx’s exclusive advertising broker for in-station and GO bus advertising. In 2014, Metrolinx conducted a Request For Proposal (“RFP”) to secure a new advertising broker for all of its operations. Exclusive and IMA along with another company, participated in the process. IMA was the successful bidder.

[2] On May 29, 2014, Metrolinx ended Exclusive’s contract and entered into a contract with IMA. Metrolinx started a breach of contract action against Exclusive on October 30, 2014, for failing to make payments and abide by transitional obligations to IMA. Exclusive defended. It later added a counterclaim. It alleged that Metrolinx breached its obligations to hold a fair procurement process.

[3] This case has taken a long time to be ready for trial. It is still not ready. I have heard three appeals from decisions of Master Short. Motions were brought before Master Short seeking various relief. Master Short heard the motions on July 24 and 25, 2017. He released an endorsement, ruling on a number of issues on each day. The endorsement of July 24, 2017 will be referred to as Endorsement #1. The endorsement of July 25, 2017 will be referred to as Endorsement #2. On July 12, 2018, Master Short released lengthy written reasons dealing with all the relief sought.

[4] Both Metrolinx and Exclusive have appealed certain aspects of Master Short’s decision. IMA is a non-party. But it appears it was given standing before Master Short where IMA made submissions. It too is not satisfied with Master Short’s decision to permit examination of its representative. It too has appealed.

[5] Let me start with this observation. Master Short was faced with an unenviable task to sort through a large number of issues during this two-day hearing conducted on July 24 and 25, 2017. They included motions to amend the pleadings, for a further and better affidavit of documents, to provide documents, answer refusals, and the examination of a representative of IMA. It was a complicated motion. Commendably, he released relatively brief endorsements at the end of each day to deal with the issues raised to that point. No doubt, Master Short was sensitive to the delay in the litigation of the action and the need of the parties to get efficient adjudication of these pre-trial procedural issues so that the case could be set down for trial. Unfortunately, it was not until a year later that Master Short released full written reasons for all the issues raised before him. I say unfortunately since this further lengthy delay may have contributed to some of the complaints raised by the various parties on this appeal before me.

[6] Not every issue dealt with by Master Short has been appealed by the parties. I am grateful for the focused submissions of the parties. Although there are separate appeals, some of the issues are common to both. I will deal with them together when convenient to do so.

A. Standard of Review

[7] The standard of review of an appeal of a master’s decision on a question of law is correctness. Matters of mixed fact and law lie along a spectrum of review. Findings of mixed fact and law, unless there is an extricable question of law, should not be overturned unless there is a palpable and overriding error. Where on a finding of mixed fact and law, an extricable error of law is made, the standard is correctness. Findings of fact should not be overturned unless there is a palpable and overriding error: Tarkalas v. Zographos, 2008 ONSC 46158, 2008 CarswellOnt 1458 (Div. Ct.) at paras. 19 and 28.

B. Exclusive’s Motion to Amend Its Pleadings

[8] To assess this ground of appeal (and indeed, some of the other grounds of appeal as well), it is important to recognize that the set-off claim and counterclaim of Exclusive involves a challenge to the 2014 tender process by Metrolinx for advertising broker services. Tender processes are governed by the Contract A and Contract B framework established in R. v. Ron Engineering & Construction (Eastern) Ltd., [1981] 1 S.C.R. 111. Where parties intend to initiate contractual relations, a submission in response to a call for tenders can lead to the formation of Contract A. The contractual rights and obligations of the parties to Contract A are governed by the express or implied terms of the tender documents. Where a bid is accepted, the terms of the tender and bid documents become the terms and conditions of Contract B.

[9] When Metrolinx sent out a tender, this Contract A contained an implied obligation to consider all bids fairly and equally: Martel Building Ltd. v. R., [2002] 2 S.C.R. 860. Failure to do so when Metrolinx chose IMA, is at the core of Exclusive’s counterclaim.

[10] Exclusive first brought a Notice of Motion dated May 19, 2017, to be heard by a master for a wide array of relief as noted above. It sought to amend its pleadings and attached a proposed Amended Statement of Defence and Counterclaim. This was to be the third amended pleading by Exclusive. In this Notice of Motion and proposed Amended Statement of Defence and Counterclaim, Exclusive did not make any allegation of “collusion” (i.e., an agreement to rig the bid) between IMA and Metrolinx. The motion was scheduled to be heard July 24 and 25, 2017.

[11] On July 19, 2017, Metrolinx delivered its factum arguing that Exclusive was not entitled to its proposed pleading amendments/requested disclosures for the post Contract B time period. On July 21, 2017, the Friday before the Monday hearing, Exclusive served another proposed amended pleading and sought leave to amend in a further Amended Notice of Motion. Metrolinx’s position is that Exclusive did this in order to try and counter the argument made in Metrolinx’s factum that absent collusion, the authorities foreclosed Exclusive from delving into matters concerning Contract B between IMA and Metrolinx.

[12] Master Short refused to consider the newest amended pleading given that it was filed late and given the background of numerous delays and breaches of deadlines by Exclusive. In his Endorsement #1 delivered July 24, 2017, he stated:

Counsel for Exclusive served a motion on Friday seeking further amendments in addition to motion already served for today. I am satisfied that timelines need to be respected and have been ignored too often in this case. I am not satisfied application is not in any event statute barred. I however have declined to allow amendment but without prejudice to Exclusive moving on proper notice and evidence for such an amendment in the future.

[13] On appeal, Exclusive refers to Master Short’s July 12, 2018 reasons and submits that a number of errors were made in his consideration of rule 26.01, which deals with amendment of pleadings. This rule expresses the mandatory nature of leave being granted in the absence of prejudice that cannot be compensated by costs or adjournments.

[14] On appeal, Metrolinx submitted that the motion to further amend the pleadings to include collusion was not properly before Master Short as he declined to hear it. Metrolinx argues that this was the basis that Master Short decided this issue. Master Short never ruled on the propriety of the proposed amendment as Exclusive now tries to argue on appeal. It is submitted that Master Short committed no reversible error in proceeding in this way.

[15] I agree with Metrolinx. Master Short exercised his discretion not to hear this late filed motion. Deference should be afforded to his discretion. It was more than reasonable in the circumstances. In this case, Master Short was rightfully concerned about the late filing of the Amended Notice of Motion. He was rightfully concerned about the history of Exclusive’s conduct of the litigation. In this case, Metrolinx started this action on October 30, 2014. Exclusive issued a Statement of Defence on December 15, 2014. On August 13, 2015, Metrolinx delivered its Affidavit of Documents. It was agreed that Exclusive was to deliver its Affidavit of Documents on September 30, 2015. It did not. Discoveries were set for March 30 and 31, 2016. Two days before the discoveries, Exclusive indicated that it wished to assert a counterclaim and this adjourned the discoveries. This case was then brought for case management. A timetable was put into place. Exclusive delivered its Affidavit of Documents on July 15, 2016, rather than May 24, 2016, as required by the timetable. Discoveries were held on September 28-29, 2016. Exclusive delivered partial answers to undertakings on May 3, 2017, rather than November 30, 2016 as per timetable.

[16] In determining the merits of Exclusive’s ground of appeal, I have also carefully assessed Master Short’s reasons of July 12, 2018 that also purportedly deals with the request for the further amendment of its pleadings to add collusion. It is found under the heading “Temporal Context”. In that decision, Master Short gives reasons that appear to go beyond what he stated in Endorsement #1. He also appears to say that it was too late for the defendant to add the proposed new paragraphs about collusion in its pleadings.

[17] If that is what Master Short meant to say, I find that to preclude Exclusive from seeking to later amend its pleadings would have been an error of law. There is no proper assessment of the factors under rule 26.01 in Master Short’s reasons. His primary focus is on the delay in the case, the fact that the timetable had been ignored by Exclusive, and the complications that would be caused by a new cause of action. There is no consideration of prejudice. To deny leave to amend without such a consideration would be an error of law.

[18] However, I find that that was not Master Short’s intent. Although the reasons are somewhat confusing, when they are read along with Endorsement #1, I find that his reference to it being too late for Exclusive to seek to add the proposed new paragraphs, is more referable to the manner in which they brought their motion. It is not a decision to deny leave to amend the pleadings in the manner Exclusive wished.

[19] My view is confirmed by Master Short’s issued formal order of November 28, 2018, where he orders that the additional relief sought in Exclusive’s Amended Notice of Motion, which included the request to amend its pleadings in this way, was denied “without prejudice to Exclusive moving on proper notice and evidence for such Relief.”

[20] Thus, this ground of appeal of Exclusive’s is dismissed.

[21] On this point, I fully appreciate that this result may engender further motions and delay should Exclusive again move to amend its pleadings in a similar way. Exclusive has argued the appeal in part on the basis that the amendment should have been made. However, I find that it will not be procedurally fair to Metrolinx to simply deal with the remaining issues on the basis that here and now, I should decide whether this amendment should be permitted. It would not be fair to Metrolinx given its position on this appeal that it could have presented further evidence and have made complete submissions if given proper notice of the motion to amend Exclusive’s pleading to add collusion. This argument obviously persuaded Master Short. I would defer to the exercise of his discretion.

C. Exclusive’s Entitlement to Discovery and Productions of Contract B.

[22] Master Short did grant Exclusive leave to amend its Statement of Defence and Counterclaim in the form attached to its original May 19, 2017, Notice of Motion except for proposed sub-paragraphs 64(p) and (q), the words “and other projects” in sub-paragraph 64(r), and paragraph 65. In addition, there were a number of refusals, productions, and an examination of a representative of Metrolinx and IMA during certain time periods, denied by Master Short. Exclusive argues that Master Short erred by basing his decision on the fact that Contract B events could not be examined in the absence of collusion. Exclusive submits that even if the amendment to its pleadings was not allowed, sufficient particulars of bias and unfair conduct by Metrolinx in the procurement process have been properly pleaded in order to overturn these decisions made by Master Short.

[23] Metrolinx submits that in the main, Master Short made no errors in this regard. However, in its own appeal, Metrolinx submits that Master Short made a few errors with respect to one amendment and two refusals. It is submitted that these orders were inconsistent with his other orders and reasons.

[24] While I may cast my reasons in a different way, I find that Master Short was correct in his decision regarding the matters raised by Exclusive on appeal. I further find that Master Short was incorrect in the issues raised by Metrolinx.

[25] As already noted, Master Short declined to entertain a further motion to amend the pleadings to add a plea of collusion. In the absence of a plea of collusion, in his decision of July 12, 2018, Master Short assessed the law dealing with the tender process, considered the allegations made by Exclusive in its pleadings, referred to the position of the parties, and determined that events dealing with the post-awarding of Contract B between Metrolinx and IMA were not relevant to the claims advanced by Exclusive.

[26] Both Metrolinx and Exclusive agree on this appeal that collusion is an exception that allows for the consideration of all activities in the tender process including at the post-award stage. Both Metrolinx and Exclusive rely upon the case of Double N Earthmovers Ltd. v. Edmonton, [2007] 1 S.C.R. 116 for the proposition that a pleading of collusion would allow for the examination of the relationship between the two colluding parties including during the period where Contract B has been formed. In that case, it was alleged that the City of Edmonton had given the award of a tender to supply equipment and operators to a competitor of the plaintiff. Edmonton eventually allowed that competitor to use older equipment than the terms of the tender permitted. Because of this, the plaintiff sued the City of Edmonton for breach of the duties owed to it under Contract A. The court rejected that proposition and explained at paras. 71 to 73:

The conduct Double N complains of (i.e. the waiver by the City of the 1980 requirement) is conduct which occurred after the award of Contract B. Where an owner undertakes a fair evaluation and enters into Contract B on the terms set out in the tender documents, Contract A is fully performed. Thus, any obligations on the part of the owner to unsuccessful bidders have been fully discharged. Contract B is a distinct contract to which the unsuccessful bidders are not privy. In Ron Engineering, Estey J. held that the "integrity of the bidding system must be protected where under the law of contracts it is possible so to do" (p. 121 (emphasis added)). The law of contract does not permit Double N to require the cancellation of a contract to which it is not privy in the name of preserving the integrity of a bidding process, which is by definition completed by the time an award of Contract B is made.

In the face of a failure to perform Contract B on the part of one of the parties, the other party has the contractual rights and remedies set out in the contract and at common law. Bidders may be held to perform as promised, or the owner may have the right to cancel the contract. It is this range of remedies that acts as a disincentive to submit deceitful bids as, absent collusion, bidders cannot predict how the owner will respond. Where an owner determines that it is in its best interests to waive a term of the contract that is within its contractual rights unless the contract stipulates otherwise. In this case, Condition 9 conferred a right of cancellation upon the City where the successful bidder did not comply with the specifications. It did not oblige the City to cancel the contract. [Emphasis added.]

Finally, we note that there are good policy reasons for rejecting Double N's position. The observation of Russell J.A., at para. 56, is particularly apt:

[P]arties to contract B might be subject to constant surveillance and scrutiny of other bidders, challenging any deviation from the original terms of contract A, thereby ultimately frustrating the tendering industry generally, and introducing an element of uncertainty to contract B.

[27] Keeping in mind this state of the law, I will analyze Exclusive’s appeal ground.

[28] First of all in its appeal before me, Exclusive argues that even if the amendment to specifically plead collusion is not allowed, sufficient facts have been pleaded to support the claim of collusion. I do not agree.

[29] Exclusive relies particularly on paragraph 64 of its Amended Statement of Defence and Counterclaim in support of this argument. Paragraph 64 states:

Metrolinx acted unfairly toward Exclusive and had an undisclosed preference to award Contract B to IMA and carried out actions designed to effect that result. Metrolinx’s unfairness to Exclusive and its undisclosed preference towards IMA is evident from, inter alia:

[30] Thereafter, a list of particulars are provided which include allegations of bias in the evaluation process, conduct done by Metrolinx to favour IMA in its RFP, and unfair conduct against Exclusive during the tender process.

[31] Even when read liberally, this paragraph does not allege conduct that is tantamount to collusion. Although said in a different context, the judgment in R. c. Leblanc at paras. 51-54, about what “collusion” means is of some assistance. After referring to dictionary definitions, the court held that collusion involves an agreement with the aim to mislead one or more persons. In my opinion, what Exclusive attacks in its pleadings is the unfairness of the tender process given Metrolinx’s preference for IMA. This too was the conclusion of Master Short. The pleading does not allege that IMA and Metrolinx agreed with an aim to mislead other bidders.

[32] It is significant that Exclusive states twice that Metrolinx’s preference was “undisclosed”. The antithesis of collusion is if one of the parties to the alleged collusion, IMA, is unaware of Metrolinx’s scheme to prefer IMA. This pleading falls significantly short of any allegation that IMA was in agreement with or participating in Metrolinx’s scheme.

[33] I recognize that sub-paragraph 64(f) alleges that Metrolinx collaborated with IMA in the preparation of the RFP. While this could be a particular supporting collusion, it could also be interpreted simply as another way of showing how Metrolinx had an undisclosed preference for IMA. In other words, this could have been done without IMA’s agreement. I find this particular does not advance Exclusive’s argument on this point.

[34] The second argument Exclusive makes is that even absent a plea of collusion, bias and the appearance of an unfair procurement process is enough to deem events regarding Contract B relevant. In this regard, Exclusive relies heavily on the case of Envoy Relocation Services Inc. v. Canada (Attorney General), 2013 ONSC 2034.

[35] This is a very long trial decision. It involved an RFP by the Canadian government for relocation services for federal employees. While Exclusive relies upon isolated comments made by Annis J. in this decision, I find the case is distinguishable since collusion was specifically pleaded in the action. In that context, the trial judge looked at events and evidence regarding Contract B to decide the case. I do not find Envoy to be of much assistance in the case at bar.

[36] In a tender process, the Supreme Court of Canada has determined that Contract B involves a privity of contract between the winning bidder and the party who presented the tender. It excludes the other bidders. Once the successful bid is accepted and the bidder notified, Contract B is entered into, and any obligations owed to the unsuccessful bidders under Contract A ends: Bois A. Lachance Lumber Ltd. v. Conseil Scolaire Catholique de District des Grandes Rivieres, 2010 ONCA 692 at para. 5.

[37] In this legal context, merely attacking the fairness of the tender process, the propriety of Contract A, as Exclusive’s Amended Statement of Defence and Counterclaim does, does not on its own open up Contract B. The unsuccessful bidder has no right to receive evidence on the successful bidder’s performance of Contract B. This is because of the unique bifurcation in the tendering process between Contract A and Contract B through which the test of relevance must be considered. The policy reasons also support this approach. To permit Contract B to be opened up merely by attacking the fairness of the tender process, would encourage all the mischief referred to by Russell J.A. It further would overly complicate and unduly burden pre-trial obligations of the defendant in nearly every case where the tender process is challenged. This would happen without any good reason to do so. It could also put at risk confidential and sensitive commercial information that the winning bidder would naturally object to being disclosed to a competitor even when the disclosure is limited by the issues raised in the pleadings.

[38] In this case, I find that Master Short was correct when he found that the pleadings did not establish that what Exclusive was seeking, either through production or answers to refusals, was relevant. He was also correct in not permitting the impugned paragraphs be added to the Amended Statement of Defence and Counterclaim in the absence of an allegation of collusion. These particulars that Exclusive wished to add relate to Contract B at a point in time when Metrolinx owed no further obligations to Exclusive or the other unsuccessful bidder. The paragraphs do not advance Exclusive’s claims as pled. Master Short’s decision on this demonstrates no reversible error.

[39] I fully appreciate Exclusive’s argument that it is only at the pre-trial discovery and production stage. I am also sensitive to Exclusive’s argument that without these effective mechanisms, it will not be able to obtain the evidence needed to prove collusion. It also asserts that its Amended Statement of Defence and Counterclaim with the particulars it has provided in paragraph 64, is better or, at least no worse, than a bald assertion of collusion. However, it is trite law that relevance is defined by reference to the pleadings. Where collusion is not pleaded and only an unfair tender process during Contract A is, the documents and information sought by Exclusive do not become relevant.

[40] This ground of appeal of Exclusive’s is therefore dismissed.

[41] Exclusive makes a further submission regarding Master Short’s order. Accepting that Master Short did not err in drawing the distinction between production of items that fell within the time period of Contract A and the time period of Contract B, Exclusive submits that Master Short did not follow his own reasons. In para. 3 of the Notice of Motion, Exclusive sought a number of other materials. It argues that some of what was requested falls within the timeframe and materiality of Contract A. It submits that it was inconsistent, given Master Short’s reasons, to not have provided Exclusive these materials.

[42] On this issue, I find that deference should be afforded to Master Short’s decision. Looking at his reasons of July 12, 2018, Master Short did not deny Exclusive this relief on the basis that he viewed these requests as being legally irrelevant to the issues raised. He also considered the principle of proportionality. He committed no palpable or overriding error in deciding to dismiss these Exclusive’s requests on the grounds of proportionality: Winter et al. v. The Royal Trust Company et al., 2012 ONSC 3126 at para. 8.

[43] Let me now turn to Metrolinx’s appeal of Master Short’s decision, I find that this should be allowed. Given my decision that Master Short was correct on the above issue, I agree that he erred in permitting Exclusive to amend its pleading by adding paragraph 64(r) and by requiring Metrolinx to answer Refusals #14 and #24. Given the reasons of Master Short regarding why he refused Exclusive’s motion and the order that he made, these impugned orders are inconsistent. As they too only have relevance to Contract B, they cannot stand in the absence of an allegation of collusion.

[44] Master Short did not provide any reasons or explanations for why he permitted this amendment and ordered these answers. But the inconsistency is plain. For example, Master Short did not permit paragraph 64(q) to be added but allowed paragraph 64(r) except for deletion of “other projects”. But both paragraphs refer to the UP Express contract that was entered into only post-Contract B. Regarding the refusals, he upheld a number of refusals including #18 to #23, but permitted the motion regarding refusals #14 and #24 which deal with matters coming within the time-period and relevance of Contract B.

[45] In the absence of any reasons for doing so, I can only conclude that Master Short committed an error of law or if an error of mixed fact and law, a palpable and overriding error. Regardless of which, I find that Metrolinx’s appeal should be allowed.

D. IMA’s Appeal of the Examination of Its Representative

[46] Before addressing this issue, at the hearing of the appeal, IMA no longer objected to the orders made by Master Short with respect to the production of certain documents by IMA to Exclusive. In addition, IMA admitted that they have not provided any evidence substantiating any allegations of procedural unfairness during the hearing dates of July 24 and 25, 2019. Thus, they did not pursue this ground of appeal.

[47] The only ground of appeal of IMA is regarding Master Short’s order that a representative of IMA attend for examination on pre-Contract B events limited to four hours for Exclusive and two hours for Metrolinx. IMA submits that Master Short erred in law in determining that the test for such an examination pursuant to rule 31.10(2) had been met. It is submitted that in Endorsement #1 Master Short got it right when he denied the request to examine Brian Rodkin, IMA’s representative, at that stage without prejudice to any future possible application when all available evidence has been obtained. IMA submits that based on the record, when Master Short changed his mind and did allow for the examination, this order was speculative in nature since there was neither an actual or constructive refusal on the part of Metrolinx to provide the information.

[48] Exclusive submits that Master Short made no error. He properly considered the law and applied the facts. It is submitted that Master Short cited the rule, referred to the case of Manga Hotels (Toronto) Inc. v. GE Canada Equipment Financing G.P., 2014 ONSC 2669, and applied the principles articulated by Brown J. (as he then was).

[49] To begin my analysis, I will refer to rule 31.10 of the Rules of Civil Procedure which states:

31.10 (1) The court may grant leave, on such terms respecting costs and other matters as are just, to examine for discovery any person who there is reason to believe has information relevant to a material issue in the action, other than an expert engaged by or on behalf of a party in preparation for contemplated or pending litigation.

(2) An order under subrule (1) shall not be made unless the court is satisfied that,

(a) the moving party has been unable to obtain the information from other persons whom the moving party is entitled to examine for discovery, or from the person the party seeks to examine;

(b) it would be unfair to require the moving party to proceed to trial without having the opportunity of examining the person; and

(c) the examination will not,

(i) unduly delay the commencement of the trial of the action,

(ii) entail unreasonable expense for other parties, or

(iii) result in unfairness to the person the moving party seeks to examine.

[50] In assessing this ground of appeal, firstly, I appreciate that Master Short’s initial Endorsement #1 did not grant the order requested by Exclusive. However, as conceded by IMA, Master Short was entitled to change his mind up until the entry of the final order. Clearly, he did.

[51] Secondly, there is no allegation made by IMA that Master Short had made any errors with respect to all but one of the conjunctive factors found in rule 31.10(2). The contentious issue is whether it was shown that Exclusive under rule 31.10(2)(a) had shown that it could not have obtained the information from its discovery of Metrolinx. On this point, Master Short held:

The involvement of IMA in this motion and the positions taken by it lead me to the view that the moving party would be unable to obtain the information from other persons it is entitled to examine for discovery.

Also, from the position taken by IMA I infer that there would have been no point in the moving party going through the formal exercise of posing numerous questions to the Metrolinx representative on his examination for discovery to make inquiries of IMA. The situation parallels that described by Justice Brown where he observed that the non-party “no doubt would have taken the same position in response to any inquiry from the defendants- i.e. go get an order under Rule 31.10”

[52] Both parties have relied upon Manga Hotels. In my view, IMA is correct in pointing out that in that case, at discovery, the moving party when examining the representative of the defendant, received the answer that the representative could not speak for the third party bank and that the moving party would have to ask them. Put another way, there was evidence of a constructive refusal. It is in this context that at paragraph 11 of the decision, Brown J. made the comment that was relied upon by Master Short. The following is the comment:

As to the ability of the moving party to secure the information from the person it seeks to examine, RBC has taken the position that it will not produce a representative for examination absent a court order. An informal interview of the RBC representative therefore is not available to the plaintiffs in this case. Also, from the position taken by RBC I infer that there would have been no point in the moving party going through the formal exercise of posing numerous questions to the defendants' representative on his examination for discovery to make inquiries of RBC, for RBC no doubt would have taken the same position in response to any inquiry from the defendants - i.e. go get an order under Rule 31.10.

[53] In order to meet the onus on the moving party under rule 31.10(2)(a), there must be an actual or constructive refusal to obtain the information: Famous Players Development Corp. v. Central Capital Corp., 6 O.R. (3d) 765 (Div. Ct.). This binding holding in Famous Players Development Corp was made in a fact situation where the non-party that the moving party wished to examine had been cooperative. This is an important consideration.

[54] In this case, there was no evidence of such cooperation. Master Short had the history of the case, the examinations, the refusals, and the positions taken by the parties before him on the motion. In particular, he had the opposition of IMA to the production and examination requests of Exclusive. From this record, he concluded he was satisfied that there was no point in getting formal refusals. Although, he did not expressly say so, I find that he essentially concluded that Exclusive had satisfied its onus to show a constructive refusal to provide the information. On appeal, I find there was no extricable error of law made by him. By referring to the test in Manga Hotels in which the decision of Famous Players Development Corp. was referred to by footnote, Master Short understood what the test was. His reasons do not demonstrate any error in that regard. Although he failed to specifically refer to a constructive refusal, when the reasons are read as a whole, I find that he was applying the correct legal test.

[55] Furthermore, his finding of a constructive refusal was not based on speculation as argued by IMA. It was an available inference that he could reasonably have made based upon the whole of the record and circumstances of the case. It would be difficult to suggest that IMA would have cooperated in providing information given the fact it went to the lengths of appearing as a non-party before Master Short and strenuously objecting to Exclusive’s requests.

[56] Finally, I disagree with IMA that this would encourage a floodgate of such motions at any time premised on an argument that the moving party only expected to receive a refusal. Each case must be considered on its own facts. I find that IMA has not demonstrated that Master Short made any palpable or overriding error when it comes to any error of fact or mixed fact and law.

[57] As a result, IMA’s appeal is dismissed.

E. Conclusion

[58] In conclusion, Metrolinx’s appeal is allowed. The appeal by Exclusive is dismissed. The appeal by IMA is also dismissed.

[59] I would encourage the issues of costs be resolved between the parties. If it cannot, I will entertain written submissions, each one limited to two pages excluding any attachments (any Bill of Costs, Costs Outline, and authorities). Metrolinx shall file within 15 days of the release of these reasons. Exclusive shall file within 10 days thereafter. IMA shall file 10 days after that. There will be no reply submissions without leave of the court.

Justice S. Nakatsuru Released: May 17, 2019