COURT FILE NO.: 4185/17
DATE: 2019 01 23
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
2462192 ONTARIO LTD.
Plaintiff/Responding Party
– and –
PARAMOUNT FRANCHISE GROUP INC. and MOHAMAD FAKIH
Defendants/Moving Party
Peter Carey and Philip Holdsworth, for the Plaintiff/Responding Party 2462192 Ontario Ltd.
Adam Ship and Nicholas Fitz, for the Defendants/Moving Party Paramount Franchise Group Inc. and Mohamad Fakih
BETWEEN:
PARAMOUNT FRANCHISE GROUP INC.
Plaintiff by Counterclaim
-and-
2462192 ONTARIO LTD., MAHER OBEID, JASON RAPPAZZO, and NADER OBEID
Defendants by Counterclaim
Adam Ship and Nicholas Fitz, for the Plaintiff by Counterclaim, Paramount Franchise Group Inc.
Peter Carey and Philip Holdsworth, for the Defendants by Counterclaim, 2462192 Ontario Ltd. and others
HEARD: January 21, 2019
REASONS FOR DECISION ON MOTION
Conlan J.
I. Introduction
The Lawsuit
[1] In its Amended Statement of Claim dated October 2017, the Plaintiff, 2462192 Ontario Ltd. (“246”), seeks, among other relief, a declaration that its franchise agreement with the Defendants was validly rescinded and damages in the amount of 2.5 million dollars.
[2] The Defendants in the action are (i) the franchisor, Paramount Franchise Group Inc. (”Paramount”), and (ii) its founder, president and director, Mohamad Fakih (“Fakih”).
[3] Very succinctly put, 246 alleges that the Defendants breached the provisions of the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3 and Ontario Regulation 581/00.
[4] The Defendants have denied any liability, and Paramount has counterclaimed against 246 and certain individuals for, among other things, breach of contract. The Counterclaim is disputed.
[5] The litigation stems from a failed venture by 246 to franchise a Paramount restaurant in Burlington, Ontario.
Motion for Summary Judgment
[6] Originally returnable in Milton on August 21, 2018, 246 brought a motion for summary judgment against the Defendants.
[7] That Motion, opposed by the Defendants, was adjourned to accommodate some interlocutory steps, such as cross-examinations on the affidavits filed by both sides, and is now scheduled to be heard in Milton on April 8, 2019.
The Motion to be Decided by this Court
[8] On January 21, 2019, at Milton, this Court heard a motion brought by the Defendants. The Motion is opposed by 246.
[9] In their Motion dated January 9th, the Defendants seek, principally, leave to file two further affidavits for consideration on the Motion for summary judgment brought by 246. Alternatively, the Defendants request that the issue of leave to file those two further affidavits be reserved to the Justice who hears the summary judgment Motion brought by 246.
[10] The two affidavits are one in the name of Fakih, affirmed on December 11, 2018 (the “Fakih Affidavit”), and one in the name of Nina Harnarine (“Harnarine”), sworn on January 7, 2019 (the “Harnarine Affidavit”).
[11] The Fakih Affidavit is 39 paragraphs in length (although three paragraphs are no longer being pursued by the Defendants), plus one dense Exhibit that consists of prior pleadings that have been filed in the action.
[12] The Fakih Affidavit responds to various reply affidavits filed by 246 on its Motion for summary judgment.
[13] Harnarine is a proposed expert forensic document examiner (handwriting expert). The Harnarine Affidavit is six paragraphs in length and attaches a document outlining Harnarine’s background, a report dated January 7, 2019, and other documentation.
[14] In total, the Fakih and Harnarine Affidavits, including the Exhibits attached thereto, occupy hundreds of pages of material.
[15] In large part, the Defendants’ objective in delivering the Fakih and Harnarine Affidavits is to combat the allegation made by 246 that a key franchise disclosure document being relied upon by the Defendants is not genuine (in other words, it is a forgery).
Why is Leave Required to File the Fakih and Harnarine Affidavits?
[16] 246’s Motion for summary judgment did not proceed on August 21, 2018 because, for one thing, cross-examinations had to take place on the affidavits filed by both sides.
[17] Before those cross-examinations took place, 246 delivered reply affidavit material on its Motion for summary judgment. That occurred on October 1 and October 16, 2018.
[18] The cross-examinations commenced on November 26, 2018 and concluded before the Defendants sought to introduce into evidence the Fakih and Harnarine Affidavits.
[19] Rule 39.02(2) of the Rules of Civil Procedure provides that “[a] party who has cross-examined on an affidavit delivered by an adverse party shall not subsequently deliver an affidavit for use at the hearing or conduct an examination under rule 39.03 without leave or consent, and the court shall grant leave, on such terms as are just, where it is satisfied that the party ought to be permitted to respond to any matter raised on the cross-examination with evidence in the form of an affidavit or a transcript of an examination conducted under rule 39.03”.
[20] As 246 does not consent to the filing of the Fakih and/or Harnarine Affidavit(s), the Defendants require leave of this Court. Hence, their Motion.
II. Analysis
The Positions of the Parties
[21] The Defendants argue that basic fairness demands that leave be granted for them to file the Fakih and Harnarine Affidavits. There will be no prejudice to 246 that cannot be adequately compensated for. Justice requires that the Motion for summary judgment be decided on the most complete evidentiary record possible.
[22] 246, on the other hand, submits that this Motion by the Defendants amounts to a classic attempt by them to split their case. The test for leave has not been met.
The Burden and the Standard of Proof on the within Motion
[23] As this Motion for leave has been brought by the Defendants, it is they who bear the onus of establishing, on a balance of probabilities, that they ought to be permitted to file the Fakih and/or Harnarine Affidavit(s).
The Issue to be Decided
[24] The question for this Court to resolve is a very narrow one: should leave be granted for the two proposed Affidavits, or either of them, to be filed by the Defendants as evidence on 246’s Motion for summary judgment?
The Law: the Test for Leave under Rule 39.02(2)
[25] Although each side has filed several cases, there are two decisions that are being pressed by counsel more so than the others.
[26] The Defendants submit that the governing authority is the decision of the Divisional Court in First Capital Realty Inc. v. Centrecorp Management Services Ltd., 2009 CarswellOnt 6914.
[27] 246 does not dispute the precedential value of that decision but focusses instead on the subsequent decision of Perell J. in Shah v. LG Chem, Ltd., 2015 ONSC 776.
[28] I see nothing incongruous between the two decisions cited, however, I will accede to the position advanced by the Defendants and apply the test for leave outlined by the Divisional Court at paragraphs 13 and 14 of First Capital, supra.
[29] Keeping in mind that a flexible and contextual approach must be taken, respecting Rule 1.04 which provides that the Rules of Civil Procedure ought to be interpreted liberally so as to achieve justice and a timely resolution of disputes and so as not to punish litigants for the oversights of their counsel, this Court should ask itself the following four questions:
(i) is the proposed evidence relevant;
(ii) does the proposed evidence respond to something raised during cross-examination(s), regardless of whether it had been raised beforehand;
(iii) would leave result in non-compensable prejudice (something that cannot be addressed through costs, terms and/or an adjournment of the underlying motion); and
(iv) does the moving party seeking leave have a reasonable or adequate explanation for not delivering the proposed evidence at the outset?
The Law as Applied in our Case
[30] All four criteria must be met. In conducting its assessment of the factors, this Court ought to strive to balance two objectives.
[31] On the one hand is the need to not apply some exacting standard that will only serve to emphasize rigidness over fairness, technicality over the interests of justice.
[32] On the other hand is the need to bring finality and certainty to the evidentiary foundation of any motion, including a motion for summary judgment. It is not appropriate, in my view, for a court to simply surrender to temptation and declare that everything goes in simply because that may appear to be the safer thing to do.
[33] After all, Rule 39.02(2) must exist for a reason.
[34] Assuming without deciding that the two proposed Affidavits are relevant and would not result in 246 sustaining any non-compensable prejudice, I have concluded that neither the second nor the fourth criterion outlined above has been satisfied by the Defendants.
[35] I am confident in that assessment now, and thus there is no reason to reserve the decision to the Justice who hears the Motion for summary judgment.
[36] Leave must be denied. Neither Affidavit shall be permitted to be filed.
[37] Regarding the fourth factor, the Defendants submit that the proposed Affidavits were not delivered earlier because their counsel assumed that the lawyer for 246 would, pursuant to the rule in Browne v. Dunn (1893), 1893 CanLII 65 (FOREP), 6 R. 67 (U.K. H.L.), ask Fakih about the forgery allegation during Fakih’s cross-examination.
[38] There are two problems with that argument, in my view.
[39] First, it has no relevance to the Harnarine Affidavit.
[40] Second, with regard to the Fakih Affidavit, it is not a reasonable or adequate explanation for the failure to deliver the proposed evidence earlier.
[41] The rule in Browne v. Dunn is all about fairness. Here, the Defendants knew about the forgery allegation, and knew about all of the allegations made by 246 and all of its evidence on the Motion for summary judgment, by mid-October 2018. The Defendants had several weeks to file a fresh affidavit in the name of Fakih before cross-examinations commenced on November 26th. If the Defendants were reluctant to do so because the Court’s timetable as ordered by Gibson J. on August 21, 2018 did not specifically contemplate that filing, then the Defendants had several weeks to bring their request to file the same back to Court.
[42] Instead, having tested the veracity of the forgery allegation in fully cross-examining the deponents on behalf of 246, the Defendants seek now to do what they could (likely should) have done before.
[43] Unlike the facts in First Capital, supra, the Defendants in our case made a deliberate choice, through their counsel, to not respond to the forgery allegation by way of fresh evidence delivered before the cross-examinations had been concluded.
[44] In First Capital, supra, counsel seeking leave had simply forgotten about the documents that were sought to be tendered late, or was unaware of their existence altogether (paragraph 16). That is not at all our case.
[45] A tactical choice by the Defendants in our case cannot result in consequences to be borne by 246.
[46] That the tactical choice by the Defendants in our case, through their counsel, was based on a misunderstanding of the rule in Browne v. Dunn does not make a difference in this Court’s assessment of the fourth criterion noted above.
[47] Clearly, in my opinion, counsel for 246 had no duty to cross-examine Fakih about the forgery allegation. Fakih and his counsel had been alerted, weeks earlier, to the forgery allegation, including who was making it and why and the details thereof. Fakih had every opportunity to explain why the opposing evidence, or any inferences drawn from it, should not be accepted and/or why his credibility ought not to be considered impeached.
[48] In short, there has been no attempt to ambush anyone here, including Fakih. There has been no infringement of the rule in Browne v. Dunn.
[49] If the position being advanced by the Defendants is correct, then it would mean that, for any type of motion, one side could not invite the trier of fact to reject the evidence filed by the opposing party as being incredible without having previously cross-examined the deponent of that allegedly incredible evidence.
[50] With respect, that cannot be the law. There are many, many motions decided in courthouses every day where there were no cross-examinations conducted at all. Some of those motions include submissions by one side that the opposing party’s evidence is not credible, or is unbelievable, or is even deliberately false. To demand or expect that in every instance there be an out-of-court cross-examination of the impugned deponent on pre-disclosed contradictory evidence is, to my mind, unreasonable and would grind the motions industry to a halt.
[51] In summary, the Defendants have offered no reasonable or adequate explanation for not delivering the proposed Affidavits, or either one of them, before the cross-examinations took place.
[52] In addition, regarding the second question posed above, it is no answer for the Defendants to argue that its counsel cross-examined witnesses for 246 on the issues raised in the Fakih and Harnarine Affidavits.
[53] Of course that is true. What does that have to do with the test for leave, though? I fail to see the connection.
[54] The submission on behalf of the Defendants must be that, having cross-examined witnesses for 246 on allegations related to forgery, allegations made and known weeks beforehand, and having stayed silent about those allegations until after cross-examinations had concluded, in order to properly respond to them, the Defendants must now be permitted to file new evidence.
[55] I reject that submission. Surely, when the Rule and the case law speak about something raised during cross-examination, although it need not be something raised for the first time, and although it need not necessarily be something raised during the cross-examination of the same person who is the deponent of the proposed new evidence to be filed if leave is granted, it does have to be something raised in a cross-examination other than counsel for the party seeking leave simply asking about the issue while questioning witnesses for the other side.
[56] If the latter was sufficient, then one could always confront potentially damaging evidence filed by the opposing party by staying silent, asking the other side’s witness questions about the potentially damaging evidence during an out-of-court examination in order to test the credibility and reliability of the witness and the veracity of his or her allegation, and then (if deemed necessary) obtain leave to file responding evidence late, all with the benefit of everything collected during the out-of-court examination (and the resulting potential to improperly tailor the response thereto) at one’s disposal in preparing that responding evidence.
[57] That practice should be discouraged. The leave mechanism in Rule 39.02(2) is there to allow for a process that is not the norm. The usual process for a motion is (i) evidence, (ii) cross-examinations if desired, and (iii) a hearing, in that order.
[58] Any variance from that usual process must be taken as being exceptional. Otherwise, the Rule would not be worded as it is, requiring that leave be granted.
[59] In conclusion, in addition to the fourth question not being satisfied in our case, the second factor has not been met either.
[60] One final point is worth mentioning. Aside from the test for leave outlined above, I would be remiss if I did not say that I find very little probative value in the evidence that the Defendants seek leave to file. Thus, I am not at all concerned that the Justice who ultimately decides the Motion for summary judgment will be deprived of something that is significant.
[61] The penultimate opinion expressed by Harnarine is that the forgery allegation is unlikely to be true because the signatures compared on two documents (described as Q1 and K4 – see page 11 of the report attached to the Harnarine Affidavit) are not identical.
[62] The trier of fact can make that determination without any difficulty and without the need for expert opinion evidence.
[63] The penultimate position taken by Fakih is that he was not and would never be a part of any attempt to forge a document and is unaware of anyone on behalf of Paramount having done so in this case.
[64] There is nothing unexpected about those assertions. There is also nothing inherently contradictory between those assertions being true and there still being a finding that the disclosure document in question is not a genuine one.
[65] Put another way, neither the Fakih nor the Harnarine Affidavit is at all determinative of the Motion for summary judgment.
III. Conclusion
[66] For these reasons, the Motion by the Defendants for leave, under Rule 39.02(2), to file the proposed additional evidence is dismissed.
[67] If the goal is to interpret the Rules with a view to encouraging a just, more expeditious and less expensive resolution of disputes that find their way to court, the request of the Defendants has failed to persuade me that it, if granted, would go any distance towards the achievement of that objective. In fact, the opposite is true.
[68] I agree with Mr. Carey, counsel for 246, that what the Defendants are seeking cannot be granted on even the most generous interpretation of the test for leave. In employing the test for leave advocated for by the Defendants themselves, at least two of the four criteria are not satisfied.
[69] I agree further with Mr. Carey that the Defendants are asking this Court to effectively condone intentional case-splitting.
[70] If counsel cannot resolve the issue of costs, they may file written submissions. Each submission shall be limited to three pages in length, excluding attachments. 246 shall file within thirty days of the date of these Reasons. The Defendants shall file within twenty days after receipt of 246’s submissions. Without leave of the Court, no reply is permitted.
[71] The hearing date for 246’s Motion for summary judgment remains as previously scheduled.
[72] I wish to thank all counsel for their assistance as the within Motion was presented and argued well by both sides.
Conlan J.
Released: January 23, 2019
COURT FILE NO.: 4185/17
DATE: 2019 01 23
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
2462192 ONTARIO LTD.
Plaintiff/Responding Party
– and –
PARAMOUNT FRANCHISE GROUP INC. and MOHAMAD FAKIH
Defendants/Moving Party
BETWEEN:
PARAMOUNT FRANCHISE GROUP INC.
Plaintiff by Counterclaim
-and-
2462192 ONTARIO LTD., MAHER OBEID, JASON RAPPAZZO, and NADER OBEID
Defendants by Counterclaim
REASONS FOR Decision on Motion
Conlan J.
Released: January 23, 2019