COURT FILE NO.: CV-16-559684

DATE: 20190920

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

TTC INSURANCE COMPANY LIMITED and TORONTO TRANSIT COMMISSION

Plaintiff (Appellants)

– and –

MVD LAW PROFESSIONAL CORPORATION, MELENI VASANTHY DAVID, NAMARTHA GOBIKRISHNA, JOHN DOES 1-10, JANE DOES 1-10, and SUHANTHAN LOGESWARAN

Defendant (Respondents)

J. Thomas Curry and Aoife Quinn, for the Appellants

C. Michael J. Kealy and Bronwyn M. Martin, for the Respondents

HEARD: August 2, 2019

O’Brien, J.

REASONS FOR DECISION

Introduction

1The Appellants, the Toronto Transit Commission and its insurer, TTC Insurance Company Limited (collectively “TTC”), appeal a Master’s decision by which the Master allowed the Respondents to select Chad Townsend as the TTC’s representative on examination for discovery. Mr. Townsend is in-house counsel at the TTC and has carriage of this action on behalf of the TTC. The issue on this appeal is whether the Master erred in permitting the Respondents to examine Mr. Townsend when he is counsel with carriage of this matter.

2In this action, the TTC alleged that the Respondents committed fraud by falsifying documentation in support of personal injury accident insurance claims against them. The action relates primarily to thirteen accident benefit files submitted on behalf of various individuals at the Respondent, MVD Law Professional Corporation (the “MVD Law firm”).

3The Master concluded at para. 31 that there was “no compelling reason for this court to interfere with the prima facie right of these Defendants to select a witness. Mr. Townsend has knowledge of the issues at hand, and his position as in-house counsel does not shield him from discovery”: see TTC Insurance v. MVD Law, 2019 ONSC 7 (“Master’s Reasons”).

4The parties already have brought a previous motion and cross-motion related to documentary production issues, with a subsequent appeal over the TTC’s claim of privilege in relation to documents authored by Mr. Townsend. Justice Schreck partially allowed the appeal, finding that the Respondents were entitled to production of the results of the TTC’s audits, as well as the statements of particular witnesses, but they were not entitled to the production of solicitor-client privileged communications.

5I conclude that the current appeal should be allowed. There is no dispute that in-house counsel are not shielded from being selected for examination for discovery. However, the Master did not advert to the particular circumstances of this case and, specifically, the importance of Mr. Townsend’s role as counsel with carriage of this matter. Further, the Respondents did not identify any prejudice to their being required to examine another representative of the TTC. In these circumstances, the Respondents should select another representative of the TTC for examination for discovery.

Standard of Review

Standard of Review

6Masters play an important and valuable role in the civil litigation process. They have developed a deep expertise in the law and practice relating to procedure: Prescott v. Barbon, 2018 ONCA 504, at para 10. On the review of a Master’s decision, the Court will not interfere unless the Master made an error of law, exercised his or her discretion on the wrong principles, or misapprehended the evidence such that there is a palpable and overriding error: Zeitoun v. Economical Insurance Group, 2008 CanLII 20996 (ON SCDC), [2008] O.J. No 1771 (Div. Ct.), at para. 40; aff’d 2009 ONCA 415.

Test under Rule 31.03(2)

Test under Rule 31.03(2)

7As indicated by the Master, Rule 31.03(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides a prima facie right to select the employee to be examined. It provides:

31.03(2) Where a corporation may be examined for discovery,

(a) the examining party may examine any officer, director or employee on behalf of the corporation, but the court on motion of the corporation before the examination may order the examining party to examine another officer, director or employee.

The Master further correctly set out the test for the Court in considering whether to interfere with the choice of the examining party as follows:

a. Is the person selected sufficiently knowledgeable in relation to the matters in issue?

b. Would it be oppressive to require the person selected by the opposing party to be examined, for example by the witness being required to give an inordinate number of undertakings or unnecessarily being taken away from onerous managerial responsibilities?

c. Would there be prejudice to the examining party to be required to examine someone other than the person whom he or she has selected?

See Wexler v. Suncor Energy Products Inc., [2006] O.J. No. 4012 (S.C.), at para. 5; leave to appeal refused, 2007 CanLII 8027 [Wexler].

Mr. Townsend had sufficient knowledge of the matters in issue

Mr. Townsend had sufficient knowledge of the matters in issue

8The TTC submits that Mr. Townsend was not “sufficiently knowledgeable in relation to the matters in issue,” as required by the first step of the test. Specifically, the TTC submits, Mr. Townsend’s knowledge was limited to the knowledge of any lawyer working on a file. That type of knowledge should not qualify a representative for examination for discovery.

9In my view, it is clear that Mr. Townsend has sufficient knowledge of the matters in issue. Although, according to the TTC’s affiant, Mr. Cerquiera, Mr. Townsend has no firsthand knowledge of the substantive issues arising from the pleadings, other materials show that Mr. Townsend has detailed knowledge of the matters in issue from his review of the material. Specifically, Mr. Townsend, in his role as in-house counsel, audited the MVD Law firm files. He then prepared a memorandum setting out the results of the audit. The memorandum is a document of over 30 pages detailing the initial reasons for the audit, as well as the specific concerns with each of the files in issue. While the TTC submits that multiple accident benefit adjusters, including Mr. Cerquiera, have firsthand knowledge of the substantive issues in this action, the Master aptly observed that there did not appear to be “any one person” with firsthand knowledge of many of the matters in the Statement of Claim.

10The TTC’s argument that Mr. Townsend was not “sufficiently knowledgeable” because he gained his knowledge via the typical role counsel plays is better dealt with at the second step of the Rule 31.03(2) test. As detailed below, in-house counsel are not insulated from being required to attend as a corporate representative. If counsel has sufficient knowledge gained from the role as in-house counsel, that knowledge may still qualify him or her for attendance. However, requiring counsel to attend may be oppressive depending on the circumstances of the case. In my view, the Master did not err in concluding that Mr. Townsend had sufficient knowledge of the matters in issue such that he was not prepared to interfere with the Defendants’ selection on that basis.

Requiring Mr. Townsend to attend would be oppressive

Requiring Mr. Townsend to attend would be oppressive

11The TTC’s primary argument is that it would be oppressive to require Mr. Townsend to be examined, in view of his role as counsel for the TTC, and especially his role as counsel with carriage of this matter. The TTC accepted that there is no bar to in-house counsel acting as a representative on examination for discovery. However, it emphasized the importance of examining the specific role of such counsel on the facts of a case. It submitted that, in this case, Mr. Townsend did not play a firsthand role in creating any of the documents or information. His role was limited to reviewing documents, analyzing information and providing legal advice. Further, it would be oppressive to require Mr. Townsend to act as the representative in this case as he has carriage of the action on behalf of the TTC.

12I agree that the Master erred in principle by concluding that it would not be oppressive to require Mr. Townsend’s attendance. In particular, in addressing the issues raised by examining in-house counsel, the Master did not address the specific and distinct concern that Mr. Townsend was not only in-house counsel, but also counsel of record.

13The Master relied on Wexler for the proposition that in Ontario there is no blanket exclusion from discovery “simply because of the constraint of solicitor-client privilege” (Master’s Reasons, at para. 23). However, in the Wexler case, in-house counsel does not appear to have been counsel with carriage of the litigation.

14In my view, the fact that Mr. Townsend is counsel with carriage of this litigation is a significant consideration that weighs heavily against requiring him to attend as the representative in this case. The Court of Appeal has emphasized the importance of limiting interference with the choice of counsel: “Canadian courts exercise the highest level of restraint before interfering with a party’s choice of counsel” Kaiser (Bankrupt), Re, 2011 ONCA 713, at para. 21. Clients are entitled to their counsel of choice, and courts are reluctant to make orders which have the impact of interfering with that right. See Essa (Township) v. Guergis (1993), 1993 CanLII 8756 (ON SCDC), 15 O.R. (3d) 573, at para. 43.

15Counsel for the TTC on this motion submitted that the “inevitable consequence” of requiring Mr. Townsend to attend for examination for discovery would be that he would be unable to continue as counsel on the case. At trial, the parties would be referring to his prior evidence and perhaps putting it to witnesses. The Respondents do not deny that Mr. Townsend would not be able to continue. Indeed, in their materials before the Master, the Respondents wrote that while requiring Mr. Townsend to be examined “impacts Mr. Townsend’s ability to appear as advocate for the plaintiffs, the plaintiffs can still be represented by any one of the lawyers who work in the TTC legal department”. However, the TTC’s evidence was that Mr. Townsend supervises the ten other litigation lawyers in the department and takes on larger and more complicated litigation matters than others. Further the TTC chose Mr. Townsend specifically to have carriage of this litigation: “The TTC’s selection of Mr. Townsend was deliberate and no other lawyer in the department is equivalent to this particular task.”

16Although the argument regarding interference with a party’s choice of counsel was before the Master, he did not directly address it.

17The Respondents submit that the requirement for Mr. Townsend to attend is caused by the TTC’s own initial decision to have Mr. Townsend engage in the detailed audit in this case. The Respondents view Mr. Townsend as having performed an investigatory function. Had Mr. Townsend not taken on this investigatory role, the Respondents would not have chosen him as the TTC’s representative. However, this characterization of Mr. Townsend’s role runs somewhat counter to Schreck, J.’s characterization in his appeal decision on the motion for production of documents where the TTC claimed solicitor-client privilege. There, Schreck, J. rejected the claim of waiver of privilege with respect to Mr. Townsend’s memoranda, stating at para. 4: “Apart from the assertion that the claim was initiated following the receipt of legal advice, which is an obvious fact true of most claims, there has been no disclosure of any solicitor-client privileged communication”: TTC Insurance Company Ltd. v. MVD Law Professional Corporation, 2018 ONSC 5050. In other words, Schreck, J. viewed Mr. Townsend’s role as a typical role of counsel, which included examining documents and providing legal advice.

18However, I do not need to decide whether Mr. Townsend’s audit, including the document setting out the results of the audit, suggest Mr. Townsend’s role was anything beyond a role performed by any lawyer. This is because, in any event, I view Mr. Townsend’s role in having carriage of the matter to be a key consideration. Interference with a party’s choice of counsel is significant and should weigh heavily in the circumstances of this case. I conclude that the Master erred in principle by failing to consider this factor.

Examination of an alternative representative would not result in prejudice

Examination of an alternative representative would not result in prejudice

19In view of his conclusions on the first two steps of the test, the Master did not directly address the question of whether requiring the examining party to examine a different representative would cause prejudice. I conclude that there would be no such prejudice in this case. Although I agree with the Master’s conclusion that Mr. Townsend had sufficient knowledge such that the Defendants’ selection should not be interfered with on that basis, the Defendants had other knowledgeable affiants available to them. For example, Mr. Cerquiera, who swore the affidavit on this motion, adjusted three of the accident claims in issue. Although he did not conduct the audit of all of the cases as did Mr. Townsend, he has firsthand knowledge of not only the three specific claims, but also of how claims are adjusted more generally. He is the TTC’s Director of Claims and oversees its Claims Department. He stated that Mr. Townsend had been reporting to him and others on the file since the TTC made the decision to conduct an audit of files involving the MVD Law firm. In addition, he testified to his ability to provide evidence based on firsthand experience in the following areas:

a. How the allegedly forged documents were relied upon;

b. The expenses that were incurred;

c. The procedures of the department to reduce fraud;

d. The obligations of the TTC to accident benefits claimants;

e. The reliance on invoicing provided by accident benefits claimants;

f. The procedure for the provision of funds to claimants;

g. The varying amount of time required to adjust accident benefit files;

h. How the time to adjust a file is impacted by the submission of extensive invoicing for personal services rendered; and

i. What level of honesty is expected on behalf of representatives of accident benefits claimants.

20Although the Respondents submit that examining Mr. Cerquiera or another TTC representative would result in undertakings in relation to the files in which he or she was not directly involved, they also acknowledge that an examination of Mr. Townsend is expected to result in numerous undertakings. Indeed, the Respondents do not rely on any specific prejudice other than to say they believe Mr. Townsend touched on all aspects of the case and others did not. Where there is no specific prejudice to requiring the attendance of a different representative, I conclude it is oppressive to require counsel with carriage of the matter to attend.

Disposition

Disposition

21The appeal is allowed and the order of the Master is set aside. Mr. Townsend is not required to attend as the TTC’s representative on examination for discovery. The Respondents may select another representative. In accordance with the agreement between the parties, the Respondents are to pay costs to the TTC in the amount of $3,500 for the motion and $5,000 for the appeal.

O’Brien, J.