COURT FILE NO.: CV-13-477271

DATE: 20200312

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: TRE MEMOVIA DEVELOPMENTS LTD. Appellant/Plaintiff

AND:

1491316 ONTARIO INC., AHMED HAMDE, ANWAR HAMDE, A.P.1 HOUR CLEANERS LTD., AHMED ANWAR HAMDE, AND NEJAT ADEM MENFOUT Respondent/Defendant

BEFORE: GILLIAN ROBERTS J.

COUNSEL: Gregory Dimitriou, for the Appellant/Plaintiff Harry Dahme and Liane Langstaff, for the Respondent/Defendant

HEARD: March 6, 2020

ENDORSEMENT

Overview

[1] The appellant/plaintiff (hereafter referred to as the plaintiff) appeals from the decision of Master Short dismissing his motion under Rule 32.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, for intrusive testing on the respondent/defendant's (hereafter referred to as the defendant) property.

[2] The plaintiff appeals on the basis that the master erred in law in applying too stringent a test whether to make an order under Rule 32.01, and he misapprehended the evidence.

[3] I conclude that the master did not err in law or principle; he applied the correct test. Further, he did not make a palpable and overriding error with respect to the facts. He make factual findings open to him on the evidence.

Background Facts

[4] The plaintiff owned two properties at 2055 and 2057 Danforth Avenue that it wished to develop. It had an environmental site assessment done by Toronto Inspections Ltd. (TIL) in 2011 which revealed no chlorinated solvents in the soil or groundwater, namely PCE (Tetrachloroethylene) and TCE (Trichloroethylene). The plaintiff had another environmental assessment done in 2012 by Terraprobe which revealed PCE and TCE in the ground water along the eastern and western boundaries, and near the centre. No impacts were detected in the soil samples analyzed. The defendant, which ran a dry-cleaning establishment on the adjacent property at 2061 Danforth Avenue, was identified as one possible source of Potentially Contaminating Activities (PCAs). Another dry-cleaner in the vicinity was also named as a possible source of PCAs. So too was the fact that there had been a fire at Woodbine Building Supply at 2055 Danforth in 2001, and the building was demolished and fill brought in from off-site.

[5] On September 17, 2012, the plaintiff sent the defendant a notice of contamination, and, on March 28, 2013, brought an action against the defendant. The plaintiff did not do any more testing of its own property, or seek access to the defendant's property for testing. The defendant did not conduct any testing, nor ask to sample the fill being removed from the plaintiff's properties.

[6] Presented with the contamination, the plaintiff did not seek to investigate the source of the contamination and stop the contamination. Rather, the plaintiff chose to work with the Ministry of the Environment to undertake risk assessment measures in relation to the planned construction. The master found that the latter course of action included a deliberate choice not to do more testing at this point: "There would appear to have been a considered decision not to 'dig deeper' or to look for further information relating to possible contamination which could risk discovering problems that might further delay the project."

[7] In 2017, the plaintiff hired a new environmental consultant, AiMS Environmental (AiMS). In 2018, the plaintiff brought the motion at issue on this appeal, pursuant to Rule 32.01, to do intrusive testing of the defendant's property.

The Master’s Decision

[8] After reviewing the facts related to the request for intrusive testing, and instructing himself on the test for granting an order for testing under Rule 32.01, the Master concluded that intrusive testing was not appropriate because it was too late to be of any real use. The master accepted the opinion of the defendant's expert, Mr. McIlelwain, that after the construction at 2055 and 2057 Danforth was completed, with the extensive excavation involved to build a two story underground parking garage, the entire area, including the adjacent area under 2061 Danforth Avenue, was so disturbed that any test results obtained would not provide any meaningful information about the source of the chlorinated solvents. The time for such an investigation was before construction when the ground water under both properties could be tested at the same time, preferably on the same day, in its pre-construction state. In addition, the master concluded that if he allowed the testing, any probative value would be exceeded by the prejudice to the other side who could no longer test the plaintiff's land.

Standard of Review

[9] A master hearing a motion under Rule 32.01 for intrusive testing has a broad discretion whether or not to permit the testing. In addition, it is well-established that masters, particularly in Toronto, have "deep expertise" in law and practice relating to procedural matters, including exactly the kind of issue presented in this case. Absent an error of law or principle, or a palpable or over-riding error about the facts, a reviewing court should not interfere: Prescott v. Barbon, 2018 ONCA 504 at paras.10-11.

Test for Intrusive Testing

[10] Rule 32.01 of the Rules of Civil Procedure provides for an order for inspection as follows:

32.01 (1) The court may make an order for the inspection of real or personal property where it appears to be necessary for the proper determination of an issue in a proceeding.

(2) For the purpose of the inspection, the court may,

(a) authorize entry on or into and the taking of temporary possession of any property in the possession of a party or of a person not a party;

(b) permit the measuring, surveying or photographing of the property in question, or of any particular object or operation on the property; and

(c) permit the taking of samples, the making of observations or the conducting of tests or experiments.

(3) The order shall specify the time, place and manner of the inspection and may impose such other terms, including the payment of compensation, as are just…. R.R.O. 1990, Reg. 194….

[11] In Peel School District No.19 v. 553518 Ontario Ltd., [2000] O.J. NO.3581 at para.16, Justice Quinn set out the following approach to guide the exercise of discretion whether to permit intrusive testing pursuant to Rule 32.01:

(a) The proposed test must be one which, in the words of rule 32.01(1), "appears to be necessary for the proper determination of an issue in a proceeding."

(b) "Necessary" has been held to mean "useful" or "probative of an issue": see Bennett et al. v. D.C. Jones Circle v. Ranches Ltd. et al. (1987), 1987 3374 (AB KB), 20 C.P.C. (2d) 213 (Alta. Q.B.). Therefore, in my view, to establish "necessity" the moving party must show that there is a reasonable possibility the proposed test will reveal something useful for the trier of fact (that is, something which will assist the trier of fact in determining an issue in the proceeding).

(c) Even if "necessity" is established, the court is not bound to authorize the test, since the opening words of rule 32.01(1) bespeak a discretion in this regard.

(d) Rather than be concerned with whether the proposed test will "destroy" the property, I think the better question is: Will the proposed test impair the integrity of the property such that the party in possession of the property will be prejudiced at trial?

(e) If the party in possession will be so prejudiced, this fact must be balanced with the benefit to be derived from the test by the trier of fact.

Analysis

[12] In this case, the master was guided by the test from Peel School District No.19. He quoted from the test, and emphasized that the issue was whether the proposed testing would be useful or probative. He also went on to note, correctly, that even if the proposed testing would be probative or useful, he still retained a discretion not to allow it, particularly where its prejudicial effect would exceed its probative value.

[13] The plaintiff asserts that while the master set out the correct test for whether an order should be granted under Rule 32.01, he went on to effectively require that the testing "definitively identify" the source of the contaminants at issue (see paragraphs 78 and 79), and thus applied too high a standard.

[14] When the reasons are read as a whole, in the context of the evidence before the master, I disagree. In using the language "definitively identify", the master was picking up on the language of Mr. McIlelvaine, whose opinion he accepted, in order to explain why the testing would not be "useful" or "probative".

[15] Before summarizing in the manner the plaintiff complains about at paragraphs 78 and 79, the master explained that he accepted Mr. McIlelwain's opinion that the plaintiff's construction had changed the physical and chemical soil and/or groundwater conditions beneath both the plaintiff's and defendant's properties, such that the proposed investigation would not be "probative" of the source of the contaminants found in 2012.

[16] Further, when the master summarized his conclusion in the paragraph immediately following the impugned paragraphs, he again emphasized that the test he was applying was whether the proposed testing would be probative, not definitive:

[80] In sum, I am satisfied that the proposal to conduct the intrusive investigation on the Hamde Property is not useful or probative and will not lead to the proper determination of the issue for which it has been proposed.

[17] In other words, there was evidence before the master that because of the change in soil and/or groundwater conditions under both properties, the proposed testing would not be probative because it could not lead to any definitive conclusions about the source of the contaminants. Even if PCE or TCE were found in the soil or groundwater beneath the defendant's property, it would not determine whether such contamination migrated to the plaintiff's property in the past and caused the contamination found in 2012. The proposed testing simply came too late to be of any meaningful assistance in resolving the issues in the litigation.

[18] The master did not make a palpable or over-riding error with respect to the facts. It was open to the master to accept Mr. McIlelwain's opinion, notwithstanding that the plaintiff's current expert, Mr. Jagani, had a different opinion. The master noted that the plaintiff did not cross-examine Mr. McIlelwain. The master also noted that Mr. McIlelwain's opinion was supported by the plaintiff's "own consultant, Terraprobe", which "noted that the direction of the water table is affected by underground structures such as underground parking garages, such as that constructed by the Plaintiff". The fact that Mr. Jegani took a different view did not mean the master could not consider the view of Terraprobe.

[19] Nor did the master err by failing to refer to the evidence of Mr. Jagani in relying on Mr. McIlelwain's opinion. The master was clearly aware of Mr. Jagani's opinion: he quoted portions of Mr. Magno's affidavit and the plaintiff's factum which described Mr. Jagani's evidence and opinion. The master was not required to explicitly explain why he preferred Mr. McIlelwain's opinion, or the opinion from the plaintiff's previous expert, Terraprobe. Nor was he required to explicitly refer to details of Mr. Jagani's opinion, such as the fact that the bottom of the two story underground parking garage was ten feet above the ground water.

[20] The plaintiff also argued that the master erred in law in considering prejudice in the context of the action as a whole as opposed to the testing requested. I disagree. It was open to the master to consider that the defendant would be prejudiced by the requested testing because they would be unable to conduct equivalent testing on the plaintiff's property (because the plaintiff had proceeded with the construction). Of course this relates to trial. But it also relates to whether the testing should be permitted, particularly after the master had already concluded that the probative value of the testing was very limited at best. The reality is that the two concepts of prejudice blurred in the context of the case. The master described the prejudice to the defendant as follows:

[81] I find persuasive the argument that the prejudice that will be suffered by Mr. Hamde is not limited to the cost and disruption of the operations of a small business owner. An investigation of the Hamde Property after the destruction of the evidence by the Plaintiff would create an uneven playing field where the Plaintiff will have had an opportunity to conduct first-hand investigations on its own property and the Defendants' property, while the Defendants will have no such opportunity to conduct investigations of the Plaintiffs Property in an undisturbed condition.

[21] In sum, I find no basis to interfere with the conclusion of the master denying an order under Rule 32.01. The appeal is dismissed.

[22] Both parties agree that they should agree to a new timetable for the litigation within 30 days of the release of this decision.

[23] The defendant is entitled to its costs on this appeal. It is well-established that the fixing of costs is discretionary under s.131 of the Courts of Justice Act, R.S.O. 1990 c. C-43. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include: the principle of indemnity for the successful party, the expectations of the unsuccessful party, the amount claimed and recovered, and the complexity of the issues. Ultimately, I must consider what is "fair and reasonable" in fixing costs, with a view to balance compensation of the successful party with the goal of fostering access to justice: Boucher v. Publix Accountants Council (Ontario), 2004 4579 (QC CQ), 2004 4579, 71 O.R. (3d) 291 (C.A.) at paras. 26 and 37.

[24] The defendant seeks costs on a substantial indemnity basis, complaining that the plaintiff has a pattern of seeking last minute adjournments, and filed "new material" and raised "new issues" on the eve of the appeal.

[25] This appeal did not proceed last June, when it was originally set, because the court time was reserved for trials. It did not proceed last November, the date that was re-scheduled, because the plaintiff's counsel was hospitalized shortly before the hearing date. This is all the information I have about adjournments; it does not suggest a pattern of seeking last minute adjournments. The new material was additional cases filed in a supplementary book of authorities. The new issue was the fact that the defendant did not know how the plaintiff planned to deal with the issue of "spoliation", something not pursued by the plaintiff in oral argument. I do not think any of these complaints, alone or together, rise to the level required to provide a sufficient basis for elevated costs. It is well-established that elevated costs are warranted only in "rare and exceptional" cases "where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties": Davies v. The Corporation of the Municipality of Clarington et al. (2009), 2009 ONCA 722, 100 O.R. (3d) 66 at paras.29-31.

[26] The defendant's costs on a partial indemnity scale are $29,157.04. The plaintiff's costs are $11,944.34. Both counsel are the same counsel who argued the motion before the master; thus both were familiar with the record. I note that the plaintiff was responsible for putting the material that was before the master into the large five-volume appeal record put before me.

[27] In all the circumstances, and in the exercise of my discretion, I fix the defendant's costs for the appeal at $10,000.00, inclusive of all fees, disbursements and taxes, payable forthwith.

Justice Gillian Roberts

Date: March 12, 2020