Scott et al. v. Marchand et al.

[Indexed as: Scott v. Marchand]

Ontario Reports

Ontario Superior Court of Justice

Master Jolley

September 1, 2020

152 O.R. (3d) 523 | 2020 ONSC 5234

Case Summary

Civil procedure — Examinations — Plaintiffs having pending motion to validate service of statement of claim on one defendant and to extend time for service on another defendant — Defendants bringing motion to examine plaintiffs on limitation period issue and to establish legal basis for pleaded causes of action — Defendants allowed to examine on limitation issue — Defendants not allowed to examine on causes of action, as plaintiffs' evidence would have been irrelevant to defendants' argument — Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 39.03.

Civil procedure — Motions — Plaintiffs having pending motion to validate service of statement of claim on one defendant and to extend time for service on another defendant — Defendants bringing motion to examine plaintiffs on limitation period issue and to establish legal basis for pleaded causes of action — Defendants allowed to examine on limitation issue — Defendants not allowed to examine on causes of action, as plaintiffs' evidence would have been irrelevant to defendants' argument — Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 39.03.

The plaintiffs had a pending motion to validate service of their statement of claim on one defendant and to extend the time to serve a second defendant. Those defendants opposed the motion on the basis that the claim against them was brought outside the limitation period and in some cases did not plead valid causes of action. The defendants sought to obtain evidence from the plaintiffs on why there was a delay in service, on what they knew about the causes of action and when, and what the legal basis was for certain of the pleaded causes of action. They brought a motion under rule 39.03 to examine the plaintiffs.

Held, the motion should be granted in part.

The defendants were entitled to examine the plaintiffs on issues relevant to the limitation period defence. The plaintiffs argued that any of their evidence about the limitation period was not relevant because the defendants had not led evidence of actual prejudice needed for the limitation argument to succeed. While that argument had the potential to succeed at the hearing of the service motion, it was not to be used to circumscribe the arguments that the defendants wished to [page524] advance. With the defendants being allowed to examine on the one issue, the motion was not an abuse of process.

The defendants were not entitled to examine the plaintiffs on the pleaded causes of action. The defendants filed an affidavit setting out various factual reasons why the causes of action would not be proven on the facts. However, that was different from the correct test on a service motion, which was that even if accepted and proven, the pleaded facts did not support a cause of action. It was a pleadings test, not an evidentiary test. The plaintiffs' evidence was irrelevant to the defendants' argument that the statement of claim did not plead reasonable causes of action on its face.

D'Addario v. Environmental Management Solutions, 2007 21598, apld

Other cases referred to

Chiarelli v. Wiens (2000), 46 O.R. (3d) 780, [2000] O.J. No. 296, 2000 3904; Cornerstone Co-operative Homes Inc. v. Spilchuk (2004), 72 O.R. (3) 103; Hamilton Harbour Commissioners v. J.P. Porter Co. Ltd. et al. (1977), 1976 665 (ON SC), 13 O.R. (2d) 199; Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1995), 1995 7258 (ON SC), 27 O.R. (3d) 291, [1995] O.J. No. 3886

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 1.03, 21.01(1)(b), 26, 39, 39.02, 39.03

MOTION by defendants to examine plaintiffs before a service motion.

Harvey Dorsey, for moving party defendants Robert and Kim Marchand.

Raphael Fernandes, for responding party plaintiffs.

MASTER JOLLEY: —

[1] The plaintiffs have a pending motion to validate service of their statement of claim on Robert Marchand and to extend the time to serve Kim Marchand. Those defendants oppose the motion on the basis that the claim against them is brought outside the limitation period and in some cases does not plead valid causes of action. As they argue that the claim will fail on those bases, they intend to argue on the service motion that leave should not be granted to allow an unviable claim to proceed.

[2] The defendants wish to examine each of the plaintiffs pursuant to rule 39.03 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] to obtain their evidence on why there was a delay in serving the Marchands, on what they knew about the causes of action and when, and what the legal basis is for certain of the pleaded causes of action. The plaintiffs object to any examination. They argue that they are not compellable under rule 39.03, which is directed at persons with knowledge of matters at issue, and not [page525] at parties themselves. They further argue that the issues on which the defendants seek to examine them are not relevant to the pending motion. Lastly, they argue that the defendants bring this motion as part of their pattern to wilfully delay a hearing on the merits, and it is therefore an abuse of process.

Scope of Rule 39.03(2)

[3] There are few cases that address rule 39.03 in the context of its applicability to parties. Quinn J. in Cornerstone Co-operative Homes Inc. v. Spilchuk (2004) 72 O.R. (3) 103 held that he did not think that "person" in rule 39.03 included parties, although he noted there were other cases that treated parties as falling under the Rule.

[4] In the later case of D'Addario v Environmental Management Solutions, 2007 21598 (ONSC), the defendants brought a motion to strike the statement of claim. The plaintiff sought to examine one of the defendants pursuant to rule 39.03 in the context of that motion. The court referred to the differing lines of cases but conducted its analysis on the assumption that Rule 39 was applicable to the defendant whom the plaintiff sought to examine.

[5] I find that the plaintiffs are compellable under rule 39.02 for three reasons. First, I rely on the language of rule 39.03 itself which states that "a person may be examined as a witness before the hearing of a pending motion or application for the purpose of having a transcript of his or her evidence available for use at the hearing". Rule 1.03 defines "person" as including a party to a proceeding. On a plain reading of the Rules, the plaintiffs fall within those persons who may be examined.

[6] Second, the majority of reported cases have permitted such an examination, For instance, I note the case of Hamilton Harbour Commissioners v J.P. Porter Co. Ltd. (1977), 1976 665 (ON SC), 13 O.R. (2d) 199 in which Cory J. held that the only restriction on one defendant's ability to examine a co-defendant in aid of the first defendant's motion for a stay was the relevance of the questions. The defendant was not shielded from a rule 39.03 (then Rule 230) examination because he was a party.

[7] Lastly, I note the court's preference to make its decision based on all available relevant evidence, where possible.

[8] For these reasons, I find the plaintiffs are subject to examination under rule 39.03, provided the defendants meet the other tests to compel their examination. [page526]

Test for evidence under rule 39.03

[9] The parties agree that the test is a low one. A party seeking to examine a person before a pending motion must satisfy the court that the evidence sought is relevant. It need not meet a higher threshold of being "reasonable reliable, relevant evidence" (Payne v Ontario Human Rights Commission, 2000 5731 (C.A.)). The court in Transamerica Life v. Canada Life Assurance Co. (1995), 27 O.R. (3d) 291, [1995] O.J. No. 3886, 1995 7258 (S.C.J.) described the threshold as being required to show that "the proposed examination will be on an issue relevant to the pending motion and that the party to be examined is in a position to offer relevant evidence".

Limitation Period Argument

[10] The plaintiffs argue that any evidence they might have about the limitation period cannot be relevant as the defendants have not led evidence of actual prejudice needed for the limitation period argument to succeed.

[11] For this proposition, they rely on Chiarelli v Weins (2000), 46 O.R. (3d) 780, [2000] O.J. No. 296, 2000 3904 (C.A.). In that case, the plaintiff brought a motion to extend the time to serve her statement of claim. The defendant alleged that she would be prejudiced due to the passage of time. The motion judge permitted the extension, which was ultimately upheld by the Court of Appeal. In doing so, the Court of Appeal stated that "if the defence is seriously claiming that it will be prejudiced by an extension it has at least an evidentiary obligation to provide some details". The plaintiffs here argue that, as the defendants have put forward no evidence of prejudice, the plaintiffs' evidence on any limitations issue is irrelevant because the defendants' limitation period argument will fail. The defendants disagree with this analysis and will argue that the expiry of a limitation period is sufficient prejudice for the purposes of the motion.

[12] While the plaintiffs may succeed in their argument at the hearing of the service motion, the position they intend to argue should not be used to circumscribe the arguments that the defendants wish to advance on the motion. A similar argument was made in D'Addario, supra. The plaintiffs argued that they required information from the defendants about when they learned certain information. The defendants argued that those specifics were irrelevant and they should not be required to submit to an examination on them. The court stated, at para. 15:

I do not accept these submissions. While it certainly open to [the defendants] to argue on the motion to strike that particulars of the D'Addario allegations [page527] are not important, their position should not dictate the kind of case that the plaintiffs may wish to pursue on the motion.

[13] I agree that the plaintiffs cannot circumscribe the argument the defendants wish to make on the return of their service motion by taking the position that the information sought is not relevant on their view of the caselaw.

[14] I find that the defendants are entitled to examine the plaintiffs on issues relevant to the limitation period defence. For clarity, this includes questions about the plaintiffs' knowledge of Robert Marchand's whereabouts between December 2019 and February 2020.

Causes of Action Argument

[15] The defendants also wish to examine the plaintiffs in relation to the defendants' argument that the statement of claim does not plead viable causes of action.

[16] In support of this position, they have filed an affidavit of the trustee of the bankrupt Robert Marchand Construction Limited ("RMCL") of which the plaintiffs are creditors. That affidavit sets out the various factual reasons why, in the trustee's view, there was no improper conduct and the causes of action will not be proven on the facts.

[17] I note that taking the position that the evidence will disprove the causes of action pleaded, as the trustee deposes, is different than saying that, even if accepted and proven, the pleaded facts do not support a cause of action. I find the latter to be the correct test on a service motion. It is a pleadings test, not an evidentiary test.

[18] The defendants' argument is analogous to rule 21.01(1) (b) (motion to strike) or to Rule 26 where the court may refuse leave to amend a pleading where the amendment is untenable at law. In those instances, the decision to strike the pleading or grant the amendment is based on the pleading itself. It is not dependent on the evidence of a party. The allegations in the pleading are taken to be true for the purposes of the motion. As such, I find that the evidence of the plaintiffs as to the factual bases that support each of their pleaded causes of action is not relevant on the service motion.

[19] If the defendants intend to argue that, on the evidence, the allegations of fraudulent conveyancing and oppressive conduct will ultimately fail, that does not make the causes of action untenable at law. Nor does it make the plaintiffs' examination on the facts in support of their pleaded causes of action relevant for this motion. The motion is not to be turned into a motion for summary judgment on an evidentiary record. [page528]

[20] The defendants may argue on the service motion that the statement of claim does not plead a reasonable cause(s) of action on its face. The plaintiffs' evidence is irrelevant to that argument.

Abuse of Process

[21] Given my finding that the plaintiffs may be examined on the limitation period issue, I do not find the motion to be an abuse of process. It has not caused undue delay and the evidence to be sought is relevant to the defendants' response to the service motion.

Motion for Inspection of Documents

[22] After the motion materials were served, the defendants advised that they wished to withdraw their supplementary motion and its request for production of documents pursuant to a request to inspect, without prejudice to bring the motion back on after they had reviewed the documents that the plaintiffs had provided.

[23] While the plaintiffs preferred to argue part of that motion to circumscribe the request later, that would have effectively required argument of the motion to do so.

[24] In the interest of efficiency, I permitted that portion of the motion to be withdrawn without prejudice. If the defendants do not pursue the motion, the plaintiffs may seek their costs thrown away before me.

Summary

[25] The defendants may examine the plaintiffs on the limitation period issue, including their knowledge of the whereabouts of Robert Marchand, as set out above. They may not examine the plaintiffs on the pleaded causes of action, as the plaintiffs' evidence on those points is not relevant on the service motion.

Costs

[26] There was divided success on the motion. I order each party to bear their own costs.

Motion granted in part.

End of Document