COURT FILE NO.: CV-18-594953

DATE: October 9, 2020

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1917196 Ontario Ltd. o/a Save On Contracting v. Sadaf Kazmi, Shazia Tareen, Tasneem Zahir and Adnan Bashir;

BEFORE: MASTER C. WIEBE

COUNSEL: Stephen R. Dyment for 1917196 Ontario Ltd. o/a Save On Contracting (“Save On”);

Robert J. Kennaley for Sadaf Kazmi, Shazia Tareen, Tasneem Zahir and Adnan Bashir (“the Defendants”);

HEARD: September 10, 2020.

REASONS FOR DECISION AND COSTS AWARD

[1] In my trial management directions of August 17, 2020, at the request of Save On, I set a schedule for a motion by Save On for an order striking the statement of defence and counterclaim of the Defendants due to their alleged non-compliance with my peremptory directions of June 15, 2020.

[2] Essentially Save On alleges that the Defendants failed to deliver the ordered Scott Schedule on or before July 3, 2020, and that, as a result, the Scott Schedule could not be completed, and the ordered site visit and examinations for discovery could not take place and did not take place by the ordered deadlines.

[3] In my first trial management directions dated December 2, 2019, I ordered that the Defendants start the process of preparing a Scott Schedule by delivering one to Save On by January 31, 2020. I included as a schedule a form of a Scott Schedule. I required that the Defendants break out each item of their claim in the schedule, number each item, state their position concerning each item, and state the amount claimed for each item, all without arguing their case. I set a schedule for the completion of the Scott Schedule.

[4] The next trial management conference, originally scheduled for April 14, 2020, was adjourned due to the COVID-19 pandemic. It eventually took place on June 15, 2020. I learned that there had been significant non-compliance with my directions by the Defendants. One of the non-compliances was a failure by the Defendants to deliver a Scott Schedule at all. I ordered that the Defendants pay costs and I set a new schedule for the completion of interlocutory steps, including the completion of a Scott Schedule. I made the new deadlines peremptory on the Defendants.

[5] It is undisputed that the Defendants through their previous lawyer, Ms. Sheikh, attempted to comply with my directions concerning the Scott Schedule by delivering three documents at the deadline, July 3, 2020. The motion material contains these documents. The first document conforms to the form contained in my December 2, 2019 directions. It lists 37 items; it entitles each item; in a separate column entitled “defendants’ comments,” it briefly purports to describe each item; finally in a column entitled “price” it places a monetary value on each item and a total of those values. This chart is followed by two other charts: one that has the format of a Scott Schedule but without a title, and with different entries (39 in number), values and total; the other with no chart, but named a Scott Schedule, arranged as a Scott Schedule, but again with different entries (32 in number), values and total. The connection between these three documents was not made clear.

[6] The evidence indicates that Mr. Dyment took the position that these documents did not comply with my December 2, 2019 and June 15, 2020 directions. At his invitation, he met with Ms. Sheikh on July 5, 2020 to review with her what he considered to be the deficiencies in the Defendants’ documents. He wrote Ms. Sheikh emails on July 20 and 22, 2020 demanding a revised Scott Schedule by July 27, 2020 so that the parties could complete the ordered discoveries by the ordered deadline of August 31, 2020. Ms. Sheikh did not respond. On July 28, 2020 Mr. Dyment emailed my Assistant Trial Coordinator seeking an appointment with me. I scheduled a teleconference for August 17, 2020. The site visit ordered to take place on August 4, 2020 did not take place.

[7] On August 6, 2020, Mr. Winter from Mr. Kennaley’s firm served a Notice of Change of Lawyers confirming that Kannaley Construction Law had been appointed to represent the Defendants. On August 11, 2020 Mr. Winter emailed Mr. Dyment advising that he would be reviewing the Defendants’ Scott Schedule documents and would be bringing them into compliance with my directions if necessary. He stated that the Defendants intended to meet the discovery deadline of August 31, 2020. On August 13, 2020 Mr. Winter emailed proposing a schedule for the completion of a revised Scott Schedule that would see its completed by August 25, 2020, and the discoveries completed by August 31, 2020. On August 14, 2020 Mr. Dyment emailed his response rejecting the proposed schedule. He stated that the “primary issue” for the teleconference with me would be setting a new timetable and the costs of the Defendants’ further non-compliance and a motion to strike the defence.

[8] At the teleconference of August 17, 2020, I asked Mr. Dyment as to what his client wanted to do. He made no mention of a fresh timetable and costs. He told me that Save On wanted nothing but a motion to strike the defence. He admitted in argument on September 10, 2020 that his client had insisted on this course of action. As a result, I scheduled this motion to strike to be argued on September 10, 2020. I strongly advised counsel, however, to resolve this motion now that the Defendants had new and experienced counsel. No discoveries took place.

MOTION TO STRIKE

[9] At the argument of the motion on September 10, 2020, Mr. Dyment relied upon Rule 60.12. This is the rule that allows a court to strike a defence where there has been non-compliance with interlocutory orders. Mr. Dyment argued that the Defendants’ documents delivered on July 3, 2020 were non-compliant with my directions concerning the preparation of a Scott Schedule. He relied heavily on the text by Duncan W. Glaholt, Conduct of Lien, Trust and Adjudication Proceedings, 2020, (Toronto: Thomson Rueters), pgs. 286-292. This text makes it clear that Scott Schedules are essentially organized statements of particulars of allegations with enough detail to allow the opposing parties to understand the individual issues in the case and the amount being claimed for each issue. Conduct also made it clear that the document is flexible and may contain argument but need not.

[10] In my December 2, 2019 directions I expressly ordered that the parties “simply identify the items claimed, and not argue their case.” I required that the parties include their “positions” on each item. Therefore, what I required in this case was a basic schedule with a breakdown of the claims into items, titles and descriptions with enough detail to identify each item, and the values assigned to each item. I noted that Mr. Dyment did not provide me with any case authority as to the level of particularity required for every Scott Schedule. That makes sense to me, as the Scott Schedule is a flexible document that can be adapted to the needs of each case.

[11] When I reviewed the Defendants’ Scott Schedules as to whether they complied with my directions, I reached the conclusion that they were in general compliance with my directions but that this compliance was imperfect. The first Scott Schedule document did indeed break down many, if not most, of the items in the Defendants’ claim, and gave each of those items a title, a very brief description and a value. The form of the Scott Schedule that I provided was indeed used. The documents were served in time. There were however several items, such as “payments to Smooth Reno,” “garage doors,” “balcony decks” and “bathroom fixtures,” that were not adequately broken down and described. I also noted, concerning the second and third Scott Schedule documents, that there was no clear connection drawn between these two documents and first document, leaving me to wonder what these documents pertained to and what their relevance was. I also noted that many of the values in these second and third documents were not broken down. There is no doubt that the Defendants’ Scott Schedule needs to be combined and fleshed out. There needs to be significant revision, which under my directions of August 17, 2020 new counsel for the Defendants no doubt has now embarked upon.

[12] But the need to revise documents is not the kind of non-compliance that justifies striking the defence. Non-compliance that merits such a draconian measure must be of a kind that shows a repeated and blatant disregard of the legal process and court orders. That was clearly not the case here. As stated by the Court of Appeal in Bell ExpressVu Ltd. Partnership v. Torroni, 2009 ONCA 85 at paragraphs 24 and 35, in the context of a contempt motion, striking pleadings must only be used when a party has been given an opportunity to cure a default and has clearly failed to do so. I am satisfied that the Defendants made a good faith attempt to prepare a Scott Schedule, particularly since Scott Schedules are such flexible documents. That the effort fell short of the mark does not negate the effort itself. Furthermore, when new counsel became involved, the Defendants offered to revise the documents and to do so expeditiously in order to allow the discoveries to be done in the time ordered. This shows again the Defendants’ good faith attempt to comply.

[13] There is another point to be made. It was undisputed and I am mindful of the fact that Ms. Sheikh is not an experienced construction lawyer and had no prior experience with Scott Schedules. Where I fault Ms. Sheikh is the time it took for her to get experienced construction law counsel involved. However, a solicitor’s failings should not be readily visited upon her clients, particularly an order striking a defence when there has been a good faith effort to comply and when the standard of particularity required for a Scott Schedule is quite fluid.

[14] Mr. Dyment in his factum and in argument referred me to authorities concerning the test to be applied when there is non-compliance with interlocutory orders. In Van Aert v. Sweda Farms Inc. (Best Choice Eggs), 2018 ONCA 831(OCA) the Court of Appeal discussed the test to be applied when a party is seeking an indulgence after being in default of a court order. Rule 60.12 was not directly in issue, but the case was referred to. I distinguish this decision. In Van Aert there was clear and blatant non-compliance with a court order, as the appellant had not paid a five-year-old order for payment. In the case before me, I was not satisfied that there was such non-compliance.

[15] In Medonia v. Mulder, 2002 CarswellOnt 481, the court dealt with an appeal from a decision of a master that struck a defence due to persistent failure to comply with undertakings. The court noted in paragraph 4 that the master found that the appellants had a long history of failing “to make any meaningful efforts to comply with their undertakings, let alone their best efforts.” The master relied upon Rule 60.12. The court upheld the decision. I distinguish the ratio of this decision as well as there was a clear finding in Medonia by the master and appellate court that the appellant had not complied with court orders about undertakings. I do not find that to be so in the case before me concerning the Scott Schedule in issue. I also draw support from this decision, as the egregious behavior of the appellant in flouting the court orders was a factor in the decision. As I said earlier, in the case before me, I find that there was a meaningful and good faith effort to comply with my directions.

[16] As a result, I informed counsel verbally at the end of the argument that I was dismissing the motion in its entirety, and that I would be issuing my reasons in due course. These are my reasons.

COSTS

[17] The argument then turned to the question of costs. Mr. Dyment provided me with no costs outline for the motion. Mr. Kennaley provided me with a costs outline that showed an amount of $14,469.09 in actual cost and $13,022.18 in substantial indemnity costs. There was no amount for partial indemnity costs, the usual standard for costs awards.

[18] There is no doubt that the Defendants were the successful party in this motion, as they defeated the motion in its entirety. They deserve to be awarded costs.

[19] As to the quantum of costs, Mr. Kennaley argued that the Defendants should be awarded either the amount shown for actual costs or the amount shown for substantial indemnity costs. He argued that the motion by Save On was tantamount to a motion for a contempt order as the allegation was that the Defendants had not complied with a court order. He acknowledged that the motion was brought under Rule 60.12, but said it was really like a contempt motion under Rule 60.11. As such, he argued that the motion was entirely without merit given the Defendants’ good faith attempt to comply, a point that I have now confirmed I agree with. He called the motion “sharp practice” that deserved a severe sanction against Save On in costs. Indeed, he initially wanted me to order costs against Mr. Dyment personally given Mr. Dyment’s correspondence with Ms. Sheikh and Mr. Winter, and Mr. Dyment’s surprisingly hard position in argument when he pursued only a striking order and not new timetable order. However, Mr. Kennaley withdrew that request when Mr. Dyment explained the dynamic behind the motion.

[20] I do not accept this argument about a contempt order per se. Rule 60.12 is not Rule 60.11, the contempt rule. Orders under Rule 60.12 can be given by masters, while contempt orders under Rule 60.11 can be given only by judges. That is because contempt orders can lead to arrest and imprisonment.

[21] Having said that, I accept that there are similarities between the two rules, and that this motion was indeed a very serious one. As a result, I am not impressed by the surprisingly hard position taken by Save On at the trial management conference of August 17, 2020 given the correspondence between counsel prior to the argument and the Defendants efforts to comply. The evidence did not support that hard position at all. I will bear that in mind in my award.

[22] But there is another part of Mr. Kennaley’s argument on costs that impressed me the most. He showed that on August 21, 2020, namely four days after the trial management conference on August 17, 2020 and just after the Save On motion record was served, the Defendants delivered an offer to settle the motion on terms whereby the Defendants would pay Save On $2,000 and negotiate a new timetable if the offer was accepted by 12 noon on August 25, 2020, namely four days later. The offer specified that if it was accepted after 12 noon on August 25, 2020, Save On would have to pay the Defendants their substantial indemnity costs of this motion. This offer remained open for acceptance until the argument of the motion. There was no response from Save On, not even a counter-offer.

[23] Why Save On did not leap at this offer is simply beyond me. There is little doubt that this offer was more favourable to Save On than the result of the motion, as under this offer Save On would have received costs, which is now not the case. At minimum, the full weight of Rule 49.10 needs to be brought to bear.

[24] But there is reason for further sanction. The offer reflects exactly what I had advised the parties to do on August 17, 2020, namely reasonably try to resolve this motion now that the Defendants had retained experienced counsel. The fact that Save On did not accept this offer, and indeed made no counter-offer, shows me that it willfully did not follow my advice. I find, therefore, that it was the party that unreasonably forced this motion on and delayed this reference.

[25] As a result, I have decided to award the Defendants substantial indemnity costs from the date of the offer, namely August 21, 2020. The Defendants’ costs outline shows that they incurred actual costs of $10,791.60 x 1.13 (HST) = $12,194.51 (HST inclusive) on and after August 21, 2020. 90% of that amount is $10,975.06.

[26] I have reviewed the Defendants’ costs outline. It is not unreasonable as to quantum. This was a critical motion for the Defendants, as their defence and counterclaim were in jeopardy. The motion merited the involvement of senior counsel such as Mr. Kennaley. It merited the production of an affidavit, factum and book of authorities, which is what the Defendants produced. Nevertheless, I note that the bulk of the work was done by junior counsel, Mr. Winter, at a reasonable rate.

[27] This is a costs outline that Save On should have reasonably expected by forcing this serious motion on. I note that there was no complaint as to the quantum of the Defendants’ costs outline.

[28] I, therefore, award the Defendants $10,975.06 in substantial indemnity, to be paid by Save On to the Defendants in thirty (30) days from today, October 9, 2020.

DATE: October 9, 2020

MASTER C. WIEBE