2021 ONSC 102

Court File and Parties

COURT FILE NO.: CV-18-00606799-0000 DATE: 20210115 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: PRIMONT HOMES (VAUGHAN) INC. Plaintiff AND: MAPLEQUEST (VAUGHAN) DEVELOPMENTS INC. Defendant

BEFORE: Justice Glustein

COUNSEL: Scott McGrath and Stephanie Sonawane, for the Plaintiff David Reiter and Sanj Sood, for the Defendant Andrew Parley and Julia Flood, for 2373480 Ontario Inc.

HEARD: January 5, 2021

Reasons for Decision

Nature of Hearing and Overview

[1] This case is currently case managed under the program entitled “Provincial Civil Case Management Pilot – One Judge Model” (the Pilot Program), which was offered to parties under the “Practice Advisory Concerning the Provincial Case Management Pilot – One Judge Program” dated January 3, 2019 (the Practice Advisory).

[2] As I set out in more detail below, Primont Homes (Vaughan) Inc. (Primont) brings a claim in this action against Maplequest (Vaughan) Developments Inc. (Maplequest) for:

(i) The Delay Claim: Primont seeks $20 million in damages arising from the alleged delay by Maplequest for delivery of 206 serviced residential townhouse dwelling lots to be created by a new subdivision to be registered by Maplequest on lands it owned or was to acquire in the City of Vaughan, pursuant to an agreement of purchase and sale dated April 30, 2012 (the APS); and

(ii) The Additional Lots Claim: Primont seeks a declaration that it has a right of first refusal, at fair market value, on 51 additional serviced townhouse lots located in the new subdivision (the Additional Lots), based on an amendment to the APS executed on April 30, 2014 (the First Amending Agreement).

[3] As I set out in more detail below, 2373480 Ontario Inc. (237) is a non-party to this action. However, 237 claims an interest in the Additional Lots [1] pursuant to a conditional sale agreement with Maplequest and, as such, is affected by the Additional Lots Claim. 237 was also affected by an interim order of Justice Dow dated March 15, 2019 (the Interim Injunction), which enjoined both Maplequest and 237 from the purchase and sale of the disputed Additional Lots and imposed an undertaking on Maplequest to Primont (similar the undertaking Maplequest had given 237) to not transfer, sell or further encumber the property in dispute.

[4] Consequently, 237 has participated in this action. By endorsement dated December 19, 2019, I held that 237 could call witnesses and participate in discoveries and cross-examinations in relation to the Additional Lots Claim.

[5] On consent, by an endorsement at a November 21, 2019 case conference, I ordered that the issues for trial in this action be bifurcated, with the first trial to begin on May 11, 2020 for five days. The issues to be addressed at that trial related to the Additional Lots Claim and were set at an opposed hearing on December 19, 2019.

[6] The first trial (which I define as the Additional Lots Trial as set out in more detail below) is now scheduled to begin on February 8, 2021. In late December 2020, Maplequest proposed certain amendments to its statement of defence and counterclaim to plead (i) a limitations defence to the Additional Lots Claim, (ii) a limitations defence to the Delay Claim, and (iii) a causation defence to the Delay Claim. Maplequest seeks leave of the court for the amendments without a formal motion.

[7] Primont does not consent to the amendments. It submits that if it opposes the amendments, a formal motion would be required.

[8] Primont submits that if leave to amend is granted to Maplequest, the Additional Lots Trial can proceed, but only if the Additional Lots limitations issue is addressed at the trial of the Delay Claim issues (along with any limitations or causation issues relating to the Delay Claim).

[9] Maplequest submits that if the court grants leave to amend its statement of defence and counterclaim, the Additional Lots Trial can proceed, but only if the Additional Lots limitations issue is heard with the current Additional Lots Trial issues. Maplequest submits that the Delay Claim limitations and causation defences should be addressed at the Delay Trial, after the court hears the Additional Lots Trial (including the Additional Lots limitations defence).

[10] The issues before the court at this hearing are:

(i) Can the Additional Lots Trial proceed on February 8, 2021, and if so, on the basis of which issues?

(ii) Given the conduct of the parties with respect to interlocutory proceedings to date, should this action continue to be managed under the Pilot Program?

[11] For the reasons that follow, I order that the Additional Lots Trial can no longer proceed as a bifurcated matter. The Additional Lots Claim must be heard together with the Delay Claim in one trial. Otherwise, there is a significant risk that a bifurcated process would result in inconsistent judgments on credibility issues arising from the same or similar evidence. Neither process proposed by the parties is consistent with settled appellate case law prohibiting bifurcated partial summary judgment motions, nor should be adopted when bifurcated trials raise the same concerns.

[12] I also order that this action be removed from the Pilot Program. Every interlocutory dispute in this case, including the present scheduling issue, has been fought to the bitter end with full submissions by the parties at formal hearings. No party has been willing to use the “informal procedures” through case conferences, prescribed under the Pilot Program.

[13] Master Josefo as the case management master, and I as case management judge, have been engaged repeatedly in disputed interlocutory matters which have been resolved through formal hearings rather than by informal procedures. More such opposed interlocutory matters are anticipated in the future, including possibly an opposed amendment motion.

[14] The consequence of such conduct is for the parties to lose the “premiums” [2] of the Pilot Program, which allows for the court to set a trial date, and to have the same judge hear the trial. Those premiums are based on a compact between the parties and the court that the parties will cooperate through informal procedures. When the compact is ignored by the parties, the action should not proceed under the Pilot Program.

[15] While I remove this action from the Pilot Program, I will stay seized for the case management of the action under Rule 77 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as will Master Josefo for issues within the master’s jurisdiction. This action is not suitable for the Pilot Program. However, case management will assist the parties to move the action forward with a single judge and master addressing interlocutory proceedings and scheduling matters within their respective jurisdictions.

Facts

The Primont Claim

[16] The statement of claim in this action was issued on October 11, 2018 and served five months later. There are two main components of that claim.

[17] Under the Delay Claim, Primont seeks damages of $20 million “for delayed delivery of 206 serviced lots and other breaches of the APS … including delayed closing costs, increased construction costs, loss of expected profits, increased financing costs and liabilities to home purchasers for delayed closing under the Ontario New Home Warranties Plan Act, RSO 990 [sic], c [sic] O.31”.

[18] Under the Additional Lots Claim, Primont seeks (i) a declaration that the parties were subject to a “binding agreement for [Primont] to acquire an additional 51 serviced townhouse lots from [Maplequest]”, [3] (ii) “a declaration that Maplequest breached the ROFR Agreement”, and (iii) “an order for specific performance of the ROFR Agreement”.

[19] Primont also seeks “interim, interlocutory and permanent injunctions restraining [Maplequest] from marketing, offering for sale, encumbering or otherwise disposing, transferring or dealing in any way with the ROFR Lots [the Additional Lots]”.

The 237 Claim

[20] 237 has brought a separate action in relation to the Additional Lots. [4] 237 alleges that:

(i) It purchased the Additional Lots through a conditional agreement of purchase and sale (the “Conditional APS”) with Maplequest;

(ii) As a result of Maplequest’s delay in closing, 237 assigned its interest in the Conditional APS to a company which 237 asserts is related to Maplequest, for payment of $19 million;

(iii) Maplequest agreed to indemnify 237 if the assignee company defaulted on its payment obligations to 237;

(iv) 237 has the right to step back into the Conditional APS upon default; and

(v) The assignee company only paid $9 million of the $19 million due before default.

[21] Consequently, 237 has sued Maplequest and the assignee. While 237 primarily seeks payment of the amounts it claims are owing, it reserves the right to make a claim on the Additional Lots and submits that, if Maplequest is required to sell the Additional Lots, the proceeds of sale should be paid to 237.

Initial Steps in the Action Before Transfer into the Pilot Program

[22] On March 15, 2019, Justice Dow granted the Interim Injunction, which, inter alia, prohibited Maplequest from dealing with the Additional Lots.

[23] By endorsement dated April 12, 2019, Justice Dow ordered that the Interim Injunction remain in effect until the parties could return before him to fully argue whether the injunction should be maintained or dismissed. The return of the injunction motion was to take place after various preliminary motions were addressed by him and by a master in September 2019, following which the parties were to agree on a timetable, or have the timetable fixed by Justice Dow at a subsequent chambers appointment.

[24] Maplequest served its statement of defence and counterclaim on May 22, 2019.

[25] On consent, the parties requested that the action be accepted into the Pilot Program. Justice Firestone (then Civil Team Lead – Toronto Region, and now Regional Senior Justice) [5] advised counsel by letter dated October 17, 2019 that he had (i) accepted the action into the Pilot Program, and (ii) appointed me as case management judge.

The November 21, 2019 Case Conference

[26] The first case conference after transfer into the Pilot Program occurred on November 21, 2019. At that time, the parties discussed whether to continue with the injunction proceedings or whether a faster and less costly resolution could be structured.

[27] In particular, the issue of bifurcating the trial was discussed at the case conference. The parties agreed that addressing the Additional Lots issue in a bifurcated trial would provide a faster and less costly resolution of the Additional Lots issue in contrast to the injunction proceedings which still would have required the merits to be addressed at a trial.

[28] Under the bifurcated approach, if Primont could not establish a right of first refusal under the First Amending Agreement, or the right to specific performance of such a right of first refusal (if found to exist), then (i) the return of the injunction proceedings would not be necessary and (ii) 237 would no longer be involved in the Primont claim and could continue with its own litigation against Maplequest. A bifurcated process would have avoided attendances at two separate proceedings (injunction and trial) to address the Additional Lots Claim.

[29] At the case conference, the parties advised the court that a bifurcated Additional Lots Trial would be determined based on the text of the First Amending Agreement, with additional evidence of the factual matrix leading up to the signing of the agreement. There was no discussion of either limitations issues or any credibility issues relating to the Additional Lots Claim that might overlap with a later trial of the Delay Claim.

[30] On the consent of counsel, and based on the above submissions at the case conference, the court approved the proposed bifurcated structure under Rule 6.1.01 of the Rules of Civil Procedure, which allows, on consent, a separate hearing on one or more issues in a proceeding.

[31] All parties affirmed they wanted to proceed as early as possible. Consequently, I scheduled the Additional Lots Trial within six months, to be heard for five days starting May 11, 2020, with a strict timetable to ensure all steps prior to trial were completed, under the terms of the Pilot Program that “[a]t a relatively early stage of the proceeding, the case management judge will fix a trial date … and impose a schedule for completing necessary steps prior to trial”.

[32] However, at the November 21, 2019 case conference, the parties could not agree on the scope of the issues to be determined at the Additional Lots Trial. In my endorsement, the parties were asked to attempt to resolve the dispute between themselves but were not able to do so.

[33] A full hearing was required to address the scope of the issues to be addressed at the Additional Lots Trial. That hearing was scheduled for December 19, 2019.

The December 19, 2019 Hearing

[34] At the December 19, 2019 hearing, the court fixed the scope of issues for the Additional Lots Trial.

[35] Both parties agreed on two issues to be addressed: (i) the enforceability of a clause in the First Amending Agreement which Primont relied upon for its alleged right of first refusal, and (ii) determination of the lots to which the clause applied.

[36] However, Maplequest also wanted two other issues to be determined at the Additional Lots Trial: (i) entitlement to specific performance and (ii) terms of specific performance (if Primont was entitled to such relief). Primont opposed Maplequest’s position.

[37] Primont wanted the rights of 237 to be determined at the Additional Lots Trial. 237 opposed that position on the basis that it was not a party to the Primont action and, as such, 237’s rights under the Conditional APS could not be addressed even if the full claim went to trial.

[38] I agreed with Maplequest that entitlement to specific performance was a “more narrow issue” which could be determined at the Additional Lots Trial. I held that the determination of the entitlement issues, along with the two issues agreed upon by the parties, “could resolve all substantive matters and obviate the need for a lengthy, costly trial [on the Additional Lot issues] when this matter should be resolved expeditiously on the rights of the parties”.

[39] I did not agree with Maplequest’s position that the terms of specific performance should be an issue at the Additional Lots Trial, as I found that “it will raise evidentiary and expert issues which will render a mini-trial meaningless since all matters will be at play”.

[40] I accepted 237’s position that the issue of its rights was not before the court. I further held that addressing 237’s rights during the Additional Lots Trial would not be appropriate “because the length of the trial would expand significantly”. I held that 237 could participate at the Additional Lots Trial by calling witnesses and participating in discoveries and cross-examinations.

[41] As at the November 21, 2019 case conference, all parties proceeded on the basis that the Additional Lots and Delay Claims issues could be readily bifurcated, based on the proposed issues for the Additional Lots Trial. In particular, there was again no discussion of limitations issues, nor any credibility issues that might overlap with a later Delay Trial.

[42] Consequently, on the basis of my December 19, 2019 endorsement, the three issues to be addressed at the Additional Lots Trial were (i) the enforceability of the clause in the First Amending Agreement which Primont relied upon for its alleged right of first refusal, (ii) determination of the lots to which the clause applied, and (iii) entitlement of Primont to specific performance.

Disputed Interlocutory Matters Following the December 19, 2019 Case Conference

[43] The court was required to schedule a motion for security for costs as part of the December 19, 2019 endorsement, since the parties could not resolve the issue through an informal process. While that motion was eventually resolved on consent, the parties filed full materials, and bargained “down to the wire” (as described by Master Josefo in his endorsement) on remaining issues which could not be resolved at a pre-hearing case conference held by Master Josefo on May 22, 2020, two weeks before the June 3, 2020 scheduled motion.

[44] During the course of examinations for discovery, hundreds of refusals were maintained by the parties. The parties sought to argue approximately 200 refusals. I transferred that motion to Master Josefo by endorsement dated July 8, 2020. Master Josefo heard the motion expeditiously on July 21, 2020. Again, full submissions were made to the court.

The Issue of Limitation Periods is Raised at the December 22, 2020 Case Conference

[45] In mid-December 2020, the court requested that the parties attend at a telephone case conference to review the status of the matter prior to the anticipated February 8, 2021 Additional Lots trial date (which had been rescheduled from May 11, 2020 due to the COVID-19 pandemic and the additional disputed interlocutory proceedings following my December 19, 2019 endorsement). While a trial management conference had been scheduled for January 18, 2021, the court wanted to ensure that all steps were (or would be) completed prior to the trial date.

[46] That case conference was scheduled for December 22, 2020.

[47] At the case conference, Primont advised the court that on December 18, 2020, it had received a proposed amended statement of defence and counterclaim from Maplequest which raised, for the first time, limitations defences to both the Additional Lots and Delay Claims, as well as an additional causation defence for the Delay Claim.

[48] In particular, Maplequest sought leave to amend its statement of defence and counterclaim to plead that:

(i) With respect to the Additional Lots Claim, Primont was aware by no later than January 2016 that 237 had purchased the Additional Lots, through discussions with Ruby Sangha (a real estate broker), Robert Gray (a real estate lawyer), and 237’s principal, Vince Vigliatore (Vigliatore). Consequently, Maplequest sought to plead that the Additional Lots Claim was statute-barred as the claim was issued on October 18, 2018;

(ii) With respect to the Delay Claim, Primont was aware of the delays by at least the April 30, 2014 date of signing the First Amending Agreement, since those delays “underlay and/or [were] behind the parties’ entry into the First Amendment Agreement”. Consequently, Maplequest sought to plead that the Delay Claim was statute-barred as the claim was issued on October 18, 2018; and

(iii) Any damage arising from the Delay Claim was not due to any purported delay of Maplequest, since the damages “would have resulted irrespective of any such act or omission by Maplequest, or those for whom it is responsible at law”.

[49] Primont advised the court that it was not prepared to consent to the amendment, at least if the effect of such consent was that the limitations defence on the Additional Lots Claim would be heard as an issue at the Additional Lots Trial. Maplequest advised the court that its position was that the limitations defence on the Additional Lots Claim must be heard as an issue at the Additional Lots Trial.

[50] At the December 22, 2020 case conference, the court did not have a copy of the proposed amended defence and counterclaim, nor had any of the parties advised the court that this new issue had arisen. While the court attempted under the Practice Advisory to seek a resolution through informal procedures, the parties again could not agree and required a formal hearing.

[51] The parties at the case conference could not agree on whether the amendments should be permitted and, if so, on what issues were to be included in the Additional Lots Trial. Consequently, the present hearing was scheduled for January 5, 2021, so that the court could consider how to address the upcoming Additional Lots Trial.

[52] The parties prepared written submissions prior to this formal hearing.

Analysis

[53] At the present hearing, Primont advised the court in its written submissions that it “did not consent to any of the amendments proposed by Maplequest at this time” and that “if it opposes the amendments, a formal motion should be scheduled by Maplequest”. This is yet another interlocutory issue which may not be resolved through an informal procedure and may require a formal motion.

[54] There were two issues at this hearing: (i) whether the Additional Lots Trial could proceed as a bifurcated trial in light of the proposed Additional Lots limitations defence and (ii) whether this action should continue to proceed under the Pilot Program.

[55] The parties raised the first issue. For the reasons I discuss below, I find that neither scheduling position proposed by the parties avoids the risk of inconsistent judgments. Rather, I find that a single trial must be scheduled to address all issues.

[56] At the hearing, I raised the second issue with the parties in light of the history of the file and my concern that the parties had not conducted themselves in a manner consistent with the intent of the Pilot Program. For the reasons I discuss below, I remove this action from the Pilot Program, although Master Josefo and I will remain in a case management capacity.

[57] I review each of the issues below.

Issue 1: Can the Additional Lots Trial Proceed in Light of the Proposed Additional Lots Limitations Defence?

(i) The Scheduling Issue Before the Court

[58] Maplequest submits that amendments are to be allowed at any stage of an action, unless either direct non-compensable prejudice would result, or the amendment is scandalous, frivolous, vexatious or otherwise is an abuse of process: 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., 2017 ONCA 42, 135 OR (3d) 681, at para. 25.

[59] Primont advised the court at the hearing that it may oppose a Maplequest motion to amend the defence to add limitations defences on the basis that it does not disclose a tenable cause of action since Primont submits that the applicable limitation period is 10 years under the Real Property Limitations Act, R.S.O. 1990, c. L. 15 (RPLA).

[60] The issue of the motion to amend is not before the court, as Primont was not prepared to consent on an informal basis and may require a formal interlocutory motion before a master to determine that issue.

[61] I review the scheduling positions of each of the parties below.

(ii) Primont’s Position

[62] Primont submits that the Additional Lots limitations defence (regardless of whether Maplequest obtains leave to amend its statement of defence at a subsequent hearing) cannot be heard at the Additional Lots Trial. Primont submits that the issues in the Additional Lots Trial must be limited to the three issues set out in my December 19, 2019 endorsement, with the Additional Lots limitations defence issue to be heard with the Delay Trial.

[63] I do not agree.

[64] Primont’s position would undermine any finality of a trial decision in the Additional Lots Trial. Even if the court (i) agreed with Primont that it had a right to purchase the Additional Lots, (ii) determined which lots were subject to the agreement, and (iii) held that Primont was entitled to specific performance, the court would be unable to give any effect to such a decision since the limitations issue (under the Primont position) could only be addressed at the Delay Trial.

[65] Appeals from a decision on the Additional Lots Claim, without consideration of the Additional Lots limitations defence (assuming leave is granted to amend the statement of defence and counterclaim), would engender wasted costs, delay, and would be inimical to the goals of case management. There would be no benefit in the parties spending years addressing issues which could become moot if the Additional Lots Claim is statute-barred.

[66] On this basis alone, I would not make the scheduling order sought by Primont. It is not sensible for a court to make a finding that the right of first refusal is in effect but then have that decision held in abeyance until the limitations issue is determined at another trial, particularly as the second trial was intended to address the Delay Claim and not the Additional Lot Claim.

[67] Further, the Primont approach is inconsistent with settled appellate law, which precludes bifurcation of issues or defendants on partial summary judgment unless exceptional circumstances exist such that there is no risk of inconsistent judgments.

[68] There are numerous appellate cases that restrict partial trial determinations by the court in the context of summary judgment. The leading case is Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, in which the court set aside the decision of the motions judge who had granted partial summary judgment based on a limitations defence.

[69] The court held, at para. 34:

A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost-effective manner. Such an approach is consistent with the objectives described by the Supreme Court in Hryniak and with the direction that the Rules be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

[70] The court in Butera expressed concern about the risk of inconsistent judgments arising since the same evidence would be addressed in both the partial summary judgment motion and at trial. At paragraph 26 of its decision, the court referred to the following passage from Corchis v. KPMG Peat Marwick Thorne, [2002] O.J. No. 1437 (C.A), at para. 3:

[P]artial summary judgment ought only to be granted in the clearest of cases where the issue on which judgment is sought is clearly severable from the balance of the case. If this principle is not followed, there is a very real possibility of a trial result that is inconsistent with the result of the summary judgment motion on essentially the same claim.

[71] Similarly, in Mason v. Perras Mongenais, 2018 ONCA 978, the Court of Appeal reversed the decision of the motions judge who granted summary judgment against one of the defendants. The court expressed a concern that the evidence in the bifurcated partial summary judgment motion would have to be considered by the trial judge, raising the risk of inconsistent judgments. The court held, at paras. 37-38:

Further, the result of the motion judge's conclusion is that one side of that tripartite arrangement has been removed from review and consideration at the trial. That result appears to directly conflict with the "interest of justice" element of the summary judgment approach laid out in Hryniak. In particular, I point to the following observation of Karakatsanis J. at para. 60:

For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice.

Those concerns loom large in this case, especially regarding the terms of Perras' retainer and whether he fulfilled his professional obligations in that regard. The answers to those questions are inextricably connected to the dealings that took place between the appellant, Perras and Chambers. One simply cannot separate those dealings into discrete compartments and pretend that a determination of one does not have any impact on the others.

[72] In the present case, the same concerns of inconsistent findings of fact “loom large” if the Additional Lots limitations defence is not heard with the Additional Lots Claim.

[73] The Additional Lots limitations defence depends primarily on numerous alleged discussions between Primont’s principal Joseph Montesano (Montesano) and 237’s principal, Vigliatore. Maplequest alleges that (i) Vigliatore repeatedly raised the issue of 237’s purchase of the Additional Lots with Montesano, and (ii) Montesano expressly asked Vigliatore in 2016 if Primont could purchase 237’s Additional Lots. Maplequest also alleges that Montesano had discussions with Sangha and Gray in which 237’s purchase of the Additional Lots was raised.

[74] Primont proposes that those issues be considered at the second trial (if leave to amend is granted).

[75] However, the same evidence is relevant to Maplequest’s submission as to the enforceability of the alleged right of first refusal clause in the First Amending Agreement, which is one of the issues in the Additional Lots Trial as set out in my December 19, 2019 endorsement. At that trial, Maplequest will ask the court to consider the factual matrix surrounding the First Amending Agreement, in addition to the language of the clause, to argue that Primont’s alleged right of first refusal is not enforceable. Maplequest will rely on the same alleged discussions between Montesano and Vigliatore/Sangha/Gray to argue that Primont’s interpretation of the clause is only a “construct” because Primont bases its claim on a contract it never understood to have existed.

[76] Primont’s alleged failure to take any steps to enforce its alleged right of first refusal, in the factual matrix of its alleged knowledge that 237 had purchased the Additional Lots, will be an issue in the Additional Lots Trial. Consequently, evidence as to when Primont knew of 237’s purchase of the Additional Lots is relevant both to enforceability of the clause and to any limitations defence; those issues cannot be bifurcated under settled appellate law.

[77] Consequently, I do not accept Primont’s position that (i) the Additional Lots Trial should proceed only on the three issues initially set by the court, and (ii) the Additional Lots limitations defence should be determined only at the Delay Trial (if the amendment is granted).

(iii) Maplequest’s Position

[78] Maplequest submits that the Additional Lots limitations defence should be (i) severed from the Delay Claim limitations defence, and (ii) heard together with the three other issues at the Additional Lots Trial. Maplequest submits that the Delay Trial can then proceed on issues related to the Delay Claim without a risk of inconsistent judgments. I do not agree.

[79] The limitation period issues in both proposed trials will engage findings of credibility by the court. For the reasons I discuss below, I find that there is a reasonable risk that credibility issues arising out of the Additional Lots limitations defence could affect the credibility issues arising out of the Delay Claim limitations defence.

[80] There is a heated credibility dispute on the issue of when Primont learned of the purchase by 237.

[81] As I discuss at paragraph 73 above, Maplequest relies on Montesano’s alleged knowledge of 237’s purchase of the Additional Lots. Primont vehemently denies all such discussions, claiming that Montesano did not know that 237 had purchased the Additional Lots until he received Vigliatore’s affidavit in 2019 in the course of the initial injunction material.

[82] The credibility of Montesano and Vigliatore is of seminal importance to the Additional Lots limitations issue.

[83] However, when the court makes the necessary credibility findings related to Montesano in addressing the Additional Lots limitations defence, it should not conduct a severed credibility analysis with respect to the Delay Claim limitations defence at a separate Delay Claim trial. Carving out separate limitation periods and their concurrent credibility issues raises the risk of inconsistent judgments.

[84] On the Delay Claim limitations issue, the factual matrix of the First and Second Amending Agreements will be pivotal. Primont will submit that discoverability should be delayed because of conversations it alleges took place with Maplequest’s representatives. Under s. 5(1)(a)(iv) of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, discoverability does not run until a plaintiff knows or ought to have known that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it. Consequently, the evidence as to those discussions about the delays, and the basis for and consequences of the amending agreements, could be important to the limitations issue.

[85] Conversely, Maplequest will ask the court to accept its version of the evidence as to the content and scope of the discussions between the parties about the delay and the amending agreements.

[86] Save for exceptional circumstances in which separate limitations defences can be clearly and readily bifurcated, a court should not make findings of credibility on a limitations defence on one issue in a bifurcated trial if the court in the second trial will be required to make findings of credibility on a limitations issue affecting another claim, particularly when the credibility of the same person is concerned.

[87] In Service Mold + Aerospace Inc. v. Khalaf, 2019 ONCA 369, 146 OR (3d) 135, the Court of Appeal reversed the decision of the motions judge who bifurcated limitations issues. The motions judge had determined one limitations issue on a motion for partial summary judgment while leaving the remaining limitations issue for trial. The court set out the facts at paras. 1 and 2:

The respondent corporations, Service Mold + Aerospace Inc., and SMI Ventilation Products Inc., were defrauded by their bookkeeper, Ms. Nada Khalaf. She committed the fraud in two distinct ways. She used forged cheques [the “cheque fraud”] and made additional unauthorized payroll payments into her bank account [the “payroll fraud”]. The respondent corporations sued the appellant, the Toronto-Dominion Bank, claiming the appellant bank was strictly liable and liable in negligence for the cheque fraud, and liable in negligence for the payroll fraud.

The appellant bank defended both claims based on: (1) a Business Banking Agreement [the “BBA”] containing a verification clause and a limited liability clause that it claimed the respondent corporations had signed [the “BBA defence”], and (2) the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B [the “limitations defence”]. These were the sole defences to the strict liability claim relating to the cheque fraud; it denied negligence on the payroll fraud claim.

[88] The respondent corporations sought partial summary judgment only on the cheque fraud claim. In effect, the respondents sought to bifurcate the limitations issues pleaded for the cheque fraud and payroll fraud claims, by having one determined by summary judgment and one at trial.

[89] The Court of Appeal reversed the decision of the motions judge who rejected the cheque fraud limitations defence and granted summary judgment on the cheque fraud claim. The court held that the motions judge erred by not considering whether there was evidence from the payroll cheque claim that was proceeding to trial that could affect the limitations defence pleaded for the cheque fraud claim. The court held, at paras. 18 and 20:

In my view, the motion judge erred in principle when evaluating the risk of overlap in the evidence. She proceeded to partial summary judgment because she had not heard evidence about the payroll fraud during the summary judgment motion, there was "no indication that any additional evidence on the cheque fraud would be available at trial", there "may or may not be a different date" for commencement of the relevant limitation periods, and there would only "possibly [be] different office procedures and possibly different considerations as to when the plaintiffs ought to have been aware of the loss." Her orientation was wrong. In effect, she looked to see whether overlap had been demonstrated. To the contrary, she should not have proceeded to partial summary judgment unless she was satisfied affirmatively that the issues before her could readily be bifurcated without causing overlap that could lead to inefficient duplication or a material risk of inconsistent findings or outcomes.

More importantly, she gave insufficient weight to the risk of overlap in the evidence relating to the respective limitations defences. For example, the limitations defences to each claim engaged the office procedures in place, and required expert evidence that could be furnished by the same expert. Deciding the issue in respect of one claim while leaving it open on the other creates the very risk of inconsistency that is to be avoided.

[90] The same risk of inconsistency exists in the present case. The limitation period issue in both actions will require a credibility finding related to Montesano. Such a finding will require a review of all of his evidence in relation to his conduct with respect to his dealings with Sangha, Gray, and Vigliatore. To reiterate the court’s caution in Service Mold, at para. 20, “[d]eciding the issue in respect of one claim while leaving it open on the other creates the very risk of inconsistency that is to be avoided”.

[91] Further, Primont advised the court at the present hearing that if Maplequest is granted leave to plead limitations defences to both the Additional Lots and the Delay Claims, Primont would seek to amend its Statement of Claim or its Reply to (i) plead that the applicable limitation period is 10 years under the RPLA, (ii) allege that the discoverability principle applies such that Primont could not reasonably have discovered its claims, and (iii) allege that Maplequest engaged in concealment of the claims. All of these issues would raise common evidence for both limitations defences and further supports rejecting Maplequest’s approach of carving out the limitations defence issues into two trials.

[92] For the above reasons, I reject the position taken by Maplequest, in which it seeks to carve out one limitation period issue to be addressed in the Additional Lots Claim, while leaving the other limitations issue to be heard in the Delay Claim.

(iv) The Single-Trial Approach

[93] I find that a single trial is required to address all of the issues in this matter. The risk of inconsistent judgments, delay, and costs (both for an Additional Lots Trial and any appeals) is significant.

[94] A single trial would be required even if the amendment to plead the Additional Lot limitations defence is not allowed. The factual matrix relating to whether Primont was aware of 237’s rights will be relevant to Maplequest’s position that Primont’s alleged right of first refusal is only a “construct”, with such evidence being considered in the interpretation of the relevant clause in the First Amending Agreement. Any credibility finding made in that regard would result in the risk of inconsistent judgments on credibility when the same evidence may be at issue to address limitations issues arising from the Delay Claim.

[95] If the amendments are allowed, based on the settled principles set out in State Farm as summarized at paragraph 58 above, the risk of inconsistent rulings upon separate Additional Lots and Delay Trials becomes even stronger.

[96] Consequently, one judge will need to hear all of the evidence and make the factual and credibility findings common to all issues.

[97] Further, there is no need for any extensive delay for a single trial to be conducted. Discoveries still remain to be completed on the Additional Lots Claim and can include any delay issues. A considerable amount of work has already been done to produce documents for the Additional Lots Claim. With the assistance of case management, the remaining documents and discoveries can be completed promptly, with a trial date set shortly thereafter.

[98] In the present case, the parties consented to a bifurcated trial under Rule 6.1.01. However, that bifurcation was not based on a limitations defence, nor on credibility issues which now raise the risk of inconsistent judgments in the Additional Lots and Delay Trials. With the proposed amendment to plead limitations defences, the risk of inconsistent judgments is now clear. Bifurcating the trial would be inconsistent with settled appellate law.

[99] Consequently, the initial consent of the parties to have an Additional Lots Trial does not require the court to conduct separate hearings when the evidence establishes the concerns subject to the caution in Butera and other leading cases discussed above.

[100] For the above reasons, I order the scheduling of a single trial, and I do not accept either of the options proposed by the parties.

Issue 2: Whether This Action Should Proceed Under the Pilot Program

[101] This case raises the issue of whether parties ought to be able to proceed under the Pilot Program when they have demonstrated no intention in the past, nor any willingness in the future, to comply by the “rules of the game” necessary for the Pilot Program to succeed. Those rules require parties seeking case management under the Pilot Program to commit to using “informal procedures … wherever possible to resolve interlocutory disputes”.

[102] The commitment to use informal procedures is the price of admission into the Pilot Program, which provides parties with the important “premiums” of a single judge (i) managing the action at all stages including trial (not including settlement conference), and (ii) setting an early trial date with the parties then working with the court to set a schedule for completing necessary steps prior to trial.

[103] Admission to the Pilot Program comprises a compact between parties and the court. The parties benefit from the premiums, on the basis that they will not be burdening the judicial system with costly and lengthy interlocutory motions, for cases which meet the case management criteria set out in the Practice Advisory. Given the similarity between the factors for Rule 77 case management and those in the Practice Advisory, the compact is the critical distinguishing factor as to whether admission into the Pilot Program is appropriate.

[104] Consequently, under the Practice Advisory, an action can only be considered for participation in the Pilot Program if the parties “consent to the following terms of the pilot” (quoted verbatim):

a. The case management judge will preside at the trial of the case, and b. Interlocutory disputes will be resolved through informal processes, such as case conferences, and no formal interlocutory motions will be scheduled unless the case management judge orders otherwise.

[105] The parties would have been required to consent on those terms in order to obtain access to the Pilot Program. As I set out at paragraph 25 above, by letter dated October 17, 2019, Justice Firestone (as he then was) accepted the action for the Pilot Program and appointed me as case management judge.

[106] If the parties had not consented to the terms of the Pilot Program, they could have requested case management under Rule 77, and Justice Firestone could have considered the request on that basis. Instead, the parties certified consent to the terms of the Pilot Program, seeking the premiums of single judge management throughout trial and an early setting of the trial date. It was on that consent basis that Justice Firestone ordered that the action be placed into the Pilot Program.

[107] However, it is clear from the history of this file that none of the parties have sought to engage the informal process which is the basis for admission into the Pilot Program. To the contrary, every dispute between the parties has result in pitched battle, whether over hundreds of refusals, security for costs, or the scheduling issues addressed at this hearing.

[108] The parties acknowledged at the present hearing that future disputes would also require formal proceedings, including Primont’s position that Maplequest may be required to bring a motion to amend its defence and counterclaim. Primont also raised the issue of reconsidering whether to bring a motion on additional refusals from prior examinations for discovery should the amendments be permitted.

[109] At the present hearing, all parties submitted that they required case management to move this matter forward, given the significant disputes between the parties and the “take no prisoners” approach to litigating every interlocutory matter leading to trial.

[110] I agree that this action remains appropriate for case management. However, it is not appropriate for the Pilot Program.

[111] In the present case, the court fulfilled its commitment under the Pilot Program and set the May 11, 2020 trial date for the Additional Lots Trial at the November 21, 2019 case conference. The trial date was set less than six months from the first case conference, based on the issues presented to the court at the time. The parties then proceeded to litigate every interlocutory issue, including conducting cross-examinations, delivering lengthy written submissions, and scheduling attendances before the court.

[112] Even the issues to be dealt with at the Additional Lots Trial had to be determined by a formal hearing.

[113] I do not criticize the parties for taking a hard-fought approach to advance their interests. Counsel have been civil and professional throughout this matter. The monetary claims are significant and can justifiably raise interlocutory procedures requiring the pitched battles which have been fought and those future pitched battles to be fought.

[114] However, parties cannot ask the court to participate in the Pilot Program when the parties are not prepared to play by the rules of that program. The informal interlocutory process is a pivotal aspect of the program, necessary to have parties work together to save costs and time, while preserving limited judicial resources. I will not allow the matter to continue as part of the Pilot Program when the parties have not followed the rules of the program.

[115] In that regard, I rely on the approach taken by Justice Myers in Mayer v. Rubin, 2018 ONSC 1826. There, Justice Myers was the case management judge, but removed the action from case management because the goals of case management (streamlining the issues and reducing delay in the proceedings) were not being achieved by the case management process: at paras. 11-13. He held, at para. 14:

Case management only works where counsel are able to cooperate and to obtain instructions to do so from their clients. Case management can fail as well where counsel focus on their obligation to be zealous and fearless advocates while ignoring the concomitant obligation to do so “in a way that promotes the parties' right to a fair hearing in which justice can be done.” The quoted words are found right after the obligation to be fearless in Commentary [1] to Rule 5.1-1 of the Rules of Professional Conduct. The overriding commitment to fairness and justice is part and parcel of the obligation to be zealous and fearless advocates. Otherwise, we revert to trial by battle in which parties pay champions to assault each other. That is not justice as we know it.

[116] In the present case, I do not remove the action from case management, as I do not find that the parties are using case management as a tool to “pay champions to assault each other”. In good faith, the parties have many interlocutory disputes, which would benefit from Rule 77 case management by both a judge and a master. As I note above, I do not criticize the parties or counsel for their “zealous and fearless” advocacy of every interlocutory issue in this hard-fought dispute between real estate developers.

[117] There remain numerous contested issues which will need to be resolved before the matter can be set down for trial, and it would not be in the interests of justice to have different judges or masters address these issues on an ad hoc basis. A case management judge and master for the file would be appropriate, for matters within their respective jurisdictions.

[118] However, to allow this action to be included in the Pilot Program is inimical to the purposes of the program. Parties cannot obtain the Pilot Program premiums of a single judge hearing all matters including trial and obtaining an early trial date, without any effort to pay the costs of such premiums as set out in the Practice Advisory—the informal resolution of interlocutory matters for a “faster and less costly resolution of civil disputes”.

[119] At the present hearing, all counsel stated that the court’s intervention has assisted the parties in moving the action forward. However, that role is part of the case management function of the court, under Rule 77, and has no relation to the Pilot Program, which encourages informal resolution of all interlocutory matters leading to trial. If the parties had required case management under Rule 77 to address multiple hard-fought interlocutory issues before trial, they ought to have asked the court to appoint either a case management master or a case management judge, who could have organized the pitched battles with the consistency of addressing all related issues in the matter.

[120] Consequently, I will remain as case management judge under Rule 77, given my participation in the file over the past year. I will only address matters which fall within my jurisdiction, and will work with the parties to provide assistance where appropriate. Master Josefo will also remain as case management master for this action, as he has already ably managed the action to ensure prompt hearings of interlocutory matters to advance the action towards trial.

Ancillary Issues Arising from the Above Orders

[121] Maplequest’s request for leave to amend its statement of defence and counterclaim cannot proceed on an informal basis given the position taken by Primont that the proposed amendment is untenable. As with the other interlocutory proceedings to date in this matter, it may require a formal hearing and lengthy motion material. That motion is within a master’s jurisdiction and, if required, will be heard by Master Josefo, who has heard the other master’s motions in this matter. He will continue his effective case management of all interlocutory steps within his jurisdiction.

[122] As in any other case management file, I will work with the parties to ensure that interlocutory matters within my jurisdiction are addressed as quickly as possible and that a trial date is set as soon as possible once the matter is ready to be set down for trial.

[123] If the parties wish to attend at another case conference to address the issues arising out of these reasons, or seek a case conference before either me or Master Josefo to address interlocutory matters within our respective jurisdictions, counsel can contact our offices to do so.

Order and Costs

[124] For the above reasons, I order that a single trial take place. I vacate the dates for the proposed Additional Lots Trial. I remove the action from the Pilot Program.

[125] I order no costs of this hearing to Primont or Maplequest. Neither party was successful in the positions they advanced.

[126] 237 asked the court to confirm that the present reasons would not prejudice 237 from seeking any costs associated with this action, whether at an interlocutory stage or at trial. I agree and order that 237 (and the parties to this action) reserve their rights to seek costs related to the present litigation, if not otherwise ordered by the court.

GLUSTEIN J. Date: 20210115

2021 ONSC 102 COURT FILE NO.: CV-18-00606799-0000 DATE: 20210115 ONTARIO SUPERIOR COURT OF JUSTICE PRIMONT HOMES (VAUGHAN) INC. Plaintiff AND: MAPLEQUEST (VAUGHAN) DEVELOPMENTS INC. Defendants

reasons for decision Glustein J. Released: January 15, 2021

Footnotes

[1] (save for one of the additional blocks, being block 50 on Plan 65M-4550)

[2] I refer to the term “premium” in a similar manner to Justice Myers who adopted this term in Mayer v. Rubin, 2018 ONSC 1826, at para. 12, in which he referred to the “premium” of case management realized by parties who participate in case managed files.

[3] (which Primont refers to as the “Right of First Refusal” or “ROFR Agreement”)

[4] See footnote 1.

[5] (with responsibility as delegated by then Acting Regional Senior Justice Archibald for determining requests for case management, including participation in the Pilot Program)