Court File and Parties

COURT FILE NO.: CV-16-6383

DATE: 2021/06/22

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: The Municipality of West Nipissing v. MX Constructors Inc., Steven Morrison and Bernard Morrison

BEFORE: Ellies R.S.J.

COUNSEL: Michael Sirdevan, for the Plaintiff William J. Leslie, for the Defendants

HEARD: June 18, 2021

ENDORSEMENT

[1] The defendants move for an order under r. 31.10 of the Rules of Civil Procedure R.R.O. 1990, Reg. 194, granting leave to examine a non-party, Marc Gagnon, under oath. The plaintiff resists that order.

[2] For the following reasons, the motion is granted.

[3] As counsel for the plaintiff correctly submits, the defendants must establish four things to succeed on the motion:

(1) That there is good reason to believe that the non-party has information relevant to a material issue;

(2) That they have been unable to obtain the information they seek from the other parties to the action and from the non-party they seek to examine;

(3) That it would be unfair to proceed to trial without providing the moving party an opportunity to examine the non-party; and

(4) That the examination will not unduly delay the commencement of the trial, involve unreasonable expense for other parties, or result in unfairness to the person the moving party seeks to examine.

See Mancinelli v. Royal Bank of Canada, 2017 ONSC 87, at para. 48.

[4] The plaintiff submits that the defendants have failed to establish that Mr. Gagnon has relevant evidence and that they cannot obtain that evidence without the order requested. Counsel for the plaintiff also submits that, because the defendants have failed to establish the relevance of Mr. Gagnon’s evidence, the defendants also cannot establish that it would be unfair to require them to proceed to trial without it.

[5] While I agree that the motion materials do not make it very obvious, I am nonetheless satisfied based on the answers to questions I asked during argument and my review of the transcript of the examination for discovery of the plaintiff’s representative that Mr. Gagnon has relevant evidence and that the plaintiff has made satisfactory efforts to get that evidence before resorting to r. 31.10. I will begin my reasons by putting the motion in context.

[6] In the underlying action, the plaintiff alleges that it paid invoices rendered by the defendant, MX Constructors Inc. (“MX”), which were fraudulent. The allegations of fraud can be grouped as follows:

(1) That MX rendered two invoices in the amount of $12,964.13 each in connection with unrelated projects to obtain payment of $25,928.26 in connection with a Dura Patcher machine that the plaintiff had previously refused to pay.

(2) That MX billed for more winter sand than it supplied.

(3) That MX billed for more granular material than it supplied on four road projects, namely Michel Road, Bear Lake Road, Promenade du Lac, and North Shore Road.

(4) That MX only completed 50 percent of the work for which it billed on the Cache Bay sidewalk replacement project.

[7] I am satisfied that Mr. Gagnon has relevant evidence to give with respect to the Dura Patcher allegation. The defendants have pleaded that MX was directed to render the two invoices in question and the evidence indicates that, if true, it would have been Mr. Gagnon who so directed them. Although the defendant, Steven Morrison, pleaded guilty as the directing mind of MX to criminal charges in relation to these invoices, counsel agree that the defendants are not precluded from defending the civil action on the basis that MX was directed by Mr. Gagnon to do what it did.

[8] Thus, the defendants have established that Mr. Gagnon has relevant evidence to give on the Dura Patcher allegation. Whether he has relevant evidence to give regarding the other three allegations is not as clear. However, like any witness who has evidence to give regarding one issue, the defendants should be free to examine Mr. Gagnon regarding the other issues to determine whether he has relevant evidence to give on those issues, as well.

[9] I am also satisfied that the defendants have made appropriate efforts to obtain Mr. Gagnon’s evidence before resorting to r. 31.10. Ordinarily, I would have expected those efforts to start with a request during the examination for discovery of a representative of the plaintiff for an undertaking to provide a summary of the evidence of Mr. Gagnon, who was an employee of the plaintiff at all relevant times. The defendants never made such a request. They maintain that they became aware of Mr. Gagnon’s role in the unfolding of events after receiving a copy of an investigative report that had been prepared for the plaintiff, which they received only after the examination for discovery of Jay Barbeau on behalf of the plaintiff.

[10] I am unable to accept that submission. The defendants were well aware of Mr. Gagnon’s significance as a witness at the pleading stage. He is referred to by title several times in the Amended Statement of Defence (see paras. 4, 17 and 19). In November 2017, after this action was commenced, Steven Morrison, the directing mind of MX, pleaded guilty to charges of fraud and uttering a forged document. During the hearing, he admitted that Mr. Gagnon was involved in those crimes. Mr. Gagnon’s significance as a witness is also obvious from the transcript of Mr. Barbeau’s examination, where Mr. Gagnon’s name appears as early as the fifth question and frequently thereafter. The defendants knew Mr. Gagnon had relevant evidence long before they received the investigative report.

[11] Nonetheless, I am satisfied that, in the circumstances of this case, the defendants would not have been able to obtain the evidence of Mr. Gagnon from the plaintiff, even if they had asked for it. I reach that conclusion for four reasons.

[12] First, Mr. Barbeau testified that he had no information about Mr. Gagnon’s evidence at the examination for discovery. At p. 34 of the transcript, q. 158, Mr. Barbeau testified that he never spoke to Mr. Gagnon about the invoices that he had approved because the plaintiff dismissed both Mr. Gagnon and Mr. Rifou, who reported to him, as a result of their involvement in the events giving rise to this action.

[13] Second, because Mr. Gagnon was dismissed as an employee, he was no longer within the control of the plaintiff at the time of the examination for discovery. Mr. Barbeau testified that employees of the plaintiff “took a step back” from Mr. Gagnon and Mr. Rifou, who were first placed on administrative leave and then fired (p. 35, q. 162). In these circumstances, it is fair to assume that Mr. Gagnon would not be very cooperative with the plaintiff.

[14] Third, the plaintiff at first refused to produce the investigative report referred to above notwithstanding the suggestion of counsel for the defendant that it would be relevant if it contained Mr. Gagnon’s evidence (transcript, p. 36). Counsel for the plaintiff refused to produce it on the basis that it was irrelevant (p. 38, q. 169). If he thought the report was irrelevant even though it contained references to Gagnon’s evidence, it is reasonable to conclude that he would have thought the same thing about a request for an undertaking to provide Gagnon’s evidence outside of the context of the report.

[15] Finally, the plaintiff’s attitude towards the relevance of Mr. Gagnon’s evidence continued even after the discovery. On October 22, 2019, after receiving the investigative report referred to above, counsel for the defendants wrote to counsel for the plaintiff, requesting that the plaintiff consent to an order that Mr. Gagnon and Mr. Rifou be examined as a non-parties. In a letter dated October 25, 2019, counsel for the plaintiff refused to consent, in part because the defendants “dealt directly with these individuals and [are] well aware of what took place.” What the defendants know, of course, is irrelevant. They are entitled to find out what Mr. Gagnon knows.

[16] Based on these facts, it would be unreasonable to hold that the defendants should have done more to obtain Mr. Gagnon’s evidence from the plaintiff.

[17] It is clear that the defendants also could not obtain Mr. Gagnon’s evidence directly from him. On February 3, 2020, counsel for the defendant wrote to both Mr. Gagnon and Mr. Rifou. He asked for an opportunity to meet with each of them in order “to discuss the issues raised in this matter.” Mr. Rifou responded and his affidavit has been filed in support of this motion. Mr. Gagnon, however, did not.

[18] Mr. Sirdevan submits that simply asking for a chance to speak to the witnesses is not enough. He submits that it tells us too little about the relevance of their evidence to justify making such an extraordinary order. However, as I have written above, the pleadings themselves make the relevance of Mr. Gagnon’s evidence clear. Copies of those pleadings were enclosed with the letter to Mr. Gagnon.

[19] It follows that, because the defendants have established the relevance of Mr. Gagnon’s evidence, I am in a position to assess whether examining him before trial is proportionate to the size and scope of the issues in this case and whether it would be unfair to require the defendants to proceed to trial without that evidence. In my view, given the central role Mr. Gagnon played in the facts of this case and his status as a witness who might be adverse in interest, or even hostile, to both sides of the dispute, this is one of those extraordinary cases in which his evidence should be taken prior to trial. It would be unfair to the defendants to have to call him or face him as a witness for the plaintiff without knowing what he is going to say.

[20] For these reasons, an order will issue granting the defendants leave to examine Marc Gagnon under oath. The defendants shall provide copies of the transcript of the examination, in accordance with r. 31.10(3).

[21] Given my comments about the inadequacies of the motion materials, I am not inclined to award costs. However, if the parties wish to make written submissions on the issue, they may be made as follows:

(1) On behalf of the defendants, within 30 days, limited to five typewritten pages, excluding attachments.

(2) On behalf of the plaintiff, within 20 days of receiving the defendants’ submissions, similarly limited.

M.G. Ellies R.S.J.

Date: June 22, 2021