Court File and Parties

COURT FILE NO.: CV-16-555680

RELEASED: 2021/07/02

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Danilo Ceballos v. Aviva Insurance Company of Canada, Action Honda and Paragon Appraisals Limited

BEFORE: Master Graham HEARD: June 1, 2021

APPEARANCES: Danilo Ceballos, plaintiff in person (moving party)

Jordan Black for the defendant Aviva Insurance Company of Canada

Zachary Silverberg for the defendant Action Honda

Avi Sharabi for the defendant Paragon Appraisals Limited

ENDORSEMENT

(Re: plaintiff’s motion to compel defendants to deliver

further and better affidavits of documents)

[1] On November 3, 2014, a Honda motor vehicle (“the Honda”) owned by the plaintiff Mr. Ceballos and insured by the defendant Aviva Insurance Company of Canada (“Aviva”) was involved in a collision and required repair. Mr. Ceballos took the vehicle to the defendant Action Honda where the damage was appraised by a representative of the defendant Paragon Appraisals Limited (“Paragon”). Action Honda repaired the vehicle in accordance with Paragon’s appraisal and Aviva paid for the repairs pursuant to Mr. Ceballos’ insurance policy.

[2] This action arises from a dispute between Mr. Ceballos and the defendants as to the extent of the damage to the Honda and the steps taken to appraise and repair the damage. Mr. Ceballos alleges that representatives of both Action Honda and Paragon fraudulently represented that there was no structural damage to the vehicle. He alleges that he did not authorize Action Honda to repair the vehicle in accordance with the Paragon appraisal and yet they completed the repair even after a representative of Aviva told him that she would instruct Action Honda to discontinue the repair. He claims a total of $18,000,000.00 from all of the defendants on the basis that they conspired to fraudulently misrepresent to him that the Honda had not sustained structural or frame damage so that they did not have to either replace the vehicle or compensate him based on its diminished value.

[3] Mr. Ceballos now moves against all three defendants for orders requiring them to deliver further and better affidavits of documents and for orders granting access to their computer hard drives to enable him to search for other relevant documents.

[4] In his notice of motion, Mr. Ceballos seeks only “an Order for further and better affidavits from the defendants”. However, in his factum, he claims for the first time as alternative relief “an Order to amend my Revised Fresh as Amended Statement of Claim incorporating a separate cause of action for spoliation of evidence and raising my claim for damages in addition to the adverse inferences against the defendants.”

[5] As stated by counsel for Paragon in their factum, Mr. Ceballos did not put the defendants on notice of any motion to amend the statement of claim in his notice of motion. Further, he has not filed a draft amended pleading so that the defendants could determine what position to take in response to any proposed amendments. I informed Mr. Ceballos that he had no motion to amend his statement of claim properly before the court and that if he wished to do so, he would have to bring a motion on proper notice to the defendants.

[6] I will address the relief sought by Mr. Ceballos from each of the individual defendants below.

Applicable rule and case law

[7] A motion for production of further documents or a further and better affidavit of documents is made under rule 30.06:

30.06 Where the court is satisfied by any evidence that a relevant document in a party’s possession, control or power may have been omitted from the party’s affidavit of documents, or that a claim of privilege may have been improperly made, the court may,

(a) order cross-examination on the affidavit of documents;

(b) order service of a further and better affidavit of documents;

(c) order the disclosure or production for inspection of the document, or a part of the document, if it is not privileged; and

(d) inspect the document for the purpose of determining its relevance or the validity of the claim of privilege.

[8] The test for when an order for further production under rule 30.06 is warranted was stated by Van Melle J. in Titanium Logistics Inc. v. B.S.D. Linehaul Inc. et al., 2019 ONSC 4955 (para. 10):

. . . [T]here must be evidence that documents have been withheld before an order under Rule 30.06 is appropriate and “speculation, intuition or guesswork are insufficient”.

[9] As indicated, the plaintiff seeks production of or access to the hard drives of the computers of all three corporate defendants.

[10] With respect to the plaintiff’s motion for production of the defendants’ hard drives, the defendant Aviva relies on the decision of Master Pope in Frangione v. Vandongen, 2010 ONSC 2823 (para. 49):

The documents [on the responding party’s hard drive] stand in no different light than paper documents, and the hard drive is the digital equivalent to a filing cabinet or document repository. A request to be able to search a party’s filing cabinets in the hope that there might be found a document in which an admission against interest is made would clearly not be allowed. Its digital equivalent should also not be allowed.

[11] Also on the issue of whether production of a party’s hard drive is appropriate, in Nicolardi v. Daley, [2002] O.J. No. 595, Master Dash stated (para. 31):

Investigating a party’s computers is a very intrusive exercise exposing all of a party’s stored data, whether or not related to the action in issue. This is particularly sensitive when dealing with the hard drive on a law firm’s computer. In the case of a law firm’s computers, there are issues that transcended the lawsuit between the law firm and one particular client, namely the expectation of privacy of other clients of the firm. Safeguards would therefore be required to ensure that the firm’s duty of confidentiality to other clients is not breached. Evidence would be required by a data recovery expert, . . . that the data recovery software used was sensitive enough to search for and recover only documents relevant to the matter in question and an undertaking would be required that the expert, the plaintiff and his solicitors not review, retain or disclose unrelated documents. [emphasis added]

[12] The defendant Aviva also relies on the comments of Leroy J. in Merpaw v. Hyde, 2015 ONSC 1053 (para. 26):

A computer hard drive contains stored data that is neither relevant nor material to a lawsuit and which contains information that is private and confidential and ought not to be produced. Relevant and material information stored on a computer hard drive is subject to production. Only in exceptional circumstances such as when there is convincing evidence that a party is intentionally deleting relevant and material information will the Court order production of the hard drive for examination. [emphasis added]

[13] Mr. Ceballos relies on Transpharm Canada v. MS Partners, 2017 ONSC 3104, in which the plaintiff alleged that the defendant accountants had breached their fiduciary duty to them and contravened Canadian auditing standards. Master Pope considered the plaintiff’s motion for an order for inspection of the accountants’ computer hard drive in circumstances in which the defendant had destroyed its working paper file for the plaintiff. In her review of the law on the issue, Master Pope noted (para. 39):

In Warman v. National Post Co., 2010 ONSC 3607 at paragraph 92, Master Short referred to Master Dash’s decision in Nicolardi v. Daley, supra, where Master Dash held with respect to the evidentiary requirement under rule 30.06 that it is not sufficient for a client to say that he believes there are more documents or it appears that documents are being hidden. If that were the situation, Master Dash found that evidence would be no more than a fishing expedition. Rather, he held that there must be specific evidence of non-disclosure. [emphasis added]

[14] In her analysis, Master Pope commented that the facts in the action gave rise to some suspicion as to the reason why the defendant shredded its working paper file, particularly where it did so in the context of suggestions that the president of the plaintiff, MacGregor, had “forged the signature of the defendant and falsely placed the defendant’s letterhead and Notice to Reader on its financial statements and provided it to its bank for financing purposes. Simply put, the defendant’s actions of destroying its working paper file in the face of its allegations of fraud against MacGregor is unusual and suspicious” (Transpharm, at para. 48).

[15] Master Pope concluded (at para. 54):

I am satisfied based on the unusual facts of this case where the defendant destroyed likely relevant evidence in the face of serious allegations of fraud against the plaintiff’s representative, withdrawing an audit after it was issued, and the inconsistent evidence of the defendant that it justifies allowing the plaintiff to inspect the defendant’s hard drive to determine whether all relevant documents have been produced by the defendant.

Motion against Aviva

[16] Mr. Ceballos seeks an order requiring Aviva to provide access to its hard drive to obtain the following:

1. Emails between Ms. Evans and Mr. Perkins in respect of his claim;

2. Ms. Evans’ emails to other parties;

3. The complete file from Aviva’s appraisal unit;

4. “Post-repair structural test”.

[17] Based on Titanium Logistics Inc., supra, the onus is on Mr. Ceballos to establish that Aviva has withheld documents from its productions. As stated in Merpaw v. Hyde, supra, “Only in exceptional circumstances such as when there is convincing evidence that a party is intentionally deleting relevant and material information will the Court order production of the hard drive for examination.”

[18] The issue is therefore whether Mr. Ceballos has provided sufficient evidence that Aviva has withheld documents, and that Aviva has intentionally deleted relevant information from its electronic records, to justify the court making the orders that he is seeking.

[19] Emails between Ms. Evans and Mr. Perkins in respect of his claim: Mr. Ceballos relies on the transcript of the examination of the Aviva representative Rachel Evans from her examination for discovery held December 17, 2020. Ms. Evans, who was an auto claims adjuster at the time of Mr. Ceballos’ initial claim, testified that following a telephone conversation with Mr. Ceballos, she “typically would have forwarded an e-mail to Mr. Perkins [Ms. Evans’ manager], provided him with your claim number and your concerns . . .” (question 32). Mr. Ceballos then requested a copy of that email (question 41) and Aviva’s counsel refused on the basis that Mr. Ceballos had indicated an intention to make a claim and the requested email was “an internal document that pertains to litigation or pending litigation.”

[20] Following the refusal to produce the requested email between Ms. Evans and Mr. Perkins, Aviva subsequently informed Mr. Ceballos, by counsel’s email correspondence of January 6, 2021, that “Aviva’s IT department has searched for emails between Evans and Perkins and no emails were found.”

[21] Mr. Ceballos submits that Aviva has failed to establish that communications between Ms. Evans and Mr. Perkins were protected by litigation privilege. However, it is impossible to consider the question of privilege in the absence of the actual document or documents in question. Aviva has said that they searched for emails between Ms. Evans and Mr. Perkins and could not locate any. If any such documents were located, I could review them under rule 30.06(d) to determine whether or not claims of privilege were properly asserted, but in the absence of such documents this is not possible.

[22] Mr. Ceballos submits that Aviva has failed to disclose when any emails “vanished from its records”. This may be the proper subject of a follow-up question on Ms. Evans’ examination for discovery, and it may give rise to an adverse inference against Aviva, but it does not open the door to the requested inspection of Aviva’s hard drive. Applying Merpaw v. Hyde, supra, there is no convincing evidence that Aviva has intentionally deleted relevant documents such as would warrant an order for production of the hard drive. There is also no evidence that the search conducted by Aviva’s IT department for the documents was in any way inadequate.

[23] Mr. Ceballos relies on Transpharm Canada, supra in which the court did order a search of the defendant’s computer hard drive. However, the decision in Transpharm to order the search was “based on the unusual facts of this case where the defendant destroyed likely relevant evidence”; in the case before me, there is no evidence that documents have been destroyed.

[24] In addition to providing no evidence that would warrant an order for production of Aviva’s hard drive, Mr. Ceballos has not complied with the requirement stipulated in Nicolardi, supra that “Evidence would be required by a data recovery expert, . . . that the data recovery software used was sensitive enough to search for and recover only documents relevant to the matter in question . . .”. Mr. Ceballos has provided no expert evidence that any search of the defendant Aviva’s hard drive could be conducted in such a way as to both exclude irrelevant documents and to protect the privacy of individuals who have no connection to his claim against Aviva and the other defendants.

[25] Ms. Evans’ emails to other parties: In email correspondence of December 5, 2019, Mr. Ceballos asked counsel for all three parties to produce various documents and this included a request that Aviva produce “any and all email messages that Rachel Hamilton (now Rachel Evans) has sent to and received from Hubert Chow, Chris Bansavatar, Grant Pickess, Bill Perkins and Miranda Titone with respect to my vehicle from November 4, 2014 onwards.” On the same day, Aviva’s counsel responded by email that “we have provided everything in our client’s control and possession that is relevant to this claim . . . by way of service of our draft Affidavit of Documents, in December 2016.”

[26] Mr. Ceballos’ request on this motion has been broadened to include Ms. Evans’ emails “to other parties” and not just Mr. Chow of Action Honda and Mr. Pickess and Mr. Bansavatar of Paragon. Once again, it is incumbent on Mr. Ceballos to show that there are documents that Aviva has failed to produce.

[27] Aviva takes issue with Mr. Ceballos’ contention that Aviva is concealing communications between its appraisal unit and Paragon. Aviva submits that an “event log” shows that the two companies were communicating and includes the identities of those involved and the dates of the communications. However, this event log does not appear to be identified in Aviva’s affidavit of documents or in their counsel’s January 6, 2021 correspondence to all parties providing answers to undertakings, nor does it appear to have been included in any of the motion materials.

[28] Aviva does not contest the relevance of the event log, nor do they claim that it is privileged. Accordingly, if they have not already done so, Aviva shall produce the event log referred to in paragraph 40 of their factum, including all communications contained therein between themselves, Paragon and Action Honda.

[29] Aviva claims privilege with respect to various documents in Schedule B of its affidavit of documents. However, the affidavit includes only two entries in Schedule B:

1. Claims adjuster’s file contents from Aviva Insurance. (litigation privilege)

2. Correspondence between Aviva Insurance and Dutton Brock [their counsel in this action]. (lawyer-client privilege and litigation privilege)

[30] With respect to category 2, Mr. Ceballos is not seeking production of any of the correspondence between Aviva and their lawyers. In any event, it is difficult to imagine that correspondence between Aviva and their lawyers would not be protected by lawyer-client privilege.

[31] With respect to category 1, absent a dated and itemized list of documents in the Aviva adjuster’s file, it is impossible to determine whether any of those documents are communications with any of the co-defendants and if so, whether they were prepared for the dominant purpose of contemplated or pending litigation. Aviva shall provide an itemized list of the documents currently identified in schedule B of its affidavit of documents as “Claims adjuster’s file contents from Aviva Insurance”. However, there is no basis on which to order that Aviva produce its hard drive for inspection.

[32] The complete file from Aviva’s appraisal unit: The main issue in the action is how the damage to Mr. Ceballos’ vehicle was appraised, so these documents would be relevant. Communications between Aviva’s appraisal unit and Paragon would be covered in the previous category. Aviva submits that documents relating to the appraisal process have been produced and that this request is “either redundant or overbroad or both”, and that there is no evidence that any relevant documents have not been produced. However, the specific documents in this category are not identified in Aviva’s affidavit of documents or in the answers to undertakings, nor do they appear to be contained in the motion materials. Aviva shall specify the documents that it has produced in this category.

[33] Once again, there is no basis for an order that Aviva produce its hard drive for inspection.

[34] Post-repair structural test: The defendants all submit that there was no post-repair structural testing undertaken and there is no evidence to the contrary. In the absence of any evidence that there was any testing or documentation of this nature, there is no basis on which to order any further production or inspection of the defendant’s hard drive. The motion in this regard is dismissed.

Motion against Action Honda

[35] Mr. Ceballos seeks an order requiring Action Honda to provide access to its hard drive to obtain the following:

1. An “internal report”;

2. All emails from Mr. Chow (Action Honda’s body shop manager) to other parties and to anyone at Action Honda;

3. “Post-repair structural test”.

[36] Internal report and emails from Mr. Chow: Mr. Ceballos alleges that Mr. Jose Sarte, a manager in the service department of Action Honda, informed him in a telephone conversation of March 10, 2016 (that Mr. Ceballos recorded) that he could not provide him with a copy of the internal report with respect to his vehicle because the report was for internal use only, but did not say that “the internal report” did not exist. The recording of this telephone conversation is exhibit A to Mr. Ceballos’ supplementary affidavit sworn April 20, 2021. The conversation was not in English, the language is unidentified, and no translation is provided.

[37] Mr. Ceballos’ summary of the recorded conversation in his affidavit is that Mr. Sarte claims that he can only provide him with a summary of the Honda’s vehicle repair and maintenance history but not a detailed full description. Mr. Ceballos also deposes that Mr. Sarte informed him that any notations or comments with respect to repairs and maintenance of the Honda are for Action Honda’s internal use only.

[38] The fact that the recording of the telephone conversation between Mr. Ceballos and Mr. Sarte of Action Honda is not in English and has not been translated by an independent translator means that the court cannot rely on it. I will rule on the motion in respect of this item based on the affidavit evidence of the parties.

[39] Mr. Ceballos further submits that Action Honda alleges that it has made best efforts to obtain a copy of its internal report but has failed to disclose when, how and why this report vanished from its records. Mr. Ceballos also submits that Action Honda has claimed lawyer-client privilege with respect to both the internal report and the post-repair structural test.

[40] In his responding affidavits on this motion, Mr. Sarte deposes that Mr. Ceballos asked him for the complete service history for the Honda motor vehicle. Mr. Sarte replied that Action Honda’s computer system includes only the basic summary records of the maintenance performed on any vehicle, including Mr. Ceballos’ Honda. This maintenance summary is the “summary” referred to in the recorded telephone conversation. The “internal documents” of which Mr. Sarte spoke in that conversation are Action Honda’s invoices. Action Honda has no other internal documents that it keeps as records of vehicles that it services.

[41] Mr. Sarte also deposes that all of Mr. Ceballos’ invoices and the summary of the services provided by Action Honda were provided with a letter dated January 5, 2021 from their counsel to Mr. Ceballos. Hubert Chow and Philip So (Action Honda’s secretary-treasurer) both indicate that neither they nor Action Honda have any written correspondence with Aviva or Paragon with respect to Mr. Ceballos’ Honda beyond what has already been produced by the parties. Mr. Sarte has access to Action Honda’s complete computer system and, after searching the system confirms that all of the records provided are all of Action Honda’s servicing, maintenance and repair records for Mr. Ceballos’ Honda. Further, Action Honda’s computer systems contain private data about their clients, including names, addresses and personal finance information.

[42] In his own affidavit, Mr. Chow adopts Mr. Sarte’s evidence and further deposes that he is unable to locate an email dated November 11, 2014 with which Mr. Ceballos would have been provided with the appraisal of the damage to his vehicle.

[43] Based on its responding evidence, Action Honda submits that it has produced all relevant documents in its possession, and that Mr. Ceballos has failed to provide any evidence that it has any other relevant documents. With respect to Mr. Ceballos’s contention that Action Honda has claimed privilege over an internal report and a post-repair structural test, Action Honda specifically states both that they have not claimed any such privilege but also that there are no such documents. Pursuant to an undertaking at examinations for discovery, Mr. Sarte of Action Honda conducted a further search of their records for any further documents and Action Honda’s counsel subsequently informed Mr. Ceballos that no further documents exist.

[44] The nature of the “internal report” that Mr. Ceballos seeks on this motion is clarified by Mr. Sarte in his affidavit and is not so much a report as internal service documents, all of which have been produced. The evidence from Action Honda is that they have produced all relevant emails in their possession except the email of November 11, 2014 that accompanied the appraisal of the damage to Mr. Ceballos’ vehicle, which they can no longer locate.

[45] Mr. Ceballos has not met his onus to establish that Action Honda has additional relevant documents that it has not produced so his motion for production of other internal documents and emails is hereby dismissed. Similarly, applying Merpaw v. Hyde, supra, there is no “convincing evidence that [Action Honda] is intentionally deleting relevant and material information” and therefore no basis on which to order production of Action Honda’s hard drive for examination. The fact that Mr. Chow could not locate a single email from November 11, 2014 is not a sufficient reason to grant Mr. Ceballos access to Action Honda’s hard drive.

[46] Post-repair structural test: As concluded above, in the absence of any evidence that there was any testing or documentation of this nature, there is no basis on which to order any further production or inspection of the defendant’s hard drive.

[47] For these reasons, Mr. Ceballos’ motion against Action Honda is dismissed.

Motion against Paragon

[48] Mr. Ceballos seeks an order requiring Paragon to provide access to its hard drive to obtain the following:

1. July 11, 2016 email from Grant Pickess (president of Paragon) to Ms. Evans of Aviva;

2. Emails between Mr. Pickess and Paragon’s appraiser Mr. Bansavatar and their emails to other parties;

3. “Post-repair structural test”.

[49] July 11, 2016 email from Grant Pickess of Paragon to Ms. Evans of Aviva: Paragon asserts that this email message is protected by litigation privilege and common interest privilege. Litigation privilege applies where there was a reasonable prospect of litigation when the document was created and the dominant purpose for creating the document was for use in litigation (see Sky Solar (Canada) Ltd. v. Economical Mutual Insurance Co., 2015 ONSC 4714 at para. 80). Common interest privilege is an extension of litigation privilege and exists where privileged information is shared among parties sharing a common goal or seeking a common outcome (see Pritchard v. Ontario, 2004 SCC 31, [2004] 1 SCR 809 at para. 24).

[50] Pursuant to rule 30.06(d), counsel for Paragon provided me with a copy of this email message so that I could determine the validity of the claim of privilege. As the document both refers to the statement of claim that was issued on June 28, 2016 and relates solely to the defence of the action, it was clearly created in the context of pending litigation, for use in that litigation, and is therefore covered by litigation privilege. The fact that its subject matter is the defence of the action against both Paragon and Aviva, who have a common interest in that regard, makes it also subject to common interest privilege. For these reasons, Mr. Ceballos’ motion to compel its production is dismissed.

[51] Emails between Mr. Pickess and Mr. Bansavatar and their emails to other parties: Mr. Ceballos’ submissions on this issue are confusing. On one hand, he submits that Paragon does not submit that adverse inferences could be drawn against it on the basis that it no longer has certain documents (factum para. 80), but on the other, he says that “Paragon prefers to have adverse inferences be drawn against it” (factum para. 83). Mr. Ceballos then goes on to submit, without providing any evidence, that “it is also highly likely that Paragon may have destroyed said documents to affect the outcome of the case.”

[52] The evidence in the responding affidavit filed by Paragon is that subsequent to the examination for discovery of Mr. Pickess on February 6, 2020, they did produce a copy of an email dated November 11, 2014 from Paragon’s appraiser Mr. Bansavatar to Hubert Chow of Action Honda attaching the appraisal for Mr. Ceballos’ vehicle. Further, Aviva’s representative Rachel Evans (formerly Rachel Hamilton) testified at her examination for discovery that she did not recall having any conversation or contact with Paragon at the time of the alleged events. Similarly, Action Honda’s representative Mr. Chow confirmed at his examination that other than receiving the November 11, 2014 email from Mr. Bansavatar, he had no further contact with Paragon.

[53] Paragon subsequently served an updated affidavit of documents on May 11, 2021 in which it included the November 11, 2014 email from Mr. Bansavatar and clarified that Paragon was claiming that the July 11, 2016 email from Mr. Pickess to Ms. Evans was subject to both litigation and common interest privilege. Paragon’s counsel stated in their covering letter that Paragon had no other documents to disclose.

[54] Mr. Ceballos’ contention that Paragon has destroyed documents is based on pure speculation on his part and is not a basis for an order for further production of documents or for inspection of Paragon’s hard drive. In the absence of evidence that Paragon has failed to produce relevant documents or has deleted relevant information from its electronic records, Mr. Ceballos’ motion for further production and for inspection of Paragon’s hard drive is dismissed.

[55] Post-repair structural test: As concluded above with respect to the other defendants, there is no evidence that any such testing was conducted and the motion in this regard is dismissed.

Conclusion

[56] The main issue in this action appears to be whether Mr. Ceballos’ Honda sustained structural damage. Mr. Ceballos relies on alleged inconsistencies in what he was told by various defendants’ employees as to whether the damage to his Honda was structural in nature. However, any discrepancies in what various defendants may have told Mr. Ceballos about whether they accepted that the damage was structural would not open the door to a search of the defendants’ hard drives. Also, applying Master Dash’s decision in Nicolardi, supra as quoted in Transpharm Canada, supra, Mr. Ceballos’ mere belief that documents have not been disclosed is not a sufficient basis to order inspection of those hard drives.

[57] For the above reasons, Mr. Ceballos’ motions against Action Honda and Paragon are dismissed.

[58] With respect to Mr. Ceballos’ motion against Aviva, for the above reasons, Aviva shall: (1) Produce the event log referred to in paragraph 40 of their factum, including all communications contained therein between themselves, Paragon, and Action Honda; (2) Provide an itemized list of the documents currently identified in schedule B of its affidavit of documents as “Claims adjuster’s file contents from Aviva Insurance”; and (3) Specify the documents that it has produced from its appraisal unit.

Costs

[59] The parties have filed costs outlines but not made submissions on costs. If they cannot agree on the disposition of the costs of the motion, they may make written submissions, not exceeding three pages each, the defendants within 20 days and Mr. Ceballos within 40 days.

MASTER GRAHAM

July 2, 2021