COURT FILE NOS.: CV-19-621746 and CV-19-621746-A1
DATE: 2022 07 11
SUPERIOR COURT OF JUSTICE - ONTARIO
IN THE MATTER OF the Construction Act, RSO 1990, c C.30, as amended
RE: DIBRACON LTD., Plaintiff
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TMAV IRENE LTD., PETER SMITH PHARMACY LTD., MAGUED HANNALAH, also known as MICHAEL HANNALAH, MARTHEO LTD. and ROYAL BANK OF CANADA, Defendants
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SETLESS STUDIO LTD. carrying on business as SETLESS ARCHITECTURE, MICHAEL LAFRENIERE and TURNER & TOWNSEND CANADA INC., Third Parties
BEFORE: Associate Justice Todd Robinson
COUNSEL: M. Drudi, for the plaintiff R. Worsfold, for the defendants, TMAV Irene Ltd., Peter Smith Pharmacy Ltd., Magued Hannalah aka Michael Hannalah, and Martheo Ltd. E. Kurz, for the third party, Turner & Townsend Canada Inc. J. Little, for the third party, Setless Studio Ltd. and Michael Lafreniere
HEARD: July 4, 2022 (by videoconference)
REASONS FOR DECISION (Refusals and Undertakings)
[1] Each of the plaintiff, Dibracon Ltd. (“Dibracon”), and the defendants, TMAV Irene Ltd., Peter Smith Pharmacy Ltd., and Magued Hannalah aka Michael Hannalah (together, the “TMAV Defendants”), bring motions on undertakings and refusals from examinations for discovery in this action. Michael DiBratto was examined on behalf of Dibracon. Magued Hannalah was examined on behalf of the TMAV Defendants and Martheo Ltd.
[2] Dibracon and the TMAV Defendants dispute the sufficiency of answers given to undertakings and matters taken under advisement, as well as the propriety of refusals. On these motions, only specific undertakings and refusals were targeted, namely those viewed as significant for a pending mediation between the parties. Further motions on the balance of disputed undertakings and refusals are expected if the action cannot be settled. The third parties take no position on the motions.
[3] I am ordering further answers to all of the undertakings ultimately argued from Mr. Hannalah’s examination, but am not ordering a further answer to the argued matter taken under advisement and am not ordering production of the refused financial documents, at least not at this time. I am also not ordering any of the argued relief sought by the TMAV Defendants.
ANALYSIS
a. Dibracon’s motion
[4] Although aspects of the two motions overlap, each of them was argued separately. I am accordingly addressing each motion in the same order that they were argued.
[5] Although Dibracon moved on a large number of undertakings, matters under advisement, and refusals from Magued Hannalah’s examination as set out in its notice of motion, it ultimately pursued only 18 at the hearing, namely:
(a) undertaking nos. 12, 13, 14, 16, 20, 22, 23, 24, 25, 29, 33, 35, 36, 37, 53;
(b) under advisement no. 8; and
(c) refusal nos. 10 and 11.
[6] Relief on the balance of undertakings, advisements, and refusals outlined in Dibracon’s notice of motion was withdrawn. The TMAV Defendants did not oppose Dibracon’s request that the withdrawal be without prejudice to moving again at a later date. A number of the other undertakings and advisements were resolved (at least in the interim) by agreement to provide an authorization to Dibracon to obtain documents directly from the completion contractor, Juliette Homes, and the replacement architect (or architectural technologist), Brett Lyver.
[7] My assessment and disposition on each of the disputed undertakings, advisements, and refusals is outlined below.
[8] Undertaking Nos. 12-14: These three undertakings deal with particularizing the TMAV Defendants’ counterclaim by breakdowns of the various categories of damages. I agree with Dibracon that the answers provided by the TMAV Defendants are incomplete. Pointing to the replacement contractor’s contract and inspection reports and providing an estimate for claimed losses for “wasted” time is not a breakdown. The TMAV Defendants agree that the answers remain outstanding, but propose to provide them by way of a pending damages expert report to be served by a proposed deadline of October 31, 2022.
[9] The undertakings were to provide breakdowns of the TMAV Defendants’ claims, not an expert report. Experts analyze factual information and documents and provide opinions based on them. I do not accept that an expert is required to identify which of the TMAV Defendants suffered the damages identified in the Scott Schedule (undertaking no. 12), to particularize and breakdown the $100,000 claim for resubmission of documents (undertaking no. 13), or to particularize and breakdown the claim for wasted management time (undertaking no. 14). Even if the TMAV Defendants are only able to estimate aspects of their damages in answering these undertakings, I see no reason why they cannot do so and identify the reason(s) that precise damages cannot be provided for a particular item in each breakdown.
[10] I accept that the TMAV Defendants prefer to have an expert assess and better quantify their damages, particularly to the extent that they are only able to estimate damages. Nevertheless, that does not alter my view that the TMAV Defendants are capable of particularizing and breaking down their claim without an expert (even if, for example, particular items are noted as estimates requiring expert opinion on quantification).
[11] If the TMAV Defendants do intend to rely on a damages expert, though, serving that report will be significant in readying this action for trial. In my view, fixing a deadline for a damages report is necessary to keep this lien action moving toward trial. The proposed deadline of October 31, 2022 for the TMAV Defendants’ damages expert report is reasonable. I am accordingly ordering that any report from a damages expert retained on behalf of the TMAV Defendants be served by that deadline. That order does not change the requirement on the TMAV Defendants to provide separate answers to undertaking nos. 12-14.
[12] Undertaking No. 16: The TMAV Defendants conceded in argument that this undertaking has not been fully answered. The undertaking was to provide the dates of meetings between Magued Hannalah and Michael DiBratto about a quotation (if the dates can be remembered), the lengths of those meetings (if recalled), and recollections of what was discussed at each of the meetings. Only a broad date range has been provided. A complete answer remains outstanding.
[13] Undertaking No. 20: The TMAV Defendants provided updated answers to undertakings shortly before the hearing. Dibracon has accepted the updated response for this undertaking and confirmed during oral submissions that it is not pursuing further relief.
[14] Undertaking Nos. 22 and 24: These undertakings deal with the allegation that Dibracon delayed the project. Undertaking no. 22 was to provide any evidence suggesting that Dibracon delayed the progress of construction. Undertaking no. 24 was to identify delays for which the TMAV Defendants say Dibracon was responsible and whether that was communicated to them. I agree with Dibracon that the answers to both undertakings are insufficient. “All included in AOD” is an answer that could have been given during the discovery. If the only responsive evidence is contained in the affidavit of documents, then specific productions should be identified. If there is other evidence, it must be identified and produced. Undertaking no. 24 also contemplates identifying specific delay events, which has not been done.
[15] I do not agree with the TMAV Defendants’ submission that the level of granularity sought by Dibracon is overly broad given that three expert reports have been produced. First, as already noted, experts provide opinions based on factual evidence. Dibracon is entitled to discover on relevant factual evidence. Second, undertakings were given to provide evidence and identify delays. The TMAV Defendants cannot now resile from answering those undertakings by arguing the scope is overbroad, unnecessary, or more properly addressed by follow-up examination. I have been directed to no case law supporting that an undertaking may be changed to a refusal after-the-fact or that the party giving the undertaking is entitled to insist on answering it by way of further examination. Proper answers to both undertakings remain outstanding.
[16] Undertaking No. 23: This undertaking was to provide details of deficiencies that were discussed with Dibracon as of April 11, 2019. I agree with Dibracon that it has not been answered. Referring to engineering and inspection reports that post-date April 11, 2019 by several months cannot be an answer for what was discussed between the parties at or prior to April 11, 2019. There is nothing in the answer provided or in the evidence before me on this motion supporting the TMAV Defendants’ assertion that all deficiencies enumerated in the reports were discussed in April 2019. In my view, the undertaking remains outstanding.
[17] Undertaking No. 25: On review, the undertaking as framed in Dibracon’s chart is not the undertaking actually given. Dibracon’s counsel asked for particulars of alleged incompetency of the construction manager as of April 11, 2019 and whether those particulars were communicated to Dibracon. In response to that request, the TMAV Defendants’ counsel agreed to provide recollections of discussions as of April 11, 2019 regarding deficiencies, delays, and negligence of the construction manager. That undertaking is for a reduced scope than what was requested. Nevertheless, even that lesser undertaking has still not been answered. The TMAV Defendants’ reference to the subsequent engineering report provided to Dibracon is non-responsive. In my view, it is appropriate to treat the requested undertaking, which was not agreed, as a refusal.
[18] The question asked was relevant. It is not a question that is not reasonably answered by reference to a subsequently-prepared engineering report. Dibracon is entitled to the requested particulars of alleged incompetence of the construction manager as of April 11, 2019 and whether and when those particulars were communicated to Dibracon.
[19] Undertaking No. 29: This undertaking was to review productions to identify any prior instances of the complaints identified in an email being put to Dibracon in writing. The answer provided of “not clear what is asked – refer to AODs” is non-responsive. Responsive productions, if any, remain to be identified.
[20] Undertaking No. 33: Magued Hannalah was to provide information on any changes that he directed to the original drawings for the project. The answer given provides only, “He has no records.” I agree with Dibracon that the answer remains outstanding. While there may be no records, Mr. Hannalah ought to be able to confirm his recollections, if any, on changes that he directed or required to the original drawings.
[21] Undertaking No. 35: The TMAV Defendants acknowledge that the answer provided is insufficient. A further and proper answer shall be provided.
[22] Undertaking No. 36: I agree with Dibracon that this undertaking remains outstanding. The transcript supports that an undertaking was given for Magued Hannalah to review records and advise if there were any discussions with Turner & Townsend Canada Inc. taking issue with any of Dibracon’s invoices. Having agreed to review records and advise Dibracon, the TMAV Defendants cannot now satisfy the undertaking by directing Dibracon to contact Turner & Townsend Canada Inc. itself. The answer provided is non-responsive to the undertaking given.
[23] Undertaking No. 37: I agree with Dibracon that the answer given to this undertaking is non-responsive. A clear undertaking was given for Mr. Hannalah to review records and provide either the written communications or particulars of any representations made to Turner & Townsend Canada Inc. or the Royal Bank of Canada about the contract with Dibracon or the contract details. The response, “All attached in the AODs provided,” is not an answer to that undertaking.
[24] Undertaking No. 53: An undertaking was given to identify the deficiencies that resulted either entirely or partially from design issues. The specific question, asked by counsel for Setless Studio Ltd. and Michael Lafreniere, was as follows:
Okay. Well, I guess my point is could you please to the extent there were design issues by way of undertaking could you advise me where those are and if your support is in the A-D report could you point me to where it is so that I don’t make a mistake as to what your position is?
[25] The requested undertaking was given, but the answer provided only refers to the produced reports for “a complete list of deficiencies reported” and discusses an HVAC deficiency. It does not particularize any deficiencies that resulted, in whole or in part, from design issues. I agree that the answer provided is non-responsive. A further answer is required.
[26] Under Advisement No. 8: Dibracon requested an undertaking to ask Michael Yousef (an alleged agent acting for the TMAV Defendants) for his recollection of any discussions that he would have had with Juliette Homes and its principal, Majdi Tourane, relating to any quotation, the contract, and the performance of work by Juliette Homes on the job. That request was taken under advisement on the basis that it was “a bit broad.” In response, the TMAV Defendants have provided contact information for Mr. Yousef. Dibracon argues that, since Mr. Yousef was a representative of the TMAV Defendants, he is unlikely to be responsive or cooperative to a call from Dibracon’s counsel.
[27] There is no evidence before me supporting that Michael Yousef was, in fact or even arguably, an agent of the TMAV Defendants. The only evidence before me on Mr. Yousef’s involvement in this action are statements in a lawyer’s affidavit that he is “the individual who introduced [Magued] Hannalah to [Majdi] Tourane” and that the relationship between Mr. Yousef and Mr. Tourane is relevant because the contract between Juliette Homes and the TMAV Defendants “appears to be non-arm’s length.” There is no evidence on why the contract does not appear to be an arm’s length transaction. There is similarly no evidence before me supporting that Mr. Yousef was an agent of the TMAV Defendants, as Dibracon argues. I was directed to nothing in the transcript addressing the relationship between Mr. Hannalah and Mr. Yousef, other than the fact that Mr. Yousef introduced Mr. Hannalah to Mr. Tourane.
[28] In these circumstances, I am unable to find that Mr. Yousef is or is likely under any control or influence of the TMAV Defendants such that he would not cooperate in answering questions about his knowledge and recollections. I find no basis on which to order that the TMAV Defendants should make the requested inquiries on Dibracon’s behalf. I thereby agree with the TMAV Defendants that providing Mr. Yousef’s contact information is a sufficient answer.
[29] Refusal Nos. 10-11: Dibracon requested production of the general ledgers and bank account statements for the defendant corporations from 2017. Those requests were refused as being irrelevant. The TMAV Defendants argue that the request is an overbroad and premature fishing expedition that first requires a damages expert report, after which aspects of the general ledgers or bank statements could potentially become relevant.
[30] Dibracon argues that relevance is not determined by how the TMAV Defendants’ expert may assess and quantify commercial losses, which include claims for loss of profits, costs incurred paying employees who were not working, and business disruption. The requests are argued to be relevant to assessing the counterclaim damages as pleaded. Although I was directed to no specific paragraphs in the statement of defence and counterclaim supporting relevance, the counterclaim does include a claim for various commercial business losses. Dibracon argues that the general ledgers and bank statements will show revenues coming in and going out, which will be needed for an expert to assess the commercial damages claims advanced.
[31] In my view, Dibracon has not established that general ledgers and bank statements are clearly relevant to assessing the TMAV Defendants’ claims for disruption and loss of business or lost revenue. The pleading is general. Although referenced in the index to Dibracon’s motion record, the TMAV Defendants’ Scott Schedule is not actually in the motion record. As the reference associate judge, I have access to a version of the Scott Schedule filed for the hearing for trial directions before me in March 2022. The descriptions of the losses alleged suffered by the TMAV Defendants are, like the pleading, quite general. A breakdown and particularization is evidently required, as acknowledged by the TMAV Defendants. Dibracon’s supporting affidavit does no more then generally assert relevance of the documents. Despite Dibracon arguing that an expert will require them, there is no evidence from an expert (such as a letter requesting specific documents) nor does the lawyer’s affidavit refer to the needs of an expert.
[32] Since I am not clear on what specific commercial impacts and losses are being claimed by the TMAV Defendants, I am not convinced that the general ledgers and bank statements are relevant at this time. I am thereby not ordering them to be produced. However, in doing so, I am not foreclosing Dibracon from moving again after the TMAV Defendants have provided the breakdown of their damages claim.
b. TMAV Defendants’ motion
[33] The TMAV Defendants ultimately only pursued answers to undertaking nos. 11, 12, and 13 from Michale DiBratto’s examination. Relief on the balance of undertakings and under advisements outlined in the TMAV Defendants’ notice of motion was withdrawn at the commencement of argument without prejudice to moving again at a later date, as was done for Dibracon’s motion. Dibracon did not oppose that withdrawal.
[34] The remaining disputes were all argued in relation to the email sent on June 23, 2022. That email contains a series of questions organized into various categories, which refers to a chart that is not in the materials (although appears to be hyperlinked in the email). In addition to seeking an order compelling answers to undertakings nos. 11-13, the TMAV Defendants seek an order that Dibracon answer all questions posed in the email.
[35] Undertaking No. 11: Dibracon undertook to advise how much was paid for subcontractor labour and to provide evidence of the payment, which Dibracon argues it has done. The TMAV Defendants’ undertakings chart asserts that the information provided by Dibracon does not explain the relationship of the various numbered companies or other entities to which money was paid for labour nor how the amounts were arrived at or what hourly rates were paid. Although not part of the undertaking, Dibracon has provided an answer on the relationship query. I agree with Dibracon that it was not asked to advise how the amounts were calculated or what hourly rates were used. I am satisfied that the undertaking has been answered. The challenges raised by the TMAV Defendants are in the nature of questions arising from the answer provided.
[36] Undertaking No. 12: Dibracon undertook to provide documentation supporting its invoices regarding site supervision, which Dibracon argues was done in its answer referring the TMAV Defendants to specific productions. The TMAV Defendants’ undertakings chart challenges that the undertaking has not been answered, since there is no evidence of the times allegedly spent by the site supervisors. Dibracon’s supplementary response indicates that the days and weeks worked, as well as hourly rates, are indicated in the invoices submitted and weekly emails were sent to Magued Hannalah with the hours worked as noted in the referenced productions.
[37] The referenced productions are not before me and the TMAV Defendants have put forward no evidence supporting their position that part of this undertaking remains outstanding. I am satisfied that it has been answered.
[38] Undertaking No. 13: Dibracon was asked to confirm how particular invoices in the productions, to be identified by the TMAV Defendants’ counsel, are associated with the job. The TMAV Defendants argue that the email dated June 23, 2022 provides a list to which a response is required and outlines questions flowing from the undertaking. I fail to see how the questions in the 8-page email tie to the undertaking given. I have been directed to no questions in the email about how or why particular invoices are associated with the job. If there is an invoice list included in the email about which that question was posed, it appears too deeply buried to locate. In my view, a clear list of invoices for Dibracon’s comment about their relationship to the project is required to trigger Dibracon’s obligation under this undertaking. That has not yet been provided.
[39] Additional questions: I do not accept the TMAV Defendants’ argument that the various additional questions posed in the email dated June 23, 2022 are captured by any of undertaking nos. 11-13. They are, at best, questions arising from the answers given. In some cases, they appear to be separate questions that could have been, but seem not to have been, asked during Michael DiBratto’s examination, such as requests for financial disclosure from Dibracon. The email itself describes the questions as “further inquiries” and the notice of motion refers to them as “follow up questions”.
[40] The questions posed greatly exceed the scope of undertaking nos. 11-13. I am satisfied that answers to the questions are not captured by any undertaking given by Dibracon, at least none to which I have been directed. No clear argument was advanced for how these questions arise from the answers to undertakings provided by Dibracon or why both written answers and further oral examination should be ordered. I thereby find no basis to order answers to the email questions. If the action is not settled at the pending mediation, the appropriateness of further examination on these “follow-up” matters may be spoken to at the next hearing for trial directions.
[41] Although I am not ordering that these new questions be answered, that is because they were framed as being captured by the undertakings, which I have found they are not. I cannot decide whether there should be further examination on these matters without additional submissions. For example, no case law was put before me supporting appropriateness of the manner of proposed further examination (i.e., written answers to the “follow-up” questions, then further oral examination). Since the TMAV Defendants were not seeking answers to their questions or a further examination prior to mediation, it is appropriate that I defer those matter to the next hearing for trial directions.
c. Timing of answers
[42] Dibracon submits that any further answers should be ordered by July 20, 2022, in advance of the mediation scheduled for July 26, 2022. The TMAV Defendants submit that any ordered answers to the questions should be dealt with by way of continued examination rather than a further written answer. Alternatively, they submit that answers should be ordered within 60 days with the damages report by October 31, 2022.
[43] In my view, ordering that the answers be given by continued examination is not necessary or appropriate in the circumstances. The further answers that I am ordering are all to questions that were already asked during the examination of Magued Hannalah and were not answered at the time. I see no benefit from sending the parties back to an examination that may lead to further requested undertakings. Dibracon is entitled to receive answers before considering if there are any additional questions arising from the answers provided that may require further examination.
[44] My prior order was that all answers to undertakings and positions on advisements, if any, be given within 60 days from the date of the examination. The examinations took place in November 2021. Since I am only ordering answers (or further answers) to undertakings, I fail to see why a further 60 days is required, particularly in the context of summary proceedings in a lien action. I appreciate that the parties previously agreed to extend my ordered deadline for answers, but all matters before me on this motion were identified as being significant for the parties’ pending mediation.
[45] In my view, the TMAV Defendants have had ample time since Mr. Hannalah’s examination to obtain necessary information and evidence to provide proper and complete answers to the undertakings. If that has not actually been done, it ought to have been. I am not convinced that more than 10 days is genuinely required to comply with outstanding undertakings. I am thereby ordering answers by July 21, 2022.
d. Further examination
[46] The TMAV Defendants also seek an order that a further examination of Michael DiBratto proceed by October 31, 2022. I see no basis for such an order at this time. As noted above, if the action cannot be settled at the pending mediation, then the need for continued examinations for discovery and any disputes over the proper scope of a further examination may be spoken to at the next hearing for trial directions.
Disposition
[47] For the reasons set out above, I order as follows:
(a) The TMAV Defendants shall, by July 21, 2022:
(i) provide Dibracon with an authorization permitting Dibracon to obtain directly from Juliette Homes and/or Mr. Lyver documentation related to the construction at the premises, provided that the authorization directs that a copy of anything produced also be delivered to counsel for the TMAV Defendants;
(ii) provide further, complete answers to undertakings nos. 12, 13, and 14 by providing the subject particulars and breakdowns;
(iii) provide a complete answer to undertaking no. 16 with respect to the dates, durations, and discussions at meetings between Magued Hannalah and Michael DiBratto;
(iv) provide a further answer to undertaking no. 22, specifically identifying the evidence in the parties’ productions and any other evidence supporting project delays by Dibracon;
(v) provide an answer to undertaking no. 23 with respect to what specific deficiencies in Dibracon’s work had been discussed with it as of April 11, 2019;
(vi) provide an answer to undertaking no. 24 by identifying the specific delays for which Dibracon is alleged to be responsible and whether and when those delays were communicated to Dibracon;
(vii) provide an answer to the refused question identified as undertaking no. 25 by providing particulars of alleged incompetence of the construction manager as of April 11, 2019 and whether and when those particulars were communicated to Dibracon;
(viii) provide an answer to undertaking no. 29 by identifying any responsive productions;
(ix) provide a further answer to undertaking no. 33 with respect to Mr. Hannalah’s recollections about what changes to the original drawings, if any, he directed or required; and
(x) provide proper answers to undertaking nos. 35, 36, 37, and 53.
(b) The TMAV Defendants shall serve their expert report on damages, if any, by October 31, 2022.
(c) Dibracon’s motion is dismissed insofar as under advisement no. 8.
(d) Dibracon’s motion is dismissed insofar as refusal nos. 10 and 11, without prejudice to moving again following receipt of the TMAV Defendants’ damages claim breakdown/particularization.
(e) The TMAV Defendants’ motion is dismissed insofar as undertaking nos. 11 and 12 and the request for an order compelling answers to questions in the email dated June 23, 2022, with the issue of any further examinations reserved to the next hearing for trial directions.
(f) The TMAV Defendants’ motion is dismissed insofar as undertaking no. 13, without prejudice to moving again following a clear request to Dibracon as contemplated by the undertaking.
(g) On consent, costs of both motions are reserved to be determined at the conclusion of litigation.
(h) This order is effective without further formality.
ASSOCIATE JUSTICE TODD ROBINSON
DATE: July 11, 2022