COURT FILE NO.: CV-18-136882
DATE: 20220719
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Giuseppina Lucchese, personally and as Executrix of the Estate of Gaetano Lucchese, Plaintiffs
AND: A. Carnovale Holdings Inc., L. Carnovale Holdings Inc., The Estates of Elgin Mills Joint Venture, Luvian Homes (The Estates of Elgin Mills) Limited, The Estates of Taunton and Thickson Joint Venture and Luvian Homes (Taunton and Thickson) Limited
BEFORE: Justice C. Boswell
COUNSEL: Shawna Sosnovich for the defendants/moving parties, L. Carnovale Holdings Inc., The Estates of Elgin Mills Joint Venture, Luvian Homes (The Estates of Elgin Mills) Limited, and The Estates of Taunton and Thickson Joint Venture (referred to throughout as the “Lee Defendants”)
Gregory N. Hemsworth for the plaintiffs/responding parties
Aoife Quinn for the defendants A. Carnovale Holdings Inc. and Luvian Homes (Taunton and Thickson) Limited (referred to throughout as the “Anna Defendants”)
HEARD: July 13, 2022
ENDORSEMENT
[1] The plaintiffs sue the defendants for payment on four promissory notes which each came due in April 2016. The total claim is about $3.5 million. The claim has been ongoing for almost four years. The Lee Defendants assert that they have had difficulty obtaining fulsome discovery from the plaintiffs. In this motion, those defendants seek an order that the plaintiffs produce a further and better Affidavit of Documents and that Giuseppina Lucchese be produced for oral discovery. The plaintiffs resist on both counts.
Overview
[2] Anna and Lee Carnovale were married for about 23 years prior to their separation in 2018. During the marriage they engaged in the business of real estate development. The defendants to this action are all companies that were created by Anna and Lee Carnovale in connection with their business. Anna Carnovale is the sole officer and director of the companies I have referred to as the Anna Defendants. Lee Carnovale is the sole director and officer of the companies I have referred to as the Lee Defendants.
[3] The plaintiffs are Anna Carnovale’s mother and the estate of Anna Carnovale’s late father. They sue both the Anna Defendants and the Lee Defendants for repayment of monies loaned to them during the course of Anna and Lee Carnovale’s marriage.
[4] That the advances in issue were made does not appear to be disputed. They were documented by promissory notes as follows:
(i) A note from A. Carnovale Holdings Inc, L. Carnovale Holdings Inc. and The Estates of Taunton and Thickson Joint Venture in the amount of $502,254.00 in favour of the plaintiffs dated April 29, 2011 and due April 29, 2016. This note accrued interest at the rate of 3% per annum and was payable interest only annually;
(ii) A note from A. Carnovale Holdings Inc, L. Carnovale Holdings Inc. and The Estates of Taunton and Thickson Joint Venture in the amount of $2,786,345.93 in favour of the plaintiffs dated April 29, 2011 and due April 29, 2016. This note also accrued interest at the rate of 3% per annum and was payable interest only annually;
(iii) A note from A. Carnovale Holdings Inc, L. Carnovale Holdings Inc. and The Estates of Elgin Mills Joint Venture in the amount of $452,122.00 in favour of the plaintiffs dated April 29, 2011 and due April 29, 2016. This note also accrued interest at the rate of 3% per annum and was payable interest only annually; and,
(iv) A note from A. Carnovale Holdings Inc, L. Carnovale Holdings Inc. and The Estates of Elgin Mills Joint Venture in the amount of $773,212.00 in favour of the plaintiffs dated April 2011 and due April 29, 2016. This note was interest free.
[5] What appears to be in dispute in this proceeding is whether any of the defendants owe anything on the notes. Anna and Lee Carnovale have very different views about that issue.
The Proceedings To Date
[6] The claim was commenced on August 7, 2018, some 27 months or so after each of the notes came due. It is peculiar in a number of respects, including:
(i) It seeks payment of the sum of $3,597,032.94, which the plaintiffs say was the total amount loaned on April 29, 2011. The promissory notes relied on in support of the advances, however, total $4,513,933.93; and,
(ii) It alleges that the defendants are jointly and severally liable for the full amount claimed, when none of the individual notes has been executed by all of the defendants. In other words, the claim proceeds as though all of the defendants have executed each of the promissory notes, when that is clearly not the case.
[7] In any event, the claim appears, for reasons not entirely clear to me, to have sat dormant for more than two years after it was issued.[^1]
[8] The Anna Defendants delivered a statement of defence on or about September 16, 2020 in which they confirmed that loans were advanced by the plaintiffs to the defendants totalling $3,597,032.94. These defendants admitted that the sum of $3,551,606.48 was outstanding as at June 30, 2018, with interest accruing at 3% per annum thereafter. The Anna Defendants are clearly not adversarial to the plaintiffs.
[9] The Lee Defendants have taken a more adversarial approach. They delivered a statement of defence on or about September 21, 2020. They assert that there is nothing due and owing on any of the notes for one or more of the following reasons:
(i) The claim is statute barred as out of time pursuant to the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B;
(ii) The notes have been paid in full;
(iii) The notes have been forgiven; and/or,
(iv) The amounts advanced by the plaintiffs were not loans but gifts, for which there was no expectation of repayment.
[10] The Lee Defendants circulated a draft Discovery Plan in accordance with r. 29.1 of the Rules of Civil Procedure in December 2020. The Plan appears not to have had any traction with the plaintiff or the Anna Defendants.
[11] In January 2021, the Lee Defendants delivered an Affidavit of Documents.
[12] On May 19, 2022, almost four years after the action commenced, the plaintiffs delivered a draft Affidavit of Documents. A sworn copy of the Affidavit of Documents was delivered in mid-June 2022.
[13] In the meantime, the plaintiffs initiated a motion for summary judgment in February 2021. The motion was supported by an affidavit sworn by an administrative assistant in the law office of the plaintiffs’ counsel. The motion was case conferenced by Regional Senior Justice Edwards on April 9, 2021. RSJ Edwards directed that the motion needed to be supported by the affidavit of someone with actual knowledge of the events in issue. The motion then appears to have stalled.
[14] The summary judgment motion was revived in March 2022 when the plaintiffs delivered a supplementary motion record. This time the motion is supported by an affidavit sworn by Anna Carnovale. The result is a little extraordinary. The plaintiffs’ summary judgment motion record does not include any direct evidence from the plaintiffs, but instead is supported by the evidence of one of the two parties against whom judgment is sought.
[15] The summary judgment motion was case conferenced for a second time on June 8, 2022, this time by Justice Sutherland. A timetable for the motion was set, with the expectation that it will be heard in October 2022. In addition to conferencing the summary judgment motion, Justice Sutherland addressed the Lee Defendants’ request to schedule a motion to seek a further and better Affidavit of Documents from the plaintiffs. That is the motion presently before the court.
THE DISCOVERY MOTION
[16] The Lee Defendants’ motion has two aspects, both of which relate to the broad issue of discovery. The first aspect has to do with documentary discovery. More specifically, a request that the plaintiffs produce a further and better Affidavit of Documents. The second aspect has to do with oral discovery. More specifically, the Lee Defendants’ request to conduct an oral examination of the plaintiff, Giuseppina Lucchese. I will consider each in turn.
The Affidavit of Documents Issue
The Facts
[17] As I noted, the plaintiffs served an Affidavit of Documents in mid-June 2022. It was sworn June 1, 2022.
[18] Schedule “A” to the plaintiffs’ Affidavit of Documents lists twenty documents. In addition to the four promissory notes referred to above, it lists two additional promissory notes executed by L. Carnovale Holdings on April 29, 2016, a copy of a Luvian Homes’ cheque dated August 26, 2016 in the amount of $50,000 payable to Giuseppina Lucchese, some financial statements relating to a numbered company that is not a party to these proceedings, corporate profile reports for some of the defendants, Anna Carnovale’s affidavit sworn November 21, 2021 in support of the summary judgment motion, and several other documents, the relevancy of which is not immediately apparent.
[19] Notably absent from the plaintiffs’ Affidavit of Documents are any records relating to the loan accounts. There are no records of interest accruals, payments made, running balances, demands made, indulgences or forgivenesses granted. The plaintiffs have not identified any bank records, account statements or tax returns that might include evidence relating to the advances and their repayment.
The Law
[20] The full and timely discovery of an opponent’s case is a fundamental principle associated with our adversarial system of justice. Full and timely disclosure facilitates the ability of each side to prepare for and argue its case. It promotes the efficient and economical resolution of cases. And it promotes early and just settlements.
[21] As Justice Carthy observed more than twenty years ago, in General Accident Assurance Co. v. Chruz (1999), 1999 CanLII 7320 (ON CA), 45 O.R. (3d) 321 (Ont. C.A.) at para. 25, “the modern trend is in the direction of complete discovery.”
[22] The Rules of Civil Procedure govern civil proceedings in this province. They promote and facilitate complete and timely discovery between litigants. They provide for both documentary and oral discovery.
[23] Rule 30.02 is the starting point. It requires each party to an action to disclose every document relevant to any matter in issue in the action that is or has been in the possession, control or power of that party. The mechanism for disclosure is the Affidavit of Documents.
[24] Relevance is sometimes a contentious issue. Prior to a 2010 overhaul of the Rules, the disclosure of documents was governed by a “semblance of relevance” test. “Semblance of relevance” is an awkward phrase because the law does not recognize degrees of relevance. A document is either relevant or not relevant. See R. v. Jackson, 2015 ONCA 832 at para. 123.
[25] Since 2010 the touchstones for disclosure are relevance and materiality. These are distinct concepts. Both are captured by the reference, in r. 30.02(1) to “relevance to any matter in issue in an action”.
[26] Relevance “exists as a relation between an item of evidence…and a proposition of fact that the proponent seeks to establish by its introduction”: R. v. Luciano, 2011 ONCA 89, at para. 204. An item of evidence is relevant if it renders the fact in issue more or less likely – as a matter of logic and human experience – than that fact would be without the evidence.
[27] Materiality is a legal concept. See R. v. Candir, 2009 ONCA 915, at para. 49. What is material in a civil action is defined by the pleadings and the positions taken by the parties.
[28] Each party must disclose – in its Affidavit of Documents – all relevant and material documents that are or were in its possession, control or power.
[29] Copies of all relevant and material documents must generally also be produced, or at least made available for inspection.
[30] Sometimes the production of a substantial volume of otherwise relevant documents may not be “worth the candle”, as the saying goes, where the effort and cost involved in gathering and producing the documents will outweigh the probative value of those documents to the proceedings, in light of the complexity of the issues and the amount involved. Rule 29.2.03 requires the court to consider the issue of proportionality when determining if a question should be answered or a document produced. More pointedly, the court is directed to consider whether:
(a) the time required for the party or other person to answer the question or produce the document would be unreasonable;
(b) the expense associated with answering the question or producing the document would be unjustified;
(c) requiring the party or other person to answer the question or produce the document would cause him or her undue prejudice;
(d) requiring the party or other person to answer the question or produce the document would unduly interfere with the orderly progress of the action; and
(e) the information or the document is readily available to the party requesting it from another source.
[31] The principle of proportionality does not, however, relieve a party from identifying relevant documents in his or her possession, control or power.
[32] The Rules provide for certain remedies in the event that a party omits to include relevant documents in his or her Affidavit of Documents. Rule 30.06 provides that 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 a claim of privilege.
The Parties’ Positions
[33] The Lee Defendants assert that the live issues in this case – based on the pleadings and the positions of counsel – include whether the claim is statute barred by the Limitations Act, 2002 as being out of time. That issue requires an examination of when the purported loans came due and when the last payment or acknowledgement of indebtedness was made. Other live issues include whether the purported loans were repaid, in whole or in part, or forgiven, in whole or in part. The Lee Defendants submit that the records sought, including the plaintiff’s banking records, receipts or other proof of repayments, and income tax filings, are all relevant to the identified live issues raised in their statement of defence. None appear in the plaintiffs’ Affidavit of Documents.
[34] The plaintiffs take the position that the Lee defendants have failed to establish that any of the documents sought are relevant or probative and that all relevant documents are already in the possession of the moving parties. Moreover, they contend that forcing the plaintiffs to search for and produce the documents in issue would unduly interfere with the orderly progress of the action. They note that their motion for summary judgment is scheduled for October 2022 and their concern is that any order requiring any further disclosure, production or oral discovery may impact on the viability of that motion date.
Analysis
[35] It is my impression, having reviewed the significant materials filed by the parties on the motion, that the dispute here is but one part of the ongoing matrimonial litigation between Anna and Lee Carnovale.
[36] Though I have an admittedly limited vantage point, it appears to me that Giuseppina Lucchese is all but a straw plaintiff. The bus is clearly being driven by Anna Carnovale. I say this for the following reasons:
(i) Though the notes in issue became due in April 2016, this action was not commenced until after the breakdown of Anna and Lee Carnovale’s marriage in 2018;
(ii) Nothing was done to move the action forward for two years, even though, as the plaintiffs’ counsel characterizes it, this is a simple collection matter suitable for summary judgment. The explanation offered for the delay is that the plaintiffs were waiting to see if the matrimonial proceedings settled;
(iii) Though the plaintiffs purport to be anxious to bring the litigation to a conclusion through a summary judgment motion, they have not been diligent in taking the basic steps that would promote efficient litigation. For instance, the plaintiffs first delivered a sworn Affidavit of Documents only weeks ago;
(iv) Giuseppina Lucchese is an elderly woman with a long list of health problems (which I will elaborate on a little later in these reasons). Her family physician, Dr. Kristin Terenzi, wrote on 1/5/21, “It has come to my attention that she has been asked to participate in legal proceedings that will require she attend discovery and make herself available for examination…Mrs. Lucchese’s daughter, Anna Lucchese, is fully apprised of all of her affairs and it is Giuseppina’s wish that Anna represent her in this matter”;
(v) Giuseppina Lucchese did not swear or file an affidavit in support of her summary judgment motion. Instead, an administrative assistant in her counsel’s office swore the affidavit offered in support. When the plaintiffs were directed to file an affidavit from someone with first-hand knowledge, they still did not produce an affidavit sworn by Mrs. Lucchese. Instead, Anna Carnovale swore the affidavit to be used in a motion against herself and her erstwhile spouse;
(vi) Anna Carnovale does not dispute the action in any way. She could have consented to judgment against the companies she controls and been done with the proceedings, yet she remains an active party; and,
(vii) There is evidence that Anna Carnovale withdrew $1 million from the bank account of Luvian Homes (Taunton and Thickson) in early 2018 purportedly for the purpose of repaying it to the plaintiffs. Mr. Lee deposed that he subsequently spoke to Mrs. Lucchese who told him she had rejected the repayment, which is odd considering that her action to recover the purportedly delinquent loans was commenced only several months later.
[37] It may very well be that substantial sums of money are properly owed to the plaintiffs by one or more of the defendants. That issue is not before me. But it is my strong impression that Anna Carnovale is far more concerned about the repayment than is her mother. Significant attempts have been made to insulate Giuseppina Lucchese from the rigours of this litigation. Perhaps understandably so.
[38] Giuseppina Lucchese has, however, commenced a lawsuit against a number of defendants seeking payment of a substantial sum of money. She, like all other civil litigants in this province, must comply with the rules that govern civil proceedings. One of those rules – a very basic one – is that the plaintiffs must produce an Affidavit of Documents setting out all relevant documents in their possession, control or power. They have failed to do so. Their Affidavit of Documents fails to list any records that the plaintiffs may have relating to the recording of the loans, including loan-specific account statements; ledgers; bank account statements; tax returns; demand letters and the like. These are documents that, in my view, are likely to exist.
[39] The principle of proportionality does not relieve a party from identifying the documents required to be identified in a proper Affidavit of Documents. Whether the plaintiffs may be relieved of producing some or all of those documents by virtue of the factors set out in r. 29.2.03 is a matter not before me today. It is an issue I am unable to address because I do not know what records exist, since they have not properly been listed on the plaintiffs’ Affidavit of Documents.
[40] The plaintiffs suggest that the documents being sought are not relevant to any live issue, because all defendants concede that funds were advanced as reflected in the notes and a full accounting of the payments made under the loan has been produced by Anna Carnovale.
[41] The plaintiffs’ argument conflates relevancy with redundancy. Redundancy may be a relevant consideration under r. 29.2.03 but, again, this motion is not about production. It is about whether the plaintiffs’ Affidavit of Documents is sufficient.
[42] In my view, the plaintiffs’ Affidavit of Documents is deficient. A further and better Affidavit of Documents must be produced, within 30 days, listing all relevant documents in the plaintiffs’ possession, control or power.
[43] I would also caution the plaintiffs, looking forward, that this is a $3.5 million lawsuit. It is not small beans. They may wish to give serious consideration to how much weight they put on the proportionality argument when it comes to the matter of producing the documents they identify on their revised Schedule “A”.
The Oral Discovery Issue
The Facts
[44] The Lee Defendants, as I noted, circulated a Discovery Plan, in accordance with the Rules, in December 2020. It suggested that oral examinations take place in February 2021. It has been essentially ignored by the other parties.
[45] Giuseppina Lucchese’s family doctor has authored two short notes about her health. I have referred to the first already. In that note, dated 1/5/21, she opined that it would be “quite cruel” to force Mrs. Lucchese to participate in these legal proceedings personally.
[46] In the second, dated 4/5/22, she wrote:
Currently, Mrs. Lucchese is suffering from a number of chronic medical conditions. She is battling chronic lymphocytic leukemia, chronic pain in her lumbar spine with accompanying chronic pain and weakness in her legs. She is diabetic. She suffers from hypertension. She’s been having significant issues with coronary artery disease recently. We are currently monitoring her for some recent changes in her memory. It is too soon to tell whether this is a dementia like process or related to the anxiety and depression that she suffered since the death of her husband. She requires daily supervision from her caregivers.
It's my opinion that testifying right now would be undue stress to her delicate medical condition. We are dealing with multiple medical issues that require frequent management and such stress and disruption to her regular routine, I believe would be harmful to her at this point.
The Law
[47] The parties agree that each has a prima facie right to oral discovery of parties adverse in interest. See r. 31.02 and Ontario (Attorney General) v. Singer, 2012 ONSC 5485, at para. 3.
[48] The Rules strongly favour oral examinations, though written interrogatories may be resorted to in exceptional circumstances. See Botiuk v. Campbell, 2011 ONSC 1632. There are numerous compelling reasons to prefer oral examination, which were fully canvassed in Botiuk. They include the spontaneous nature of oral examinations, the ability to conduct meaningful cross-examination and the ability to clarify or expand on answers amongst others.
[49] A request to deviate from the oral examination model on the basis of a medical condition generally requires persuasive proof of that condition and the manner in which it impairs the party’s ability to attend for oral discovery.
The Parties’ Positions
[50] The Lee Defendants assert that the medical evidence provided to date is insufficient to support an order excusing Giuseppina Lucchese from attending oral examinations. They say there is nothing in Dr. Terenzi’s notes that indicates why specifically Mrs. Lucchese cannot attend for examination. In other words, there is no indication as to what harm may result if she is compelled to attend for an examination that allows her sufficient health breaks or other accommodations.
[51] The plaintiffs submit that persuasive medical evidence has been provided to support their position that Mrs. Lucchese is unable to attend oral examinations. They also appear to suggest that nothing of consequence is likely to flow from an examination and that the best course of action, in the interests of justice, is to simply proceed straight to their summary judgment motion.
Analysis
[52] Mr. Lee strikes me as a bitter, matrimonial litigant. That bitterness has coloured his reasonableness on this issue.
[53] Giuseppina Lucchese, based on her doctor’s notes, is patently unhealthy and frail. Her doctor, who is in the best position to know, offered the opinion that it would be “cruel” to compel her to attend discovery in her condition. I am satisfied that compelling her to prepare for and attend an oral examination may be seriously detrimental to her health. I am not going to impose that cruelty on her.
[54] A party’s request to be relieved of the obligation to attend oral examination must be considered in light of the circumstances as a whole. This is not a case where there are likely to be significant credibility issues engaged, as there might be if it were a substantial fraud case (like Botiuk) or a claim for damages for sexual assault (as in F.(J.) v. Roman Catholic Eposcopal Corp. for the Diocese of Toronto in Canada (1996), 2 C.P.C. (4th) 64). This is a debt collection action. The case will turn largely, though perhaps not entirely, on the documentary record.
[55] I am satisfied, in the circumstances, that it is appropriate that the examination for discovery of Giuseppina Lucchese be conducted, at least initially, through written interrogatories. If those prove to be unsatisfactory, the Lee Defendants may renew their motion.
[56] The Lee Defendants’ written interrogatories should be delivered 30 days after receipt of the plaintiffs’ further and better Affidavit of Documents and Schedule “A” productions.
[57] The plaintiffs will have 30 days thereafter to respond to those written interrogatories.
[58] The plaintiffs suggested that discoveries should be foregone because conducting them might interfere with the orderly progression of this proceeding. By that they meant it might interfere with the timing of their summary judgment motion.
[59] I am unsympathetic to the plaintiffs’ arguments. The defendants are entitled to complete discovery. Fulsome discovery is essential to the proper functioning of the adversarial process and to the truth-seeking function of the administration of justice. The plaintiffs have, in my view, been obstructionist in making proper disclosure and to the extent that their motion date may be prejudiced, they largely have themselves to blame. And to be candid, when I say “plaintiffs”, I include Anna Carnovale in that group. She too strikes me as a bitter matrimonial litigant who, in my view, has been making decisions for herself and her mother based too heavily on her negative feelings towards her estranged husband.
Summary
[60] In summary, I make the following orders:
(a) The plaintiffs are to provide a further and better Affidavit of Documents within 30 days, listing, on Schedule “A”, all relevant documents in their possession, control or power;
(b) The Lee Defendants shall conduct an examination for discovery of Mrs. Lucchese through written interrogatories. These interrogatories are to be served on the plaintiffs within 30 days of the receipt of the plaintiffs’ further and better Affidavit of Documents and Schedule “A” documents; and,
(c) The plaintiffs’ response to the written interrogatories is due within 30 days of their receipt.
[61] The parties are strongly encouraged to agree on the issue of costs. If they cannot agree, they may make written submissions not exceeding two pages in length. The Lee Defendants’ submissions are to be served and filed by August 2, 2022 and the plaintiffs’ by August 16, 2022. Submissions should be filed by email to my assistant Jennifer.Smart@Ontario.ca.
C. Boswell J.
Date: July 19, 2022.
[^1]: The plaintiffs’ counsel suggested in oral argument that in the first two years after the action was commenced, the plaintiffs did not press it in the hope that Anna and Lee Carnovale’s matrimonial proceedings would resolve. When they did not, the plaintiffs decided to press on with the action. It is not clear to me, however, why or how the resolution of the matrimonial proceedings would have impacted on the liability of the defendants to the plaintiffs for the purported loans.