COURT FILE NO.: CV-22-0086-00, CV-22-0087-00
DATE: 2022-11-29
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Larry Levchak v. Automation Now Inc., 1852168 Ontario Ltd., 2563906 Ontario Ltd., Edward Fukushima, Kelly Campbell (CV-22-0086-00)
And
Sharon O’Shea v. Automation Now Inc. (CV-22-0087-00)
HEARD: July 28, 2022 via Zoom
BEFORE: Nieckarz J.
COUNSEL: R. Johansen, for the Applicants
E. Zablotny, for the Respondents
Endorsement
[1] The Plaintiff, Larry Levchak, is a former employee of the Defendant corporation, Automation Now. He is also a shareholder. This action pertains to the termination of his employment, and allegations that the Defendants have conducted themselves in a manner that is oppressive to the interests of the Plaintiff contrary to s. 248 of the Business Corporation Act, R.S.O. 1990, c. B-16.
[2] The Defendants are Plaintiffs by Counterclaim and by Third Party Claim initiated against Sharon O’Shea, sister of Levchak. O’Shea, also formerly an employee of the Defendant corporation, has also commenced an action against Automation Now Inc.
[3] The Defendants allege that Levchak and O’Shea committed extensive acts of fraud while employed by Automation Now.
[4] The Plaintiff delivered a demand for particulars of the allegations of fraud, conspiracy, misrepresentations, breach of fiduciary duties and other allegations contained in a Statement of Defence and Counterclaim. The Plaintiff also delivered a demand for particulars in the Third- Party Claim against O’Shea.
[5] The Defendants say that they satisfied the demand for particulars on June 2, 2022.
[6] The Plaintiff denies that the demand for particulars was satisfied and has brought a motion for particulars.
[7] The Plaintiff argues that the particulars are necessary to allow him to properly defend against the counterclaim.
[8] In support of that motion the Plaintiff delivered an affidavit, sworn June 3, 2022.
[9] The Defendants promptly advised the Plaintiff that they were seeking to cross-examine him on his sworn affidavit.
[10] The Plaintiff has resisted the Defendants’ request to examine the Plaintiff as an abuse of process, arguing that the request effectively obviates the Plaintiff’s entitlement to particulars in priority to an examination.
[11] The Defendants allege that the demand for particulars is really discovery in disguise, while the Plaintiff argues that the Defendants’ desire to cross-examine on his affidavit is a disguised examination for discovery conducted prior to him even knowing the particulars of the allegations against him. Both parties argue that the conduct of the other is improper, and an attempt to delay the litigation.
[12] The dispute over whether the Plaintiff should be compelled to attend for cross-examination on his affidavit is the subject of this motion and the issue to be determined.
[13] The Defendants argue that the court has no discretion to preclude their right to cross-examination of the Plaintiff on his sworn affidavit. The Defendants take the position that the right granted by Rule 39.02(3) of the Rules of Civil Procedure to cross-examine a deponent on an affidavit is absolute, limited only if the party seeking to cross-examine fails to act diligently. I disagree.
[14] The general rule is that a party has a prima facie right to cross-examine on an affidavit filed in support of a motion or an application. See: Rule 39.01 of the Rules of Civil Procedure.
[15] The right to cross-examine on an affidavit is always subject to the court’s discretion to control its own process. The court may prevent or limit cross-examination where it is in the interests of justice to do so. See: Canada (Attorney General) v. Mennes, 2014 ONCA 690, at para. 27; Charles Poisson General Contracting Inc. v. Yee et. al., 2022 ONSC 1199, at para. 5.
[16] Questions on cross-examination must be relevant to the motion, to the affidavit in support of the motion, or to the deponent’s credibility.
[17] The Defendants argue that the cross-examination will be relevant in their defence to the particulars motion. Regardless, they argue they are not limited to what is relevant for the motion. They may examine on anything in the affidavit.
[18] On a motion for particulars, particulars may be required to limit the generality of pleadings but not to the extent that they move from material facts into the realm of evidence. Their primary purpose is to clarify a pleading sufficiently to allow the opposite party to respond. They are intended to narrow the generality of a pleading, define the issues and prevent surprise at trial. See: Duron Ontario Ltd. v Cladit Siding Solutions Inc. 2018 ONSC 3897, referencing Pennyfeather v. Timminco Ltd. 2011 ONSC 4257 at paragraphs 69 and 60.
[19] To succeed on a motion for particulars, the particulars sought must not be within the knowledge of the party requesting them and they must be necessary to enable the requesting party to plead. See: Physicians’ Services Inc. v. Cass 1971 CanLII 359 (CA).
[20] The Defendants take the position that cross-examination is necessary to establish that the Plaintiff knows the particulars of the allegations. The Defendants argue that the plaintiff has sufficient knowledge as to whether he committed the alleged acts or not, in order to plead.
[21] I share the concerns of the Plaintiff that the examination sought may amount to a premature discovery and potential fishing expedition, with little relevance to the motion for particulars. I question the Defendants’ motives in proceeding in this manner. It strikes me that they are attempting to conduct a premature discovery without having to reveal their hand by providing particulars of the alleged wrongdoings, such as the alleged unauthorized and unlawful transactions (the who, what, where, when of these transactions).
[22] The affidavit of the Plaintiff is, in many respects, uncontroversial. It attaches the pleadings, the demand and response to demand for particulars, and correspondence between counsel. Courts have denied the right to cross-examine on uncontroversial affidavits. See: Canada (Attorney General) v. Mennes, at para. 28. This makes sense from a practical perspective, as a cross-examination on such an affidavit serves little to no valid purpose and does not assist in the determination of the issues before the court.
[23] The court and the parties are also governed by the principle of proportionality as provided for in Rule 1.04(1.1).
[24] The only potentially controversial statement in the affidavit may be found at paragraphs 5 and 9, where the Plaintiff attests that he has no knowledge of the allegations in the Defence and Counterclaim and Third-Party Claim, which he denies.
[25] The Defendants shall be permitted to cross-examine the Plaintiff on his affidavit, but in order to avoid a premature discovery being conducted, and to guard against the dangers and prejudice of subjecting a party to discovery when the pleadings have yet to close due to a claim by that party that he had insufficient information to plead, I am exercising my discretion to limit the scope of cross-examination. Relevance and proportionality shall be the guiding factors in the cross-examination.
[26] Cross-examination shall be limited to questions pertaining to the Plaintiff’s knowledge of the particulars sought. This is the only relevance to the motion for particulars. While I appreciate that cross-examinations do not need to be limited to relevance to the motion if an issue is raised in an affidavit, it is appropriate to do so in this case. It would be highly prejudicial to permit cross-examination of the Plaintiff on his general denial of general allegations, before he receives particulars of these allegations. It also unnecessarily increases the cost of the litigation. What is relevant to the court on the motion for particulars is whether the Plaintiff has sufficient knowledge of what acts he is alleged to have committed in order to properly plead his defence. This is what the cross-examination is to be limited to. The cross-examination shall be conducted within 60 days of the release of this endorsement unless the parties agree otherwise.
[27] Costs of this motion shall be reserved to the judge hearing the motion for particulars. That judge will be in a better position to determine whether there was any necessity for a cross-examination, and therefore this motion.
"Original signed by" The Honourable Madam Justice T.J. Nieckarz
DATE: November 29, 2022
COURT FILE NO.: CV-22-0086-00, CV-22-0087-00
DATE: 2022-11-29
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Levchak et al. v. Automation Now Inc et al.
and
O’Shea v. Automation Now Inc.
HEARD: July 28, 2022 via Zoom
COUNSEL: R. Johansen, for the Applicant
E. Zablotny, for the Respondent
ENDORSEMENT
Nieckarz J.
DATE: November 29, 2022