Court File and Parties
Court File No.: CV-20-00645206 Motion Heard: 2022-01-26 Superior Court of Justice - Ontario
Re: William J. Harding, Plaintiff, Defendant by Counterclaim And: Fairwater Capital Corporation, Defendant, Plaintiff by Counterclaim
Before: Associate Justice L. La Horey
Counsel: Richard J. Nixon and Titus Totan, Counsel for the Moving Party Defendant, Plaintiff by Counterclaim Robert C. Taylor and Katherine Golobic, Counsel for the Responding Party Plaintiff, Defendant by Counterclaim
Heard: January 26, 2022 by videoconference
Reasons for Decision
[1] The defendant, Fairwater Capital Corporation (“Fairwater” or the defendant), brings this motion to quash three Rule 39.03 summonses to witness served by the plaintiff, William J. Harding (“Mr. Harding” or the plaintiff), on employees of Fairwater, in respect of his forthcoming pleadings motion scheduled to be heard by me on March 15, 2022.
[2] For the reasons that follow, I grant the motion and quash the summonses.
Background
[3] Mr. Harding was the defendant’s President and Chief Investment Officer from January 2, 2020 until his termination on June 26, 2020. On August 6, 2020, Mr. Harding commenced this action for wrongful dismissal in which he claims, among other things, damages for wrongful dismissal and unpaid vacation pay. In his statement of claim, Mr. Harding alleges that he was terminated without cause on June 29, 2020.
[4] Fairwater served a demand for particulars in which it, inter alia, sought particulars of the claim for vacation pay, including the dates on which Mr. Harding took vacation and the period for which the unpaid vacation pay was claimed. Mr. Harding’s response to demand for particulars did not provide any particulars, stating that the demanded particulars were within the defendant’s knowledge.
[5] On October 13, 2020, Fairwater served its statement of defence and counterclaim. In it Fairwater admitted paragraph 10 of the statement of claim, which provided that: “Mr. Harding was terminated, without cause, by letter dated June 29, 2020.” That statement was repeated in paragraph 14 of the pleading, in which Fairwater also stated that it provided salary in lieu of notice in accordance with the employment agreement. Fairwater also pleaded that no vacation pay was owing to Mr. Harding because he took all the paid vacation to which he was entitled.
[6] Mr. Harding delivered a reply and defence to counterclaim on November 16, 2020, in which he pleaded that he did not take any vacation during his employment with Fairwater.
[7] On November 26, 2020, the defendant delivered a reply to defence to counterclaim in which it claimed that it had after-acquired cause to terminate Mr. Harding’s employment. Fairwater alleges that until it received the reply to defence to counterclaim, it believed that Mr. Harding was on vacation on nine days in February 2020 that he did not report to Fairwater’s office. The defendant alleges that if Mr. Harding was not on vacation on those nine days, he was in breach of his employment agreement.
[8] The parties attended two case conferences with Justice Sharma concerning a discovery plan and the plaintiff’s proposed motions. At the second case conference, the defendant agreed to amend its amended statement of defence and counterclaim to address concerns about its pleading identified by the plaintiff. In his endorsement of May 7, 2021, Justice Sharma stated that there was merit to the plaintiff’s arguments with respect to the defendant’s pleadings. Justice Sharma directed that any pleadings motion required after the parties amended their pleadings should be brought before an Associate Judge. He decided that it was premature to schedule the plaintiff’s contemplated Rule 21 motion until the pleadings were finalized. Justice Sharma did not hear any motion on the pleadings, and both parties confirmed that there is no res judicata issue and that Justice Sharma’s comments are not binding upon me.
[9] On May 17, 2020, the defendant delivered its amended amended statement of defence and counterclaim (“Fairwater’s Amended Pleading”). Fairwater “moves” into this pleading, allegations that it made in its reply to defence to counterclaim. Fairwater’s Amended Pleading leaves unchanged its pleading that it terminated the plaintiff’s employment on a without cause basis on June 26, 2020. It includes the pleading of after-acquired cause and contains the statement that until Fairwater read the plaintiff’s reply and defence to counterclaim served on November 16, 2020, Fairwater believed that Mr. Harding was on vacation on the nine days he was away in February 2020.
[10] The plaintiff has delivered a notice of motion dated October 15, 2021 seeking an order striking out portions of Fairwater’s Amending Pleading, inter alia, including the allegations of after-acquired cause, “without withdrawing its express admissions” in the previous pleading that it had terminated the plaintiff without cause. This is the motion scheduled to be heard by me on March 15, 2022.
[11] Although the plaintiff has not served his motion record in this matter, he has served a Rule 39.03 summons to witness on each of: (1) Michael Gardiner, the Chairman of Fairwater, (2) Rebecca Gardiner, a Vice President and member of the Board of Directors of Fairwater and Mr. Gardiner’s daughter; and (3) Kelly Murray, Fairwater’s office manager.
[12] Fairwater brings this motion to quash the three Rule 39.03 summonses. Prior to serving the motion, Mr. Nixon advised counsel for the plaintiff that after Mr. Harding serves his motion record, Fairwater will serve a responding affidavit from Mr. Gardiner and the plaintiff will have the opportunity to cross-examine Mr. Gardiner. This was not satisfactory to the plaintiff and the plaintiff has not withdrawn the summonses. At the hearing, Mr. Nixon undertook to produce Mr. Gardiner for cross-examination even if the defendant chooses not to deliver an affidavit from Mr. Gardiner.
Position of the Parties
[13] Fairwater submits that the summonses should be quashed because the plaintiff has not shown that the evidence he seeks to obtain from the three Rule 39.03 examinations is relevant to the motion to strike out its pleading. In argument, Mr. Nixon conceded that Mr. Gardiner does have relevant evidence on the pending motion. However, his evidence is relevant to the test for withdrawing an admission, in the event that Fairwater’s primary argument on the upcoming motion is not accepted. Fairwater’s main argument on the pending motion is that Fairwater has not withdrawn an admission and its pleading is not inconsistent. It is in that context that Mr. Gardiner’s evidence is relevant. Mr. Gardiner’s evidence on the issues relating to Mr. Harding’s absences is not relevant or necessary to the pending motion. Ms. Gardiner and Ms. Kelly have no relevant evidence on the pending motion. Fairwater further submits that the three summonses are an abuse of process.
[14] The plaintiff argues that he has a prima facie right to examine witnesses under Rule 39.03. The onus is then on Fairwater to demonstrate that the exercise of this right would amount to an abuse of process. This is a high bar which Fairwater cannot meet.
[15] The plaintiff submits that the evidence of the witnesses is clearly relevant to his pending motion to strike out the allegations of after-acquired cause based upon Mr. Harding’s alleged absences from the office. Fairwater pleads the allegation of after-acquired cause as a defence to the wrongful dismissal claim and as the basis for a counterclaim seeking return of monies paid to Mr. Harding, including monies paid in lieu of notice of termination. The plaintiff submits that Fairwater’s Amended Pleading demonstrates that each of the witnesses has relevant evidence, as Fairwater pleads that each of the witnesses had separate conversations with Mr. Harding about his alleged absences and obtained explanations for those absences prior to his termination without cause. Fairwater has admitted relevance by offering to file Mr. Gardiner’s affidavit on the pending motion.
[16] Mr. Harding denies that the real purpose of the summons is discovery and says that he has agreed to limit any examination of the witnesses to the issues relevant to the motion and has only sought relevant documents.
Law and Analysis
[17] Rule 39.03 of the Rules of Civil Procedure provides that “a person may be examined as a witness before the hearing of a pending motion or application for the purpose of having a transcript of his or her evidence available for use at the hearing.”
[18] The applicable test on a Rule 39.03 motion is not in dispute. The test has been set out by the Court of Appeal as follows:[^1]
[A]n examination under rule 39.03 is appropriate when the evidence sought is relevant to any issue raised on the main application. (See Payne v. Ontario (Human Rights Commission) (2000), 2000 5731 (ON CA), 192 D.L.R. (4th) 315 (Ont. C.A.) and Consortium Development (Clearwater) Ltd. v. Sarnia, 1998 762 (SCC), [1998] 3 S.C.R. 3). The onus is on the party seeking to conduct the examination to show on a reasonable evidentiary basis that the examination would be conducted on issues relevant to the pending application and that the proposed witness was in a position to offer relevant evidence.
[19] The court must consider not only relevance, “but also whether the right to examine would be an abuse of process, which includes considering whether the underlying application has merit.”[^2]
[20] In the underlying motion, Mr. Harding relies on Rule 25.11 and Rule 51.05 of the Rules of Civil Procedure.
[21] Rule 25.11 provides that:
25.11 The court may strike out or expunge all or part of a pleading or other document, with or without leave to amend, on the ground that the pleading or other document,
(a) may prejudice or delay the fair trial of the action;
(b) is scandalous, frivolous or vexatious; or
(c) is an abuse of the process of the court.
[22] Rule 51.05 provides that: “An admission in a pleading may be withdrawn on consent or with leave of the court.”
[23] The plaintiff takes the position that the pleading of after-acquired cause is the withdrawal of an admission and therefore the defendant is required to bring a motion for leave to withdraw the admission under Rule 51.05. Fairwater says that it has not withdrawn an admission, and therefore no motion is necessary. Accordingly, the plaintiff has brought its motion to strike out parts of the pleading relying on Rule 25.11 and Rule 51.05.
Relevance
[24] It is conceded that Mr. Gardiner has relevant evidence on the motion as noted above, and the defendant has agreed to produce him for cross-examination, whether or not he files an affidavit on the pending motion.
[25] It is difficult to see what relevant evidence Ms. Gardiner or Ms. Kelly could have on a Rule 25.11 motion given the applicable test. A court will strike out a pleading on the basis that is frivolous or vexatious or an abuse of the process of the courts only in the clearest of cases and where it is plain and obvious that the case cannot succeed.[^3] A Rule 25.11 motion is not a determination of the merits.[^4] Examination of these witnesses about Mr. Harding’s alleged absences goes to the merits of Mr. Harding’s claims. The merits of the after-acquired cause issue are not being determined on Mr. Harding’s forthcoming motion. It is not a summary judgment motion.
[26] Although the issue of whether or not the defendant’s Amended Pleading has the effect of withdrawing an admission is not being determined on this motion, and the issue was not fully argued, the defendant has made a comprehensive argument that it has not withdrawn any admission in the Amended Pleading and that its Amended Pleading is not inconsistent. If so, it will not need to satisfy the test for leave to withdraw an amendment. However, even if the court concludes that an admission has been withdrawn and therefore leave is required, evidence is required only to show that there is a triable issue with respect to after-acquired cause,[^5] not that the defendant will ultimately prevail. On a motion for leave to withdraw an admission, evidence may also be tendered on the issues of prejudice and whether the admission was inadvertent or resulted from wrong instructions.^6 With respect to the latter issue, the defendant has said that it will serve Mr. Gardiner’s affidavit in which he will attest to that fact that he was the one providing instructions on the pleading. Therefore, provided that Mr. Gardiner’s affidavit says this, Ms. Gardiner and Ms. Kelly will not have relevant evidence.[^7] I cannot see how any of the defendants could have relevant evidence as to any prejudice to the plaintiff, except potentially in response to an affidavit that the plaintiff has not tendered.
[27] The plaintiff in his submissions points to the fact that Fairwater has not produced a draft of Mr. Gardiner’s affidavit, “so it is not known what Mr. Gardiner will be saying with respect to his conversations with Mr. Harding or the other witnesses”. However, the reason we do not have evidence from Mr. Gardiner at this point is because of the plaintiff’s decision to serve the summonses prior to filing his motion record and waiting to see the defendant’s response. The defendant is not obliged to file a draft affidavit. Further, the plaintiff in making this statement is assuming that Mr. Gardiner is going to provide hearsay evidence in his affidavit and this is by no means clear.
[28] However, I do not need to decide the issue of relevance, given my conclusion that the summonses are an abuse of process.
Abuse of Process
[29] Where the proposed examination is a fishing expedition or the document request in the summons is overbroad, the court may quash the summons as an abuse of process.[^8]
[30] The plaintiff has delivered three revised identical notices to produce dated December 7, 2021 in respect of the three Rule 39.03 summonses.[^9] The revised notice to produce requires each of Mr. Gardiner, Ms. Gardiner and Ms. Murray to produce the following documents:
A copy of Mr. Harding’s employment agreement dated December 16, 2019;
A copy of Mr. Harding’s job description;
A copy of the vacation policy and/or time off policy of Fairwater Capital corporation during Mr. Harding’s employment, and any changes to such policy/policies after Mr. Harding’s employment was terminated;
A copy of any policy of Fairwater Capital Corporation during Mr. Harding’s employment mandating where its employees are permitted to work, and any changes to such policy/policies after Mr. Harding’s employment was terminated;
A copy of the vacation records of all Fairwater Capital Corporation employees during Mr. Harding’s employment;
Any records pertaining to the time spent by Michael Gardiner, Rebecca Gardiner, and Scott Gardiner at Fairwater Capital Corporation’s office during Mr. Harding’s employment;
A copy of Mr. Harding’s Microsoft Office calendar;
All records, documents, letters, memoranda, notes, emails and other documentation, or any copy or extract from any such documents, pertaining to:
a. any conversations between Kelly Murray, Rebecca Gardiner, Michael Gardiner and Mr. William Harding referenced at paragraph 12(d)(i – ix) of the Defendant’s Amended Amended Statement of Defence and Counterclaim dated November 1, 2021;
b. any conversations between Kelly Murray, Rebecca Gardiner, and Michael Gardiner about the conversations with Mr. Harding referred to in point (a) above; and
c. any conversations between Kelly Murray, Rebecca Gardiner, Michael Gardiner and any other person regarding the conversations with Mr. Harding referred to in point (a) above.
- any other relevant documents as defined by the Rules of Practice.
[31] The breadth of this list of documents for a pleadings motion is remarkable. The plaintiff is not a responding party on a motion for summary judgment, where he is required to put his best foot forward as was the case in Seelster Farms Inc v Ontario.[^10]
[32] Even on a generous view of relevance, it is difficult to see how many of the categories of documents could possibly be relevant to the pending motion. For example, it is hard to fathom how the request for the “vacation records of all Fairwater Capital Corporation employees during Mr. Harding’s employment” or “records pertaining to the time spent by Michael Gardiner, Rebecca Gardiner, and Scott Gardiner at Fairwater Capital Corporation’s office during Mr. Harding’s employment” would be relevant at an examination for discovery, let alone on a pleadings motion. Other items in the documents list appear to be documents that Mr. Harding would likely have in his possession, e.g. his employment agreement, his job description and his Microsoft Office calendar.
[33] It is manifest from a review of this extensive list of documents, that the proposed examinations are a fishing expedition. It is apparent that the summonses are an attempt to use the pending motion to initiate an early discovery process, possibly with a view to a potential summary judgment motion. This conclusion is buttressed by the fact that Mr. Harding seeks to examine three witnesses with identical requests for documents. The plaintiff is entitled to examine for discovery only one representative of the defendant, absent consent or leave of the court (Rule 31.03(2)(b)). Assuming that Mr. Gardiner was the chosen representative, Mr. Harding would not be entitled to the oral testimony of Ms. Gardiner and Ms. Murray prior to trial, absent consent or leave of the court, save in the possible case of a summary judgment motion. In the ordinary course, the plaintiff would have to be content with their anticipated evidence on information and belief via Mr. Gardiner.
[34] The fact that the plaintiff has served the summonses prematurely, in the sense that he had not delivered anything except a notice of motion, further suggests that the plaintiff is embarking on a fishing expedition.
[35] Given the foregoing, and given that the defendant has undertaken to produce Mr. Gardiner for cross-examination, whether or not he provides an affidavit, I conclude that the three summonses are an abuse of process and should be quashed.
Disposition and Costs
[36] The defendant’s motion is granted.
[37] I encourage the parties to agree to costs of this motion, bearing in mind the presumptive rule that costs of a motion are payable to the successful party on a partial indemnity basis within 30 days.[^11]
[38] If the parties cannot agree on the costs, they may file written costs submissions not to exceed three pages (double-spaced) excluding costs outlines. The defendant shall deliver its costs submissions by February 21, 2022, and the plaintiff shall deliver his costs submissions within two weeks thereafter.
L. La Horey, A.J.
Date: January 31, 2022
[^1]: Ontario Federation of Anglers & Hunters v Ontario (Ministry) of Natural Resources, 2002 41606 (ONCA) at para 30
[^2]: Ibid at para 57
[^3]: Baradaran v Alexanian, 2016 ONCA 533 at para 15
[^4]: Ibid at para 16
[^5]: Vassos v Enterra Holdings Inc., 2019 ONSC 661 at para 12
[^7]: If Mr. Gardiner’s affidavit says something different than what is represented counsel’s letter, the plaintiff may be in a position to seek further examinations. However, the fact that we don’t have Mr. Gardiner’s affidavit, is as a result of the plaintiff’s decision to serve summonses at this early stage.
[^8]: Seelster Farms Inc. v Ontario, 2017 ONSC 4756 para 40 – 41; Derenzis v Scoburgh, 2021 ONSC 3286 at paras 38 – 40, 60
[^9]: The original summons included a request for all documents “within the scope of this proceeding”.
[^10]: Seelster Farms Inc. v Ontario, at para 89
[^11]: DUCA Financial Services Credit Union v Bozo, 2010 ONSC 4601 at para 5