COURT FILE NO.: CV-18-138026
DATE: 2023-03-17
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: THAYALINY WIJEYATHUNGAM, Plaintiff/Moving Party
AND:
FOREST HILL HOMES (CORNELL ROUGE) LIMITED and IAN CHEN, Defendants/ Respondents
BEFORE: The Honourable J. Dawe
COUNSEL: N. Makki, Counsel, for the Plaintiff/Moving Party
S. Greaves, Counsel, for the Defendant/Respondent Forest Hill Homes (Cornell Rouge) Limited
No one appearing for the Defendant/Respondent Ian Chen
HEARD: March 15, 2023
ENDORSEMENT (Refusals Motion)
I. Overview
[1] In 2016, the plaintiff Thayaliny Wijeyathungam agreed to buy a home in a new housing development that was being built by the defendant Forest Hill Homes (Cornell Rouge) Limited ("Forest Hill"). When she signed the agreement of purchase and sale, construction of the house that she was purchasing had not yet started.
[2] Ms. Wijeyathungam later refused to close on the transaction. She now contends that she had been misled into believing that the home she was purchasing would be fully detached, whereas the home as constructed was semi-detached. She is suing both the vendor, Forest Hill, and her real estate agent, the defendant Ian Chen.
[3] During examination for discovery of a representative from Forest Hill named Ryan Latchman, who was the sales representative who had dealt with Ms. Wijeyathungam in 2016, counsel for the plaintiff asked a series of eight questions that were all directed in various ways at eliciting evidence about whether Forest Hill had received similar complaints from other purchasers about being misled by Forest Hill's promotional materials and/or representations into thinking that they were buying fully-detached rather than semi-detached homes. Counsel for Forest Hill refused to allow Mr. Latchman to answer these questions on the basis that they were not relevant.
[4] Ms. Wijeyathungam now moves for an order that Mr. Latchman be required to answer the eight disputed questions.
[5] She also seeks an order granting her leave to amend her pleadings in accordance with the Amended Statement of Claim that she has filed in her motion record. Forest Hill consents to this latter order, and Mr. Chen does not oppose it. I advised counsel at the hearing that this aspect of the motion would be granted, and after hearing argument on the refusals issue I reserved my decision on the balance of the motion.
II. Analysis
A. Determining relevance
[6] Rule 31.06(1) of the Rules of Civil Procedure requires persons being examined for discovery to "answer, to the best of his or her knowledge, information and belief, any proper question relevant to any matter in issue in the action". The main question I must now decide is whether the eight disputed questions are "relevant" to "any matter in issue in the action".
[7] It is well-settled that relevance in civil actions is determined by the pleadings. As Morawetz J. (as he then was) explained in Sycor Technology Incorporated v. Kiaer, 2012 ONSC 5285, at para 23:
Relevance is determined by reference to the pleadings. A document is "relevant" if it is logically connected to and tending to prove or disprove a matter in issue.
This same standard applies to questions asked in oral discovery.
[8] In R. v. Calnen, 2019 SCC 6, [2019] 1 S.C.R. 301, at para. 108, Martin J. explained further (dissenting in part, but writing for the Court on this issue):
Relevance involves an inquiry into the logical relationship between the proposed evidence and the fact that it is tendered to establish. The threshold is not high and evidence is relevant if it has "some tendency as a matter of logic and human experience to make the proposition for which it is advanced more likely than that proposition would be in the absence of that evidence": R. v. White, 2011 SCC 13, [2011] 1 S.C.R. 433, at para. 36, quoting D. M. Paciocco and L. Stuesser, The Law of Evidence (5th ed. 2008), at p. 31. In other words, the question is whether a piece of evidence makes a fact more or less likely to be true. Relevance does not require a "minimum probative value": R. v. Arp, 1998 CanLII 769 (SCC), [1998] 3 S.C.R. 339, at para. 38.
[9] It is important to emphasize that a question will be relevant if the answer has the potential to make some material fact either more or less likely to be true: see, e.g., R. v. Truscott, 2006 CanLII 34698, at para. 19 (Ont. C.A.); R. v. Robinson, 2017 ONCA 645, at para. 57; R. v. Ohab, 2022 ONCA 592, at para 12. The party asking a question during discovery does not have to demonstrate that the witness's answer is likely to support the party's position on a disputed material fact. Indeed, for discovery purposes it can be equally important for a party to identify evidence that weighs against its position.
[10] It is also worth noting that my task on this motion is a narrow one. I do not need to determine all of the possible ways that a particular question or answer might conceivably be relevant. Identifying at least one basis of relevance will be sufficient to decide the issue before me.
B. The pleadings
[11] In her amended pleadings, at para. 1, the plaintiff frames her action against Forest Hill primarily as a challenge to the validity of the sales contract, seeking a declaration that the Agreement of Purchase and Sale is "void ab initio and/or rescinded" (para. 1(a)). She also pleads "misrepresentation and/or negligence" against her real estate agent, Mr. Chen (para. 1(e)). In addition, in relation to both defendants she seeks (at para. 1(f)):
A declaration that the Plaintiff is entitled to punitive and exemplary damages for misrepresentation by the Defendants ...
[12] The plaintiff goes on to then plead facts that expressly allege that Forest Hill misrepresented to her that she would be purchasing a detached home. For instance, at para. 6-8 she asserts:
The Defendant Forest Hill's sales office displayed only model detached houses and townhouses. All the marketing materials presented to the Plaintiff depicted the properties as detached homes or did not provide a description about the house. None of the marketing materials presented to the Plaintiff described any of the Defendant Forest Hill's properties as semi-detached.
The Defendant Forest Hill's employee and agent, Ryan Latchman, advised the Plaintiff that her Property would be similar to a model house in the sales office, which was a detached house, only that the Plaintiff's property would be slightly smaller.
At the time of signing the APS, Ryan Latchman advised the Plaintiff that the Defendant Forest Hill is only selling detached houses and townhouses at that time.
[13] She then states further at paras. 17-18:
Both before and after the signing of the APS, the Defendant Forest Hill represented to the Plaintiff that the property would be a detached house.
The Defendant Forest Hill's marketing materials depicted the Property as being a detached house.
At the time of signing the APS, Ryan Latchman failed to mention anything to the Plaintiff regarding the house being constructed as a semi-detached, whereby one side of the property is physically connected to the neighbouring property.
[14] Pleadings must be interpreted "generously", in the sense that they must be given "the widest latitude" that is "reasonable and not fanciful": 152729 BC Ltd v. Chicago Title Insurance Company Canada, 2022 ONCA 321, at para. 31.
[15] In my view, Ms. Wijeyathungam's pleadings, read as a whole, can reasonably be understood as advancing several different analytically distinct causes of action against Forest Hill. First, she can be understood as making a claim in contract based on the doctrine of unilateral mistake. As van Rensburg J.A. explained in Deschenes v. Lalonde, 2020 ONCA 304 at para. 32:
The law on rescission for unilateral mistake is that a party may seek rescission of a contract for its own unilateral mistake only where the mistake goes to a material term of the contract, where the other party knows or ought to know of the mistake, and where it would be unconscionable for the second contracting party to rely on the contract: 256593 B.C. Ltd. v. 456795 B.C. Ltd. (1999), 1999 BCCA 137, 171 D.L.R. (4th) 470 (B.C.C.A.), at p. 479. See also Gerald H. Fridman, The Law of Contract in Canada, 6th ed. (Toronto: Thomson Reuters Canada Limited, 2011), at pp. 252-54; Toronto Transit Commission v. Gottardo Construction Limited et al. (2005), 2005 CanLII 31293 (ON CA), 257 D.L.R. (4th) 539 (Ont. C.A.), at para. 30, leave to appeal refused, [2005] S.C.C.A. No. 491.
[16] For this claim to succeed, the trial court would have to be satisfied that Ms. Wijeyathungam's mistaken belief that she would be receiving a fully detached house went "to a material term of the contract", in the sense that it was "something that [went] to the root of the contract, or [was] fundamental to the contract": Deschenes, at para. 45. She would also have to show that Forest Hill either knew or ought to have known about her mistake, and that it would be "unconscionable" for Forest Hill to continue to insist on upholding the contract. However, Ms. Wijeyathungam would not have to show that Forest Hill induced her mistake by actively misrepresenting to her that the home that she was buying would be fully detached, as long as she can show that Forest Hill knew or ought to have known that she held this belief.
[17] Second, Ms. Wijeyathungam can be understood as claiming the equitable remedy of rescission, "which is available for a false or misleading representation that induce a contract": Deschenes, at para. 29. As van Rensburg J.A. noted at para. 30, "[t]he remedy of rescission is available even if the misrepresentation was made innocently". Moreover, as Rosenberg J.A. noted in Samson v. Lockwood, 1998 CanLII 1920, at para. 45 (Ont. C.A.)
Unlike an action for negligent misrepresentation, it seems that a party induced to enter a contract by a misrepresentation, even an innocent misrepresentation, need not show that the reliance on the misrepresentation was reasonable.
[18] Third, Ms. Wijeyathungam can be understood as making a claim in tort against Forest Hill for negligent misrepresentation. Although this cause of action is less clearly pleaded against Forest Hill than her other claims, it is at least implied by her claim at para. 1(f) that both defendants should be found liable for "punitive and exemplary damages for misrepresentation". Since it would be extremely difficult to claim exemplary or punitive damages for an innocent misrepresentation, I think this pleading also implies that Ms. Wijeyathungam is asserting that Forest Hill's alleged misrepresentations were at least negligent.
[19] Significantly, I am also satisfied from Forest Hill's own pleadings that it understands Ms. Wijeyathungam to be alleging that it and its agent, Mr. Latchman, actively induced her to purchase the property by misrepresenting it to be a detached home. At paras. 35-37 of its Statement of Defence, Forest Hill responds to the plaintiff's allegations by specifically denying having made any such misrepresentations, and by asserting to the contrary that Ms. Wijeyathungam "was aware that she was not purchasing a detached home".
C. Are the disputed questions relevant?
[20] The plaintiff argues that the refused questions in dispute:
... are relevant in that they could furnish similar fact evidence on a material issue, namely, whether the marketing materials and practices of Forest Hill Homes were sufficiently unclear as to have misled other purchasers into believing that the homes were detached when in fact they were not.
[21] Framing the issue in terms of similar fact evidence in my view introduces an unnecessary layer of complication into the analysis. There is considerable debate in the case law about whether a plaintiff's reliance on similar fact evidence can or should be expressly pleaded (see, e.g., Garwood Financial Ltd. v. Wallace, 1997 CanLII 12276 (Ont. S.C.J.), and over whether the issue of alleged similar acts by a defendant can properly be explored on discovery: see Howorth v. Danylkiw, 2009 CanLII 50226(Ont. S.C.J.).
[22] However, in the circumstances in this case I think the plaintiff's characterization of her proposed lines of questioning in this case as involving "similar fact evidence" is somewhat inapt, for two different reasons.
[23] First, as Binnie J. explained in R. v. Handy, 2002 SCC 56, [2002] 2 S.C.R. 908, the law limits the admissibility of similar fact evidence because it is ordinarily introduced to support chains of reasoning that involve propensity reasoning. That is, a party introducing similar fact evidence generally seeks to first establish that a defendant acted in a certain way in relation to another person, and then have the trier of fact infer from this that the defendant has a propensity to act in the same way towards other people, thereby making the complainant or plaintiff's similar allegations about the defendant's conduct towards him or her more likely to be true. For this reason, Binnie J. used the terms "similar fact evidence" and "propensity evidence" essentially interchangeably in his reasons.
[24] In the case at bar, however, I do not understand Ms. Wijeyathungam to be claiming that Forest Hill has some sort of innate corporate "propensity" to mislead purchasers into believing they are buying fully detached homes. Rather, she seems to be alleging in her pleadings that she was misled by Forest Hill's marketing materials because they were objectively misleading on this specific point, or at least because she herself found them unclear and confusing. To the extent that she hopes to show that other purchasers were similarly misled, her claim seems to be that they were misled by the same marketing materials, not by some independent misleading action that Forest Hill took in relation to them.
[25] Second, the similar fact evidence rule is a rule about the admissibility of evidence, not a rule of relevance. Propensity evidence is presumptively inadmissible in criminal trials not because it is irrelevant, but because it is often highly prejudicial. At the discovery stage in a civil action, however, the sole focus is on relevance, not admissibility. Ms. Wijeyathungam does not have to show that her questions will generate admissible evidence, only that they are "relevant" to "any matter in issue in the action".
[26] The eight questions in dispute that Ms. Wijeyathungam's counsel asked of Mr. Latchman during his examination for discovery, and which he refused to answer on the basis of irrelevance, were as follows:
(a) Are you aware of any other deals in this development that have resulted in complaints such as the ones that my client's just made?
(b) Were you involved in deals where complaints of this nature were made?
(c) Mr. Latchman, did the builder at some point send out an email to everyone who had complained, offering them a price adjustment?
(d) Did anyone complain to you personally, Mr. Latchman of a similar nature where they thought they purchased a detached house and it ended up being something else?
(e) Mr. Latchman do you know if anyone complained to someone else higher up at the company about having thought to have bought a detached house, but ended up with something else?
(f) Mr. Latchman, did you have occasion to testify in other proceedings where complaints of a similar nature were raised by other purchasers?
(g) Mr. Latchman do you know how those other complaints from other purchasers were resolved?
(h) Would you undertake to find out how many other cases of this nature there were and to advise?
[27] The common thread that connects most of these questions is that they are directed in ascertaining whether Forest Hill and/or Mr. Latchman were aware of other purchasers of homes in the Cornell Rouge development who have also claimed to have been misled into mistakenly believing that they were purchasing a detached rather than a semi-detached house.
[28] In my opinion, the question of whether any such other purchasers exist meets the low threshold test for relevance, namely, that it have "some tendency as a matter of logic and human experience to make the proposition for which it is advanced more likely than that proposition would be in the absence of that evidence": Calnen, at para. 108.
[29] None of Ms. Wijeyathungam's legal claims can succeed unless she can establish, at a minimum, that she honestly believed that she was contracting to buy a fully detached house. She claims to have subjectively believed this because of what Mr. Latchman told her, and because of what she read and saw in Forest Hill's marketing materials and displays.
[30] Accordingly, one of the central "propositions" that she seeks to establish at trial is that Forest Hill's marketing materials and/or Mr. Latchman's representations to her were potentially misleading and caused her to honestly believe that she would be receiving a fully detached home. She does not necessarily have to prove that her mistake was reasonable (see Samson v. Lockwood, at para. 45), but the trier of fact is far more likely to accept her claim as true if her mistake seems like a reasonable one for her to make in the circumstances.
[31] Since it is implausible as a matter of common sense and human experience to imagine that Forest Hill created special marketing materials that were shown only to Ms. Wijeyathungam, it can reasonably be inferred that there were probably many other potential customers who also saw and reviewed these same materials. Moreover, it is also reasonable to expect that a sales representative like Mr. Latchman would have given sales presentations to many other potential customers that were broadly similar to his presentation to Ms. Wijeyathungam. Indeed, Mr. Latchman acknowledged in his examination for discovery that he had no specific memory of meeting with Ms. Wijeyathungam, but he nevertheless expressed confidence about what he would have said or not said to her, based on his general practices and experiences dealing with other purchasers.
[32] If Ms. Wijeyathungam's claim that she was honestly misled by Forest Hill's marketing materials and/or Mr. Latchman's representations is true, it would be quite surprising if she were the only purchaser who was misled in this manner. Accordingly, as a matter of common sense and human experience, the existence of other purchasers who became similarly confused about what they were buying would make her claim appear at least somewhat more likely to be true. Conversely, the non-existence of any such other purchasers would make her claim seem at least somewhat less likely to be true.
[33] Forest Hill cites Ontario v. Rothmans Inc., 2011 ONSC 2504, at para. 129, where Perell J. noted that "[o]verbroad or speculative discovery is known colloquially as a 'fishing expedition', and is not permitted." However, Perell J. also explained that he was referring to questions that "go beyond the pleadings in an effort to find a claim or defence that has not been pleaded". As I have already explained, the main thrust of Ms. Wijeyathungam's proposed questions are in my view relevant to a material fact that is central to all of her pleaded legal claims.
[34] Moreover, her proposed questions cannot properly be pejoratively labelled a "fishing expedition" merely because she may not know in advance how Mr. Latchman will answer them. The right to discovery would be largely futile if parties could only ask questions to which they already know the answer. Indeed, if there are other purchasers who have made similar complaints to Forest Hill, this information lies within Forest Hill's particular knowledge. It is hard to see how Ms. Wijeyathungam could realistically obtain this information other than by getting it from Forest Hill or its representatives.
[35] Some of Ms. Wijeyathungam's proposed questions are also relevant on a second, analytically distinct basis, in that the answers may shed light on what Forest Hill knew about any complaints that were made by its purchasers, and when it first learned that its customers were claiming that its marketing materials and/or sales representations were unclear or misleading.
[36] Forest Hill's knowledge, or lack thereof, about any such complaints will be material in at least two different ways. First, the question of whether Forest Hill continued using the same marketing material even after purchasers complained that they had been misled by it will bear on the issue of Forest Hill's negligence, in relation to the third cause of action raised in Ms. Wijeyathungam's pleadings. Second, the issue of the nature and timing of Forest Hill's knowledge could also have some bearing on Ms. Wijeyathungam's claim for punitive or exemplary damages.
[37] It is important to reiterate that the relevance of the proposed questions does not depend on predicting whether the answers Mr. Latchman gives to them are likely to be helpful or harmful to Ms. Wijeyathungam's case. As I have previously noted, relevance merely requires that evidence make a material fact "more or less likely to be true". It is entirely possible that Mr. Latchman's answers to Ms. Wijeyathungam's questions will turn out to be entirely unhelpful to her, and they may instead be helpful to Forest Hill. This will not make the questions, or the witness's answers, any less relevant.
[38] Returning to the specific questions in dispute, four of the questions – namely, (a), (d) (e), and (h) – are all directed at obtaining essentially similar information, namely, whether any other purchasers have made similar complaints about being misled into believing they were buying a detached house.
[39] As I have already explained, I think that the answers to these questions will be relevant to the issue of whether Ms. Wijeyathungam's own complaint is legitimate. If some other purchasers have made similar complaints, this will make it seem at least slightly more likely that Ms. Wijeyathungam's own complaint is at least honestly held, if not reasonable. On the other hand, if there have been no similar complaints, this will tend to undermine the credibility and plausibility of Ms. Wijeyathungam's claim that she alone was misled about what sort of house she was buying by Forest Hill's marketing materials and representations.
[40] Depending on the answers, these questions could also be relevant to the issue of Forest Hill's knowledge of the potentially confusing nature of its marketing materials, and when it first acquired this knowledge.
[41] Question (b), which asks whether Mr. Latchman was personally involved in any other deals where similar complaints were made, is also relevant on a related but distinct basis. If similar complaints were made, but they all arose out of sales made by other Forest Hill employees, this may weigh to some extent against Ms. Wijeyathungam's claim that Mr. Latchman specifically told her that the house she was purchasing would be fully detached. On the other hand, if other purchasers have made similar complaints specifically about Mr. Latchman's presentations to them, this will provide some potential support for Ms. Wijeyathungam's claim that his presentation to her misrepresented the nature of the house she was agreeing to purchase.
[42] Question (c), which asks whether Forest Hill ever sent out an email to anyone who complained to offer them a price adjustment, is potentially relevant to Ms. Wijeyathungam's claim for the equitable remedy of rescission of the contract on the basis of misrepresentation. If such an email was sent, its contents could conceivably be found to be an admission by Forest Hill that its marketing materials and/or sales presentation were misleading. This could support Ms. Wijeyathungam's claim for rescission, even if any misrepresentations made by Forest Hill were entirely innocent when they were made.
[43] Conversely, if it turns out that there was no such email ever sent, or that an email was sent but that Forest Hill denied making any misrepresentations, this information will still be relevant, although it may tend to support Forest Hill's position and undermine Ms. Wijeyathungam's claims.
[44] Question (f), which asks whether Mr. Latchman has testified in any other proceedings involving similar complaints, is less directly relevant to any material issue raised by the pleadings. It also may turn out to be answered by Mr. Latchman's responses to earlier questions, since if he has no knowledge of any similar complaints, it will necessarily follow that he could not have testified as a witness in related legal proceedings. However, I think it is potentially a legitimate and proper follow-up question to the questions in (a), (b), (d) and (e), depending on Mr. Latchman's answers. If there were prior similar complaints, and if Mr. Latchman has testified as a witness in relation to any of them, any evidence he gave may well be relevant.
[45] Finally, question (g), which asks if Mr. Latchman knows how other complaints were resolved, may not be a proper question if the witness denies any knowledge of any such complaints. However, it may be an appropriate follow-up question, depending on how Mr. Latchman responds to the previous questions when they are put to him.
[46] In summary, I find that the proposed questions (a) through (e) and (h) meet the low threshold standard for relevance. Question (f) and (g) may be appropriate follow-up questions depending on the answers to these other questions.
D. Forest Hill's alternative arguments
[47] Forest Hill makes two alternative arguments that I will now address briefly.
[48] First, Forest Hill contends that the proposed questions are precluded by rule 31.06(b), which bars questions that are "directed solely to the credibility of the witness".
[49] Rule 31.06(b) does not prohibit asking questions that may have some potential bearing on a witness's credibility if they are also relevant to some other material fact in issue, which I have found the proposed question at issue here are. Moreover, in the circumstances of this case most of the proposed questions, with the possible exceptions of (b) and (d), have little or no discernible bearing on Mr. Latchman's credibility in any event.
[50] Second, Forest Hill argues that even if the proposed questions are relevant, they should be disallowed because their prejudicial effect outweighs their probative value.
[51] The short answer to this argument is that I am not deciding, one way or the other, whether any evidence that emerges from Mr. Latchman's examination for discovery will be admissible at trial. Requiring Mr. Latchman to answer the proposed questions, and any reasonable follow-up questions that flow from his answers, will simply give the parties a proper foundation to argue admissibility issues in front of the trial judge in due course.
III. Disposition and costs.
[52] In the result, both aspects of the plaintiff's motion are granted. Questions (a) through (e) and (h) are relevant and should be answered, along with any reasonable follow-up questions that flow from the witness's answers, which may possibly include questions (f) and (g).
[53] The plaintiff's request for leave to amend her statement of claim is also granted, on Forest Hill's consent and with the request unopposed by Mr. Chen.
[54] At the hearing, counsel advised that they were agreed that the costs of this motion to the successful party should be fixed at $5,000 all inclusive. I agree that this a reasonable and appropriate figure, and accordingly fix costs of this motion at $5,000 all inclusive, payable by Forest Hill to Ms. Wijeyathungam forthwith.
[55] Once counsel have agreed on the form and content of a draft order in accordance with these reasons, it may be sent to my judicial assistant for my approval and signature.
The Honourable J. Dawe
Date: March 17, 2023