COURT FILE NO.: CV-20-653366
DATE: 20230911
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BEACON UTILITY CONTRACTORS LIMITED
Plaintiff/Respondent
– and –
SANSCON CONSTRUCTION LTD., ON-TEK ELECTRIC SERVICES LIMITED, CARLO SANSALONE, SCOTT JOHNSON, KEITH JOHNSON, DOMINIC GONSALVES, 2662441 ONTARIO LIMITED and APEX INFRASTRUCTURE GROUP
Defendant/Appellant
Emilio Bisceglia, for the Plaintiff/Respondent
Jonathan Frustaglio, for the Defendants/Appellants
HEARD: August 25, 2023
Papageorgiou J.
Overview
[1] The plaintiff, Beacon Utility Contractors Limited (“Beacon”) is a contractor that provides electrical utility work.
[2] Beacon alleges that its former employees, Scott Johnson, Keith Johnson and Dominic Gonsalves, secretly established a competing enterprise while they were still employed with Beacon, and that together, the defendants misappropriated Beacon’s corporate opportunities. Further, while employed, they made inappropriate decisions with respect to Beacon’s customers resulting in non-payment of invoices owed to Beacon for work done.
[3] On February 9, 2023, Associate Judge Josefo ordered that the defendants produce further and better affidavits of documents.
[4] The defendants appeal that decision.
Decision
[5] For the reasons that follow, I am dismissing the appeal.
Issues
[6] This appeal involves the following issues:
• Issue 1: Did Associate Judge Josefo err by refusing to grant an adjournment?
• Issue 2: Did Associate Judge Josefo err by making the Order without sufficient evidence?
• Issue 3: Did Associate Judge Josefo err by referencing a list of documents that should be contained in the affidavits of documents?
Issue 1: Did Associate Judge Josefo err by refusing to grant an adjournment?
[7] The short answer is that he did not.
[8] In arriving at this conclusion, I have considered: a) the test for granting an adjournment; and b) whether there is any basis to interfere with Associate Judge Josefo’s exercise of his discretion.
[9] The decision on whether to grant an adjournment is discretionary. An appellate court will not interfere with the exercise of this discretion unless it is shown that the judge failed to exercise their discretion judicially. Deference must be given to such a decision: Ariston Realty Corp. v. Elcarim Inc. (2007), 2007 CanLII 13360 (ON SC), 51 C.P.C. (6th) 326 (Ont. S.C.), at paras. 30 and 37; Van Decker Estate v. Van Decker, 2022 ONCA 712, 163 O.R. (3d) 227, at para. 4; and Supreme Sweets Inc. v. Perlman, 2023 ONSC 487, at para. 10.
[10] Associate Judge Josefo gave the following reasons for denying the adjournment:
[T]he materials were served well and early, and the defendant sought an adjournment basically yesterday on the eve of the motion. In my view, the adjournment should not have been sought. Counsel knew of the date and should have made arrangements to be here. Ms. Menard who was here acknowledged that she was not fully briefed on the case, yet in my view she soldiered on and did an admiral job for her client, and so I believe that it was appropriate that I deny the adjournment and allow this case to proceed. I would note in coming to that conclusion that motion days are quite precious these days, and to put this matter off would mean that it would languish for at least six or more months, and that would not do justice to either side in this civil action.
[11] The argument made by the defendants before me was that their lawyer, Mr. Frustraglio, had to attend at another court to deal with an urgent criminal matter which arose suddenly.
[12] It was the defendants’ burden to establish this fact before the Associate Judge, as well as why no other lawyer from Mr. Frustraglio’s firm could address the matters at issue, with evidence: Senjule v. LSUC, 2013 ONSC 2817, 309 O.A.C. 1 (Div. Ct.), at para. 24; The Law Society of Upper Canada v. Igbinosun, 2009 ONCA 484, 96 O.R. (3d) 138, at para. 37; and Reynolds v. Wood, 1994 CarswellOnt 4609 (Gen. Div.), at para. 21.
[13] However, they failed to do so.
[14] Apart from Mr. Frustaglio, there was another lawyer listed on the Statement of Claim and the Demand for Particulars as the lawyer for the defendants, Mr. Roy Moubarak. The record before the Associate Judge contained no evidence explaining why that other lawyer, who must have had knowledge of the case, could not attend. The record contained no evidence documenting Mr. Frustraglio’s need to be in another court or any explanation as to why no one else from his law firm could attend that other matter. It contained no evidence to support the argument that the failure to grant the adjournment interfered with a determination of the motion on its merits, that it interfered with substantive or procedural justice, or that there was any non-compensable prejudice. See Ariston, at para. 34, where the court discusses these as factors which a court may take into account in considering an adjournment request.
[15] Instead, the facts before the court were that the motion had been scheduled well in advance and that there was a lawyer present who Associate Judge Josefo found capably argued the motion. Further the issue was an uncomplicated motion for further and better affidavits of documents.
[16] There is no basis to conclude that the Associate Judge failed to exercise his discretion judicially.
Issue 2: Did Associate Judge Josefo err by making the Order without sufficient evidence?
[17] I conclude that Associate Judge Josefo did not err in this respect.
[18] In arriving at this conclusion I have considered: a) the standard of review; b) the test for ordering a further and better affidavit of documents; and c) whether Associate Judge Josefo applied the correct law and/or made a palpable and overriding error of fact.
[19] The standard of review of an associate judge’s order on questions of law is correctness: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8. The standard of review on questions of fact or mixed questions of fact and law is palpable and overriding error: Housen, at para. 10.
[20] Rule 30.03 of the Rules of Civil Procedure, R.R.O 1990, Reg. 194 (the “Rules”) provides that a party must serve an affidavit of documents disclosing “the full extent of the party’s knowledge, information and belief” as to “all documents relevant to any matter in issue in the action”.
[21] Rule 30.06 provides that a court may order a further affidavit of documents “where the court is satisfied by any evidence that a relevant document” in that party’s possession may have been omitted. [Emphasis added]
[22] The Associate Judge considered the necessity of there being evidence to support the motion. He specifically cited the case White v. Winfair Management Inc., 16 C.P.C. (6th) 41.
[23] He specifically noted that the evidence on such a motion must be more than speculation.
[24] Therefore, he did not make an error of law.
[25] The Associate Judge’s ultimate conclusion that there was sufficient evidence was a finding of mixed law and fact. Therefore, to succeed, the defendants here must demonstrate a palpable and overriding error.
[26] The Associate Judge had before him the affidavit of Larry Tricinci ("Mr. Tricinci"), an officer and director of Beacon. Mr. Tricini’s affidavit contained the following chronology, attaching relevant documents as exhibits:
• The Statement of Claim was issued on December 17, 2020.
• The defendants served a Demand for Particulars on March 19, 2021.
• Beacon delivered its Response on June 23, 2021.
• The defendants delivered their Statement of Defence and Counterclaim on September 7, 2021.
• Beacon delivered its defence to the counterclaim on September 24, 2021.
• Beacon delivered its affidavit of documents on March 14, 2022.
• There were many follow-up emails related to the defendants’ affidavits of documents and a discovery plan.
• On September 13, 2022, each of the defendants delivered an unsworn affidavit of documents which indicated that none of them had any relevant documents.
• On October 7, 2022, Beacon requested further and better affidavits of documents.
• On October 26, 2022, Beacon followed up and also sent the defendants a draft motion record.
• Thereafter the motion returnable February 9, 2023 was scheduled.
[27] The final paragraph of Mr. Tricinci’s affidavit reads:
I verily believe that the List of Documents, which is attached as Schedule "A" to the Notice of Motion dated November 2, 2022, outlines relevant and necessary documents that should, at an absolute minimum be produced by the respective Defendants given the claims advanced herein by the parties, and in particular, the Counterclaims. Attached and marked as Exhibit "P" is the List of Documents.
[28] The Associate Judge specifically considered the defendants’ argument that Mr. Tricinci’s affidavit contained insufficient evidence. He stated:
In this case, the question is whether the documents are relevant, and of course one looks to the pleadings to make that determination. But what makes this particular case unique is that there have been no documents produced by the defendants in this action. Their Schedule As are bare, and that is what makes this case unique. That to me is a very unlikely position.
Responding counsel for the defendants makes the point that there should be some evidence of documents, yet when I review the affidavit of Mr. [Tricinci], paragraph 31 expresses his view as to what would be expected to be found. Whether that's perfect evidence or not, it's more than speculation; it's a testimony that was not challenged in cross-examination by a party to the action and someone who was clearly well involved in the dispute that frames this particular case.
Again, I come back to the fact that if there had been some production of some documents, I would be far more supportive of the defendants’ view that the party should proceed to discoveries and then further documents that may arise and may be found to be relevant would be produced. But not in this case.
[29] There was no palpable and overriding error made by the Associate Judge. As noted by the Associate Judge, the defendants could have, but failed to challenge any of assertions in Mr. Tricinci’s affidavit. As well, the defendants elected not to cross examine Mr. Tricinci and it was implausible that the none of the defendants had any relevant documents, particularly since there is a significant counterclaim asserted by several of them.
[30] While the defendants assert that Beacon should have proceeded to discovery to establish that documents exist, in Apotex Inc. v. Richter Gedeon Vegyeszeti Gyar RT, 2010 ONSC 4070, Master Short indicated that it is not necessary to first conduct an examination for discovery: “If a more efficient solution exists, without creating unfairness to either of the parties, the costs and delay inherent in successive rounds of examination and productions should be avoided”: at paras. 121-123. He further recognized, at paras. 119-120:
While the evidence in support of the motion cannot be based on speculation or guesswork, the level of proof required must take into account that one party has access to the documents and the moving party does not….
It would be bizarre indeed if the level of proof required to grant relief on a production motion was so high that the only way to obtain it was to get possession of the documents themselves.
[31] The process sought by the defendants would not be efficient and would only lead to further delays in this already significantly delayed proceeding.
Issue 3: Did Associate Judge Josefo err by referencing a list of documents that should be contained in the affidavit of documents?
[32] The same standard of review applies to this issue as to Issue 2. I conclude that Associate Judge Josefo did not err in this regard either.
[33] The defendants say that the list appended to Associate Judge Josefo’s Order is overly broad. They contend that the items listed are not limited as to time, duration or scope, and are thus vague.
[34] They say that this is an error of law and that the standard of correctness applies.
[35] I disagree. The determination of the type of documents that should be listed in an affidavit of documents based on relevance and proportionality is a mixed question of law and fact. The standard of review is whether the Associate Judge made a palpable and overriding error.
[36] The documents in Schedule “A” to Associate Judge Josefo’s Order fall into the following categories: correspondence; banking records; records related to alleged misappropriated projects; documents produced using Beacon’s estimating program; and calendars and journals.
[37] Associate Judge Josefo went through each and every category of document requested and made handwritten notes thereon, demonstrating that he turned his mind to issues of relevance and proportionality.
[38] Most of the documents set out in Schedule “A” are expressly limited to the matters in dispute, and reference projects that Beacon says were its misappropriated corporate opportunities or specific bids related to them. See items 5, 8, 10, 11, 12, 19, 20, 21, 23, 24, 25, 26, 27, 28, 29 and 30.
[39] The calendars ordered to be produced are specifically limited to work and not personal matters.
[40] Some of the items listed in Schedule “A”, in particular communications among the parties set out in items 1, 2, 3, and 4, are not expressly limited to the matters in dispute.
[41] However, the operative part of the Order circumscribes what must be produced by specifically referencing rr. 29.2 and 30 of the Rules, which speak to relevance as well as proportionality.
[42] The Order reads:
THIS COURT ORDERS that the Defendants shall serve by March 10, 2023, further and better sworn Affidavits of Documents together with Schedule A documents that comply with Rules 29.2 and 30 of the Rules of Civil Procedure which shall include all documents set out in the attached Schedule “A”. [Emphasis added.]
[43] In argument, Beacon specifically pointed out the reference to rr. 29.2 and 30 and conceded that it did not read the Order as requiring any disclosure of documents that did not comply with rr. 29.2 and 30
[44] I add that in his endorsement the Associate Judge specifically noted that what was required was for the defendants to conduct a diligent search and produce whatever they had that corresponded to the items in Schedule “A”. He noted that if none were found, they would obviously not have to be listed. He said:
Moreover, in going through Schedule “A” documents, as we all cooperatively worked on today to narrow the scope, these documents strike me as relevant to the case. The question is not whether these documents are produced; the question is, is that the defendants are to do a search to locate these documents if they exist. If they don’t exist, that’s the end of the matter, but if they exist, they must be produced.
[45] The manner in which the Associate Judge addressed this issue is very much in line with Apotex where Master Short indicated, at para. 123, that:
[T]here may well be, not one further document to be disclosed by the plaintiff. The process I am directing will give both the Court and the defendants the comfort of knowing that the entire universe of existing documents relating to the claims of Apotex has been identified. [Emphasis in original.]
[46] The defendants did not even attempt to search through their documents and list those documents which they considered complied with rr. 29.2 and 30 after the Order was made.
[47] They are now in breach of that Order altogether as they did not obtain a stay.
[48] It is time for the defendants to simply review their records and provide further and better affidavits of documents with reference to Schedule “A” of the Order, taking into account relevance and proportionality, which were both implicitly and explicitly taken into account by Associate Judge Josefo when he referenced rr. 29.2 and 30.
[49] Then it will be up to Beacon to assure itself, through the discovery process, that all relevant documents have been produced.
[50] The appeal is therefore dismissed.
[51] With respect to costs, Beacon seeks $7,851 in partial indemnity costs. I am satisfied that the rates charged and the hours spent are fair and reasonable and within the reasonable contemplation of the defendants. The defendants’ own costs outline sets out partial indemnity costs in the amount of $6,177.56 which is comparable and supports Beacon’s costs request.
Papageorgiou J.
Released: September 11, 2023
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BEACON UTILITY CONTRACTORS LIMITED
Plaintiff/Respondent
– and –
SANSCON CONSTRUCTION LTD., ON-TEK ELECTRIC SERVICES LIMITED, CARLO SANSALONE, SCOTT JOHNSON, KEITH JOHNSON, DOMINIC GONSALVES, 2662441 ONTARIO LIMITED and APEX INFRASTRUCTURE GROUP
Defendant/Appellant
REASONS FOR JUDGMENT
Papageorgiou J.
Released: September 11, 2023