Court File and Parties

COURT FILE NO.: CV-13-00488748-0000 DATE: 20231122 ONTARIO SUPERIOR COURT OF JUSTICE

RE: 10495585 ONTARIO INC. o/a RPR ENVIRONMENTAL SERVICES, Plaintiff -and- ATTORNEY GENERAL OF CANADA and EDWARD NICHOLAS WELLS, Defendants/Moving Parties

BEFORE: Shin Doi J.

COUNSEL: Richard Macklin and Shae-Lynn Chung, for the Plaintiffs Jacqueline Dais-Visca and Wendy Wright, for the Defendants

HEARD: August 22, 2023

Endorsement

[1] The Defendants move for a dismissal of the actions on the grounds that the Plaintiffs breached court orders regarding privileged documents. In the alternative, the Defendants seek an order removing the Plaintiffs’ counsel from the record and an increase in the security for costs paid by the Plaintiffs.

[2] The Plaintiffs sued the Defendants alleging that they abused their positions as Environmental Enforcement Officers and targeted the Plaintiffs, causing damage to their businesses and reputations.

[3] I deny the Defendants’ motion to dismiss the actions because there are reasonable excuses for the alleged breach of the Crown Privilege Order by the Plaintiffs and the prejudice suffered by the Defendants in the defence of these actions is not likely. I deny an increase in security for costs paid by the Plaintiffs because it would be unjust to the Plaintiffs and there is no evidence that the Plaintiffs are not able to pay costs.

Facts

[4] The Plaintiff, 1049585 Ontario Inc. operates a waste transfer facility under license from the Ontario Ministry of the Environment, and from time-to-time exports hazardous and non-hazardous waste to the United States for treatment, recycling, or disposal in accordance with applicable permits from Environment Canada. [1] The Plaintiff, 876947 Ontario Limited is in the business of collection, storage, and transportation of hazardous and non-hazardous waste and recyclable materials under license form the Ontario Ministry of the Environment. [2] The Plaintiff, RPR Environmental Inc. is in the business of marketing the services of those companies. The Plaintiff Patrick Whitty is an owner, director, officer, and general manager of each of the companies.

[5] The Defendants Edward G. Wells, Edward N. Wells, and Bradley May were employees of the Crown employed by Environment Canada in its Environmental Enforcement Division.

[6] There are four actions. The actions stem from an inspection and investigation conducted by Environment Canada and Climate Change Canada in 2007 and 2008. Search warrants at the Plaintiffs’ operations were executed, charges were laid, and matters were resolved. The Plaintiffs sued the Defendants in 2011, alleging that the Defendants abused their positions as Environmental Enforcement Officers to target the Plaintiffs unfairly, causing damage to their business and reputations.

[7] There is a long and complex procedural history between the parties. For the purposes of these motions, I will focus on the relevant procedural history. On October 11 and 17, 2016 the parties argued their productions motions including the Defendants’ motion to claw back six (6) solicitor-client privileged documents which had inadvertently been released to the Plaintiffs in responses to an access to information request. The court granted the Defendants motion and made findings on privilege. The court prohibited the Plaintiffs from using the privileged documents and required the Plaintiffs, their counsel and all of their respective agents, and employee, and anyone with knowledge of the order to return all the privileged documents to the Crown and to destroy the documents (see Whitty v. Wells, 2016 ONSC 7716, upheld by the Divisional Court in Whitty v. Wells, 2017 ONSC 3682). The Defendants refer to this order as the Crown Privilege Order.

[8] In 2018, the Defendants asked the Plaintiffs about their compliance with the Crown Privilege Order. On June 19, 2021, it was discovered that the Hamilton Small Claims Court had six of the privileged documents in its files when the documents were referenced by the Plaintiffs.

[9] The Plaintiffs’ counsel, Vilko Zbogar has been counsel of record since 2011 in these complex actions.

[10] The Defendants anticipate that the trial of the actions will be five weeks with approximately 20 witnesses. The Defendants estimate $644,452.59 in costs at a substantial indemnity rate for discoveries, trial preparation and trial which includes the deduction of $130,000 previously ordered for steps leading up to the commencement of trial.

Rule 60.12 and Compliance with the Crown Privilege Order

[11] Rule 60.12 of the Rules of Civil Procedure provides the court with jurisdiction to dismiss a proceeding if a party fails to comply with interlocutory order.

Failure to Comply with Interlocutory Order

60.12 Where a party fails to comply with an interlocutory order, the court may, in addition to any other sanction provided by these rules,

(a) stay the party’s proceeding;

(b) dismiss the party’s proceeding or strike out the party’s defence; or

(c) make such other order as is just. R.R.O. 1990, Reg. 194, r. 60.12.

[12] The moving party has the burden to show that the other party’s breach of the interlocutory order was “intentional, contumelious or without reasonable excuse or otherwise constitute an abuse of the court’s process” (Richardson v. Cuddy, 2017 ONSC 3186 at 27, citing Provato v. Burgantin, 2003 ONSC 29309 at 22).

[13] There seem to be reasonable excuses as to why those privileged documents remained in the Hamilton Small Claims Court file. The parties blame each other for their lack of diligence and care. The Defendants allege that the Plaintiffs intentionally breached and “utterly” disregarded the Crown Privilege Order to the ongoing prejudice of the Defendants. The Defendants argue that the Plaintiffs were obligated to remove the six privileged documents from the Small Claims Court file after the Crown Privilege Order. The Plaintiffs submit that they filed the documents in the Hamilton Small Claims Court in 2014 before the Crown Privilege Order was issued in 2016 and that the Defendants had full knowledge of what was filed in the Small Claims Court file.

[14] The Plaintiffs explain that after the Crown Privilege Order, the Plaintiffs complied and destroyed their copies of the six privileged documents in 2018. The Plaintiffs subsequently discovered that CDs containing access to information releases might have contained some of the six privileged documents and proceeded to destroy the CDs. The Plaintiffs further explain that their understanding was to deal with documents in their possession. The Plaintiffs argue that there was no court order compelling the Plaintiffs to purge the privileged documents from the Hamilton Small Claims Court file. The Plaintiffs complain that the Defendants waited until 2021 to write to the court seeking removal of the privileged information from the court file.

[15] The Plaintiffs argue that a dismissal order is akin to “civil litigation capital punishment”. The Plaintiffs rely on Mader v. Hunter, 2004 ONCA 17834 in which the Court of Appeal held at para 4, “the court is always reluctant to dismiss a potentially meritorious claim on grounds that do not address its merits”.

[16] The Plaintiffs further argue that there is no actual prejudice to the Defendants in defending the actions. Those documents in the Small Claims Court file relate to the prosecutor who has since been released from the actions. The Plaintiffs submit that the documents will not have bearing on the actions. I agree with the Plaintiffs. While there is a presumption of significant prejudice to the Defendants arising from the privileged documents remaining in the Small Claims Court file, that presumption can be rebutted (Continental Currency Exchange Canada Inc. v. Sprott, 2023 ONCA 61). I am persuaded that those documents that remained in the Small Claims Court file are not likely to create prejudice for the Defendants in the defence of the actions.

[17] In conclusion, I am satisfied that there are reasonable excuses for the alleged breach of the Crown Privilege Order by the Plaintiffs and that prejudice to the Defendants is not likely. Further, I am reluctant to dismiss meritorious claims on grounds that do not address the merits. Accordingly, I do not dismiss the Plaintiffs’ actions as sought by the Defendants. I also do not remove the Plaintiffs’ counsel from the record for those same reasons.

Security for Costs

[18] In 2016, Justice Myers imposed security for costs as a term of an order granting an extension of time for the Plaintiffs to deliver their affidavit of documents and expert damages report. The order was made pursuant to Rule 56.09 [3] which gives the court discretion to impose security for costs as a condition of granting relief.

[19] I deny the Defendants’ request for an increase in the security for costs. The Defendants sought an increase pursuant to Rule 60.12 – Failure to comply with an interlocutory order. However, I have found that there are reasonable excuses for the alleged breach of the Crown Privilege Order. In the event that there are no reasonable excuses for the alleged breach of the Crown Privilege Order, I still deny an increase in the security for costs. There is no good reason to increase the amount to be paid by the Plaintiffs other than the mounting costs of the proceedings on the Defendants. In my view, imposing an increase in the amount of $600,000 payable by the Plaintiffs as security may result in an injustice to the Plaintiffs. Further, there is no evidence that the Plaintiffs are unable to pay the costs of the litigation. I do not order any increase in the security for costs.

Costs of the Motion

[20] At the end of the hearing of the motion, I was inclined to award costs in favour of the Defendants despite the dismissal of the motion because their position had some merit. However, after considering the Plaintiffs’ submissions on costs including an offer to settle served on the Defendants. I do not award costs to or against either party for this motion.

Shin Doi J. Released: November 22, 2023

Footnotes

[1] Plaintiffs’ Factum dated April 4, 2023 at para 9.

[2] Plaintiffs’ Factum dated April 4, 2023 at para 10.

[3] Security for Costs as Term of Relief 56.09 Despite rules 56.01 and 56.02, any party to a proceeding may be ordered to give security for costs where, under rule 1.05 or otherwise, the court has a discretion to impose terms as a condition of granting relief and, where such an order is made, rules 56.04 to 56.08 apply with necessary modifications. R.R.O. 1990, Reg. 194, r. 56.09.