COURT FILE NO.: CV-21-670996 DATE: 2024 01 24
SUPERIOR COURT OF JUSTICE - ONTARIO
IN THE MATTER OF the Construction Act, RSO 1990, c C.30, as amended
RE: INSITE CONSTRUCTION MANAGEMENT INC., Plaintiff - and - AMBIENT MECHANICAL LTD., Defendant
BEFORE: Associate Justice Todd Robinson
COUNSEL: S. Deak, for the plaintiff (moving party) N. Maragna, for the defendant (responding party)
HEARD: October 16, 2023 (by videoconference)
REASONS FOR DECISION (Further and Better Affidavit of Documents)
[1] Insite Construction Management Inc. (“Insite”) moves for an order compelling Ambient Mechanical Ltd. (“Ambient”) to serve a further and better affidavit of documents. Insite takes the position that Ambient has refused to produce documents that are relevant to both estimated and actual costing of the project that underlies this lien litigation. Ambient submits that it has already disclosed all relevant documents, has confirmed that it has no further financial documents to produce, that the documents sought by Insite are irrelevant, and that, in any event, Insite’s request for additional productions is overly broad, speculative, and a “fishing expedition”.
[2] I agree with Ambient that, based on the pleadings as they stand, the costs and costing of the underlying project are not relevant. I am accordingly dismissing the motion, albeit with a caveat permitting Insite to revisit its production request at a later date if relevance of some or all of the documents is established through examinations for discovery.
Analysis
[3] In this lien action, Insite claims $388,738.08 as the value of its supply of services to Ambient for a repair and renovation project involving a commercial building in Toronto. Insite’s claim is predominantly for developing a new work plan and methodology to facilitate replacing certain mechanical units at the premises. Ambient denies that Insite performed any work at all.
[4] At the first hearing for trial directions in this reference, I granted leave for documentary discovery and ordered that the parties exchange affidavits of documents. Documentary discovery rules in the Rules of Civil Procedure, RRO 1990, Reg 194 (the “Rules”) thereby apply. However, because this is a lien action, those rules must be read purposively with regard to the scheme of the Construction Act, RSO 1990, c C.30. Notably, procedure in lien actions is statutorily prescribed to be as far as possible of a summary character, having regard to the amount and nature of the liens in question: Construction Act, s. 50(3).
[5] Insite argues that Ambient has failed or refused to disclose relevant documents that are reasonably within its possession, control, or power. Specifically, Insite seeks an order requiring Ambient to produce the following:
(a) documentation, including correspondence, relating to the costing of the project (both total estimated cost and total actual cost), whether involving the original work plan prepared by Ambient (the “Ambient Plan”) or the new work plan and methodology prepared by Insite (the “Insite Plan”), including all documentation relating to the anticipated or actual costs of the Ambient Plan and the Insite Plan;
(b) all documentation relating to sub-trade and supplier quotations received by Ambient with respect to construction, either under the Ambient Plan or the Insite Plan; and
(c) any estimates or costing documentation relating to the Ambient Plan for:
(i) the costs that would have been incurred relating to the relocation of the existing tenants while work was being performed under the Ambient Plan;
(ii) the estimated costs associated with the inability to use the existing building elevator while work was being performed under the Ambient Plan;
(iii) all dust and slurry clean-up estimates, including space in the tenants’ premises, under the Ambient Plan;
(iv) estimated costs for a prolonged construction schedule due to city and neighbour issues around multiple mobile crane visits and closures if the Ambient Plan was used;
(v) any estimates or plans regarding the requirement for additional overtime work under the Ambient Plan;
(vi) all communication and documentation of projected costs, scope of work, scheduling, and any other documentation relating to the project between Ambient, the project managers for the owners, the owners, and all relevant consultants; and
(vii) all payments made for any and all design, consultation, and construction or other applicable expenses pertaining to the work in question.
[6] Pursuant to subrule 30.02(1) of the Rules, parties are required to disclose “every document relevant to any matter in issue in the action that is or has been in the possession, control or power of a party to the action.” Subrule 30.03(2) requires that a party’s affidavit of documents describe, in separate schedules, all documents relevant to any matter in issue that are or were in the party’s possession, control or power.
[7] Production rules are intended to ensure that parties make full disclosure of all relevant documents and production of all relevant non-privileged documents well in advance of the examinations for discovery or, in the case of newly discovered documents, “forthwith” after their discovery. Parties are expected to comply with their document disclosure and production obligations without the need for court intervention: Falcon Lumber Limited v. 2480375 Ontario Inc. (GN Mouldings and Doors), 2020 ONCA 310 at paras. 42-43.
[8] The ambit of production is determined by reference to the pleadings. All documents relevant to an issue raised in a pleading must be disclosed and produced. A document is relevant if it is logically connected to or tends to prove or disprove a matter in issue: Sky Solar (Canada) Ltd. v Economical Mutual Insurance Company, 2015 ONSC 4714 at para. 25; Caruk-Hall Construction Inc. v. Maciel, 2021 ONSC 2350 at para. 25.
[9] Subrule 30.06(b) provides that a further and better affidavit of documents may be ordered where the court is satisfied by “any evidence” that a relevant document in a party’s possession, control or power may have been omitted from the party’s affidavit of documents.
[10] In Maalouf v. Bayer Inc., 2023 ONSC 4875, a non-lien case, I summarized the applicable legal principles on a motion for a further and better affidavit of documents under the Rules. Although that decision was not specifically cited by either party, the principles are the same as those identified in the cases put before me. As I noted in Maalouf, at para. 17, case law supports that four primary considerations are assessed on a motion for a further and better affidavit of documents, as follows:
(a) Parties are generally left to make the initial decision about what documents to produce themselves;
(b) When missing documents are alleged, the moving party must prove that the documents exist on a balance of probabilities before an order is made that they be disclosed in a further and better affidavit of documents;
(c) There must be evidence that specific documents exist that have not been produced. Evidence that amounts to intuition, speculation and guesswork is insufficient. However, the level of proof required must take into account that one party has access to the documents and the moving party does not; and
(d) Simply identifying the existence of documents is not enough. The missing documents must also meet the test of relevance under the Rules and must also satisfy the proportionality requirements of rule 29.2.03.
[11] Both sides have tendered substantive evidence and advanced arguments on whether Insite performed any work, including preparing the Insite Plan, and whether any work product from Insite was relied upon by Ambient. That evidence and argument goes well beyond the scope of this motion. I am not deciding the case at this juncture and it would be contrary to established case law to decide relevance based on whose case appears stronger from the affidavit evidence tendered. This is a production motion. I am concerned with whether the requested documents are relevant based on the pleadings and whether the scope of requested production is proportionate.
[12] Ambient’s main argument in opposition to the motion is that the requested documents are not relevant, or at least are not clearly relevant at this time. Ambient submits that Insite should be asking during examinations for discovery about what documents exist, including whether assumed facts are accurate (such as tenant relocation and inability to use the building elevator). I agree.
[13] The pleadings of both parties, as currently framed, do not support relevance of project costing or actual costs incurred. There are no paragraphs in Insite’s statement of claim that address project costs, either directly or indirectly. Insite points to several paragraphs in its statement of claim as supporting relevance of the requested production, namely:
(a) para. 4, in which Insite alleges that, between March 22 and August 11, 2021, it supplied services related to the methodology and plans for removal of wall and slab sections (i.e., the Insite Plan) at Ambient’s “request and insistence”;
(b) para. 10, in which Insite alleges that its work enhanced the value of the premises and Ambient has received the benefit and been unjustly enriched;
(c) para. 11, in which Insite specifically alleges that one factor in determining the value of the work Insite performed is the amount of the prime contract between Ambient and the owner; and
(d) para. 12, in which Insite pleads and relies on the doctrine of unjust enrichment and quantum meruit.
[14] In my view, these paragraphs do not assist Insite. None of them implicate project costs or cost savings from the Insite Plan. There is no pleading on what, if anything, was discussed on how Insite was to be paid for its services. There is also no pleading on how Insite’s work enhanced the value of the premises beyond the blanket allegation that it did. The only particularized pleading on the value of Insite’s work is in para. 11, in which Insite pleads that the prime contract between Ambient and the owner is a factor in determining the value of work. However, Insite has not established any connection between the prime contract and the documents sought. Insite’s evidence on this motion does not discuss the prime contract.
[15] Similarly, none of the paragraphs in Ambient’s statement of defence raise project costs. Ambient’s statement of defence states, at para. 4, that the parties entered into a contract for Insite to provide construction services. However, at para. 5, Ambient pleads that Insite “did not perform any part of the contract and/or did not provide any work and/or supply any materials to the improvement as required by the Construction Act, as amended.” Put simply, Ambient denies that Insite performed any work at all. That position is made clear in Ambient’s responding affidavits. Project costing and cost savings to Ambient, if any, are not pleaded.
[16] Insite’s position is that one method of assessing the value of its work on a quantum meruit basis requires examining what it would have cost Ambient if the services contemplated by the Ambient Plan and the Insite Plan were provided under a competitively bid contract. In support of that position, Insite points to the methodologies for quantifying damages that have been proposed by its expert, Pelican Woodcliff. The expert puts forward two scenarios for quantifying damages: (i) a damages valuation based on a percentage of the costs saved by Ambient in implementing the Insite Plan as compared to the Ambient Plan; and (ii) a damages valuation based on a percentage of the total cost of the work.
[17] In my view, apart from the fact that whether or not the Insite Plan was used by Ambient is expressly disputed in the affidavit evidence before me, the expert’s opinion is immaterial to deciding this particular motion. Relevance for discovery purposes is grounded in the pleadings, not an expert’s opinion. Insite has not sought to amend its statement of claim following receipt of its expert’s report. As I have already found above, project costing is not raised in the current pleadings. Baldly pleading quantum meruit and unjust enrichment in a lien action does not itself open the door to full production of project costing. In my view, there must be some additional particularization that makes costing relevant to assessing the value of services and materials on a quantum meruit basis. A vague reference to the prime contract is not enough.
[18] During examinations for discovery, it will be open to Insite to probe whether and how the Insite Plan was used or relied upon by Ambient and how Ambient and the project did or may have benefited from it. Those areas are clearly relevant based on the conflicting pleadings over whether Insite performed any work at all and whether there was any benefit from Insite’s alleged work plan and methodology. Answers to proper questions on those issues could potentially ground relevance of some of the documents sought by Insite as well as questions about those documents. A motion for production of those specific documents, if refused, would then be appropriate.
[19] The foregoing is sufficient to dismiss Insite’s motion, so I need not address whether Insite has met its onus to demonstrate, on a balance of probabilities, that the documents exist and are in the possession, control, or power of Ambient. I also need not address the arguments on what I should do with evidence from David Ferracuti, the Vice-President of Ambient, that all “financial documents” have been produced to Insite.
[20] I would note, though, that even if I had found that the requested documents were relevant and were also to find that Insite had met its onus of demonstrating they were in the possession, control, or power of Ambient (which, as noted, I need not decide), I would not have ordered the breadth of production sought. I agree with Ambient that the requested production, as framed, is overbroad.
[21] Insite seeks production of documentation “relating” to the various identified groups of project costs and costing. The standard for production is relevance. “Relating to” is, in my view, akin to the former standard of “semblance of relevance” which was replaced with the standard of relevance many years ago. All documentation, including correspondence, relating to anticipated and actual project costing and costs actually incurred is overbroad, particularly in a summary lien action. Given my decision on relevance, though, I need not further discuss that issue.
Costs
[22] Ambient has been successful in opposing the motion and is entitled to its costs. Ambient seeks its costs of the motion on a substantial indemnity scale in the amount of $5,539.09, taking the position that this motion was a waste of judicial resources and time. Insite does not challenge the hours spent or rates claimed by Ambient, but disputes the scale of costs.
[23] I am not convinced that substantial indemnity costs are warranted. The parties’ dispute over relevance of the requested documents predates the first hearing for trial directions before me. They were unable to resolve it and could not agree to proceed with examinations for discovery prior to having it decided by the court. In my view, there is nothing improper about bringing a dispute over the scope of documentary discovery to court prior to proceeding with examinations for discovery. In many cases, doing so may well avoid the need for further examinations arising from answers to production-related undertakings or refusals.
[24] Moreover, in my view, costs of this motion were heightened by both sides expending unnecessary time preparing affidavits that delved into the merits of the case. Insite’s supplementary affidavit was entirely in response to specific factual allegations put forward in Ambient’s responding record, which Insite felt were incorrect. Ambient’s supplementary affidavit was then sworn in direct response to Insite’s view of the facts. These affidavits will no doubt assist the parties during discoveries, but they were frankly unhelpful to me on a procedural motion grounded in the pleadings.
[25] Partial indemnity is the correct scale. Insite has only challenged Ambient’s claim for substantial indemnity costs. It does not dispute Ambient’s partial indemnity costs claim, and rightly so since those costs are lower than Insite’s own partial indemnity claim. I am accordingly granting Ambient its partial indemnity costs of $3,692.73, including HST.
Disposition
[26] For the foregoing reasons, Insite’s motion is dismissed. Insite shall pay to Ambient its partial indemnity costs of the motion fixed in the amount of $3,692.73, including HST, payable within thirty (30) days. This dismissal is without prejudice to Insite seeking to establish relevance of the requested documents, in whole or in part, through examinations for discovery and thereafter revisiting seeking a further production order a later date.
ASSOCIATE JUSTICE TODD ROBINSON DATE: January 24, 2024