Justice Brown Lambastes Provincial Government’s “Poor Excuse of A System” for Document Management

Posted on March 16, 2012 by Stephen Cavanagh

I don’t often burst out laughing when reading reasons for judgment (tears are more likely), but today’s offering from Justice David M. Brown was an exception. In Romspen Investment Corporation v. 6176666 Canada Ltée, His Honour was riding one of his favourite hobbyhorses: the antediluvian document management system used in Ontario’s courts.

(In  an earlier decision, Pershadsingh v. Thompson, 2010 ONSC 4943 (CanLII), Brown J. complained that “I am not the only judge in this region who has complained about having to get down on one’s hands and knees to organize into piles, on the floor, the materials filed with the court.” He added that, “apart from trading ribbon-tied bundles of paper for cirlox-bound volumes of paper thrown into bankers’ boxes, and the entry of filed documents into a computer ledger, instead of onto a handwritten ledger, one really wonders how much the document and file management systems maintained by the Government of Ontario in this Court differ from those that existed back in 1867”.)

In the Romspen case, it was not so much the waste of his own time that was on his mind as it was the needless running around that the lawyers before him had had to do (and the concomitant expense to their clients).

Under the heading, “Just how broken is the document management system of the Superior Court of Justice?”, Justice Brown’s reasons began in a somewhat whimsical tone:

I suppose that on a sunny, unusually warm, mid-March day one should be mellow and accept, without complaint, the systemic failures and delay of this Court’s document management system. The problem is that from the perspective of the members of the public who use this Court, delays caused by our antiquated, wholly-inadequate document management system impose unnecessary, but all too real, costs on them.

The case involved the sale of condominium units by a Receiver. As part of this process, it had filed sealed appraisals of some of the units. However, it had (understandably) filed only one copy of each appraisal. His Honour needed multiple copies and so, “a two-track process unfolded”. He sent a member of his staff to a nearby court building, where sealed documents for Commercial List matters are kept, to try to retrieve the documents. Simultaneously, counsel for the Receiver also tried to obtain copies through her office. Each was successful but in both cases, the task took one hour.

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C.A. Says Only “Damage” Necessary to Start Limitation Period, Not “Damages”

Posted on March 15, 2012 by Stephen Cavanagh

The language of the Limitations Act, 2002 continues to be interpreted by the courts and an important decision was handed down this week by the Court of Appeal. Hamilton (City) v. Metcalfe & Mansfield Capital Corporation was an appeal from a decision of Madam Justice Eva Frank, in which an action by the City of Hamilton, arising out of certain investments that it made, was dismissed as statute-barred. The Court of Appeal upheld her decision and, in so doing, provided some extensive comments about how section 5 of the Limitations Act, 2002 should be interpreted. The decision is a cautionary tale for litigants and their lawyers because it strongly suggests that the clock starts running under the Limitations Act, 2002 quite a bit earlier than many of them might have thought.

In 2007, the City made a $10 million investment in asset backed commercial paper. The investment was to mature about two months later but some three weeks after the purchase, the market for this form of investment collapsed. The City and others took certain steps to try to preserve the status quo, such as entering into a standstill agreement but ultimately, commenced this lawsuit two years less a day after the maturity date of the notes. This was several months past the two-year anniversary of the date on which the notes had been purchased. The City has never received any payment on the notes.

The defendants raised a limitation defence and the motions judge agreed with their position. She dismissed the action as having been brought out of time.

Although several causes of action were apparently pleaded, the argument in the Court of Appeal focused on the claim for negligent misrepresentation. The City advanced a number of arguments in response to the limitation defence but in this post, I am only going to discuss the main one. The City argued that it had only “discovered” its damage on September 26, 2007, the date on which the note had matured and on which default in payment was made. (Section 4 of the Limitations Act, 2002 provides that the two-year limitation period runs from the day on which the “claim was discovered”. Section 5 sets out the criteria for when a claim is “discovered” and one of them is knowledge (or imputed knowledge) that “injury, loss or damage had occurred”. This was the key phrase for purposes of the decision.

The Court of Appeal held that the City’s cause of action was complete, not when there had been default in payment but when it discovered that it had been misled about the asset structure underlying the notes. There seems to have been no dispute that the City had come to that realization more than two years prior to the commencement of the action.

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Master MacLeod Discusses Appropriate Procedure In Undertakings Motions

Posted on March 7, 2012 by Stephen Cavanagh

Kariouk v. Pombo was a motion by the plaintiff to compel plaintiffs to answer undertakings given in the course of examinations for discovery. A commonplace type of motion, to be sure. But it is because such motions occur so frequently that Master MacLeod’s comments about the correct procedure to follow are valuable to practitioners. In particular, the Master’s reasons on the issue of costs in this context are instructive. Typically, by the time an undertakings motion is actually heard, the dilatory party has answered the undertakings and the motion has become largely academic. But time has been spent by that point; what should be done about those costs?

The plaintiff was a designer who worked on the renovation of the defendants’ home. He sued under Rule 76 for unpaid fees of $40,000. The defendants responded with a counterclaim of $750,000, alleging cost overruns.

Although the parties had not agreed on a discovery plan, counsel for the plaintiff had proposed one. Counsel for the defendants indicated that he would be withholding his agreement to the plan until the parties had exchanged lists of documents.

At the defendants’ examinations for discovery, thirty three undertakings were given. There were also some refusals that were later converted into undertakings. At the time that the plaintiff’s motion was brought, none of the undertakings had been answered. However, by the time the motion was argued, only a few of the undertakings remained outstanding.

In his reasons, the Master dealt with the various unanswered undertakings and established a timetable for the completion of the discovery process.

He then turned to the issue of costs. He noted that the moving party (the plaintiff) had spent 11.8 hours in preparation for the motion and had incurred actual costs of $5,519.81. The defendants’ preparation time was three hours, resulting in an actual costs of $2,957.78. Based on this information, the Master fixed partial indemnity costs at $2,900 plus disbursements. However, he then had to go one step further, to review the conduct of each party, leading up to the motion. This was because the plaintiff was arguing for costs on a substantial indemnity basis and the defendants contended that the plaintiff should be deprived of costs altogether. This led the Master to “the somewhat unsavory exercise of reviewing correspondence and e-mail passing between counsel”.

A rather painstaking analysis followed. The Master’s description of the communications between counsel on both sides will probably be, to many litigation lawyers, reminiscent of many of their own files, with a certain amount of posturing and threats.

The defendants argued that the plaintiff should be deprived of costs because:

  1. there was no discovery plan in place and specifically no deadline had been agreed upon for answering undertakings;
  2. it was precipitous and unreasonable to bring the motion when there had been a commitment to answer the undertakings; and
  3. insisting on unreasonably strict adherence with the Rules of Civil Procedure is a breach of principles of civility particularly when the defendants had cooperated in moving the action forwards with rapidity and were prepared to set a pre-trial and trial date.

The Master rejected the defendants’ argument. He found that counsel for the plaintiff had been courteous (albeit firm) throughout and that he could not be faulted “for giving notice in advance of what he intended to do and then doing what he said he would do” (i.e., move to compel compliance with the undertakings).

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C.A. Slams Duration of “GasTOPS” Action

Posted on March 2, 2012 by Stephen Cavanagh

The Court of Appeal has just released its decision in GasTOPS Ltd. v. Forsyth et al. This case is well-known in the East Region and arose out of the departure of a number of employees of a software company, GasTOPS, who then formed their own competing company, MxI. GasTOPS sued MxI and its founders for breach of fiduciary duty and other relief. Following a very lengthy trial, Mr. Justice Granger ordered MxI to disgorge profits of $12,306,495 and ordered damages against the individual founders in the same amount. He also awarded prejudgment interest of $3,039,944 and full indemnity costs of $4,252,920.24.

MxI appealed, principally with respect to the trial judge’s use of a ten year period for the calculation of the disgorgement of profits. The Court of Appeal rejected that argument on the basis that such a calculation is very much driven by the facts and that the trial judge had evidence to support his choice of that period here. MxI’s appeal was dismissed.

GasTOPS cross-appealed Justice Granger’s refusal to order a permanent injunction. The cross-appeal too was dismissed.

The Court of Appeal concluded its reasons by sharply criticizing the duration of the lawsuit:

[96] I wish to conclude with an expression of concern about the length of time that this proceeding took. There is no doubt that it involved significant stakes, and some issues that were not easy. But it took seven years. The evidentiary portion of the trial took three and a half years. There were 295 days of evidence and 70,000 pages of exhibits. Written submissions occupied more than 3,000 pages and took a further year and a half. The reasons for judgment took another two years, and ran to 668 pages.

[97] It is important to reiterate that the principle of proportionality is a vital prerequisite to an efficient and effective justice system. Counsel and especially the trial judge have a responsibility to manage the processes with this in mind. It is difficult to conclude that a trial of this length and a record of this magnitude were necessary to resolve the issues in this case.

Interestingly, this trial was conducted “electronically”, with counsel, the trial judge and the witness all having computer monitors before them. Documents were imaged in Summation and were accessed and displayed in that fashion.

Justice Granger (who is now retired) has long been a strong proponent of the use of technology in litigation and has written approvingly of the Summation software in particular and has given presentations in which he has advocated the approach used in the GasTOPS case.

The use of litigation technology is a cause that I too strongly support. However, based on the dim view that the Court of Appeal has taken of the end result in GasTOPS, it might be time to go back to the drawing board…

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Plaintiff Given Leave to Examine Defendant Under Rule 39.03 On Rule 25.11 Motion to Strike Statement of Claim

Posted on March 2, 2012 by Stephen Cavanagh

Khan v. Lee is an interesting decision of Master Joan Haberman. In this medical malpractice action, the defendant doctor had moved, under Rules 21.01 and 25.11, to strike the statement of claim. He filed no evidence on the motion. Counsel for the plaintiff served the defendant with notice of examination under Rule 39.03 (10) in order to obtain responding evidence on the defendant’s motion. The defendant did not attend for his examination and, as a result, the plaintiff brought this motion before the master, seeking an order compelling the defendant to attend to be examined. The motion was granted.

Although no evidence is permitted on a motion to strike, brought under Rule 21.01, the plaintiff argued that this was, in substance, a motion under Rule 25.11, on which the court is permitted to receive evidence.

Master Haberman noted that the defendant doctor had not filed a factum on this motion but had filed one on his own motion to strike. In that factum, the defendant had said, “the statement of claim, as it is currently pleaded, fails to allow the defendant or the court to ascertain precisely the issues in dispute, nor does it permit the defendant to respond to the allegations” [emphasis added by court]. The master found the highlighted portion significant:

Despite having asserted in his factum that he is unable to respond to the allegations raised by the plaintiffs in their statement of claim, Lee has filed no evidence to support his position and now asserts that the issue is not relevant. This leaves the plaintiffs with no ability to refute the statement. Though, at the end of the day, the court may well give it little weight, this is not a risk the plaintiffs wish or should have to take.

On that basis, she granted leave to the plaintiff to examine the defendant with respect to issues raised by his motion to strike the claim, including his contention that the form of the statement of claim made it impossible for him to respond to it.

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Rules Committee’s “Information for the Profession” on Hourly Rates Is Adjusted Upwards for Inflation

Posted on March 2, 2012 by Stephen Cavanagh

In First Capital (Canholdings) Corporation v. North American Property Group, 2012 ONSC 1359 (CanLII), Mr. Justice Robert Smith had to address the following issue: “Should partial indemnity costs be ordered at hourly rates in excess of the maximum rates set out as guidelines by the Costs Subcommittee in its Notice for the Profession?” He concluded that they should. (Justice Smith sits in Ottawa, so I assume that the motions with respect to which costs were being awarded were heard in that city.)

On these motions, the successful plaintiff sought partial indemnity costs of $35,000, inclusive of fees, disbursements and HST. (This was a commercial real estate case and both parties had brought motions. Justice Smith found that the plaintiff had had partial success on its own motion and complete success in opposing the defence motion. The plaintiff was acknowledged to be entitled to costs on a partial indemnity basis.)

The claimed costs, in the amount of $35,000, were made up of hourly rates for two lawyers. The first was called to the bar in 2002, had an actual rate of $610 per hour and claimed $455 per hour. The second was called to the bar in 2007. His actual rate was $415 per hour and he claimed partial indemnity costs at a rate of $309 per hour. (Both lawyers were seeking 75% of their actual rate.)

Justice Smith observed that the issues involved in the case “were not overly complex” but were important to the parties.

His Honour was not prepared to consider partial indemnity costs calculated as 75% of actual rates. He noted that, under rule 1.03 (1), substantial indemnity rates are defined as being 1.5 times times the partial indemnity rates and that “the substantial indemnity rate would also be slightly less than the full indemnity rate”. On that basis, Justice Smith observed that 60% of the full indemnity rate would have produced partial indemnity hourly rates of $366 and $249, respectively.

However, even on that basis, the hourly rates claimed by the two plaintiff’s counsel exceeded the maximum partial indemnity rates for lawyers of their years of experience that are set out in the “Information for the Profession” published by the Costs Subcommittee of the Civil Rules Committee, that was effective  July 1, 2005. Since both lawyers had less than 10 years’ experience, the maximum partial indemnity rates for both, set out in the Information Notice, was $225. (And the Information Notice also specifies that the maximum rates should be reserved for the most complicated matters and for more experienced counsel within each category.)

In the result, Justice Smith allowed partial indemnity rates for the two lawyers at $335 per hour and $200 per hour. He felt that the schedule of rates that appears in the “Information for the Profession” had become out of date and needed to be adjusted for inflation. This and the other factors that he took into account were set out as follows in his reasons: Continue reading →

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Leave to Appeal to Divisional Court Granted Concerning Applicable Test for Examination for Discovery of Second Deponent

Posted on February 21, 2012 by Stephen Cavanagh

Fortini v. Simcoe (County), 2012 ONSC 1034 (CanLII) is an interesting case in which Madam Justice Susan E. Healey granted leave to appeal an order of Madam Justice Anne Mullins, requiring that the appellant (defendant) produce a second deponent for examination for discovery after the examination of the first deponent had been completed and while the appellant was still in the course of fulfilling undertakings given at that examination. Justice Healey felt that the decision of Mullins J. had been in error and that there was a state of conflict in the caselaw on this issue.

The motion before Mullins J. had been brought pursuant to the provisions of sub rule 31.03 (4), which has only been in force since January 1, 2010. It reads as follows:

Before making an order under clause (2) (b) or (3) (d), the court shall satisfy itself that,

(a) satisfactory answers respecting all of the issues raised cannot be obtained from only one person without undue expense and inconvenience; and

(b) examination of more than one person would likely expedite the conduct of the action.

Healey J. noted that two decisions that have interpreted this subrule have taken different approaches. In Waxman v. Waxman, 2011 ONSC 4707 (CanLII), 2011 ONSC 4707, Mr. Justice Frank Newbould found that the caselaw that predated the enactment of the new subrule did not address the tests set out in that subrule. He felt that the newly-enacted provision “broadened the circumstances in which a second representative may be ordered to be examined”.

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Brown J. Discusses Waiver of Privilege

Posted on February 21, 2012 by Stephen Cavanagh

In Ebrahim v. Continental Precious Minerals, 2012 ONSC 1123 (CanLII), Mr. Justice David M. Brown undertook a fairly comprehensive analysis of the circumstances in which both lawyer-client privilege and litigation privilege will be found to have been waived. The discussion arose in a somewhat unusual context, in that the litigation was playing out in applications rather than in actions. The fact that Justice Brown, as the applications judge, would be hearing the dispute on its merits, clearly played a significant role in his finding that waiver of privilege had taken place.

This was a shareholders’ dispute which has given rise to two applications, both of which are to be heard in late March of this year.

Cross examinations on affidavits have taken place and the motions heard by Justice Brown arose out of refusals on the cross examinations.

Waiver of lawyer-client privilege

The applicant in one of the applications swore an affidavit in which he deposed, “My sons and I do not act jointly and in concert and received legal advice to that effect prior to initially purchasing shares of the Company”. The respondent in that application took the position that this amounted to a waiver of privilege. In response, counsel for the applicant sent a letter in which he said, “we will agree to remove the reference to receiving legal advice”. In addition, the applicant himself swore a supplementary affidavit in which he said, “If I did waive privilege by making such statement in my affidavit, that was certainly not my intention.”

Justice Brown refused to permit the applicant to withdraw the portion of his affidavit in which he referred to having received legal advice. His Honour was satisfied that the applicant had “intentionally included in his affidavit the language which he now seeks to withdraw – this is not a case of inadvertence, mistake or oversight”.

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Stepping From Behind the Curtain…

Posted on February 20, 2012 by Stephen Cavanagh

Long-time readers will have noticed a few changes on this site. It has been renamed, “Cavillations”. And, after many years of publishing a blog in the name of his firm, Steve Cavanagh will now be posting in the first person singular.

With only one or two exceptions, I’ve written all of the posts that have appeared on the site. When I began to write the case commentaries that evolved into this blog, I had no partners, so there was no need to consider anyone else’s views about the subjects of the posts. Since then, I have been fortunate to be joined in the practice by a number of fine lawyers who have become my partners and associates. They don’t get consulted about what I write, so it’s not really fair to them to speak in terms of what “we” think about a particular subject. (I don’t actually recall that any of them ever voiced disagreement with any comments that I wrote, but maybe they were just being polite.)

So, with the full support of my partners, to whom I am most grateful, I have decided to transform this blog into a more individual site. The views expressed on it will be mine alone (except for those of any guest commentators).

During the coming year, I plan to add some richer content to this site, to make it of greater use to those in the legal community. So thanks for your support and stay tuned!

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Opinion Evidence: Is There An “Ordinary Work” Exception That Makes It Admissible Although R. 53.03 Requirements Not Met?

Posted on February 20, 2012 by Stephen Cavanagh

UPDATE: These three decisions are now available on CanLII, here, here and here.

Two days ago, Bruce Mitchell of Windsor sent along some interesting decisions of Madam Justice Darla Wilson, all rendered last month in a case that is now being tried. Her Honour’s three rulings are attached to this post as they have not appeared in CanLII.

The case is Hoang et al. v. Vicentini et al. It is a personal injury action arising out of a motor vehicle accident and is being tried before a jury.

In two of the three attached decisions (the link is at the top of the post), Wilson J. declared mistrials because of improprieties in the opening addresses of counsel. Mr. Mitchell tells us that the trial began again, with a third jury, on January 24 and that the trial is scheduled to continue until March.

While the mistrial rulings are interesting, what caught our attention was one aspect of Justice Wilson’s first decision, rendered on January 10, 2012 (also discussed in her later rulings of January 11 and 17, 2012): can opinion evidence be elicited from witnesses who undertake some official investigation without complying with Rule 53.03 or even s. 12 of the Evidence Act? Is there an “ordinary work” exception that allows opinion evidence to be introduced while circumventing the requirements of the rule and the statute?

Justice Wilson’s ruling

Counsel for the plaintiff moved for leave to call more than three experts at trial and Justice Wilson ruled on which witnesses could be called. (Actually, the plaintiffs’ lawyer sought to go well beyond the three-witness limit of s. 12 of the Evidence Act; he proposed to call a total of 17 experts.)

As she has done before, Justice Wilson expressed her disapproval of the common judicial practice of taking a liberal approach to the admissibility of expert evidence and then addressing shortcomings in that testimony by attaching less weight to it. She quoted with approval observations made by Justice Ducharme in Dulong v. Merrill Lynch Canada Inc. (2006), 80 O.R. (3d) 378 (S.C.J.), where His Honour said:

There is no question that, in civil cases, at least, the path of least resistance in matters such as these seems to be to admit the evidence and then compensate for any of its weaknesses by attaching less weight to the opinion. But such an approach is an abdication of the proper function of the trial judge and was explicitly rejected by Binnie, J. in R. v. J-L.J…

One of the witnesses whom the plaintiffs’ lawyer wanted to call was a mechanic, employed by the investigating police force, who had inspected the defendant’s vehicle after the collision. The following three paragraphs from Justice Wilson’s reasons describe the proposed testimony and her decision to exclude it:

[14] Counsel for the Plaintiff wishes to elicit opinion evidence from Mr. Grisolia, the police mechanic who filled out a vehicle mechanical examination in the course of his duties on August 9, 2004. The two page form that was completed identifies Mr. Grisolia’s findings but does not set out any opinion. Mr. Grisolia noted on the form that the front calipers sliders seized [unsatisfactory] and the friction material [unsatisfactory]. He does not describe the effects of the two items he deemed unsatisfactory nor does he comment on the function of the brakes themselves. Counsel for the plaintiffs concedes this point, but submits that in speaking with the officer in preparation for trial, he was advised of Mr. Grisolia’s opinion on the brakes of the Vicentini car. After learning this, counsel sent a brief synopsis of the evidence of Mr. Grisolia, including his opinion on the function of the brakes. Counsel for the Plaintiffs argued that Mr. Grisolia has evidence that is relevant and material to the issues in this lawsuit and there is no other way to get that evidence before the Court other than to have him testify and state his opinion.

[15] I do not agree. The Rules of Civil Procedure have very specific provisions for the inclusion of expert testimony at trials and the 2010 amendments to the provisions governing expert reports provide for more stringent requirements before an expert is permitted to testify. No report from Mr. Grisolia that complies with Rule 53.03 has been tendered and there is no evidence before me of any attempts made by the solicitor for the Plaintiffs to secure an opinion from Mr. Grisolia on the brakes on the Viscentini [sic] car in a form of a report that complies with Rule 53. There is nothing in the document that he completed in 2004 that sets out his opinion. What he has done is to examine the various items listed on the document and tick off the appropriate box to indicate whether the component met the Ministry standards or not. I do not say this in a critical fashion; this is the document that Mr. Grisolia is required to fill out by the police when he inspects a vehicle that has been involved in a collision. The document, however, is deficient in terms of providing the minimum information that is contemplated by Rule 53 for expert reports. I have no information as to what qualifications Mr. Grisolia has, apart from the fact that he was employed by the police to do mechanical inspections of vehicles. I do not know if he has the proper qualifications to even permit him to be qualified us an expert at trial.

[16] In my view, on the basis of the document he completed on his inspection of the vehicle, I am not prepared to permit him to give expert testimony at this trial. To do so, in my opinion, would contravene the requirements of Rule 53 and would flout the reasoning giving rise to the amendments to the Rules governing expert evidence. The fact that the solicitor for the Plaintiff has provided a synopsis of his expected testimony does not, in my mind, get around the problems with Mr. Grisolia offering an expert opinion to this Court. Furthermore, no unfairness to the Plaintiffs will result as a consequence of my ruling. Counsel has retained an engineer who has delivered a report that complies with Rule 53 and he, presumably, will testify on the liability issues. On the other hand, to permit Mr. Grisolia to testify at this trial and to provide his opinion on the function of the brakes on the Viscentini [sic] vehicle at the time of the collision would be manifestly unfair to the defendants Viscentini [sic] and Ford Credit when the performance or the brakes has not been an issue in this lawsuit and no expert has opined on this to date.

In her later (January 17, 2012) mistrial ruling, Justice Wilson provided more information about the Grisolia form:

[4] [T]he Plaintiffs sought leave to call the police mechanic, Sergio Grisolia (“Grisolia”), who examined the Vicentini vehicle after the collision and filled out a two page form, which is found at tab 12 of Exhibit A in this trial. That document, dated August 9, 2004, contains a list of examination results for the various parts of the vehicle, including brakes, steering and tires. There are five columns next to the various items and the examiner can tick off whether the part in question was satisfactory or unsatisfactory. Identified as unsatisfactory in the brakes section are the friction material and the mechanical components, specifically that the “front calipers sliders seized”. The balance of the brake items are noted as satisfactory. None of the boxes indicating whether the defect existed prior to collision are marked.

Discussion

Fact or opinion?

A number of interesting issues arise from this part of Justice Wilson’s decision. First of all, was the proposed witness Grisolia really being tendered as an “expert”, so as to engage the requirements of Rule 53.03? The Rules of Civil Procedure do not define “expert”. However, s. 12 of the Evidence Act, which Justice Wilson quoted in her reasons, describes them as “persons entitled, according to the law or practice, to give opinion evidence”. Continue reading →

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