Ontario – costs awarded for late, ‘cavalier’, speculative motion for disclosure of arbitration documents – #103

Master C. Wiebe in ABCO One Corporation v. Pomerleau Inc., 2018 ONSC 4480 issued a costs decision following ABCO One Corporation’s (“ABCO”) decision to withdraw its motion for production for inspection of transcripts of evidence, document briefs and expert reports filed in an arbitration between Pomerleau Inc. (“Pomerleau”), general contractor, and the Toronto Transit Commission (“TTC”) regarding construction of a street car facility (the “Pomerleau-TTC Arbitration”). Not only did Master Wiebe determine that ABCO’s motion fell well short of demonstrating ‘compelling evidence of necessity’, he also determined that that ABCO failed to bring its motion with diligence and care. The brief reasons do not question the ability to bring such motions but only that they be timely and justified, and seek materials necessary to the applicant’s ability to make its case.

ABCO knew about the Pomerleau-TTC Arbitration as early as June 2015 and raised no issues about the arbitration during its discoveries held in March and April 2016 in its court litigation. Master Wiebe on December 17, 2017 set the trial down to commence October 2, 2018. On that date, ABCO advised of its intention to bring its motion but only made a first request for the arbitration documents January 29, 2018 and brought its motion at the end of April 2018.

ABCO’s motion was made presentable the first time on June 11, 2018. On that date, counsel for TTC requested and obtained an adjournment of ABCO’s motion until August 7, 2018 despite ABCO’s opposition. Two (2) days later, ABCO wrote Master Wiebe to withdraw its motion, advising that “there is a risk the Trial Date will be impacted” due to the adjournment.

By abandoning its motion, ABCO triggered Rule 37.09(3) of Ontario’s Rules of Civil Procedure, RRO 1990, Reg 194 which provides that when a motion is abandoned, a responding party is entitled to its costs of the motion payable “forthwith”, unless the court orders otherwise.

Pomerleau submitted two costs outline: one for $13,492.03 for substantial indemnity and actual costs and another for $12,813.95 for partial indemnity costs. Master Wiebe granted Pomerleau $12,000.00 payable within 45 days of the order.

Master Wiebe agreed with Pomerleau that the test for ordering disclosure of documents in an arbitration is that they be “necessary”, referring to paras 44-45. (See the Québec Superior Court’s contemporaneous handling of Adesa Corp. v. Bob Dickenson Auction Services Ltd., 2004 CanLII 45491 in its decision on a motion for production of arbitration materials in SNC-Lavalin inc. v. ArcelorMittal Exploitation minière Canada, 2018 QCCS 3024 as well as the ArbitrationMatters note “Québec court outlines and upholds confidentiality of what is “said, written or done during” arbitration”.)

Though Master Wiebe cited Pomerleau’s submissions at length in paras 11-12 and began his own response in para. 14 with the mention “On balance, I agree” with Pomerleau, it is not clear if he had any particular nuances to draw of his own regarding those comments. That said, Pomerleau’s distinction of Adesa Corp. v. Bob Dickenson Auction Services Ltd., 2004 CanLII 45491 is pointed and, absent any refinement by Master Wiebe, draws meaningful distinctions worth noting for future motions.

[11] Ms. Groulx replied by arguing that the motion was indeed unreasonable. First, she argued that the leading case authorizing such disclosure, Adesa Corp. v. Dickenson, 2004 CarswellOnt 5087 (SC [Commercial List], is distinguishable from this case on several grounds. In Adesa the plaintiff, a party to the third party arbitration, consented to the production of documents from the arbitration; here Pomerleau, a party to the arbitration, did not consent. In Adesa, the issues in the arbitration clearly overlapped with the issues in the action; here Pomerleau has stated throughout that the arbitration relates to an event that happened after ABCO’s subcontract was terminated. In Adesa, the arbitration concluded some time before the action and therefore assisted the court with refresher evidence; here the third party arbitration and this action are running in tandem, and there is no such benefit. In Adesa the plaintiff, the party to the concluded arbitration, commenced the action on overlapping issues and, thereby, was found to have waived the arbitration privilege; here Pomerleau is being sued and cannot be viewed as having waived the privilege.

Master Wiebe agreed with Pomerleau’s submissions that ABCO had not brought its motion with “diligence and care that it should have applied, particularly given the immediacy of the trial” and that “the evidence of the necessity of the arbitration document disclosure was indeed thin”.

Later on as he closed his reasons, at para. 18, he brought together both the importance of confidentiality and the need for valid evidence that the sought-after documents are necessary. “The importance of the motion to Pomerleau is clear and accepted. If confidential arbitration proceedings can be penetrated for speculative reasons, a prime point of arbitrations, namely confidentiality, would be lost.

Master Wiebe’s appreciation of the motion did not focus on whether such motions could be made but whether the applicant (a) had done so in a timely manner and (b) demonstrated a genuine belief in the merits or necessity of its motion. His reasons set out in two consecutive paragraphs his determination on both points.

[15] I am particularly critical of the timing of the ABCO motion. Having known about the arbitration for some time, ABCO simply took too long and was too cavalier about the process. It should have asked questions about the arbitration at the discovery in March and April, 2016 (over two years ago) to lay the foundation for the motion. It did not. It should have investigated the matter in a timely way, and moved as quickly as possible for the documentation. It did not. When I scheduled the trial on December 12, 2017, ABCO was contemplating this motion and should have moved forthwith thereafter. It did not. I am not at all satisfied that the eventual motion date of June 11, 2018 (six months later and less than four months before the trial date) gave sufficient time for the requested disclosure even if the disclosure had been ordered that day. I am mindful that this period before the trial will be full of other trial preparation work.

[16] All of this, when combined, made the motion appear to me in the end to be a last minute “try-on” to get helpful documents that are not critical to ABCO’s case. In short, it appeared to be a “fishing expedition.” This impression was reinforced when ABCO quickly withdrew the motion when it was adjourned. In the modern era of proportionality and directional production and discovery, this conduct cannot be accepted. Therefore, I have reached the conclusion that there must be an award of costs, and that it cannot be nominal.

Master Wiebe’s comments caution parties from delaying any such request once knowledge of the arbitration exists and that parties should provide ‘compelling evidence of necessity’.