Great Lakes Copper Inc. v., 2013 ONSC 2600

CITATION: Great Lakes Copper Inc. v. 1623242 Ontario Inc., 2013 ONSC 2600 COURT FILE NO.: 216/11 and 501/12 DATE: 2013-04-30 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: ) ) GREAT LAKES COPPER INC. ) ) ) Charles W. Skipper , for the Plaintiff ) Plaintiff ) ) ) - and - ) ) ) 1623242 ONTARIO INC. and 3072453 NOVA SCOTIA COMPANY ) ) ) Gregory Govedaris , for the Defendant 1623242 Ontario Inc. ) ) ) Stuart R. Mackay , for the defendant 3073242 Nova Scotia Company ) ) Defendants ) )) HEARD: February 12, 2013, at Guelph, Ontario Price J.

Reasons For Order NATURE OF MOTION [ 1 ] The plaintiff, Great Lakes Copper, moves for an Order substituting its project manager, Mr. Kevin Grosbeck, for its Chief Executive Officer, Mr. Jean Noelting, and its President, Mr. Don Wellington, as the party to be examined on its behalf, for purposes of discovery in its Construction Lien actions no. 216/11 and 502/12.

It also seeks an Order requiring the defendant, 1623242 Ontario Inc., to produce and identify certain documents referred to in the Statement of Claim, setting aside any noting in default of GLC while the Request to Inspect Documents is outstanding, and permitting GLC to file a Statement of Defence to the claim within five days after the documents have been produced and identified, and an Order amending the title of proceedings in the action by the deletion of defendants whom the parties have agreed are unnecessary to the action. [ 2 ] 162 seeks an Order discharging the claims for lien against it or, in the alternative, that: (

a) Jean Noelting, as agent of Great Lakes Copper, the Lien Claimant, be cross examined on the Claim for Lien registered as WC301392 on January 18, 2011 (the 1 st Lien), and on the Affidavit of Verification sworn January 18, 2011, prior to discovery of any party in the Construction Lien action 216/11. (

b) Don Wellington, as agent for Great Lakes Copper, be cross-examined on the Claim for Lien registered as WC345173 on June 7,

2012 (the 2 nd Lien), and on the Affidavit of Verification sworn June 7, 2012, prior to discovery of any party in the Construction Lien action 502/11. (

c) Great Lakes Copper produce for inspection the “contract” or “sub-contract” referred to in the Claims for Lien for the 1 st Lien and the 2 nd Lien. BACKGROUND FACTS [ 3 ] These reasons are being issued contemporaneously with my reasons in a motion by 1623242 Ontario Inc. (“162”) in a related action, 1623242 Ontario Inc. v.

Great Lakes Copper Inc. et al. (Court File No. 571/12), where 162 sought an Order directing that the two actions, and others, be tried together, or immediately following one another, based on the fact that they had all arisen from misrepresentations made to it in 2005, when it purchased a property at 865 Gartshore Street in Fergus (“the Property”). The facts are set out at length in those reasons. [ 4 ] Briefly, Great Lakes Copper (“GLC”) claims construction liens for work it did, removing PCB’s and other contaminants from the Property from January 16 to April 25, 2012.

In response to a request by 162 for a copy of the contract between it and GLC, counsel for GLC replied at the hearing that there was no contract, and that GLC relied on a request by 162 that it perform the work. [ 5 ] 162 denies that it requested the work. It asserts that when it bought the Property in 2005, the vendor, Wolverine Tube (Canada) Inc. (“Wolverine Tube 1) represented that the Property was clean of contaminants. It further states that when the Ministry of the Environment discovered the contamination in 2010, it ordered both the current and the past owners to clean it up.

When 162 refused, GLC, which was the successor company of Wolverine Tube 1, performed the work, as it was obliged to do pursuant to the Ministry’s Order. [ 6 ] 162 relies on an internal memo by GLC that states, in part: Wolverine Tube, Inc. was named as a responsible party by the Ministry of the Environment pursuant to the original order dated November 2, 2012, which was subsequently amended November 26, 2010… The property owner, 1623242 Ontario Inc., Krishan Judge, refused to take responsibility or pay for the clean up costs and as such, Great Lakes Copper Inc. coordinated the effort and paid for the clean up per the Ministry order, to satisfy Wolverine Tube, Inc.’s obligation under the order .

Per the Purchase and Sale Agreement dated July 8, 2008, WT1 is required to reimburse Great Lakes Copper (formerly Wolverine Tube Canada (Inc.)) for the total cost before HST of $257,203.42 incurred to satisfy the Ministry order. [Emphasis added] [ 7 ] 162 has commenced an action against Wolverine Tube 1, GLC, and others for damages arising from the vendor, Wolverine Tube 1’s alleged misrepresentation concerning the condition of the Property in 2005.

In my order of today’s date in that action, I have directed that 162’s fraud action be tried together with GLC’s construction lien actions, and a mortgage foreclosure action by the assignee of the VTB mortgage from Wolverine Tune 1 (“the foreclosure action”), or one immediately following the other, as the trial judge may determine. [ 8 ] The fraud action , the lien actions , and the foreclosure action are all at an early stage of proceedings .

G LC initially brought its construction lien action s against both 162 and 307, on the basis that 162’s VTB mortgage was for the purpose of improvements, including the clean-up. When it later discontinued its action s as against 307, 162 sought leave on July 11, 2012, pursuant to the Construction Lien Act , [1] to continue its cross-claim against 307. 307 opposed the motion, seeking an adjournment and leave to cross- examine Krishan Judge, the deponent of 162’s supporting affidavit, on his affidavit. [ 9 ] In allowing 307 to cross cross-examine Mr.

Judge on his affidavit, I directed that the cross-examination was also to serve as 307’s examination for discovery of 162. I also granted 162 leave to continue its cross-examination of 307, at least to the stage of discovery, and directed that 162 and G LC were to conduct their discoveries contemporaneously with 307’s cross-examination of Mr. Judge.

I further directed that, following completion of the examinations, the balance of 162’s motion to continue its cross-claim could be returned for determination, at which point 307’s costs for the intervening steps could be determined. [ 10 ] 162 served Notices of Examination on Mr. Noelting and Mr. Wellington on January 23, 2012, and Mr. Noelting and Mr. Wellington failed to attend for examination.

ISSUES [ 11 ] The issues raised in the present motion are whether 162 is entitled to examine the representatives it has named in its Notices of Examination and whether it would expedite the resolution of issues in dispute in GLC’s construction lien actions to substitute Mr. Grosbeck. [ 12 ] As GLC has acknowledged at the hearing of the motion that there was no contract or sub-contract, it is unnecessary for me to deal with this issue.

PARTIES’ POSITIONS [ 13 ] GLC asserts that Kevin Grosbeck was its project manager who performed, directed, and has first-hand knowledge of the work performed on the Property in respect of both the first and the second lien action. It asserts that both the Claim for Lien in the first lien action, which was sworn by its Chief Executive Officer, Mr. Jean Noelting, and the Affidavit of Verification for the second lien, which

was sworn by its President, Don Wellington, were based on information provided by Mr. Gosbeck. [ 14 ] GLC asserts that it would be inefficient and costly to conduct three examinations where one will suffice, and that Mr. Grosbeck, being a person who may properly be examined under both liens, and whose answers will bind GLC, is the appropriate person to be examined. It submits that if Mr. Noelting and Mr. Wellington testify, they will be relying on information given to them by Mr.

Grosbeck, which will result in three different transcripts, each with its own set of exhibits, undertakings and possible refusals, which is inefficient, costly and will cause unnecessary delay. [ 15 ] 162 asserts that Mr. Noelting and Mr. Wellington were agents for the lien claimant in respect of the first and second lien, respectively. 162 caused them to be served with Notices of Examination, and they failed to attend, as appears from Certificates of Non- Attendance issued by the Examiner’s Office.. 162 relies on its presumptive right to examine representatives of its choice.

ANALYSIS AND EVIDENCE [ 16 ] The Construction Lien Act provides, in part: 40.

(1) Any of the following persons is liable to be cross-examined without an order on a claim for lien at any time , regardless of whether an action has been commenced: 1. The lien claimant. 2. An agent or assignee of the lien claimant. 3. A trustee of the workers’ trust fund, where subsection 81(2) applies. 2010, c. 16 , Sched. 2, s. 2(11).

(2) There shall be only one examination under subsection (1), but the contractor, the payer of the lien claimant, and every person named in the claim for lien who has an interest in the premises are entitled to participate therein. R.S.O. 1990, c. C.30, s. 40(2) . …

(4) The rules of court pertaining to examinations apply, with necessary modifications, to cross-examinations under this section. R.S.O. 1990, c. C.30, s. 40(4) . [2] [Emphasis added] [ 17 ] Mr. Noelting and Mr. Wellington are identified as agents for the lien claimant in the Liens as registered. 162 therefore has a presumptive right, pursuant to the Construction Lien Act , s. 40(1), to examine them.

As is the case with Rule 31.03(2) of the Rules of Civil Procedure , [3] which provides that the examining party may examine any officer, director, or employee on behalf of the corporation, but the court on motion of the corporation before the examination may order the examining party to examine another officer, director or employee, the examining party has the presumptive right to select the officer he wishes examined and the onus is on the corporation to convince the court to substitute another representative selected by it. [4] [ 18 ] For the reasons that follow, I find that GLC has not discharged its onus of demonstrating why it would expedite the resolution of the issues in the action to substitute Mr.

Grosbeck. [ 19 ] As Strathy J. observes in Ciardullo v. Premetalco Inc., [5] (2009), the starting point for the analysis is to note the purposes of discovery, which are to enable the examining party to know the case it must meet, to assess the strengths and weaknesses of the opposing party’s case, and its own case, and to obtain admissions for use at trial. [ 20 ] In deciding whether one corporate representative should be substituted for another, the court should consider:

a) Whether the person selected is sufficiently knowledgeable in relation to the matters in issue;

b) Whether it would be oppressive to require the person selected by the opposing party to be examined, for example, by the witness being required to give an inordinate number of undertakings or unnecessarily being taken away from onerous management responsibilities; and

c) Whether there would be prejudice to the examining party to be required to examine someone other than the person selected. [6] [ 21 ] The material filed discloses that while the amount of the liens claimed is disputed, the principal issues in dispute are not, as in many Construction Lien actions, the work that was done, but whether Wolverine Tube 1 had knowledge of the contamination of the Property when it sold the Property to 162 in 2005, whether it misrepresented the condition of the Property as clean of contaminants to 162, and whether 162 asked GLC to perform the work needed to remove the contaminants in 2010, and did so to enhance its estate or interest in the Property so as to give rise to an entitlement by GLC to a lien. [ 22 ] The inspection notes of the Ministry of the Environment that 162 has produced includes a draft Amending Order that states, in part: 1.4 A February 21, 2002 press release, issued by Wolverine Tube, INc., as filed with the United States Security Exchange Commission, included the following: “Wolverine Tube, Inc. (NYSE: WLV) today announced the discontinuance of its Wolverine Ratcliffs, Inc. joint venture, located in Fergus, Ontario, Canada.

This business, formed in 1999 by Wolverine Tube, Inc. and Ratcliffs- Severn, Ltd., is 74.5% owned by Wolverine Tube, Inc. and produces both heavy-gauge and light-gauge copper and copper alloy strip.” 1.5 In correspondence dated November 12, 2010 information was received from former or current, or both, employees of Wolverine

Tube, Inc. or its subsidiaries which indicates Wolverine Tube, Inc. had management or control of the Property from prior to July 19, 1999, and until May 4, 2005.

For example, the activities at the Property during this period were directly under the control of Wolverine Tube, Inc; senior executives of Wolverine Tube Inc. regularly visited the Property and gave directions on the running of the activities at the property; and the sale and management of the assets at the Property after the plant closing in 2002 were under the control of Wolverine Tube, Inc. [Emphasis added] [ 23 ] The foregoing information underlies the relevance of the information that “senior executives of Wolverine Tube Inc.” may have regarding the contamination of the Property and the knowledge possessed by those in senior management of the Wolverine group of companies that negotiated the sale of the Property to 162 in 2005.

Mr. Noelting and Mr. Wellington are, admittedly, senior executives of GLC, whom 162 alleges is the successor of Wolverine Tube 1, which sold the Property to it in 2005. An inference can therefore be drawn that they would have knowledge of the contamination that was done by GLC’s predecessor and as to whether the contamination was disclosed to 162 during the negotiations to sell the Property to that company. It is not evident from the material, nor do the deponents of GLC’s affidavits state that Mr. Noelting and Mr. Wellington would not have relevant evidence on these issues. [ 24 ] In Roe v.

Dominion Stores Ltd., [7] (1984), Master Garfield allowed a defendant’s application to substitute any or all of four officers or employees of the defendant corporation for the president of the corporation, whom he plaintiff had selected. In that case, it was established that the president, who did not have specific first-hand knowledge of the issues to be explored in the action, was in charge of a corporation having 289 retail stores and was considered the 31 st largest corporation in Canada. In Bassett Furniture Industries Incorporated v.

Sargent Color T.V. & Furniture Limited , [8] referred to by Master Garfield, the defendant wanted the president of the plaintiff company who had no first-hand knowledge, but managed a company with approximately 30,000 accounts in North America and foreign countries.

In that case the Judge allowed a sales representative selected by the plaintiff company to be examined in the president’s place, “although not foreclosing the defendant from naming some other party who “may qualify as an officer of the plaintiff with some connection to these proceedings”. [ 25 ] Master Garfield concluded: “To expect the president of the company as large as this defendant to appear as representative of the defendant in a case that does not appear unusual, would be oppressive to the defendant, comparable to requiring the president of General Motors to appear on discovery in all claims against General Motors.” [ 26 ] In the present case, there is no evidence as to the extent of Mr.

Noelting’s or Mr. Wellington’s responsibilities or the scale of the companies they serve. There is therefore no basis upon which I can find that the disruption that their being examined would represent to them and to GLC would be disproportionate to the value of their evidence in the action. [ 27 ] In Canadian Imperial Bank of Commerce v. Cigam Entertainment Inc. [9] (1999), B.

Wright J. allowed an appeal from Master Sedgwick refusing to allow the CIBC to substitute another officer for the President of personal and commercial banking for the Bank in a case involving misrepresentations made to a customer who was obtaining $50,000.00 of financing from the Bank.

There was no evidence before Justice Wright as to any person at the Bank who was alleged to have made the representations and the President had been selected because he had given a speech concerning a new lending policy for knowledge-based small businesses. [ 28 ] In allowing the substitution of the account manager at the branch where the customer did his banking, who had been directly involved with the customer in assisting him with financing, Justice Wright questioned the relevance of the evidence the President would have.

He stated: Presidents of corporations are not immune from being produced on examinations for discovery, however, they should only be required to attend such examinations where they have sufficient knowledge of the matters in dispute, which means at least some direct involvement with the parties and the transactions out of which the claims arise. [10] [ 29 ] In the present case, I am unable to conclude from the evidence before me that Mr. Noelting and Mr. Wellington would not have relevant evidence on the matters most in issue in the action, nor am I able to determine that Mr.

Grosbeck would have such evidence, apart from the work done which, as noted above, does not appear to be among the principal issues. CONCLUSION AND ORDER [ 30 ] Based on the foregoing, GLC has not discharged its onus of establishing that 162 should be deprived of its presumptive right to select the representatives it wishes to examine in this action. Accordingly, its motion is dismissed. [ 31 ] If the parties are unable to agree on costs, 162 may submit written arguments by May 15, 2013, not to exceed four pages with a Costs Outline.

GLC may submit its written arguments, with a Costs Outline, by May 30, 2013. ___________________________ Price J. Released: April 30, 2013

CITATION: Great Lakes Copper Inc. v. 1623242 Ontario Inc., 2013 ONSC 2600 COURT FILE NO.: 216/11 and 501/12 DATE: 2013-04-30 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: GREAT LAKES COPPER INC. Plaintiff - and – 1623242 ONTARIO INC. and 3072453 NOVA SCOTIA COMPANY Defendants REASONS FOR ORDER Price J. Released: April 30, 2013