COURT OF APPEAL FOR ONTARIO

CITATION: Falcon Lumber Limited v. 2480375
    Ontario Inc. (GN Mouldings and Doors), 2020 ONCA 310

DATE: 20200525

DOCKET: C67321

Gillese, Brown and Huscroft JJ.A.

BETWEEN

Falcon Lumber Limited

Plaintiff (Respondent)

and

2480375 Ontario Inc., carrying
    on business as "GN Mouldings and Doors", Muhammad Asjid Iqbal, GN
    Trim and Doors Ltd., a.k.a. "GN Trim & Door Ltd.",
Surinder P. Lotey a.k.a. "Paul Lotey"
, 2562825
    Ontario Inc., carrying on business as VK TRIM & DOORS, 2625068 Ontario
    Inc., carrying on business as VK Trim & Doors

Defendants (
Appellant
)

Micheal Simaan and Rahul Gandotra, for
    the appellant

Ritchie J. Linton, for the respondent

Heard: In-writing

On appeal from the order of Justice Leonard
    Ricchetti of the Superior Court of Justice, dated October 15, 2019, reported at
    2019 ONSC 4280.

BROWN J.A.:

I.        OVERVIEW

[1]

There are two appellants on this appeal. The first, Mr. Paul Lotey,
    appeals the order of the motion judge striking out the statement of defence filed
    on behalf of himself and two of his companies, GN Trim and Doors Ltd. a.k.a.
    GN Trim & Doors Ltd. (GN Trim) and 2562825 Ontario Inc., carrying on
    business as VK TRIM & DOORS (256) (collectively the Lotey Defendants). They
    were defending a March 31, 2016 action commenced by the respondent, Falcon
    Lumber Limited (Falcon Lumber), for the payment of $131,748.17 for lumber and
    building materials sold and delivered to GN Trim in 2015.

[2]

The second appellant is the law firm of Kramer Simaan Dhillon LLP (the
    KSD Firm) who represented the Lotey Defendants in the proceeding below and who
    continue to represent Mr. Lotey on this appeal. The KSD Firm appeals that part
    of the motion judges order requiring it to pay Falcon Lumbers costs of the
    motion fixed in the amount of $6,246.54.

[3]

In addition to the Lotey Defendants, there are two other groups of
    defendants in this action. The second is the Moulding Defendants, which
    consists of Muhammad Asjid Iqbal and 2480375 Ontario Inc., carrying on business
    as GN Mouldings and Doors. Falcon Lumber pleaded that in 2015 the Lotey Defendants
    and Mouldings Defendants colluded to avoid payment of its invoices for the goods
    sold and delivered. As the litigation unfolded, the claim against the Mouldings
    Defendants took a back seat to an amended claim involving the dealings between
    the Lotey Defendants and the third defendant group, 2625068 Ontario Inc.,
    carrying on business as VK Trim & Doors (262). It purchased the assets of
    GN Trim in April 2018 from Mr. Loteys company, 256.

[4]

In October 2018, Falcon Lumber amended its statement of claim to add 262
    and Mr. Loteys company 256 as defendants. The amendment resulted from the
    disclosure the motion judge had ordered in June 2018 concerning the November
    2017 receivership of GN Trim. The productions revealed the following series of
    transactions:

(i)

In March 2017, Mr. Lotey incorporated 256;

(ii)

In
    April 2017, Mr. Lotey caused GN Trim  the company to which Falcon Lumber had sold
    the lumber  to grant him a security interest over its assets;

(iii)

In
    November 2017, Mr. Lotey took the position that GN Trim had defaulted on the
    general security agreement and appointed a private receiver over GN Trims
    assets. At the time, Mr. Lotey was the largest creditor of GN Trim;

(iv)

Two days
    after its appointment, the receiver sold GN Trims assets to Mr. Loteys new
    company, 256, by way of a private sale for $147,000. 256 operated its business
    from the Bolton, Ontario address from which GN Trim had operated (the Premises);

(v)

In
    March 2018, 262 was incorporated with its registered head office listed as the Premises;
    and

(vi)

In late
    April, 262 closed the purchase of GN Trims assets from 256 for $580,000. The
    assets acquired by 262 were the same assets of GN Trim that 256 had bought from
    the receiver.

[5]

Falcon Lumber pleads that the 2017 and 2018 transactions involving GN
    Trim, 256, and 262 were intended to defeat its claim as a creditor for the
    goods it had sold and delivered to GN Trim and resulted in Mr. Lotey receiving
    a personal financial benefit. Mr. Lotey and 262 deny the allegations.

[6]

By Superior Court of Justice standards, this is a claim for a modest
    amount of money. One would expect a reasonably prompt disposition of the
    dispute on its merits.

[7]

That has not occurred.

[8]

The main reason is that close to three years were consumed by Falcon
    Lumber trying to obtain proper documentary disclosure and production from the
    Lotey Defendants regarding their dealings with GN Trims assets including what,
    if any, benefit Mr. Lotey personally received from those dealings.

[9]

According to the motion judge in his July 2019 reasons, by July 4, 2019,
    when he heard Falcon Lumbers motion to strike out the statement of defence of
    the Lotey Defendants for failure to make proper production: (i) there had been
    30 dates for motions, cross-motions, and case conferences; (ii) on most court
    attendances the primary issue had been the Lotey Defendants failure to provide
    complete productions; (iii) 22 orders or judicial endorsements had been made;
    (iv) six court production orders had been made against the Lotey Defendants;
    and (v) as of the date of the motion, the Lotey Defendants still had not made
    full and complete production of relevant documents: at para. 1.

[10]

The
    motion judge struck out the statement of defence of the Lotey Defendants,
    without leave to amend, noted them in default, and permitted Falcon Lumber to
    proceed to obtain default judgment against them. As well, he awarded Falcon
    Lumber its costs of the motion of $6,246.54 against the Lotey Defendants
    counsel, the KSD Firm.

[11]

As
    noted above, Mr. Lotey appeals the striking out of his statement of defence;
    his companies, GN Trim and 256, do not join in the appeal. The KSD Firm appeals
    the award of costs made against it.

[12]

For
    the reasons set out below, I would dismiss Mr. Loteys appeal and deny the KSD
    Firm leave to appeal the cost order.

II.       THE LITIGATION

A.

The ACTIONS PROCEDURAL HISTORY

[13]

Following
    the close of pleadings in June 2016, Falcon Lumber and the Lotey Defendants
    pursued separate, but parallel, procedural tracks in this litigation.

[14]

Falcon
    Lumber sought documentary production from and the examination of the Lotey
    Defendants. The Lotey Defendants did not appear in response to an initial
    notice of examination, which led Falcon Lumber to obtain a consent order from
    Price J., dated August 18, 2016, that examinations for discovery take place on
    October 7, 2016.

[15]

Contemporaneously,
    Mr. Lotey informed Falcon Lumber that he intended to seek summary judgment
    dismissing the action as against him personally. In August 2016, he advised
    Falcon Lumber that he had secured the first available motion date: April 5,
    2017.

[16]

Falcon
    Lumbers difficulties in obtaining proper production from the Lotey Defendants resulted
    in motions to produce and culminated in its motion to strike out their
    statement of defence. The return dates for Mr. Loteys summary judgment motion
    tracked those for the Falcon Lumber motions.

2016

[17]

Mr.
    Lotey first attended for examination for discovery in October 2016. He appeared
    both in his capacity as a named defendant and as the representative of GN Trim.
    Mr. Lotey confirmed that he was the sole shareholder of GN Trim.

[18]

Mr.
    Lotey swore GN Trims initial August 2016 Affidavit of Documents as the
    principal of the company. The only documents listed were the invoices sent by
    Falcon Lumber. Mr. Loteys personal affidavit did not list any documents.

[19]

Mr.
    Lotey brought to the discovery only the Falcon Lumber invoices; he refused to
    produce any other documents. Falcon Lumber was not prepared to proceed in the
    circumstances and advised it would bring a motion to compel production. In his
    July 2019 reasons, the motion judge stated, at para. 26:

There can be no dispute that the Lotey
    Defendants had not produced all relevant documents in the Affidavit of
    Documents as required by the Rules (as subsequently decided by this court) and
    as such, the Plaintiff did not want to and had every right not to proceed with
    the examination for discovery.

2017

[20]

Falcon
    Lumber moved for an order requiring the Lotey Defendants to produce a full and
    complete Affidavit of Documents. That motion was heard by Barnes J. in March
    2017. He disposed of the motion by order dated July 21, 2017
(the
    Barnes J. Production Order)
.

[21]

In
    his reasons,
Falcon Lumber Limited v. 2480375 Ontario Inc
.,
    2017 ONSC 4470, Barnes J. stated, at para. 22:

Thus the documents sought by the Plaintiff are
    relevant to the issues raised by the action. The documents can help discover
    why the amount claimed has not been paid, who may have obtained the benefit
    arising from the failure to pay, whether there is any financial relationship
    between the [Lotey] Defendants and the nature of any financial relationships.
    All of these items are relevant to the issue of unjust enrichment and whether
    the corporate veil can be pierced in this action.

[22]

Barnes J. ordered the Lotey Defendants to produce
    full disclosure of the last 24 months of their business records, corporate
    records and financial information, including the last 24 months of financial
    statements; the last 12 months [bank] statements with cancelled cheques; and
    payroll ledger for the prior 24 months. They shall also produce a full and
    complete affidavit of documents: at para. 3.

[23]

As
    the motion judge wrote about the Barnes J. Production Order in his July 2019
    reasons, at para. 29: This court order should have finally resolved the
    production issues. It did not.

[24]

In
    April 2017, Mr. Loteys motion for summary judgment had been adjourned to late
    August 2017. Mr. Lotey was cross-examined in June 2017. Barnes J. released the
    reasons for his production order the following month.

[25]

Falcon
    Lumber then brought a motion to compel Mr. Lotey to re-attend for
    cross-examination to answer undertakings given and refusals made on his June
    cross-examination. Shaw J. disposed of the motion in October 2017:
Falcon Lumber Ltd. v. 2480375
, 2017 ONSC 6248. He wrote,
    at para. 4, that:

The defendants have not complied with Justice
    Barnes order. GN [Trim] and [Mr.] Lotey were to have provided disclosure by
    August 31, 2017. Counsel for the defendants informed the court during the
    motion that the disclosure would be provided by September 28, 2017.

[26]

Shaw
    J. also ordered Mr. Lotey to answer certain questions refused on his
    cross-examination. Counsel for the Lotey Defendants advised that proper
    production would be made by September 28, 2017. It was not.

2018

[27]

Falcon
    Lumber arranged for the continuation of Mr. Loteys cross-examination and the
    examination for discovery of the Lotey Defendants to take place in March 2018.
    Although Mr. Lotey attended, full production had not been made. As a result,
    Falcon Lumber did not proceed with the examination for discovery, although it
    did continue its cross-examination of Mr. Lotey on his summary judgment motion
    affidavit.

[28]

Counsel
    from the KSD Firm took the position that the examination for discovery of the
    Lotey Defendants should proceed notwithstanding deficient production. The motion
    judge quite properly rejected that contention, stating at paras. 39-40:

Clearly, the Lotey Defendants' counsel did not
    and does not understand that all relevant documents should have been produced
in advance
for a proper and complete cross-examination.

This is a further example of the deliberate
    delay and failure to comply with the Rules for almost two years and the failure
    to comply with the Barnes J.s order for almost a year. Six months had elapsed
    since Lotey Defendants' counsel advised the court that the productions would be
    made by September 28, 2017.
[1]
[Emphasis in original.]

[29]

Further
    production-related steps took place during 2018:

·

On May 3, 2018, GN Trim served an unsworn further affidavit of
    documents, that bore Mr. Loteys name, which its counsel advised included the
    disclosure ordered by the July 2017 Barnes J. Production Order.

·

On May 16, 2018, Falcon Lumbers motion to strike and Mr. Loteys
    motion for summary judgment came before the motion judge. This was the parties
    first attendance before the motion judge, who dealt with all subsequent
    motions. In his July 2019 reasons, the motion judge wrote that at that time it
    was painfully obvious that the Lotey Defendants continued to be in breach of
    the Barnes J.s order: at para. 43.

·

The motion judge adjourned Mr. Loteys summary judgment motion
    because it would be unfair to [Falcon Lumber] to force on the motion for
    summary judgment with such multiple and deliberate delays by Lotey and without
    a full examination for discovery of Lotey by [Falcon Lumber].

·

The motion judge directed that an examination of Mr. Lotey occur
    in June 2018. The examination did not proceed due to a dispute over whether Mr.
    Loteys answers would bind GN Trim which, at that point, was in receivership.

·

At a June 28, 2018 case conference, the Lotey Defendants advised the
    motion judge that GN Trim had been placed in receivership. The motion judge
    ordered the production of documents relating to the receivership. Some were
    produced in August 2018.

·

As a result of the productions, Falcon Lumber amended its claim
    as described in paras. 4 and 5 above.

·

Other productions due from the Lotey Defendants remained
    outstanding at the time of a further attendance before the motion judge in
    December 2018. The motion judge directed the completion of productions.

2019

[30]

By
    the time of a January 10, 2019 case conference before the motion judge, the
    Lotey Defendants had not made complete production. A further order for a better
    Affidavit of Documents was made and examinations directed for February.

[31]

Following
    the case conference, the Lotey Defendants produced some further documents. They
    did not make full production before the scheduled February 27, 2019
    examinations notwithstanding letters from Falcon Lumbers counsel requesting
    that they do so. As put by the motion judge at para. 62:

[D]
espite now having consented to provide a
    fresh and complete Affidavit of Documents, the Lotey Defendants continued to
    fail to produce all relevant documents, in particular the documentation in
    relation to the trail of the monies and assets from GN [Trim] Ltd., the
    security, receivership and subsequent sales.

[32]

On
    the day of examination, February 27, 2019, the Lotey Defendants produced some
    additional documents. Counsel for Falcon Lumber stated that he was not going
    to be ambushed or conduct an examination in dribs and drabs. Counsel for the
    Lotey Defendants invited him to examine on the documents produced. Counsel for
    Falcon Lumber refused and adjourned the examination. The motion judge quite
    properly stated, at para. 64:

It was entirely appropriate for Plaintiffs
    counsel to refuse to proceed with the examination that day. On the other hand,
    Lotey Defendants' counsel's position is, in light of the history, absolutely
    shocking and unprofessional.

B.

The motion to strike

[33]

In April 2019, Falcon Lumber initiated a motion
    for an order either to strike out the Lotey Defendants statement of defence or
    to produce a better, complete Affidavit of Documents. For the motion, Falcon
    Lumber filed an affidavit from its sales manager, Stephen Blackadder, that
    itemized the types of documents the Lotey Defendants had failed to produce to
    date.

[34]

As well, in its notice of motion, Falcon Lumber
    put the SKD Firm on notice that it would seek costs of the motion against it.
    Mr. Blackadder deposed that it appears to me that Counsel for the Lotey
    Defendants has engaged in a litigation policy promoting non-disclosure; failing
    to inform of all material changes in the course of litigation, and causing
    unnecessary delay and costs in consequence.

[35]

On the return of the motion on May 17, 2019, the
    SKD Firm sought an adjournment to retain counsel to deal with the claim for
    costs against it. The motion judge granted an adjournment until July 4, 2019.
    As terms of adjournment, the court ordered the Lotey Defendants to deliver by
    the end of June 2019 a better Affidavit of Documents that disclosed specific
    items, deliver the related productions at least a week before the motions
    return date, and bring the productions to court on the return of the motion so
    that the court could examine them.

[36]

In late June, the Lotey Defendants served a
    fresh Affidavit of Documents, which Mr. Lotey affirmed on behalf of himself and
    his two corporations.

[37]

According to the motion judge, on the July 4,
    2019 return of the motion: it became clear that the Lotey Defendants had not
    produced what was ordered; the Affidavit of Documents was incomplete; [m]any
    of the produced documents were redacted; and some were missing; and the
    redactions and missing documentation obfuscated exactly what happened and
    whether the transactions were
bona fide
: at paras. 69-71. When the
    motion judge asked counsel for the Lotey Defendants about the missing
    documentation, counsels response was that he would now ask the bank for
    this documentation: at para. 72. The motion judge continued, at para. 74:

To get to the bottom line, I asked the Lotey
    Defendants counsel whether the new Affidavit of Documents and the most
    recently produced documents showed what happened to the assets and monies
    regarding the sale of the GN [Trim] Ltd. Counsel for the Lotey Defendants
    admitted that the documentation/information in the now produced documentation
    did
not
disclose this information. [Emphasis in original.]

C.

Reasons of the motion judge

[38]

The
    motion judge found that the Lotey Defendants had: willfully disregarded court
    procedure and orders for three years; done everything in their power to avoid
    an adjudication on the merits;

and done everything they could to prejudice Falcon Lumbers claim by
    failing to provide full disclosure of the various transactions relating to GN
    Trims assets
: at paras. 86-91.

[39]

The
    motion judge considered but rejected the option of affording the Lotey
    Defendants yet a further opportunity to make proper production. The Lotey
    Defendants had ignored his last chance order of May 17, 2019 and their actions
    were clearly contumelious. In striking out the Lotey Defendants statement of
    defence, the motion judge stated, at para. 95:

If the Rules and court orders can be ignored
    repeatedly and over a number of years without severe consequences, then there
    would be no point in having Rules or making orders on such motions. The Lotey
    Defendants actions can no longer be excused.

[40]

The
    motion judge ordered the SKD Firm to pay the substantial indemnity costs of the
    motion to strike fixed in the amount of $6,246.54. I will consider his reasons
    for doing so in Part IV below.

III.      FIRST ISSUE: STRIKING OUT THE LOTEY DEFENDANTS
    STATEMENT OF DEFENCE

A.

The governing principles

The fundamental obligation to disclose and produce relevant documents

[41]

At
    the heart of the rules governing actions in the Superior Court of Justice lie
    the obligations of every party to an action to disclose every document relevant
    to any matter in issue in an action that is or has been in its possession,
    control or power, whether or not privilege is claimed in respect of a document,
    and to produce all such documents, unless privilege is claimed in respect of a
    document:
Rules of Civil Procedure
, rr. 30.02(1)-(2).

[42]

Three
    requirements imposed by the
Rules of Civil Procedure
emphasize the importance of the obligation to disclose and produce relevant
    documents to the proper and fair functioning of the civil litigation process:

·

First, the obligation to disclose all relevant documents is not
    limited to documents upon which the party intends to rely to establish its
    claim or defence. A party must disclose every document relevant to any matter
    in issue, whether or not the document helps or hurts the partys case: r.
    30.02(1);

·

Second, in order to ensure that a party fully understands its
    obligation to disclose and produce all relevant documents, the partys lawyer must
    certify in the partys Affidavit of Documents that the lawyer has explained the
    necessity of making full disclosure of all documents relevant to any matter in
    issue in the action and what kinds of documents are likely to be relevant to
    the allegations made in the pleadings: Forms 30A and 30B; rr. 30.03(4) and
    76.03(4). Courts expect that a party has received from its counsel legal advice
    that the documents it must disclose and produce are determined by their
    relevance to the issues pleaded, not by whether the party regards the document
    as favourable or harmful to its case. No doubt this advice may rub against the litigation
    instincts of some parties, who would prefer to deep-six relevant documents
    that might undermine their claims or defences; and

·

Third, the obligation to disclose and produce is not a one-time
    obligation. It is a continuing one:
Tripp v. Ontario
    (Ministry of Transportation)
(1999), 123 O.A.C. 278 (C.A.), at
    para. 22. Where, after serving an affidavit of documents, a party comes into
    the possession or control of a relevant document or discovers that its Affidavit
    of Documents is inaccurate or incomplete, the party must forthwith serve a
    supplementary affidavit of documents specifying the extent to which the
    affidavit of documents requires modification and disclosing any additional
    documents:
Rules of Civil Procedure
,

r.
    30.07.

Taken together, these key rules are designed 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 permitted in Superior Court actions or, in the case of newly
    discovered documents, forthwith  i.e. within a few days  after their
    discovery.

[43]

The
    goal of Ontarios civil justice system is to provide the public with the just,
    most expeditious, and least expensive determination of every civil proceeding
    on its merits:
Rules of Civil Procedure
, r. 1.04(1);
Rules of the
    Small Claims Court
, r. 1.03(1). To achieve that goal, parties to every
    action must comply with their document disclosure and production obligations
    without the need for a court to intervene to compel their adherence. This court
    has stated, in regard to family law litigation, that a partys fundamental duty
    to disclose financial information is automatic, immediate, and ongoing, and should
    not require court orders to obtain production:
Roberts v. Roberts
,
    2015 ONCA 450, 65 R.F.L. (7th) 6, at paras. 11 and 13. The same applies to
    civil actions. The fundamental obligation to disclose relevant documents and
    produce those that are not privileged should be performed automatically by a
    party, without the need for court intervention.

[44]

Of
    course, the
Rules of Civil Procedure
provide for means by which a
    party can seek the assistance of the court where an opposite party has ignored
    or breached its obligation to make automatic, immediate, and ongoing full
    disclosure and production. A party usually seeks the courts intervention by
    bringing a motion against the defaulting party under either r. 30.06 or r.
    30.08. In certain parts of the province, parties may have ready access to a
    case management judge who can deal more informally and expeditiously with requests
    for relief under these rules.

[45]

Rule
    30.06 focuses on the situation where the served affidavit of documents is
    inadequate or the opposite party wishes to challenge the other partys
    assertion of privilege over a document. It states:

30.06
Where
    the court is satisfied by any evidence that a relevant document in a partys
    possession, control or power may have been omitted from the partys affidavit
    of documents, or that a claim of privilege may have been improperly made, the
    court may,

(a) order
    cross-examination on the affidavit of documents;

(b) order
    service of a further and better affidavit of documents;

(c) order
    the disclosure or production for inspection of the document, or a part of the
    document, if it is not privileged; and

(d)
    inspect the document for the purpose of determining its relevance or the
    validity of a claim of privilege.

[46]

Rule
    30.08 overlaps to some degree with r. 30.06, as it deals with the situation
    where a party fails to disclose a document. But r. 30.08 also addresses a
    partys failure to produce a document for inspection. Rule 30.08(1) authorizes
    a court to impose certain sanctions at the trial of an action. It states:

30.08
(1)
    Where a party fails to disclose a document in an affidavit of documents or a
    supplementary affidavit, or fails to produce a document for inspection in
    compliance with these rules, an order of the court or an undertaking,

(a) if the
    document is favourable to the partys case, the party may not use the document
    at the trial, except with leave of the trial judge; or

(b) if the
    document is not favourable to the partys case, the court may make such order
    as is just.

[47]

Rule
    30.08(2) authorizes a court to impose certain pre-trial sanctions, including
    striking out a pleading. It states:

30.08(2) Where a party fails to
    serve an affidavit of documents or produce a document for inspection in
    compliance with these rules or fails to comply with an order of the court under
    rules 30.02 to 30.11, the court may,

(a) revoke
    or suspend the partys right, if any, to initiate or continue an examination for
    discovery;

(b)
    dismiss the action, if the party is a plaintiff, or strike out the statement of
    defence, if the party is a defendant;
[2]
and

(c) make
    such other order as is just.

[48]

However,
    each time a party defaults on its disclosure and production obligations and requires
    the opposite party to seek the courts assistance to remedy the default, two
    things happen. First, the cost of the litigation increases. Motions are not
    cheap; they add significantly to the overall costs of a civil case. Second, the
    final determination of the case on its merits gets pushed back, delayed by the
    need to bring a defaulting party into compliance with its disclosure obligations.

The principles guiding the striking out of pleadings for breach of
    production obligations

[49]

Limited
    jurisprudence exists about when it is appropriate to strike out a partys pleading
    under r. 30.08(2)(b) for breach of documentary disclosure and production
    obligations. Given the variety of circumstances in which a party may resort to
    r. 30.08, the most pragmatic articulation of a guiding principle is that made
    by Wein J. in
Newlove v. Moderco Inc.
, 2002
    CanLII 34748 (Ont. Sup. Ct.), at para. 21, that the scope of the remedy is one
    within the discretion of the Court, to be determined in the context of the
    particular case. Several principles guide the exercise of that discretion.

[50]

First,
    contrary to the appellants assertion, striking out a pleading under r.
    30.08(2)(b) is not restricted to last resort situations, in the sense that it
    must be preceded by a party breaching a series of earlier orders that compelled
    better disclosure or production. Some cases have granted the remedy where
    previous orders were breached:
DLE Consulting Inc. v.
    Graham
, 2016 ONCA 315, 130 O.R. (3d) 799;
Vacca
    v. Banks
, 2005 CanLII 1054 (Ont. Div. Ct.). In others, no prior order had
    been made:
Royal Bank of Canada v. Russo
, 2002 CarswellOnt 73 (Ont.
    Div. Ct.). However, courts usually want to ensure that a party has a reasonable
    opportunity to cure its non-compliance before striking out its pleading:
Koohestani
    v. Mahmood
, 2015 ONCA 56, 124 O.R. (3d) 205, at para. 54.

[51]

Second,
    a court should consider a number of common sense factors when deciding whether
    to strike out a pleading under r. 30.08(2): (i) whether the partys failure is deliberate
    or inadvertent; (ii) whether the failure is clear and unequivocal; (iii)
    whether the defaulting party can provide a reasonable explanation for its
    default, coupled with a credible commitment to cure the default quickly; (iv) whether
    the substance of the default is material or minimal; (v) the extent to which
    the party remains in default at the time of the request to strike out its
    pleading; and (vi) the impact of the default on the ability of the court to do
    justice in the particular case:
Royal Bank of Canada
,
    at para. 12; and see the cases reviewed in
King v. Belair
    Direct
(2004), 184 O.A.C. 189 (Div. Ct.), at paras. 12-13.

[52]

Third,
    although a court may also consider the merits of a partys claim or defence, as
    it does under r. 60.12 dealing with the failure to comply with an interlocutory
    order
[3]
,
    this factor may play only a limited role where breaches of production
    obligations are alleged as one would reasonably expect a party with a strong
    claim or defence to comply promptly with its disclosure and production
    obligations.

[53]

Finally,
    a court must consider whether an order to strike out a pleading would constitute
    a proportional remedy that is consistent with the recent calls of the Supreme
    Court of Canada to alter the Canadian litigation culture.

[54]

Parties
    who default on their documentary disclosure and production obligations impede
    the ability of our civil justice system to provide the fair, timely, and
    cost-effective adjudication of civil disputes on their merits. Their defaulting
    conduct promotes the culture of complacency towards delay decried by the
    Supreme Court, in the context of the criminal justice system, in
R. v.
    Jordan
, 2016 SCC 27, [2016] 1 S.C.R. 631, at para. 40. As well, such
    conduct undermines on-going efforts to shift the Canadian civil litigation
    culture in the direction of providing more accessible justice to the public. As
    the Supreme Court pointed out in
Hryniak v. Mauldin
, 2014 SCC 7, [2014]
    1 S.C.R. 87, at para. 27,
the developing consensus that the
    traditional balance struck by
extensive pre-trial
    processes
and the conventional trial no longer reflects the modern
    reality and needs to be re-adjusted. (emphasis added) In
Hryniak
, the
    Supreme Court called for a civil justice system that not only provides a fair
    process that results in the just adjudication of disputes, but also is
    accessible  proportionate, timely and affordable, for without an accessible
    process, a fair process is illusory: at para. 28.

[55]

Hryniak
requires judges to actively manage the civil
    legal process in line with the principle of proportionality: at para. 32. Orders
    to strike out pleadings are one means by which to ensure that the civil justice
    process delivers justice that is proportionate, timely, and affordable.
    Accordingly, when considering whether to strike out a partys pleading by
    reason of its failure to comply with its documentary disclosure and production
    obligations, in addition to the factors set out in paras. 50 to 54 above, a
    court should consider:

·

the extent to which the defaulting partys conduct has increased
    the non-defaulting partys costs of litigating the action, including the
    proportionality of those increased costs to the amount actually in dispute in
    the proceeding; and

·

to what extent the defaulting partys failure to comply with its
    obligation to make automatic disclosure and production of documents has delayed
    the final adjudication of the case on its merits, taking into account the
    simplicity (or complexity) of the claim and the amount of money in dispute.

[56]

Applying
    the principle of proportionality in the context of a motion to strike out a
    pleading for failure to perform document disclosure and production obligations means
    that the moment when a court may make the order to strike will come much
    earlier in a simple claim for a modest amount of money than it will in a
    complex case where millions are in dispute. Common sense dictates that the
    simple case should spend less time in the court system and impose lower legal
    costs on the litigants than the more complex one.

[57]

To
    summarize, several principles guide the exercise of a courts discretion to
    strike out a partys claim or defence under r. 30.08(2) for non-compliance with
    documentary disclosure and production obligations:

·

The remedy is not restricted to last resort situations, in the
    sense that it must be preceded by a party breaching a series of earlier orders
    that compelled better disclosure or production.
However,
    courts usually want to ensure that a party has a reasonable opportunity to cure
    its non-compliance before striking out its pleading;

·

A court should consider a number of common sense factors
    including: (i) whether the partys failure is deliberate or inadvertent; (ii)
    whether the failure is clear and unequivocal; (iii) whether the defaulting
    party can provide a reasonable explanation for its default, coupled with a
    credible commitment to cure the default quickly; (iv) whether the substance of
    the default is material or minimal; (v) the extent to which the party remains
    in default at the time of the request to strike out its pleading; and (vi) the
    impact of the default on the ability of the court to do justice in the
    particular case;

·

The merits of a partys claim or defence may play only a limited
    role where breaches of disclosure and production obligations are alleged as one
    would reasonably expect a party with a strong claim or defence to comply
    promptly with its disclosure and production obligations;

·

In considering whether an order to strike out a pleading would
    constitute a proportional remedy in the circumstances, a court should consider:

o

the extent to which the defaulting
    partys conduct has increased the non-defaulting partys costs of litigating
    the action, including the proportionality of those increased costs to the
    amount actually in dispute in the proceeding; and

o

to what extent the defaulting
    partys failure to comply with its obligation to make automatic disclosure and
    production of documents has delayed the final adjudication of the case on its
    merits, taking into account the simplicity (or complexity) of the claim and the
    amount of money in dispute.

B.

Application of the governing principles

[58]

Where
    a motion judge exercises discretion, an appellate court should intervene only
    where the discretion has been exercised on a wrong principle of law or a clear
    error has been made. An appellate court should defer to the findings of fact
    made by a motion judge unless he or she disregarded or failed to appreciate
    relevant evidence:
Bottan v. Vroom
, 2002
    CanLII 41691 (Ont. C.A.), at para. 13.

[59]

In
    the present case, Mr. Lotey submits that the motion judge made three reversible
    errors in striking out his statement of defence. His submissions must be
    assessed in the larger context of the case: a claim for only about $131,000; a
    three-year history of the Lotey Defendants failing to make full disclosure and
    production of relevant, non-privileged documents; and six court orders
    directing them to cure their non-compliance.

The Lotey Defendants were in default of their production
    obligations

[60]

First,
    Mr. Lotey submits that the Lotey Defendants were not in default at the time the
    motion to strike came before the motion judge in July 2019. As part of his
    argument, Mr. Lotey contends that there was no evidence of continued
    non-compliance by the Lotey Defendants with past orders.

[61]

Mr.
    Loteys submission stands at odds with the record. In his reasons, the motion
    judge thoroughly and accurately reviewed the disclosure and production orders
    made against the Lotey Defendants following the close of pleadings, which
    showed continued non-compliance by them. As well, the record clearly shows that
    at the time of the July 4, 2019 hearing, the Lotey Defendants were in default
    of the May 17, 2019 production order, as found by the motion judge.

[62]

First,
    the motion judge had ordered the production, by June 27, 2019, of the bank
    statements and cancelled cheques of GN Trim. Mr. Lotey, in his June 27, 2019
    affidavit, admitted that he had not produced them but stated that he had
    requested them from his bank. Waiting for three years after the start of an
    action to ask for obviously relevant documents does not satisfy a partys
    obligation of prompt and automatic disclosure and production.

[63]

Second,
    the April 2018 sale of assets by 256 to 262 contemplated that 256 would assign
    its lease of the Premises to 262. In his May 17, 2019 endorsement, the motion
    judge ordered the Lotey Defendants to produce, by June 27, 2019, the assignment
    of lease. In his June 27, 2019 affidavit, Mr. Lotey deposed that the lawyer who
    acted for his company, 256, on the transaction advised him that there was no
    assignment of lease because 262 entered into a new lease with the landlord. The
    motion judge did not accept Mr. Loteys explanation, stating at para. 70(c)
    that:

While the Lotey Defendants were to show how
    the leased business premises were transferred between the companies, the
    Lotey Defendants simply said there was no assignment. There was no new lease
    produced, no termination documents, or other documents which would show this
    was either a sham transaction or a legitimate leasing transaction.

[64]

In his supplementary submissions, Mr. Lotey
    describes these comments by the motion judge as improper and unreasonable. On
    the contrary, they were astute and most appropriate given the issues raised by
    Falcon Lumbers pleading.

[65]

Finally, the Lotey Defendants were ordered to
    produce the cancelled cheques of 256.
Mr. Lotey deposed that they were
    produced in late June 2019. But, as the motion judge found, the information on
    many of the cheques had been redacted. As the motion judge quite accurately
    wrote, at para. 71, the
redactions and missing documentation
    obfuscated exactly what happened with respect to the initial corporate
    dealings/transfer, the securitization, the receivership and the subsequent
    sale.

[66]

Notwithstanding this evidence of the continuing failure of the Lotey
    Defendants to discharge their production obligations, in
his
    supplementary submissions Mr. Lotey argues that any prejudice by the
    redactions could easily be remedied by ordering that the documents be
    unredacted. This extraordinary submission speaks volumes about the Lotey
    Defendants cavalier attitude toward their production obligations, showing that
    they regard them as nothing more than a game of catch me if you can. The
    culture shift directed by
Hryniak
has no place for such tactical
    gameship, which unreasonably increases litigation costs and delays the
    adjudication of a case on its merits.

The motion judges order was not disproportionate in the
    circumstances

[67]

Mr.
    Lotey next submits that the motion judges order was disproportionate because there
    was no prejudice to Falcon Lumber and he could remedy any remaining production
    deficiencies.

[68]

There
    is no merit in that argument.

[69]

This
    action involved a modest monetary claim of about $131,000. If the action were
    started today, it would fall within the Simplified Procedure regime. Part of
    the claim is a straight-forward debt claim for the payment of invoices for
    goods sold and delivered. That is the type of claim that should enter and exit
    the Superior Court civil justice system quite quickly.

[70]

However,
    the claim contains an additional element: it seeks to impose the liability for
    a corporate debt on the principal of the company based on allegations that the
    principal used a scheme to take the benefit of the transaction with Falcon
    Lumber for himself. Corporate principals who are the targets of such claims are
    entitled to defend an action. But, they are not entitled to defend by ignoring
    and defaulting on their fundamental document disclosure and production obligations.
    Breaching the
Rules of Civil Procedure
is not
    a legitimate defence tactic.

[71]

In
    the present case, the various motion judges were generous in affording the
    Lotey Defendants multiple opportunities to cure their disclosure defaults. As
    the chronology of events set out above discloses, three judges made production
    orders and one of them, the motion judge, made several production orders during
    the one-year period that he case managed the action. The Lotey Defendants
    default of their production obligations ran from at least July 21, 2017, when
    the Barnes J. Production Order was made, until the July 4, 2019 hearing before
    the motion judge.

[72]

Hryniaks
goal of accessible civil justice cannot be achieved if courts allow defendants
    in modest monetary claims to remain in default of their fundamental production
    obligations for two years. Such cases should be disposed of on their merits within
    two years, not remain mired in production disputes and motions for two years.

[73]

On
    the record before us, the motion judge did not jump the gun in striking out
    the Lotey Defendants statement of defence. He had been case managing this
    action for the better part of a year. As the Divisional Court appropriately
    observed in
Starland Contracting Inc. v. 1581518 Ontario
    Ltd
. (2009), 252 O.A.C. 19 (Div. Ct.), at para.
    26:

The authority to dismiss proceedings for
    repeated failure to comply with court orders and flagrant disregard for the
    court process is an essential management tool. A case management judge or
    master who has a continuous connection with an action, the parties and their
    counsel is well-positioned to monitor the conduct of the participants
    throughout the proceedings, and to determine whether anyone is deliberately
    stalling, showing bad faith or abusing the process of the court when deadlines
    are missed and defaults occur under procedural orders. A decision to dismiss an
    action or strike a pleading because of such defaults is entitled to deference,
    unless that decision is shown to have been exercised on wrong principles or
    based upon a misapprehension of the evidence such that there is a palpable and
    overriding error.

[74]

In
    the present case, the motion judge had been more than generous in the
    opportunities he granted the Lotey Defendants to cure their disclosure
    failures. An order to strike out their pleading could well have been made much
    earlier in the life of this action.

Mr. Lotey should pay the price for the production failures
    of the corporate Lotey Defendants

[75]

Finally,
    Mr. Lotey submits that the motion judge erred in striking out his statement of
    defence as he failed to recognize that any findings as pertaining to [GN Trim]
    and/or 256, ought not to be considered or attributed to Lotey as a defendant in
    his personal capacity.

[76]

This
    submission ignores the facts contained in the record, which show that Mr. Lotey
    controlled the disclosure and production of documents by GN Trim and 256:

·

He was the sole directing mind of both companies;

·

In August 2016, Mr. Lotey affirmed two affidavits of documents:
    one as an individual defendant and the other as the principal of GN Trim;

·

Mr. Lotey attended the short October 7, 2016 examination for
    discovery both in his personal capacity and as the representative of GN Trim;

·

Mr. Lotey was the named affiant in a May 2018 updated affidavit
    of documents for GN Trim;

·

In January 2019, the Lotey Defendants sent an unsworn joint
    affidavit of documents to Falcon Lumber in which Mr. Lotey was shown as the
    intended affiant; and

·

A joint affidavit of documents of the Lotey Defendants was
    affirmed by Mr. Lotey in June 2019.

[77]

Falcon Lumber has asserted both statutory and common law causes
    of action against the Lotey Defendants in its effort to impose personal
    liability on Mr. Lotey for the unpaid debt of GN Trim. One of the causes of
    action sounds in fraud and seeks to pierce the corporate veil:
Yaiguaje v.
    Chevron Corporation
, 2018 ONCA 472, 141 O.R. (3d) 1, at paras. 64-83.
    Whether Falcon Lumber can meet the statutory and common law tests to impose
    liability on Mr. Lotey personally for the debt is a matter for the default
    judgment proceeding.

[78]

The issue before the motion judge was quite different: Which of
    the Lotey Defendants directed their litigation conduct? There is only one
    answer on the record: Mr. Lotey. The Lotey Defendants advanced a joint defence.
    Mr. Lotey controlled the disclosure of documents by each of the three Lotey
    Defendants and he was the party who filed the affidavits that sought to explain
    and justify the disclosure and production failures of the Lotey Defendants. In
    those circumstances, it was open to the motion judge to sanction the disclosure
    misconduct of the corporate Lotey Defendants by striking out the joint
    statement of defence because Mr. Lotey clearly directed that disclosure
    misconduct.

C.

Conclusion

[79]

For
    the reasons set out above, I conclude that the motion judge did not err in
    striking out the statement of defence of Mr. Lotey. I would dismiss Mr. Loteys
    appeal.

IV.     SECOND ISSUE: AWARDING COSTS AGAINST COUNSEL

[80]

The
    KSD Firm appeals the order of the motion judge requiring it to pay Falcon
    Lumbers costs of the motion fixed in the amount of $6,246.54. The order also prevented
    the KSD Firm from seeking recovery of the costs from its client.

[81]

I
    accept Falcon Lumbers submission that the KSD Firm requires leave to appeal
    the cost order. Section 133(b) of the
Courts of Justice
    Act
, R.S.O. 1990, c. C.43 (
CJA)
states that no appeal lies without leave of the court to which the appeal is to
    be taken where the appeal is only as to costs that are in the discretion of
    the court that made the order for costs. Where a party seeks to join an appeal
    under s. 133(b) of the
Courts of Justice Act
with an appeal as of right, that party must seek leave to appeal:
Rules of Civil Procedure
, r. 61.03(17)(b). The only
    aspect of the order that the KSD Firm may appeal is the cost order. Leave to
    appeal therefore is required.

[82]

While
    the joint Amended Amended Notice of Appeal of Mr. Lotey and the KSD Firm does
    not expressly seek leave to appeal, the section of the notice dealing with the
    jurisdiction of this court to hear the appeal does refer to s. 133(b) of the
CJA
if required. I will proceed on the basis that the
    KSD Firm is seeking leave to appeal costs.

[83]

Awarding
    costs is a discretionary exercise that is afforded significant deference. Leave
    to appeal a costs order is granted sparingly and only where there are strong
    grounds to believe that the lower court erred:
Feinstein v. Freedman
,
    2014 ONCA 205, 119 O.R. (3d) 385, at para. 52.

[84]

I
    would not grant leave to appeal. I do not see strong grounds to believe that
    the motion judge erred.

[85]

The
    motion judge dealt with the cost claim against the KSD Firm in a procedurally
    fair way. Prior to the May 17, 2019 motion return date, Falcon Lumber had put
    the KSD Firm on notice that it would seek costs against it. On the return of
    the motion, counsel from the KSD Firm sought an adjournment to retain counsel
    for claim of costs personally, as recorded by the motion judge in his
    endorsement. The motion judge granted the adjournment. When the motion was
    returned on July 4, 2019, the KSD Firm had not retained counsel. The motion
    proceeded and counsel made submissions in respect of the cost request.
    Accordingly, the motion judge satisfied the requirement of giving the lawyer a
    reasonable opportunity to make representations to the court:
Rules of Civil Procedure
, r. 57.07(2).

[86]

The
    motion judge properly instructed himself on the law concerning awards of costs
    against counsel personally. He understood that such awards are rare and he
    accurately summarized the guiding factors as discussed in
Galganov v.
    Russell (Township)
, 2012 ONCA 410, 294 O.A.C. 13.

[87]

As
    well, at para. 98 of his reasons, the motion judge gave a detailed explanation for
    his decision to order costs against the KSD Firm:

·

Counsel had continually attempted to force on
    the examinations knowing that the Affidavit of Documents was not complete,
    despite non-compliance with court orders, producing new documents on the day of
    the examination, and suggesting that missing documents could simply be asked
    for during the examination;

·

The Lotey Defendants failed to produce
    Affidavits of Documents by the various dates represented by counsel to the
    court;

·

Counsel did not advise the court after the GN Trim
    receivership that he had a new client, the receiver, and deal with the
    receivers obligation to produce relevant documentation;

·

Counsels request on May 17, 2019 for an
    adjournment to retain its own counsel but the subsequent appearance without
    counsel simply appeared to be yet another delay tactic; and

·

At the July 4, 2019 hearing, the Lotey
    Defendants counsel was aware there had not been compliance with the court
    orders, yet, said nothing until directly pressed on the issue by this court.
    Lotey Defendants' counsel facilitated an expensive delay in this proceeding.

[88]

Although
    the motion judge assumed that the KSD Firm simply followed its clients instructions,
    the motion judge noted at para. 99:

The difficulty is that counsel must never
    forget they are also officers of the court and have duties to the court in
    connection with this responsibility. There comes a point when following
    instructions, makes counsel complicit in the flagrant disregard of the Rules
    and court orders. That happened here.

[89]

The
    KSD Firm submits that those findings are tainted by three palpable and
    overriding errors.

[90]

First,
    they submit that there was no evidence that the firm knew about the November
    2017 receivership of GN Trim before they disclosed that information to the
    motion judge at the June 28, 2018 case conference. I read the motion judges
    reasons as stating the KSD Firm should have disclosed the fact of the
    receivership at the parties earlier attendance before him on May 16, 2018.

[91]

I
    take the KSD Firms point on this issue. The record shows that on June 13, 2018
    the firm sent Falcon Lumbers counsel the November 2017 notice of the receivers
    appointment. Whether the firm knew about the receivership before that time
    cannot be ascertained from the record. In any event, I do not think it makes a
    material difference because Mr. Blackadder of Falcon Lumber acknowledged that
    he knew about the receivership back in November 2017. Given that Falcon Lumber
    knew about the receivership before the May 16, 2018 attendance before the
    motion judge, it could have informed the motion judge about the receivership
    and made submissions about its impact on outstanding disclosure issues. The
    motion judges May 16, 2018 endorsement does not record any such discussion.
    Accordingly, it is difficult to see how any failure by the KSD Firm to make
    such disclosure at that time caused costs to be incurred without reasonable
    cause or to be wasted by undue delay, negligence or other default:
Rules of Civil Procedure
, r. 57.07(1).

[92]

If
    that was the only reason why the motion judge awarded costs against the KSD
    Firm, I might question the soundness of his order. But it was not. The other
    reasons enumerated by the motion judge provide more than ample support for the cost
    order.

[93]

The
    KSD Firm submits that the motion judge erred in characterizing the firms
    request for an adjournment to retain counsel and then not showing up with
    counsel on the next return date as a delay tactic. I do not agree. By that
    point, the motion judge had been managing the case for almost one year and was
    in a good position to assess the litigation conduct of the Lotey Defendants and
    their counsel. Against that background, it was open to him to characterize the
    adjournment request as a delay tactic.

[94]

It
    was also open to the motion judge to treat as another example of a delay tactic
    the conduct of the lawyer from the KSD Firm regarding the documents ordered
    produced in the May 17, 2019 endorsement. In that endorsement, the motion judge
    had specifically directed that copies of the new Affidavit of Documents and
    productions be brought to court on the return date. The motion judge obviously wanted
    to see what the Lotey Defendants had produced. It was clear that he was giving
    them one last chance to remedy their disclosure failures.

[95]

Nevertheless,
    when counsel from the KSD Firm appeared in court on July 4, 2019, he provided
    the court with redacted copies of documents over which no claim for privilege
    was asserted in the updated June 27, 2019 Affidavit of Documents. A lawyer from
    the KSD Firm signed the certificate in that affidavit. It is no surprise that
    the motion judge concluded that the
Lotey Defendants' counsel
    facilitated an expensive delay in this proceeding.

[96]

Remarkably,
    in its submissions on this appeal, the KSD Firm contends that [t]he issue of
    the appropriateness of the redactions is one that should either be established
    during examinations, and if still outstanding thereafter, on a refusals
    motion. That is an extraordinary submission for the KSD Firm to make in light
    of the history of this litigation. It reinforces the correctness of the motion
    judges conclusion
that the KSD Firm was complicit in the
    flagrant disregard of the Rules and court orders and should be required to pay
    costs of the motion to Falcon Lumber, without recourse to their client.

[97]

For these reasons, I would deny the KSD Firm leave to appeal the
    cost order made against it.

[98]

Falcon
    Lumber raises an additional issue in respect of the cost appeal. It submits
    that the KSD Firm put itself in a conflict of interest position by appealing
    the cost order which was made without recovery from their clients. Although it
    was open to the KSD Firm to appeal an order that imposed on it a financial
    obligation, it is very troubling that the KSD Firm would seek leave to appeal the
    cost order while, at the same time, acting for Mr. Lotey on his appeal.

[99]

Such
    a course of action gives rise to an appearance of a conflict of interest. If
    the KSD Firm succeeded in its cost appeal but Mr. Lotey failed in his appeal,
    the most likely outcome would be an order against Mr. Lotey to pay Falcon
    Lumber its costs of the motion below.

[100]

A law firm is under a
    duty to avoid conflicting interests, including its own personal interest:
R.
    v. Neil
, 2002 SCC 70, [2002] 3 S.C.R. 631, at para. 19. The Law Society of
    Ontarios
Rules of Professional Conduct
state that [a] lawyer shall
    not represent a client in a matter when there is a conflict of interest unless
    there is consent, which must be fully informed and voluntary after disclosure,
    from all affected clients and the lawyer reasonably believes that he or she is
    able to represent each client without having a material adverse effect upon the
    representation of or loyalty to the other client: r. 3.4-2. Notwithstanding r.
    3.4-2, r. 3.4-3 states that a lawyer shall not represent opposing parties in a
    dispute. As the
Commentary
to the rule explains:
A
    lawyer representing a client who is a party in a dispute with another party or
    parties must competently and diligently develop and argue the position of the
    client. In a dispute, the parties' immediate legal interests are clearly
    adverse.

[101]

In
    the present case, the immediate legal interests of Mr. Lotey and the KSD Firm
    the other party affected by the order  are clearly adverse on the issue of
    who should pay the costs of the motion below in the event Mr. Loteys appeal
    was dismissed. Accordingly, it is very troubling that the KSD Firm acted for
    Mr. Lotey on the appeal when the firm was bringing its own appeal against the
    motion judges award of costs against it.

V.      DISPOSITION

[102]

For the reasons set
    out above, I would dismiss Mr. Loteys appeal from the order striking out his
    statement of defence. I would deny the KSD Firm leave to appeal the motion
    judges award of costs against it in the amount of $6,246.54.

[103]

I would award Falcon
    Lumber its costs of the appeal fixed in the amount of $14,000, inclusive of
    disbursements and taxes, which I would allocate $7,000 as payable by Mr. Lotey
    and $7,000 payable by the KSD Firm, with both amounts to be paid within 30 days
    of the date of the release of these reasons.

Released: EEG MAY 25 2020

David
    Brown J.A.

I
    agree. E.E. Gillese J.A.

I
    agree. Grant Huscroft J.A.

[1]

The
    motion judge appears to have confused the continued cross-examination of Mr.
    Lotey for the summary motion, which did proceed, with the continued examination
    for discovery of the Lotey Defendants, which did not. This confusion is of no
    consequence.

[2]

Other
    rules authorize a court to dismiss an action or strike out a statement of
    defence where a party defaults on a procedural obligation. For example, a
    pleading may be struck out where: (i) a person sought to be examined fails to
    attend the examination, take an oath or affirmation at the examination, to
    answer any proper question at the examination, or produce a document he or she
    is required to produce (r. 34.15(1)(b)); or, where a party fails to comply with
    an interlocutory order (r. 60.12(b)).

[3]

Koohestani
, at para. 58.