One of the biggest hurdles when pursuing an action is gathering the evidence to support your claim or defence. Sometimes, parties to a commercial litigation dispute do not cooperate exactly as you require. Alternatively, non-parties may have the relevant documents that can make or break your case.

In the recent case of Anmar Mechanical and Electrical Contractors Ltd. v. Baffinland Iron Mines Corporation, a mining company brought a motion to compel the production of evidence from certain parties after experiencing a fire in one of its facilities.

A fire destroyed or damaged equipment covered under insurance policies

This case involves a mining company, Baffinland Iron Mines Corporation, and its facilities on Baffin Island in Nunavut. Baffinland hired Anmar Mechanical and Electrical Contractors Limited for conveyor and ship loader installation work at this facility. A fire broke out within the facility originating from a temporary structure erected by Anmar. The fire destroyed or damaged equipment owned by both companies.

Under the contract between the two parties, Baffinland had a duty to obtain insurance on Anmar’s equipment used to carry out the contract. Both parties were insured under three separate policies that were brokered through Aon. Aon contracted Baffinland “to provide advisory and consulting services including insurance procurement and risk management advice.” The policies obtained by Baffinland included a Builders’ Risk Insurance Policy, a policy with Lloyds Underwriters, and another policy. Anmar had its own separate policy to cover its equipment as well.

Not all equipment was covered under the insurance policies

The insurers appointed an independent adjuster concerning the claims arising from the fire. However, Anmar’s claims were not covered entirely by the Risk Insurance Policy obtained by Baffinland. As a result, Anmar commenced an action in February 2017 to recover the uninsured losses and related expenses in the amount of $12 million.

In its Statement of Claim, Anmar submitted that Baffinland did not obtain sufficient insurance coverage. In its Statement of Defence and Counterclaim, Baffinland alleged that an Anmar employee’s actions started the fire. Baffinland also started a third-party claim against Aon for contribution and indemnity for the amount Anmar claimed.

Baffinland brought two motions. In the first, Baffinland sought to compel Aon to answer 15 refusals that arose in the examination for discovery. In the second motion, Baffinland wanted to compel the independent adjuster to produce its complete adjuster’s file and to have the adjuster present at the examination.

Witnesses can be compelled to answer questions during examination for discovery

Examination for discovery is a pre-trial proceeding that allows the parties to examine evidence that may be presented at trial. In Ontario, discoveries are governed by the Rules of Civil Procedure. Under Rule 29.2.03, witnesses can be compelled to answer questions or produce documents in certain circumstances:

(1)   In making a determination as to whether a party or other person must answer a question or produce a document, the court shall consider whether,

(a) the time required for the party or other person to answer the question or produce the document would be unreasonable;

(b) the expense associated with answering the question or producing the document would be unjustified;

(c) requiring the party or other person to answer the question or produce the document would cause him or her undue prejudice;

(d) requiring the party or other person to answer the question or produce the document would unduly interfere with the orderly progress of the action; and

(e) the information or the document is readily available to the party requesting it from another source. 

(2)  In addition to the considerations listed in subrule (1), in determining whether to order a party or other person to produce one or more documents, the court shall consider whether such an order would result in an excessive volume of documents required to be produced by the party or other person. 

Broker’s representative ordered to respond to the majority of refused requests

The Ontario Superior Court of Justice reviewed Aon’s 15 refusals from the Examination for Discovery and made the following findings: 

1. Refusal 1 – Baffinland asked Aon’s representative “for a practical definition of what contract reviews entail.” Aon refused on the basis that this was a legal question that the representative was not qualified to ask. However, the Court disagreed. The representative acknowledged just before the question that “Contracts Review” was part of the agreement between Aon and Baffinland. Therefore, the question was related to the previous response and did not require legal interpretation. Even though lay witnesses are not required to provide legal opinions, they are required to explain their positions on legal issues relevant to the action. Aon was thus ordered to produce a response within 45 days.
2. Refusals 2 to 4 – Baffinland asked Aon’s representative if, within their contract review, they advise clients when they need to amend the contract for more coverage. Baffinland also asked if Aon had the impression that Baffinland’s staff were overworked. Aon refused based on irrelevance and improper speculation. The Court found these questions directly related to Baffinland’s claims against Aon, so they were relevant. Asa result, Aon was ordered to respond to two of these three refusals within 45 days.
3. Refusals 5 to 15 – Aon refused to respond to questions by Baffinland regarding correspondence issued by consultants working on Aon’s claims-side operations and not the broker-side operations. Aon submitted that the claims-side operations were irrelevant as the communications at issue were sent after the fire. However, the Court disagreed, finding that Aon’s operational structure was irrelevant. The Court noted that even if an employee works in a different area of the business structure, they can still discuss the overlapping aspects between the brokerage and claims issues. Aon was ordered to respond to nine of these refusals within 45 days.

Can non-parties be compelled to produce evidence for a trial?

The second motion concerned the independent adjuster, a non-party to the dispute. The Rules of Civil Procedure dictate, at Rule 30.10, whether non-parties can be compelled to produce records or witnesses at a hearing:

(1) The court may, on motion by a party, order production for inspection of a document that is in the possession, control or power of a person not a party and is not privileged where the court is satisfied that,

(a)  the document is relevant to a material issue in the action; and

(b)  it would be unfair to require the moving party to proceed to trial without having discovery of the document.

In making its determination, the court must also take into consideration the interests of the non-party. The relevant factors include: 

1. The importance of the documents to the litigation;
2. Whether production of the documents at discovery, as opposed to at trial, is necessary to avoid unfairness;
3. Whether discovery with respect to the issues to which the documents are relevant was adequate and, if not, whether the examining party was responsible for that inadequacy;
4. The position of the non-parties concerning production;
5. The availability of the documents or their informational equivalent from another source; and
6. The relationship of the non-parties to the litigation and the parties to the litigation.

Production of non-party adjuster’s documents ordered as they were relevant to proceedings

In assessing the factors above, the Court concluded that some of the documents in the independent adjuster’s file were relevant to the proceedings. The Court held it would be unfair to allow Baffinland to proceed to trial without knowing the reasons for the denial of Anmar’s loss. With the documents, Baffinland may be able to raise defences otherwise unavailable to it. While production was ordered, the Court did not order production of the entire file and instead suggested a staged approach to production to balance the interests of both parties.

Campbells LLP in Oakville Provides Exceptional Representation in Commercial Litigation

The skilled commercial litigation lawyers at Campbells LLP are highly knowledgeable in complex evidentiary matters. We pursue resolutions that advance our clients’ best interest in negotiations and alternative dispute resolution processes and bring that same tenacity when cases proceed to trial. To discuss your commercial law issue or other civil litigation matter, please contact us at 905-828-2247 or reach out online. We look forward to speaking with you and going through this process by your side.