A summary of the endorsement of Justice Koehnen.
Think Research Corporation v. N & M Medical Enterprises, 2023 ONSC 6910 (CanLII)
Nick Todorovic, Partner, and Jamie Davison, Student-At-Law
January 12, 2024
Justice Koehnen provides a helpful avenue to get ahead of the current 14- to 20-month wait for motions via case conferences. While the Respondents submitted that substantive relief could not be granted at this stage of the proceeding, Justice Koehnen disagreed. In citing several decisions in which our courts have noted their concern with the backlog in our justice system, his Honour held that proportionate and nonprejudicial procedures, tailored to the needs of the particular case, were necessary to reduce these delays.
1 . Background
- A share purchase agreement was made between the Applicant and the Respondents. This agreement provided for an adjustment after closing based on the calculation of net working capital as defined in the agreement. Post-closing, the purchaser was to submit a possible calculation method to the seller within 60 days of closing. If the parties, post-closing, were unable to agree on the calculation to be used for future adjustment, the share purchase agreement provided that an independent accountant would be appointed to decide.
- The sale closed on January 29, 2021. Post-closing, the Applicant and Respondents worked cooperatively to arrive at a calculation. Email correspondence showed that at least part of these calculations required information from the Respondents.
- Nearly 8 months post-closing, the Respondents emailed the Applicant requesting that the closing statements be delivered and in return, the Respondents would provide their comments or approval within the stipulated time period.
- At the end of October, the Applicant provided their calculations to the Respondents as requested.
- The parties disputed the calculations for 3 more months until the Applicant delivered its notice to appoint an independent accountant as per the agreement. In response, the Respondents delivered a letter taking the position that since the draft closing statements were not delivered within 60 days of closing, the ability to appoint an independent accountant had been spent.
- Up until this point, no comment had been made by the Respondents with respect to the delay.
- On November 6, 2023, both parties attended a case conference before Justice Koehnen regarding the issue of appointing an independent accountant. Counsel for the Respondents also advised that they had issued their own Application for a declaration that the time for such an appointment had expired.
- Justice Koehnen issued an endorsement scheduling a further case conference for November 28, 2023. The endorsement indicated that:
The object of the case conference will be to make a determination on the merits of the [A]pplication.
If the [A]pplication cannot be determined on November 28, the next question will be whether the [A]pplication can be determined in writing. Only if the [A]pplication cannot be determined at the case conference or in writing will it be directed to an oral hearing.
To facilitate this, both sides should deliver a case conference memo of up to 10 double spaced pages setting out their position and why they should succeed.
- At the November 28th case conference, Respondents’ counsel submitted the substantive argument that more evidence was necessary to decide the issue as the particular correspondence on which the Applicant was relying needed to be read in context. Counsel for the Respondents also made the procedural argument that a decision on the merits of the application could not be made at a case conference.
2. Substantive Arguments of Respondents’ Counsel
- At the November 28th case conference, Respondents’ counsel submitted that more evidence was necessary to decide the issue as the particular emails on which the Applicant relied needed to be read in context.
- However, in response, Justice Koehnen determined that the onus remained on the Respondents to demonstrate at the case conference that there was reason to believe that the email was being taken out of context. Simply posing a question about context or making a bald allegation about context was insufficient.
- The Respondents provided no submissions or evidence about the necessary context other than claiming that the Court did not know whether the correspondence was being taken in its proper context. This was especially insufficient since the endorsement of the preceding case conference gave the Respondents notice that the purpose of their next attendance was to determine the issue on the merits if possible.
- The Respondents further submitted that some of the emails were from an individual who lacked authority to bind the Respondents in that regard.
- Again, Justice Koehnen stated that the mere making of such a statement was insufficient in the circumstances as the parties were made aware that the point of the attendance was to resolve the matter on the merits. Further, the individual in question was someone who had been authorized to communicate with the Applicant on behalf of the corporate Respondents. Moreover, the other two authorized decision-makers for the Respondents were copied on the emails in question and the lack of position taken to disavow the email was sufficient for Justice Koehnen to disagree with this submission.
3. Procedural Arguments of Respondents’ Counsel
- The Respondents submitted that no substantive relief could be given at a case conference because Rule 50.13(6) limited the power of case conference judges to:
- making procedural orders
- convening a pre-trial conference
- giving directions; and
- in the case of a judge,
- making an order for interlocutory relief, or
- convening a hearing.
- Justice Koehnen admits that with the benefit of hindsight, it might have been preferable to have referred to the attendance as a “hearing” as opposed to a “case conference”. However, despite this, the wording of the direction following the previous case conference made clear to the parties that the object of the November 28 appearance was to determine the application on the merits if possible.
- Justice Koehnen referred to one of his prior decisions, Miller v. Ledra, where his Honour laid out the type of relief that is appropriate to be awarded at a case conference.
- The analysis hinged on the backlog of cases in Toronto. As of December 6, 2023 the first date available for a motion of less than two hours was February 3, 2025. The first date available for a motion of over two hours was in July of 2025. Put simply, the current wait for a motion was between 14- to 20-months.
- Justice Koehnen stated plainly, “delay begets delay”:
If a litigant knows that it can delay litigation by between 14 and 20 months simply by bringing a motion or by insisting on a full blown application process, it will often have an interest in doing so. As ever more parties learn of those delays, the number of motions and insistence on full blown applications increases, thereby creating even longer delays. This is evident in the evolution of events even in the short time since Miller was released on August 28, 2023. Miller refers to delays of between 14 and 16 months. By the time these reasons are being written in early December 2023, the delays have increased to between 14 and 20 months.
- As a result, civil courts must develop proportionate procedures tailored to the needs of the particular case to diminish these delays. The insistence on a one-size-fits-all approach has contributed to such ever-growing delays.
- Rule 1.04 of the Rules of Civil Procedure provides that the rules shall be construed liberally to secure the just, most expeditious, and least expensive resolution of every civil proceeding on its merits. In applying these rules, the courts shall make orders and give directions that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.
- Justice Koehnen then considered the following information in determining what consisted of a proportionate proceeding on these facts.
- The parties had a commercial agreement which clearly contemplated the issue at hand.
- The Applicant produced emails and made submissions demonstrating that the parties were working cooperatively to arrive at the stipulated post-closing calculation. The process was delayed by unforeseen complications. When a calculation was not reached, next steps were taken as provided in the agreement.
- The Respondents failed to produce any evidence or make any submissions demonstrating otherwise.
- On the facts of this case, Justice Koehnen required “at a minimum, a real reason for agreeing to the [R]espondents’ request for a full-blown application procedure with all of its attendant delays and cost. That could have been done by showing [his Honour] emails to suggest that the October 6 email was being read out of context or through some other explanation that went beyond bald assertions.”
- Further, in consideration of potential prejudice to the Respondents, it was held that appointing the independent accountant would not cause an injustice. The only prejudice to the Respondents would be that they were “forced to live with the agreement that they entered into”.
- With this information, Justice Koehnen concluded that there was no reason to refuse the request to appoint an independent accountant as requested by the Applicant. Justice Koehnen was satisfied that awarding the requested substantive relief was a proportional procedure tailored to the needs of the particular case.
- In conclusion, the Application to appoint an independent accountant under the share purchase agreement was granted and the Respondents’ competing application was dismissed.
- Justice Koehnen determined that the failure to provide the relief requested would, “in the words of Chief Justice Strathy, allow the court to be ‘burdened by its own procedures’ to the point that it would ‘impede the very justice we are striving to protect’”.
- In future, if counsel wishes to persuade the court that it is inappropriate to grant substantive relief without exchanging application records, factums, cross examinations, and oral argument, they must be prepared to do so with more than “bald assertions”. However, Justice Koehnen clarified that counsel need not come to the attendance with full affidavits and cross-examination transcripts; one must merely cast doubt on the fairness of granting substantive relief without a more robust examination of the case.
 Miller v. Ledra et al. 2023 ONSC 4656
 Supra note 1 at para 21.
 Think Research Corporation v. N & M Medical Enterprises, 2023 ONSC 6910 (CanLII) at para 29.
 Supra note 3, at para 28.
 Supra note 3, at para 30.
 Supra note 3, at para 18.