Cheung si. Toyota Canada Inc. Between Margaret Suk

Page I ol b
Case Name.
Cheung si. Toyota Canada Inc.
Between
Margaret Suk Fan Cheung, Loretta Bik Ching Cheung, and Lavinia
Bik You Cheung by their litigation Guardian, Margaret Suk Fan
Cheung, Luk fling Lee, Vincent Y.F. Cheung, Doris Chow, Moon
Tong Cheung, Chak Tong Cheung and Russel Siu-Lun Cheung,
Nicholas Chow, Irvin Chow, Ho Kwan Cheung, Ho Him Cheung, Kit
Yan Cheung, and Yan Lam Cheung, minors by their litigation
Guardian, Vincent Y.F. Cheung, plaintiffs, and
Toyota Canada Inc., Brimell Motors Limited, operating as
Brimell Toyota, 928161 Ontario Limited, operating as First
Choice Auto Service and Wai Tong Cheung, deceased, by his
litigation Administrator, Andrea Bik Wah Cheung, defendants
[2003] O.J. No. 411
29 C.P.C. (5th) 267
120 A.C.W.S. (3d) 238
Court File No. 98-CV-149812
Ontario Superior Court of Justice
by J.
Heard: January 30, 2003.
Judgment: February 10, 2003.
(31 paras.)
Practice
continue.
--
Evidence
--
Preservation of evidence
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Judgments and orders
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Enforcem en! of orders
—
Loss of right to
Motion by Toyota and two other defendants for sanctions against the defendant Estate of Wai Tong Cheung for spoliation of
evidence and breach of a preservation order. Toyota urged the Court to dismiss the Estate’s cross-claim against them as well
as the Estates defence to the Cheungs’ claim. Wai Tong died when his Toyota minivan rolled on Highway 401. A number of
his family members were injured in the action and alleged product liability against Toyota. sale of a defective product by the
dealer, negligent servicing by the repairer, and negligent operation by Wai Tong. The central issue was whether the minivan
rolled as a result of the manner in which Wai Tong operated the minivan, causing the rear axle to break, or whether the rear
axle broke first, causing the van to roll. The preservation order related to the failure to preserve the minivan and destructive
testing of the rear axle prior to Toyota having notice of the accident or the claim. It required the Estate to produce all
photographs, data, findings and opinions arising out of the investigation, examination or testing of the minivan. The Estate
produced photographs and negatives. The photographs showed that the nuts were lower on the securement bolts than in the
earlier photographs. It was discovered that two rear tires were missing.
HELD: Motion allowed. The Estate was precluded from adducing or relying on any reports or other evidence regarding the
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missing tires and was liable for costs of the motion. The documented loosening of the nuts following the accident
significantly prejudiced the Estate. Its defence rested on the nuts being insufficiently tightened at the time of the accident and
that opinion rested on a photograph taken after the nuts had been loosened. The spoliation events had not substantially denied
Toyota and the other defendants the ability to defend the cross-claim, or the Cheungs’ ability to proceed against the Estate.
The severe sanction of dismissing the Estates cross-claim and defence was not appropriate at this stage. This was not a
situation where such sanctions should be imposed in the absence of evidence of intentional destruction or alteration through
bad faith. The Estate intended to comply with the preservation order and was equally surprised by the spoliation. There was
no evidence of reckless or wilful breach or suggestion of misconduct.
Statutes, Regulations and Rules Cited:
Ontario Rules ofCivil Procedure, Rule 60.11,60.11(5), 60.1 l(5)(f), 60.12.
Counsel:
Mark Baker, for the plaintiffs.
Glenn M. Zakaib and Thomas J. Donnelly, for Toyota Canada Inc.
Lauren N. Bloom, for First Choice Auto Service.
Elliott A. Zeitz, for Wai Tong Cheung.
I
HOY J.:-- This is a motion by three defendants, Toyota Canada Inc., Brimell Motors Limited and First Choice Auto
Service, for sanctions against the fourth defendant, the Estate of Wai Tong Cheung, for spoliation of evidence and breach of
a preservation order made by Justice Ewaschuk on September 6, 2001. Spoliation refers to the destruction or material
alteration of evidence or to the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable
litigation. Justice Ewaschuk’s order was made in response to previously detected events of spoliation. The Estate does not
argue that this Court should not impose sanctions. The real issue is what sanction is appropriate, given the particular facts and
the extent of prejudice to the three moving defendants and given that this motion is made prior to trial. The moving
defendants urge that this Court dismiss the Estate’s cross-claim against them as well as the Estate’s defence to the plaintiffs’
claim; the Estate says that this would be excessive. In the alternative, the moving defendants seek lesser sanctions. The action
is set down for an eight week trial, commencing in a little over two months.
BACKGROUND
2 Wai Tong Cheung died on June 22, 1996 when his Toyota minivan rolled on Highway 401. A number of his family
members were injured in the accident and are the plaintiffs in this action. They allege product liability against Toyota, sale of
a defective product by Brimell, Toyotas dealer, negligent servicing by First Choice Auto and negligent operation of the van
by Wai Tong Cheung. The plaintiffs support the moving defendants’ request for sanctions in advance of trial.
3 The central issue in the action is whether the van rolled as a result of the manner in which Wai Tong Clieung operated
the van, causing the rear axle to break, or whether the rear axle broke first, causing the van to roll. The Estate takes the
position that the van’s axle fractured, causing the accident. The report of the Estates expert, Mr. Neil Bigelow of Rochon
Engineering, concludes that recent repairs to the brakes were faulty and caused the axle failure. He concluded that nuts on a
bearing retainer plate were insufficiently tightened, leading to a misalignment, which resulted in friction causing wear on the
axle that ultimately lead to its catastrophic failure. Mr. Bigelow’s conclusion that the nuts were improperly tightened appears
to be based on his observation that the nuts were near the ends of the securement bolts. The moving defendants take the
position that the axle fractured during the course of the accident and was not its cause.
4 Two spoliation events were at issue before Justice Ewaschuk: the failure to preserve the van and destructive testing of the
rear axle of the van prior to Toyota having notice of the accident or the claim. Before the van was scrapped, Mr. Bigelow. an
engineer-in-training, removed some components. On cross-examination in connection with the motion before Justice
Ewaschuk, Mr. Bigelow testified that, “I preserved all the evidence that I believed at that time was crucial or involved in
this.”
5 Justice Ewaschuk’s order required the Estate to produce, among other things, all photographs, data, findings and opinions
arising out of the investigation, examination or testing of the van, except for documents for which privilege was claimed.
Justice Ewaschuk also ordered the Estate to deliver to the moving defendants’ experts specified component parts in the
possession of Rochon Engineering. These parts included the two rear tires of the van. Within a month following the issuance
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of Justice Ewaschuk’s order, counsel for the Estate provided a copy of the order to Mr. Bigelow.
6 In compliance with the order, the Estate produced photographs and negatives of the vehicle. Once Mr. Correia, the
moving defendants’ expert, reviewed those materials he discovered a further spoliation event, which was not before Justice
Ewaschuk. Photographs taken by Roger Lichty of Forensic Engineering about six weeks prior to Mr. Bigelow’s examination
and photographs clearly show that the nuts in question are lower on the securement bolts than in Mr Bigelow’s photographs
Mr. Correia also advised that the nuts have been rotated in Mr. Bigelow’s photographs. It is clear that the nuts had been
moved in the absence of all interested parties. In any event, as indicated above, Mr. Bigelow’s report hinges on his finding
that certain nuts were insufficiently tightened.
7 Mr. Correia sought to obtain the components that were to be delivered to him pursuant to Justice Ewaschuk’s order. 1 he
two rear tires were missing. Rochon has provided no explanation of why it failed to preserve and deliver the tires to Mr.
Correia in accordance with Justice Ewaschuk’s order.
THREE ALTERNATE BASES FOR IMPOSING SANCTIONS
8 The moving defendants submit that this court has jurisdiction to impose the requested sanctions on three bases. First, the
moving defendants argue that the court has inherent jurisdiction to strike pleadings in the context of a spoliation motion. This
is the only jurisdiction advanced with respect to the alteration of the bolts; the alteration of the bolts did not constitute a
breach of Justice Ewaschuk’s order. Second, Rule 60.12 specifically permits the court to dismiss a party’s proceedings or
strike out a party’s defence where the party fails to comply with an interlocutory order. Third, the moving defendants submit
that on a motion for contempt under Rule 60.11 the court has authority to make any order that is just, regardless of whether
there is a finding of contempt.
(1)
Inherent Jurisdiction
9 The moving defendants argue that: the court has inherent jurisdiction to impose sanctions for spoliation; such sanctions
can be imposed prior to trial; evidence that the spoliation was intentionally effected in bad faith is not required before the
court can impose sanctions; and, in the circumstances, dismissal of the Estate’s cross-claim and defence is the appropriate
sanction. The Estate argues that sanctions can only be imposed by the trial judge and then only if the spoliation was
intentionally effected in bad faith. Moreover, the Estate argues that the sanction sought by the moving defendants is too
severe.
10 With respect to the court’s inherent jurisdiction, the moving defendants submit that the court “has all of the powers that
are necessary to do justice between the parties”. 80 Wellesley St. East Ltd. v. Fundy Bay Builders Ltd., [197212 OR. 280 at
282 (CA.). The moving defendants rely on Gagnon v. Pritchard (2002), 58 O.R. (3d) 557 (S.J.C.) for authority that this
jurisdiction permits the court to control its own procedure. Justice Ewaschuk’s pre-trial order requiring production and
preservation of evidence may have relied on this jurisdiction. Justice Ewaschuk appears to have declined to impose sanctions
I note that in Gagnon v. Pritchard, the court concluded that such jurisdiction did not permit the plaintiffs in that action to be
represented by a non-lawyer. It is clear that there are restrictions on the courts’ jurisdiction to control its own procedure.
11 In Daoust v. Schatz, [2002] S.J. No. 674, the Saskatchewan Court of Appeal commented that it is open to the trial judge
to impose sanctions for spoliation. Counsel for the moving defendants were not however able to point to any Canadian
precedent for the court striking pleadings and dismissing a claim, or imposing other sanctions, on a pre-trial spoliation motion
in reliance on its inherent jurisdiction. There is U.S. precedent, which the moving defendants urge inc to follow: Silvestri v.
General Motors Corp., 271 F. (3d) 583 (4th Cir. 2001).
12 The moving defendants point to recent changes with respect to the law of spoliation in Canada, which take Canada
closer to the position of the courts of some U.S. states. Until recently, it was clear that in Canada spoliation was viewed only
as an evidentiary rule that raises a rebuttable presumption that the evidence was unfavourable to the party that destroyed it.
The Court of Appeal recently permitted claims for spoliation to proceed as independent, stand-alone torts: Spasic Estate v
Imperial Tobacco Ltd. (2000), 49 O.R. (3d) 699 (C.A.), reversing (1998), 42 OR. (3d) 391 (Gen. Div.), application for lea~e
to appeal refused [2000] S.C.C.A. 547 (S.C.C.); Robb v. St. Joseph’s Health Centre (2001), 5 C.P.C. (5th) 252 (C.A.); Robb
Estate v. Canadian Red Cross Society (2001), 9 C.C.L.T. (3d) 131 (CA.). While the moving defendants are not claiming for
the tort of spoliation on this motion, they argue that prior cases in Canada addressing spoliation are no longer applicable and,
I believe, also that the U.S. authorities are now more relevant.
13 The moving defendants argue that cases in Canada addressing spoliation prior to the decisions in Spastic and the Rohb
are no longer applicable in order to distinguish Dawes v. Jajcaj. [1995] B.C.J. No. 2366, and cases which have followed it.
which the Estate submits are applicable. Dawes, following two U.S. cases decided in the 1970’s, imported the requirement
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that the court must be satisfied that the evidence in issue was intentionally destroyed through bad faith, and not as a result of
mere negligence, before an adverse inference may be drawn and sanctions such as the exclusion of expert reports imposed.
The moving defendants do not allege that the nuts were altered or the tires destroyed intentionally through bad faith. Dawes
has been followed in Ontario as recently as last year: Enterprise Excellence Corp. v. Royal Bank of Canada, [2002] O.J. No.
3086. The moving defendants cite ten U.S. decisions, including Silvestri, released between 1988 and 2001, which did not
require proof that the evidence was intentionally destroyed through bad faith before imposing sanctions.
14 In Silvestri, the plaintiff failed to take steps to preserve the damaged vehicle. There was no allegation that he acted in
bad faith or intentionally destroyed the vehicle. The District Court dismissed the plaintiffs ease before trial because it
concluded the spoliation denied General Motors access to the only evidence from which it could develop its defenses. The
United States Court of Appeals for the Fourth Circuit in 2001 concluded that the decision of the District Court was not
clearly erroneous and that although the sanction was severe, in the peculiar circumstances of that case, it was not an abuse of
discretion. The Court of Appeals held that dismissal was only justified if (I) the spoilator’s conduct was so egregious as to
amount to a forfeiture of his claim, or (2) the effect of the spoliator’s conduct was so prejudicial that it substantially denied
the defendant the ability to defend his claim. The Court of Appeals also commented that if~ instead of dismissing the
plaintiffs claim, it denied the plaintiffs experts from testi~ing, the plaintiff would have no case at all. The effect of the lesser
sanction would ultimately be the same as the more immediate and more severe sanction.
15 If I follow Silvestri, I should only dismiss the Estates cross-claim if I am able to determine from the materials before
me that the Estate’s conduct was so prejudicial that it substantially denied the moving defendants the ability to defend the
cross-claim.
Extent of Prejudice
16 The moving defendants say they are prejudiced by the loss of the tires. When Mr. Correia conducted his initial
inspection in April 2000 at the offices of Rochon Engineering, he noted that the rim on the right rear wheel was dented and
contained a foreign material within the dented portion of the rim. He intended to have a sample of the material within the
dented portion of the rim tested at a laboratory to determine whether it was asphalt. The presence of asphalt would indicate
that the right rear rim gouged the pavement during an accident. This would support the evidence observed at the scene by the
police: a curved gouge mark with the radius of a tire rim was found on the asphalt after the spot where the van started to roll
over. This would mean that the tire and rim were still on the van as it was rolling over along the pavement and the axle could
not have failed prior to the accident, as alleged by Mr. Bigelow. Nor, say the moving defendants, will they be able to
demonstrate how the dent and impact forces correlate to the fracture sight or examine what appears from the photographs to
be damage to the tires, to assist in determining when and how the axle fractured.
17 The moving defendants argue that the degree of prejudice to them from the two spoliation events in question should be
considered along with the prejudice from the two prior spoliation events before Justice Ewaschuk.
18 The plaintiffs did not bring this motion, but argue that they are prejudiced in mounting a claim against Toyota or
responding to the Estate’s allegations in its defence that there was another cause or contribution to this accident.
19 The documented loosening of the nuts following the accident significantly prejudices the Estate. As I understand it, the
entire theory of the Estate’s cross-claim and defence rests on the nuts being insufficiently tightened at the time of the accident
and the opinion that they were not sufficiently tightened rests on a photograph taken after the nuts had been loosened. If I
were the trial judge, I would at a minimum discount the Estate’s theory. Given that the Estate appears to have no basis for
arguing that the axle broke first, lam not clear to what extent the moving defendants are actually prejudiced. If the Estate had
not discredited the theory of its case by altering the position of the nuts, the loss of the tires, which Mr. Bigelow himself
identified as “crucial or involved in this”, would have significantly prejudiced the moving defendants.
20 As to the plaintiffs, I understand they relied on the Estate’s theory to claim against the moving defendants. With the
Estate’s theory discredited, the plaintiffs do not have a plausible basis for their claim against the moving defendants. To
succeed in their claim against the Estate, the plaintiffs will have to establish that the axle did not break first, causing the van
to roll. The moving defendants indicate that the evidence of the police with respect to the gouge maths in the asphalt supports
the position that the tire and rim were on the axle at the time the van rolled, and that the axle therefore did not break before
the van rolled. Clearly, the plaintiffs have less evidence available to them than they would if the tires had not been disposed
of. Given, however, that the Estate would appear to have no credible evidence to the contrary, it is not clear to me that the
extent of the actual prejudice to the plaintiffs is severe. Moreover, as discussed above, the spoliation of evidence raises a
rebuttable evidentiary presumption that the evidence was unfavourable to the party that destroyed it. St. Louis v. The Queen
(1894), 25 S.C.R. 649; Endean v. Canadian Red Cross Society (1998), 157 D.L.R. (4th) 465 (B.C.C.A.), leave to appeal to
Supreme Court of Canada granted but appeal abandoned on January 19, 2000, 119981 S.C.C.A. No. 260; Rintoul v. St.
Joseph’s Health Centre (1998), 42 O.R. (3d) 379 (Div. Ct.); Spasic. The trial judge will determine whether intentional
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destruction through bad faith is required before this adverse inference can be drawn.
21
In the unusual circumstances of this case, and based on the materials now before me, lam not convinced that the two
spoliation events before me have substantially denied the moving defendants the ability to defend the cross-claim or the
plaintiffs the ability to proceed against the Estate. Hence, even if this court were to follow Silvestri, and I am not concluding
that it should, the severe sanction of dismissing the Estate’s cross-claim and defence is in my view not appropriate at this
stage. The trial judge may of course have a different view based on all the evidence before him.
22 The moving defendants argue that in this case dismissing the Estate’s cross-claim and defence would not be as severe a
sanction as would normally be the case. They argue that the Estate could claim against Mr. Bigelow and Rochon
Engineering, alleging negligence. Presumably they mean that in these circumstances a lesser level of prejudice therefore
justifies the sanction of dismissing the Estate’s cross-claim and defence. There is no authority for this.
23 As to whether any sanctions can be imposed for spoliation prior to trial in the absence of evidence of intentional
destruction or alteration through bad faith, in reliance on the courts inherent jurisdiction, it seems to me that in appropriate
circumstances the court should be able to impose sanctions. I suspect that often such sanctions are more appropriately dealt
with at trial, and I believe that is the case here.
(2)
Rule 60.12
24 Rule 60.12 permits the court to dismiss the party’s proceeding or strike out the party’s defence or make such other order
as is just where a party fails to comply with an interlocutory order. The court may strike a defence under Rule 60.12 even
though this would preclude a determination of the case on the merits: Bottan v Vroom, [2001] 0.3. No. 2737, affd [2002]
Ci. No. 1383 (Ont. CA.). The Estate again argues that this is too severe a sanction in the circumstances.
25 In Bottan v. Vrooni, Justice Nordheimer struck the statement of claim and the statement of defence to the counterclaim.
That case had a lengthy procedural history, with interlocutory proceedings before about 10 judges in a little over a one-year
period. The conduct of the litigation was the subject of criticism by a number ofjudges. Nordheimer 3. concluded that the
plaintiffs had no intention of complying with the prior court orders.
26 In this case, the Estate intended to comply with Justice Ewaschuk’s order. It produced the required documentation and ii
advised Mr. Bigelow of the existence of the court order. The Estate was as surprised as the moving defendants when advised
that Rochon Engineering no longer had the tires. This is not in my view an appropriate case for me to exercise my discretion
to dismiss the Estate’s cross-claim and defence under Rule 60.12.
27 Rule 60.12 also gives the Court authority to “make such other order as isjust” where a party fails to comply with an
interlocutory order. In the circumstances, I believe it is just to preclude the Estate from adducing or relying on any reports or
other evidence to the extent that it relates to or is in any manner based upon the missing tires. I also believe that it is just that
the moving defendants and the plaintiffs be entitled to their costs of this motion, brought largely as a result of the Estate’s
breach of the order of Justice Ewaschuk, on a substantial indemnity basis.
(3)
Contempt Order
28 Rule 60.11(5) provides that, “In disposing of a motion under subrule (I) Emotion to enforce an order], the judge may
make such order as is just, and where a finding of contempt is made, the judge may order that the person in contempt, (I’)
comply with any other order that the judge considers necessary
...
29 On a motion for contempt under Rule 60.11, misconduct must be proven beyond a reasonable doubt: Werner v. Warner
Auto-Marine Inc. (1996), 3 C.P.C. (4th) 110 (Ont. CA.). There is no evidence of reckless or wilful breach by the Estate; as
noted above, the Estate complied with other aspects of the order and in fact provided a copy of the order to Mr. Bigelow. In
Werner v. Warner Auto, the Court of Appeal noted that the contempt was the conduct of the plaintiffs’ solicitors and expert
not of the plaintiffs personally. In this case, there is no suggestion of misconduct on the part of the Estate’s solicitors. Nor is
there evidence of misconduct on the part of Rochon Engineering or Mr. Bigelow. There are clearly issues of competence I
have understood the moving defendants to submit that Rule 60.11(5) permits me to make an order that the Estate’s statement
of defence and counterclaim be struck out, if I determine that it is just to do so, in the absence of a finding of contempt by the
Estate.
30 In Werner v. Warner Auto, fUrther destructive testing testing on selected samples of small areas cut from a boat’s gas
tank occuffed in breach of a preservation order. The Court of Appeal upheld the motions judge’s finding of contempt,
holding that the solicitors and insurers for two plaintiffs had acted in a high handed manner, and flouted both the spirit and
-
-
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the letter of the preservation order. The Court of Appeal determined, however, that concerns of actual prejudice to the
defendants were overblown and that dismissing the actions of two plaintiffs was an “excessive response”. It changed the
sanctions to prohibit the plaintiffs from relying on the expert report that resulted from the breach of the court order and to
reduce the scope of the costs award against the two plaintiffs, so that it related only to the proceedings before the motions
judge. The Court of Appeal found the dismissal of an action an “excessive” sanction where contempt was found. In vie~ ol
my conclusion above as to the extent of the actual prejudice to the moving defendants as a result of the Estate’s breach of the
order, I believe such a sanction is clearly excessive under Rule 60.11(5) where no contempt has been found.
CONCLUSION
31 An order shall issue pursuant to Rule 60.12 that: (I) the Estate is precluded from adducing or relying on any reports or
other evidence to the extent that it relates to or is in any manner based upon the missing tires; and (2) the moving defendants
and the plaintiffs are entitled to their costs of this motion on a substantial indemnity basis. If the parties are unable to agree as
to the amount of such costs, the moving defendants and the plaintiffs shall provide me with draft bills of costs within 14 days
after these reasons are released. The Estate shall have ten days thereafter to make written submissions to me with respect to
such bills of costs. The costs shall be payable within 30 days after they are agreed to or fixed by me, as the case may be.
Additional sanctions may possibly be imposed by the trial judge as a result of the spoliation events which were the subject of
this motion and the motions before Justice Ewaschuk.
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