Instructions Specific to This Exam

1. This examination contains four questions of unequal value, worth a total of 100 marks.

2. Suggested time allocations are provided for guidance only. Candidates remain responsible for managing their examination time.

3. Unless otherwise stated, assume that all proceedings are brought in the Ontario Superior Court of Justice and are governed by Ontario’s Rules of Civil Procedure.

4. You will be assessed primarily on your knowledge and application of the Rules of Civil Procedure, applicable statutes, assigned cases and other required Civil Procedure materials, together with your ability to identify the procedural problems raised by the facts and recommend appropriate procedural steps.

5. No marks are awarded for merely reproducing or summarizing the facts. Use the facts in applying the relevant procedural principles.

6. Each question is independent. Do not import facts from another question.

7. Where a procedural rule gives the court discretion, do not stop after identifying that discretion. Explain:

   • the considerations relevant to its exercise;

   • the competing interests of the parties;

   • proportionality;

   • prejudice;

   • efficiency; and

   • the practical consequence of the order sought.

8. In dealing with pleadings, distinguish:

   • material facts;

   • evidence;

   • conclusions of law;

   • particulars;

   • amendments;

   • counterclaims;

   • crossclaims; and

   • third-party claims.

9. Do not assume that every related claim must be placed into the same proceeding. Where joinder, consolidation or a hearing together is proposed, consider both procedural efficiency and possible prejudice or complication.

10. In discovery problems, distinguish:

• disclosure from production;

• relevance from admissibility at trial;

• ordinary discovery obligations from non-party discovery;

• solicitor-client privilege from litigation privilege;

• the continuing obligation to correct documentary disclosure; and

• the deemed undertaking restricting collateral use of discovery material.

11. Apply the proportionality principles contained in the Rules when assessing the proper scope of discovery. Electronic discovery should not become unlimited merely because large quantities of electronic material exist.

12. Where summary judgment is sought, apply Hryniak v. Mauldin and the current Rule 20 framework. Consider whether the court can make the necessary findings and fairly resolve the relevant issues without a conventional trial.

13. Where interlocutory injunctive relief is sought, apply the framework in RJR-MacDonald Inc. v. Canada (Attorney General) and consider the requirements imposed by Rule 40.

14. Distinguish between:

• entitlement to judgment;

• interim procedural relief;

• settlement incentives;

• and costs consequences.

15. Where an offer to settle is relevant, distinguish the automatic or presumptive costs consequences under Rule 49 from the court’s broader discretion to consider written settlement offers when determining costs.

16. Do not assume that satisfying one of the enumerated grounds for security for costs automatically determines the motion. Rule 56 remains discretionary and the court must make an order that is just in the circumstances.

17. Unless expressly required by the facts, do not address the substantive merits of the underlying contract, negligence, confidentiality or other private-law causes of action except to the extent necessary to analyze the procedural issue.

18. Full citations are unnecessary. The relevant case name, statute or Rule number is sufficient.

19. Write clear and organized answers in complete sentences.

QUESTION ONE

25 marks — suggested time: 45 minutes

FACTS

Everwyn Produce Terminal Inc. (“Everwyn”) operates a refrigerated distribution centre in southwestern Ontario.

The facility contains six temperature-controlled storage chambers used by grocery wholesalers.

The refrigeration system was installed three years ago by Bracken Mechanical Ltd. (“Bracken”).

The electronic control system was supplied by Novalume Controls Inc. (“Novalume”).

In February, the refrigeration system shut down for approximately 36 hours.

Everwyn alleges losses exceeding $4.2 million, including:

• spoiled produce;

• physical damage to refrigeration equipment;

• customer credits;

• emergency refrigeration expenses; and

• business interruption losses.

Everwyn commenced one action against Bracken and Novalume.

Paragraph 18 of the statement of claim provides:

“The Defendants negligently designed, manufactured, supplied, installed, tested, inspected, maintained and operated an unsafe refrigeration system and are jointly and severally liable to Everwyn in negligence, breach of contract, negligent misrepresentation, gross negligence and otherwise.”

No additional paragraphs identify:

• which defendant allegedly performed which act;

• what design defect existed;

• what representation was made;

• when any representation was made; or

• why either defendant allegedly knew the system was unsafe.

Another paragraph alleges that:

“Novalume fraudulently concealed defects in its control software from Everwyn.”

No particulars of the alleged fraud are given.

Everwyn has also reproduced within the pleading:

• 23 complete emails;

• four pages of temperature readings;

• excerpts from an engineering report; and

• photographs of damaged equipment.

The statement of claim is 74 pages long.

Bracken delivers a defence stating:

“Any loss was caused or contributed to by Everwyn’s own operation and misuse of the refrigeration system.”

The defence does not explain what Everwyn allegedly did incorrectly.

Everwyn demands particulars.

Bracken responds:

“The evidence will come out at discovery.”

Bracken has now obtained a preliminary expert opinion suggesting that the refrigeration configuration specified by Rookwell Engineering Inc. (“Rookwell”), a non-party engineering consultant retained by Everwyn during construction, may have caused the shutdown.

Bracken’s original construction agreement also contains a clause under which Rookwell agreed to indemnify Bracken for certain losses resulting from errors in Rookwell’s design specifications.

Bracken wants to claim contribution or indemnity against Rookwell.

Bracken delivered its statement of defence 24 days ago.

No reply has been delivered.

Everwyn refuses to consent to a third-party claim.

It argues:

“Bracken missed the deadline. We should not have to delay our action because Bracken only now investigated its own defence.”

Documentary discoveries have not begun.

No trial date has been scheduled.

Novalume faces a different problem.

Its original defence denied responsibility but did not contain a crossclaim against Bracken.

Novalume now alleges that, if the control system malfunctioned, Bracken improperly connected several sensors during installation.

It wants contribution and indemnity from Bracken.

Two months after the pleadings closed, Everwyn also obtains a new laboratory analysis of the controller.

It now wishes to amend the statement of claim to plead that:

• a particular firmware defect existed when Novalume supplied the controller;

• Novalume had received three prior reports of the defect; and

• Novalume failed to disclose those reports.

The proposed amendment does not add a new party.

Finally, Saffron Market Group Ltd. (“Saffron”), one of Everwyn’s warehouse customers, has commenced a separate action arising from the same shutdown.

Saffron claims $900,000 for spoiled inventory.

It sues:

• Everwyn;

• Bracken; and

• Novalume.

Its action is presently at the pleadings stage.

Bracken asks that the two proceedings either be consolidated or heard together.

Saffron objects.

It says its case includes a separate contractual dispute with Everwyn that has nothing to do with the engineering issues and argues that combining the proceedings will unnecessarily complicate its relatively straightforward claim.

QUESTION

Advise Everwyn, Bracken and Novalume concerning the procedural issues raised by the existing pleadings, Bracken’s proposed claim against Rookwell, Novalume’s proposed claim against Bracken, Everwyn’s proposed amendment and the relationship between Everwyn’s action and Saffron’s separate proceeding.

25 MARKS

THE BRICKAM EXPLANATION — QUESTION ONE

1. The Function of Pleadings Is to Define the Real Dispute

Pleadings are not evidence briefs.

Rule 25.06 requires a concise statement of the material facts relied upon but not the evidence by which those facts will ultimately be proved.

Their purpose includes giving the opposing party fair notice of:

• the case to be met;

• the material factual allegations;

• the legal issues generated by those facts; and

• the scope of discovery and trial.

Both Everwyn’s claim and Bracken’s defence create pleading problems, although for different reasons.

2. Everwyn’s Generalized Allegation Is Insufficiently Particularized

Everwyn alleges collectively that both defendants:

“designed, manufactured, supplied, installed, tested, inspected, maintained and operated”

the system.

Yet the facts suggest that Bracken and Novalume performed materially different functions.

A pleading need not contain every evidentiary detail, but each defendant should be able to understand the material conduct alleged against it.

A pleading that simply attributes every possible act to every defendant may obscure rather than define the dispute.

3. Legal Labels Cannot Substitute for Material Facts

Everwyn also pleads:

• negligence;

• breach of contract;

• negligent misrepresentation;

• gross negligence; and

• fraud.

A party may plead legal conclusions where the supporting material facts are pleaded.

It cannot merely list causes of action and expect discovery to supply their factual foundation afterward.

For example, a negligent-misrepresentation claim requires sufficient material facts concerning the alleged representation and surrounding circumstances.

None are presently identified.

4. Fraud Requires Greater Particularity

Rule 25.06 specifically requires full particulars where fraud, misrepresentation, breach of trust, malice or intent is alleged.

The statement:

“Novalume fraudulently concealed defects”

is therefore particularly vulnerable.

Everwyn should plead the facts supporting that serious allegation rather than leave Novalume to guess:

• what was concealed;

• by whom;

• when;

• through what conduct; and

• why the conduct was allegedly fraudulent.

5. Everwyn Has Also Over-Pleaded Evidence

The 23 emails, technical readings, report extracts and photographs appear primarily evidentiary.

A pleading should ordinarily state the material factual proposition those materials are intended to prove rather than reproduce the proof itself.

The court may require a pleading to be made clearer and more manageable.

Rule 25.11 also allows material to be struck where the pleading or document creates unfairness, delay or other recognized procedural problems.

The better cure would ordinarily be a properly particularized and concise amended claim rather than treating the 74-page pleading as an evidentiary record.

Bracken’s Defence

6. Bracken Must Plead Its Own Material Version Where It Relies on Plaintiff Misconduct

Bracken says Everwyn:

“operated and misused”

the system.

That allegation is potentially material because it may reduce or eliminate Bracken’s responsibility.

But simply denying Everwyn’s position is not enough if Bracken intends to prove a materially different factual version.

Rule 25.07 requires a defendant relying on affirmative factual matters to plead them sufficiently to avoid surprise.

7. “The Evidence Will Come Out at Discovery” Is Not an Adequate Answer

Discovery follows the issues defined by the pleadings.

It is not a substitute for pleading the material facts necessary to define those issues.

Everwyn therefore has a legitimate basis to demand particulars of the alleged misuse.

If Bracken refuses, Rule 25.10 permits the court to order delivery of particulars.

Bracken need not disclose all of its evidence.

It must disclose enough of its material factual case for Everwyn to understand what misuse is alleged.

Rookwell

8. A Third-Party Claim Is the Appropriate Procedural Device

Rookwell is not presently a party.

Bracken alleges that Rookwell:

• may bear responsibility for the same loss; and

• may owe Bracken contractual indemnity.

Rule 29.01 permits a defendant to commence a third-party claim against a non-party who:

• may be liable to the defendant for all or part of the plaintiff’s claim;

• may owe related independent relief; or

• should be bound by determination of an issue in the main action.

Rookwell fits comfortably within that framework.

9. Bracken Missed the Ordinary Ten-Day Period

Rule 29.02 ordinarily requires the third-party claim to be issued within ten days after delivery of the defence, subject to the rule concerning a reply.

Bracken is already 24 days beyond delivery of its defence.

It therefore cannot simply issue as of right on the ordinary timetable.

10. Leave Is Nevertheless Available

Rule 29.02 permits a later third-party claim with:

• the plaintiff’s consent; or

• leave of the court.

Where leave is required, the Rule directs that it be granted unless the plaintiff would be prejudiced.

The key question is therefore not simply:

“Was Bracken late?”

It is:

“Would allowing the claim now cause Everwyn procedural prejudice?”

11. Everwyn’s Prejudice Argument Is Presently Weak

The action remains at an early stage.

There has been:

• no documentary discovery;

• no oral discovery;

• no scheduled trial; and

• no major procedural step that would have to be repeated.

Adding Rookwell will create some additional cost and complexity.

That is not necessarily the type of prejudice that justifies excluding a closely connected third-party claim.

A court could impose:

• timetables;

• costs;

• or other directions

to minimize delay.

Leave is therefore likely.

Novalume’s Claim Against Bracken

12. Contribution Against an Existing Co-Defendant Is a Crossclaim

Novalume does not need a third-party claim because Bracken is already a defendant.

Rule 28.01 permits a defendant to crossclaim against a co-defendant who may:

• be liable for all or part of the plaintiff’s claim;

• owe related relief; or

• need to be bound by an issue determined in the action.

A claim for contribution under the Negligence Act between co-defendants is appropriately asserted by crossclaim.

13. Novalume May Amend Its Defence to Add the Crossclaim

Rule 28.03 expressly permits a defendant that omitted a crossclaim from its original defence to amend the defence in accordance with Rule 26.

The question therefore becomes whether the amendment should be allowed under the general amendment regime.

Everwyn’s Proposed Amendment

14. Rule 26 Favours Amendments That Permit the Real Issues to Be Determined

Rule 26.01 directs that leave to amend should be granted on such terms as are just unless prejudice would result that cannot be compensated for by:

• costs; or

• an adjournment.

This reflects a preference for deciding the genuine controversy rather than freezing pleadings unnecessarily.

15. The Proposed Firmware Amendment Appears Closely Connected to the Existing Case

Everwyn is not introducing:

• an unrelated transaction;

• a wholly different defendant; or

• an entirely separate loss.

The new allegations concern the same controller and the same refrigeration failure.

They provide substantially greater factual specificity regarding Novalume’s alleged fault.

That strongly favours amendment.

16. Passage of Two Months Is Not, By Itself, Dispositive

Novalume may reasonably require:

• additional documentary disclosure;

• revised expert investigation;

• or corresponding amendments to its defence.

Those consequences can ordinarily be addressed through procedural directions and costs.

Nothing presently suggests irremediable prejudice.

The amendment is therefore likely to be permitted.

Consolidation or Hearing Together

17. The Two Proceedings Clearly Have Significant Common Issues

Everwyn’s action and Saffron’s action arise from the same refrigeration shutdown.

Both will likely address:

• how the failure occurred;

• whether Bracken’s installation was defective;

• whether Novalume’s controller was defective; and

• the respective responsibility of the parties.

Separate trials risk:

• duplicated experts;

• repeated witnesses;

• inconsistent factual findings;

• and unnecessary cost.

18. Rule 6 Provides Several Options

Where proceedings share common questions of fact or law or arise from the same occurrence, the court may:

• consolidate them;

• order that they be heard at the same time;

• order one immediately after the other;

• stay one pending determination of another;

• or make related procedural directions.

Consolidation is therefore not the only possible solution.

19. Saffron’s Separate Contractual Claim Matters

Saffron has a contractual dispute with Everwyn that apparently does not concern Bracken or Novalume.

Full consolidation may therefore force parties to participate in portions of litigation in which they have little interest.

Rule 5.05 and the broader proportionality principle permit the court to guard against:

• undue complication;

• delay; and

• prejudice.

20. A Hearing Together May Better Balance the Interests

The court could preserve separate pleadings and distinct causes of action while coordinating the proceedings so that common evidence concerning the system failure is heard once.

That may achieve:

• consistency;

• efficiency; and

• proportionality

without unnecessarily merging Saffron’s separate contractual dispute into Everwyn’s entire action.

21. Overall Advice

Everwyn should substantially clean up and particularize its pleading.

Bracken should particularize the alleged misuse rather than defer its factual case to discovery.

Bracken likely obtains leave to issue the Rookwell third-party claim because the action remains early and material prejudice is difficult to demonstrate.

Novalume may pursue contribution against Bracken by crossclaim and amend its defence accordingly.

Everwyn’s firmware amendment is also likely to be allowed.

Finally, the common engineering issues strongly support coordinated treatment of the Everwyn and Saffron proceedings, although hearing them together may be preferable to complete consolidation.

Brickam’s Suggested Marking Approach — Question One

Issue	Marks
Function of pleadings; material facts versus evidence under Rule 25	4
Defects in Everwyn’s collective allegations, legal conclusions and fraud/misrepresentation pleading	4
Bracken’s affirmative misuse defence and Everwyn’s entitlement to particulars	3
Rookwell third-party claim under Rules 29.01 and 29.02; missed ordinary period, leave and prejudice	5
Novalume’s contribution claim against Bracken as crossclaim and amendment of defence	3
Everwyn’s amendment under Rule 26; prejudice, costs and adjournment	3
Consolidation/hearing together under Rule 6; efficiency versus Saffron’s distinct issues	2
Overall procedural advice	1
TOTAL	25

QUESTION TWO

30 marks — suggested time: 54 minutes

FACTS

Quarrylight Health Systems Inc. (“Quarrylight”) develops scheduling and records-management software for private medical clinics.

It sues Elmspire Data Services Ltd. (“Elmspire”) for $11 million after a large data-migration project allegedly corrupted several years of business records.

Elmspire denies that its migration caused the loss.

It says Quarrylight’s own database contained pre-existing defects.

The pleadings are closed.

Counsel agreed to a written discovery plan providing for searches of:

• five identified email custodians;

• four years of email;

• specified project folders;

• relevant internal messaging channels; and

• 22 agreed search terms.

After reviewing the first production, Quarrylight becomes convinced that Elmspire employees discussed database problems long before the migration.

It now demands:

“all emails, messages, documents, backups and electronically stored information concerning Quarrylight or database integrity in the possession, control or power of Elmspire from 2015 to present.”

Elmspire estimates that complying literally would require review of approximately 9.4 million electronic records at a cost exceeding $1.1 million.

Quarrylight says the amount claimed justifies the expense.

Elmspire proposes instead to:

• add three custodians;

• add eight search terms;

• search one additional year; and

• use technology-assisted review to identify potentially relevant material.

A separate dispute concerns several categories of documents.

Document A

In 2019, three years before any dispute arose, Elmspire commissioned an operational review from Kestrel Ridge Consulting.

The review examined:

• data-security weaknesses;

• backup failures;

• staffing;

• software architecture; and

• commercial risk.

No lawyer was involved.

Elmspire’s chief operating officer now says the report is:

“privileged because it discusses legal-risk issues.”

Document B

One week after Quarrylight sent Elmspire a formal demand letter threatening litigation, Elmspire’s outside litigation counsel retained a forensic technology firm.

The engagement letter states that the firm was retained:

“to assist counsel in investigating Quarrylight’s allegations, advising Elmspire and preparing for anticipated litigation.”

The resulting report analyzes the corrupted database and identifies several vulnerabilities in Elmspire’s migration process.

Elmspire claims litigation privilege.

Document C

Elmspire’s general counsel sent the CEO an email entitled:

LEGAL ADVICE — Quarrylight Claim

The email explains:

• the contractual risk;

• potential defences;

• exposure to damages; and

• counsel’s recommendation concerning settlement strategy.

Quarrylight demands production because the email was copied to Elmspire’s chief financial officer.

Elmspire also discovers another problem.

Three months after serving its affidavit of documents, an information-technology employee restores an archived server.

The archive contains approximately 4,000 previously unknown internal messages concerning the Quarrylight project.

Some assist Elmspire.

Others appear damaging.

Elmspire’s litigation counsel proposes:

“We can wait until Quarrylight specifically asks whether anything else has been found.”

Quarrylight also wants server-access logs held by Nimbus Vault Inc. (“Nimbus”), an unrelated cloud-storage provider.

Elmspire once had access to the logs but says that its account has expired and it can no longer obtain them.

Nimbus refuses voluntary production.

The logs would show which party accessed and modified several disputed data files during the migration.

Quarrylight proposes a motion requiring Nimbus to produce them.

At oral discovery, Quarrylight has already examined Elmspire’s representative for seven hours.

It wants another four hours because the restored archive has generated new issues.

Elmspire refuses consent.

Finally, Quarrylight discovered through Elmspire’s production that another clinic network had experienced similar migration problems.

Quarrylight’s president wants to:

1. give the discovered documents to counsel acting for that clinic in a separate proceeding;

2. send them to an industry regulator; and

3. post selected documents publicly to pressure Elmspire into settlement.

One particular document, however, was later attached by Elmspire itself as an exhibit to an affidavit filed on a contested discovery motion.

QUESTION

Advise Quarrylight and Elmspire concerning the appropriate scope of discovery, the privilege claims, the newly restored archive, the proposed production from Nimbus, the request for additional oral discovery time and Quarrylight’s proposed use of information obtained through discovery.

30 MARKS

THE BRICKAM EXPLANATION — QUESTION TWO

1. Relevance Does Not Mean Unlimited Discovery

Rule 30.02 requires disclosure of documents relevant to matters in issue that are or have been within a party’s:

• possession;

• control; or

• power.

But discovery operates within a broader proportionality framework.

The fact that electronic storage makes millions of records technically searchable does not make every conceivable search proportionate.

2. The Discovery Plan Matters

Rule 29.1 requires parties to establish a discovery plan addressing matters including:

• scope;

• timing;

• electronic production;

• custodians;

• examination arrangements; and

• cost-effective completion of discovery.

The parties already created one.

It does not freeze discovery forever.

Rule 29.1 also contemplates updating the plan as circumstances change.

Quarrylight therefore can seek expansion if the first production reasonably reveals a broader relevant problem.

3. Quarrylight Has a Legitimate Basis to Revisit Scope

The initial production suggests earlier knowledge of database weaknesses.

That may materially affect:

• causation;

• notice;

• defences; and

• credibility.

Quarrylight is therefore not merely engaging in speculative fishing.

Some expansion is justified.

4. Its Proposed Search Is Nevertheless Extremely Broad

Quarrylight seeks nearly every electronic record touching:

• Quarrylight; or

• database integrity

over approximately a decade.

That would capture enormous quantities of material unrelated to the pleaded dispute.

Rule 29.2 requires consideration of matters such as:

• time;

• expense;

• prejudice;

• interference with orderly progress;

• availability from other sources; and

• overall volume.

A $1.1 million review exercise requires substantial justification even in an $11 million action.

5. Elmspire’s Alternative Is Procedurally Stronger

Elmspire proposes:

• additional custodians;

• additional search terms;

• another year of records; and

• technology-assisted review.

That proposal responds directly to the new evidentiary concern without abandoning proportionality.

A court would likely prefer an iterative and targeted expansion over an immediate order for review of 9.4 million documents.

The amount at stake supports meaningful discovery.

It does not eliminate proportionality.

Document A

6. Commercial Sensitivity Is Not Privilege

The 2019 Kestrel Ridge report was created:

• years before litigation;

• in the ordinary course of business;

• without lawyer involvement; and

• for broad operational purposes.

Discussing “legal risk” does not itself make a business document privileged.

7. Litigation Privilege Is Unlikely

Under Blank v. Canada, litigation privilege protects communications and documents whose dominant purpose is litigation.

At the time Document A was created, litigation with Quarrylight was not contemplated.

Its purposes included:

• business operations;

• security;

• staffing; and

• architecture.

The privilege claim is therefore weak.

Subject to relevance, Document A should ordinarily be produced.

Document B

8. Document B Has the Classic Features of Litigation Privilege

The forensic firm was retained only after a formal litigation threat.

Outside counsel retained it expressly to assist with:

• investigation;

• legal advice; and

• anticipated litigation.

Its dominant purpose appears closely connected to the litigation process.

This is materially different from the earlier routine operational report.

9. Litigation Privilege Protects the Litigation Process, Not Only Direct Lawyer-Client Communications

The fact that the report was created by a non-lawyer expert does not necessarily defeat the privilege.

Litigation privilege can protect qualifying communications and materials created for the dominant purpose of litigation.

Document B therefore has a strong privilege claim.

Document C

10. Solicitor-Client Privilege Is Distinct

Document C is a confidential communication from Elmspire’s general counsel providing legal advice about:

• exposure;

• contractual risk;

• defences; and

• settlement.

That lies at the core of solicitor-client privilege.

11. Copying an Appropriate Corporate Officer Does Not Automatically Waive Privilege

Corporate legal advice frequently must be communicated to individuals responsible for corporate decision-making.

The mere fact that the CFO was copied does not establish waiver.

The relevant question is whether the communication remained confidential and was circulated for legitimate purposes connected with obtaining or acting upon legal advice.

On the supplied facts, the privilege claim is strong.

The Restored Archive

12. Discovery Obligations Continue After the Original Affidavit of Documents

Rule 30.07 expressly deals with:

• subsequently obtained documents; and

• discovery that an earlier affidavit was inaccurate or incomplete.

Where new relevant, non-privileged documents are identified, the party must serve a supplementary affidavit forthwith.

13. Elmspire Cannot Wait for Quarrylight to Guess That More Documents Exist

The proposed strategy:

“Wait until they ask”

is inconsistent with the continuing discovery obligation.

Elmspire must supplement its disclosure whether the new documents:

• help it;

• hurt it; or

• contain a mixture of both.

Discovery obligations do not depend on litigation advantage.

Nimbus

14. Non-Parties Are Not Subject to Ordinary Party Discovery

Nimbus is not a party.

Quarrylight therefore cannot simply demand the logs from Nimbus as though it were another defendant.

Rule 30.10 provides a specific mechanism for non-party documentary production.

15. The Rule Requires More Than Mere Curiosity

The court may order inspection of a non-privileged document in a non-party’s possession, control or power where it is satisfied that:

• the document is relevant to a material issue; and

• it would be unfair to require the moving party to proceed to trial without discovery of it.

The procedure protects non-parties from routine litigation burdens.

16. Quarrylight Has a Strong Application

The logs are directly tied to a central factual dispute:

who accessed and altered the data?

Elmspire says it no longer possesses or controls them.

Nimbus appears to be the only practical source.

That makes the information both:

• materially relevant; and

• difficult to replace.

Subject to any legitimate privacy, privilege or technical objections Nimbus may raise, a Rule 30.10 order is realistic.

Quarrylight ordinarily bears the reasonable production cost unless the court orders otherwise.

Additional Oral Discovery

17. The Seven-Hour Limit Is the Starting Point

Rule 31.05.1 ordinarily limits each party to seven hours in total of oral examination for discovery unless:

• the parties consent; or

• the court grants leave.

Quarrylight has exhausted its ordinary entitlement.

18. Leave Depends on Context

The court considers factors including:

• amount at issue;

• complexity;

• reasonable time genuinely required;

• parties’ financial positions;

• prior conduct during discovery;

• refusals or evasiveness; and

• related procedural circumstances.

The restored archive was discovered after Quarrylight had already used its seven hours.

That matters.

19. Quarrylight Has a Good Argument for Some Additional Time

It should not receive four extra hours simply because new documents exist.

But where the documents create genuinely new material issues that could not reasonably have been examined earlier, some additional examination may be proportionate.

The court could grant:

• fewer than four hours;

• examination confined to specified new topics; or

• other limits.

The goal is sufficient discovery, not unlimited discovery.

Deemed Undertaking

20. Discovery Material Cannot Ordinarily Be Used for Collateral Purposes

Rule 30.1 deems parties and their lawyers to undertake not to use discovery evidence or information for purposes other than the proceeding in which it was obtained.

The rule encourages full disclosure by protecting litigants against collateral exploitation of compelled information.

21. Giving the Documents to Another Litigant Is Not Automatically Permitted

Quarrylight wants to assist another clinic’s separate lawsuit.

That may be strategically attractive.

It is nevertheless a different proceeding.

Absent:

• consent;

• a recognized exception; or

• a court order relieving against the undertaking,

Quarrylight cannot simply transfer compelled discovery material to outside counsel for use elsewhere.

22. The Same Problem Applies to Regulatory or Public Pressure

Sending discovery material to:

• a regulator; or

• the public

for a collateral purpose may also breach the deemed undertaking.

The fact that Quarrylight believes Elmspire behaved badly does not itself create an exception.

23. Publicly Filed Material Is Different

The Rule contains exceptions for evidence that becomes part of the public court process in the circumstances specified by the Rule.

The document Elmspire itself attached to an affidavit filed on a contested motion is therefore differently situated from confidential documents existing only because of discovery.

That document may no longer receive the same deemed-undertaking protection.

A careful answer should analyze documents individually rather than assume that one public filing releases the entire production.

24. Settlement Pressure Is Particularly Problematic

Posting compelled discovery documents publicly to pressure Elmspire into settlement is precisely the type of collateral use the undertaking is designed to prevent.

Quarrylight should not proceed without determining that the material falls within an exception or obtaining appropriate relief.

25. Overall Advice

Discovery should be broadened in a controlled and proportionate way rather than through Quarrylight’s decade-wide demand.

Document A is unlikely privileged.

Documents B and C have strong privilege claims for different reasons.

Elmspire must disclose the restored archive through supplementary documentary disclosure.

Quarrylight has a strong Rule 30.10 argument for the Nimbus logs and a respectable case for limited additional oral discovery.

Finally, the deemed undertaking significantly restricts Quarrylight’s proposed collateral use of confidential discovery material, subject to any applicable exception for material that has properly entered the public court record.

Brickam’s Suggested Marking Approach — Question Two

Issue	Marks
Scope of documentary discovery and relationship between relevance and proportionality	4
Discovery plan under Rule 29.1; basis for revision and comparison of the parties’ competing proposals	4
Document A: routine operational report and lack of privilege	3
Document B: litigation privilege and dominant-purpose analysis under Blank	3
Document C: solicitor-client privilege and corporate circulation	3
Continuing documentary disclosure and supplementary affidavit under Rule 30.07	3
Non-party production from Nimbus under Rule 30.10	3
Seven-hour oral discovery limit and request for leave for additional time	3
Deemed undertaking; separate litigation, regulator/public use and public-record exception	3
Overall advice	1
TOTAL	30

QUESTION THREE

25 marks — suggested time: 45 minutes

FACTS

Vireo Transit Analytics Inc. (“Vireo”) develops software used by municipal transit agencies to predict passenger demand and set service schedules.

Its most valuable commercial asset is a database containing:

• historical bid prices;

• municipal purchasing patterns;

• route-level cost assumptions;

• proprietary demand forecasts; and

• internal pricing formulas.

Eamon Trevelyan worked for Vireo for six years.

He left in April and immediately joined Stonemere Mobility Corp. (“Stonemere”), one of Vireo’s principal competitors.

Vireo alleges that Eamon copied confidential information before leaving.

Computer records show that:

• an external storage device was connected to Eamon’s workstation at 11:42 p.m. on his final Friday;

• approximately 22,000 files were accessed during the next 19 minutes;

• the records do not conclusively establish that files were actually transferred; and

• Eamon deleted his local downloads folder the following morning.

Eamon says he connected the external drive to copy:

“personal photographs and tax records”

stored on his work computer.

He denies taking Vireo information.

Two weeks after Eamon joined Stonemere, Stonemere submitted a bid for a municipal transit contract.

Its pricing was within 0.7% of the confidential internal price Vireo had planned to submit.

A Stonemere executive says the similarity was coincidental because:

“everyone in this industry understands municipal operating costs.”

Three former Vireo clients have also received sales presentations from Stonemere.

One client states in an affidavit that the presentation contained:

“a chart that looked extremely similar to a Vireo forecasting chart.”

Stonemere says the chart is based entirely on publicly available ridership information.

A major municipal tender closes in 12 days.

Vireo intends to bid.

It believes Stonemere will use the allegedly copied information.

Vireo commences an action and immediately seeks an interlocutory injunction prohibiting Eamon and Stonemere, pending trial, from:

• using or disclosing any confidential Vireo information; and

• using any Vireo documents or data in preparing the upcoming municipal bid.

Vireo does not seek to prevent Eamon from working for Stonemere generally.

It initially proposes bringing the motion without notice, arguing that:

“If Stonemere knows we are coming, it could use or destroy the information before the court acts.”

There is no direct evidence that Stonemere has threatened to destroy evidence.

A motion on notice could be heard in approximately six days.

Vireo says damages will be impossible to calculate accurately because once its confidential pricing methodology is exposed:

• competitors may use it repeatedly;

• Vireo may never know which future contracts were affected; and

• confidentiality itself cannot later be restored.

Stonemere responds that an injunction would disrupt its tender work and stigmatize it publicly as a company using stolen information.

Vireo is prepared to provide the usual undertaking concerning damages.

Five months later, assume that the interlocutory dispute has passed and discoveries are substantially complete.

Vireo moves for summary judgment on liability.

Its evidence includes:

• the computer-access records;

• the municipal pricing similarity;

• the client affidavit;

• and an admission from Eamon that he took one Vireo spreadsheet home during his employment several years earlier, although he says he later deleted it.

Stonemere files:

• affidavits denying receipt of confidential information;

• source files said to show independent development of its pricing model;

• and an expert report stating that similar pricing can be produced from public data.

Vireo’s expert reaches the opposite conclusion and says some features of Stonemere’s model are:

“extremely unlikely to have arisen independently.”

Each expert attacks the methodology of the other.

Eamon has also given discovery evidence that differs in several respects from his affidavit about what he was doing on his final night.

Vireo argues:

“A full trial is unnecessary. The judge can weigh the evidence, decide credibility and draw the obvious inference.”

Stonemere responds:

“The whole case turns on whether you believe Eamon and which expert is right. That is what trials are for.”

QUESTION

Advise Vireo and Stonemere concerning Vireo’s request for immediate interlocutory relief and its later summary judgment motion. Address the procedural tests, relevant powers of the court, competing arguments and appropriate form of relief.

25 MARKS

THE BRICKAM EXPLANATION — QUESTION THREE

Interlocutory Relief

1. Rule 40 Provides the Procedural Vehicle

An interlocutory injunction may be sought by motion to a judge under Rule 40 in a pending or intended proceeding.

Its function is ordinarily to protect rights pending final adjudication rather than finally determine the substantive dispute.

Vireo has commenced an action and seeks preservation of confidentiality pending trial.

That is a conventional interlocutory objective.

2. The RJR-MacDonald Framework Applies

The familiar framework asks:

1. whether there is a serious issue to be tried;

2. whether the applicant will suffer irreparable harm if relief is denied; and

3. where the balance of convenience lies.

The analysis is contextual rather than mechanical.

Serious Issue

3. Vireo Easily Clears the Ordinary Serious-Issue Threshold

Its case is not frivolous or vexatious.

The evidence includes:

• unusual late-night computer activity;

• access to 22,000 files;

• deletion of local material;

• highly similar pricing;

• and an allegedly similar forecasting chart.

None conclusively proves misuse.

That is not necessary at this stage.

A genuine substantive dispute clearly exists.

4. Stonemere Has Real Merits Defences

The court should nevertheless recognize that the inference is contested.

The electronic evidence does not establish actual transfer.

Stonemere offers:

• independent source material;

• public-data explanations; and

• sworn denials.

The injunction motion should not become a premature final trial.

Irreparable Harm

5. Irreparable Harm Concerns the Nature, Not Simply the Size, of the Loss

The question is whether damages after trial would provide an adequate remedy.

Vireo’s strongest point is that loss of confidentiality may be difficult to reverse.

Once competitors know:

• pricing assumptions;

• bid strategy;

• forecasting methodology; or

• customer intelligence,

the information cannot simply become secret again following judgment.

6. Future Competitive Loss May Also Be Difficult to Quantify

Vireo may never know:

• which future bids were affected;

• how competitors altered their prices;

• what customers were influenced; or

• how long the commercial advantage lasted.

That supports irreparable harm.

7. The Harm Cannot Be Purely Speculative

Stonemere will emphasize that Vireo has not established actual possession or threatened misuse.

The court should not restrain a competitor merely because misuse is imaginable.

The strength of the electronic and pricing evidence therefore matters when assessing whether the feared harm is sufficiently real.

On balance, Vireo has more than a bare speculative concern.

Balance of Convenience

8. The Proposed Order Is Narrow

Vireo does not ask the court to:

• terminate Eamon’s employment;

• prevent Stonemere from bidding;

• or prohibit ordinary competition.

It asks only that they refrain from using Vireo confidential information.

That matters significantly.

If Stonemere genuinely has not received or used such information, compliance should impose comparatively little legitimate business burden.

9. Stonemere Still Faces Practical Harm

The order could create:

• compliance costs;

• uncertainty over what information qualifies as Vireo’s;

• disruption during a major tender;

• and reputational consequences.

The injunction therefore should be drafted with enough precision that lawful competitive activity remains possible.

10. Vireo’s Undertaking as to Damages Supports Relief

Rule 40 contemplates an undertaking concerning damages.

It protects the responding parties if an injunction later proves unjustified.

Vireo’s willingness to provide the undertaking strengthens the procedural fairness of interim relief.

Without-Notice Relief

11. Vireo’s Case for Proceeding Without Notice Is Weak

Without-notice injunctive relief is exceptional because the affected party does not have an opportunity to respond.

Rule 40 also limits the ordinary duration of such relief.

Vireo says notice may trigger destruction or misuse.

But there is no evidence of:

• threatened destruction;

• evasion;

• imminent disappearance; or

• comparable exceptional conduct.

12. A Six-Day On-Notice Hearing Is Available

The tender closes in 12 days.

A hearing can occur in six.

That leaves time for meaningful interim relief before the feared event.

The principles of procedural fairness therefore strongly favour an expedited motion on notice rather than an ex parte order based on speculation.

13. Likely Interlocutory Result

Vireo has a substantial case for a carefully drafted prohibitory injunction preventing use or disclosure of genuinely confidential Vireo material.

The court should avoid an order that effectively prevents lawful competition or is so vague that Stonemere cannot know what conduct is prohibited.

Summary Judgment

14. The Summary Judgment Inquiry Is Different From the Injunction Motion

Five months later the question is no longer whether the status quo should be protected.

Vireo seeks final judgment on liability.

Rule 20 and Hryniak v. Mauldin govern.

The central question is whether there is a genuine issue requiring a trial.

15. Hryniak Rejects an Overly Trial-Centric Approach

Summary judgment supports the broader culture shift toward:

• proportionality;

• timely adjudication;

• affordability; and

• fair resolution.

A conventional trial is not required merely because the dispute is factually substantial.

16. The Judge Has Enhanced Fact-Finding Powers

Rule 20 permits a judge, where appropriate, to:

• weigh evidence;

• evaluate credibility; and

• draw reasonable inferences,

unless it is in the interests of justice that those powers be exercised only at trial.

The court may also use limited oral evidence where appropriate.

Stonemere is therefore wrong if its argument is simply:

“credibility is disputed, so summary judgment is impossible.”

17. The Governing Question Is Whether the Process Can Produce a Fair and Just Determination

Under Hryniak, a summary process can be appropriate where the judge is able to:

• make the necessary factual findings;

• apply the law to those findings; and

• achieve a fair and just adjudication

on the available record.

The process must also be proportionate to the dispute.

18. Vireo Has a Substantial Evidentiary Record

The court has:

• computer logs;

• affidavits;

• discovery evidence;

• bid data;

• source files;

• and expert reports.

This is not a case where the moving party relies merely on pleadings or unsupported suspicion.

That supports summary adjudication.

19. The Credibility Problem Is Nevertheless Serious

Eamon’s account contains inconsistencies.

Whether those inconsistencies establish dishonesty may be central to the inference that information was taken.

A judge may assess credibility on summary judgment, but the existence of that power does not mean it should always be exercised.

The question is whether the paper record and any limited oral evidence provide a reliable basis for the necessary findings.

20. The Expert Conflict May Be Even More Important

The experts fundamentally disagree about whether Stonemere’s pricing model indicates copying or independent development.

Each attacks the other’s methodology.

If deciding liability requires extensive:

• technical explanation;

• cross-examination;

• credibility assessment; and

• competing inferential reasoning,

a full trial may provide a materially better fact-finding process.

21. A Mini-Trial Is an Available Intermediate Tool

The judge need not choose immediately between:

judgment on the written record

and

a full conventional trial.

Rule 20 permits limited oral evidence where that could enable the court to resolve a genuine issue fairly.

For example, targeted oral evidence from:

• Eamon; or

• the experts

might determine whether the remaining factual disputes can be resolved proportionately.

22. But a Mini-Trial Should Not Become a Trial by Another Name

If resolving liability requires:

• lengthy competing expert evidence;

• extensive credibility findings;

• reconstruction of electronic records; and

• numerous witnesses,

the efficiency rationale for summary judgment diminishes.

The court should not compress a trial artificially merely to call the proceeding summary.

23. Partial Relief May Be Considered

Rule 20 permits summary judgment on all or part of a claim.

If a discrete matter is genuinely capable of fair determination—for example, an admitted act of taking a particular document—the court may consider whether that issue can be resolved separately.

But partial adjudication should not create:

• inconsistent findings;

• procedural duplication; or

• greater expense than simply trying the interrelated issues together.

24. The Likely Summary-Judgment Result Is Less Certain Than the Injunction Motion

Vireo has a serious record and the court possesses substantial fact-finding powers.

But the combined disputes concerning:

• Eamon’s credibility;

• actual copying;

• independent development;

• and competing expert methodology

may lead the judge to conclude that a trial is required for final liability.

The proper answer is not categorical.

It turns on whether targeted oral evidence can fairly bridge those gaps.

25. Overall Advice

Vireo has a strong argument for a narrow interlocutory injunction obtained on notice, supported by its undertaking as to damages.

Its summary judgment motion is more difficult.

Hryniak prevents Stonemere from defeating the motion merely by invoking credibility.

But if reliable resolution of the competing factual and expert narratives requires extensive live evidence, the interests of justice favour trial.

Brickam’s Suggested Marking Approach — Question Three

Issue	Marks
Rule 40 and purpose of interlocutory relief	2
RJR-MacDonald: serious issue and application to competing merits evidence	3
Irreparable harm: confidentiality and difficulty quantifying future competitive loss	4
Balance of convenience, narrowness of proposed order and undertaking as to damages	3
Without-notice versus expedited on-notice relief	2
Rule 20 / Hryniak and “no genuine issue requiring a trial” framework	3
Enhanced fact-finding powers: weighing, credibility, inferences and limited oral evidence	3
Application to Eamon’s credibility and conflicting expert evidence	3
Possibility and risks of partial summary judgment	1
Overall conclusion	1
TOTAL	25

QUESTION FOUR

20 marks — suggested time: 36 minutes

FACTS

Karsen Biomedical Ltd. (“Karsen”) is incorporated and headquartered in British Columbia.

It has no office, land, bank account or other significant property in Ontario.

Karsen commences an Ontario action against Oaktide Distribution Inc. (“Oaktide”), an Ontario corporation.

It claims $900,000 in unpaid commissions allegedly owing under a medical-device distribution agreement.

Oaktide denies liability.

Karsen’s documentary case includes:

• the written distribution agreement;

• monthly commission statements prepared by Oaktide;

• emails discussing payment;

• and a spreadsheet apparently prepared by Oaktide’s chief financial officer showing approximately $640,000 in accrued commissions.

Oaktide alleges that Karsen breached several contractual obligations and is therefore entitled to no further commission.

Karsen has few assets of its own.

Its most recent financial statements show:

• $72,000 in cash;

• no significant fixed assets;

• and approximately $1.9 million in liabilities.

Its parent corporation, however, has a $4 million operating credit facility and has so far paid all of Karsen’s litigation expenses.

The parent has not agreed formally to satisfy any future costs order.

Ten months after delivering its defence—and only six weeks before trial—Oaktide moves for security for costs.

It argues that:

• Karsen is a corporate plaintiff;

• Karsen has insufficient assets in Ontario to satisfy a substantial costs award; and

• Oaktide should not be required to defend an expensive trial without security.

Karsen responds that:

• the motion comes very late;

• its claim has substantial merit;

• the parent will continue funding the litigation; and

• an order requiring immediate payment of $300,000 as security would force Karsen to abandon the action.

However, evidence shows that the parent paid a $185,000 expert invoice for Karsen only three weeks earlier.

Settlement negotiations have also occurred.

Two months before trial, Karsen’s lawyer sent an ordinary email stating:

“Our client would resolve the action today for $475,000 plus its reasonable legal costs.”

The email was not served as a formal Rule 49 offer.

Oaktide rejected it.

Twenty-one days before trial, Oaktide serves a formal Rule 49 offer offering:

$525,000 plus Karsen’s partial indemnity costs to the date of the offer.

The offer remains open until trial.

Karsen rejects it.

The action proceeds to judgment.

Assume that:

• Karsen receives judgment for $500,000;

• the figure is less favourable to Karsen than Oaktide’s $525,000 offer for Rule 49 comparison purposes;

• there is no dispute about the validity or timing of Oaktide’s formal offer; and

• the court must now determine costs.

During the litigation:

• Oaktide refused three reasonable requests to admit documents that it later admitted at trial;

• Karsen pursued a damages theory worth approximately $200,000 that it abandoned on the second day of trial; and

• both parties incurred significantly greater legal costs than they originally estimated.

QUESTION

Advise Karsen and Oaktide concerning Oaktide’s motion for security for costs and the likely costs consequences following judgment, including the significance of both parties’ settlement communications and their litigation conduct.

20 MARKS

THE BRICKAM EXPLANATION — QUESTION FOUR

Security for Costs

1. Rule 56 Is Protective Rather Than Punitive

Security for costs is designed to protect a defendant against the risk that it will successfully defend litigation but be unable to recover an eventual costs award.

It is not intended simply to create a financial obstacle for plaintiffs.

The governing question remains whether an order is just.

2. Karsen Falls Within a Recognized Rule 56 Category

Rule 56.01 permits security where, among other grounds, a plaintiff is:

• a corporation or nominal plaintiff; and

• there is good reason to believe it has insufficient assets in Ontario to pay the defendant’s costs.

Karsen:

• is a corporation;

• has no significant Ontario assets; and

• is financially weak on its own balance sheet.

Oaktide therefore has a substantial threshold basis for the motion.

3. Meeting a Ground Does Not End the Inquiry

The Rule says that the court may make such an order as is just.

Security remains discretionary.

Relevant practical considerations include:

• merits;

• timing;

• actual risk of non-payment;

• whether the claim would be unfairly stifled;

• availability of funding;

• proportionality; and

• prejudice to both parties.

4. Karsen’s Claim Does Not Appear Frivolous

The action is supported by:

• a written contract;

• commission statements;

• payment correspondence; and

• Oaktide’s own internal spreadsheet.

The court should therefore not treat the security motion as a disguised method of terminating a meritless action.

There is a genuine dispute for trial.

5. Oaktide’s Delay Matters

Oaktide waited ten months after defending the action and moved only six weeks before trial.

Security applications should not be strategically delayed until the plaintiff has:

• incurred most of its litigation costs;

• committed to a trial;

• and become particularly vulnerable to financial pressure.

Delay does not necessarily eliminate Oaktide’s entitlement.

It is relevant to the fairness and structure of any order.

6. Karsen’s “Stifling” Argument Is Factually Weak

Karsen says that a $300,000 order would end the litigation.

But its parent:

• has a substantial credit facility; and

• recently paid a $185,000 expert invoice.

That does not prove the parent is legally obliged to fund security.

It does undermine the assertion that security necessarily makes the litigation impossible.

A party claiming that an order would stifle a bona fide claim ordinarily needs persuasive evidence of genuine inability to obtain funding.

7. The Parent’s Informal Support Is Not Equivalent to Security

Oaktide is entitled to point out that the parent has given no enforceable undertaking to pay any costs award.

Past voluntary payments do not guarantee future recovery.

The court may therefore conclude that some security remains justified.

8. A Proportionate Order Is More Likely Than an All-or-Nothing Result

Even if security is warranted, the amount and timing should be just.

The court could:

• order less than $300,000;

• stage security;

• require an acceptable guarantee;

• account for the lateness of the motion;

• or structure payment to avoid unnecessary interference with trial preparation.

On balance, Oaktide has a good argument for some security, but not necessarily the full amount demanded immediately.

Costs After Judgment

9. Costs Remain Discretionary

Under the Courts of Justice Act and Rule 57, the court possesses broad discretion concerning costs.

Relevant considerations include matters such as:

• result;

• amount claimed and recovered;

• complexity;

• importance;

• conduct;

• offers to settle;

• unnecessary steps;

• and proportionality.

Rule 49 then creates specific settlement incentives within that broader framework.

10. Karsen Is the Successful Party on the Merits

Karsen recovers $500,000.

Absent other factors, success ordinarily favours an award of costs to Karsen.

But the costs analysis does not stop at:

“Karsen won.”

Oaktide made a qualifying settlement offer that Karsen failed to beat.

Oaktide’s Formal Offer

11. Rule 49.10 Applies

Oaktide:

• made a formal offer more than seven days before trial;

• left it open;

• and offered $525,000.

Karsen ultimately obtained the less favourable result of $500,000.

This engages the defendant-offer costs consequences under Rule 49.10.

12. The Presumptive Consequence Divides the Litigation at the Offer Date

Subject to the court ordering otherwise:

• Karsen, as successful plaintiff, is generally entitled to partial indemnity costs up to the date of Oaktide’s offer; and

• Oaktide is generally entitled to partial indemnity costs from the date of the offer onward.

The Rule deliberately places economic risk on a plaintiff that refuses a defendant’s offer and then fails to improve upon it at trial.

13. The Result Is Not That Oaktide Becomes the Successful Party on Liability

Karsen still obtained judgment.

Rule 49 modifies the costs consequences of that success because the litigation after the offer did not produce a result superior to what Karsen could have accepted.

That distinction should be maintained.

Karsen’s Earlier Email

14. The $475,000 Email Is Not Entitled to Automatic Rule 49.10 Treatment on These Facts

The question states that Karsen did not serve it as a formal Rule 49 offer.

It therefore does not automatically generate the prescribed Rule 49.10 consequences.

15. But Written Offers May Still Matter

Rule 49.13 preserves the court’s wider costs discretion.

A written settlement proposal may be considered even where it does not trigger the automatic Rule 49 regime.

Karsen can therefore argue:

Oaktide could have settled for $475,000 two months before trial but chose to continue and ultimately paid $500,000.

That fact is relevant.

It does not automatically override Oaktide’s later qualifying Rule 49 offer.

16. The Sequence of Offers Is Important

Karsen’s earlier proposal may support a discretionary adjustment because Oaktide initially rejected a settlement lower than the judgment.

But Oaktide later changed its position and offered more than Karsen ultimately recovered.

Once the $525,000 formal offer was made, Karsen had the opportunity to avoid the remaining trial expense on terms better than the judgment.

That strongly supports application of the normal Rule 49 consequence after that date.

Litigation Conduct

17. Oaktide’s Refusals to Admit May Increase Its Costs Exposure

Costs may reflect conduct that unnecessarily lengthens litigation.

Oaktide refused three reasonable admissions and then made those admissions at trial.

If that conduct caused unnecessary:

• preparation;

• witnesses;

• document proof; or

• hearing time,

the court can take it into account.

18. Karsen’s Abandoned $200,000 Damages Theory Also Matters

Karsen pursued a significant claim until the second day of trial and then abandoned it.

If that theory required substantial:

• expert work;

• disclosure;

• preparation; or

• trial time,

the court may reduce Karsen’s costs or otherwise account for the wasted expense.

Costs are intended partly to encourage reasonable and proportionate litigation conduct.

19. Proportionality Remains Relevant

Both sides spent more than expected.

That fact does not entitle either to pass every dollar of legal expense to the other.

Costs awards must remain fair and proportionate having regard to:

• what was actually at stake;

• how the case was conducted; and

• the reasonable expectations of the parties.

20. Overall Advice

Oaktide has a strong threshold case for security for costs because Karsen is a financially weak corporation without meaningful Ontario assets.

The court should nevertheless account for:

• Oaktide’s delay;

• the apparent merits;

• parent-company funding;

• and proportionality

when deciding the form and amount of security.

Following judgment, Oaktide’s formal $525,000 Rule 49 offer is highly significant because Karsen recovered only $500,000.

The presumptive result is:

• Karsen’s partial indemnity costs to the offer date; and

• Oaktide’s partial indemnity costs thereafter,

subject to the court’s discretion.

Karsen’s earlier written $475,000 proposal and both parties’ litigation conduct remain relevant to the ultimate discretionary costs order but do not erase the later Rule 49 consequences automatically.

Brickam’s Suggested Marking Approach — Question Four

Issue	Marks
Security-for-costs purpose and Rule 56 threshold applicable to corporate plaintiff with insufficient Ontario assets	3
Discretionary “just” inquiry: merits, Ontario assets, parent funding, stifling, proportionality	4
Significance of Oaktide’s delay and possible structure/amount of security	2
General costs discretion under Courts of Justice Act and Rule 57	2
Oaktide’s formal Rule 49 offer and defendant-offer consequences under Rule 49.10	4
Karsen’s informal written offer and Rule 49.13 discretion	2
Effect of unreasonable refusals to admit and abandoned damages theory	2
Overall conclusion	1
TOTAL	20

Overall Mark Allocation

Question	Marks
Question One — Pleadings, Crossclaims, Third-Party Claims and Consolidation	25
Question Two — Discovery, Privilege and the Deemed Undertaking	30
Question Three — Interlocutory Injunctions and Summary Judgment	25
Question Four — Security for Costs, Settlement Offers and Costs	20
TOTAL	100