CNL Stamping & Tooling Inc. v. Lorwood Holdings Incorporated

2015 ONSC 492 | Court File No. CV-10-408126 | Master R.A. Muir

Commercial Litigation Pleadings & ProcedureBy Paul H. Starkman | Starkman & Zhang Lawyers

The defendant scheduled discoveries on the very paragraphs of our amended reply that it later moved to strike — without ever reserving its rights. We anchored on Rule 2.02 waiver. Master Muir dismissed the strike motion in a single hearing, without engaging the substantive Rules 25/26 debate.

The Commercial Problem

Our client, CNL Stamping & Tooling Inc., is the plaintiff in a long-running commercial action commenced in 2010 (CV-10-408126). After several years of pleadings and discoveries, we served an amended reply in late October 2013. The defendant’s counsel objected to the amended reply on receipt — alleging that some paragraphs properly belonged in the statement of claim and others were not responsive to the amended statement of defence (Rules 25 and 26).

What followed was nearly 18 months of correspondence, scheduling, and continued examinations — with the defendant’s lawyer never once stating that further steps would be taken without prejudice to the original objections. The trial was adjourned to permit examinations on the new paragraphs. Notices of examination were served by both sides — including two by the defendant. Discovery dates were re-booked.

Three business days before the continued examination scheduled for April 1, 2014, defendant’s counsel sent an email reasserting his October 2013 objections and stating — for the first time — that the continued examination would be “without prejudice” to those objections. We refused to accept that reservation. The defendant declined to examine on April 1 and brought a motion in September 2014 to strike portions of the amended reply or, alternatively, for leave to amend its own statement of defence.

For a commercial plaintiff in this position, the strike motion was a procedural tool of delay. If granted, it would have forced CNL to re-plead, restart parts of discovery, and push the trial date even further out — the action was already approaching its fifth year. The question was whether there was a procedural mechanism to make the defendant’s motion go away without engaging on the substantive Rules 25/26 debate, which would have generated months of motions, written submissions, and a likely appeal.

Strategic Decisions

Decision 1: Anchor on Rule 2.02 waiver — not on the substantive Rules 25/26 debate

The defendant’s motion engaged Rules 25 and 26 (proper content of pleadings, replies, and amendments). Engaging there would have meant litigating, paragraph by paragraph, whether each impugned paragraph of the amended reply was “properly” pleaded. That route was open to us, but it produced an inefficient hearing and a likely appeal.

We took a different route. Rule 2.02 of the Rules of Civil Procedure requires a moving party to seek leave if it has taken further steps in the proceeding after obtaining knowledge of the irregularity. Our argument was that the defendant’s subsequent conduct — agreeing to adjourn the trial, scheduling continued discoveries, serving notices of examination — constituted further steps amounting to waiver under Lynch v. Westario Power Inc., [2009] O.J. No. 2927 (Ont. S.C.J.). This made the analysis fact-driven (the chronology of correspondence and steps), not merits-driven. Master Muir adopted that framing in full.

Decision 2: Refuse the late “without prejudice” reservation when offered three business days before the examination

When defendant’s counsel tried to qualify the April 1, 2014 examination as “without prejudice” to the October 2013 objections — in an email three business days before the examination — the diplomatic move would have been to accept the reservation, complete the examination, and let the matter proceed. We did the opposite.

Accepting the reservation would have given the defendant a free option: the benefit of the discovery plus the right to re-litigate the pleading whenever convenient. Refusing the reservation forced the defendant into a binary choice: examine (waiving) or refuse to examine (file motion). Either path produced a clean factual record for waiver. The defendant chose to file the motion. That gave us the procedural posture we wanted.

Decision 3: Accept the partial loss on alternative relief — do not over-litigate

The defendant’s motion sought, in the alternative, leave to amend its own statement of defence to respond to our amended reply. Master Muir dismissed that alternative relief, but expressly “without prejudice” to a future Rule 26 motion brought on proper grounds and with proper evidence (including a draft amended pleading, which was missing from this motion record).

We could have fought to make that dismissal “with prejudice.” We did not. Three reasons. First, fighting that further would have introduced additional issues into Master Muir’s reasoning and risked diluting the core waiver analysis. Second, any future Rule 26 motion would face fresh hurdles — timing, prejudice from delay, the need to produce a draft pleading, the existing record. Third, the defendant has had multiple opportunities and may not bring a fresh motion. The cost of accepting a small “without prejudice” carve-out was lower than the cost of litigating it further.

Outcome

Master Muir dismissed the defendant’s strike motion (paragraphs (a) and (b) of the notice of motion) on the Rule 2.02 waiver ground. The Master’s key finding (para. 8): the defendant’s notices of examination, served and scheduled without any reservation of rights, were “no clearer example of a further step of the nature contemplated by Rule 2.02(b).” The defendant’s actions “clearly and unambiguously waived any rights it had to object to the amended reply.”

The alternative relief (leave to amend the defendant’s own statement of defence) was dismissed without prejudice to a proper Rule 26 motion. The plaintiff’s representative was ordered to attend a continued examination for discovery on a date to be agreed. Costs were to be agreed between the parties or addressed by written submissions by February 20, 2015.

If we had engaged on the Rules 25/26 merits, the motion would have generated multiple rounds of substantive submissions, potentially cross-examinations on affidavit material, and a likely appeal — all to litigate, paragraph by paragraph, whether the amended reply was “properly” pleaded. By collapsing the motion on Rule 2.02 waiver, we resolved it in a single hearing on procedural facts that were largely undisputed: the chronology of the parties’ correspondence and the defendant’s subsequent steps. The waiver analysis turned on documents the defendant itself had created — its own notices of examination — not on contested credibility findings. That made it almost impossible to dislodge.

Three Takeaways for Long-Running Commercial Actions

1. In long-running commercial actions, Rule 2.02 waiver is the most efficient counter to belated procedural attacks. When opposing counsel objects to a pleading but then takes further steps — discoveries, examinations, scheduling — without reservation, the right of attack is waived. The implicit waiver standard from Lynch v. Westario Power requires the further step to amount to forgiveness of the irregularity. Scheduling examinations on the very paragraphs the moving party seeks to strike satisfies that standard with no daylight.

2. Refusing a late “without prejudice” reservation is sometimes the right move. When opposing counsel tries to qualify late-stage participation as “without prejudice” to earlier objections, accepting that reservation gives them a free option to re-litigate. Refusing forces the binary: proceed (waive) or stop (file motion). Either way, the next hearing has clean facts. Diplomacy here is not always strategy.

3. Accept partial losses that do not disturb the core win. When the moving party seeks alternative relief that the court is willing to dismiss only “without prejudice,” over-litigating that further has diminishing returns. Keep the core win tight; let alternative relief be addressed through a proper future motion if one ever materializes. Most do not.

Are you a commercial litigant facing belated procedural attacks on pleadings?

Long-running commercial actions accumulate procedural opportunities. The most effective counter to a belated strike motion is rarely a substantive engagement on the pleading rules — it is showing that the moving party has waived the objection through subsequent conduct. The decisive question is whether the paper trail supports waiver under Rule 2.02.

We recommend a 60-90 minute legal posture assessment to evaluate the chronology, the factual basis for waiver, and the realistic litigation path. This is a litigation-focused diagnostic, not a sales meeting.

Book a Consultation Call 905-477-3110

Legal Foundation

This case engaged the following framework and authorities:

Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194 — Rule 2.02 (when irregularities can be attacked); Rules 25 and 26 (pleadings, including replies and amendments)
Lynch v. Westario Power Inc., [2009] O.J. No. 2927 (Ont. S.C.J.) at para. 11 — further step under Rule 2.02(b) must amount to implied waiver of the irregularity
Court File No. CV-10-408126 (Ontario Superior Court of Justice) — endorsement of Master R.A. Muir dated January 22, 2015 (heard January 16, 2015)

This case is a publicly issued endorsement (2015 ONSC 492); both parties are named in the public record. This page summarizes our work for informational purposes only and does not constitute legal advice. Each pleading-stage motion turns on the specific chronology of the parties’ correspondence and conduct, the procedural posture, and the surrounding rules. To discuss a specific matter, please contact us.