Executive Summary: Key Legal and Evidentiary Issues

• Intact Insurance Company sought an order compelling a representative of non-party Seawaves Development Services Inc. to answer a question refused during an examination under rule 39.03.
• Seawaves had declined to answer a hypothetical question asking whether it would indemnify Intact if the City of Hamilton's motion for leave to file a late statement of claim succeeded.
• Justice Kriwetz found the question was indeed hypothetical, contrary to Intact's position.
• No cases were found directly addressing whether hypothetical questions fall within the scope of rule 39.03, so the court relied on principles developed for examinations for discovery.
• Relevance to the City's pending motion could not be confirmed because the materials on that motion were not before the court.
• Ultimately, the court dismissed Intact's motion and ordered Intact to pay Seawaves' costs of $6,000.00.

Facts of the case

This motion arose out of a dispute over a construction performance bond. On November 18, 2020, Seawaves Development Services Inc. entered into an Indemnity Agreement with a predecessor of Intact Insurance Company, under which Seawaves agreed to indemnify Intact for expenses or losses arising from bonds issued to Seawaves. On February 22, 2022, Intact issued a performance bond in the amount of $2,609,969.25 for a construction contract between Seawaves and the City of Hamilton, naming Intact as surety, the City as owner, and Seawaves as contractor. The City notified Intact of a claim under the bond on October 11, 2023, and Intact responded on November 8, 2023, that it lacked sufficient information to accept liability.

On October 3, 2025, Intact issued a notice of action against Seawaves seeking indemnity under several bonds, including this one, followed by a statement of claim on October 31, 2025 ("Intact's Action"). Seawaves has since been noted in default in that action, which came as a surprise to its counsel, though that issue was not before the court on this motion. Separately, the City issued a notice of action against Intact on October 10, 2025, but failed to file its statement of claim within the required 30-day period under the Rules of Civil Procedure. The City therefore moved for an order permitting a late filing ("the City's Motion"). Intact refused to consent, arguing this would prejudice its rights under the Indemnity Agreement. On February 19, 2026, Justice Bordin set a timetable for the City's Motion and noted that Seawaves could seek leave to participate, which it had not done.

In the course of the City's Motion, Intact examined a Seawaves representative as a witness under rule 39.03. Seawaves refused to answer whether it would indemnify Intact for the City's action against Intact if the City succeeded in its motion and was permitted to file its claim late.

Indemnity agreement and rule 39.03 scope at issue

Two instruments framed the dispute: the Indemnity Agreement between Seawaves and Intact's predecessor, and the performance bond naming Intact as surety, the City as owner, and Seawaves as contractor. Beyond the terms of those instruments, the central issue was procedural — the permissible scope of an examination under rule 39.03. That rule does not itself define the boundaries of what a witness must answer. Existing case law establishes that such examinations are narrower than examinations for discovery, and a witness is not required to make inquiries beyond their own knowledge, per Magnotta Winery Corp. v. Ontario (Alcohol and Gaming Commission), 2016 ONSC 3174, at para. 21. Questions are also limited to matters relevant to the motion to which the examination relates, per Elfe Juvenile Products Inc. v. Bern, [1994] O.J. 2840, at para. 30.

Court's reasoning and analysis

Associate Justice Kriwetz first determined that the examination related to the City's Motion, but noted that none of the materials on that motion were before the court on this application. He then addressed whether the disputed question was hypothetical, siding with Seawaves' position that it was, despite no prior case law directly addressing hypothetical questions under rule 39.03.

Turning to guidance from discovery jurisprudence, the court considered The Estate of Maryam Asharzadeh v. Amin, 2019 ONSC 1024, in which Master McGraw set out eight principles governing hypothetical questions on examinations for discovery, including that such questions must fall within the witness's knowledge and expertise, must be relevant and proportionate, must have a factual foundation, and must not require the witness to opine on an ultimate legal issue. These principles were later cited with approval in Metis National Council Secretariat Inc. v. Chartier, 2023 ONSC 5469, at para. 140.

Applying these principles, the court found that the question would require the Seawaves witness to give an answer carrying significant legal implications outside his knowledge and expertise. The court also could not identify how an answer would bear on the City's Motion, since Intact's concern was prejudice from that motion succeeding — not whether Seawaves would indemnify it. An affirmative answer, moreover, would effectively amount to an admission of Intact's indemnity claim against Seawaves, causing disproportionate prejudice to Seawaves. Finally, because the question asked whether Seawaves "would" indemnify Intact, it went to the ultimate legal issue in Intact's separate action against Seawaves.

Ruling and outcome

The court concluded that the disputed question fell outside the scope of what Seawaves' representative was required to answer under rule 39.03, and dismissed Intact's motion. On costs, Intact had sought $5,000.00 and Seawaves had sought $7,500.00, each contingent on success. Seawaves, having succeeded, was awarded its costs of the motion, which the court fixed at $6,000.00 on a partial indemnity scale, inclusive of disbursements and taxes, payable by Intact within 30 days.