Ontario Land Tribunal

Tribunal ontarien de l’aménagement du territoire

ISSUE DATE: August 27, 2021

CASE NO(S).: LC180019

PROCEEDING COMMENCED UNDER subsection 26(b) of the Expropriations Act, R.S.O. 1990, c. E.26, as amended

Claimant: The Healthy Butcher Inc.

Respondent: Metrolinx

Subject: Land Compensation

Property Address/ Description: 298 Eglinton Ave W

Municipality: City of Toronto

LPAT Case No.: LC180019

LPAT File No.: LC180019

LPAT Case Name: The Healthy Butcher Inc. v. Toronto (City), Metrolinx

Heard: July 13, 2021 by video hearing

APPEARANCES:

Parties	Counsel
The Healthy Butcher Inc. (“Claimant”)	Al Burton
Metrolinx (“Respondent”)	William Martin

DECISION DELIVERED BY DAVID L. LANTHIER AND PIERRE BRUNELLE AND ORDER OF THE TRIBUNAL

1This Decision and Order deals with the motion brought by the Respondent for the production of documents (“Motion”) in this claim for damages under the Expropriations Act arising from injurious affection to its business operations at the retail store located on Eglinton Avenue and arising from the construction of the Eglinton Crosstown LRT by the Respondent. The hearing of the Motion was directed by the Tribunal at the Case Management Conference conducted on April 16, 2021.

2For the purposes of hearing the Motion, the Panel had before it the following materials:

1. Notice of Motion dated June 28, 2021;
2. Affidavit of Mr. Glenn Tautrims sworn June 28 with Exhibits;
3. The Claimant’s Pleading – being the Notice of Arbitration and Statement of Claim dated May 17, 2018;
4. The Respondents’ Pleading – being the Reply dated September 7, 2018;
5. A copy of the Claimant’s Affidavit of Documents sworn March 19, 2019;
6. The Respondent’s Book of Authorities;
7. The Response to the Motion filed by the Respondents dated July 6, 2021; and
8. Two additional cases received from the Claimant as well as a copy of the discovery transcript of Ms. Tara Longo, who appeared on behalf of the Claimant and was examined on March 20, 2019.

3For the purposes of the argument of the Motion, it is helpful to set out a few basic facts that are relevant to the subject matter of the Motion. They are as follows:

1. The Claimant’s claim is for business damages, as a result of injurious affection, relating to one of its retail stores.
2. The Claim arises out of impacts from the construction activities relating to the Eglinton Crosstown LRT line, including traffic congestion, parking problems, disruption of pedestrian and vehicular access, nuisance and other aspects of the Respondent’s project in the vicinity of the Eglinton store.
3. The Claimant claims business losses relating to the construction in and around the Eglinton store and the impacts on sales and revenues, extra labour and delivery costs, borrowing costs due to reduced revenues, the loss of business opportunities to expand, and the loss of executive time of the principals of the Claimant.
4. The losses claimed relate only to the Claimant’s operations at the Eglinton location. The Claimant, at the time of the alleged losses, also operated a second outlet in the City, online sales and a location in Kitchener.
5. The Claimant does not claim a loss of value of the business or its shares, and only the identified losses in the Claim. The Claimant has included the usual general catch-all wording in its Claim, pleading that: (1) the claims “include, but are not limited to” the enumerated categories of damages identified in paragraph 20 and (2) the Claimant claims “further and other damages” and “such further and other relief” as the Tribunal may deem just.
6. The Claimant advises the Tribunal that despite the catch-all pleading above, the Claimant is not advancing any other claims or damages beyond what is indicated in the Claim.
7. The entirety of the shares of the Claimant corporation were sold to a third party on April 30, 2019, under a share transfer, and not an asset transfer. As such, the corporate assets of the Claimant remained as they were at the time of sale and were inclusive of the subject retail location on Eglinton.
8. Paragraph 5 of the Procedural Order governing this proceeding, issued under the Decision of the Tribunal dated May 5, 2021, anticipates this Motion and provides that examinations for discovery arising from any productions directed to be produced by the Tribunal are to be exchanged and answered in writing by the times specified.

THE MOTION AND THE DOCUMENTS/INFORMATION REQUESTED

4The Respondent’s Motion specifically requests production of identified documents from the Claimant, within two groups, together with other supplementary relief. The specifics are as follows:

(a) “Sale Documents” - The Respondent first requests that the Claimant disclose and deliver additional relevant documents in its possession control or power relating to the sale of the shares of The Healthy Butcher on April 30, 2019.

(b) “Expert’s Foundational Documents and Information” - The Respondent’s second request relates to production of those foundational documents and information identified by the Claimant’s expert witness as within the expert’s “Scope of Review” and forming the basis for the Claimants identified business losses. The documents and information requested in the Motion are included in those listed in the Report prepared by RSM Consulting Canada LP and dated June 23, 2020 (the “Expert’s Report”) and again identified in the Affidavit of Glenn Tautrims filed by the Respondent in support of the Motion. They are:

1. Discussions with and information provided by Ms. Tara Longo and Mr. Mario Fiorucci;
2. Monthly profit and loss statements, by location, for the period from May 2019 to December 2019;
3. Monthly revenues, by location, for the period from October 2011 to October 2013, and May 2019 to December 2019;
4. Management provided listing of employees, by location;
5. Summary of additional costs incurred, as provided by Management;
6. Monthly sales summary for online cookware business (SS);
7. Online sales export for THB for the period November 2013 to October 31, 2019;
8. Timeline and log of relevant events; and
9. Publicly available statistics and information.

(c) An Order that The Healthy Butcher Inc. serve a further and better Affidavit of Documents; and

(d) An Order that a representative of The Healthy Butcher Inc. respond to written questions, if requested by Metrolinx.

THE CLAIMANTS RESPONSE TO THE MOTION

5The Claimant’s Response to the Motion, as confirmed in submissions and argument, is summarized as follows:

(a) The Claimant objects to the production of the Sale Documents on the basis of relevancy, primarily because there is no connection between the sale of the shares of the Claimant by the former owners and the Claim.

(b) The Claimant objects to the production of Item 1 of the Foundational Documents and Information on the basis of litigation privilege. Since this first item does not relate to the production of documents but rather to discussions or notes of discussions between the expert and the principals of the Claimant, they constitute material protected by litigation privilege.

(c) The Claimant does not object to the production of the Foundational Documents and Information relating to Items 2 to 7 set out in paragraph 4(b) above “to the extent not already provided”.

(d) The Claimant submits that the timeline and log of relevant events identified in Item 8 of the Foundational Documents and Information have already been provided and relies upon Tabs 3 to 10 of the Claimant’s Affidavit of Documents;

(e) Finally, the Claimant submits that publicly available statistics and information, Item 9 of the Foundational Documents and Information, is not within the exclusive control of the Claimant, and therefore not producible, and the request for production amounts to advance cross-examination of an expert on his report.

THE LEGAL FRAMEWORK FOR THE MOTION

6In argument the Parties have referred the Panel to Rule 9 of the Ontario Land Tribunal Rules of Practice and Procedure (“Tribunal’s Rules”), and Rules 30, 30.06, 31 and 53.03 of the Ontario Rules of Civil Procedure as well as various authorities in argument.

7There are some general principles regarding the scope of discovery, and the producibility of documents and information in the discovery processes, that have been set out by the Courts and the Tribunal. The first and foremost principle is that the scope of the discovery is defined by the pleadings and all discovery questions must be relevant to the issues as defined by the pleadings. The examining party may not go beyond the pleadings to find information or a claim or defense, or pursue matters that have not been pleaded, often referred to as a "fishing expedition". The extent of discovery is accordingly not unlimited, and in controlling its process, and to avoid discovery from being oppressive and uncontrollable, the court or tribunal may keep discovery within reasonable and efficient bounds. The discovery process is, within such boundaries, intended to enable each litigant to know the facts of the case they must meet and efficiently and effectively prepare for a hearing on the merits.

8The Rules of Civil Procedure provide guidance on the conduct of examinations for discovery and document discovery.

9The principle of proportionality is provided for in the Tribunal’s Rules of Practice and Procedure. Rule 29.2.03 of the Rules of Civil Procedure provides guidance on the considerations of proportionality to be applied to matters relating to the discovery process. In the case of document disclosure this requires a consideration of such things as whether the time required to produce the document is unreasonable, or the expense of disclosure unjustified, whether production would cause undue prejudice or unduly interfere with the orderly progress of the proceeding and finally, whether the document is readily available to the party requesting it from another source.

ANALYSIS AND DISPOSITION

10The Tribunal has considered all of the materials and authorities submitted by the Parties and for the reasons, and upon the analysis and findings that follow, the Tribunal denies the Motion as it relates to the Sale Documents and allows the Motion, in part, as it relates to the Expert’s Foundational Documents and Information.

Sale Documents

11The sale transaction which is the subject of the production request relates to an arms length share purchase of the corporate Claimant, as it conducted all of its business operations. In contrast, only the retail operation located at Eglinton Avenue West is the subject of the Claim before the Tribunal, and the Claimant’s claimed business losses also relate only to that component of the business located on Eglinton Avenue West, where the transit work of the Respondent occurred.

12Despite the inclusive wording used by the Claimant to initially identify the categories of the business damages in paragraph 20 of the pleadings, the Claimant categorically confirms that there is no claim for a loss of goodwill or reduction in business value tucked into the “including, but not limited to” catch-all in paragraph 20 of the Claim, and neither were such damages claimed specifically. The business losses identified in the pleadings are restricted to the Eglinton Avenue West component of the corporation, and counsel for the Claimant submits in this Motion that the claims for business damages in this proceeding are sufficiently particularized as to exclude issues relating to losses of value relating to the shares of the Claimant, or the overall business operations as a whole.

13The facts confirm that the entirety of the business operations and share valuation or business valuation would also necessarily include the second business outlet and online sales of the Claimant’s business and share value and not just Eglinton Avenue West.

14Based upon the compartmentalized form of the claim for damages, and the fact that the proceedings do not include a loss of value claim of any kind relating to the shares of the Claimant, or the business value as a whole, the Tribunal finds that such Sale Documents are not relevant to the proceedings before it.

15In the Tribunal’s view, the fact that the information and materials within the Sale Documents might relate to the past or projected future performance of the Claimant corporation does not mean that such documents become relevant to this proceeding. This is because the business damages based upon injurious affection relate to only one part of the business operations.

16In paragraph 10 of Mr. Tautrim’s Affidavit he postulates that in the negotiations for the sale, a “transaction pitch (book) which would include historical records and details surrounding business operations” including risks and forecasts would have been requested by the buyers and would have been produced to establish the “true financial performance of the Eglinton Location”.

17Indeed, such exchanged information between the prior and current shareholders relating to share value and business valuations for the entirety of the corporate operations might contain a sale prospectus that includes part of the Eglington outlet. It might also have contained the suspected disclosure of information relating to the entirety of the business operations. This does not, by virtue of this fact alone, make all such Sale Documents relevant to this proceeding. Other productions, including those under the second grouping of Foundational Documentation and Information, relate specifically to the Eglinton store operations, and not, in contrast, the entirety of the share and business valuation. The Tribunal would consider such exploratory inquiries into a much more comprehensive share purchase transaction, and documentation relating to matters beyond those damages pleaded in the Claim, to be akin to the type of “fishing expedition” that is to be avoided in the discovery/production processes.

18If the shareholders of the Claimant Corporation had claimed a loss in share value or claimed business value losses relative to the entire corporation, then such information might become relevant. That is not the case. If the entirety of the Claimant’s business operations had been restricted only to the Eglinton Avenue West operation, and the sale transaction under scrutiny related only to the Eglinton Avenue West operations, then such information might become relevant in relation to the Claimant’s Claim. Again, that is not the case.

19The Tribunal must agree with the Claimant that the fact that the share sale, that occurred in 2019, might be categorized by the Respondent as a “significant step” in the life of the corporate Claimant does not, in the Tribunal’s view, cause this private arms length transaction to then become relevant to the focused issues in this proceeding upon business loss and damages from only one segment of the corporate Claimant’s operations.

20To the extent that considerations of proportionality are to be applied to the document discovery process, as engaged by this Motion, the Tribunal concludes that requiring the Claimant to answer questions, or produce all such documentation, relating to the Sale would cause the persons or entities who acquired the shares, or who sold the shares for that matter, some degree of undue prejudice. The seller shareholder(s) and the buyer shareholder(s) in this private transaction, who exchanged such information are not parties to this Motion. They, as the prior and current shareholders of the Claimant must not be confused with, and must be distinguished from, the corporate entity that is the Claimant in this proceeding claiming the damages. The Respondent’s request for information blurs these distinguishing lines which are relevant to the issue of the production of the Sale Documents.

21Finally, the Respondent’s argument to the Tribunal based upon the Claimant’s Expert’s Report supporting the business losses, has been considered. The Respondent submits that paragraph 35 of the Expert’s Report confirms that the reduction in business value and loss of goodwill has not been considered as part of the analysis but adds, as a further comment that a lower purchase value/price “may” have been received on the sale and therefore the “calculations may be understated”. This statement, the Respondent argues, makes the Sale Documents relevant because they support such a statement.

22The Tribunal considers this one-line additional conjecture, in this one paragraph, to be clearly speculative in all respects and is ultimately of little significance in the context of the entire Expert’s Report, as it may be considered by the Tribunal in the hearing on the merits. As such, it is insufficient, as a minor comment within the Report, to warrant the disclosure of the entirety of the Sale Documents, both from the perspective of proportionality, as noted, or relevance, as also noted.

23To summarize, the Tribunal concludes that the Sale Documents are irrelevant to the within proceeding as determined by the Claimant’s request for damages and need not be produced. Sufficient disclosure has been provided, or will be provided, with respect to the business damages advanced in the Claimant’s pleadings. On its face, rooting out information relating to the private sale transaction between the vendor and purchaser of the shares of the Claimant would be prejudicial to those parties. Such an exercise would also represent an unreasonable extension beyond the four corners of the pleadings and represent an attempt to find information and thus seek to pursue matters that have not been pleaded – the kind of fishing expedition that is not endorsed as reasonable discovery nor reasonable disclosure requirements in litigation of this nature.

Expert’s Foundational Documents and Information

24In simplest terms, the Tribunal is of the view that all raw data, documentation or information that might have formed the foundation for the Claimant’s expert report is relevant, necessary for the Respondent to know and respond to the Claimant’s case, and should be produced, save and except as noted below.

25The Tribunal must agree with the Respondent that because the Claimant will be advancing this Expert’s Report is support of its damage claim, the foundational documents and non-privileged information that form the basis for the opinions and calculations in the Expert’s Report are relevant and producible, and there is no consideration of proportionality which would militate against production of all such foundational documents listed in, and relied upon, in the Expert’s Report.

26To this end, counsel for the Claimant has pre-emptively advised the Tribunal that there is no objection to the production of items 2 to 7 in paragraph 4(b) of this Decision to the extent that they have not already been produced.

27This latter qualification, addressed by Mr. Burton in his submissions, with references to portions of the transcripts and productions purportedly delivered already by the Claimant, may apparently give rise to an identification exercise between counsel to glean what remains to be delivered. Mr. Burton has pointed to the volume of documents produced to date, but that does not assist in knowing what has not been produced. Mr. Martin submits that none or little of Items 2 to 7 have been produced because what has been produced does not include the raw data that is the subject matter of these listed documentary items.

28The Tribunal is not in a position, upon the materials in the Motion (including the absence of the necessary Refusals and Undertakings Chart under Rule 37.10(10)) to begin a forensic exercise of what has, or has not, been delivered and it will be incumbent upon counsel, based on the Order, to sort this out. Given the specificity of what must be produced under the Order, and with the disclosure to date, this process of determining what remains to be delivered should not be contentious.

29The Tribunal will, upon the materials and submissions in this Motion, direct the production of items 2 to 7 in paragraph 4(b) (now renumbered in the Order below), which are determined to be producible, to the extent that they have not already been delivered by the Claimant to the Respondent as of the date of this Decision and Order.

30The request for Item 8 of paragraph 4(b) (the timeline and log of relevant events) has been withdrawn by the Respondent in argument, for the reasons indicated, so it is unnecessary to address that request.

31This leaves two remaining items – 1 and 9 from the list.

32The Respondent now excludes from the request under Item 1 (discussions with, and information from, the Claimant’s representatives, provided to the Expert) any written notes or records regarding such discussions with the Claimants, acknowledged to be subject to litigation privilege. It is the Tribunal’s view that whatever “discussions” may have taken place between the Expert, counsel and the Claimant’s representative in preparation for the litigation, is subject to privilege and that any specific factual underpinnings or raw data to the conclusions and opinions in the Expert’s Report are otherwise identified in the Expert’s Report. Beyond that no further order for production should be, or is, warranted.

33With respect to Item 9 (the general reference to “publicly available statistics and information”) counsel for the Respondent confirms that he does not necessarily require production of public documents that can be accessed directly, but instead, wants additional confirmation of exactly what is included in this general reference to such public documents.

34The Tribunal concludes that an order that is not for the production of public documentation but rather, the identification of certain factual bases supporting the opinions and conclusions of the Expert, crosses the fine line to become a form of cross-examination of the expert in advance of the hearing rather than proper pre-hearing productions. If assumptions or presumptions are made by an expert based upon information, data, statistics and documents within the public domain, and not already identified in the report, an exercise to delve into such specifics does amount to cross-examination as submitted by the Claimant.

Other Relief

35Beyond the disputed productions addressed in this Decision, there is no basis to warrant the delivery of a further and better Affidavit of documents

36Regarding the request by the Respondent for an order directing parties to answer questions, the Tribunal observes that the process for questions arising from any productions ordered under this Motion is already provided for in the Procedural Order issued on May 5, 2021. Paragraph 5 of the Procedural Order provides a detailed processed for the examination for discovery in writing arising from the Motion and accordingly, no further order is necessary.

ORDER

37The Motion is allowed in part, as follows:

(a) The request for the Order directing production of the Sale Documents relating to the sale of The Healthy Butcher on April 30, 2019 is denied.

(b) The request for the Order directing production of the Foundational Documents relating to the Report prepared by RSM Consulting Canada LP and dated June 23, 2020 is allowed in part. Subject only to the extent that such documents and information have already been delivered by the Claimant to the Respondent, the Claimant is directed to forthwith deliver all of the following to the Respondent, all of which is producible by the Claimant:

1. Monthly profit and loss statements, by location, for the period from May 2019 to December 2019;
2. Monthly revenues, by location, for the period from October 2011 to October 2013, and May 2019 to December 2019;
3. Management provided listing of employees, by location;
4. Summary of additional costs incurred, as provided by the management of the Claimant;
5. Monthly sales summary for online cookware business (SS); and
6. Online sales export for The Healthy Butcher for the period November 2013 to October 31, 2019.

38All other claims for relief or directions in the Motion are denied.

“David L. Lanthier”

DAVID L. LANTHIER

VICE CHAIR

“Pierre Brunelle”

PIERRE BRUNELLE

MEMBER

Ontario Land Tribunal

Website: olt.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248

The Conservation Review Board, the Environmental Review Tribunal, the Local Planning Appeal Tribunal and the Mining and Lands Tribunal are amalgamated and continued as the Ontario Land Tribunal (“Tribunal”). Any reference to the preceding tribunals or the former Ontario Municipal Board is deemed to be a reference to the Tribunal.