SUPERIOR COURT OF JUSTICE - ONTARIO
COMMERCIAL LIST
COURT FILE NO.: 99-CL-3473
DATE: 20120628
B E T W E E N:
NOVA GROWTH CORP. and
WIN NORTH GAMING CORPORATION
Plaintiffs
- and –
ANDRZEJ ROMAN KEPINSKI, 1021862 ONTARIO LTD.,
RICHARD J.G. BOXER, 867214 ONTARIO LIMITED,
BUCKINGHAM CAPITAL CORPORATION,
FALLS ENTERTAINMENT CORPORATION, and
A. KEPINSKI & ASSOCIATES
Defendants
A N D B E T W E E N:
ANDRZEJ ROMAN KEPINSKI, 1021862 ONTARIO LTD.,
and A. KEPINSKI & ASSOCIATES
Plaintiffs by Counterclaim
- and -
NOVA GROWTH CORP., WIN NORTH GAMING CORPORATION,
BRIAN HAMM, WILLIAM HAMM, MARCO DURANTE,
and PETER TASSIOPOULOS
Defendants by Counterclaim
A N D B E T W E E N:
RICHARD J.G. BOXER, 867214 ONTARIO LIMITED,
BUCKINGHAM CAPITAL CORPORATION
and FALLS ENTERTAINMENT CORPORATION
Plaintiffs by Counterclaim
- and -
BRIAN HAMM, WILLIAM HAMM, MARCO DURANTE,
PETER TASSIOPOULOS, NOVA GROWTH CORP.
and WIN NORTH GAMING CORPORATION
Defendants by Counterclaim
BEFORE: Justice Newbould
COUNSEL:
S. Dale Denis, for the plaintiffs
Thomas J. Dunne, Q.C. and Sirpal Randhawa, for the defendants Andrzej Roman Kepinski, 1021862 Ontario Ltd. and A. Kepinski & Associates
Ronald G. Slaght, Q.C., and Ren R. Bucholz, for the defendants Richard J. G. Boxer, 867214 Ontario Limited, Buckingham Capital Corporation and Falls Entertainment Corporation
DATE HEARD: June 27, 2012
E N D O R S E M E N T
[ 1 ] This case has a long history and it appears that it will continue for some time. The plaintiffs claim to be entitled to a 50% interest in a Niagara Falls Casino project pursuant to an oral agreement said to have been made in August 1996.
[ 2 ] The plaintiffs intend to assert, not as a separate cause of action, that one or more of the defendants engaged in spoliation of evidence. It is said that the evidence of this came to light many years ago when documents were produced by the defendants which, mistakenly, contained privileged material of discussions between the defendants and their solicitors.
[ 3 ] Central to the issues heard by me is a decision of Farley J. dated December 31, 2001. The evidence of the alleged spoliation was before Farley J. who held that the privileged material had to be returned to the defendants and that the plaintiffs’ then solicitors who had reviewed the privileged material should be removed. There was evidence before Farley J. of allegations of at least one officer of the plaintiffs that the solicitors for the defendants, including Mr. Boswell, Mr. Dunne and Mr. Slaght, participated in the destruction of documents, the wiping of computer hard drives and the withholding of producible evidence.
[ 4 ] The trial of this action was scheduled to commence on February 27, 2012, said to be for a duration of up to six months. Prior to the trial, Justice Archibald, the team leader for the long civil trials in Toronto, held a number of pre-trial conferences with counsel. In one conference, Justice Archibald raised a concern that a mistrial could result if the plaintiffs’ case in spoliation revealed that defence counsel were in a conflict of interest to the extent that they may feel that their own conduct was in question. Of obvious concern to him was be the possibility of the trial judge declaring a mistrial after two or three months of evidence if defence counsel decided that they were required to testify because of allegations regarding their conduct. Issues were raised as well by the defence that what the plaintiffs sought to do at the trial should be prevented because of issue estoppel and like equitable defences. The defendants sought an early designation of a trial judge so that these issues could be dealt with at the outset. A trial judge was not designated. Rather, Justice Archibald made two cryptic endorsements stating:
The parties are granted leave, on consent, to bring motions concerning issue estoppel, issues of conflict of interest and related issues.
and
Both motions to be placed before the Motions Judge – issue estoppel and conflict of interest. It is up to the assigned Commercial Motions Judge whether both motions are joined and heard at the same time or separately.
[ 5 ] The plaintiffs request the following relief regarding the conflict of interest issue:
A determination as to whether Defence counsel (Messrs. Slaght, Dunne and Boswell – hereafter “Defence Counsel”) intend to, must, or may wish to testify at trial as witnesses for the Defendants with respect to the Plaintiffs’ case in spoliation, and
(a) if so, advice and directions as to the appropriate remedy to best ensure that a mistrial will not occur; or
(b) if not, a determination as to whether Defence Counsel will, at trial, nevertheless be in a position of a real or apparent “conflict of interest” of sufficient gravity that a mistrial could result, and if so, advice and directions as to the appropriate remedy to ensure that a mistrial will not occur;
[ 6 ] The defendants request an order that the plaintiffs be estopped at the trial from leading or attempting to lead evidence heard by Farley J.:
"for the purposes of raising or advancing any inference or argument, directly or indirectly, that the Defendants, or any one of them, or their counsel concealed evidence, intentionally or improperly withheld evidence, or acted fraudulently, unethically, or otherwise improperly in discharging the defendants’ disclosure obligations since the commencement of these proceedings on March 13, 1998, including with respect to the Order made by the Honourable Mr. Justice Blair, dated September 20, 1999;"
"for the purposes of raising or advancing any inference or argument that the Defendants, or any one of them, or their counsel have made or sworn statements since the commencement of these proceedings on March 13, 1998, that were knowingly or materially false, misleading or incomplete and were made for the purposes of obstructing the course of justice;"
"for the purposes of raising or advancing any inference or argument that the Defendants, or any one of them, or their counsel intentionally destroyed evidence or obstructed justice since the commencement of these proceedings on March 13, 1998;"
[ 7 ] I expressed to counsel at the outset of the motions my concern that as I am not the trial judge, it is difficult to think that I have the ability or should make contested rulings binding on the trial judge.
[ 8 ] With respect to the motion by the defendants that the plaintiffs are estopped by reasons of issue estoppel from leading evidence or making argument that the defendants themselves, as opposed to their solicitors, acted improperly in destroying or suppressing evidence, I think it far preferable that this be dealt with by the trial judge who will have before him or her a proper factual record of the trial evidence and know precisely what evidence that the plaintiffs seek to introduce.
[ 9 ] In light of the position taken by the plaintiffs in their affidavit material and factum, and as further clarified during the argument, the essential pre-trial problem regarding the alleged conflict of defence counsel can be dealt with without resort to making any decision at this stage regarding issue estoppel.
[ 10 ] In his factum, Mr. Denis takes the position for the plaintiffs that were it not for Justice Archibald’s direction, the plaintiffs would not have brought any motion with respect to conflict of interest. It is stated in the factum that the plaintiffs make no allegations against defence counsel, and will not seek any findings against defence counsel, regarding spoliation. It is stated that the plaintiffs make claims regarding spoliation and knowingly failing to produce relevant documents only against defence counsels’ clients.
[ 11 ] In paragraph 5 of the affidavit of Brian Hamm sworn June 1, 2012 filed on behalf of the plaintiffs, Mr. Hamm states the following:
The Plaintiffs’ case in spoliation is against the Defendants, Messrs. Kepinski and Boxer, and the Defendants alone. The Plaintiffs do not and shall not make any allegations against Defendants’ trial counsel. The Plaintiffs have no need or intention to call the Defendants’ current counsel (Messrs. Slaght, Dunne, Boswell) as witnesses. To the best of my knowledge, information, and belief, there is nothing which would indicate or suggest that Defendants’ current counsel have or could have any relevant evidence to offer, either in support or defence of, the Plaintiffs’ case in spoliation against the Defendants, which cannot be offered at trial by the Defendants themselves.
[ 12 ] In light of the position now taken by the plaintiffs, which for the purposes of the motions before me I take as being admissions binding on the plaintiffs, there is really little or no concern that allegations will be made against Messrs. Slaght, Dunne and Boswell that would require them to consider becoming witnesses to defend themselves or their clients at trial.
[ 13 ] There are documents, such as an affidavit of Mr. Boswell, which the plaintiffs claim fails to disclose relevant documents or contains statements that are incorrect, or “false”. For example, paragraph (1)(d) of the notice of motion of the plaintiffs contains an allegation that "the Defendants, Messrs. Kepinski and Boxer, knew that the affidavit sworn September 15, 1999 by counsel for the Defendants (Mr. Boswell) in support of the Defendants’ motion for the Bifurcation Order granted by the Honourable Mr. Justice Blair on September 20, 1999, contained false statements." Counsel for the defendants expressed concern that such an allegation left open the possibility of it being claimed by the plaintiffs that as the affidavit of Mr. Boswell was allegedly "false", Mr. Boswell knew that it was untrue. In argument, Mr. Denis made clear that it was not being alleged that Mr. Boswell knew that what was in his affidavit was untrue, but only that his clients new that it was untrue.
[ 14 ] Counsel for the defendants acknowledged in argument that it would be open at the trial for counsel for the plaintiffs to put to the defendants on cross-examination letters, affidavits or other documents written by defence counsel and assert that the defendants knew that such documents were incomplete or untrue, so long as it was not asserted that the particular lawyer who wrote the document in question knew that it was incomplete or untrue, i.e. knew that it was false. In that regard, the positions of both counsel for the plaintiffs and for the defence are ad item. This position of counsel for the defendants is subject to their contention that because of issues estoppel arising from the decision of Farley J., there is no basis to be claiming any spoliation after the commencement of this action. That is an issue that will have to be dealt with by the trial judge.
[ 15 ] In my view the appropriate order on the motions before me is to make a declaration that gives effect to the statement of Mr. Hamm in paragraph 5 of his affidavit as follows:
(a) The plaintiffs shall not at the trial make any allegation, lead any evidence or seek to have drawn any inference that defence counsel engaged in any acts of spoliation.
(b) The plaintiffs shall not at the trial make any allegation, lead any evidence or seek to have drawn any inference that defence counsel concealed evidence, intentionally or improperly withheld evidence, or acted fraudulently, unethically, or otherwise improperly in discharging the defendants’ disclosure obligations since the commencement of these proceedings on March 13, 1998, including with respect to the order of Blair J. dated September 20, 1999.
(c) The plaintiffs shall not at the trial make any allegation, lead any evidence or seek to have drawn any inference that defence counsel have made or sworn statements since the commencement of these proceedings on March 13, 1998, that were knowingly or materially false, misleading or incomplete and were made for the purposes of obstructing the course of justice.
(d) The plaintiffs shall not at the trial make any allegation, lead any evidence or seek to have drawn any inference that defence counsel intentionally destroyed evidence or obstructed justice since the commencement of these proceedings on March 13, 1998.
[ 16 ] The balance of the motions before me are dismissed but without prejudice to the parties raising any issue with the trial judge contained in the balance of the motions. I make no order as to costs.
Newbould J.
DATE: June 28, 2012