SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: Robert Benson Family Holdings Inc. and John Hopkins Family Holdings Inc., Applicants

AND:

Matlar Holdings Inc. and Doctors Choice Pharmacy Inc., Respondents

AND BETWEEN:

Nancy Simonot and Matlar Holdings Inc., Counter-Applicants

AND:

Robert Bensen, Dr. John Hopkins, Robert Bensen Family Holdings Inc., John Hopkins Family Holdings Inc., Pharmaca Health Inc. and Doctors Choice Pharmacy Inc., Respondents to Counter-Application

BEFORE: D. M. Brown J.

COUNSEL: H. M. Rosenberg, for the Applicants

P. Henein and J. Martin, for the Respondents

HEARD: October 10, 2012

REASONS FOR DECISION

I. Refusals motions and Commercial List judges

[ 1 ] When this refusals/production motion first came before me on September 24, 2012, I spent the better part of an hour questioning counsel to ascertain what this case really was about. Boiled down to its essence, there are two main issues: (i) how much will the applicants have to pay Matlar Holdings, Ms. Simonot’s company, to purchase its shares in Doctors Choice Pharmacy Inc.? and, (ii) is Ms. Simonot entitled to termination pay? Counsel advised that valuators had not yet been retained, but would be soon and, as well, the parties disagreed on the appropriate methodology for valuing the shares.

[ 2 ] With that information gained, the refusals motion was put over to today. At today’s motion counsel for Matlar began his submissions. As is my habit, I started to ask questions. After about 30 minutes I made the following endorsement on the record:

During the first 30 minutes of this motion I outlined my views, in a summary fashion, of the relevant issues and how documents relate to those issues. However, I did so orally, in a summary manner, without allowing counsel full time to argue his points. I think the best approach is to refer the matter to a Master. Parties to contact Master Glustein for an appointment.

[ 3 ] I did make some additional comments at the time without including them in the endorsement and, on reflection, I thought it best to issue a supplementary endorsement which captured them.

[ 4 ] As I mentioned at the hearing, in my view parties should not expect judges on the Commercial List to listen to extensive refusals or production motions. Such motions lie within the jurisdiction of Masters in the Toronto Region. Judges should spend their time dealing with matters which lie only within their jurisdiction, not those with which Masters can deal. Sometimes, as in this case, Commercial List judges are prepared to hear short, focused refusals/productions arguments, but they do so in the expectation that the issues are compact and that counsel will take the guidance they give and apply it to the details of the case.

[ 5 ] During today’s hearing I gave what I thought was considerable guidance to the parties on two keys points. First, to the extent that both parties are alleging that the other “scooped” business from Doctors Choice Pharmacy, both parties are obliged to produce documents and answer questions which identify the allegedly scooped business. In this case the parties’ evidence suggested that they regarded individual physicians as the “source” of Doctors Choice’s business so, on that basis, each party would have to produce information concerning business their various companies – e.g. Pharmaca Health, NKS Apothecary, etc. – garnered from those Doctor Choice physicians. Second, since the valuation of the shares of Doctors Choice is a key issue in this proceeding, to the extent that the funds of Doctors Choice were used to pay for work which benefited other companies – e.g. paying the payroll expenses of those who actually worked for other companies, or providing space rent-free – then documents relating to such use of Doctors Choice funds would have to be produced. I went one step further to state that if information in the possession of Doctors Choice did not reveal the purpose of an expenditure, then given the relationship between Doctors Choice and other companies such as Pharmaca (which is a named party), it would be reasonable to require Pharmaca to produce documents to explain funds it received from Doctors Choice.

[ 6 ] I thought the guidance given during the course of questioning respondents’ counsel would have provided the parties with a framework within which to resolve their outstanding production disputes. It did not. That is fine. If the parties wish to argue the refusals/production issue in greater detail, Masters are available to hear such an argument, and I so directed. But, I do not think that parties should reasonably expect that judges of the Commercial List have the time to provide much more than a “quick and dirty” view on refusals and productions issues. If such an approach is not satisfactory to a party (and, by rights, a party is entitled to a full hearing), then the party should have recourse to our Masters.

[ 7 ] Let me close this part of my Reasons by acknowledging that some of the difficulties which arose on this refusals/production motion likely were caused by my failure to express clearly my expectations about how this motion was to proceed. In my September 5, 2012, 9:30 endorsement I had simply noted: “1 hour refusals motion – about 3 groups”. When I received the two factums for the motion and saw that they totaled 56 pages, I emailed counsel on September 21 querying the length of the factums and stating:

If I determine that you really have put before the court materials for a 3 hour motion, I will simply refer you to a Master. A lengthy motion was not the intention of my endorsement. I think I informed you that Monday is a non-sit for me, so scheduling any motion was an accommodation to the parties to move this matter along. I have no intention of spending more than one hour hearing the motion, and I do not intend to spend preparation time necessary for a three hour motion.

[ 8 ] As mentioned, in the result I spent 30 minutes at the September 24 hearing simply trying to drill down to figure out what this dispute really was about. I think that was time well spent for the case management of this proceeding. But it then became clear today that the parties really intended to argue a lengthy refusals motion and, for the reasons I set out above, in my respectful view that is not the job of judges on the Commercial List.

[ 9 ] So, if parties are willing to make short “pitches” to Commercial List judges on very limited groups of key refusals on the understanding that they will receive a “quick and dirty” view from the judge so that the proceeding can move ahead, then we will accommodate the parties. If, however, the parties wish to argue “full-blown” refusals motions, then they should seek directions at a 9:30 appointment for a referral to a Master.

II. Proposed trial plan

[ 10 ] I had asked counsel at the last attendance to file a proposed timetable for further pre-trial steps in this proceeding. They did so in counsel’s letter of October 9, 2012, and I thank them for their efforts. The proposed plan looks reasonable, but I cannot approve it until the parties resolve their refusals/production issues.

[ 11 ] If, following today’s hearing, the parties plan to argue a full refusals motion before a Master, then upon the disposition of that motion I would ask them to attend on a 9:30 appointment before me to finalize a trial plan. If the parties are able to resolve the refusals/production issues without resort to a motion before the Master, they are free to re-attend before me on a 9:30 appointment for approval of the trial plan.

_______ (original signed by) ____________

D. M. Brown J.

Date : October 10, 2012