ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 04-CV-266496
DATE: 20121109

B E T W E E N:

Botiuk Plaintiff/Moving Party - and - Danyliw, et al . Defendants/Responding Parties

Hazzard, S. F., for the Plaintiff/Moving Party
Graham, E. , for the Defendants/Responding Parties

HEARD AND DISPOSED: October 31, 2012 with reasons to follow

MASTER J. HABERMAN

REASONS FOR DECISION

[ 1 ] This is a motion by Mr. Botiuk for responses from Andrew Danyliw (“Andrew”) to questions refused at his discovery and to compel Frances Danyliw (“Frances”) to reattend for completion of her examination for discovery.

[ 2 ] The motion arises in the context of the following background. In 1978, Mr. Botiuk commenced proceedings against George Danyliw (“George”) and others as a result of alleged libel. The action was tried in November and December 1990 and Mr. Botiuk was granted judgment against all defendants, including George Danyliw, on June 19, 1991, in the amount of $972,335.73. That was over 20 years ago.

[ 3 ] All defendants appealed and were partially successful. The matter then wended its way up to the Supreme Court of Canada where the original judgment in Botiuk’s favour was restored on September 21, 1995 - more than 15 years ago.

[ 4 ] Since that time, George, who passed away after these events, has paid nothing towards satisfaction of that debt, which now approaches $3 million. Neither have his heirs.

[ 5 ] The current action was commenced in order to facilitate execution on what is now a long-outstanding judgment. The trustee of George’s estate has been included in the action, along with his widow, Frances, their son, Andrew, and various corporations alleged to have been emanations of George.

[ 6 ] The crux of the action is set out in the following paragraphs of the amended statement of claim, as follows:

1. Paragraph 24: Danyliw incorporated or caused the incorporation of some or all of the corporate defendants and at all material times directly or indirectly controlled, managed and or/directed the affairs of Claireville, Z.E.D., 802158, Ostrofort, Urban & Country Transport Limited and Urban & Country Developments Limited.

2. Paragraph 27: From at least the commencement of the Libel Action in September 1978, Danyliw knew he was exposed to judgment for substantial damages. Botiuk states and the fact is that Danyliw organized his affairs in the period after the commencement of the action and fraudulently transferred, conveyed or otherwise dealt with his assets with the intent to defeat, hinder, delay or defraud his creditors and in particular, Botiuk . On paper, Danyliw was insolvent or unable to pay his debts in full or knew that he was. Danyliw entered into a series of sham transactions and trust arrangements with the assistance and participation of the other defendants in this action to hinder, delay and defraud creditors.

3. Paragraph 119: Botiuk pleads that each of Claireville (including the operation with which it amalgamated, Ostrofort), Urban & Country Developments Limited, Urban & Country Transport Limited, 802158 and Z.W.D. Developments Limited (the “Corporate Defendants”) were at all times prior to Danyliw’s death, managed, operated and financed for Danyliw’s personal benefit and that each has been Danyliw’s alter ego and/or nominee.

4. Paragraph 121: Danyliw provided personal guarantees for the funding he secured for some of all of the properties described in the claim taken in the name of some or all of the Corporate Defendants. He was personally involved in all aspects of funding and development on behalf of each property for the Corporate Defendants.

5. Paragraph 122: Danyliw was the sole and exclusive beneficial owner of all shares in Claireville and the other Corporate Defendants and has been paid directly or indirectly through sham transaction described in this Statement of Claim.

[ 7 ] In essence, Mr. Botiuk asserts that George created an elaborate shell game, designed to make it appear that properties owned and income owing to him were, in fact, targeted for coffers belonging to others. The purpose of this exercise was to make it impossible for Mr. Botiuk to execute on his hard-won judgment. Notwithstanding George’s death, the existence of this scheme has continued to stymie Mr. Botiuk’s efforts to track down the money and execute on his judgment.

[ 8 ] On the basis of these allegations, Mr. Botiuk claims that he is entitled to a Declaration that George’s trustee is the beneficial owner of all shares in Claireville and the other corporate defendants (paragraph 123) and that he is entitled to damages for fraud from all of the defendants for their participation in and benefit from the actions set out in the claim (paragraph 124) .

[ 9 ] These paragraphs create a framework for the law suit and establish the parameters of what is and what is not relevant. The assertions are far reaching as regards financial dealings between George and the companies and as between the companies, themselves. As the scheme was allegedly set up by George for his benefit, and now the benefit of the other defendants, the financial status of each remains relevant, despite George’s demise.

[ 10 ] The Danyliw defendants have denied each and every one of these allegations, such that they all remain in issue.

[ 11 ] It is important to note that Mr. Botiuk has produced a document which he says lends credence to his position – a mortgage loan application submitted by George to the Community Trust for $750,000, to be used as the deposit with an offer to purchase 305-311 King Street W. in Toronto. The application was made in George’s name, personally, and the property it pertains to is one in issue in this litigation. The Danyliw defendants now claim it was released in error; however, no motion was brought to seek its return.

[ 12 ] The date of the application was February 1990, well after the commencement of the libel action and only 9 months before trial.

[ 13 ] The financial statement appended to the loan application states on its face that it reflects George’s financial status at that time. It appears that George was extremely well off at this stage of his life. His real estate holdings are listed as being valued at almost $20 million; he claims that his vehicles were worth $35,000 and he states he was receiving a monthly rental income of $42,000, equivalent to over half a million dollars annually. George was clearly a man of substantial means.

[ 14 ] Mr. Botiuk is now trying to understand how a man with such a vast fortune was unable to satisfy any part of the outstanding judgment. As the various pieces of real estate referred to on this financial statement appear to have been transferred to and remain in the hands of the Corporate Defendants, it is not surprising that Mr. Botiuk is concerned. He is now an elderly man and has yet to receive any portion of what he is owed on this judgment.

[ 15 ] To this end, questions designed to assist Mr. Botiuk in obtaining the information he needs to determine if George had a beneficial interest in these companies and in the lands they hold were posed at discoveries but responses were not provided to several of them. Several questions about George’s and the companies’ financial status at various points in time were also refused. Finally, several questions about intercompany transactions were refused. All of these questions were relevant to the matters in issue in this action as defined by the pleadings.

[ 16 ] Further, having already been ordered to produce Frances Danyliw for discoveries, the defendants now refuse to have her return to the table to complete this step.

[ 17 ] All of these issues were resolved when the matter came before me on October 31, 2012, with brief reasons to follow. In view of the history of this motion, however, further background is necessary to put my order in context.

HOW WE GOT HERE

[ 18 ] This action was commenced in April 2004 and was automatically assigned to Case Management at that time, as this was the standard approach in Toronto until January 2005. I first dealt with the action in February 2005 when a motion scheduled before me was adjourned. From thereon in, I was seized of the action, as per Case Management protocol in place at that time.

[ 19 ] Matters did not appear to be proceeding quickly and in March 2007, the defendants changed counsel. Later that year, they amended their statement of defence.

[ 20 ] From time to time, timetables were established for this action, but each successive timetable culminated in deadlines being pushed further and further out. First, defense counsel was ill and Mr. Botiuk accommodated him. Then, Mr. Botiuk’s counsel became ill. All of this is part of life and, as human beings, we make accommodation for one another. However, these events have had a very unfortunate impact on an already old action.

[ 21 ] Mr. Botiuk’s motion dealing with discovery-related issues was first raised with me in August 2010 but the motion failed to materialize. At that time, the parties were already locked in a debate over whether Frances should be required to attend for oral examinations for discovery. That issue, first raised by the Danyliws in 2007, was finally raised at a case conference on January 5, 2011, at which time Frances’ counsel advised he would move to seek an order allowing for the examination of Frances in writing.

[ 22 ] During the same case conference, I was advised again that Mr. Botiuk would be moving on Andrew’s refusals from discoveries conducted on various dates in 2007, 2008 and 2009. It was ordered that that motion should proceed and be heard by the end of January 2012, to leave time for issues that had to be resolved before hand.

Examination of Frances Danyliw

[ 23 ] Early in 2011, the issue of whether Frances could be examined for discovery by way of written questions finally came before me formally by way of motion. After reviewing the materials filed and hearing the submissions of counsel, I decided, on March 16, 2011, that she was bound to attend in person. As I stated at that time:

I am not satisfied that Frances is unable to provide her evidence by way of oral discovery or that in doing so, she would likely exacerbate any of her various conditions other than in the short term. Both of her physicians note that they had not seen her for about two years and each appears to have seen her recently in large part for the purpose of addressing the issues raised by this motion, rather than health-related concerns. Each addresses the issue more as an advocate, rather than an independent witness who clearly understands the process. I do not find either expert or the totality of their evidence to amount to the kind of persuasive medical evidence that Lax J. speaks of.

[ 24 ] As a result, I refused to exempt Frances from having to attend at her examination and dismissed the motion. I, did, however, put safeguards in place to facilitate Frances’ ability to give her evidence and to minimize the discomfort to her. One of the terms built into the order was that Frances should be permitted to take frequent breaks during her examination. Presumably, those breaks resulted in the inability to complete her examination, hence the current motion.

[ 25 ] Another term included in the order was to allow Frances to be examined where she was most comfortable, “to the point of (the examination) taking place in her own home.” I will return to this.

History of this motion

[ 26 ] Having ordered the motion to be completed by the end of January 2011, I found it on my motions list on February 2, 2012. At that time, there was no responding position on the refusals chart, as required by the Rules and I was not prepared to hear a motion of this length absent a completed chart. This was the Danyliws’ first of several breaches (of the Rules, in this instance).

[ 27 ] Accordingly, I adjourned the motion at that time, ordering the respondents to complete their portion of the chart before we next spoke and to provide it to the Court.

[ 28 ] The motion was put over to a telephone case conference, convened on March 19, 2012, in order to reschedule it. It was important that I have the full chart properly completed at that time to enable me to assess what actually remained in issue and how much time would be required for it. This was made clear to the parties at the time I put over scheduling of the motion.

[ 29 ] Both Mr. Curry and Ms. Graham participated in this case conference on behalf of the Danyliw defendants. Mr. Curry advised that he had not completed their portion of the chart, nor did he have a “good explanation” for not having done so in the face of my previous order. They were given the benefit of the doubt and an extension until March 23, 2012 to complete the charts and yet another telephone case conference was scheduled, this time, for April 3, 2012. This was the second of the unexplained Danyliw breaches – this time, of a court order.

[ 30 ] On April 3, 2012, I was advised that the charts were all completed, that issues with the trustees had been almost fully resolved and that, as a result, the motion would require only half a day, rather than the full day thought necessary when we had spoken earlier.

[ 31 ] In the interim, Frances was to have attended to for completion of her examination but she had failed to do so. Nothing was said by her counsel about a further motion on their part to have her exempted from having to attend nor did they seek an extension of the deadline for completion of her examination. This constitutes the Danyliws’ third breach, again of my order.

[ 32 ] June 5, 2012 was the date agreed to by all parties for the return of the motion. Both sides agreed that new materials were in order, to replace what had been filed. It was ordered at that time was follows:

In view of the fact that the motion has been considerably pared down, counsel will file new brief materials, with refusals and undertakings charts that are current, 7 clear days before the new return date. I am now returning the box of materials to filing as I am told none of it should be required for the hearing

[ 33 ] On May 25, 2012, Mr. Botiuk’s counsel filed a new motion record. The Danyliw defendants filed nothing.

[ 34 ] On May 31, 2012, the motion was confirmed as proceeding. As there were no materials at all from the Danyliws, I asked my staff to contact Mr. Curry on June 1. In response, Mr. Curry wrote to say that he would be out of the country on the date scheduled for the motion, adding:

I do not believe we were consulted about the date of the motion and my trip has been planned for some time.

[ 35 ] In view of the fact that both Mr. Curry and his junior, Ms. Graham, had participated in the conference call at which time the new date was selected and agreed to by all counsel, Mr. Curry’s assertion was both surprising and completely untenable.

[ 36 ] Further, as we only set the motion date on April 3, 2012, I was left to ponder why Mr. Curry had agreed to the date, despite having planned his trip “for some time”.

[ 37 ] Mr. Curry advised further that Ms. Graham would attend the motion in his place and that she would file materials the day before the return date.

[ 38 ] This proposal completely disregarded my order requiring that all materials be submitted within 7 clear days of the new date. Further, neither this proposal nor Mr. Curry’s failure to complete his portion of the chart before the first return of the motion and again in March “for no good reason” has ever been explained. This was the fourth Danyliw breach.

[ 39 ] In the end, the motion did not proceed in June as Mr. Hazard took ill and was unable to contact the court to seek an adjournment. Ms. Graham, however, did attend and was advised at that time that the materials which she sought to hand up would not be accepted as they were not filed in accordance with the timelines I had set. In that we had little else to discuss that day in view of Mr. Hazzard’s absence, it would be surprising if this is something she did not recall.

[ 40 ] In the interim, though I had been told by the parties earlier that all charts were now complete, Frances’ refusal chart still failed to reflect her position.

[ 41 ] Since that time, I have had no further requests from the Danyliws for leave to file materials.

[ 42 ] A further telephone case conference was convened for July 3, 2012 to, again, schedule this motion. It was agreed and ordered that Frances’ chart would to be completed by July 31, 2012 and a new return date for the motion was scheduled for August 28, 2012. In my order, I included the following:

In view of paragraph 2 of my April 3, 2012 order the defendants will file no further material.

[ 43 ] Notwithstanding that very clear order, the Danyliws proceeded to file a motion record, factum and book of authorities, once again in breach of one of my orders. No case conference was sought before hand to seek leave, though it was clear by my discussion with Ms. Graham on the previous return date and in my order of July 3, 2012 that no further materials would be accepted from the Danyliws at this late date.

[ 44 ] Mr. Hazzard was absent again on August 28, 2012, again due to sudden illness, so the motion again did not proceed. It was put over to October 31, 2012 and, thankfully, finally proceeded on that date.

[ 45 ] Prior to the return date, Mr. Hazzard filed yet another set of materials, without having asked for leave to do so and without having alerted me. As I had already read and annotated the previous set of materials in preparation for the two earlier aborted motions dates, I advised we would argue the motion from the materials previously filed.

Attempt to revisit oral examination of Frances

[ 46 ] The Danyliw defendants filed their own motion on August 1, 2012, notwithstanding my order of July 3, 2012 prohibiting them from filing further materials. This motion was never booked, though it was being added to a special appointment that could only be booked directly with me. There was no correspondence from their counsel, seeking a case conference to discuss and book this motion. There was no correspondence from them alerting me to this plan, which was not raised during the course of the various case conferences convened to schedule and then reschedule this motion. The materials were simply filed and I came upon them when I received the materials to prepare for the hearing.

[ 47 ] The purpose of the Daniliw motion was, once again, to have Frances complete her examination in writing. As this was an issue I had already dealt with, and had written extensive reasons about why I did not allow it in first instance, it ought to have been clear that very compelling evidence was required to meet the threshold.

[ 48 ] Ms. Graham was advised that this was not proper responding material and in any event, could not be filed as responding material in view of my July 3 order. She was also told that it was not properly before me as a cross-motion, as it had never been scheduled. At no time did these defendants ask for a case conference to add this motion or to seek leave to file materials despite my previous order. They have conducted themselves repeatedly during the life of these motions as though they were not required to abide by orders or the Rules of this Court. None of this has been explained, so I am left to draw my own conclusions.

[ 49 ] Having refused to hear the motion to exempt Frances from having to attend oral examinations for discovery, I did review the new materials filed to ensure that I did not miss anything.

[ 50 ] The only new report of any substance is that of Frances’ family physician, Dr. Stefanovich. He speaks, in his report of May 30, 2012 about Frances’ arterial fibrillation, concluding that:

For the foreseeable future I do not think it wise for her to venture far from her home . Unfortunately, the morphine will further cloud her mental capacity and it is my professional opinion that testimony that she may need to give in the next few months could be compromised by her physical status and the necessary mediations.

[ 51 ] The doctor then goes on to say that Frances should not be made available for a hearing appearance for the foreseeable future based on her cardiac and gallbladder infection status.

[ 52 ] What has the doctor actually said here? He begins by saying it would not be wise for Frances to venture far from her home . That is a non-issue, however, as my previous order made it clear that Frances could be examined where she was most comfortable, including in her own home.

[ 53 ] The doctor then suggests that Frances’ testimony could be compromised by her physical health and medications if given in the next few months . The report was written in May 2012 and it is now November 2012 – in my view, we are passed the next few months .

[ 54 ] Dr. Stefanovich then changes “the next few months” to “the foreseeable future ”, again playing the role of advocate, as I found was the case in the earlier motion to exempt Frances from giving oral discovery evidence. Once again, the doctor’s evidence is somewhat vague and it falls short of addressing the test.

[ 55 ] Further, as and when this matter comes to trial, I expect Frances will be prepared to testify. Throughout the almost two years since this issue has formally reared its head, there has been no undertaking from her not to testify at trial.

[ 56 ] Based on my review of the medical report filed to support the renewed motion to exempt Frances from oral discovery, I am satisfied that there was no new evidence before the court that would have changed my previous ruling.

ORDER

A. Regarding Andrew’s refusals

[ 57 ] All questions ordered answered shall be answered as the information sought is relevant to the matters in issue between the parties, and all shall be answered within 30 days .

[ 58 ] If the response to any of the questions ordered answered refers to information already provided, this shall be indicated, along with the numbers of the questions where it was answered.

1. All questions in item 1 (questions 143; 144-147; 1222; 1451) shall be answered. The financial statements of each company are part of the puzzle of what became of George’s fortune, still intact, apparently, in February 1990 according to his loan application. Knowing where the statements are generally kept is also important, to the extent that it has been asserted that some of these statements cannot now be located. Obtaining copies from the Danyliw accountant is in order if Andrew, himself, does not have access to these documents. Copies of all request letters to the accountant shall be provided to Mr. Botiuk within the 30 day time frame, as well, to facilitate a Rule 30.10 motion by Mr. Botiuk if this is the route he chooses to pursue;

2. All questions in item 2 (871; 873 [both parts]; 2249 (if not apparent from the face of the financial statements) 2253-2256; 2272; 2431; 2439; 2548; 3096) shall be answered. This is an action about execution on a judgment already obtained, the focus being on where the monies legally owning to Mr. Botiuk went. In order to follow the money, Mr. Botiuk has to begin where it does, even if it precedes the first judgment, and track it beyond George’s death as it seems his assets were transferred to these corporate entities during his lifetime and remained there. This includes allowing Mr. Botiuk to examine transfers between all of these related companies, which he alleges are emanations of George. As this is disputed, it remains in issue;

3. All questions in item 3 (355; 356-358; 497; 532-546; 602; 618; 765; 779; 791; 794; 813; 818; 914; 915; 918; 922; 1077; 1140; 2443; 2497 -2502; 2607; 2609-2610; 2616) shall be answered. The “financial statement” appended to the loan application demonstrates that George had a sizable income and considerable assets in February 1990, yet only a few months later, he was apparently judgment-proof. Getting a sense of how he represented his holdings throughout the time was involved in the original litigation, as well as after the judgment was obtained, is clearly relevant as it will allow Mr. Botiuk to see when the money left George’s hands and where it went. If Andrew does not have access to these documents, the necessary inquiries must be made and copied to Mr. Botiuk within 30 days, again to facilitate a possible Rule 30.10 motion. With respect to question 1140 , as these documents were not produced for the court, I am unable to substantiate what appears to be reference by tab numbers (to what?) to the materials having already been provided. That question shall therefore be answered;

4. All questions in item 4 (1769; 1884; 1885; 1889; 1901;1931; 1972; 1981; 2086; 2087; 2174; 4420; 4521-4524; 4656; 4689) shall be answered. Again, these questions are geared to following the money or establishing value of assets based on taxes paid or other related events. Counsel for the Danyliws advises that they have answered question 4521-4524 – the redacted amount on the cheque is $9,004.50. This shall form part of the discovery record.

5. All questions in item 5 (2578; 2579) shall be answered. With respect to question 2578, Danyliws’ counsel advises that Andrew does not have any of the correspondence. He shall provide an affidavit to that effect, along with a request letter for same from the trustee within 30 days.

B. Regarding Frances’ reattandence

[ 59 ] Frances had no responding materials properly before me for this motion. Nonetheless, I did review what she had filed well beyond the agreed deadline and continue to find her evidence wanting.

[ 60 ] It is disturbing that, after having dragged their feet with respect to this examination, Frances is now trying to gain an advantage caused by her own delay. As I note in my earlier decision dealing with this issue, the issue of whether Frances could be examined orally was first raised by her counsel in January 2007 – almost 6 years ago. She was only 75 at that time.

[ 61 ] Despite a timetable that required completion of her discovery by October 31, 2007, Frances neither attended nor moved to be exempted from having to attend. It was not until March 2009 that Frances’ counsel indicated that she suffered from high blood pressure, a condition that, in and of itself, that is meaningless without considerably more information in terms of how attending an oral examination could be damaging to Frances’ health. Still, she brought no motion and filed no evidence.

[ 62 ] By allowing time to pass and taking no action, Frances continued to age, her various ailments became more serious and her memory apparently became less reliable. These problems are the result of her own inaction – she ought to have been examined in 2007 as agreed.

[ 63 ] As I noted with detailed reasons in my earlier decision, in which I dealt with this issue head-on, despite her various ills, Frances had not met the test to permit deviation from the norm. Her new evidence adds little of relevance to the picture and, in any event, ought not to have been filed. Frances is therefore still unable to meet the requisite test more fully discussed in the earlier decision.

[ 64 ] Accordingly, Frances shall attend for the completion of her examination on a date or dates before the end of December 2012, to have been arranged within 7 days of the hearing of this motion. The terms I set out last day continue to apply, such that the examination can take place at Frances’ home and for periods of time that she can tolerate.

[ 65 ] The evidence most recently (and improperly) filed by Frances suggests that there is cause for concern regarding the quality of the evidence that she is expected to give. Of course, as is the case with all witnesses who give evidence at examinations for discovery, Frances is subject to an ongoing obligation to ensure that the information she has provided is accurate. If and when she realizes that a response she provided did not meet that standard or she recalls more than what came to her during the event, she is obliged to correct or ameliorate the record. This will ensure that her evidence at trial is consistent with her discovery evidence.

C. Costs

[ 66 ] The costs of the motion are to the moving party, who was successful in each instance of demonstrating that the defendants had taken a far too narrow view of relevance in the context of this action and its history. Costs are fixed at $9,200.00 (not disputed by defence counsel) and payable within 30 days.

D. Extension of set down date

[ 67 ] This action shall be set down for trial no later than the end of February 2013 , failing which it will be dismissed with costs and without further notice.

Master Haberman

Released: November 9, 2012

COURT FILE NO.: 04-CV-266496
DATE: 20121109

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N:

Botiuk Plaintiff/Moving Party - and - Danyliw, et al . Defendants/Responding Parties

REASONS FOR DECISION Master J. Haberman

Released: November 9, 2012