SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 10-17240
DATE: 2013/03/14

RE: CATEGORY 5 IMAGING LTD.

AND:

ANGELO ANTONIADIS and CLARKE PRODUCTIONS (1982) LIMITED

BEFORE: The Honourable Mr. Justice D.J. Taliano

COUNSEL: Philip Kennedy, for the Plaintiff

Michael Emery, for the Defendant, Clarke Productions (1982) Limited

ENDORSEMENT

TALIANO, J.

[1] This is a motion by the plaintiff for production of financial materials in the possession of the defendant Clarke Productions (“CP”) including financial statements, income tax returns and records pertaining to the digital side of this defendant’s business. Full particulars of the demanded productions are detailed in paragraph 11 of the plaintiff’s factum.

[2] The motion is resisted by CP on the grounds that detailed financial information has already been produced and that further production is unnecessary and irrelevant.

[3] The plaintiff corporation is in the business of providing printing and graphic imagining services, providing its customers with screen printing, lithographic and digital processes.

[4] The defendant, Antoniadis, was at one time, the General Manager and a 25 % shareholder of the plaintiff before his employment was terminated by reason of alleged improper conduct on July 3, 2009.

[5] In consideration of the plaintiff agreeing to redeem his shares in the plaintiff corporation, Antoniadis entered into a written, non-competition, non disclosure and non solicitation agreement with the plaintiff which was executed on December 9, 2009 and by its terms, expired on September 9, 2010.

[6] Following his termination and while still a shareholder of the plaintiff, Antoniadis entered into an arrangement with CP, a competitor of the plaintiff who was servicing the same geographical market, to establish and manage its in-house digital printing operations, a role which he continues to perform to-day. Up until Antoniadis’ involvement, the digital printing services provided by CP to its customers were sub-contracted out to other competitors including the plaintiff.

[7] It is alleged by the plaintiff that in the lead-up to and following the commencement of his employment with CP, Antoniadis provided advice to CP as to which digital printing press it should acquire and the decision by CP was to acquire the identical press used by the plaintiff. In addition, it is alleged by the plaintiff that one of its key employees was induced to leave the employment of the plaintiff and to accept employment with CP. Further, it is alleged that specifically-named customers of the plaintiff were solicited by the defendants to become customers of CP.

[8] It is also alleged that CP was aware of the contractual commitments Antoniadis had made to the plaintiff following the termination of his employment and that notwithstanding its knowledge, CP induced Antoniadis to accept its offer of employment. Thereafter, CP both encouraged and benefited by Antoniadis’ business activities allegedly in violation of the terms of the non- competition agreement.

[9] As a result of the defendants’ alleged behaviour, the plaintiff alleges that it has incurred damages and CP has been correspondingly and unjustly enriched at the plaintiff’s expense.

[10] It was argued, with ample supporting authority, that the plaintiff may choose to have its damages measured either as the profits wrongfully acquired by CP which the court may require CP to disgorge or alternatively, by the profits the plaintiff has lost by reason of the alleged misconduct. At this stage, the plaintiff is entitled to pursue both remedies and is not required to elect which remedy it will select.

[11] I have concluded that the plaintiff is entitled to the productions which it has sought and that the objections to their production are not valid.

[12] It is true that the productions sought by the plaintiff exceed the temporal limits of the non competition agreement. However, in order to properly determine the plaintiff’s alleged loss, the ambit of the production period cannot be strictly confined to the contract period. A proper analysis of the plaintiff’s alleged losses and CP’s alleged gains, may require a broader production period. Production is sought for a two year period both before and after the date of the non completion agreement which under all of the circumstances is a reasonable period for the necessary assessment.

[13] Nor is it valid to say, as it was argued, that the request for production of CP’s income tax returns is unnecessary since the “money pages” of its financial statements have already been produced. I disagree because the issue at trial will be to what extent CP has profited at the plaintiff’s expense and the determination of CP’s profits will necessarily involve an analysis of its tax liability as disclosed by its tax returns. They are relevant and therefore producible.

[14] Although submissions made by counsel for CP did allude to the execution of a Release of Antoniadis by the plaintiff, the Statement of Defence does not plead this document. Accordingly, it is inappropriate to consider the document for the purposes of this motion, particularly in the context of this motion which seeks relief only as against CP.

[15] For these reasons, an order will go as sought.

[16] If costs of this motion cannot be resolved by counsel, directions with respect to submissions may be initially sought from me by telephone conference arranged through the local trial co-ordinator.

TALIANO, J.

Released: March 14, 2013