SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: CV-09-4166-00
DATE: 2013-10-31
RE: Maplewin v. Food Systems Innovation Inc.
BEFORE: Barnes, J
COUNSEL:
A. Renaud, for the Defendant
P. Callahan, for the Plaintiff
HEARD: April 3, 2013
E N D O R S E M E N T
[1] The Plaintiffs, Maplewin Limited and James Long, hereafter the Plaintiff seeking the following relief:
(a) An Order striking out the Statement of Defence of the Defendants; or
(b) An Order compelling the Defendant to produce the further documentation relating to the operation and financial reporting of the Defendant corporations as set out in schedules “A” and “B” to the Plaintiffs Notice of Motion;
(c) An Order fixing the Plaintiffs costs of the Motion on a substantial indemnity basis; and
(d) Such further and other relief as this Court may seem just.
[2] The Defendant seek an Order for an for an expedited trial date and /or assignment to case management.
PARTIES
[3] Maplewin Limited and James Long the Plaintiffs are hereafter referred to as Plaintiff.
[4] Food Systems Innovation Inc. (FSI), EFI Technologies Inc., 1492994 Ontario Inc., Mahmoud Eino, 1491405 Ontario Inc., Larry Milligan, HR Mentor Inc., Michael Ramsey and James McCurley are hereafter referred to as Defendant.
CENTRAL ISSUE IN LITIGATION
[5] The Defendant FSI has allegedly become insolvent. The Defendant were directors of FSI.
[6] The Plaintiff Maplewin Limited owned shares in FSI, on behalf of the Plaintiff James Long. James Long Plaintiff was a director of FSI.
[7] The Plaintiff alleges that the Defendant have acted unlawfully by diverting a corporate opportunity away from the Plaintiff FSI to Defendant EFI Technologies and these actions resulted in the insolvency of FSI.
[8] The Plaintiff alleges that Defendant were, directors of FSI and by engaging in the alleged actions breached their fiduciary duty to FSI. As a result the Plaintiff claims that their rights and interests have been irreparably prejudiced.
CENTRAL ISSUE IN THIS MOTION
[9] Striking of the Defendant statement of defence for alleged nondisclosure and in the alternative an Order for additional disclosure. This is the Central issue is this motion.
[10] Other ancillary remedies sought by the Defendant, under Business Corporation Act R.S.O., 1990 Chapter 8.16 as amended, was not fully developed by the Plaintiff in argument and in any event, given the conclusion reached by this Court on this motion, are premature and properly addressed at trial.
[11] For these reasons and for greater certainty and clarity, the Business Corporation Act remedies as presented before this Court are dismissed.
DISCLOSURE
[12] At the completion of pleadings the parties exchange documents. The exchange/disclosure documents is governed by Rule 80.02.
[13] The Rule prescribes the disclosure of every document “relevant to any matter in issue in an action”.
[14] The previous disclosure rule was the “semblance of relevance” test. See Compagne Financiere Commerciale du Pacifique v. Peruvais Guano (1882), 11 Q.B.D 55 (C.A.). This often cited case provided guidance on the interpretation of the old disclosure standard i.e. “relating to any matter in issue in an action”.
[15] The issue of relevance is determined by the pleadings “relevant to any matter in issue in an action”. This signals that disclosure obligations are determined by the concept of relevance which, in practical terms, exclude material remotely connected but not relevant to the issues in the action.
[16] In circumstances where the relevance of the disclosure sought is not patently or clearly obvious, more than a bald assertion of potential relevance will be required to satisfy the “relevant to standard”. In such instances, affidavit or even viva voce evidence may be required. Each circumstance is determined on a case by case basis.
HISTORY OF THESE PROCEEDINGS
[17] This matter was commenced almost four years ago i.e. on September 14, 2009.
[18] On July 2011, Honourable Corbert J. consolidated the two actions, commenced by the Plaintiff based on the same facts and transactions, into one action CV-09-4166-00 the matter before this Court.
[19] Corbert J. began case managing this matter in 2010. Defendant’s motion for summary Judgment was heard on April 20, 2012. On consent, Corbert J. ordered that the matter should proceed to trial. The parties consented to an expedited trial date on October 29, 2012, before Corbett J. Corbett J. transferred to Toronto before trial could take place.
[20] The Defendant declined to proceed with mediation before Muary J. as recommended by Corbett J. and indicated that they were not interested in mediation or an expedited trial until the present financial disclosure issues were dealt with.
HISTORY OF DISCLOSURE
[21] Upon reading the affidavits of Debbie James for Plaintiff, Jessica Zhi and Peter Ferraro for Defendant, all the material filed by both parties and hearing the submissions of Counsel, I conclude that the Plaintiff have had an opportunity to cross examine these Defendant’s:
Dr. Mahmoud Eino
John Ovoborne (non-party witness)
Judy McCrie (non-party witness)
and written question were submitted to non-party witness
- Dino Dello Sbarba
[22] The Defendants have also received the following categories of documents:
(a) Corporate records and Minutes Books for FSI and EFI.
(b) Patent and technical scientific data for EFI and FSI.
(c) Financial statements and general ledger reports for EFI and FSI.
(d) Documentation relating to the patent litigation that contributed to FSI’s insolvency.
(e) Contracts of EFI and FSI with third parties.
ADDITIONAL DISCLOSURE REQUESTS
[23] Based on the material filed at this motion, the Plaintiff seeks production of the items listed in schedule “A” and “B” of the Plaintiff’s motion record returnable April 3, 2013.
[24] After careful review of the material filed, I have no basis to reject the assertion of Peter Ferraro in his Affidavit, sworn March 20, 2013, that items requested have either already been provided or are too broad in scope. I also specifically prefer to the answers to the Defendant’s request for further disclosure at para 24 and 25 of the said Affidavit.
[25] The items listed by the Defendant’s expert, as necessary to make a proper valuation, are too broad in scope and is the absence of an Affidavit or other evidence from the expert, explaining the relevance of these items, I conclude the items are too remote in scope as to satisfy the “relevant to a fact is issue” test.
[26] For greater clarity, on the basis of material presented, this Court accepts the description and responses provided by Peter Ferraro at para 24 and 25 of his Affidavit.
ORDER
[27] Having reached this conclusion this Court Orders the following:
(a) The Plaintiff’s motion for additional financial information, as described in this motion, is dismissed.
(b) Having concluded that sufficient financial information has been provided to facilitate an expedited trial in this matter, there is no basis for the Defendant to resile from the consent for an expedited trial of this matter, as Ordered by Corbett J. on April 30, 2012.
For greater certainty this matter shall proceed to trial on an expedited basis.
(c) The parties shall attend a trial management conference, by teleconference before Barnes J. on a date to be arranged for 9:00 a.m., any date he is available but no later than August 10, 2013.
(d) Counsel should have a list of evidence to be tendered in writing, a list of all the witnesses to be called at the trial, for use at the trial management conference.
(e) Counsel shall submit a written submission as to costs within 30 days from the date of this Order. Such cost submission shall be no more than two pages in length.
Barnes, J
Released: April 3, 2013
Transcribed: October 31, 2013
COURT FILE NO.: CV-09-4166-00
DATE: 2013-10-31
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Maplewin v. Food Systems Innovation Inc.
BEFORE: Barnes, J
COUNSEL: A. Renaud, for the Defendant
P. Callahan, for the Plaintiff
ENDORSEMENT
Barnes, J
Released: April 3, 2013
Transcribed: October 31, 2013