ONTARIO

SUPERIOR COURT OF JUSTICE

Court File No.: CV-12-455284

Title of Proceedings: PDP Importing v. Tiffany Gate Foods Inc. 2013 ONSC 6468

Counsel: J. Copelovici for the plaintiff

J. Heller for the defendant

ENDORSEMENT

Master R.A. Muir -

[1]. The defendant has brought a motion for an order staying this action on the basis that it is a nullity by virtue of the operation of the Business Names Act, R.S.O. 1990, c. B.17. (the “BNA”). That motion is currently scheduled to be heard by me on December 20, 2013. The defendant’s stay motion is to be heard together with a motion brought by the plaintiff for an order granting it leave to amend its statement of claim in order to include its full corporate name and not just the name under which it purports to carry on business.

[2]. This endorsement is made in connection with a motion brought by the defendant seeking answers to numerous questions refused on the cross-examination of the plaintiff’s witness, Tony Zuccaro. The cross-examination was held on August 20, 2013. This motion was heard by me on October 15, 2013.

[3]. The plaintiff is claiming payment for certain food items imported on behalf of the defendant. The defendant has defended this action. Its defence, in part, rests on the position that PDP Importing (“PDP”) was, at the material times, an expired business name for 863704 Ontario Limited (“863”). Therefore, the defendant argues, this action is a nullity pursuant to the provisions of the BNA.

[4]. After the statement of defence was delivered, 863 apparently re-registered the PDP name. However, the defendant takes the position that simply re-registering the PDP name does not solve the plaintiff’s problem. The defendant takes the position that this action was a nullity from the outset and no subsequent steps taken by the plaintiff can fix that problem.

[5]. The principles applicable to the scope of cross-examination are set out in the recent decision of Justice Perell in Ontario v. Rothmans, 2011 ONSC 2504. At paragraph 143 of that decision, Justice Perell summarizes those principles as follows:

143 The case law has developed the following principles about the scope of the cross-examination of a deponent for an application or motion:

• The scope of a cross-examination of a deponent for an application or motion is narrower than an examination for discovery: BOT Construction (Ontario) Ltd. v. Dumoulin, [2007] O.J. No. 4435 (S.C.J.) at para. 6.

• A cross-examination is not a substitute for examinations for discovery or for the production of documents available under the Rules of Civil Procedure: BOT Construction (Ontario) Ltd. v. Dumoulin, supra at para. 7; Westminer Canada Holdings Ltd. v. Coughlan, [1989] O.J. No. 252 (Master), aff'd [1989] O.J. No. 3038 (H.C.J.).

• The examining party may not ask questions on issues that go beyond the scope of the cross-examination for the application or motion: Thomson v. Thomson, [1948] O.W.N. 137 (H.C.J.); Toronto Board of Education Staff Credit Union Ltd. v. Skinner, [1984] O.J. No. 478 (H.C.J.) at para. 12; Westminer Canada Holdings Ltd. v. Coughlan, [1989] O.J. No. 3038 (H.C.J.).

• The questions must be relevant to: (a) the issues on the particular application or motion; (b) the matters raised in the affidavit by the deponent, even if those issues are irrelevant to the application or motion; or (c) the credibility and reliability of the deponent's evidence: Superior Discount Limited v. N. Perlmutter & Company; Superior Finance Company v. N. Perlmutter & Company, [1951] O.W.N. 897 (Master) at p. 898; Re Lubotta and Lubotta [1959] 0.W.N. 322 (Master); Wojick v. Wojick, 1971 538 (ON SC), [1971] 2 O.R. 687 (H.C.J.); Toronto Board of Education Staff Credit Union Ltd. v. Skinner, [1984] O.J. No. 478 (H.C.J.) at para. 11; BASF Canada Inc. v. Max Auto Supply (1986) Inc., [1998] O.J. No. 3676 (Master) at paras. 6, 10-11; Caputo v. Imperial Tobacco Ltd., [2002] O.J. No. 3767 (Master) at paras. 14-15; BOT Construction (Ontario) Ltd. v. Dumoulin, [2007] O.J. No. 4435 (S.C.J.) at para. 4; Shannon v. BGC Partners LP, 2011 ONSC 1415 (Master) at para. 8.

• If a matter is raised in, or put in issue by the deponent in his or her affidavit, the opposite party is entitled to cross-examine on the matter even if it is irrelevant and immaterial to the motion before the court: Wojick v. Wojick and Donger, 1971 538 (ON SC), [1971] 2 O.R. 687 (H.C.J.), at p. 688; Ferring Inc. v. Richmond Pharmaceuticals Inc. [1996] O.J. No. 621 (Div. Ct.) at paras. 14 and 15; Logan v. Canada (Minister of Health), [2001] O.J. No. 6289 (Master); Guestlogix Inc. v. Hayter, 2010 ONSC 5570 at para. 16.

• The proper scope of the cross-examination of a deponent for an application or motion will vary depending upon the nature of the application or motion: Blum v. Sweet Ripe Drink Inc. (1991), 47 C.P.C. (2d) 263 (Ont. Master); Moyle v. Palmerston Police Services Board (1995), 1995 10659 (ON SC), 25 O.R. (3d) 127 (Div. Ct.).

• A question asked on a cross-examination for an application or motion must be a fair question: Superior Discount Ltd. v. N. Perlmutter & Co., [1951] O.W.N. 897 (Master) at p. 898; Canadian Bank of Commerce (CIBC) v. Molony, [1983] O.J. No. 221 (H.C.J.) at para. 3; Seaway Trust Co. v. Markle, [1988] O.J. No. 164 (Master); BASF Canada Inc. v. Max Auto Supply (1986) Inc., [1998] O.J. No. 3676 (Master) at para. 6. (See discussion below.)

• The test for relevancy is whether the question has a semblance of relevancy: Re Lubotta and Lubotta [1959] O.W.N. 322 (Master); Rodriques v. Madill, [1985] O.J. No. 1666 (Master).

• The scope of cross-examination in respect to credibility does not extend to a cross-examination to impeach the character of the deponent: Moyle v. Palmerston Police Services Board (1995), 1995 10659 (ON SC), 25 O.R. (3d) 127 (Div. Ct.).

• The deponent for an application or motion may be asked relevant questions that involve an undertaking to obtain information, and the court will compel the question to be answered if the information is readily available or it is not unduly onerous to obtain the information: Bank of Montreal v. Carrick (1974), 1973 381 (ON SC), 1 O.R. (2d) 574 (Master), aff'd ibid p. 574n (H.C.J.); Mutual Life Assurance Co. of Canada v. Buffer Investments Inc. (1985), 1985 1940 (ON SC), 52 O.R. (2d) 335 (H.C.J.) at paras. 9-13; Caputo v. Imperial Tobacco Ltd., [2002] O.J. No. 3767 (Master) at paras. 42, 56; BOT Construction (Ontario) Ltd. v. Dumoulin, [2007] O.J. No. 4435 (S.C.J.) at para. 8; Hinke v. Thermal Energy International Inc., 2011 ONSC 1018 (Master) at paras. 36-37.

• The deponent for a motion or application who deposes on information and belief may be compelled to inform himself or herself about the matters deposed: Rabbiah v. Deak, [1961] O.W.N. 280 (Master); Caputo v. Imperial Tobacco Ltd., [2002] O.J. No. 3767 (Master) at paras. 42, 46.

[6]. Rule 1.04(1.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) is also important to the issues on this motion. It requires that the court, when applying the Rules, make orders and give directions that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.

[7]. These are the general principles I have applied in determining the issues on this motion.

[8]. A few of the questions initially refused on Mr. Zuccaro’s cross-examination have now been answered by the plaintiff. However, a large number of questions remain in issue.

[9]. The central issue on the stay motion brought by the defendant is whether 863 should be relieved of the consequences of its failure to renew the registration of its PDP Importing business name on a timely basis. The name was registered in 2005. It expired in 2010 before it was re-registered after this action was commenced. It appears that 863 was carrying on business as PDP at a time when the PDP Importing business name registration had expired. This would appear to violate section 2(1) of the BNA. It also appears that 863 failed to set out both its business name and its full corporate name on all contracts, invoices, negotiable instruments and orders. As an example, the invoices found in the plaintiff’s motion record only refer to PDP Importing. This would appear to violate section 2(6) of the BNA.

[10]. Section 7(1) of the BNA provides as follows:

Ability to sue

7. (1) A person carrying on business in contravention of subsection 2 (1), (2) or (3) or subsection 4 (4) or (6) is not capable of maintaining a proceeding in a court in Ontario in connection with that business except with leave of the court.

Idem

(2) The court shall grant leave if the person seeking to maintain the proceeding satisfies the court that,

(a) the failure to register was inadvertent;

(b) there is no evidence that the public has been deceived or misled; and

(c) at the time of the application to the court, the person is not in contravention of this Act or the regulations.

[11]. The defendant’s main submission is that the refused questions are relevant to the analysis the court must undertake in order to determine whether leave should be granted to 863 to continue this action pursuant to section 7(2). In my view, the requests made by the defendant are, for the most part, far too broad and simply amount to a fishing expedition.

[12]. The defendant’s requests go far beyond what is necessary for a proper consideration of the section 7(2) factors, let alone what is appropriate for an action of this nature. The plaintiff is claiming payment of approximately $106,000.00 although I am advised that its claim has been reduced to approximately $75,000.00. The defendant is advancing a counterclaim in the total amount of $110,000.00. This action is in reality a simplified procedure matter. I note that if this action was proceeding under the simplified procedure, no cross-examination would have been permitted in connection with the motion to amend or the stay motion, let alone a lengthy refusals motion. In my view, all of these factors are appropriate considerations for the court pursuant to Rule 1.04(1.1).

[13]. It is also important to remember the public policy behind the BNA. The purpose of the BNA is disciplinary. There do need to be some consequences for failing to comply. Preventing an action from proceeding is one of those potential consequences. However, “where the failure to register is inadvertent, and no harm flows from it, the disciplinary function of the [BNA] becomes largely irrelevant”. See Bazinet v. Kinross Gold Corp., 1999 CarswellOnt 584 (G.D.) at paragraph 14. The wider purpose of the BNA is to “ensure ethical and accountable business practices by assuring that other individuals and businesses can know the people with whom they are doing business”. See Bazinet at paragraph 16.

[14]. In my view, it is important to note, for the purposes of this motion, that the defendant knew exactly who it was doing business with. Its purchase orders were directed to “PDP Importing, A Division of 863704 Ontario Ltd.”. It does not appear that the defendant was deceived or misled in any way by the failure of 863 to renew the business name registration or the lack of a full corporate name on the plaintiff’s invoicing.

[15]. As a final general observation, I note that section 7(2) of the BNA speaks of evidence that the “public has been deceived or misled”. It does not refer to evidence that the public could have been deceived or misled.

[16]. The information and documents the defendant is seeking can be summarized as follows:

• particulars of the various employees of 863 and their roles and responsibilities (refusals 2-5 and 9 on the cross-examination chart);

• details of the PDP Importing name registration and other corporate filings, the corporate minute books, along with access to files kept by the businesses’ accountants and corporate lawyers (refusals 10-14 on the chart and questions 66 and 77 from the transcript);

• particulars of the operation of a related corporation known as Metropolitan Ice Cream Inc. (refusals 16-18 and 20-25 on the chart);

• for the period from 2005 to the present – information and documents relating to leases of real property, cheques, banking information, product orders, tax returns, financial statements, contracts, ownership of real property, municipal business licences and documents relating to the liquidation of the product that forms the subject matter of this action (refusals 26-34 and 36-39 on the chart);

• annual returns filed by 863 and/or PDP and any information regarding PDP’s association with Metropolitan Ice Cream Inc. (refusals 42-45 on the chart);

• the contents of a file brought to the cross-examination by Mr. Zuccaro (refusal 35 on the chart);

• various refusals from the examination for discovery of Mr. Zuccaro relating to how the revenue generated from the sales to the defendant was recorded, minute books, shareholder information, the treatment of revenue, details regarding the business of Metropolitan Ice Cream Inc., product shipping documents and information regarding the lease of real property from which the plaintiff carries on business (under advisement 1 and refusals 1, 2, 4, 6-9, 13 and 27on the examination for discovery chart).

[17]. In general, I agree with Mr. Copelovici that the vast majority of these requests are nothing more than fishing expeditions. The defendant wishes to examine virtually all of the corporate records kept by PDP, 863 and other related business entities from 2005 to the present day in the hope that something interesting might turn up. These requests, in the context of this action, are far too broad and far reaching. In my view, the court’s consideration of the factors under section 7(2) of the BNA, insofar as this action is concerned and given the public policy behind the BNA, can be adequately carried out with the further limited production of certain key documents.

[18]. In my view, some of the information and documents sought relating the employees of 863 is relevant to the question of inadvertence and should be produced. The transcript from Mr. Zuccaro’s cross-examination reveals that these questions arose from a line of inquiry initiated by Mr. Heller in order to determine who at PDP or 863 was responsible for corporate filings (see question 14 on the cross-examination transcript). The parties then became distracted with a series of other questions and it does not appear that this specific question was answered. I note that PDP and 863 have conceded that refusals 7 and 8 (notices from governmental authorities) are relevant and they have now been answered. Refusals 2, 3 and 4 shall be answered but only in relation to the issue of governmental corporate filings. In my view, refusals 5 and 9 are overly broad and not relevant to the issues on the main motions and need not be answered.

[19]. I am also of the view that the questions relating to the PDP name registration and other corporate filings, the corporate minute books and the files kept by the businesses’ accountants and corporate lawyers are also far too broad in the context of this action. However, a limited amount of further production is appropriate. In my view, any documents found in the files kept by PDP, 863, their accountants and their corporate lawyers that relate to the PDP Importing business name registration or its expiry, and the necessity for the registration to be renewed, are relevant to the issue of inadvertence and should be produced. The production of such documents shall be a sufficient response to refusals 10-14 and questions 66 and 77 from the cross-examination transcript.

[20]. In my view, none of the information and documents requested in connection with the operation of Metropolitan Ice Cream Inc. is relevant to the issues on the main motions. Moreover, the requested production is not proportional in the circumstances of this action. There is certainly nothing unusual about the same individuals operating several and separate businesses from the same location. Such business practices are not, on their face, deceptive or misleading. There is no indication that the defendant in this action thought it was dealing with Metropolitan Ice Cream Inc. The only evidence the defendant can point to is the fact that a few of Mr. Zuccaro’s emails contained a Metropolitan Ice Cream Inc. signature line. A close reading of the emails, however, makes it clear that the entity involved was PDP. Any suggestion that Metropolitan Ice Cream Inc. was being used to deceive or mislead anyone is pure speculation. Refusals 16-18 and 20-25 need not be answered.

[21]. Similarly, the requests for information and documents relating to leases of real property, cheques, banking information, product orders, tax returns, financial statements, contracts, ownership of real property, municipal business licences and documents relating to the liquidation of the product that forms the subject matter of this action are also far too broad and out of proportion when viewed in the context of this action. The defendant wants production of such documents for the years 2005 to the present. This would involve the production of an enormous number of documents. As I stated above, this is essentially a simplified procedure case. This kind of extensive production is simply not in keeping with the proportionality requirements of the Rules. Moreover, there is no evidence of any intention to deceive or mislead on the part of PDP or 863 or any suggestion of anything unethical as was referenced in Bazinet. The only exception to this is refusal 39. This refusal relates to the very product in issue in this action. In my view, the manner in which PDP and 863 may have treated revenue derived from that specific product is marginally relevant to the issues on the main motions. Refusal 39 shall be answered. Refusals 26-34 and 36-38 need not be answered.

[22]. In my view, basic corporate filings are relevant to the issues on the main motions in terms of inadvertence and whether the public may have been misled. Refusals 43-45 shall be answered by PDP and 863 providing copies of any annual returns filed by either entity from 2005 to the present. Refusal 42 deals with Metropolitan Ice Cream Inc. and need not be answered for the reasons I have set out above in paragraph 20.

[23]. In my view, refusal 35 need not be answered. At questions 129 and 130 of the transcript from Mr. Zuccaro’s cross-examination, Mr. Heller asked whether the file that Mr. Zuccaro had brought with him to the cross-examination contained any documents relating to the PDP business name registration, its renewal or its expiry. The answer provided was that the file contained no such documents. In my view, those answers are sufficient in view of my conclusions regarding the general scope of necessary corporate document production, as set out in paragraph 19, above.

[24]. For the same reasons I have set out in paragraphs 20 and 21, above, the refusals in issue from the examination for discovery of Mr. Zuccaro need not be answered. In my view, those questions are far too broad and not proportional in the context of this action and the pending motions. Those refusals need not be answered.

[25]. To the extent that I have ordered PDP and 863 to answer questions initially refused, they shall do so by November 6, 2013.

[26]. Counsel shall confer in an attempt to resolve the issue of the costs of this motion. If the parties are unable to reach a resolution, they may make brief written submissions by no later than November 1, 2013.

DATE: October 16, 2013

Master R.A. Muir