ONTARIO SUPERIOR COURT OF JUSTICE
Commercial List
FILE NO. : CV-13-10222-00CL
HEARD: 20131126
RELEASED: 20140306
BETWEEN:
JACK ALAN LONG, JR.
Plaintiff
- and-
REPRODUX LIMITED, 1208168 ONTARIO LTD., 2234303 ONTARIO INC., 1176558 ONTARIO LTD., JACK ALAN LONG, SR. and KIMBERLY LONG-SUWARY
Defendants
APPEARANCES:
D. Barry Prentice Fax: (416) 593-5437
-for Defendants (Moving Parties)
Jason W.J. Woycheshyn Fax: (416) 863-1716
Carlo Di Carlo
- for Plaintiff
BEFORE: MASTER D. E. SHORT
HEARD: November 26, 2013
REASONS FOR DECISION
I. Motion To Replace Witness Selected By Plaintiff To Be Discovered.
[1] When a son sues his father and his sister and their companies for wrongful dismissal and oppression, the litigation is very often problematical and expensive.
[2] This case is no exception.
[3] The Defendants bring this motion for an Order pursuant to Rule 31.03(2)(a) substituting the person identified by the plaintiff as the witness on discovery for the corporate defendant Reprodux with “a representative permitted by the Rules and one who is sufficiently knowledgeable in relation to the matters in issue”.
[4] The pleaded grounds for the Motion are:
“(a) The individual selected by the Plaintiff to be examined on behalf of the Corporate Defendants is not a permitted selection pursuant to Rule 31.03(2) (a);
(b) The individual selected by the Plaintiff to be examined on behalf of the Corporate Defendants is not sufficiently knowledgeable in relation to the matters in issue;
(c) It would be oppressive to require the person selected by the Plaintiff to be examined;
(d) There is no prejudice to the Plaintiff if he is required to examine a proper individual pursuant to Rule 31.03(2) (a) and an individual who has the requisite knowledge;
(e) The selection by the Plaintiff appears to be a "tactical" move which step the court ought to discourage; and
(f) Such further and other grounds as counsel may advise and this Honourable Court may permit.”
[5] While there are a number of corporate defendants named, this motion was argued on the basis that the witness proposed by the plaintiff, James Haden, was sought to be examined with respect to his employer, the defendant Reprodux Limited.
II. Applicable rule
[6] Rule 31.03 (2) reads as follows:
"Where a corporation may be examined for discovery,
(a) the examining party may examine any officer, director or employee on behalf of the corporation, but the court on motion of the corporation before the examination may order the examining party to examine another officer, director or employee;"
[7] The issue, therefore, is whether this court should exercise its discretion to order that the Plaintiff examine someone other than Haden.
[8] I note in passing that the rule permits the examination of an employee but does not oblige the Corporation to be bound by that employee. The extent of the use that can be made of the evidence given on discovery is not before me. Rather I am simply addressing whether or not there is a sufficient justification to require the plaintiff to examine a different representative.
III. The Plaintiff’s Claims
[9] The plaintiff is Jack Alan Long, Jr. (“JJ”). The Plaintiff’s Statement of Claim is over 30 pages in length and asserts claims arising from the termination of his employment against Reprodux which include:
• damages for wrongful dismissal and breach of contract in amount of $400,000;
• damages in the amount of $100,000 arising from Reprodux’ breach of its duty act in good faith in the course of the dismissal of JJ;
• damages in the amounts of $25,000 for aggravated damages and for out-of-pocket expenses .incurred in searching for alternative employment.
[10] Claim are asserted by JJ against his sister (“Kim”) and his father Jack Alan Long, Sr. (“Jack”) relating to Family Trust issues and for unjust enrichment. As well claims are asserted against all the defendants seeking various remedies under the Business Corporations Act. Those claims thus are asserted against Reprodux and include claimed relief including:
• a declaration that Jack and Kim, as directors and officers of the corporate defendants, have engaged in conduct that is oppressive, unfairly prejudicial to and unfairly disregards the interests of JJ within the-meaning of section 248 of the Business Corporations Act, RSO 1990, c. B 16 ;
• a declaration that the business and affairs of the corporate defendants have been conducted in a manner that is oppressive and unfairly prejudicial to, and that unfairly disregards JJ's interests;
• compensation to JJ for all harm suffered as a, result of the defendants' oppressive conduct, described below, in an amount of $3,500,000.
[11] Clearly there are significant amounts claimed and Reprodux is at the centre of many of the issues involved in this case. Counsel for the defendants asserts that Kim is the more appropriate representative of the company and that Mr. Haden for a number of reasons ought not to be the witness examined.
[12] Determining this issue requires some examination of the role of both proposed witnesses.
IV. Previous Litigation
[13] Reprodux was previously involved in a wrongful dismissal trial held before Justice Bellamy. In February 2010, following a trial that ran for more than two weeks, her Honour released lengthy reasons in Qubti v. Reprodux Ltd., 2010 ONSC 837; [2010] CLLC para. 210-015.
[14] Case was put before me by counsel and contains some observations with respect to some of the parties in this case which I find helpful. In a section of her reasons described as Defendant’s Witnesses Justice Bellamy observes;
22 Jack Long is a self-made man with two years of high school education. Everything he has accomplished at Reprodux has come as a result of the sweat of his brow. Reprodux, as he acknowledged, is "his baby." At 74 years old, he is now mostly retired, but he still goes to Reprodux and his presence is still felt there. When he was working there, he was a hands-on boss who wanted nothing at all to do with administration or policy. He worked in production and that was all he cared about.
23 Given the importance of this case to Jack Long, the manner in which he gave his evidence was perplexing. I was constantly surprised by how he reacted in the witness box. At times he was antagonistic; other times, defeatist. At times he stared down plaintiff's counsel, seemingly refusing to answer questions; other times, he threw up his hands and said things like, "you got me!" or "OK -- you hung me!" He would sit either in a tightly guarded position, clench his teeth, cross his arms and close his eyes, or he would lean back in the chair with his hands clasped behind his head, and stare down plaintiff's counsel rather than answer the question, or he would slide all the way down the chair.
24 It was clear that he was used to being the one in control, the one making the decisions. He was given a full opportunity to say what he needed to say, but in my view, what he did say was not particularly helpful to Reprodux. …
A number of times he was caught in an out-and-out lie, and at least once he admitted that he said something he knew to be untrue. I had to examine his evidence in the context of all of the above.
26 Jim Haden is 50 years old. He has a grade 10 education and has been at Reprodux for 32 years. He started as a driver and through the dint of hard work, became Jack Long's trusted assistant, his right-hand man. ….
27 Jim Haden still works at Reprodux and is so close to Mr. Long that his co-workers refer to Mr. Long as "his father." He has a deep respect for him, is fiercely loyal to him and would do nothing to hurt him. He was defensive and very protective of Reprodux, but generally where his evidence differs from Jack Long's, I prefer his. He was clearly more candid, and was prepared to acknowledge and admit some unpleasantness about working at Reprodux. For example, he acknowledged that "you had to be a guy to survive that work environment" and "you had to be tough."
28 Kim Long and 38-year-old J.J. Long are two of Jack Long's children who work at Reprodux. They have a strong personal interest in supporting their father. First, because he is their father and they love him; second, and perhaps more importantly now that their father has retired, they have a personal and financial interest in keeping Reprodux as a strong and reputable work environment.”
[15] The parties filed affidavits in support of the respective positions and transcripts of three cross examinations were filed before me. On the cross examination of Kim the following exchanges took place:
Q. Do you agree that Mr. Haden is a valued employee of Reprodux?
A. He is.
Q. Do you agree that he is a trustworthy employee?
A. Yes.
Q. I take it that Jack has never told you that he does not trust Mr. Haden?
A. No.
Q. You're agreeing with me?
A. That he hasn't -- he has never said those words, no.
Q. You agree, yes; he's never said those words?
A. Correct; he's never said those words.
Q. Do you agree that Mr. Haden is a loyal employee?
A. Yes.
Q. I take it that you agree with me that Jack has never told you that he questions Mr. Haden's loyalties to Reprodux?
A. No, he has not.
Q. With Mr. Haden being an employee for approximately 35 years, you were not aware of any occasion when Mr. Haden has shared confidential Reprodux information outside of the company?
A. He doesn't have any to share, so no, I'm not aware.
[16] I see no basis to regard Mr. Haden as a witness who would act other than in the best interests of his employer. Given that this is a family dispute, based on events over a number of years Mr. Haden may well be a useful witness both on discovery and a trial in assisting the court from at least a “somewhat” detached position.
V. Defendants’ Position
[17] I have considered all the arguments put before me both in writing and orally by the defendants. In particular it was asserted that Kim was much more knowledgeable about the affairs of the company. In the defendants factum a number of points were noted. For example while Mr. Haden holds no position with any of the corporations, Kim held offices with all four defendants. She is the treasurer of all three numbered companies and a director of two of them. With respect to Reprodux, she is Vice-President, Finance & Operations, Director and Treasurer.
[18] Conversely it is argued that
“Haden is a long time employee of Reprodux who works in the printing department at Reprodux' North York location. He is responsible for the operation of a major piece of equipment used for the creation of large scale print jobs for the architectural and engineering customers of Reprodux. This type of work is a major part of Reprodux' business and Haden's role in connection therewith is critical to the livelihood of Reprodux. Haden also oversees the workflow between Reprodux' branches and dispatches drivers to pick up/deliver work from and to Reprodux' customers which are using the North York location.”
“As Vice President of Sales, JJ was responsible for Reprodux' sales force. He was also involved in the development of a software project called myplanroom which is designed to create another source of business for Reprodux. JJ's work involvement with Haden was limited to those occasions when he would inquire of Haden as to the status of a particular print job for a customer or to discuss a customer complaint.”
[19] The Defendants assert that:
“Haden had no role in the overall management of Reprodux. He was not, and is not, privy to the financial statements or payroll records of any of the Corporate Defendants. His knowledge of the wage of Reprodux' employees is limited to that of its drivers. The Corporate Defendants keep all of this information strictly private and do not want any of this information disclosed to Haden.”
[20] As well potential prejudice to the company’s operations is asserted:
Haden's day to day activities are critical to Reprodux. Because he has virtually no personal knowledge of any of the factual allegations contained in the pleadings, if he were to be examined as the representative of the Corporate Defendants, he would be required to spend a very significant amount of time in an attempt to inform himself to prepare. Furthermore, any such examination would result in a very significant number of undertakings, the answers to which would also take a considerable period of time and resources to answer, thus taking him away from his valuable duties to the detriment of Reprodux' business. In addition, this would necessarily result in his obtaining access to information and documentation which is of a sensitive and private nature.”
[21] It is also asserted that Mr. Haden had no involvement in the decision to terminate JJ’s employment. Moreover the factum argues that
“15. Kim, who is not only a Director and Officer but a personal defendant, has sworn that Haden has reviewed the pleadings in this action and has advised her that he has no direct knowledge in respect of any of the allegations made against the Corporate Defendants nor does he have knowledge of the basis of the counterclaim made by Reprodux against JJ. His knowledge regarding the other factual allegations is extremely limited and is restricted to observing, on a few occasions, interaction among JJ, Jack and Kim.
- Kim has knowledge of all of the allegations in the pleadings. She has been directly involved in instructing counsel in all aspects of the Corporate Defendants' Defence.”
[22] To my mind all these points go to whether or not Kim might well have been a more knowledgeable witness and a better choice. However such decisions often depend on your perspective. The rules make it clear that the plaintiffs are entitled to elect to select the one individual felt to be most helpful in obtaining information to advance their case.
VI. Analysis
[23] In Nemni v. BCE Inc., [2011] O.J. No. 4568; 2011 ONSC 6196, my colleague Master Jean dismissed the defendant's motion in which the defendant sought an order compelling the plaintiff to examine a representative other than the President and Chief Executive Officer of the defendant.
[24] In that case she observed:
“The general approach in litigation is that, where a corporation is subject to examination, the examining party has a prima facie right to select the officer, director or employee of the corporation to be examined. Clearly, the preference of the examining party should not be interfered with unless the selection is somehow inappropriate, the onus of establishing that resting upon the party being examined.”
[25] My review of the cases put before me and the Nemni decision establish a number of factors enumerated by the Master to be considered:
Whether the person selected has sufficient knowledge of the matters at issue;
Whether the person selected has direct involvement in the matters at issue;
Whether the person selected can properly inform himself;
Whether it would be unduly oppressive to the defendant in the sense that there would be many undertakings, a longer or more expensive examination or whether the person selected is taken away from the onerous responsibility of running the defendant corporation. Inconvenience or disinterest is not a sufficient reason to excuse the person selected; and
Whether someone other than the person selected would be prejudicial to the plaintiff, a matter of judgment of counsel for the examining party.
[26] I have considered these factors in dismissing the motion and adopt some of the submissions by counsel for JJ in this regard:
“53. …there is insufficient evidentiary support for Reprodux's purported concerns about Haden gaining access to sensitive information.
- Finally, given that JJ seeks damages against Reprodux for more than $3.5 million, it is both reasonable and proportionate for Reprodux to expend some resources to prepare for examinations and, possibly, fulfil some undertakings.
[27] Clearly courts have shown deference to the examining party in regard to whether it would be prejudiced if it were obliged to examine a person other than the proposed witness, recognizing that this is "largely a matter of the judgment of counsel.” So long as the examining party's concerns about prejudice are not obviously misplaced or groundless, courts will accept them. [see Farris v Staubach, [2004] OJ. No. 3961]
[28] I accept counsel’s submissions in the unique circumstances of this case to the effect that:
“56. Here, JJ would be prejudiced if he were denied the opportunity to examine Haden. As discussed above, Haden has a unique and close relationship with Jack and is his "right hand". Jack and Haden are confidantes and often discuss issues at Reprodux during work and during vacations together.
If JJ is prevented from examining Haden for discovery, he will be denied the opportunity to examine an independent (non-defendant) representative of Reprodux.”
[29] I feel there is merit as well to the concern of prejudice with respect to examining the same individual in two capacities. In situation where a plaintiff has brought an action against both an individual and that individual's corporation, courts have recognized that the plaintiff has a "right to examine both defendants separately".[see Eversonic Inc. v MacGirr, et al (1986), 1986 2490 (ON SC), 53 OR (2d) 179 ]
[30] As a result, I think there is merit in the position asserted on behalf of the plaintiff:
“57. …Because Kim will be examined in her personal capacity, it will be difficult, if not impossible, for her to separate her personal evidence from her evidence given as corporate representative of Reprodux. The same is not true for the other Corporate Defendants, against which JJ's allegation are much narrower. Forcing JJ to examine Kim as corporate representative for Reprodux will deny JJ the right of examining these different defendants separately.
- Further, with respect to the decision to wrongful dismissal claim against Reprodux, Kim has admitted that she was not involved in that decision" In this regard, Kim is no different than Haden.”
[31] Protter Management Ltd. v. Ontario Housing Corp. (1975), 8 OR 2nd 4456, is authority for the proposition that a party making an application to substitute the identity of its representative on discovery is not required to show that the person selected by the other side is not a responsible person and does not have knowledge of the matters involved in the action. Instead, each application is to be dealt with on the circumstances presented in that case.
[32] I would further observe that this action is governed by limits on the length of discovery. I do not see that Mr. Haden’s attendance for examination would be unduly oppressive, despite his position with the defendant.
[33] As well it would seem to me that, there was nothing in the record to show that Haden informing himself would be onerous beyond what would ordinarily be required in litigation where the party being examined is a corporation where a number of its officers, directors and employees might have had some involvement with the matters at issue. As Master Jean observed in Nemni: “A certain level of "informing oneself" is typically required.”
VII. Disposition
[34] In considering all the foregoing and the evidence and argument before me I do not fell the moving party has met the onus upon it to the necessary extent to justify substituting a different witness.
[35] The Defendants motion is therefore dismissed.
[36] Counsel provided me with their “win or lose” costs submissions at the close of argument. Together their clients spent in excess of $40,000 to deal with this issue. The partial indemnity claims of both sides were less than $750 apart.
[37] I therefore award an amount roughly in the middle of their two partial indemnity accounts at $15000 payable by the moving parties within 30 days.
[38] I am obliged to all counsel for their thorough and professional submissions.
Master D. E. Short
Registrar in Bankruptcy
March 6, 2014
DS/ R. 62