ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-13-0248-00
DATE: 2014-09-15

B E T W E E N:

CHAN-PHONG TU

Neil G. Wilson, for the Plaintiff

Plaintiff

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JAMES PETER EMMS, VERONA MEDICAL GROUP INC., (operating as DENT-X CANADA), and CLE LEASING ENTERPRISES LTD.

Solomon R. Fischhoff, for the Defendants
Chad Kopach, for the Defendants

Defendants

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SPECIALTY DENTAL SERVICES LTD., SPECIALTY DENTAL PRODUCTS LTD., DERIK GRAMMENZ, URSULA GRAMMENZ, and PETER KUBISTA

Martin G. Banach, for the Third Parties

Third Parties

HEARD: April 8, 2014

REASONS FOR JUDGMENT

Barnes, J.

[1] The crux of the plaintiff’s action is that the defendants Mr. Emms, Verona Medical Group Inc., and CLE Leasing Enterprises Ltd. provided defective equipment which caused the plaintiff to lose business income and to incur repair costs.

[2] The plaintiff is a dentist. The defendants James Peter Emms and Company Verona Medical Group Inc. supplied the plaintiff, Chan-Phong Tu, with certain dental equipment. The plaintiff asserts that this equipment was defective.

[3] The plaintiff seeks an Order setting out a discovery plan; an Order for the discovery of Peter Emms; an Order for the production of documents and an Order for costs of this motion.

[4] The defendants seek an order that the plaintiff provide a better affidavit of documents; an order that the plaintiffs be prohibited from discovering Mr. Peter Emms; and the costs of this motion.

[5] I order the plaintiff to produce the documents as articulated below, and a discovery plan shall be put in place. Justice Barnes shall case manage this case in the short term. Should the case require long term case management, authorization will be obtained.

[6] This case involves the disclosure and production of documents. Rule 30.02 states that a document should be disclosed if relevant to the pleadings. Relevance is determined by how the issues are framed in the pleadings.

[7] The issues in the pleadings stem from an alleged loss of income and business as a result of the sale of defective dental equipment to the plaintiff. The plaintiff claims the faulty equipment led to defective x-ray images and leaking equipment which resulted in damage to an office. The plaintiff further claims that the defendants failed to supply equipment to a second office. The plaintiff claims loss of business and income from all these events.

[8] The production orders below, made in the context of the proportionality priniciple set out in Rule 29.2.03(1) and (2), relate to materials relevant to issues in the statement of claim which are in the possession of the plaintiff or defendants.

DEFENDANTS’ DOCUMENT PRODUCTION REQUEST – DOCUMENTS REQUESTED TO BE PRODUCED BY THE PLAINTIFF

[9] Issue: Defective equipment

(a) Documents requested:

(i) X-ray images: The plaintiff concedes these are relevant. Electronic copies of images of x-ray images taken by the subject machines are available. The plaintiff shall provide 100 copies of these images.

(ii) Panoramic Images: These documents are relevant to demonstrate how the machines are working. If in existence, plaintiff is to provide 100 copies.

(c) Equipment Test results: The plaintiff asserts that they do not exist.

(d) Memo, notes, correspondence and emails relating to defective equipment and/or complaints about same: The plaintiff asserts that they have disclosed all such documents.

[10] Issue: Equipment leaking water into another office

[11] All these documents are relevant to the plaintiff’s assertion that water leaking from the machines have caused damage to the office below.

(a) Photographs showing the leak: The plaintiff shall produce all existing photographs of the leak.

(b) Insurance documents for any claims made relating to the leak: Plaintiff shall provide all such existing documents.

(c) Repair invoices: These are relevant. The plaintiff asserts that they have already provided invoices relating to the repair of the machines. The plaintiff shall provide existing invoices for repair of office water leakage damage.

[12] Issue: Loss of Income

(a) Income Statements and Tax Returns of the Plaintiff: The plaintiff concedes that these are relevant and he has already produced his 2010, 2011, 2012 income tax returns. The plaintiff shall produce his 2013 income tax returns. As the plaintiff is a sole proprietor, income statements are included in the tax returns.

(b) Bank Statements: The plaintiff concedes these are relevant. The plaintiff has produced bank statements from December 31, 2010, to the present. Any disputes with respect to the transactions in these accounts can be dealt with at discoveries.

(c) Patient Schedules: The plaintiff concedes these are relevant, however, he requests the court to consider proportionality. Information identifying patients shall be redacted. The plaintiff has provided redacted patient records for March and May 2012. On consent, the plaintiff shall provide good quality copies of redacted patient schedules for December to February 2012, and June to September 2012.

(d) Doctor Schedules: The plaintiff conceedes these are relevant. The plaintiff states that doctor schedules for Dr. Tu and anyone working for him have been produced. For greater certainty, the plaintiff shall produce doctor schedules for any professional who worked with the machines during these periods: December to March 2012, and June to September 2012.

(e) Billing Summaries: The defendant submits that these summaries will show the number of appointments, amounts billed, and x-rays taken. This information is relevant to the impact of the allegedly deficient machines on the plaintiff’s revenue.

[13] The plaintiff submits that he does not posses these documents and he argues that the purpose of disclosure is for parties to disclose documents they possess, control or have power over, not for the parties to create new documents.

[14] These documents are relevant to the issues. One would expect that the plaintiff keeps such records in the ordinary course of running his business.

[15] The plaintiff shall produce billing summaries for the period of December 2011, to April 2012, and May to August 2012, if they exist. If such documents do not exist, the plaintiff shall provide an explanation at discoveries.

(f) Documents dating back two years for comparison: This is a vague and unclear request. This matter can be clarified at discoveries.

(g) Treatment summaries: This is also vague. This matter can also be explored in discoveries.

[16] Issue: Delay in opening second Clinic (5085)

(a) Building and Government Permits:

[17] The plaintiff conceedes these docuuments are relevant, however, he submits that there are no building permits because the work done was by internal renovation. The plaintiff explains that the construction invoices have already been produced in the original affidavit of documents.

(b) Leak agreement by plaintiff as landlord of 5085. The plaintiff asserts that the defendants’ delay in delivering the equipment resulted in delays in opening the plaintiff’s second clinic, 5085, and a corresponding loss in business income.

[18] The defendants submit that by the time the plaintiff signed the lease for 5085, their agreement with the plaintiff had concluded. Therefore, the defendants could not have been responsible for any of the plaintiff’s losses.

[19] The timing of the lease is relevant in determining when the defendant’s liability, if any, may have crystalized. Therefore, the plaintiff shall produce a copy of the lease between the plaintiff and the landlord of the 5085 clinic.

[20] Issue: Misrepresentation

[21] The plaintiff asserts that the defendant Mr. Emms, misrepresented the capabilities of the equipment and provided the plaintiff with brochures and other promotional material designed to misrepresent the true capability of the equipment. The defendant seeks production of these documents. The plaintiff conceedes that these documents are relevant, however, he claims that the documents have already been produced. The issue of whether additional documents exist can be explored at discovery.

[22] Issue: The plaintiff incurred costs of repair

[23] Documents requested: The documents described below are all relevant to any issues of damages arising from the allegedly deficient equipment:

(a) Invoices for repairs; particulars of what was repaired; relevant memos, note etc.

[24] The defendant has requested the production of repair invoices for the defective equipment. I agree that this is relevant.

[25] The plaintiff explains that he has already disclosed the invoices. The defendants argue that the plaintiff only produced an invoice for a hand-held instrument, which was not supplied by the defendants.

[26] The plaintiff shall provide any additional invoices for the repair of the equipment. The issue of the existence of additional invoices can be explored at discovery.

[27] Issue: Misappropriation

[28] Documents requested:

(a) Bank Statement

The plaintiff alleges that the defendants have continued to withdraw money from the plaintiff’s bank account, as payment for the equipment, even though they have been instructed not to do so.

[29] These bank statements are already subject to my previous production order. Any outstanding issues can be explored at discovery.

[30] Issue: Mental Distress

[31] Documents requested:

(a) Doctors Notes, Medical records, prescriptions, OHIP summary:

[32] The plaintiff has explained that none of the requested documents exist. The issue of whether these documents exist can be explored at discoveries.

[33] Issue: Dr. Tu’s dealings with suppliers

[34] Documents requested:

(a) Memos, e-mails, correspondence or other related documents.

[35] The relevance of these documents is not in dispute. The defendants assert that their efforts have revealed that there are additional undisclosed documents. The plaintiff submits that he has produced all the invoices. The invoices in question relate to three of the plaintiff’s suppliers; Mr. Henry Shine, Speciality Dental, and Demand Construction.

[36] The plaintiff shall produce all such invoices that have not already been produced. The existence of additional invoices can be explored at discoveries.

[37] Issue: Dr. Tu’s old equipment

[38] The documents requested:

(a) Documents relating to the age of the equipment; repair/maintenance logs; warranty information: The defendants submit that these documents are relevant because the plaintiff did not replace certain pieces of hand-held equipment. These documents are necessary to determine whether the old equipment or the new equipment was leaking. The defendant wishes to determine the age of the old hand-held equipment. This issue can be dealt with in discoveries.

PLAINTIFF’S DOCUMENT PRODUCTION REQUEST – DOCUMENTS REQUESTED TO BE PRODUCED BY THE DEFENDANT

[39] The plaintiff is seeking production of these documents:

(a) Purchase of equipment and acquisition of the equipment: The plaintiff says these documents are relevant because the defendants are asserting a counter-claim for lost profits and damages. The plaintiff explains that the price the defendants paid for the equipment will be relevant to what their profits would have been, and the plaintiff also alleges that he significantly over paid for the equipment. Therefore, he claims this is relevant to the defendants’ claim for lost profits and damages.

[40] The defendants have expressed concern that this information will be used by its competitors to its disadvantage.

[41] These documents are relevant to the defendants’ counter-claim for loss of profits and damages, particularly since these claims arise from the sale of equipment to the plaintiff.

[42] If the defendants intend to pursue this claim, they shall produce documentation describing the purchase and acquisition prices of the equipment. These documents shall only be used for the purpose of this litigation and for no other purpose. Any other outstanding issues that arise may be explored at discoveries.

(b) Mitigation Documents

[43] The plaintiff submits that there are no documents to illustrate the defendant, Dent-X-Canada’s mitigation efforts.

[44] The defendants submit that these documents do not exist, as efforts to mititgate are ongoing. The defendants also argue that an accounting would have to be made for trial. The documents are relevant, however, given the defendants’ assertion that the documents are not in existence this issue can be explored at discoveries.

(c) Employment Contract between Dent-X-Canada and Mr. Emms.

[45] The plaintiff has named Mr. Emms as a party to the action. The plaintiff wishes to attach liability to Mr. Emms personally, and wishes to cross-examine Mr. Emms at discoveries.

[46] The defendants submit that Mr. Emms is an employee of Dent-X-Canada and should not be discovered. An officer of the corporation, Ms. Anaida Deti, is available to be discovered.

[47] The defendants also explain that no employment contract exists for Mr. Emms. Given this assertion by the defendants, this is a matter that may be explored at discovery.

(d) The plaintiff seeks a supplier profile document which was prepared and exchanged between Dent-X and CLE.

[48] CLE did not attend and is not a party to this motion, and therefore this matter may be explored at discoveries.

(e) Business Loss Documents

[49] The plaintiff seeks production of business documents such as bank statements, etc. The plaintiff argues that these documents are relevant to the defendants’ counter claim for loss of profits, and are necessary to assess the reasonableness of the loss of profits being claimed.

[50] These documents are relevant to the issue of lost profits for the reasons previous articulated. The defendants shall produce all such documents in their possession and control. Any outstanding issues shall be addressed at discovery.

CROSS-EXAMINATION OF THE DEFENDANT EMMS

[51] The plaintiff states that he wishes to cross-examine the defendant Mr. Emms, because Mr. Emms is the directing mind of the defendant Verona Medical Group Inc., and he was the one who made all representations to the plaintiff.

[52] The defendants say that Mr. Emms is an employee of Verona Medical Group Inc., and an officer of the corporation is available to be cross-examined at discovery.

[53] Paragraphs 6, 7 and 8 of the amended statement of claim deal with the representations made by Mr. Emms. At para. 31, allegations are made against Mr. Emms personally; that Mr. Emms was using Verona Medical Group Inc. to shield him from personal liability.

[54] The allegation contained in the statement of claim, that Mr. Emms is using the corporation to shield his actions, indicates that Mr. Emms is a relevant party who must be examined.

[55] I have considered the affidavit filed by the officer of the corporation, Ms. Anaida Deti, asserting that Mr. Emms is an employee of Verona Medical Group Inc. and that there is no employment contract in existence. However, in the context of the issues decribed in the statement of claim, Ms. Deti’s affidavit regarding the absence of an employment contract alone is insufficient to shield Mr. Emms from cross-examination. There is no affidavit from Mr. Emms. The plaintiff is permitted to cross-examine Mr. Emms at discovery.

DISCOVERY PLAN

[56] The parties have been in significant disagreement on which documents should be produced, and this case is now at a stand-still. I conclude that a discovery plan is required.

[57] The parties have already exchanged discovery plans, but have been unable to agree on one. This court has made its rulings on the plaintiff and defendants’ production motions. The parties have had time to further consider their positions in this matter, therefore the parties shall agree to and file a discovery plan with this court by October 6, 2014.

[58] Should the parties fail to agree on a discovery plan by October 6, 2014, they shall be bound by the following discovery plan effective October 7, 2014. All discoveries are to commence no later than December 15, 2014, and shall be completed no later than January 31, 2015.

COSTS

[59] Production Orders were made in favour of both parties. Each party shall bear their own costs for this motion.

Barnes, J.

Released: September 15, 2014