SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Carol Lee Sculley v. Pivot Acquisition Corporation a/k/a Pivot Technology Solutions Inc., David Beck, Shane Maine, Gordon McMillan and John Sculley
APPLICATION UNDER section 60 of the Evidence Act, R.S.O. 1990, c. E-23, as amended, and section 46 of the Canada Evidence Act, R.S.C. 1985, C. C-5, as amended
BEFORE: Sproat, J.
COUNSEL: David S. Ward, for the Applicant
Caitlin Sainsbury and Maureen Doherty, for the Respondents, Pivot Acquisition Corporation a/k/a Pivot Technology Solutions Inc., David Beck and Gordon McMillan
No one appearing, for Shane Maine and John Sculley
HEARD: December 17, 2014
E N D O R S E M E N T
Introduction
Introduction
1The Applicant’s 32 year marriage to the Respondent John Sculley (“Sculley”) ended in 2010. They were divorced in 2011. The Applicant has now commenced an action in Florida alleging that Sculley fraudulently concealed assets in the course of the divorce proceedings. The central allegation is that Sculley used SCF Growth Equity (“SCF”), a marital asset, to create and execute a business plan through Pivot. Justice Small of the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County in the State of Florida issued Letters Rogatory (“the Request”) requesting that a representative of Pivot, David Beck (“Beck”) and Gordon McMillan (“McMillan”) (who I will collectively refer to as the Respondents in these reasons) produce documents and attend to be deposed in Toronto by counsel in the Florida action.
The Request
The Request
2The Request provided in relevant part as follows:
WHEREAS, Petitioner has made allegations which have yet to be ruled upon, but which are sufficient for this Court to allow the issuance of Letter Rogatory, and that this request is required to produce information and documents which may be necessary for trial. The specific allegations supporting this request as alleged by Petitioner are as follows:
Petitioner and JOHN SCULLEY (“Respondent”) were married in 1978, and remained married for 32 years.
On June 4, 2010, Petitioner filed her Petition for Dissolution of Marriage against Respondent in Palm Beach County, Florida, United States.
On February 25, 2011, the parties entered into a Marital Settlement Agreement, and on March 10, 2011, the parties obtained a final judgment for dissolution of marriage with the Court reserving jurisdiction to enforce its judgment (“Final Judgment”).
After the entry of the Final Judgment, on July 3, 2013, Petitioner filed an action for 12.540 relief, breach of contract, and fraudulent misrepresentation seeking equitable relief and damages against Respondent to seek recovery for assets not disclosed in the underlying divorce.
Petitioner has alleged that Pivot, a corporation organized by Respondent, under the laws of Canada was intentionally and fraudulently concealed from her by Respondent in an attempt to avoid equitable distribution and deprive Petitioner of those assets.
Further, Petitioner has alleged that Shane Maine and Gordon McMillan who also organized and otherwise created Pivot, along with David Beck who was intimately involved in the creation of Pivot, have pertinent information regarding the concealment of marital assets and the existence of marital assets that should have been disclosed in the underlying divorce.
The Petitioner has alleged the Deponents have direct knowledge which is necessary for the determination of Petitioner’s claims and Respondent’s defenses.
WHEREAS, this Court has found that justice cannot completely be done between the parties without the testimony of the named Deponents, located within your jurisdiction, and without certain documents within Deponents’ possession and/or control and therefore will allow Letters Rogatory to be issued notwithstanding that Petitioner’s allegations must been proven and remain pending before this Court.
The Evidence
The Evidence
3Joshua Miron (“Miron”), a lawyer with the firm representing the Applicant in the Florida proceeding filed an affidavit sworn August 28, 2014. He provides a brief summary of the background to the Florida proceeding and the Request.
4Pivot was incorporated on September 8, 2010. The Applicant alleges in the Florida proceeding that Sculley was a co-founder of Pivot. Sculley became Chairman, and Beck and McMillan became Directors, of Pivot on March 22, 2013. While counsel for Sculley presented argument respecting the Request he did not oppose the Request in its final form. Miron also states his opinion that the evidence sought is “critical to a full and fair trial”.
5The Respondents filed:
a) the affidavit of Michael Flinn (“Flinn”), a U.S. resident, who is the Chief Commercial Officer of Pivot, sworn November 14, 2014; and
b) the affidavit of Martin L. Haines III (“Haines”), self-described as the “owner” of the law firm representing Sculley in the Florida proceeding, sworn November 14, 2014.
6Flinn’s affidavit provides a history of Pivot stating that it was a shell corporation until December 30, 2010.
7Flinn also asserts that the document requests are overly broad and unduly burdensome. In particular certain documents sought have already been provided in the Florida proceeding or are not in the possession of Pivot.
8The Haines affidavit similarly asserts that the Request is overly broad and mostly irrelevant as many documents requested post-date the commencement of the divorce proceeding which is the relevant date for determining assets and liabilities.
9Haines also states that John Paget, the first CEO of Pivot, has already been deposed in the Florida proceeding. The Haines affidavit also provides detail regarding Sculley’s relationship with SCF. Haines essentially deposes that the Applicant’s claim is not well founded and bound to fail.
10The second Miron affidavit sworn December 8, 2014, addresses the argument that since the rights of the parties crystallized on June 4, 2010 (the date the Applicant filed for divorce), and Pivot did not exist on that date, it follows that discovery of Pivot and its directors and officers cannot be relevant. In somewhat simplified form the Miron affidavit evidences that:
(a) Sculley listed SCF as an asset in the divorce proceedings;
(b) the Applicant alleges there were other SCF entities in which Sculley, Maine and McMillan were interested as partners, officers and/or directors;
(c) it is alleged that prior to June 4, 2010, Sculley, Maine and McMillan, by and through SCF, were planning to incorporate Pivot; and
(d) emails in June and July 2010 (in other words soon after June 4, 2010) demonstrate an intention to form Pivot. A July 27, 2010, non-disclosure agreement signed by SCF specifically contemplated that Pivot may be “a Canadian acquisition vehicle” for SCF Growth Equity Ltd.
11The second Miron affidavit also describes Justice Small as “presiding over” the Florida litigation. Justice Small conducted what was described as a “lengthy” hearing and heard objections by Sculley to the wording of the Request.
12Haines filed a supplementary affidavit dated December 15, 2014, indicating that he was bringing a motion to depose Flinn, McMillan and Maine in the Florida proceeding. Only Flinn, as a U.S. resident, could be compelled to attend a deposition. At the hearing on December 17, 2014, I was advised the motion was granted.
13In his affidavit Haines took the position that the granting of the motion might render the Request moot. Counsel before me did not advance this argument and, in any event, I conclude it is untenable. Certainly if Justice Small, by granting the motion, regarded the Request to be moot I would expect her to so state. In any event it is only Flinn who can be compelled to attend a deposition in the Florida proceeding and he is not alleged to be a co-founder of Pivot.
14A third Miron affidavit sworn December 16, 2014, was filed responding to the Haines affidavit and the assertion that the Request might be moot.
The Law
The Law
15In Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2013 ONCA 264, the Court of Appeal identified six “guideposts” that should be considered in deciding whether to enforce letters rogatory. The court should consider whether:
(a) the evidence sought is relevant;
(b) the evidence sought is necessary for trial and will be adduced at trial, if admissible;
(c) the evidence is not otherwise obtainable;
(d) the order sought is not contrary to public policy;
(e) the documents sought are identified with reasonable specificity; and
(f) the order sought is not unduly burdensome, having in mind what the relevant witnesses would be required to do and produce were the action to be tried in Ontario.
16In Connecticut Retirement Plans & Trust Funds v. Buchan, 2007 ONCA 462, the Court heard an appeal from a decision to enforce letters rogatory. It was argued on appeal that the affidavit filed in support of the request to enforce letters rogatory did not establish the relevance of the evidence sought. Weiler J.A. dismissed this argument noting that the U.S. judge requesting letters rogatory had stated that the proposed deponent had relevant evidence and reasoning that:
The Canadian court does not function as an appellate court in respect of the decision of a foreign court.
17In Presbyterian Church of Sudan v. Taylor [2005] O.J. No. 3822 (C.A.) Goudge J.A. for the Court stated:
- What then does the record disclose? The request was issued following an unopposed motion in which the American court was provided only with the representations of counsel. The request simply recites that the American court accepts these representations. It is clear that an Ontario court is not bound to accept the language of the foreign request as the final say, but is entitled to go behind it to examine precisely what it is the foreign court is seeking to do. The Ontario court is to give effect to the request only if the requirements of Ontario law are met. See Fecht, supra, at p. 195.
Analysis
Analysis
18I now turn to the six “guideposts” identified in Lantheus.
19First guidepost being relevance - it is implicit in the request for Letters Rogatory that Justice Small concluded testimony and documents from the deponents were relevant. Simply put the Applicant pleads that prior to June 4, 2010, there was a plan in place whereby Pivot would be formed and used to carry out acquisitions on behalf of SCF entities. The evidence sought regarding Pivot, its relationship with the SCF entities, is clearly relevant. I agree with the line of reasoning in the second Morin affidavit that documents created after the fact can still be relevant to the parties assets, liabilities and intentions as of June 4, 2010. Jurors are routinely instructed that after the fact conduct can shed light on a parties actions and intention at an earlier time
20Second guidepost being necessity - the Request signed by Justice Small states, “. . . this Court has found that justice cannot completely be done between the parties without the testimony of the named Deponents . . . and without certain documents within Deponents’ possession and/or control . . .” Justice Small also notes that the depositions are to be available as evidence at trial.
21As I have already discussed I am satisfied that the evidence sought is relevant. Evidence that is relevant to the matters in issue will generally be necessary to prove the allegations subject to certain exceptions. Justice Small has determined that the evidence sought is necessary for trial and I see no reason to go behind that.
22Third guidepost being not otherwise obtainable - given the allegations that Beck and McMillan were and are associated with Sculley, and that Pivot was conceived as a vehicle to receive assets and opportunities that were matrimonial property, the evidence sought is by its nature not obtainable elsewhere. The evidence of Beck and McMillan as founders of Pivot is clearly of a higher value than that of other witnesses such as a Flinn or Paget.
23Fourth guidepost – there is nothing to suggest that the order sought is contrary to public policy.
24Fifth guidepost – Justice Small heard arguments regarding the level of specificity before making the orders she did and obviously concluded that the documents sought were properly identified.
25Sixth guidepost being not unduly burdensome – subject to exceptions to be discussed the documents requested are generally of the type that would be required to be produced in Ontario litigation. There is no evidence from McMillan or Beck that their attendance would be burdensome to them.
26The guideposts, therefore, in my opinion strongly favour enforcing the Request.
27I will now address the principal specific objections made by the Respondents.
28The Respondents note that the Request asks for correspondence between Pivot and named individuals, however, the Request and material filed on the Application in this court does not explain who these individuals are.
29Clearly Pivot knows who these individuals are as they corresponded with Pivot. The Flinn and Haines affidavits do not claim any lack of knowledge. Justice Small clearly knew who they were. Further, all the specific requests are topic limited. For example, request 26 that relates to Greg Gallagher also refers to the topic of creating and raising capital for Pivot and/or the SCF Entities.
30The Respondents also complain that certain of the documents requested have already been produced or do not exist. This type of objection was previously raised by Sculley. Justice Small ordered that Sculley was not required to produce a document again but could provide “a line-item response detailing those records previously provided”. Mr. Ward submitted, and I agree, that the Respondents can provide this response to any document they say was previously produced. Similarly it is a simple matter to respond that documents do not exist.
31The Respondents also advance the general position that the Request is unduly burdensome. I note that the Flinn affidavit does little to establish this apart from the bald assertion that documents would be unduly burdensome to retrieve. Certainly there is no detail concerning the time and expense that would be incurred in complying with the Request. I suspect the time and expense in fighting the Request exceeds the time and expense that would have been required to comply.
32The Respondents contend that the Request requires production of virtually all of Pivot’s documents from its inception and refers to paragraph 23 of the Pivot Production request which states:
Any and all documents, including but not limited to correspondence by and between you and Respondent, or any communications in which you were included, relative to you and/or the SCF Entities between September 1, 2009 and present.
33I agree that parsing this sentence it could be interpreted to mean that Pivot has to produce “…any communications in which you were included relative to you…”, which would mean all Pivot documents.I would enforce the Request by amending paragraph 23 and any similarly worded paragraphs by replacing “and/or” with “and” which makes clear that the documents must relate to Scully or the SFC entities.
34I am mindful of the fact that under Ontario law a party could not ordinarily examine more than one corporate representative. Beck and McMillan, however, are closely associated with Sculley. Neither has filed an affidavit to support the contention it would be personally burdensome for them to attend. The Florida court has requested they be deposed. I am, therefore, not prepared to reject the Request on this basis.
35I do, however, decline to grant the request for the “entire employment file” as set out in the original requests 78 and 79 of Pivot. Employment files often contain highly personal information and there is no nexus between the “entire employment file” and the allegations made against Sculley. Any documents that happen to be in an employment file but fall within the scope of other requests will, of course, have to be produced.
Conclusion
Conclusion
36I grant an order recognizing and enforcing the Request subject to the exceptions I have noted.
37Counsel for the Applicant shall make cost submissions related to this application, and as to the costs of counsel representing Pivot, McMillan and Beck at the examination, within ten days. Counsel for the Respondents shall respond within a further ten days. Applicant’s reply, if any, within a further five days.
Sproat, J.
DATE: January 21, 2015
CITATION: Sculley v. Pivot, 2015 ONSC 287
COURT FILE NO.: 5031/14
DATE: 2015-01-21
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Carol Lee Sculley v. Pivot Acquisition Corporation a/k/a Pivot Technology Solutions Inc., David Beck, Shane Maine, Gordon McMillan and John Sculley
BEFORE: Sproat, J.
COUNSEL: David S. Ward, for the Applicant
Caitlin Sainsbury and Maureen Doherty, for the Respondents, Pivot Acquisition Corporation a/k/a Pivot Technology Solutions Inc., David Beck and Gordon McMillan
No one appearing, for Shane Maine and John Sculley
ENDORSEMENT
Sproat, J.
DATE: January 21, 2015
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