SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-14-506965
DATE: December 24, 2015

RE: Dundee Securities Ltd. v. Atul (Al) Verma;

BEFORE: MASTER C. WIEBE

COUNSEL: Craig Stehr for Atul Verma; Michael Bookman for Dundee Securities Ltd;

HEARD: December 17, 2015 in Toronto, Ontario.

REASONS FOR DECISION

I. INTRODUCTION

[1] This is a motion by the defendant, Atul Verma, in essence for an order requiring that the plaintiff, Dundee Securities Ltd. (“Dundee”), answer 36 questions that were refused to be answered by the representative of Dundee at discoveries, Doug Glover. The motion is also for an order requiring that Mr. Glover answer 8 questions he took under advisement and then did not answer. All of these questions were refused on the ground that they were not relevant. In some cases, they were also refused on the ground of privilege. The Glover discovery took place on July 22, 2015.

[2] For the reasons stated herein, I have decided to require that the bulk of these questions be answered.

II. BACKGROUND

[3] The pleadings in this case set the background for this motion. Having reviewed the pleadings, I have determined that the key facts, as pleaded, are the following:

• Mr. Verma, an investment advisor, had an employment contract with an investment dealer named Macquarie Canada Services Ltd. (“Macquarie”) dated June 20, 2013. This contract will be called the “Verma Contract.” Under this contract, Verma obtained funds from Macquarie in the amount of $505,000. Dundee describes this as a loan repayable on “resignation”; Mr. Verma describes this as a “signing bonus” structured as a forgivable loan for tax purposes and not to be repaid should Verma’s employment be terminated without cause.

• In September, 2013, Macquarie was acquired by another investment dealer, Richardson GMP (“RGMP”). The Verma Contract was assigned to RGMP.

• Dundee, an investment dealer, then entered into an agreement (“the Agreement”) with RGMP, dated January 13, 2014 and amended March 13, 2014, whereby RGMP assigned various agreements, including the Verma Contract, to 2403027 Ontario Limited (“Holdco”), a wholly owned subsidiary of RGMP, on March 14, 2014. Pursuant to the Agreement, Dundee then acquired the shares of Holdco and amalgamated with Holdco on March 15, 2014 purporting to become Mr. Verma’s employer.

• Mr. Verma stopped working for Dundee on March 18, 2014, and together with his assistant, Carolyn Kirkland, went to work for another investment dealer, BMO Nesbitt Burns, a competitor of Dundee.

[4] Dundee alleges that the Agreement was a share sale, that Mr. Verma became Dundee’s employee as a result, and that Mr. Verma “resigned” his employment with Dundee on March 18, 2014, thereby triggering his obligation to repay the “loan.” Dundee has raised other claims in the action against Mr. Verma such as a claim for damages for breach of contract, duty of good faith, fidelity and confidence primarily for taking Dundee’s clients.

[5] Mr. Verma, on the other hand, alleges that the Agreement was really an asset sale, that the Verma Contract was effectively assigned to Dundee without Verma’s approval, and that the Verma Contract was therefore terminated without cause thereby allowing Verma to avoid any obligation to repay what he calls the “signing bonus” when he moved to BMO Nesbitt Burns. Mr. Verma also alleges that, if he became a Dundee employee, he was constructively dismissed without cause by virtue of all the unilateral changes that were imposed on his employment. Mr. Verma has also raised a counterclaim for damages in the amount of $500,000 for defamation and unlawful interference with economic relations on account of certain communications Dundee had with BMO Nesbitt Burns and the industry regulator, Investment Industry Regulatory Organization of Canada (“IIROC”).

III. ISSUES AND ANALYSIS

(a) What is the scope of relevance and privilege at discovery?

[6] There are some basic principles to be kept in mind in determining relevance for the purpose of examinations for discovery. In his decision in Ontario v. Rothmans Inc. 2011 ONSC 2504 (S.C.J.) at paragraph 129, Justice Perell provides a useful summary of the case law on this point. I glean the following principles from this paragraph: the scope of discovery is defined by the pleadings and cannot be speculative; the questions must be “relevant to any matter in issue,” which His Honour described as a “modest narrowing” of the scope under the former rules which described the scope as “relating to any matter in issue”; and the witness may be questioned about hearsay evidence and a party’s position on questions of law.

[7] Justice Leroy in Merpaw v. Hyde 2015 ONSC 1053 (S.C.J.) at paragraphs 14 to 19 had a further useful discussion about relevance at discovery. I glean the following principles from this discussion: relevance at discovery is broader than at trial; proportionality must be considered (see Rule 29.2.03), namely whether the required evidence warrants the cost of disclosure; disclosure of the required evidence may be outweighed by other important factors, such as privacy, access to justice and fairness; and the probity of evidence turns on the question of whether it will make a relevant fact more or less probable.

[8] Finally, concerning the question of privilege, Master Sprout in PSC Industrial Services Canada Inc. v. Thunder Bay (City), 2006 CarswellOnt 1392 (Ont. Master) held in paragraphs 15 and 16 that the onus rests on the party claiming privilege to establish the privilege. That party must adduce sufficient evidence to establish the privilege.

[9] I will bring these principles to bear in reviewing the questions in issue. I will review the questions in accordance with the numbering sequence of the Undertakings and Refusals Chart that starts at page 268 of the Responding Motion Record.

[10] For clarity sake, Mr. Stehr confirmed at the outset that Mr. Verma is not seeking answers to the refused questions numbered 29, 30 and 33 and the questions taken under advisement numbered 4, 10, 11 and 12.

(pages continue exactly as original…)

DATE: December 24, 2015 __________________________

MASTER C. WIEBE