Court File and Parties

COURT FILE NO.: CV-15-0694-00 DATE: 2016 06 30

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

TSI International Inc. Plaintiff

Robert Taylor and Tatha Swann for the Plaintiff

- and -

John Formosa, Steffen Nielsen, iFarmLocal Inc., Richard Taylor, Great Life Group Inc. and John Masih, carrying on business as MSM Group Defendants

Tim Duncan, for the Defendants

HEARD: June 21, 2016

REASONS FOR JUDGMENT

LEMAY J

[1] The parties in this case have been engaged in ongoing litigation for over sixteen months at this point. Pleadings in this action have not yet closed, and the history is set out in at least two reported decisions, the reasons of Ricchetti J. reported at 2015 ONSC 1138 and my own previous reasons reported at 2016 ONSC 3750.

[2] Pursuant to the Order of Ricchetti J., the Plaintiff, TSI International, obtained an Order permitting the seizure and imaging of a significant number of computers and other electronic devices. This work was completed by Deloitte Inc., an accounting firm, and the Order of Ricchetti J. imposed a number of conditions on Deloitte’s performance of that work.

[3] The Defendants now seek further directions from me interpreting Ricchetti J.’s Order. Specifically, the Defendants are seeking the following:

a) A finding that the Order of Ricchetti J. incorporates, by inference, the protections generally contained in an ex-parte Anton Piller Order. b) A finding that, Deloitte Inc., the firm that executed the Order for seizure of documents and computer devices, is an independent and Court appointed supervisor. c) A finding that the Plaintiff’s counsel and Deloitte are in breach of the Order of Ricchetti J. d) A stay of the action until Plaintiff’s counsel and Deloitte are in compliance with the Order of Ricchetti J.

[4] The Plaintiff resists this motion on the basis that the Order of Ricchetti J. is clear, and that the Defendants are seeking to import additional terms into that Order. The Plaintiff argues that the relief sought by the Defendants should not be granted because:

a) The Defendants were represented at the hearing of the motion before Ricchetti J., and had the opportunity to make submissions on both the merits of the motion, and on the draft Order. b) The Order itself is clear, and does not contain the provisions that the Defendants are seeking to import into it. c) The terms that the Defendants are seeking to import into the Order are not necessary given the fact that the Defendants were represented at the motion where the Order was made.

[5] The Plaintiff acknowledges, however, that further work needs to be done in order to manage some of the results from the searches that Deloitte has completed. The Plaintiff claims that this work should be done by both Deloitte and the Defendants’ accounting firm, BDO Dunwoody. The Defendant claims that Deloitte should have done this work a long time ago, and that any remaining work is solely Deloitte’s responsibility.

Issues

[6] Each party has set out its own formulation of the issues to be determined on this motion. However, in reviewing the arguments, I am of the view that three basic issues present themselves:

a) Does the Order of Ricchetti J. include either expressly or by implication all of the requirements that would exist in a standard Anton Piller Order? b) Was Deloitte appointed by the Court as an “independent supervising solicitor”? c) Has Deloitte done all of the work that is required in this case? If not, how should the remaining work be completed?

Factual Outline

[7] The factual dispute in this case is set out in the previous decisions referenced above. I will provide a brief outline of the underlying facts for the convenience of the reader, as well as outlining the relevant facts relating to the issues on this motion.

The Background Facts

[8] The Plaintiff, TSI Incorporated, is a company involved in land banking in Ontario. Its current principal is Mr. Richard Lane, who came into control of the company in the summer of 2014.

[9] During the course of the fall of 2014, the relationship between Mr. Lane and the personal Defendants deteriorated. As a result, in late January of 2015, TSI terminated the employment of Mr. Neilsen. At approximately the same time, Mr. Formosa resigned his employment, claiming constructive dismissal.

[10] It is alleged by TSI, but not proven, that the personal Defendants breached their fiduciary duties to TSI by setting up an alternative corporation to compete with TSI, and taking TSI’s confidential and proprietary information. As I understand it, the corporate Defendants are all controlled by personal Defendants.

[11] As a result, TSI commenced an action against the Defendants, and sought an injunction and other relief against the Defendants.

The Order of Ricchetti J.

[12] The Plaintiff’s notice of action formed the basis for a motion for an injunction and other relief. It was returnable on February 18th, 2015. It was brought on notice to all of the Defendants.

[13] In the course of his argument, Mr. Duncan stated, on several occasions, that the Plaintiff’s original motion was brought on “short notice”. He is correct in that there were only six (6) calendar days between the service of the materials and the return date. However, the Defendants were able to provide the Court with substantial affidavit material, and Ricchetti J. offered them the opportunity to adjourn the motion and conduct cross-examinations on the Plaintiff’s affidavits. They declined that opportunity, and the motion was fully argued.

[14] At the conclusion of the motion on February 18th, 2016, Ricchetti J. advised the parties that he would be granting the motion. He signed a draft Order that was provided by counsel for the Plaintiff. This Order was provided to both the Court and to Defendants’ then counsel.

[15] The Notice of Motion from the Plaintiff contained the following requests relating to the search and seizure of electronic devices in the possession of the Plaintiff:

5. An Order permitting Deloitte LLP to inspect the computers, laptops and other devices in the Defendants’ possession or control to determine if they contain the Plaintiff’s Confidential or Proprietary Information or TSI’s Copyright.
6. An Order permitting Deloitte LLP to search at the Defendants’ respective premises for the missing computer equipment and devices listed as an Exhibit to the filed Affidavit of Lane.

[16] For the purposes of this motion, the relevant provisions of Ricchetti J.’s Order are:

8.1 Following the Preservation of the Defendants’ Systems, Deloitte shall inspect the forensic images to search for any responsive documents having the MD5 hash values of the Plaintiff’s Documents or key words from the Plaintiff’s Documents. 8.2 Deloitte shall then identify any information contained in the Defendants’ Documents having the Plaintiff’s MD5 hash values or containing the Plaintiff’s key words. 8.3 Deloitte shall prepare a list of the responsive Documents in the Defendants’ Systems containing the MD5 hash values of the Plaintiff’s Documents containing Confidential or Proprietary Information and Intellectual Property of the Plaintiff, and Deloitte shall provide the list to the Defendants. 8.4 Deloitte shall prepare a list of the responsive documents on the Defendants’ Systems identified by key words from the Plaintiff’s Confidential or Proprietary Information and Intellectual Property and provide that list to the Defendants and provide copies of the responsive documents, including metadata, to the Defendants. 8.5 If the Defendants agree the information identified by Deloitte originated from the Plaintiffs or is Confidential or Proprietary Information and Intellectual Property of the Plaintiff then all documents and copies thereof in the possession, power or control shall be delivered up to the Plaintiffs and the electronically stored information containing the Plaintiff’s Confidential or Proprietary Information and Intellectual Property shall be deleted from the Defendants’ by Deloitte. 9.1 If the Defendants identify any confidential or privileged information which they wish to be protected from disclosure, the Defendants shall identify and segregate it in a separate paper and/or electronic file so labelled, and provide a list or such information to the Plaintiff for review by the Court, if required.

[17] Counsel for the Defendants asserts that Ricchetti J. granted an Anton Piller Order, and that there are certain obligations that automatically flow when such an Order is granted. He further asserts that, when Ricchetti J. identified the Order as an Anton Piller Order, the Plaintiff had an obligation to return to Court to advise Ricchetti J. of the provisions that are usually included in an Anton Piller Order that the Plaintiff had failed to include in its Order.

[18] Counsel for the Plaintiff, on the other hand, states that the Plaintiff did not ask for an Anton Piller Order, and that he had no obligation to advise the Court of the regular terms included in such an Order. I will return to this issue below.

The Subsequent Events

[19] Approximately a week after Ricchetti J. signed the Order, Deloitte attended at various properties where the Defendants lived and worked and began retrieving and imaging computers. With the exception of the devices taken from Mr. Formosa’s ex-wife, counsel for both sides were present when these devices were taken. I also note that the times scheduled for the collection and imaging of computers were agreed to between counsel.

[20] In addition, Deloitte took some of the computers off-site to conduct imaging, as it was impractical for Deloitte to conduct the imaging on-site. Again, this was done on consent.

[21] All of this work was done in February and March of 2015. In late February of 2015, the Defendants’ counsel wrote to Plaintiff’s counsel advising that they looked forward to receiving the report from Deloitte. The Defendants’ counsel now argues that this letter is a clear indication that the Defendants viewed Deloitte as a Court appointed independent supervising solicitor. The letter does not say that.

[22] I was not provided with any evidence of communications between the parties from March of 2015 to September of 2015.

[23] In September of 2015, counsel for the Plaintiff requested that certain images of devices owned by the Plaintiffs be released by Deloitte. Counsel for the Defendants rejected this request, and advised that they expected that, at the very least, “the few procedures included in the Order to safeguard their rights and privacy would be honoured.”

[24] There is considerable correspondence between the parties from this letter in September of 2016, up until the scheduling and hearing of this motion. I have read all of the correspondence that has been filed, but I do not intend to review all of it in these reasons.

[25] However, there is one further exchange of correspondence that requires some discussion. On October 6th, 2015 at approximately 12:30 pm, Mr. Duncan, counsel for the Defendants, sent an e-mail to Mr. Taylor, counsel for the Plaintiff to ask whether Deloitte had instructions to develop and provide their responsive document list in accordance with clause 8.4 of the Order.

[26] Approximately 22 hours later, Mr. Taylor wrote back and advised that he understood that this task was underway.

[27] Mr. Duncan, in argument before me, pointed to this 22 hour delay in Mr. Taylor’s response as a clear indication that the Plaintiff and its counsel had instructed Deloitte not to follow through on the requirements of Ricchetti J.’s Order. In Mr. Duncan’s view of the case, the 22 hour delay in responding to Mr. Duncan was clearly caused by Mr. Taylor reversing course and starting Deloitte on the work that they were supposed to have done six months previously.

[28] In response to this argument, Mr. Taylor pointed to the Affidavit of Mr. Corey Fotheringham, the partner from Deloitte. In that Affidavit, Mr. Fotheringham states that a number of employees from the Plaintiff were involved in assembling the key words and preparing the MD5hash values for the searches. He also advises that these employees were required to go through all of the files on the Plaintiff’s server.

[29] Search results were provided by Deloitte to the Defendants over a period of some months from November 5th, 2015 to February 17th, 2016.

[30] This brings me to the searches. As part of its work, Deloitte ran two types of searches. First, there was an MD5hash search, which is a search for identical documents. This revealed approximately 12,000 documents that the Plaintiff claims are its confidential information that were allegedly found on the Defendants’ electronic systems.

[31] Counsel for the Plaintiff referred to this evidence as “smoking gun” evidence. He suggests that it is clear proof that the Defendants copied the Plaintiff’s confidential information. At this stage, I expressly make no findings on this question either way. It is possible that this information is confidential, proprietary information of the Plaintiff’s. However, I simply do not have enough evidence to determine that question and it is not my role to determine this question. That is to be left to either the judge hearing a summary judgment motion or to the trial judge.

[32] The second type of evidence was keyword searches. These searches have produced approximately a million documents. It is also clear that there are at least some false positives in this search. In particular, Mr. Duncan pointed to one document that was from 2002, and was Christmas related. This is obviously a false positive, as TSI was not founded until 2003. In argument, Mr. Taylor conceded that this was likely a false positive, and that there were other false positives amongst the documents that were listed as a result of the keyword search.

[33] In any event, the Plaintiff provided this information to the Defendants, who took the view that it was not in compliance with the Order of Ricchetti J. After some correspondence, the Defendants brought this motion. As part of their motion materials, they served an expert’s report from Mr. Gregory Hocking of BDO Dunwoody.

The Expert’s Report

[34] One of the issues that should be addressed is the “expert’s report” prepared by BDO Dunwoody for the Defendants. This report details Mr. Hocking’s view about what the appropriate way to administer an Anton Piller Order is. He also sets out his views about Deloitte’s role, which he formed by reviewing in particular the Order of Ricchetti J.

[35] Indeed, at paragraph 14 of the Defendants’ factum, they note the following:

On this motion, the role of Deloitte under the AP Order has been reviewed by BDO Canada LLP (“BDO”). Based on BDO’s experience assisting in the execution of Anton Piler orders and its review of the AP Order in this case, BDO has opined that the intended role of Deloitte is to serve as an independent party with Deloitte’s primary responsibilities being its responsibilities to the Court – not to the Plaintiff.

[36] In my view, this report is an attempt by the Defendants’ expert to direct the Court on the proper interpretation and administration of an Anton Piller Order. I am of the view that it is not evidence that I can (or should) consider for that purpose for three reasons:

a) The very question that I am called on to decide in this case is what the Order of Ricchetti J. means. Allowing an expert with no formal legal training to opine on that question would be allowing the expert to usurp my functions as a judge. b) Each Order is different. As I will discuss below, there is no one standard Anton Piller Order. Instead, there are standard terms that are often (but not always) included in an Order. Further, the Orders of the Court will take into consideration the unique circumstances of each case. Opinion evidence on what is generally in an Anton Piller order is of limited assistance in determining the meaning of a specific Order. c) The opinion itself is focused on the implementation of an Anton Piller Order, and the steps that are usually taken by a party implementing such an Order. Again, this evidence is of no assistance in interpreting the meaning of a specific Order.

[37] Accordingly, I place no weight on the opinion evidence tendered in the report from BDO Dunwoody. The report was of assistance in understanding some of the technical information in this case, and I have reviewed it for that purpose.

[38] Although I have rejected this “expert report” for this motion, it is quite possible that witnesses from both BDO Dunwoody (or some other firm chosen by the Defendants), and Deloitte will be tendered as experts in this case. For that reason, and for convenience, I will refer to them as “experts” throughout the remainder of these reasons.

Issue #1- How Should Ricchetti J.’s Order be Interpreted?

[39] A consideration of how this Order should be interpreted starts with its terms. Those are set out at paragraph 16 above. In reviewing those terms, it is clear that they impose some obligations on Deloitte, on the Plaintiff and on the Defendants.

[40] Counsel for the Defendants argues that this Order should be interpreted as imposing the following obligations on Deloitte and on the Plaintiff:

a) That Deloitte was appointed as an independent and impartial marshal of the evidence under the Anton Piller Order. b) The obligations of Deloitte to act independently are ongoing. c) Deloitte has a duty to report back to the Court and to the Defendants on its searches. d) The Plaintiff had an obligation to advise Ricchetti J. of any and all deviations from the “standard” Anton Piller Order in their proposed Order. e) Deloitte and the Plaintiff should have been bound to the standard Anton Piller terms.

[41] I will deal with the role of Deloitte as an “independent supervising solicitor” separately.

[42] Counsel for the Defendants points to the decision of the Supreme Court of Canada in Celanese Canada Inc. v. Murray Demolition Corp [2006] 2 S.C.R. 189, 2006 SCC 36 in support of his position. His view is that this decision sets out the terms that must be included in an Anton Piller Order. These terms deal with three categories of provisions that should be included in an Anton Piller Order. First, there are basic protections for the rights of the parties; second, there are provisions relating to the conduct of the search; third, there are provisions relating to the post-search conduct.

[43] Counsel says that all of those terms are either implicit in Ricchetti J.’s Order, or should be read into that Order. He advances this argument on the basis that the Plaintiff asked for an Anton Piller Order and had an obligation to advise the Court of any deviations from the traditional Anton Piller Order. Further, in response to the Plaintiff’s assertion that it did not specifically ask for an Anton Piller Order, the Defendants’ counsel says that the Plaintiff had an obligation to return before Ricchetti J. the moment he referred to the Order as an “Anton Piller” Order and provide him with a full explanation of the differences between the Plaintiff’s draft Order and an Anton Piller Order.

[44] In essence, the Defendants’ counsel argues that the Plaintiff has (or should have) the same obligations to the Court and to the other side that they would have if Ricchetti J. had granted his Order on an ex-parte basis. This assertion is fundamentally wrong, and I reject it.

[45] I start from the premise that we work in an adversarial system. A key tenet of that system is that both sides are represented before the Court when the Court makes a decision. Each side has the opportunity to advance its position, respond to the arguments that the other side makes, and address any concerns that they have with the issues and evidence being placed before the Court.

[46] In an ex-parte motion, one side is absent, and does not know that the hearing is taking place. As a result, the Court does not have the opportunity to hear both sides of the argument. Instead, the Court relies on the one side that is present to share all of the material facts with the Court. The side that is present is subject to a substantially higher burden in its presentation to the Court.

[47] The mischief that can arise if one side is not present at the hearing of a motion is explained in Grenzservice Speditions GES.m.b.h. v. Jans (1995), 129 D.L.R. (4th) 733 (B.C.S.C.). At paragraph 77 of that case, Huddart J. (as she then was) stated:

First I want to say that counsel are not to be faulted for having been successful in obtaining the order. I agree with Scott J. when he said in Columbia Picture Industries that the safeguard against orders that ought not to be made or against orders made in unnecessarily wide orders is that they seem usually to be made ex parte, late in the afternoon, in circumstances of haste and pressure by enthusiastic counsel who are convinced that the defendant is a rouge. That enthusiasm is contagious to a busy judge who hears only one side of the story. It is the reason that this Court commonly has standard orders granted in such circumstances. Any variation from the standard order should be identified for the judge and the reasons for it explained.

[48] However, that mischief does not exist when both sides are present in Court at the initial hearing of the motion. As a result, Courts do not apply the higher standards used in ex parte Orders when both sides are present, because they are neither necessary nor appropriate.

[49] The higher standards are not necessary because both sides are present, and the Court has the opportunity to hear the entire argument, and to consider a complete record. They are not appropriate because applying them would place an undue burden on the side bringing the motion. In an adversarial system, each side has the obligation to present its own case. Placing the same high burden used in an ex parte motion on the moving party when a motion is not ex-parte would require that party to advance the arguments of the other side in the presence of the other side.

[50] The argument being advanced by Defendants’ counsel in this case illustrates the problem clearly. The Defendants’ previous counsel was present in Court when the draft Order was given to Ricchetti J. They had an opportunity at that time to comment on the Order and did not do so. Approximately a year later, the Defendants return to Court to ask that the Plaintiff (and Deloitte) retroactively be held to a different Order. It was the Defendants’ responsibility to raise these issues at the hearing before Ricchetti J. if they had any concerns about them.

[51] In addition, an ex-parte Anton Piller Order comes with a great deal of surprise to the party that is the subject of the Order. Usually, the party that is the subject of the Order is served with the Order, and has their premises searched (often in chaotic conditions) almost immediately thereafter. In this case, however, the search was done in an orderly way, on notice, and in the presence of solicitors appointed by the Defendants. Therefore, the search was of a substantially different character, and the Court should (and did) apply different terms to it. For all these reasons, I reject the Defendants’ position on this issue.

[52] The Defendants’ also assert that the standard Anton Piller terms are implicit in the Order of Ricchetti J., and his Order should be interpreted to include them. I reject this assertion as well.

[53] In support of this position, counsel for the Defendants points to the Grenzservice and Celanese decisions. However, a careful reading of those decisions illustrates two points. First, they both involved ex-parte motions. As a result, the passages that the Defendants’ counsel relies on are distinguishable on that basis.

[54] Second, and more importantly, the Celanese decision clearly states that the standard terms are the type of provisions that Courts should consider but are not obligated to include. Specifically, at paragraph 40 of Celanese, Binnie J. states that “the following guidelines…. may be helpful”. In other words, there is no requirement to include these terms in an Order. A Court must fashion the terms that are appropriate to the circumstances.

[55] For reasons set out above, this case is substantially different than the normal Anton Piller Order. In this case the relief was granted after hearing from both sides. The appropriate relief will be different in this case than in a case where the Order is granted on an ex-parte basis.

[56] As a result, the Order of Richetti J. should be read on its face without importing additional terms into it. The Defendants’ request to read in additional terms to Ricchetti J.’s Order would also cause substantial hardship for the Plaintiff and for Deloitte. In essence, the Defendants are asking the Court to retroactively change the terms under which Deloitte was engaged and performed its work. The Defendants’ request should not be granted when they were present on the motion and had the opportunity to raise these issues at the original hearing.

[57] In conclusion, the only obligations that Deloitte or the Plaintiff has under the February 18th, 2015 Order of Ricchetti J. are the obligations specifically set out in that Order. The Defendants’ motion on this point is dismissed.

Issue #2- Is Deloitte an Independent Supervising Solicitor?

[58] Counsel for the Defendants argues that the Order of Ricchetti J. should be interpreted to find that Deloitte was an independent supervising solicitor. He argues that an independent supervising solicitor has to be appointed in every case where an Anton Piller Order is issued.

[59] In support of this position, he points to the decision in Grenzservice. In that case, the Court considered a number of the safeguards that are generally set out in Anton Piller Orders, and went on to state:

87. All of these safeguards come to naught if they are not enforced by the supervising solicitor. Thus, the obligation on the court to supervise its officer and this application. As Professor Dockray concluded in his 1977 article (ibid. at 388), “… it is in the practical administration of the jurisdiction that its merits and defects must be tested.”

[60] In essence, counsel for the Defendants relies on this passage for the proposition that an independent supervising solicitor must be appointed in every case, and that Ricchetti J. certainly intended to appoint Deloitte as that independent supervising solicitor in this case.

[61] I reject these arguments for a number of reasons. First, the role of an independent supervising solicitor is explained in Celanese and in other cases. It is to supervise the search that is being conducted on a neutral basis, explain the search to the party that is the subject of the search, and report back to the Court on the results of the search.

[62] All of these roles are essential when an Anton Piller Order is granted on an ex-parte basis. However, in this case, the Defendants had notice of the motion, had notice of the searches, and had their own counsel present at every step of the way. Indeed, the scheduling of the searches was generally done on consent. In short, it is more than reasonable to conclude that Ricchetti J. determined that an independent supervising solicitor was not necessary in this case.

[63] Second, Deloitte was not given notice that it was fulfilling the role of an independent supervising solicitor. Such a position comes with significant responsibilities to the Court. I would expect that, if the obligations of an independent supervising solicitor were imposed on Deloitte (or, indeed, any other organization), the Order of Ricchetti J. would specify those obligations. It would be unfair and unreasonable for a Court to impose these obligations on a firm such as Deloitte without advising them in advance of the Court’s expectations.

[64] Third, Mr. Duncan argued that the obligations of an independent supervising solicitor are usually imposed on a firm in Deloitte’s position and that, as a result, they should be imposed in this case. I reject that argument for two reasons. First, as I have noted above, this is not the usual case. In this case, the Anton Piller Order was granted only after a full hearing before Ricchetti J., in which the Defendants were full participants. As I have noted above, the full participation of the Defendant in this case meant that there was substantially less need for an independent supervising solicitor.

[65] Second, it would work an unfairness on both Deloitte and on the Plaintiff to impose these obligations on Deloitte after the fact. It should have been clear that Deloitte was the Plaintiff’s expert. In support of that conclusion, I note that Mr. Fotheringham provided an Affidavit on the original motion before Ricchetti J. In that Affidavit, he stated (at paragraph 4) that Deloitte had been retained by the Plaintiff.

[66] Finally, Mr. Duncan argues that the Defendants’ reasonable expectation was that Deloitte was an independent supervising solicitor and that I should enforce that reasonable expectation. As far as I can tell, the only basis for the Defendants’ expectation would be that an independent supervising solicitor is what was usually ordered in these types of cases, and that this Order did not say anything to the contrary.

[67] I reject this argument as well, for the following reasons:

a) The Defendants were represented by counsel throughout. If they thought that Deloitte was supposed to report to the Court or was an independent supervising solicitor, they could have sought clarification earlier. In my view, if the Defendants were taking the view that Deloitte was a Court-appointed independent supervising solicitor, then it would have been essential for the Defendants to clarify that understanding with the Court on the original appearance. b) The correspondence from Defendants’ counsel does not support their position. As I noted in my review of the facts, the September 16th, 2015 letter from Defendants’ counsel acknowledges that there are “few protections” for their clients’ rights and privacy in the Order of Ricchetti J. c) The terms of the Order clearly set out Deloitte’s responsibilities. Any additional responsibilities would have been included in the Order had the Court intended to impose those responsibilities on Deloitte. d) Ricchetti J. cited the Celanese decision in his reasons on the motion. Had he intended to import additional terms into the Order, it is likely that he would have said so.

[68] As a result, I conclude that Deloitte was not acting as an independent supervising solicitor in this case. Instead, they were acting as the Plaintiff’s experts. The protections in the Order relating to confidentiality are designed to ensure that Deloitte does not disclose anything that is the Defendants’ confidential information to the Plaintiff, and these provisions were necessary as Deloitte might have come into contact with the Defendants’ confidential information.

Issue #3- Has Deloitte Completed Its Obligations Under the Order?

[69] The Defendants argue that Deloitte has not completed its obligations under the Order in the following respects:

a) Deloitte failed to inspect all of the devices, failed to identify information and failed to report to the Court. b) Deloitte delayed unduly in carrying out its responsibilities under the Order. c) Deloitte was not sufficiently independent from the Plaintiff in carrying out its responsibilities

[70] The issues relating to the reporting to the Court and the independence of Deloitte have been addressed above, and I do not need to review my analysis again. There are issues related to the search (keywords and MD5hash values), as well as inspection and delay that must be considered.

[71] The Plaintiff argues that the Defendants have not complied with their obligations under the Order in the following respects:

a) The Defendants have not dealt with the MD5hash values that they have been provided with by the Plaintiff. b) The Plaintiff is also seeking the return of some devices that the Defendants and/or Deloitte have.

[72] I will deal with the remaining issues separately.

The MD5hash Documents

[73] I reject the Defendants’ assertion that the Plaintiff and Deloitte have not complied with their obligations in providing a list of these documents. Based on my understanding of the evidence in the possession of the parties, the Defendants have a list of approximately 12,000 documents on their devices that the Plaintiff is claiming are identical to copies of documents that the Plaintiff claims are confidential information.

[74] I see no reason why the Defendants should not start to conduct a review of these documents, and provide the Plaintiff with their views on whether they are making a claim under paragraph 9.1 of the Order of Ricchetti J. that these documents contain confidential or privileged information of the Defendants. This is to be completed within ninety (90) days of the release of these reasons.

The Keyword Searches

[75] The keyword searches have returned approximately a million different documents for review. It is clear to me that this is an unmanageable amount of documentation. It is also clear to me that there are going to be “false positives” in this collection of documents.

[76] There is a clear argument that Deloitte was responsible for narrowing the searches to a manageable amount. The Defendants argue that this is Deloitte’s sole responsibility under the terms of the Order.

[77] I am of the view that Deloitte has not provided all of the information that the Order envisions, as I would have expected them to narrow the keyword searches to a more manageable level.

[78] I am not prepared to Order that Deloitte conduct any further work at this time. The Defendants have challenged both Deloitte’s independence and their approach to this case. They have also questioned the ethics of counsel for the Plaintiff. I note that I saw nothing on this motion that would support a challenge to the conduct of Plaintiff’s counsel in this case.

[79] However, when those types of allegations are being made about document searches and production, the Court has a responsibility to step in and ensure that the issues are dealt with in a clear and expeditious way.

[80] As a result, I am of the view the Defendants should have their own expert assist Deloitte in reviewing the searches that have been collected. The Defendants may choose not to appoint such an expert, but they make that decision in the knowledge that Deloitte is the Plaintiff’s expert and has no obligations to the Defendant and to the Court outside of the specific terms of Ricchetti J.’s Order or of the usual obligations that apply to any expert.

Devices Not Searched

[81] Defendants’ counsel aggressively argued that the Plaintiff failed to search some of the devices that it imaged. As a result, counsel argued that the Plaintiff was in breach of the Orders.

[82] I reject this submission. If the Plaintiff has decided not to search some of the devices that it imaged, then the Plaintiff must accept that none of its confidential information is on any of those devices. The Defendants should have no complaint about this conclusion.

[83] The Plaintiff is to identify the devices that it has not had Deloitte search, and those devices will be deemed not to have any of the Plaintiff’s confidential information on them unless the Plaintiff has Deloitte search the devices within twenty one (21) calendar days of the release of these reasons.

Identifying Confidential Information

[84] As I have noted above, the Plaintiff and Deloitte have complied with their obligations relating to the MD5hash documents. This produced approximately 12,000 results, which is a completely manageable number from my perspective.

[85] Defendants’ counsel argued that his clients should not have to go through these documents at this stage as it remains Deloitte’s responsibility to review them.

[86] I reject this assertion. I am of the view that there is no reason why the Defendants should not go through the identified documents and identify which ones are their proprietary information. This is work that the Defendants should have started the moment that they received the MD5hash searches. In a complex litigation case, both sides should be dealing with documentary disclosure, production and privilege issues at the same time. I have set out the time limit by when the Defendants’ are to complete this work in the MD5hash issue above.

Delay

[87] Counsel for the Defendants spent a great deal of time in his argument outlining his concerns with the delays in collecting this information. He asserted that the Plaintiff actually chose to tell Deloitte not to implement the Order of Ricchetti J.

[88] As a result, counsel for the Defendants seeks the disclosure of the communications between the Plaintiff’s counsel and Deloitte both so that he can assess the reasons for the delay and so that he can review the search terms that were provided to Deloitte.

[89] In oral argument, I pressed counsel for the Defendants about what prejudice his clients had suffered as a result of the delay, given that the pleadings had not yet closed. He was unable to identify any prejudice to my satisfaction, likely because the Defendants have not suffered any prejudice by this delay.

[90] Counsel for the Defendants argued that the Court (and the Defendants) needed to know what communications passed between the Plaintiff’s counsel and Deloitte so that we can assess whether Deloitte failed to follow the Court order. I reject this assertion for the following reasons:

a) I have found that Deloitte is the Plaintiff’s expert. As a result, intruding too far into the communications between the Plaintiff and its expert could result in breaches of privilege. b) Such intrusions are not necessary because the Defendants have not suffered any prejudice in this case. c) Deloitte (and the Plaintiff) have disclosed some of their communications and have advised that there were reasons for the delay. d) The Defendants had the opportunity to cross-examine the Plaintiff’s affiants, and have not pursued that opportunity. As a result, it is difficult to see how the Defendants, at least on this motion, can challenge the explanations the Plaintiff has provided.

[91] I give no effect to the Defendants’ delay argument.

The Plaintiff’s Devices

[92] The Plaintiff is seeking the return of devices that had been used by the Defendants, and imaged by Deloitte. There may be confidential information on these devices that is the property of the Defendants.

[93] However, the devices appear to be the property of the Plaintiff. As a result, it seems reasonable to me that these should be returned after the Defendants’ expert has had an opportunity, under the same terms as apply to the Plaintiff’s expert, to consider whether there is any documentation where the Defendants’ are making a claim of confidentiality or privilege.

[94] I am not making any Orders in this regard. However, it would be my expectation that this issue would have been resolved as between the parties before the next attendance before me in August.

The Next Steps and Orders

[95] I required the parties to make themselves available for a one hour in person attendance on August 25th, 2016 at 9:00 am. I confirm that this attendance remains necessary, and that I am not prepared to permit it to be adjourned for any reason without my leave. The purpose of this attendance is to prepare a timetable for this litigation and to discuss any outstanding issues that remain.

[96] In reviewing the issues relating to the Deloitte report, it also appears to me that a number of additional steps need to be taken in order to move this action forward. First, as I have noted above, Deloitte is the Plaintiff’s expert. Although Deloitte is bound to certain confidentiality provisions in the Order of Ricchetti J., it takes its instructions from the Plaintiff, and from its solicitor as long as those instructions do not breach the specific provisions of Ricchetti J.’s Order or the Order that will flow from these reasons.

[97] Second, the Defendants may wish to have its own experts (either BDO Dunwoody or someone else) review the documents and servers in Deloitte’s possession. The Defendants are to identify their desire to have their own expert assist Deloitte within seven (7) days of the date that these reasons are released. The Defendants are to provide the identity of their expert within fourteen (14) days of the date that these reasons are released.

[98] It appears to me that it would likely be appropriate to provide the Defendants’ experts access to the computer documentation under the same terms as apply to Deloitte. I am, at this stage, not ordering this, but merely suggesting it as a possibility. If either party disagrees with that suggestion, they may provide me with written submissions of no more than two (2) single spaced pages on what should be done about the Defendants’ expert within fourteen (14) days of the release of these reasons. If I do not receive submissions from the parties within that time period, then the suggestion that I have made in this paragraph will become an Order.

[99] Next, it appears to me that the production and disclosure issues relating to the devices that Deloitte have imaged need to be moved forward. The terms of the Order of Ricchetti J. remain in place, but I am making the following additional Orders:

a) The experts will meet within thirty five (35) days of the release of these reasons and develop a proposed protocol for compliance with section 8 of the Order. b) If there is no agreement on the protocol within fifty (50) days, the parties will address the issues in their appearance before me on August 25th, 2016. c) The protocol, if agreed, will be executed within ninety (90) days of the release of these reasons.

[100] Finally, in terms of the deadlines that I have set out in various places in this decision, I note two points. First, those deadlines may not be changed, even on consent, without my leave. Second, the deadlines are longer than I would have liked to have given the parties because this action has been dragging on for nearly a year and a half. However, I have taken into account both what I suspect may be technical difficulties that may exist with the computer searches and the fact that the next two months are likely to be consumed with summer vacation.

Costs

[101] The Plaintiff’s costs submissions are due fourteen (14) days from the release of this decision. They are to be no more than three (3) double spaced pages, excluding bills of costs and case law.

[102] The Defendants’ costs submissions are due fourteen (14) days from the date that the Plaintiff provides their costs submissions. Again, they are to be no more than three (3) double spaced pages, excluding bills of costs and case law.

[103] There are to be no reply submissions on costs without leave of the Court.

LEMAY J

Released: June 30, 2016

COURT FILE NO.: CV-15-0694-00 DATE: 2016 06 30 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: TSI International Inc. Plaintiff - and - John Formosa, Steffen Nielsen, iFarmLocal Inc., Richard Taylor, Great Life Group Inc. and John Masih, carrying on business as MSM Group Defendants REASONS FOR JUDGMENT LeMay J. Released: June 30, 2016