COURT FILE NO.: 13-58129 DATE: August 15, 2016

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Cimtel Inc. and Wireless Resident Nurse Alert Technology Inc. Plaintiffs and TSV Holdings Ltd. and Azure Health Care Ltd. Defendants

BEFORE: MASTER NATHALIE CHAMPAGNE

COUNSEL: David Elliott for the plaintiffs Stephen Cavanagh for the defendants

HEARD: July 12th, 2016

ENDORSEMENT

[1] This motion is about whether a plaintiff’s right to examine an officer, director or employee of a defendant corporation ought to be interfered with by the court.

Background

[2] Cimtel Inc. and Wireless Resident Nurse Alert Technology Inc. (“Cimtel”) carry on business as a provider of emergency “nurse call services” for long-term care facilities. Cimtel had a reseller agreement with a company named Austco Marketing & Service (Canada) Ltd. (“Austco Canada”). Azure Health Care Ltd. (Azure) is the parent company of Austco Communication Systems Pty Ltd. of which Austco Canada is a subsidiary. In June 2011, Tim Love, a long-term employee of Cimtel, resigned and joined Austco Canada. A very short time later Austco Canada terminated Cimtel’s reseller agreement with Austco Canada. Cimtel started an action against Austco Canada and Tim Love for breach of contract, misuse of confidential information and breach of fiduciary duty. Cimtel started a separate action against Azure, seeking the same relief and relying on the same facts as the Austco Canada action, as it believes that Azure was involved in soliciting Tim Love to join Austco Canada.

[3] A man by the name of Clayton Astles was the president of Austco Canada at the time that Austco Canada terminated its reseller agreement with Cimtel. He has since become employed as CEO of Azure. The plaintiff wishes to examine him for discovery in the Azure action. Azure objects and seeks an order from the court ordering that a different officer of Azure be examined.

Issue

[4] Whether Cimtel’s right to examine any officer, director or employee of a defendant corporation it chooses, ought to be interfered with by the court.

Evidence

[5] The evidence in this matter is not disputed for the most part.

[6] Azure is the parent company of a group of companies that is described on its website as an “International provider of healthcare, communication and clinical workflow management solutions”. In its annual reports, amongst its listed subsidiaries are Austco Canada and Austco Communication Systems Pty. Ltd (“Austco Communication”). Azure’s evidence is that in fact Austco Canada is a subsidiary of Austco Communication and Austco Communication is a subsidiary of Azure.

[7] Cimtel provides “emergency nurse call services” to various institutions and from 2001 until June 2011, it operated as a reseller of the Austco Canada nurse call system, which is an emergency call system used in hospitals, long-term care facilities, retirement homes, prisons and educational facilities. In June 2011, Tim Love, one of Cimtel’s key employees, left the company to work for Austco Canada and shortly thereafter, Cimtel’s reseller agreement with Austco Canada was terminated by Austco Canada. Cimtel commenced an action against Austco Canada and Tim Love in 2012 for intentional interference with contractual relations, inducing breach of contract, breach of fiduciary duty, unfair competition, wrongful use of the plaintiff’s confidential information, as well as solicitation of the plaintiff’s customers. In 2013, Cimtel commenced the within action against Azure seeking the same relief and relying on the same facts.

[8] At the time of Tim Love’s departure from Cimtel and of the termination of the reseller agreement, Clayton Astles was the president of Austco Canada. Austco Canada offered him as a corporate representative at examination for discovery in the Austco Canada action. Cimtel chose instead to examine Aaron Rosler. It is Azure’s evidence that in the Austco Canada action Mr. Rosler did not have much direct knowledge of what had transpired and that he gave a significant number of undertakings which involved obtaining information from Mr. Astles. Azure’s affiant, Jason D’Arcy, suggests that in the present action he (Jason D’Arcy) would be the best candidate to attend for examination. Mr. D’Arcy states that he would have more intimate knowledge of Azure’s role in the litigation because he has been in its employ since 2004 and attends all of its board meetings. His evidence is that he was not aware of any discussions of any kind about Cimtel by anyone at Azure until the filing of this suit.

[9] Cimtel’s affiant, Joseph Norris, says that Mr. Astles would be the best candidate to attend examinations as he was the president of Austco Canada and was involved in the hiring of Tim Love and the termination of the reseller agreement. There is also evidence from undertakings that Mr. Astles had at least one conversation with the Executive Director of Azure, Robert Grey, regarding the hiring of Tim Love. Specifically, the answer to undertaking #31 in the parallel action sets out that Mr. Astles spoke with Aaron Rosler, Victor Almeida, Robert Grey and Wayne Robinson about hiring Tim Love.

[10] For the reasons that follow, I will not interfere with Cimtel’s choice to examine Mr. Astles at examinations for discovery.

Analysis

[10] Rule 31.03(2) of the Rules of Civil Procedure provides that an examining party may examine for discovery any officer, director or employee of a corporation with the caveat that a court may, on a motion, order the party to examine someone other than the individual chosen. In coming to a decision on the application of that rule in this matter I am guided by Master Hawkins decision in Farris v. Staubach [2004] O.J. No. 3961 (S.C.J.) para 2 which sets out the following factors to be considered:

1. Does the selected individual have sufficient knowledge of the matters in issue?
2. Does the selected individual have direct involvement in the matters in issue?
3. Can the selected individual inform himself/herself of the matters in issue?
4. Would it be unduly onerous for the selected individual to be examined?
5. Would substituting the selected individual be prejudicial to the examining party?

Sufficient knowledge

[11] Azure takes the position that Mr. Astles does not have sufficient knowledge of the matters at issue as he has only been the CEO of Azure since July 2015. It is Azure’s contention that any knowledge that Mr. Astles had in his capacity as president of Austco Canada prior to his appointment as CEO of Azure should not be considered. Its basis for that is a line of cases which stand for the proposition that a corporate officer “may be examined only as to matters coming to his knowledge as an officer of the corporation. Knowledge which he has acquired otherwise than as such an officer cannot be explored” (Regina v. Corning Glass Works of Canada Limited, [1971] 2 O.R. 3 (C.A.), at para. 12).

[12] Cimtel provided me with a line of cases in which courts ordered that representatives who had worked for interrelated companies, to answer questions in their personal knowledge. While the facts of some of those cases were different than the facts before me, they are worth reviewing here. In Willroy Mines Ltd. v. New Cinch Uranium Ltd. et al. (1983), 34 C.P.C. 13 (Ont. S.C.), Senior Master Rodger ruled that when a corporation’s officer is also sued in his personal capacity, he/she must answer all questions about which he/she has knowledge in both capacities. In Young-Warren Food Brokerage Ltd. v. Uniline Corp. (1978), 19 O.R. (2d) 332 (S.C.), Master Sandler concluded that an officer’s knowledge as general manager of a corporation which later incorporated another corporation of which he became an officer, is relevant. The decision of the Master in Young-Warren was upheld on appeal. More recently, in Hacking v. Skyjack Inc., Justice Matheson compelled a witness to answer questions that were refused stating that the individual was an employee of two interrelated companies. At paragraph 9 of that decision, the judge concluded that:

“the two companies are very closely intertwined. The controlling mind of Skyjack Inc. is Linamar Corporation. Thus executives of one company would be aware of the affairs of the other”.

[13] Azure is the parent company of a group of companies that is described on its website as an “International provider of healthcare, communication and clinical workflow management solutions”. In its annual reports, among its listed subsidiaries are Austco Canada and Austco Communication Systems Pty. Ltd (“Austco Communication”) yet the evidence of Azure is that in fact Austco Canada is a subsidiary of Austco Communication and Austco Communication is a subsidiary of Azure. Whether Austco Canada is a subsidiary of Austco Communication or of Azure, I am satisfied that the companies are closely connected. They all carry on the same business and they are controlled by Azure either directly or indirectly. Given the relationship between the companies and the fact that Mr. Astles has knowledge of the affairs of both Austco Canada and Azure, both in his role as president of Austco Canada and in his current role as CEO of Azure, I am satisfied he has sufficient knowledge. The test is sufficient knowledge and not who has greater knowledge (Eversonic v. MacGirr et al. (1986), 53 O.R. (2d) 179 S.C.).

Direct Involvement and Ability of a Representative to Properly Inform Himself

[14] Mr. D’Arcy by his own admission had no involvement in the matter that gave rise to this litigation. In fact, he knew nothing of any communication between Azure and Cimtel until he was made aware of the lawsuit. While Mr. Astles may not have direct involvement in the matters at issue as CEO for Azure, he certainly had direct involvement while in the employ of Austco Canada. There is evidence that at the time he had communications with Azure with respect to the hiring of Tim Love. In my view, as CEO for Azure, Mr. Astles would be well positioned to access that information either directly or by way of undertakings.

Unduly Onerous

[15] None of Azure’s evidence on this motion would indicate that having Mr. Astles attend at examination would be unduly onerous. On the facts before me, given Mr. D’Arcy’s lack of knowledge, he would be required to provide undertakings to at least the same extent as Mr. Astles. I do not find in the circumstances that having Mr. Astles attend examinations would be unduly onerous.

Prejudice

[16] An examining party’s right to choose which director, officer or employee of a corporation to examine should not be interfered with by the courts unless there is a compelling reason to do so. The reason for this can be found in Ciardullo v. Premetalco Inc. (2009), 82 C.P.C. (6th) 148 (Ont. S.C.), in which Strathy J. sets out that the purpose of discovery is to enable an examining party to know the strengths and weaknesses of its opponent as well as its own case, and to obtain admissions at trial. Cimtel submits that substituting Mr. D’Arcy for Mr. Astles would hamper its ability to know Azure’s case and to obtain first-hand information relating to the matters at issue. It contends that Mr. D’Arcy has no information. Azure’s response to this is that if Mr. D’Arcy does not know anything it is because “there is nothing to know”. I disagree. There is evidence that when he was CEO of Austco Canada Mr. Astles had a conversation with the Executive Director of Azure about hiring Tim Love. This fact, of which Jason D’Arcy appears to have been unaware, combined with the fact that Mr. Astles was directly involved in the events that lead to this litigation, leads me to conclude that Cimtel would in fact be prejudiced by not having Mr. Astles attend as the representative for Azure. At the very least he would have as much knowledge as Mr. D’Arcy and he would be better placed than Mr. D’Arcy to give undertakings.

[17] Azure contends that it would be an abuse of process to have Mr. Astles examined in this action as it would effectively amount to a second examination given the many undertakings he answered in the Austco Canada action. Given my findings, I disagree.

[18] In his submissions, counsel for the plaintiff asked the court to order that Mr. Astles answer all questions about which he would have acquired knowledge other than as a CEO of Azure. That relief has not been requested by way of motion and the defendant has not had an opportunity to properly respond; I am therefore not prepared to deal with it at this juncture.

Conclusion

[19] For the reasons set out above, I am not prepared to interfere with the plaintiff’s choice to examine Mr. Astles in this matter.

[20] If the parties cannot agree on costs, they may submit written submissions limited to three pages, within 30 days of today.

Master Nathalie Champagne Date: August 15, 2016