COURT FILE NO.: CV-15-10993-00CL MOTION HEARD: 20170613 REASONS RELEASED: 201 70710

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

NEW YORK STOCK EXCHANGE, LLC

Plaintiff

- and-

ORBIXA TECHNOLOGIES INC., ORBIXA TECHNOLOGIES LTD., BRMS HOLDINGS INC. and PETER BECK

Defendants

BEFORE: MASTER M.P. McGRAW

COUNSEL: J. Squire Email: jsquire@lerners.ca -for the Plaintiff

M. Cooper Email: cooper@cooperlaw.ca -for the Defendants

REASONS RELEASED: July 10, 2017

Reasons For Endorsement

I. Background

The Motions

[1] There are two motions before me which proceed pursuant to the Endorsement of Justice Hainey dated March 1, 2017 who is supervising this matter on the Commercial List.

[2] The first is a motion by the defendants under Rule 31.03 to strike the Notice of Examination dated January 23, 2017 (the “Notice”) of the plaintiff, New York Stock Exchange, LLC (“NYSE”) to examine Olga Sementchoukova on behalf of the defendants Orbixa Technologies Inc. (“Incorporated”) and Orbixa Technologies Limited (“Limited”). The defendants seek to substitute the defendant Peter Beck (together with Incorporated, Limited and BRMS Holdings Inc., the “Defendants”) as the representative of Incorporated and Limited. The Defendants are based in Toronto.

[3] The second is NYSE’s motion pursuant to Rule 31.06 to compel the defendants to answer 17 questions taken under advisement and/or refused on the examination for discovery of Mr. Beck held on March 22, 2017. NYSE also seeks certain relief with respect to documentary discovery which, as set out below, appears to have been resolved.

The Arbitration Award, the Enforcement Application and the Ontario Judgment

[4] This action arises from NYSE’s extensive efforts over the last 4 years to enforce a New York arbitration award against Incorporated which is now worth more than US$5,000,000.

[5] Pursuant to a contract dated July 8, 2008 (the “Contract”), NYSE provided market data to Incorporated for distribution to certain third party users. In 2012, a dispute arose between NYSE and Incorporated with respect to Incorporated’s designation of its third party users and corresponding fees owed to NYSE.

[6] Incorporated submitted the dispute for arbitration in New York pursuant to the Contract (the “Arbitration”). By Award dated April 28, 2013, Limited is required to pay US$3,516.844.58 to NYSE and NYSE was entitled to terminate the Contract (the “Award”).

[7] On May 28, 2013, Incorporated filed an application (the “SEC Application”) with the Securities Exchange Commission (“SEC”) for a review of NYSE’s decision to terminate the Contract which was dismissed on November 15, 2013.

[8] On July 26, 2013, Incorporated filed a Complaint in the United States District Court for the Southern District of New York against NYSE seeking to vacate the Award. Incorporated withdrew the Complaint on August 9, 2013.

[9] On June 13, 2013, NYSE commenced an application in Ontario for recognition and enforcement of the Award (the “Enforcement Application”). Pursuant to the reasons and judgment of Justice Pattillo dated September 6, 2013 (the “Judgment”), Incorporated was ordered to pay the Award plus costs of $12,000 (see New York Stock Exchange, LLC v. Orbixa Technologies, Inc., 2013 ONSC 5521).

[10] By Endorsement dated March 20, 2014, the Court of Appeal dismissed Incorporated’s appeal of the Judgment and awarded costs of $7,000 (see New York Stock Exchange, LLC v. Orbixa Technologies, Inc., 2014 ONCA 219)

[11] The Judgment and costs awards remain unpaid.

The Transaction and the Action

[12] On October 9, 2014, Mr. Beck, the President of Incorporated and Limited, disclosed the following on Incorporated’s examination in aid of execution:

i.) on or about July 11, 2013, approximately 1 month after the commencement of the Enforcement Application, Mr. Beck caused Limited to be incorporated in Ontario;

ii.) pursuant to an Asset Purchase Agreement dated July 11, 2013 between Incorporated and Limited (the “APA”), executed by Mr. Beck on behalf of both parties, substantially all of the property and assets of Incorporated were transferred to Limited (the “Transaction”);

iii.) the Transaction was funded by the defendant BRMS Holdings Inc. (“BRMS”), the controlling shareholder of both Incorporated and Limited. Mr. Beck is the controlling shareholder of BRMS;

iv.) the purpose of the Transaction was to repay approximately $5,570,000 in unsecured and secured loans made by BRMS to Incorporated between November 27, 2012 and June 28, 2013 pursuant to an Unsecured Grid Promissory Note dated November 2, 2012 and a Secured Grid Promissory Note dated November 16, 2012 (collectively, the “Notes”) executed in November 2012 by Mr. Beck on behalf of both BRMS and Incorporated (NYSE alleges that bank records produced for Incorporated’s examination in aid of execution support loans of only $2,380,000);

v.) advances by BRMS to Incorporated under the Secured Grid Promissory Note were secured over substantially all of the assets of Incorporated pursuant to a Security Agreement in favour of BRMS dated November 16, 2012 (the “GSA”);

vi.) on or about July 11, 2013, Incorporated closed its bank account at RBC through which it had conducted business with NYSE and opened a new bank account for Limited at BMO;

vii.) on or about July 11, 2013, the employees of Incorporated became employees of Limited;

viii.) since July 11, 2013, Limited has carried on the same business previously carried on by Incorporated, used the same credit cards and written cheques on its BMO account in the name of the same entity, “Orbixa Management Services Inc.”, previously used by Incorporated

ix.) on September 9, 2013, the first business day following the release of the Judgment, BRMS made a registration under the Ontario Person Property Security Act (the “PPSA Registration”) against the remaining assets of Incorporated purportedly to secure an unspecified amount;

[13] As a result of these disclosures, NYSE commenced this action by Statement of Claim dated June 9, 2015. The plaintiff seeks, among other things, an order declaring void and setting aside the Transaction, the APA and the Notes as fraudulent conveyances and various remedies pursuant to the oppression provisions of the Ontario Business Corporations Act. The Defendants delivered a Statement of Defence dated August 25, 2015 (the “Defence”).

[14] Counsel commenced discussions with a view to agreeing on a discovery plan in or about May 2016. In Mr. Cooper’s letter to Mr. Squire dated May 9, 2016 with respect to the defendants’ deponents for discovery, he stated as follows:

“I should advise you that Mr. McGuire, the former Vice President of Orbixa has not been with the company for a little over a year. We are therefore proposing on producing Ms. Olga Sementchoukova, Controller for both companies. Ms. Sementchoukova was present and directly involved in the financial transactions with respect to these companies. Mr. Beck is the proper representative for BRMS Holdings Inc.

[15] By email message dated October 3, 2016, Mr. Cooper then advised Mr. Squire that Ms. Sementchoukova was on maternity leave adding “I doubt you would like to wait until she returns”. In the exchange of correspondence with respect to the possible examination of Regan Louis, the person covering the Controller’s position in Ms. Sementchoukova’s absence, the General Counsel for Incorporated and Limited noted that he would be “wholly inadequate”. Specifically, General Counsel stated that he did not believe that Ms. Sementchoukova had “trained him on the historical aspects of the business” and that “by necessity she had to get somewhat familiar with the 2013 matters when Steve left in 2015”.

[16] In an exchange of e-mails on November 14-15, 2016, Mr. Cooper then advised Mr. Squire that the defendants would not produce Ms. Sementchoukova for discovery, characterizing her as an “unauthorized representative” of Limited and Incorporated. Mr. Squire reminded Mr. Cooper of the statements in his letter dated May 9, 2016 and agreement to produce her. Mr. Cooper replied as follows:

“The bookkeeper Olga was not a party to nor directed the impugned transactions and the corporate defendants are not obliged to accede to your request that they produce for discovery a low-level clerical person whose answers cannot possibly bind these corporations in this litigation.”

[17] After service of the Notice, Mr. Cooper reiterated the Defendants’ position that Ms. Sementchoukova was not an appropriate witness, referring to her as “a non-officer, non-director, non-management clerical employee” and advised that he would proceed to bring a motion on the Commercial List to strike the Notice.

[18] The parties were unable to agree on a discovery plan. NYSE brought a motion to impose a discovery plan, however, examinations for discovery proceeded notwithstanding the disagreements between the parties. NYSE agreed to defer its motion regarding documentary discovery and Mr. Beck’s examination proceeded on March 20, 2017.

II. The Law and Analysis

Generally

[19] The proportionality factors for discovery in Rule 29.2.03 (1) apply to these motions:

(1)In making a determination as to whether a party or other person must answer a question or produce a document, the court shall consider whether,

(a) the time required for the party or other person to answer the question or produce the document would be unreasonable;

(b) the expense associated with answering the question or producing the document would be unjustified;

(c) requiring the party or other person to answer the question or produce the document would cause him or her undue prejudice;

(d) requiring the party or other person to answer the question or produce the document would unduly interfere with the orderly progress of the action; and

(e) the information or the document is readily available to the party requesting it from another source.

(2) In addition to the considerations listed in subrule (1), in determining whether to order a party or other person to produce one or more documents, the court shall consider whether such an order would result in an excessive volume of documents required to be produced by the party or other person.

[20] Relevance, the scope of discovery and proportionality were explained and applied comprehensively by Perell J. in Ontario v. Rothmans Inc., 2011 ONSC 2504 and Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2013 ONSC 917. In particular, discovery questions must be relevant to the issues as defined by the pleadings such that they must have probative value and adequately contribute to the determination of the truth or falsity of a material fact. Overbroad and speculative discovery and “fishing expeditions” are not permitted.

[21] I have also considered and applied Rule 1.04(1) which provides that the Rules of Civil Procedure shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits and Rule 1.04(1.1) which requires the court to make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

Striking of Notice of Examination and Substituting Corporate Representative

[22] Rule 31.03 provides that:

(1) A party to an action may examine for discovery any other party adverse in interest, once, and may examine that party more than once only with leave of the court, but a party may examine more than one person as permitted by subrules (2) to (8).

(2) Where a corporation may be examined for discovery,

(a) the examining party may examine any officer, director or employee on behalf of the corporation, but the court on motion of the corporation before the examination may order the examining party to examine another officer, director or employee; and

(b) the examining party may examine more than one officer, director or employee only with the consent of the parties or the leave of the court.

(4) Before making an order under clause (2) (b) or (3) (b), the court shall satisfy itself that,

(a) satisfactory answers respecting all of the issues raised cannot be obtained from only one person without undue expense and inconvenience; and

(b) examination of more than one person would likely expedite the conduct of the action.

(9) Where a party is entitled to examine for discovery,

(a) more than one person under this rule; or

(b) multiple parties who are in the same interest,

but the court is satisfied that multiple examinations would be oppressive, vexatious or unnecessary, the court may impose such limits on the right of discovery as are just.

[23] The Defendants submit that the court should exercise its discretion to substitute Mr. Beck for Ms. Sementchoukova as the representative of Incorporated and Limited such that Mr. Beck would be examined on behalf of all 3 corporate Defendants. NYSE submits that, not only did the Defendants offer and agree to produce Ms. Sementchoukova, they admitted that she has direct knowledge of the matters at issue and NYSE would suffer prejudice if she is not produced.

[24] As set out by Master Muir in De Sousa v. Aviva Insurance Company of Canada, 2013 ONSC 185, Rule 31.03(2) provides an examining party with a prima facie right to examine the officer, director or employee of his or her choice which should not be lightly interfered with by the court. It is not the court’s role to decide who the best representative of the corporate party might be and if an examining party makes a poor selection, they must live with the consequences (De Sousa at para. 7).

[25] While the parties rely on different cases, they agree on the considerations and factors to be applied where a corporate party seeks to substitute a deponent for the representative selected by the examining party. The starting point for the analysis is to note the purposes of discovery, which is to enable the examining party to know the case it must meet, to assess the strengths and weaknesses of the opposing party’s case and its own case and to obtain admissions for use at trial. The court should consider the following:

i.) whether the person selected is sufficiently knowledgeable in relation to the matters at issue;

ii.) whether it would be oppressive to require the person selected to be examined for example because it would give rise to an excessive number of undertakings or unnecessarily take the person away from onerous management responsibilities;

iii.) whether there would be prejudice to the examining party to be required to examine someone other than the person whom he or she selected (see Ciardello v. Premetalco, [2009] O.J. No. 3625 (S.C.J.) at para. 19; Great Lakes Copper v. 1623242 Ontario Inc., 2013 ONSC 2600 at paras. 19-20; Sawah v. Strategy Insurance Limited, 2011 ONSC 2114 at para. 6).

[26] NYSE has a prima facie right to examine Ms. Sementchoukova on behalf of Incorporated and Limited, a right which this court should not lightly interfere with considering the purposes of discovery which includes NYSE’s right to assess the Defendants’ case and obtain admissions.

[27] Mr. Cooper’s letter dated May 9, 2016 demonstrates that the Defendants not only initially agreed to produce Ms. Sementchoukova, but offered to do so before NYSE even knew who she was. However, the parties were unable to agree on the terms of a discovery plan and the Defendants refused to produce her for discovery. Therefore, I decline to make any finding as to whether there was an agreement to produce Ms. Sementchoukova.

[28] However, in offering to produce Ms. Sementchoukova, the Defendants, through Mr. Cooper and their General Counsel, stated that she has direct knowledge of the Transaction and that in assuming the Controller’s position in June 2015 had already informed herself with respect to the history of the Transaction and related matters. Further, Ms. Sementchoukova was the bookkeeper at the time of the Transaction and when the advances were made from BRMS to Incorporated, her initials appear next to advances recorded in one of the Notes and as Controller she has been responsible for maintaining the grid.

[29] In retreating from their initial position, the Defendants now characterize Ms. Sementchoukova as a low-level clerical employee at the time of the Transaction with no direct knowledge of the matters at issue. When pressed, counsel for the Defendants states that the Defendants changed their position regarding Ms. Sementchoukova because Mr. Beck has now been examined and answered relevant questions, provided undertakings and is prepared to re-attend as a deponent for all 3 corporate Defendants. This response seems disingenuous not only because it does not address Ms. Sementchoukova’s admitted knowledge of the matters at issue but because the Defendants already changed their position not to produce her by November 14, 2016, over 4 months before Mr. Beck’s examination.

[30] The Defendants’ position is also contrary to the evidence regarding Ms. Sementchoukova’s knowledge of the matters at issue. Even if, as the Defendants suggest, she was a low level clerical employee at the time of the Transaction, she was involved in maintaining the financial records and journal entries of the corporate Defendants and possessed sufficient skills, knowledge and experience to be promoted to Controller. In my view, the evidence as a whole supports the conclusion that Ms. Sementchoukova is sufficiently knowledgeable in relation to the matters at issue.

[31] The Defendants also submit that it would be oppressive for Ms. Sementchoukova to attend on discovery. Specifically, the Defendants state that given that her knowledge is derivative of documents they have produced and what Mr. Beck has and could provide on another examination for discovery and her lack of independent knowledge, she will be unable to answer many questions which will therefore result in a large number of undertakings. The defendants state that her examination would be “little more than a re-examination of Mr. Beck.”

[32] This position ignores the fact that Mr. Beck was unable to answer a significant number of questions or provide much guidance at all on his examination regarding financial matters which are material to this action. This includes relevant questions regarding journal entries, revenue, the maintenance of the grids attached to the Notes, the particulars of the financial relationships between Limited and its customers and creditors, the maintenance of ledgers, preparation of balance sheets, accounting advice related to the Award and inquiries regarding Limited’s financial statements. Mr. Beck also deferred to the Controller on certain issues, a position now held by Ms. Sementchoukova.

[33] In my view, there is no basis to conclude that requiring Ms. Sementchoukova to attend on an examination for discovery would be oppressive. Given her direct involvement in the Transaction and financial administration of Limited and Incorporated, informing herself as a result of her promotion to Controller, she is already able to provide relevant information even before she informs herself further. In fact, it is possible that she may be able to provide relevant information which Mr. Beck was unable to provide and even if she provides undertakings, they may be fewer in number and/or more specific in nature. There is also no suggestion that attending a one-day examination in the city where she resides after she returns from maternity leave would interfere with Ms. Sementchoukova’s duties or personally.

[34] NYSE submits that it would suffer prejudice if Mr. Beck is substituted for Ms. Sementchoukova. NYSE states that it would essentially be left with the same examination of Mr. Beck, who was unable to answer relevant financial questions and who, as a personal defendant and officer and director of all of the corporate defendants has a vested interest in controlling the evidence. The Defendants submit that no prejudice would result since examining Ms. Sementchoukova will not provide them with any independent knowledge other than what Mr. Beck could provide.

[35] As set out above, Ms Sementchoukova may be able to provide independent information, evidence and clarity regarding relevant matters at issue in addition to what Mr. Beck has provided, particularly given Mr. Beck’s lack of knowledge of accounting and financial matters at issue. NYSE, which has a prima facie right to examine one representative per corporate defendant of their choice would suffer prejudice if it is not permitted to ask relevant questions of Ms. Sementchoukova in these circumstances which would be probative of financial and accounting issues. If, as the Defendants suggest, Ms. Sementchoukova has little to offer, then NYSE will be stuck with their choice.

[36] The Defendants also submit that it would be contrary to the principles of proportionality and Rule 1.04(1) to require Ms. Sementchoukova’s attendance now that Mr. Beck has already been examined and the Defendants have now produced a substantial number of bank and other financial records. In my view, there is nothing inefficient or disproportionate about a corporate representative with involvement in transactions and financial matters at issue at issue being examined regarding her knowledge, information and belief including with respect to the very bank and other financial records which have been produced in the litigation.

[37] Having considered all of the factors and circumstances, I conclude that the Defendants have not demonstrated that it would be appropriate for this court to interfere with NYSE’s choice of deponent and substitute Mr. Beck for Ms. Sementchoukova. Therefore, the Defendants’ motion must fail and Ms. Sementchoukova shall attend on an examination for discovery to be scheduled for after her return from maternity leave on a date to be agreed upon between counsel.

[38] During submissions, counsel for the Defendants advised that they would agree to allow Ms. Sementchoukova to answer written interrogatories. NYSE would not agree to this proposal given their concerns that Mr. Beck may influence her answers or control her evidence. Quite apart from these concerns, I am not prepared to order that Ms. Sementchoukova’s examination proceed in writing. This will be the first attendance of a corporate representative for Incorporated and Limited where NYSE has demonstrated that the court should not interfere with its right to examine the representative of its choice. As there are no other issues such as prejudice to Ms. Sementchoukova, she shall attend in person.

[39] Similarly, I deny the Defendants’ requests that Ms. Sementchoukova’s examination be limited to her actual knowledge of the transactions at issue, that she not be asked to provide her interpretation of accounting records and financial documents and that she not be asked undertake to ask questions of Mr. Beck or review corporate records. As a result of my conclusions above, there is no basis to order any such limitations which in my view are unnecessary and unfair to NYSE in the circumstances. Her examination should proceed pursuant to the Rules with counsel bringing any motions arising from undertakings, refusals and/or under advisements if necessary.

Under Advisements and Refusals

Overview

[40] Rule 31.06 provides that:

(1) A person examined for discovery shall answer, to the best of his or her knowledge, information and belief, any proper question relevant to any matter in issue in the action….

[41] The under advisements and refusals from Mr. Beck’s examination are divided into 3 groups (the Refusal and Under Advisement numbers correspond with the chart attached as Schedule “A” to NYSE’s Notice of Motion):

i.) Legal Advice, Privileged Correspondence and Documents – 3 question/requests by NYSE related to the privileged correspondence and documents with respect to the legal advice obtained by the Defendants regarding the GSA;

ii.) Financial and Other Records – 10 questions/requests related to financial and other records of Beck, Limited and BRMS;

iii.) Miscellaneous – 4 questions/requests related to various issues.

Legal Advice, Privileged Correspondence and Documents

[42] Refusals #9, #10 and #13 all relate to privileged correspondence and documents regarding legal advice obtained by the Defendants from Stikeman Elliot LLP (“Stikemans”) with respect to the GSA.

[43] Refusal #9 is NYSE’s request that Mr. Beck advise if he advised Stikemans about the Arbitration. This question was refused on the basis of solicitor-client privilege. The answer is found at Schedule 5.1(q) of the GSA where the Arbitration is disclosed as “Litigation” pursuant to the Representations, Warranties and Covenants section of the GSA. This demonstrates that Limited disclosed the Arbitration to Stikemans. Therefore, NYSE’s motion with respect to Refusal #9 is dismissed.

[44] Refusal #10 is NYSE’s request to advise whose idea it was to include the provision under section 3.1(g) of the GSA that a judgment, order or arbitral award in excess of $50,000 is an Event of Default. I will address Refusal #10 as part of my consideration of Refusal #13 below, in which NYSE seeks a copy of Stikemans’ entire file with respect to the preparation of the GSA. In this regard, NYSE submits that the Defence and answers given at Mr. Beck’s examination for discovery constitute a deemed waiver of privilege with respect to communications and advice provided by Stikemans.

[45] NYSE’s Statement of Claim states as follows:

“27. A second grid promissory note – this time supposedly “secured” – was executed by Beck for BRMS and Beck for Incorporated on 16 November 2012, which purportedly secured any “loans” from BRMS to Incorporated going forward.”

50. While Incorporated was aware of an arbitral award against it, and the pending Enforcement Action to enforce the arbitral award in Ontario, Incorporated arranged for the conveyance of substantially all of the assets of Incorporated to Limited in a non-arm’s length transaction

51. The transfer of Incorporated’s assets to a non-arm’s length corporation was done with full knowledge of the debt owed to NYSE and with the intend to defeat, hinder or delay NYSE in its execution upon its Judgment, and thus to defraud NYSE in the sense referred to in the Fraudulent Assignments and Preferences Act and the Fraudulent Conveyances Act, and therefore must be declared void.

52. Moreover, while all of the defendants were aware, or should reasonably have been aware, that Incorporated had not satisfied the arbitral award in favour of NYSE and that NYSE was seeking to enforce the award in Ontario, Incorporated arranged for: (a) a conveyance or preference to BRMS, a non-arm’s length party, of substantially all of Incorporated’s assets; and (b) the day after Justice Patillo awarded judgment to NYSE in the Enforcement Action, a PPSA registration that served as a conveyance or preference in favour of BRMS over substantially all of what remained of Incorporated’s assets following the asset sale to Limited.

53. The transactions described herein were undertaken despite the defendants’, all of whom are non-arm’s length parties, knowledge that Incorporated would not otherwise be able to satisfy the arbitral award and Justice Patillo’s Judgment in favour of NYSE. In doing so, Incorporated unlawfully preferred BRMS over NYSE and fraudulently conveyed its assets to BRMS and to Limited.”

[46] Paragraph 36 of the Defence states as follows:

“Contrary to the allegations in paragraph 27 of the Statement of Claim, the General Security Agreement appropriately secures all funds advanced from November 16, 2012 onward, under the terms of the Promissory Note. That General Security Agreement was prepared with the professional guidance and assistance of external counsel, Stikeman Elliot LLP. There is no factual or legal basis to support the Plaintiff’s claims that the secured debt is subordinate to NYSE’s claims as an unsecured creditor.”

[47] At Mr. Beck’s examination, counsel engaged in the following exchange at Q951-952:

Q. Paragraph 36 of your statement of defence. You’ve pleaded there that the general security agreement, which we’ve looked at briefly today –

A. Yes.

Q. – at tab 6 of the Defendants’ productions, was prepared with the professional guidance and assistance of external counsel, Stikeman Elliot LLP. First of all, I want to know why you’ve pleaded that.

MR. COOPER: Okay, I can answer that since I’m the author of the pleading. It’s my understanding, under fraudulent conveyance authorities and case law, that in the case of non-arm’s length transactions one of the badges of fraud relied upon by the courts is self-help, or undue haste, or some surreptitious activity internally that would give rise to the implication of a fraudulent conveyance and fraud generally. So this is pleaded with respect to your specific allegation of fraudulent conveyance, to present the rebuttal that none of the badges of fraud exist here.

MR. SQUIRE: I would like copies of – or a copy of – Stikeman’s file with respect to the preparation of the general security agreement in the related transaction.

MR. COOPER: Better get it from the Court of Appeal.

MR. SQUIRE: And to be clear on our position, you’re seeking to give some imprimatur of legitimacy because of the involvement of counsel. And counsel’s advice is only as good as the information given to counsel may support. So I want to see that file to see what your client advised Stikeman Elliot about the purpose of the transaction, and about the material facts advised to counsel.

MR. COOPER: Well, we’re not going to answer that. And the purpose of the pleading is to relate to the issue of the fact that this was not done internally, not done by in-house counsel, not done as a matter of self-help but – prepared with the professional involvement of external counsel to the company does not give you a carte blanche to ignore solicitor-client privilege.

[48] The law with respect to deemed waiver of privilege was summarized by Perell J. in Creative Career Systems Inc. v. Ontario, 2012 ONSC 649. A deemed waiver of privilege and an obligation to disclose a privileged communication requires two elements: i.) the presence or absence of legal advice is material to the lawsuit; and ii.) the party who received the legal advice must make the receipt of it an issue in the claim or defence (Creative at para. 30).

[49] A party will be deemed to have waived privilege on the grounds of fairness or consistency when they make their privileged communications an issue in the proceeding (Creative at para. 25). Further, a party will be deemed to have waived privilege if the party places its state of mind in issue with respect to its defence and has received legal advice to help form the state of mind (Creative at para. 26). Perell J. then goes on to state at paragraph 27:

“There is, however, a subtle and profound point here about when a party must answer questions about the occurrence of legal advice in the factual narrative of a case. The subtle and profound point is that there is no waiver of the privilege associated with lawyer and client communications from the mere fact that during the events giving rise to the claim or defence, the party received legal advice, even if the party relied on the legal advice during the events giving rise to the claim or defence. For a party to have to disclose the legal advice more is required.”

[50] In setting out what more is required, Perell J. cites Doman Forest Products Ltd. v. GMAC Commercial Credit Corp. – Canada, 2004 BCCA 512, the primary case relied upon by the defendants. Perell J. notes that it is not enough that a pleading puts a party’s state of mind in issue and that its state of mind might have been influenced by legal advice, there must be the further element that the state of mind involves the party understanding its legal position in a way that is material to the law suit (Creative, at para. 29). Perell J. provides further guidance at paragraph 30:

“But the materiality of the legal advice, while necessary to make questions about it relevant, is still not sufficient to justify the compelled disclosure of the legal advice. To justify a party being required to answer questions about the content of privileged communications, the party must utilize the presence or absence of legal advice as a material element of his or her claim or defence. The waiver of the privilege occurs when the party uses the receipt of legal advice as a material fact in his or her claim or defence. While the waiver is a deemed waiver, it requires the intentional act that the party makes legal advice an aspect of his or her case.”

[51] In providing further clarity, Perell J. cites the decision of Corbett J. in Guelph (City) v. Super Blue Box Recycling Corp., [2004] O.J. No. 4468 (S.C.J.), the primary case relied upon by NYSE, noting that:

“….the deemed waiver occurs as a matter of the party’s choice. Waiver does not occur because the party discloses that he or she received legal advice, nor does it occur because the party admits that he or she relied on the legal advice; it occurs because the party chooses to use the legal advice as a substantive element of his or her claim or defence” (Creative, at para. 31).

[52] At paragraph 31, Perell J. cites the following considerations from Guelph:

i.) privilege is waived when the client relies upon the receipt of advice to justify conduct in respect of an issue at trial (Guelph, para. 88);

ii.) privilege can be claimed regardless of the opposite party’s allegations. However, when faced with a claim of bad faith, a party who responds by relying on good faith conduct as a result of following legal advice will thereby waive its privilege (Guelph, para. 97);

iii.) it is irrelevant whether the client received and followed legal advice. It is only relevant to the extent that the client relies upon the fact that it received legal advice on these topics to establish its good faith that privilege will be waived on the basis of reliance (Guelph, para. 101).

[53] In Creative, the defendant civil servants, who were being examined with respect to claims by a private career college regarding statutory registrations, deposed on discovery that they obtained legal advice but did not reveal the substance of that advice. Unlike the Defendants in the present case, the defendants in Creative did not refer to legal advice in their pleadings. In concluding that there had been no deemed waiver of privilege, Perell J. stated at paragraphs 33-35:

“33. The fact that the Defendants’ had received legal advice about whether the Plaintiffs owned or controlled the private career colleges for which they sought registration was not relevant to the issues of whether the Plaintiffs did own or control these private career colleges. Similarly, it is irrelevant to the law suit that the Plaintiffs may have obtained legal advice to support their assertion that they owned the private career colleges. Ultimately, the court will decide the ownership issue based on facts that do not include either party’s lawyer’s legal opinion about ownership.

34. And while the fact that the Defendants had received legal advice could have been relevant to the issue of whether the Defendants were acting in good faith, the Defendants do not rely on their having received legal advice as an aspect of that defence.

35. I will borrow what Justice Corbett said in Guelph (City) v. Super Blue Box Recycling Corp., supra. It is only to the extent that the Defendants rely upon the fact that they received legal advice to establish their good faith that privilege will be waived on the basis of that reliance. Mere disclosure that legal advice was received about the Plaintiffs’ ownership of the private career colleges, by itself, does not give rise to waiver. The defendants do not rely on their having received legal advice as evidence of their good faith.”

[54] In Guelph, Corbett J. commented on causes of action involving state of mind, intention, motive and bad faith at paragraph 95:

“Most claims in a commercial law context will have little or nothing to do with what the parties intended or felt, but rather with what they were obliged to do, and what they did in fact. However, in many of these cases allegations will be made on the basis of theories of liability tied to intention or motive, in addition to contract law theories of liability. This is one of the consequences of the growing confluence of tort and contract law into a general common law of obligations. And so, allegations of lack of good faith, intentional breach of obligation and/or bad faith will be made more often than such allegations are made out at trial. And when the allegations are made, the state of mind of the parties, the reasons why they did the things they did, will be in issue.”

[55] In Guelph, Corbett J. concluded that what was pleaded in the City of Guelph’s Reply did not constitute a deemed waiver of privilege. However, he found that it remained the City’s choice as to whether it would rely upon the legal advice it sought and received as evidence of its lack of bad faith, its good faith and/or its acting in the public interest. He considered whether the City had made its choice as a result of the answers its staff gave on discovery (Guelph, para. 100).

[56] The questions on discovery in Guelph related to legal advice obtained by City staff with respect to an agreement and lease with the plaintiff to build an energy recovery plant for processing solid waste. On discovery, the City’s deponent was asked why the City imposed a deadline and brought a resolution to City Council to impose additional waste processing capacities on the plaintiff notwithstanding the plaintiff’s concerns. The deponent responded that City staff acted in reliance on advice from external counsel that in order to comply with its environmental Certificate of Approval the City had to take action. Corbett J. held that the City could not rely on external counsel’s opinion with respect to its obligations to achieve certain waste processing capacities without waiving privilege over the entirety of the lawyer’s file and work product.

[57] Corbett J. distinguished this question from other discovery questions which related to advice obtained by City staff from in-house counsel. Specifically, Corbett J. held that he could not conclude whether City staff were relying on legal advice from in-house counsel as evidence to establish that the City was acting in good faith, and therefore, the City had not yet made a choice to waive privilege over the privileged communications in question. Corbett J. stated that, if the City subsequently chose to rely on the fact that they obtained advice from in-house counsel that the City was acting in good faith to explain its intentions and motivations at trial, then privilege would be waived.

[58] Applying the factors and considerations above to the present case, the Defendants have pleaded in their Defence and stated on discovery that they obtained and relied on legal advice from Stikemans with respect to the GSA, a document related to a transaction which gives rise to claims in this action. While the pleading and answers make the legal advice material, the disclosure by the Defendants that they obtained advice and relied on it is not sufficient to constitute a deemed waiver.

[59] For a deemed waiver of privilege to have occurred, I must conclude that the Defendants have made a choice to utilize the fact that they obtained and relied on Stikemans’ legal advice as evidence that they acted in good faith to explain their intentions and motivations and justify their actions in response to NYSE’s allegations. Since the answers provided on discovery by Mr. Cooper explain the purpose of pleading legal advice in the Defence, I will consider the Defence and the discovery answers together.

[60] In the Defence, the Defendants plead that the GSA was prepared with “the professional guidance and assistance” of Stikemans. On discovery, Mr. Cooper advised that legal advice was pleaded to “present the rebuttal that none of the badges of fraud exist here” including “self-help, or undue haste, or some surreptitious activity internally that would give rise to the implication of a fraudulent conveyance and fraud generally”. Mr. Cooper added on discovery that “the purpose of the pleading is to relate to the issue of the fact that this was not done internally, not done by in-house counsel, not done as a matter of self-help but – prepared with the professional involvement of external counsel to the company”.

[61] During submissions, Mr. Cooper largely repeated what he stated on the record at discovery and added that legal advice was pleaded as a complete rebuttal and response to NYSE’s claims of fraudulent activity in order to demonstrate that the Transaction and the GSA were not done “in haste” and that the GSA was not “homemade” or “concocted”. He further states that the pleading only relates to Stikemans as the author of the GSA and PPSA registrant and “as a matter of due care and intention to protect BRMS” given that BRMS would only advance new funds on a secured basis. Mr. Cooper submits that this is not a plea of reliance on legal advice but a factual pleading of legal activity to a claim of fraud.

[62] With respect to rebutting the badges of fraud, Mr. Cooper cites the Court of Appeal’s decision in FL Receivables Trust 2002-A (Administrator of) v. Cobrand Foods Ltd. (2007), 2007 ONCA 425, 85 O.R. (3d) 561 (C.A.). As set out by Laskin J.A. in FL Receivables, while the legal burden to prove fraudulent intent remains with the plaintiff, the plaintiff can raise an inference of fraud sufficient to put a “burden of explanation” on the defendant debtor by putting forward “badges of fraud” which are typical and suspicious facts that may allow the court to make a finding of fraud absent an explanation from the debtor (FL Receivables Trust at paras. 39-40).

[63] The badges of fraud are evidentiary rules by which the evidentiary burden is shifted to the defendant if the plaintiff can establish that an impugned transaction (including one being attacked as a fraudulent conveyance) has characteristics which are typically associated with fraudulent intent including: a non-arm’s length relationship between the parties, inadequate consideration, knowledge of a pending or threatened action, unusual haste in making the transfer and the transferor continuing to be in possession or enjoying the benefits of the property (Bank of Montreal v. Amer Javed et al, L.P., 2015 ONSC 1229 at para. 30; Indcondo Building Corp. v. Sloan, 2014 ONSC 4018 at paras. 52-53; aff’d 2015 ONCA 752; Cambone v. Okoakih, 2016 ONSC 792 at paras. 177-186).

[64] In my view, by pleading legal advice for the stated purpose of rebutting NYSE’s claims of fraudulent activity and rebutting any evidentiary burden shift as a result of the badges of fraud, the Defendants have made a choice of the kind contemplated in Creative and Guelph. Specifically, the Defendants have chosen to utilize and rely on Stikemans’ legal advice as evidence of good faith and an absence of bad faith to explain their actions, intentions and motivations regarding the GSA and the Transaction.

[65] NYSE alleges fraud, oppression and other bad faith conduct against the Defendants. In defence of and to rebut these claims and allegations and to demonstrate that none of the badges of fraud exist, the Defendants rely on the fact that they obtained and relied on legal advice from Stikemans, which they use as evidence that there was no surreptitious activity, self-help, undue haste and/or that nothing was concocted internally or homemade. Put simply, NYSE has made claims of bad faith and the Defendants use the existence of Stikemans’ advice as evidence that they were not acting in bad faith. This constitutes a deemed waiver of privilege such that the communications and work product related to Stikemans’ advice must be produced.

[66] In reaching this conclusion, I reject the Defendants’ submission that they are simply pleading the fact that they obtained legal advice as part of the narrative surrounding the Transaction and the GSA. This submission is inconsistent with the Defendants’ admitted purpose in pleading legal advice which is to rebut the badges of fraud as a result of any shift in the evidentiary burden. In my view, this is a substantive, material defence which they are relying on to establish good faith conduct and absence of bad faith. As Corbett J. concluded in Guelph, the Defendants cannot rely on legal advice as evidence of good faith without waiving privilege.

[67] The Defendants rely primarily on Doman in support of their position that privilege has not been waived. In that case, the plaintiff claimed that the defendant had fundamentally breached a credit agreement. The plaintiff did not plead legal advice but the motion judge concluded that the combined effect of their Statement of Claim and Reply put their state of mind at issue and therefore, it was reasonable to assume that the legal advice they admitted on discovery they received had influenced that state of mind.

[68] The B.C. Court of Appeal held that there had been no waiver for 3 reasons: i.) the plaintiffs did not reveal the fact of legal advice voluntarily (eg. in a pleading) but rather in response to questions on discovery; ii.) the plaintiffs’ state of mind as to whether there had been an event of default was not at issue; iii.) the legal advice was not relevant to the particular state of mind put in issue such that it cannot be said that the plaintiff had put its knowledge of the law in issue and that enforcing privilege would deprive GMAC of information necessary to defend the allegation (Doman at paras 26-28).

[69] In my view, Doman is distinguishable from the present case for the following reasons:

i.) the Defendants voluntarily pleaded legal advice in their Defence. Mr. Cooper submits that the pleading was involuntary as it was in response to NYSE’s allegations that the GSA was a “sham”, however, nothing obligated or required the Defendants to plead legal advice at all or for the purpose of rebutting the badges of fraud;

ii.) the Defendants’ state of mind is at issue in the present case given the allegations of fraud and oppression. As Corbett J. noted in Guelph, where allegations of lack of good faith, bad faith, motivation and intention are made, state of mind or “why” a party did something will be at issue. Doman involved events of default under a credit agreement where intention, motivation and state of mind were not at issue;

iii.) the state of mind at issue here is relevant to the legal advice in the present case given the nature of the allegations made and the stated purpose of pleading legal advice to rebut the badges of fraud and allegations of surreptitious conduct. As a result of the Defendants’ reliance on legal advice as evidence of good faith they have put their knowledge of the law at issue such that enforcing privilege would deprive NYSE of the ability to discover information relevant to the Defendants’ substantive defences.

[70] In addition, we now have the benefit of this court’s guidance in Creative where Perell J. considered Doman and set out very specifically and comprehensively what more is required for deemed waiver to occur. Namely, a party, as the Defendants have done here, makes a choice to rely on the existence of legal advice as evidence of good faith.

[71] The Defendants also rely on FCMI Financial Corp. v. Curtis International Ltd., 2003 Carswell Ont. (S.C.J.). In FCMI, in their defence to oppression claims, the defendants pleaded that the impugned offer to shareholders was prepared by experienced U.S. securities lawyers. Swinton J. held that the defendants had not put their state of mind in issue and therefore, privilege was not waived by pleading legal advice in this manner (FCMI at para. 26).

[72] Swinton J. further concluded that even if she was wrong, before implied waiver is found, the court must determine that disclosure of the legal advice is necessary to achieve trial fairness. She held that disclosure of legal advice was not necessary because a determination of the plaintiff’s claim would require the court to assess the process and price paid, not just the defendants’ state of mind (FMCI, at paras. 26-27).

[73] In my view, FCMI is distinguishable from the present case. While the defendants in FCMI pleaded that they received legal advice, unlike the Defendants in the present case, they did not take the further step of stating on discovery that the purpose of pleading legal advice was to rebut the badges of fraud and oppressive conduct or in any way using it as evidence of good faith.

[74] With respect to trial fairness, the Defendants submit that the court will determine the enforceability of the GSA based on documentary and other evidence and not the substance of Stikemans’ legal advice. Therefore, the Defendants submit that Stikemans’ advice is not relevant and NYSE would suffer no trial unfairness as a result of the non-production of the privileged communications. For these same reasons, the Defendants also submit that it would offend proportionality and Rule 1.04(1) to order the production of the legal advice. In this regard, the Defendants also state that they have already produced some of the documents which they provided to Stikemans and which Stikemans relied on in providing the legal advice.

[75] Unlike in FCMI, the Defendants here have stated their intention to rely on the legal advice they obtained from Stikemans to rebut the badges of fraud. While it may ultimately be the case that the court will not rely on the substance of Stikemans’ advice, the Defendants have chosen to use the existence of Stikemans’ legal advice as part of their substantive defence and evidence of good faith. In my view, trial fairness requires that NYSE be entitled to information and discovery with respect to this advice. Again, the Defendants cannot rely on Stikemans’ legal advice as evidence of good faith and use it as a defence to rebut allegations of fraud while at the same time denying NYSE the opportunity to discover on this advice.

[76] I am also mindful of Swinton J’s comments in FCMI that the Supreme Court of Canada has held that solicitor-client privilege must be as absolute as possible and yield only in clearly defined circumstances (see R. v. McClure, 2001 SCC 14, [2001] 1 S.C.R. 445 at para. 35). However, Creative and Guelph set out the requirements for one of these clearly defined circumstances, deemed waiver, which I conclude have been met in this case.

[77] Based on my consideration of all of the factors and circumstances set out above, I conclude that NYSE’s motion with respect to Refusal #13 must succeed and that the Defendants shall produce all documents, correspondence and communication in their possession or control, including from Stikemans, with respect to the legal advice provided by Stikemans related to the GSA only. This order does not extend to other advice provided by Stikemans and does not include any documents with respect to legal advice which have already been produced. The parties may seek further directions from me if issues arise as to the scope of production. Given the overlap, the production of documents for Refusal #13 shall constitute a complete response to Refusal #10.

Financial and Other Records of Co-Defendants

[78] There are 8 refusals and 2 under advisements related to NYSE’s requests for financial information and documents from Limited’s co-defendants, Incorporated, BRMS and Mr. Beck.

[79] NYSE submits that it is entitled to this information on the basis that the Defendants have broad disclosure obligations given the allegations of a fraudulent conveyance and the admitted facts regarding the Transaction and the transfer of assets and funds between the related party Defendants. NYSE relies on on J.G. Young & Son Ltd. v. Gelleny, 2002 CarswellOnt 3597 (S.C.J.) in which Master Dash held that where assets have been transferred to other parties, questions may be asked of a judgment debtor as long as “some connection” between the judgment debtor and the assets can be established. This may be done by: i.) demonstrating that the judgment debtor supplied funds for the purchase of the assets; or ii) establishing a documented, contractual or other right to an interest in the property (see J.G. Young, at paras. 16-17). In my view, based on the facts and circumstances of the Transaction and related party transfers admitted by Mr. Beck, a connection has been established between the Defendants and the assets at issue.

[80] Although the Defendants have previously opposed these requests on the basis that Limited’s co-defendants are not judgment debtors, they do not oppose all of them now. Rather, the Defendants submit that they have recently produced a substantial number of financial and bank records which are responsive to many of NYSE’s requests and that certain questions could be answered by Mr. Beck on a re-attendance on discovery. It was also apparent during submissions that further discussion between counsel, with the benefit of the recent productions, may resolve some of the outstanding issues. Given that a substantial number of NYSE’s requests relate to financial information, NYSE will also be able to ask questions of Ms. Sementchoukova on her examination regarding financial and banking information generally, including questions specific to the records recently produced and any additional documents which may be relevant.

[81] Each refusal and/or under advisement is addressed below, grouped together where possible.

[82] Refusal #2 (produce financial records of BRMS), Refusal #7 (produce the general ledgers for BRMS for the period when BRMS was advancing funds to Limited) and Refusal #8 (produce the bank records of BRMS for the advancement period) can be considered together. The Defendants submit that documents responsive to Refusals #7 and #8 are included with the recent productions and that without further specificity, they cannot determine what “financial records” NYSE is seeking in Refusal #2 but believe they may also be included with these recent productions. NYSE does not seem to take issue with this response. Therefore, NYSE’s motion with respect to Refusals #2, #7 and #8 is dismissed. NYSE can identify any further financial records and ask any questions regarding productions when they examine Ms. Sementchoukova and re-examine Mr. Beck.

[83] Refusal #4 (advise if BRMS earned or received funds loaned to Incorporated from other group-related activities), Refusal #11 (advise where BRMS obtained the funds to loan Limited the purchase price funds for Incorporated) and Refusal #12 (advise if the source of funds for the purchase price was from another related corporation) can be considered together. All 3 requests seek to determine the source of the funds loaned by BRMS to Incorporated and Limited. Counsel for the Defendants submits that where BRMS obtained its funds it is not relevant or material to the action or the Transaction, however, I disagree.

[84] Based on the pleadings and the facts disclosed by Mr. Beck regarding the related party advances and the Transaction, the source of BRMS’ funds is relevant, particularly given the possibility that the funds came from a related party or from related party transactions including those involving Incorporated, the judgment debtor. However, what is not clear from the record and counsel’s submissions is whether this information is disclosed or available to NYSE in the recent production of bank and financial records. Defendants’ counsel states that the Defendants have produced line items for various transactions supported by the relevant bank records for each line item. NYSE’s counsel says that they were not provided with general ledgers and that redactions limit the information only to advances under the Notes. In my view, what is proportionate and efficient in the circumstances is, if counsel cannot otherwise resolve these requests, for NYSE’s counsel to ask for the specific information they are seeking on Ms. Sementchoukova’s examination or Mr. Beck’s re-attendance including where it may be available in records already produced and if there are any additional relevant documents. NYSE’s motion with respect to Refusals #4, #11 and #12 is dismissed.

[85] Refusal #3 is to advise who purchased the Dill software which was developed by Incorporated and transferred to Limited if the purchaser was an arm’s length or non-arm’s length party, when the transaction occurred and the amount of the proceeds. Defendants’ counsel submits that the sale of Dill is not relevant given that it occurred “long after” the Transaction though he did not specify how long or when. In my view, based on the pleadings, including the circumstances surrounding the Transaction, the timing, parties and consideration with respect to the Dill transaction is relevant, particularly since it was originally an asset of Incorporated, the judgment debtor. The Defendants shall provide this information within 30 days.

[86] Refusal #5 is NYSE’s request for a list of Limited’s non-arm’s length customers. The Defendants submit that this is essentially a request for a list of the non-arm’s length parties and that if NYSE wants this information it should just ask Mr. Beck on his re-attendance. To the extent to which this information has not already been provided, the Defendants shall provide a list of the non-arm’s length customers prior to Mr. Beck’s re-examination so that any questions can be asked.

[87] Advisement #1 (advise who the arm’s length third party owner of the software Ginger, developed by Incorporated and transferred to Limited, is today and when the transfer occurred) and Advisement #2 (advise if the arm’s length party who purchased the Ginger, Dill and Rosemary software, all developed by Incorporated and transferred to Limited, also purchased any additional products from Limited) can be considered together. The Defendants submit that it is not relevant what Limited did with any assets transferred to it because Limited is not a judgment debtor. Again, given the connections between the related parties and the assets and funds transferred, this is not true in the case of all assets. In the case of assets developed and owned by Incorporated which would have been available to satisfy the Judgment, when, to whom and for how much are all relevant to the matters at issue in this action. With respect to Advisement #2, at this point, I am satisfied that the question as asked should be answered given that it relates only to whether or not the arm’s length party purchased anything else, not what it might have purchased. This may be probative of whether any such transfers or transactions were in the ordinary course. Therefore, the Defendants shall answer Advisements #1 and #2 within 30 days.

Miscellaneous

[88] There are 2 refusals and 2 under advisements which relate to various matters.

[89] Refusal #1 is to advise if Incorporated expected that NYSE was required to provide market data as long as Incorporated paid for it. NYSE submits that Incorporated’s reasonable expectations are relevant to NYSE’s oppression claims. I am not satisfied that the expectations of Incorporated or Mr. Beck, as described by counsel in the context of the oppression remedies claimed, are probative of matters at issue which are relevant to this action. NYSE’s motion with respect to Refusal #1 is dismissed.

[90] Refusal #6 is to waive any confidentiality provisions that could restrict the ability of Charles Kim to speak with NYSE’s counsel prior to trial. Mr. Kim was a minority shareholder at the time of the GSA and the Transaction who sold his shares to Mr. Beck in 2015. In their Defence, the Defendants state that one of the reasons for the GSA was to discharge BRMS’ fiduciary duties to Mr. Kim. While Mr. Kim may have evidence which is relevant to matters at issue, when asked, counsel advised that nobody has asked Mr. Kim if he will voluntarily waive any confidentiality provisions to provide evidence in this action. The Defendants cannot do so on their own. In my view, it would be premature and inappropriate to compel Mr. Kim to provide evidence in the absence of a request and in the absence of a properly brought motion, on notice to Mr. Kim, seeking to obtain his evidence. NYSE’s motion with respect to Refusal #6 is dismissed.

[91] Advisement #3 is for Mr. Beck to review the transcript from Incorporated’s examination in aid of execution and correct or update any answers. NYSE submits that Incorporated has an obligation to correct and update its answers and therefore, it is not asking Mr. Beck to do anything extra. However, in my view, this would be a disproportional and inefficient manner to achieve this outcome especially since Mr. Beck has already attended on discovery and will be re-attending. What is proportional and efficient would be for NYSE to ask any further questions of Mr. Beck on his re-attendance including questions or updates arising from the transcript of the examination in aid in execution that it did not ask Mr. Beck on his initial examination, or that they have not otherwise obtained from the Defendants, through the recent productions or otherwise. NYSE’s motion with respect to Advisement #3 is dismissed.

[92] Advisement #4 is to produce the complete file of Rosenblatt Securities (“Rosenblatt”) with respect to the valuation report of Incorporated prepared by Rosenblatt on July 9, 2013 (the “Rosenblatt Report”) which the Defendants relied upon in structuring the Transaction. The Report and related documents are relevant and probative to NYSE’s claims that the Transaction was fraudulent and oppressive and to the Defendants’ defence and rebuttal to these claims, particularly with respect to the consideration paid for Incorporated. The Defendants submit that they have already produced a copy of the Report and the documents which they provided to Rosenblatt therefore, there is nothing more to produce. However, it may be that there is additional correspondence or other communications between the Defendants and Rosenblatt in which the Defendants provided additional information which Rosenblatt relied on or which are otherwise relevant to the Rosenblatt Report. In my view, while it is not necessary to produce Rosenblatt’s entire file, what is proportionate is for the Defendants to produce any additional documents or correspondence between the Defendants and Rosenblatt in the possession or control of the Defendants including in Rosenblatt’s possession with respect to the preparation of the Rosenblatt Report within 30 days.

Affidavit of Documents

[93] NYSE states that it has not received an Affidavit of Documents for each of the 4 Defendants. Counsel for the Defendants states that the 1 Affidavit of Documents which it has provided is for all 4 Defendants. Based on the discussions during submissions, it is my view that this issue is resolved and that counsel will continue to produce relevant documents as a result of their discussions and the upcoming attendances of Mr. Beck and Ms. Sementchoukova.

III. Disposition

[94] Order to go as follows:

i.) Olga Sementchukouva shall attend on examination for discovery on a date to be agreed upon between counsel after she returns from maternity leave;

ii.) the Defendants shall produce all documents and correspondence in their possession or control, including in the possession of Stikemans, with respect to the legal advice provided by Stikemans related to the GSA within 30 days;

iii.) the Defendants shall advise who purchased the Dill software, when the transaction occurred and the amount of the proceeds within 30 days;

iv.) the Defendants shall provide a list of the non-arm’s length customers of Incorporated prior to Mr. Beck’s re-examination;

v.) the Defendants shall advise who the arm’s length third party owner of the software Ginger, developed by Incorporated and transferred to Limited, is today and when the transfer occurred and shall advise if the arm’s length party who purchased the Ginger, Dill and Rosemary software also purchased any additional products from Limited;

vi.) the Defendants shall produce any additional documents or correspondence between the Defendants and Rosenblatt in the possession or control of the Defendants including in Rosenblatt’s possession with respect to the preparation of the Rosenblatt Report within 30 days;

vii.) the relief sought by NYSE with respect to Refusals #1, #2, #4, #6, #7, #8, #9, #11, #12 and Advisement #3 is dismissed.

[95] If the parties cannot agree on the costs of this motion they may file costs submissions in writing not to exceed 4 pages (excluding costs outlines) with me through the Masters’ Administration Office by August 18, 2017.

Released: July 10, 2017

Master M.P. McGraw