Court File and Parties

COURT FILE NO.: CV-16-544244 MOTION HEARD: 20170707 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Dufferin Drug Mart Inc., Plaintiff AND: Pharmadx Drugs Ltd., Maher Mikhail and Edmund Moss, Defendants

BEFORE: Master Jolley

COUNSEL: M. Ross and S. Sam, Counsel for the Responding Party Plaintiff and the Moving Party on the Cross Motion Patricia Virc, Counsel for the Moving Party Defendants and Respondent on the Cross Motion

HEARD: 7 July 2017

REASONS FOR DECISION

[1] There are two motions before me arising from undertakings and refusals given at the parties’ examinations for discovery.

Background

[2] The plaintiff bought the assets of the defendant Pharmadx Drugs Ltd. The personal defendants were the officers and directors of that defendant pharmacy. The plaintiff alleges that between the signing of the agreement of purchase and sale and the closing, one of the defendants, Maher Mikhail, took steps to divert pharmacy customers from the business to other pharmacies and also advised staff and the local community that the pharmacy was closing. The plaintiff says this was in breach of the agreement of purchase and sale that required the defendants to operate the business in the ordinary and normal course until closing and to use best efforts to ensure a smooth transition and to preserve the goodwill of the business. It claims the defendants’ conduct has caused it to suffer $2,500,000 in damages.

[3] The defendants bring a motion to compel the plaintiff to answer what are in effect follow up questions as a result of information given in answer to a number of undertakings concerning the customers of the pharmacy and to compel answers to four refusals. The questions relate both to liability (did the defendants breach their contract and did the defendant Mikhail divert business away from the pharmacy) and to damages (if so, how much business was lost).

[4] The plaintiff brings a cross motion to compel the defendants to answer questions refused on their examinations for discovery.

Defendants’ motion

Customer Information

[5] The defendants’ follow up questions are complicated by the fact in order to answer those questions the plaintiff is required to disclose the names and contact information of the customers it says it lost as a result of the alleged wrongful conduct of the defendants. That information sought may disclose personal health information of those customers as their prescription information will also be disclosed.

[6] As a result of these concerns, the plaintiff advised that it was unable to provide the information requested without a court order compelling it to do so. When faced with the follow up questions, plaintiff’s counsel sought the advice of the Ontario College of Pharmacists and he is to be commended for that. The College directed counsel to the Information and Privacy Commissioner of Ontario as to how to respond to the issues raised. In addition to certain other suggestions, the Privacy Commissioner suggested that it might be possible for the plaintiff to provide the customer names and contact information first as a stand-alone document and later, if there is evidence that those individuals left because of the defendants’ conduct, those names could be linked to the prescriptions they had filled at the pharmacy, as required for the damages portion of the plaintiff’s claim.

[7] In answer to its undertaking, the plaintiff provided prescription transfer reports, redacting the names and contact information of those customers. To satisfy the follow up questions, I order that the plaintiff will review the documents that it provided at tab 6 of its answers to undertakings and by 31 July 2017 will provide to defendants’ counsel a version that includes the names and contact information of any customer it says it lost as a result of the defendants’ conduct. All other names and contact information will remain redacted. In this way, the cull for relevant information will take place at the outset. This should accomplish the aim of the Privacy Commissioner in its suggestion of a two-step process, which was to ensure, to the extent possible, that only relevant names and contact information be disclosed.

[8] Similarly, on 26 June 2017, in answer to question 631, the plaintiff produced active patient reports for 2014, 2015 and 2016, with the customer names and contact information redacted. The plaintiff will review these productions and by 31 July 2017 will provide defendants’ counsel with a version that includes the names and contact information of any customer it says it lost as a result of the defendants’ conduct. All other names and contact information will remain redacted. The plaintiff shall also include on these active patient reports the names and contact information of any patients who have returned to do business with the plaintiff.

[9] The plaintiff did not oppose these terms and was active in obtaining the position of the appropriate regulator and Commissioner to assist.

[10] For all the information above, on consent of the parties and in accordance with correspondence from the Privacy Commissioner, the parties will ensure the physical security of the patient names and contact information and shall not disclose this information to anyone except persons employed by counsel for the plaintiff and counsel for the defendants and the court, subject to any further order of this court.

[11] Should counsel for the defendants disclose the patient names and contact information to the defendants, the defendants shall not disclose this information to anyone, subject to any further order of this court.

[12] The parties shall not file the patient names and contact information with the court, subject to any further order of this court and the discretion of the trial judge.

[13] If it becomes necessary for any party to place the patient names and contact information before the court on any motion, case conference, pre-trial or trial, the information shall be filed separately and in a sealed envelope directly with the office of the presiding judicial officer so that it does not become part of the court file, subject to any further order of this court and the judge presiding over the particular attendance.

[14] Upon expiry of the time period provided for any appeal of the disposition of this action, counsel for the defendants and the defendants, as applicable, shall securely destroy all copies of the patient names and contact information and certify to counsel for the plaintiff that all such copies have been destroyed, subject to any further order of this court.

Refusal on Damages Quantum and Breakdown

[15] Questions 89 and 94 sought the plaintiff’s position on damages with a quantum and a complete breakdown. The plaintiff’s position was that this would be provided in its expert’s report. On consent, the plaintiff shall provide any such expert report upon which it intends to rely by 20 September 2017, subject to the defendants providing the plaintiff with any reasonable and necessary financial data from its general ledgers as requested by the plaintiff. If there is any issue concerning the scope of this data to be produced, the parties may return before me for further direction.

Refusals concerning information from Wahid Girgis

[16] The plaintiff pleads in paragraph 12 of its statement of claim that, in an effort to sabotage the transaction, the defendant Mikhail “approached Emad’s [the plaintiff’s principal’s] business advisor Wahid Girgis and attempted to persuade him that purchasing the pharmacy was an unwise investment and that Wahid should tell Emad to simply walk away from the deal.”

[17] The first question in issue was at Q211: “And if no one has interviewed [Girgis], I would like you to ask him directly what he recalls about whatever interaction there was that has resulted in this pleading at paragraph 12.”

[18] The second question was in relation to a meeting between Emad, Mr. Girgis and two other individuals about the potential sale of the business and the reason for that, at Q547: “Can you undertake to ask Mr. Girgis what he remembers of this discussion, when it took place and what was said?”

[19] As a lead up to that question, even though the plaintiff’s statement of claim sets out information that the plaintiff presumably received from Mr. Girgis about his conversation with Mr. Mikhail, plaintiff’s counsel advised that he had not obtained a witness statement from Mr. Girgis and had not interviewed him. Had he done so, the outcome on this question would have been quite different. Plaintiff’s counsel advised that, if anyone had interviewed Mr. Girgis, including anyone from the plaintiff’s former law firm, a summary of that information would be provided.

[20] I note that the defendants did not ask the plaintiff what Mr. Girgis told him about this conversation or ask for particulars of that paragraph. The plaintiff is not being asked to disclose what it already knows but is asked to go out and interview a witness and provide information thereafter. This is not dispositive of the issue as a party may be compelled to attempt to obtain information from its former agents and servants, when appropriate. While the plaintiff pleads that Mr. Girgis is Emad’s business advisor, it is not pleaded that Mr. Girgis was the agent of the plaintiff or a party under the plaintiff’s control and direction such that the obligation should be on the plaintiff to interview him as opposed to the defendants.

[21] I find there is no property in Mr. Girgis and the plaintiff is not required to interview him. It is open to the defendants to contact Mr. Girgis and determine his recollection to prepare for trial.

Refusals concerning the employees

[22] Plaintiff’s counsel took witness statements from the plaintiff’s employees. To test the reliability of those statements, defendants’ counsel asked the following at Q395: “was each and every person who was retained asked to go and give a witness statement?” and at Q397: “Were the witnesses told that they needed to give a statement as a condition of continuing their employment?”

[23] I agree that these were proper refusals. From which witnesses counsel chooses to obtain a statement and what is said to those witnesses is subject to litigation privilege. If the witnesses are called at trial, it is open to the defendants to ask them about their motivation and whether they were pressured into giving the statements or told their continued employment was dependent on them providing the statement.

[24] The defendants advised that they were not pursuing Question 488 or the second question on the lease contained in Question 631 at this time.

Plaintiff’s Cross Motion

[25] The plaintiff’s cross motion seeks an order that the personal defendants answer questions refused at their examinations for discovery.

[26] Mr. Moss and Mr. Mikhail were partners in the pharmacy ultimately purchased by the plaintiff. The plaintiff alleges that Mr. Moss was the investor/silent partner and Mr. Mikhail ran the operations. The plaintiff’s theory of the case is that Mr. Moss was not earning any money from the business and wanted to sell. Mr. Mikhail did not want to sell the business as it provided him and his family with good incomes. Mr. Mikhail was upset that the pharmacy was being sold and set about to sabotage the business by diverting customers to other pharmacies. It is alleged this was done out of spite and not for profit.

[27] Messrs. Moss and Mikhail deny any disagreement over the decision to sell. They plead that the shareholders were in full agreement to sell the business.

[28] The plaintiff asked Mr. Moss a series of questions aimed at discovering whether Mr. Moss was financially benefiting from the business and to what extent. It asked, for instance, for evidence that Mr. Moss was making money from the pharmacy, for copies of his T4s and T5s and whether his father-in-law (who lent money to the business) was being paid on his loan.

[29] As noted, the plaintiff’s theory is that Mr. Mikhail interfered with the purchased business out of spite because he was angry that the business was being sold. Assuming that to be true, it is difficult to see the relevance of the motivation for selling the business. Whether Mr. Moss wanted to sell because it was profitable and it was a good time to realize his gain, whether he wanted to sell because he was retiring, whether he wanted to sell because the business was not doing well or whether he wanted to sell at the behest of the company’s principal financier, the end result is that the business was sold. It is the fact of the sale itself that, as pleaded, that is relevant to the actions of Mr. Mikhail, not the rationale behind it.

[30] Accordingly, Questions 80, 175, 177, 184, 453 and 465 which concern the rationale for the sale and range from questions about the loan on the corporate defendant’s books, money paid to Mr. Moss’ father-in-law, income earned by Mr. Moss from the business issues and whether the business was meeting its financial obligations, are properly refused.

[31] Certain of the refusals will be subsumed in the order on the motion above requiring the corporate defendant to provide reasonable and necessary financial data from its general ledgers as requested by the plaintiff for its expert’s report. This affects Questions 152, 383, 384 and 536 from Mr. Moss’ examination for discovery and Question 61 from Mr. Mikhail’s examination.

[32] Question 185 from Mr. Moss’ examination and Question 390 from Mr. Mikhail’s examination were withdrawn.

[33] Question 472 from Mr. Mikhail’s examination was resolved on consent. The plaintiff agreed to provide the names and contact information of persons who might reasonably be expected to have knowledge of the matters in issue, but not a summary of their information.

[34] There has been mixed success on the motion and the cross motion. Most of the refusals on both sides were held to be proper. While the defendants were successful on their motion for information concerning the plaintiff’s customers, the plaintiff could not have consented to the motion and did work diligently to provide a solution. The plaintiff advised the defendants during examinations for discovery that it would cooperate on a form of order for the customer information and it has done so. Each party shall bear their own costs.

Master Jolley Date: 13 July 2017